Senate Standing Committee on Commerce and Consumer Protection

Good morning, everyone. We are convening the joint Committee on Consumer Protection and Commerce and the Committee on Commerce and Consumer Protection for an info briefing to get an update from HHRF and HPIA on the insurance bill that we passed to expand capacity in the market market. On behalf of the House, we have myself here grand and.

I'm Senator Jared Keohokalole, Chair of the Senate Commerce and Consumer Protection Committee. We do have Senators McKelvey, Richards, Awa and Lamasal. I think Lamasal might be joining us shortly. Thank you. So why don't we kick it off with Commissioner Good morning.

Good morning Chairs and Members. Thanks for holding this briefing this morning, this really important topic. I just wanted to thank the Chairs in particular and the Members for taking the lead on this issue.

About two and a half years ago when the Legislature first became aware of the skyrocketing condo insurance costs and you know, what the Chairs did was to find form a task force that worked on developing recommendations to create economy, insurance program, program or product.

And those recommendations were used by the Governor to issue the emergency proclamation where he implemented those recommendations. And that was in August 2024. And that was followed up with enactment of Senate Bill 1044 in May 2025 when the Legislature codified all of the recommendations and the provisions of the proclamation.

So there is some good news today because all of that work over the past two and a half years has resulted in uconno insurance products that so far look to be on a positive track. And you'll hear updates on that today.

I wanted to do a shout out to those at the table with us this morning from HPIA we have the Chair of the HPIA Board, Matthew Chung, and Terry Fabry, who's with the Marsh Company. Terry is the administrator for the HPI program.

And also from HRF we have the chair of the HHRF board, Edward Hake, and Paul Eaton, who is from aon. Paul served was retained as the administrator and implementer for the HRF and he worked diligently last year to help us with that.

So with that I'd just like to, you know, again thank the Legislature for all of your work and focus on this issue. And I'll just turn it over to hpi.

Thanks. Thank you. Commissioner Saiki. Good morning Committee Chair K and Committee Chair Matayoshi and esteemed Members of the Consumer Protection and Commerce Committee and the Consumer, Commerce and Consumer Protection Committee.

On behalf of HPIA, we would like to express our appreciation for the opportunity to appear before you today as Scott has introduced me, Commissioner Seiki has introduced me. I'm Matthew Chung, board chairman for HPIA. And with me I have Terry Fabry and Scott Sternberg from Marsh. Marsh is the plan administrator for HPIA.

Today we have some prepared remarks and they'll cover four key areas. It'll start with a brief review of hpa, its history and background. Next, we will present an update on the current product offerings and highlight some key financial metrics.

Next, we will provide an analysis of the current state of the Hawaii property market and in conclusion, a review of HPA's strategic initiatives. We look forward to engaging with the committees and addressing any questions you may have. Terry, would you please begin with a review of HPA Sure.

So we're on page three in the handout that the Committee Members present have. And. We'll start just with a brief history and background of HPIA in case there are people here today that aren't familiar with the HPIA. So the Legislature created HPIA in 1991. It began writing policies in 1992.

It was created to address the critical gap in availability of insurance coverage for homeowners, specifically in lava zones 1 and 2 on the big Island. Shortly after inception, it was expanded to address homeowners insurance needs throughout the state of Hawaii.

The policy count in the HPIA grows and declines depending on the health and stability and availability of insurance in the admitted market. So at one time the HPIA had 45,000 policies in force and today we're just under 2,400. The policy count has been growing steadily since 2018 when the lava flowed on the Big Island.

And then again, we've been seeing consistent growth about 20 to 30% in the non lava program since the LEERS. HPIA is a private, nonprofit, unincorporated association of Member insurance companies. It is not a governmental agency. It receives no funding from the feds, state or local entities. It has no employees. It's governed by a board of directors.

And the authority to run the HPIA is delegated to to a third party contractor who is currently Marsh through the plan of operations. And Marsh performs for HPIA all the activities of a standard insurance company. Underwriting, billing, collection, claims, financial statement reporting, rate form and file analysis and filings.

So we just had to talk about the mics. They're having trouble picking you guys up. They guys could speak a little louder. I think they might that way too. So just raise your volume. Okay, thank you.

The HPIA is governed by a 12 member board of directors, eight of whom are Member insurance companies and they're elected. Four are appointed by the insurance commissioner one represents licensed insurance agents and then three represent the public or consumers.

One representative from the island of Kauai, Hawaii and Maui and the hpia, like other insurance companies, operates under the regulatory oversight of the Hawaii Insurance Division. Moving on to the products that HPIA currently offers, policy count and the total insured value. Today HPIA offers four residential property products. These were tailored based on the needs of homeowners.

The first is a homeowner's product or an HO2. That product is for owner occupied primary homes. We also have a renter's policy that covers contents only. And then we have a condo unit owners policy in HO6 and a dwelling fire that also covers homes but homes that are long term rentals. For secondary residences.

