SB 1129: RELATING TO INSURANCE.

A BILL FOR AN ACT

RELATING TO INSURANCE.

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

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to part II of article 2 to be appropriately designated and to read as follows:

     "§431:2-    Working group to identify, assess, and recommend risk transfer market mechanisms to promote investment in natural infrastructure to reduce risks of climate change related to catastrophic events.  (a)  The commissioner shall convene a working group to identify, assess, and recommend risk transfer market mechanisms that:

     (1)  Promote investment in natural infrastructure to reduce the risks of climate change related to catastrophic events;

     (2)  Create incentives for investment in natural infrastructure to reduce risks to communities; and

     (3)  Provide mitigation incentives for private investment in natural lands to lessen exposure and reduce climate risks to public safety, property, utilities, and infrastructure.

     (b)  To the extent that the working group recommends risk transfer market mechanisms that would be provided by insurance and reinsurance companies, the working group shall recommend mechanisms that:

     (1)  Are profitable to insurance and reinsurance companies; and

     (2)  If appropriate, apply to communities or regions, rather than individual land parcels.

     (c)  The policies recommended pursuant to subsections (a) and (b) shall include the following considerations:

     (1)  Hawaii-analogous examples in other countries for creating incentives for investment in natural infrastructure as part of insurance policies that mitigate elemental risks;

     (2)  Use of insurance to create incentives for wetland restoration to help defend the coast against storm surge;

     (3)  Creation of incentives for forests to be managed to reduce the risk of major fires;

     (4)  Reduction of insurance companies' exposure to climate change related losses through innovative state policies or insurance pricing mechanisms that reward good behavior and charge premiums for actions that increase risks to public safety, property loss, or environmental attributes; and

     (5)  Development of rating systems based on community risk factors to climate events, and the use of insurance incentives to make communities more resilient.

     (d)  The commissioner shall submit an annual report of the working group's findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of each regular session, beginning with the regular session of 2026."

     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 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the Insurance Commissioner to convene a working group to identify, assess, and recommend certain risk transfer market mechanisms pursuant to this Act.

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

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2050.

Report Title:

Insurance Commissioner; Working Group; Risk Transfer Market Mechanisms; Reports; Appropriations

Description:

Requires the Insurance Commissioner to convene a working group to identify, assess, and recommend certain risk transfer market mechanisms.  Requires annual report to the Legislature.  Appropriates funds.  Effective 7/1/2050.  (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 INSURANCE.

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

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to part II of article 2 to be appropriately designated and to read as follows:

     "§431:2-    Working group to identify, assess, and recommend risk transfer market mechanisms to promote investment in natural infrastructure to reduce risks of climate change related to catastrophic events.  (a)  The commissioner shall convene a working group to identify, assess, and recommend risk transfer market mechanisms that:

     (1)  Promote investment in natural infrastructure to reduce the risks of climate change related to catastrophic events;

     (2)  Create incentives for investment in natural infrastructure to reduce risks to communities; and

     (3)  Provide mitigation incentives for private investment in natural lands to lessen exposure and reduce climate risks to public safety, property, utilities, and infrastructure.

     (b)  To the extent that the working group recommends risk transfer market mechanisms that would be provided by insurance and reinsurance companies, the working group shall recommend mechanisms that:

     (1)  Are profitable to insurance and reinsurance companies; and

     (2)  If appropriate, apply to communities or regions, rather than individual land parcels.

     (c)  The policies recommended pursuant to subsections (a) and (b) shall include the following considerations:

     (1)  Hawaii-analogous examples in other countries for creating incentives for investment in natural infrastructure as part of insurance policies that mitigate elemental risks;

     (2)  Use of insurance to create incentives for wetland restoration to help defend the coast against storm surge;

     (3)  Creation of incentives for forests to be managed to reduce the risk of major fires;

     (4)  Reduction of insurance companies' exposure to climate change related losses through innovative state policies or insurance pricing mechanisms that reward good behavior and charge premiums for actions that increase risks to public safety, property loss, or environmental attributes; and

     (5)  Development of rating systems based on community risk factors to climate events, and the use of insurance incentives to make communities more resilient.

     (d)  The commissioner shall include in the annual report required under section 431:2-211 a report of the working group's findings and recommendations, including any proposed legislation."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

Insurance Commissioner; Working Group; Risk Transfer Market Mechanisms; Report

Description:

Requires the Insurance Commissioner to convene a working group to identify, assess, and recommend certain risk transfer market mechanisms. 

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. 173

Honolulu, Hawaii

RE:    S.B. No. 1129

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1129 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose and intent of this measure is to require the Insurance Commissioner to convene a working group to identify, assess, and recommend certain risk transfer market mechanisms.

     Your Committee received testimony in support of this measure from one individual.

     Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs.

     Your Committee finds the insurance landscape has been challenging for homeowners in the State, with issues ranging from high premiums to inadequate coverage for natural disasters.  These issues are exacerbated by the lack of transparent, fair, and effective risk transfer mechanisms, which leaves many homeowners feeling they are financially unprotected in the event of significant property damage.  Your Committee finds that this measure seeks to address these issues by comprehensively studying the complexities of more equitable risk distribution models to enhance insurance affordability in the State.

     Your Committee acknowledges the testimony of the Department of Commerce and Consumer Affairs, which recommended that the working group have a clear timeline to prepare a report, appropriate funds to facilitate the study, and require the group to submit its findings and recommendations, including any proposed legislation, in a separate report rather than as part of the Insurance Commissioner's annual report required pursuant to existing law.

     Accordingly, your Committee has amended this measure by:

     (1)  Deleting language that would have required the working group's findings and recommendations to be included in the Insurance Commissioner's annual report pursuant to section 431:2-211, Hawaii Revised Statutes, and inserting language to require that the Insurance Commissioner submit a separate annual report of the working group's findings and recommendations to the Legislature no later than twenty days prior to the convening of each regular session, beginning with the regular session of 2026;

     (2)  Inserting language to appropriate an unspecified amount of general funds for the working group to facilitate the study;

     (3)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

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

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1129, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1129, S.D. 1, and be referred to your Committee on Ways and Means.

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