HB2056

HOUSE OF REPRESENTATIVES	H.B. NO.	2056
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII

A BILL FOR AN ACT

relating to insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that reinsurance is a means of reducing an insurer's risk by establishing a contract that transfers risk to a reinsurance company, which assumes either a portion of or the entirety of one or more of the liabilities taken on by the initial insurer.

The legislature further finds that rising global temperatures associated with climate change have increased severe weather events and, as a result, reinsurance companies are having to drastically raise their prices in order to assure coverage of future liabilities. In Florida, the Florida Hurricane Catastrophe Fund is a state trust fund that provides reimbursement to residential property insurance companies for a portion of their catastrophic hurricane losses, with reinsurance coverage provided to insurers at a lower cost than the private reinsurance market. Establishing a similar program in Hawaii may help homeowners and insurance companies address the increased risk of catastrophic events like the 2023 Maui wildfires.

Accordingly, the purpose of this Act is to establish a working group to identify the feasibility of a state-run reinsurance program to offset the liabilities of private reinsurance companies as a means of ensuring affordable coverage for property owners against catastrophic events such as wildfires or flooding.

SECTION 2. (a) There is established within the department of commerce and consumer affairs a state reinsurance exploratory working group to explore the feasibility of establishing a state run reinsurance program in Hawaii to ensure affordable coverage for property owners against catastrophic events such as wildfires or flooding.

(b) The working group shall consist of the following members or their designees:

(1) The insurance commissioner, who shall serve as the chair of the working group;

(2) The director of taxation;

(3) The representative of house district 4;

(4) A representative from an insurance company that sells property and casualty insurance in Hawaii, to be chosen by the chair;

(5) A representative of a reinsurance company that operates in Hawaii, to be chosen by the chair;

(6) A representative of the Hawaii Association of Realtors;

(7) A representative of the Hawaii Insurance Council;

(8) A representative of a bank that operates in Hawaii, to be chosen by the chair; and

(9) A representative of a mortgage lender that operates in Hawaii, to be chosen by the chair.

(c) The members of the working group shall serve without compensation but shall be reimbursed for reasonable expenses, including travel expenses, necessary for the performance of their duties. No member of the working group shall be subject to chapter 84, Hawaii Revised Statutes, solely because of the member's participation in the working group.

(d) The working group shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2025.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for administrative costs of the working group.

The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 4. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37‑91 and 37‑93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in H.B. No. , will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. In addition, the appropriation contained in this Act will cause the general fund expenditure ceiling for fiscal year 2024‑2025 to be further exceeded by $ or per cent. The combined total amount of general fund appropriations contained in only these two Acts will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. The reasons for exceeding the general fund expenditure ceiling are that:

(1) The appropriation made in this Act is necessary to serve the public interest; and

(2) The appropriation made in this Act meets the needs addressed by this Act.

SECTION 5. This Act shall take effect on July 1, 2024.

INTRODUCED BY:	_____________________________