HB 20: DCCA; Insurance Division; Study; Homeowners Insurance; Lava Zones; Report; Appropriation

A BILL FOR AN ACT

RELATING TO LAVA ZONE INSURANCE.

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

     SECTION 1.  (a)  The insurance division of the department of commerce and consumer affairs, in consultation with actuaries with relevant experience, shall conduct a study to:

     (1)  Identify mechanisms to bring more insurers into the market to provide additional options for homeowners in lava zones 1 and 2; and

     (2)  Determine the subsidy required to lower homeowners insurance premium payments for homeowners in lava zones 1 and 2 to rates similar to those prior to the downturn in the insurance market.

     (b)  The insurance division of the department of commerce and consumer affairs shall submit a report of findings resulting from the study to the legislature no later than twenty days prior to the convening of the regular session of 2027.

     (c)  For the purposes of this Act, the following

definitions shall apply:

     "Lava zone 1" means the land area classified by the United States Geological Survey as lava flow hazard zone 1 and includes volcanic vents in the summits and rift zones of Kilauea and Mauna Loa where vents have been repeatedly active in historic time.

     "Lava zone 2" means the land area classified by the United States Geological Survey as lava flow hazard zone 2 and includes areas adjacent to and downslope of zone 1.

     SECTION 2.  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 2026-2027 for the insurance division of the department of commerce and consumer affairs to conduct a study on the homeowners insurance market for lava zones 1 and 2.

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

     SECTION 3.  This Act shall take effect on July 1, 3000.

Report Title:

DCCA; Insurance Division; Study; Homeowners Insurance; Lava Zones; Report; Appropriation

Description:

Requires the Insurance Division of the Department of Commerce and Consumer Affairs to conduct a study on the homeowners insurance market for lava zones 1 and 2.  Requires a report to the Legislature.  Appropriates funds.  Effective 7/1/3000.  (SD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO LAVA ZONE INSURANCE.

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

     SECTION 1.  (a)  The legislative reference bureau, in consultation with actuaries with relevant experience, shall conduct a study to:

     (1)  Identify mechanisms to bring more insurers into the market to provide additional options for homeowners in lava zones 1 and 2; and

     (2)  Determine the subsidy required to lower homeowners insurance premium payments for homeowners in lava zones 1 and 2 to rates similar to those prior to the downturn in the insurance market.

     (b)  The legislative reference bureau shall submit a report of findings resulting from the study to the legislature no later than twenty days prior to the convening of the regular session of 2027.

     (c)  For the purposes of this Act, the following

definitions shall apply:

     "Lava zone 1" means the land area classified by the United States Geological Survey as lava flow hazard zone 1 and includes volcanic vents in the summits and rift zones of Kilauea and Mauna Loa where vents have been repeatedly active in historic time.

     "Lava zone 2" means the land area classified by the United States Geological Survey as lava flow hazard zone 2 and includes areas adjacent to and downslope of zone 1.

     SECTION 2.  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 2026-2027 for the legislative reference bureau to conduct a study on the homeowners insurance market for lava zones 1 and 2.

     The sum appropriated shall be expended by the legislative reference bureau for the purposes of this Act.

     SECTION 3.  This Act shall take effect on July 1, 3000.

Report Title:

LRB; Study; Homeowners Insurance; Lava Zones; Report; Appropriation

Description:

Requires the Legislative Reference Bureau to conduct a study on the homeowners insurance market for lava zones 1 and 2.  Requires a report to the Legislature.  Appropriates funds.  Effective 7/1/3000.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO LAVA ZONE INSURANCE.

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

     SECTION 1.  The legislature finds that homeowners residing in lava zones 1 and 2 face unique challenges caused by the inherent volcanic hazards associated with their properties.  Based on these challenges, the legislature further finds that it is appropriate to help alleviate some of the financial burden of insurance premiums for these properties through the establishment of a dedicated lava zone insurance fund.  The intent of the fund is to subsidize the cost of insurance premiums for properties in lava zones 1 and 2, thereby reducing the disproportionate burden placed upon homeowners because of the geographic location of their properties.

     The legislature additionally finds that subsidizing the cost of insurance premiums for properties in these zones will promote fairness, affordability, and accessibility in the insurance market, encouraging homeownership and community resilience in these unique geographical areas.

     Accordingly, the purpose of this Act is to ensure that people are not forced to lose their homes over a sudden rise in homeowners' insurance by establishing a fair and equitable resource to subsidize property insurance for homeowners residing in lava zones 1 and 2.

     SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10E, part III, to be appropriately designated and to read as follows:

     "§431:10E-     Lava zone insurance special fund; lava zone subsidy program.  (a)  There is established a lava zone insurance special fund into which shall be deposited the following moneys:

     (1)  Appropriations by the legislature to the special fund;

     (2)  Gifts, donations, and grants from public agencies and private persons;

     (3)  Any proceeds collected by the division derived from fees charged to carry out the purposes of this section; and

     (4)  Civil, criminal, and administrative penalties, fines, and other charges, if any, collected under this chapter or any rule adopted pursuant to this chapter.

