Tackling the California Insurance Crisis: The Promise of the INSURE Act

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The INSURE Act: A Legislative Response to a Growing Crisis 

In the wake of escalating natural disasters in California, the introduction of the Incorporating National Support for Unprecedented Risks and Emergencies (INSURE) Act marks a pivotal moment in the state’s ongoing insurance crisis. This article explores the implications of this groundbreaking federal bill, aimed at redefining insurance coverage for homeowners amidst the growing threat of wildfires, floods, and earthquakes. 

5 Key Points: 

  • Introduction of the INSURE Act: A federal bill proposed to address the insurance crisis in California, particularly in response to increasing natural disasters. 
  • Federal Catastrophic Reinsurance Program: The Act aims to establish a program limiting insurers’ liabilities and ensuring coverage for all natural disasters. 
  • The Role of Reinsurance: Understanding reinsurance as a crucial element in stabilizing the insurance market and its potential transformation through the INSURE Act. 
  • Industry Response and Challenges: Assessing the potential impact of this legislation on private insurers’ decisions and the current state of the insurance market in California. 
  • Long-Term Implications: The expected timeline for the Act’s implementation and its long-term significance in mitigating climate-related insurance issues. 

In the shadow of escalating natural disasters, California homeowners face an insurance market in turmoil. The crisis, exacerbated by major insurers withdrawing from the state due to the increased frequency of wildfires, flooding, and earthquakes, has sparked a significant legislative response. The introduction of the Incorporating National Support for Unprecedented Risks and Emergencies (INSURE) Act, spearheaded by Rep. Adam Schiff (D-Burbank), aims to revolutionize this landscape. 

The INSURE Act proposes a federal catastrophic reinsurance program to limit insurers’ liability and obligate participating companies to cover all natural disasters. This initiative seeks to address the soaring costs of insurance and the industry’s hesitancy to underwrite new policies in California, making disaster coverage more affordable and accessible for homeowners. 

At the core of the INSURE Act’s strategy is the concept of reinsurance – insurance for insurance companies. This system allows insurers to distribute a portion of their risk, ensuring their ability to pay out claims in catastrophic events. The proposed federal reinsurance program, managed by the U.S. Treasury Department, intends to provide a more transparent and equitable alternative to the current global, unregulated reinsurance market. Carmen Balber, Executive Director of Consumer Watchdog, emphasizes that this public reinsurance backstop could stabilize the market, curtailing the reinsurance costs that insurers often cite for their demands for deregulation. 

The potential impact of the federal reinsurance program on private insurers’ decisions to renew or expand operations in California remains to be seen. Companies like State Farm, Allstate, Farmers Insurance, and USAA have either ceased writing new policies or significantly limited their business in the state. Their response to the new legislation is critical in determining the future of insurance coverage in California. 

Governor Gavin Newsom’s parallel efforts to entice insurers back to the state, including streamlining the state’s rate approval process for insurers covering more homes in high wildfire risk areas, reflect a concerted effort to address the insurance crisis. 

However, the full impact of the INSURE Act will not be immediate. The Treasury Department has a four-year window to establish the program, indicating a long-term approach to mitigating the insurance industry’s concerns over climate-related disasters. This public reinsurance backstop could reshape the insurance landscape in California, potentially providing a more stable and sustainable market for homeowners. 

The INSURE Act is a critical step towards stabilizing the insurance market in California. While the immediate effects may be gradual, its long-term promise to make insurance more accessible and affordable in disaster-prone areas is a vital development. As we navigate the complexities of climate change and its impact on the insurance industry, the role of legislation like the INSURE Act in protecting homeowners and the industry becomes increasingly paramount. 


Baer, Stephanie K. “New Federal Bill Could Help Tackle the California Insurance Crisis.” The SF Standard, 11 Jan. 2024, Insurance Crisis: Californians Could Benefit From New Bill (sfstandard.com)

California Insurance Coverage Crisis: What You Need to Know.” Grand Mutual Insurance Services, 30 June 2023, California Insurance Coverage Crisis: What You Need to Know – Grand Mutual Insurance Services.

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