California Rep. Adam Schiff, D- Burbank, introduced new federal legislation on Wednesday aimed at stabilizing the insurance market after multiple companies announced their departure from various markets nationwide.
The Incorporating National Support for Unprecedented Risks and Emergencies Act, also known as the INSURE Act, aims to solve the problem through federal reinsurance.
The proposed act would require insurers participating in the program to provide coverage for all natural disasters and invest in loss prevention and risk mitigation strategies so customers can prepare for such events.
Additionally, the act would establish improved market monitoring through the Office of Financial Research and the Federal Insurance Office, which would work with state insurance regulators.
“My INSURE Act addresses the urgent crisis in the home insurance market, particularly in California, where the cost of insurance has gone through the roof and insurers have stopped writing new policies,” Rep. Schiff said in a statement.
“Climate change has significantly increased the risk of natural disasters and insurance companies are shifting the costs to consumers who struggle to purchase disaster coverage. My bill is a critical step forward in the effort to ensure homeowners and communities have access to affordable and accessible coverage. I’ll keep working to get this across the finish line and bring the cost of insurance down.”
In California, insurance companies like State Farm and Allstate announced last year that they would stop accepting insurance applications for all business and personal property statewide.
Both companies announced these decisions due to rising business costs and increased risks of natural disasters in the state, particularly wildfires.
Smaller companies like Merastar Insurance Co., Unitrin Auto and Home Insurance Co., Unitrin Direct Property and Casualty Co. and Kemper Independence Insurance Co. made similar announcements.
However, California isn’t alone. States like Colorado, Louisiana and Florida have also dealt with similar issues.
In California, politicians have been working to address the troubled insurance market. In September, California Department of Insurance Commissioner Ricardo Lara introduced the Sustainable Insurance Strategy, which aims to bring back insurers to communities with high wildfire risks.
Rep. Schiff’s proposed act must pass both the House and Senate and requires a signature from the president before it can become law.