     (b)  All interest earned or accrued on moneys deposited in the fund shall become part of the fund.

     (c)  Moneys in the fund shall be expended by the commissioner to subsidize the cost of insurance premiums for homeowners in properties in lava zones 1 and 2; provided that:

     (1)  A homeowner does not own a real estate investment property;

     (2)  The homeowner is a part of a low-income household as determined by the United States Department of Housing and Urban Development; and

     (3)  No more than      per cent of the moneys may be used to cover administrative and operational costs of the lava zone subsidy program.

     (d)  The subsidy amount for each homeowner shall not be more than $           and for a period of      years.

     (e)  Moneys deposited in the fund shall not revert to the general fund.

     (f)  The commissioner shall adopt rules in accordance with chapter 91 for the purposes of this section, including the establishment of any fees, penalties, fines, and other charges that may be needed to implement the lava zone subsidy program."

     SECTION 3.  Section 431:2-215, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  All assessments, fees, fines, penalties, and reimbursements collected by or on behalf of the insurance division under title 24, except for the commissioner's education and training fund (section 431:2-214), the patients' compensation fund (Act 232, Session Laws of Hawaii 1984), the drivers education fund underwriters fee (sections 431:10C-115 and 431:10G-107),[and] the captive insurance administrative fund (section 431:19-101.8) to the extent provided by section 431:19-101.8(b), and the lava zone insurance special fund (section 431:10E-   ), shall be deposited into the compliance resolution fund under section 26-9(o).  All sums transferred from the insurance division into the compliance resolution fund may be expended by the commissioner to carry out the commissioner's duties and obligations under title 24."

     SECTION 4.  Section 431:10E-141, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§431:10E-141[]  Lava zone defined.]  Definitions.  As used in this article[, "lava]:

     "Lava zone" means a volcanic hazard zone identified by the United States Geological Survey on the island of Hawaii.

     "Lava zone 1" means the land area classified by the United States Geological Survey as lava flow hazard zone 1 and includes volcanic vents in the summits and rift zones of Kilauea and Mauna Loa where vents have been repeatedly active in historic time.

     "Lava zone 2" means the land area classified by the United States Geological Survey as lava flow hazard zone 2 and includes areas adjacent to and downslope of zone 1."

     SECTION 5.  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 2026-2027 to be deposited into the lava zone insurance special fund.

     SECTION 6.  There is appropriated out of the lava zone insurance special fund the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 to subsidize the cost of insurance premiums for properties in lava zones 1 and 2 pursuant to section 2 of this Act.

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

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 3000.

Report Title:

Property Insurance; Lava Zones; Premiums; Lava Zone Insurance Special Fund; Appropriation

Description:

Establishes a Lava Zone Insurance Special Fund to subsidize the cost of insurance premiums for properties in lava zones 1 and 2.  Defines lava zones 1 and 2.  Appropriates funds.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

rELATING TO LAVA ZONE INSURANCE.

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

     SECTION 1.  The legislature finds that homeowners residing in lava zones 1 and 2 face unique challenges caused by the inherent volcanic hazards associated with their properties.  Based on these challenges, the legislature further finds that it is appropriate to help alleviate some of the financial burden of insurance premiums for these properties through the establishment of a dedicated lava zone insurance fund.  The intent of the fund is to subsidize the cost of insurance premiums for properties in lava zones 1 and 2, thereby reducing the disproportionate burden placed upon homeowners because of the geographic location of their properties.

     The legislature additionally finds that subsidizing the cost of insurance premiums for properties in these zones will promote fairness, affordability, and accessibility in the insurance market, encouraging homeownership and community resilience in these unique geographical areas.

     Accordingly, the purpose of this Act is to ensure that people are not forced to lose their homes over a sudden rise in homeowners' insurance by establishing a fair and equitable resource to subsidize property insurance for homeowners residing in lava zones 1 and 2.

     SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10E to be appropriately designated and to read as follows:

     "§431:10E-     Lava zone insurance fund.  (a)  There is established a lava zone insurance fund into which shall be deposited the following moneys:

     (1)  Appropriations by the legislature to the special fund;

     (2)  Gifts, donations, and grants from public agencies and private persons;

     (3)  Any proceeds collected by the department derived from fees charged to carry out the purposes of this section; and

     (4)  Civil, criminal, and administrative penalties, fines, and other charges, if any, collected under this chapter or any rule adopted pursuant to this chapter.

     (b)  All interest earned or accrued on moneys deposited in the fund shall become part of the fund.

     (c)  Moneys in the fund shall be expended by the commissioner to subsidize the cost of insurance premiums for homeowners in properties in lava zones 1 and 2; provided that:

     (1)  A homeowner does not own a real estate investment property;

     (2)  The homeowner is a part of a low-income household as determined by the United States Department of Housing and Urban Development; and

     (3)  No more than      per cent of the moneys may be used to cover administrative and operational costs of the lava zone subsidy program.

     (d)  The subsidy amount for each homeowner shall not be more than $           and for a period of      years.

