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House Bill 619 — Wildfire reinsurance, mitigation

House Bill 619 — Wildfire reinsurance, mitigation

Parrish Miller
February 23, 2024

Bill Description: House Bill 619 would grow government by creating an Idaho Wildfire Risk Reinsurance and Mitigation Pool and a board to oversee it. The bill would also create a fund to give money to homeowners. 

Rating: -5

Does it create, expand, or enlarge any agency, board, program, function, or activity of government? Conversely, does it eliminate or curtail the size or scope of government?

House Bill 619 would amend Chapter 24, Title 41, Idaho Code, by adding nine new sections of code to create the Idaho Wildfire Risk Reinsurance and Mitigation Pool, with two new funds and a board to oversee it all. 

The Idaho Wildfire Risk Reinsurance and Mitigation Pool will be "an independent public body corporate and politic" that will (according to this code) "perform an essential governmental function in the exercise of power conferred on it pursuant to this chapter."

One might wonder how the state has survived for so long without the expansion of government to perform this "essential" function. 

The pool will be overseen by a 14-member board, with one member from the Senate, one from the House, and 12 appointed by the director of the Department of Insurance. The board would be tasked with creating and submitting a "plan of operation" to the director for approval. 

The pool would have two funds with distinct but related purposes. 

The first fund created for the pool will be called the "wildfire risk reinsurance fund." This fund will "assist in attracting and retaining insurers to provide property coverage in target areas through offering reinsurance pursuant to the provisions of this chapter."

This is an expansion of the size and scope of government. 


The second fund created for the pool will be called the "wildfire risk mitigation fund," and it will "assist in fire prevention and mitigation." This fund is redistributive in nature and intended to provide "grants to citizens for wildfire risk mitigation." The bill says "such grant amounts should be limited to assist the largest number of citizens and may require matching funds."

This is also an expansion of the size and scope of government. 


Does it transfer a function of the private sector to the government? Examples include government ownership or control of any providers of goods or services such as the Land Board’s purchase of a self-storage facility, mandatory emissions testing, or pre-kindergarten. Conversely, does it eliminate a function of government or return a function of government to the private sector?

House Bill 619 says the Idaho Wildfire Risk Reinsurance and Mitigation Pool “shall have the general powers and authority granted under the laws of this state to insurance companies licensed to transact business, except the power to issue property coverage directly to individuals."

In simple terms, reinsurance is insurance for insurance companies, and many companies offer it already. When government establishes its own reinsurance pool, it competes with the existing market for reinsurance and may stifle the future growth of the reinsurance market. 


Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?

The grants distributed from the "wildfire risk mitigation fund," would benefit some property owners at other people's expense.

More broadly, the choice to purchase and develop property in an area that has an elevated risk of natural disasters such as fires, floods, or hurricanes is a calculated risk. Individuals and businesses alike need to account for that through buying more expensive and comprehensive insurance. 

Insurance allows individuals and businesses to share risks (of natural disasters and many other possible calamities) and the costs of recovery, but this process should be voluntary and market-based. It is not the proper role of government to mitigate risk or to subsidize recovery. When the government takes on this role (as it has largely done with health care), what remains is not really insurance. Instead, it’s redistributive socialism operating behind a thin veneer of market terminology. 


Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

House Bill 619 specifies five funding sources for the Idaho Wildfire Risk Reinsurance and Mitigation Pool. The first is "premiums paid by ceding insurers for reinsurance" and the second is "the ongoing appropriation of premium tax authorized pursuant to section 41-406(1)(e), Idaho Code."

Section 41-406, Idaho Code, specifies how the Department of Insurance uses the taxes, fines and penalties it collects, and House Bill 619 would add the new subsection (1)(e) referenced above. It would say, "After all other deductions pursuant to this subsection have been made, if the premium tax remaining exceeds one hundred thirty-five million dollars ($135,000,000), one fourth (1/4) of such excess is hereby appropriated and shall be paid to the Idaho wildfire risk reinsurance and mitigation pool established in chapter 24, title 41, Idaho Code."

This provision is one way in which the pool would be funded through tax dollars. 

The third funding source for the pool is "moneys from the reduced cigarette ignition propensity and firefighter protection act fund allocated to the state fire marshal pursuant to sections 39-8904 and 39-8909, Idaho Code, not utilized for the processing, testing, enforcement, and oversight activities authorized pursuant to chapter 89, title 39, Idaho Code."

This "Reduced Cigarette Ignition Propensity and Firefighter Protection Act Fund" is funded through taxes, fees, and penalties assessed against cigarette manufacturers and distributors. 

The fourth funding source for the pool comes from "assessments as deemed necessary to meet the obligations of the reinsurance program." Based on the language of the bill, it appears that these assessments would be levied against all property insurers in the state, not just those who chose to purchase reinsurance through the pool. 

The fifth funding source for the pool would be "grants or other contributions available for fire prevention or mitigation." The bill's statement of purpose suggests that this language applies to "federal grants or appropriations," which raises additional concerns about increasing Idaho's dependency on debt-financed federal funding. Of course, all federal money comes either from taxpayers or from debt that will eventually have to be paid by taxpayers. 

It is clear that the Wildfire Risk Reinsurance and Mitigation Pool would be funded in part through taxes, fees, and assessments. 


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