On November 5, 2021, Congress passed a $1.2 trillion bipartisan infrastructure bill known as the Infrastructure Investment and Jobs Act (the Bill). The Bill includes $550 billion in new spending on infrastructure over the next five years. The Bill was initially passed by the Senate in August, but was stalled in the House of Representatives for months as House Democrats worked through disagreements over whether to tie the Bill to the passage of a larger climate and social spending package known as the Build Back Better Act.
The Bill calls for the repair of 20,000 miles of roads and 10 of the country’s most economically important bridges; modernization of public transit, including addressing the repair backlog of more than 24,000 buses, 5,000 rail cars, 200 stations and thousands of miles of track and power systems; removal of lead pipes to improve the quality of drinking water; expansion of the nation’s freight and passenger rail network, including the construction of new rail corridors and transit lines; reduction of commute times by alleviating rail and roadway congestion; extending broadband internet access to rural areas, low-income families and tribal communities; and enhancement of grant and loan programs that support passenger and rail safety.
According to White House representatives, the Bill, a signature component of President Biden’s economic agenda, marks the largest-ever federal investment in public transit, the largest federal investment in passenger rail since the creation of Amtrak and the largest bridge investment since the construction of the interstate highway system. White House representatives estimate the Bill will add approximately 2 million jobs per year over the next decade.
This may serve as a significant catalyst for insurers, particularly given the recent focus on infrastructure investments at the NAIC. Insurance companies have long been a significant presence in infrastructure financing. This is in part because infrastructure projects are asset-intensive and generate predictable and stable cash flows over the long term, which provide a natural match for insurers’ investment strategies. Since infrastructure investment can offer portfolio diversification, low-risk and competitive returns over long timeline, institutional investors, such as insurance companies, are increasingly seeing this as a viable and distinct asset class.
Faegre Drinker’s infrastructure team is actively tracking the Infrastructure Investment and Jobs Act, and we will continue to monitor developments in this space. Keep an eye out for more updates and analysis — and for insights to help your organization identify opportunities and navigate next steps — as the Bill’s many infrastructure programs come to fruition.