Hearing Entitled: Diversifying Risk: The Benefits of Reinsurance and Credit Risk Transfers

The GOP Financial Services subcommittee on housing insurance held a hearing on April 23, 2026, titled "Diversifying Risk: The Benefits of Reinsurance and Credit Risk Transfers." The hearing focused on the use of reinsurance and credit risk transfer (CRT) mechanisms to distribute risk away from insurers and government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, thereby protecting taxpayers and stabilizing the housing and insurance markets. Witnesses from the reinsurance industry, academia, and policy institutes discussed the role of reinsurance in managing catastrophic risks, the evolution and benefits of CRT in transferring mortgage credit risk to private capital, and the importance of maintaining and codifying CRT programs in future GSE reforms. The hearing also addressed the National Flood Insurance Program's use of reinsurance and catastrophe bonds, the impact of climate risks on insurance markets, and concerns about regulatory actions affecting housing finance. Members questioned witnesses on the structure of CRT programs, attachment points, market discipline, and the potential effects of federal reinsurance proposals. The discussion emphasized the importance of private capital in risk management, the need for transparency and market discipline, and the role of CRT and reinsurance in supporting affordable housing and protecting taxpayers.