Our maximum dwelling limit for the homeowners and dwelling fire product is 450,000. Our maximum dwelling limit for the HO6 condo unit owner's product is 5,000. And we offer 25,000 for contents for the renter's policy. The chart on the right shows the total insured value.

So that's the sum of all of the limits for all of the dwellings that HPIA rights. You'll see that the trend has been upward over the last decade with a few fluctuations reflecting market dynamics. So at one time HPIA had 72% of its insured value on the Bank Island.

That has been declining because we're just seeing more risks written elsewhere in the state due to the tightening of admitted carriers underwriting guidelines.

If we turn to the financial performance of the HPIA, this is on slide 5, you'll see that in 2018, as a result of the significant lava flow, there was a hardening of the reinsurance market and so HPIA's reinsurance cost outpaced the premium collected.

That means we paid more out to reinsurers than we collected from our policyholders here in the state. Subsequently, the HPIA filed a rate increase, but the reinsurance costs continue to exceed the direct written premium. There's good news though, looking at the chart on the upper left.

In 2025, the reinsurance costs have declined because the HPIA board made a different purchasing decision. And with the last rate increase that was filed with the division, the premium is stabilizing. Now in terms of reinsurance and operating expenses, net income has been. Very volatile in the last few years, again driven primarily to the reinsurance expense.

The chart on the bottom is surplus and that's been declining as the HPIA has needed to liquidate a portion of its investment portfolio to cover operating obligations. So now we'll turn to the state of the market. And we'd like to start with what's happening in the commercial property condo market.

And I'm going to turn it over to Scott.

Thanks, Terry. Yeah, so there's some pretty good news happening in the insurance market. Go back to that last slide, Terry. The last slide with the chart. Yeah, right there. So you see that chart in the upper left hand corner? You're going to see reinsurance costs dramatically increasing.

Started in 2020, and kind of every year going up and up like that in the insurance market, this happens. In the last 50 years, there's been four hard markets. So we're in the tail end of this last hard market. So there's dynamics just that are fundamental to our insurance industry. What drives pricing is reinsurance.

So HPIA, HHRF, providing that buffer against the severity of that increase in reinsurance rates was really instrumental to helping insurers maintain some rate parity. And Paul's going to go into details on that in HHGRF. And I know we're talking about HPIA, but there's a key fundamental element here that I wanted to make sure you understood.

So in 2025, in June, we started to see these prices stabilize, and we're starting to see now some capacity come back into the market.

So if after Lahaina, our admitted carriers became very restrictive in their underwriting and withdrew some capacity, and now we're seeing capacity, meaning more carriers wanting to do business here, writing insurance, what filled the gap, what was known as excess and surplus lines, carriers. Those carriers are also now becoming more competitive.

So you'll see that we have a trend here. Deductibles went way up. Now deductibles are starting to pull back.

Do you mean that more companies are coming in to increase the capacity of the market, or do you mean the existing companies? The move is a foot.

Yes. Yes. Representative Matiyoshi. Yes, the move is afoot for more capacity to come down, more carriers to consider writing. And we're aware there may be one carrier that wants to stand up, an admitted carrier in Hawaii. That's. That. That's beginning to emerge.

I haven't seen any additional carriers coming into the. No, we have not. Okay. So the existing carriers here are expanding their capacity. That's.

That's the expansion. That's right. Okay, I just wanted to make sure. Yeah, absolutely. So, you know, we're starting to see some deductibles come back too. So that's kind of the picture that we're seeing emerging here. And I guess we'll go into some detail.

It's not all rosy because there's some still some very difficult parts of the market and I think HPIA is going to address that.

So I'd like to talk to about two other parts of the property market and this is the residential property market. So the first is the condo unit owners policies, the HO6.

So earlier this year when HPI had hired Guy Carpenter as our strategic advisor to help develop and launch a commercial property, all other perils excluding hurricane product for condos based on the market intel. At that time we were seeing that condo unit owners were being non renewed after two claims regardless of the dollar amount.

If they were able to get a policy through the excess and surplus lines market there were coverage, a lot of coverage limitations. Sometimes if condo buildings would force place coverage for condo unit owners, that kind of arena was drying up and so there were limited options. We've continued to see worsening of that market.

Now we're seeing carriers non renew after just one loss and even the excess and surplus lines market is tightening their underwriting guidelines. So what we're seeing, the biggest need for coverage is a policy that's offered with $100,000 of dwelling limit, $100,000 loss assessment limit and a variety of deductibles.

So we've seen the situation worsen since the second quarter of this year in that there are many condo unit owners who are unable to get coverage at this time, which means they're self insuring. If we move to the single family home market, there hasn't been too much change here.

We've been called upon, we being the HPIA to offer a higher dwelling limit so we can write more policies, offer a product that meets the replacement cost of a dwelling for more people. In Hawaii we also don't see here in Hawaii where agents will layer coverage for personal lines.

So if they, they're not getting an excess policy over the residual market policy, those are.

Can you.

Can you explain that? Yes, yes. So hbia being a market of last resort or residual market, we cap our maximum limit. So let's say that a homeowner, the replacement cost to rebuild in the event of a total loss, let's say was 600,000.