     (e)  Moneys deposited in the fund shall not revert to the general fund.

     (f)  The department shall adopt rules in accordance with chapter 91 for the purposes of this section, including the establishment of any fees, penalties, fines, and other charges that may be needed to implement the lava zone subsidy program."

     SECTION 3.  Section 431:2-215, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  All assessments, fees, fines, penalties, and reimbursements collected by or on behalf of the insurance division under title 24, except for the commissioner's education and training fund (section 431:2-214), the patients' compensation fund (Act 232, Session Laws of Hawaii 1984), the drivers education fund underwriters fee (sections 431:10C-115 and 431:10G-107),[and] the captive insurance administrative fund (section 431:19-101.8) to the extent provided by section 431:19-101.8(b), and the lava zone insurance fund (section 431:10E-   ), shall be deposited into the compliance resolution fund under section 26-9(o).  All sums transferred from the insurance division into the compliance resolution fund may be expended by the commissioner to carry out the commissioner's duties and obligations under title 24."

     SECTION 4.  Section 431:10E-141, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§431:10E-141[]  Lava zone defined.]  Definitions.  As used in this article[, "lava]:

     "Lava zone" means a volcanic hazard zone identified by the United States Geological Survey on the island of Hawaii.

     "Lava zone 1" means the land area classified by the United States Geological Survey as lava flow hazard zone 1 and includes volcanic vents in the summits and rift zones of Kilauea and Mauna Loa where vents have been repeatedly active in historic time.

     "Lava zone 2" means the land area classified by the United States Geological Survey as lava flow hazard zone 2 and includes areas adjacent to and downslope of zone 1."

     SECTION 5.  There is appropriated out of the general fund the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the lava zone insurance fund.

     SECTION 6.  There is appropriated out of the lava zone insurance fund the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to subsidize the cost of insurance premiums for properties in lava zones 1 and 2 pursuant to section 2 of this Act.

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

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 2025.

Report Title:

Property Insurance; Lava Zones; Premiums; Lava Zone Insurance Fund; Appropriation

Description:

Establishes a Lava Zone Insurance Fund to subsidize the cost of insurance premiums for properties in lava zones 1 and 2.  Defines lava zones 1 and 2.  Appropriates funds.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  816-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 20

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 20, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO LAVA ZONE INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to establish and appropriate funds for a Lava Zone Subsidy Program to provide subsidies for the cost of insurance premiums for certain homeowners in properties in lava zones 1 and 2.

     Your Committee received testimony in support of this measure from Malama o Puna and numerous individuals.  Your Committee received testimony in opposition to this measure from the Department of Commerce and Consumer Affairs; Hawaii Insurers Council; and one individual.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 20, H.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

STAND. COM. REP. NO.  688-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 20

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 20 entitled:

"A BILL FOR AN ACT RELATING TO LAVA ZONE INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to establish a Lava Zone Subsidy Program funded by a Lava Zone Insurance Fund to provide subsidies for the cost of insurance premiums for certain homeowners in properties in lava zones 1 and 2.

     Your Committee received testimony in support of this measure from numerous individuals.  Your Committee received testimony in opposition to this measure from the Department of Commerce and Consumer Affairs; Hawaii Insurers Council; and one individual.

Your Committee finds that homeowner's insurance is becoming increasingly more expensive across the nation as a result of growing losses from disasters.  This trend is also true in Hawaii County, where insurance premiums have soared in the last few years for properties located in the two most hazardous lava zones.

However, your Committee further finds that the risk related to these properties is particularly unique.  Unlike other types of disasters – such as hurricanes, earthquakes, floods, or wildfires – the risks associated with lava peril cannot be mitigated by steps initiated by the homeowner.  The inability to safeguard the home against lava flows makes it difficult for admitted insurance companies to offer new policies in these zones.  As a result, any viable insurance solution must have substantial financial backing to ensure it can provide reliable coverage and the ability to rebuild homes after a loss.  Thus, most insurers are unwilling to issue policies at any price, making it difficult to attract private carriers back into these high-risk areas.

To address this issue, the State mandated the creation of the Hawaii Property Insurance Association in 1991 to serve as the insurer of last resort and to insure homes in the lava zones.  However, the coverage offered by the Hawaii Property Insurance Association has become so expensive that people in the lava zones are canceling their policies or putting their homes up for sale.  This measure provides financial relief to allow people to have homeowner's insurance and remain in their homes.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     Your Committee notes the concerns expressed by the Insurance Division in their written testimony regarding the potential effects on actuarial soundness, fiscal sustainability, and the diversion of enforcement revenues away from the Division's core regulatory responsibilities.  Your Committee further notes the concerns raised by the Hawaii Insurers Council that subsidizing insurance premiums in lava zones 1 and 2 may encourage habitation in areas of uniquely unmitigable volcanic risk and could increase systemic exposure for the State's property and casualty insurance market.  Your Committee respectfully requests your Committee on Finance, should it deliberate on this measure, to consider how to address these issues.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 20, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 20, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,