Our limit is only 500,000 so that homeowner needs another 150,000 so they'd have full coverage to be able to rebuild in the event of a total loss. So they would buy the HPIA policy and then in other states on the mainland the agent would go to the excess and surplus lines market and get an excess policy.

So that insured is fully insured to the $600,000 limit. And that's layering? That's layering, yes.

Thank you. Good question. When was the $450,000 limit set?

It was increased to 450,000 in 2023. Okay, so pretty recently.

Very recently, yes. So what's the ask to move? What's the kind of the median home price that people are asking you to raise it to?

They're asking. The agents have been asking us to look at between 650 and 750,000.

So significant increase. Do you have the capacity for that?

We do. And I will have some, I'll share some details on that on my next slide.

And are you able to. I'm assuming you're able to do that independently of anything?

We. Has the authority to do that. We have to submit a filing to the Administration.

Sorry. Because this was so recent that it moved up to 450. What was the thinking of raising it to 450 instead of 600,000 or more? I'm just. Now you have to do another filing. And it sound like home prices have.

So, you know, we were, we were, we didn't increase rates as fast as inflation was increasing. So inflation was accelerating quite a bit. And I think the, that increase was really attempting to get us to the, to, you know, some level to reflect the inflationary pressure.

And then of course, you know, just in looking at the market need, recognizing that construction costs are still escalating and you know, so, you know, we wanted to go higher.

Okay. After the Maui fires, the construction rebuild costs accelerated at a higher rate than it had in the past, measured in, you know, year by year, unfortunately.

Okay, wait. But, but the chair's question was, you know, I mean, the 650 to 700,000 seems like a more reasonable limit for the real estate market that we're in right now. But looking back at 2023, it seems like that's a pretty realistic target to have considered in 2023 as well.

So I think his question was, you know, you guys did do the increase, but why that increment versus just going to where we are now? And it doesn't look like it in hindsight. 650 or 700000 limit was very unreasonable even back then.

Yeah, I didn't want to harp on you guys, which is why I was going to let you go on, but because the chair points it out, that's why you said that you have the capacity for it. So it does confuse me why that decision was made in 2023.

But it does encourage me that you are trying now to raise it up to kind of maybe remedy that.

Was there some concern that we should.

Note in 2023, the board discussed raising the limit from 350,000 to 450,000. And that was done for both programs, the lava program and the non lava program.

Was that meant to be an inflationary.

Adjustment rather than due to the cost of increased cost of construction?

Yes, construction.

Okay. But that didn't reflect. And we found based on the analysis of the policies that we write, 450,000 was adequate for like 99% of the submissions that we received.

Okay, okay.

So do you think that it's unnecessary then to raise it to six? I mean, that's quite a. Quite a big change for 1% of your applications, or do you anticipate that more applications will come in at that level if you raise it up? I mean, it's the 99% sort of a symptom of the $450,000 level.

We believe it is in talking with many of our agency agents that write with us, many agents will not send submissions to HPIA if the dwelling replacement cost exceeds the maximum limit offered. Because if the insured is not.

If the homeowner is not insured to full replacement cost, then the insurer could go back to the agent and then it's on his errors and emissions insurance. So we expect to receive an increase in submissions once we raise the maximum limit to a higher amount.

Was it the lava zone thing? What's the ratio of lava zone to Non Lava Zone now compared to Or I mean, is there. You're anticipated, I guess, split of.

So at one time the book was 70% lava zone, 30% non lava. And now it's getting closer to 5050. And we expect with this increase that we've requested for the maximum dwelling limit that that ratio that will. We have a larger proportion of the book in the non lava program.

And so that's the answer. And that's the answer. I think in hindsight you're right. I think it probably would have been better to just do it at that time. But you know, when we were making that decision at the time stair stepping, it felt like a big increase. Insurance reinsurance costs were really accelerating too.

So that's a form of capital. So we have some capital plus the reinsurance. So. Yeah. But in hindsight you're right. I think probably could have done it all at one time.

For 22, you've got about 2,200 houses covered right now, what do you anticipate? If you moved up to 650700 what do you think the increase would be?

I have no idea, honestly.

Sorry. The increase in the number of potential insureds or the. How many more people. How many more homes do you think would be. Would you be open up to the capacity? Yeah, it is hard to determine right now. We'd have to come back to you. You just know that there's demand. Yeah.

I mean, just based on, you know, construction costs today in Hawaii, the reality, it's more reflective. And I think when we do this adjustment, we're going to pretty much, you know, be in a very good position from a living perspective.

Okay, Rep Iwamoto.

thank you. So what's the role of the lender, the mortgage holder, in terms of saying how much insurance that the home should have? Is that the replacement costs? Is it. You know, so wouldn't they be dictating? And then what percentage of all home ownership has a mortgage?

Right. So generally the lender is looking for to ensure that coverage equal to the loan amount covering their interest in the property. Right.

And then your second question was, what percentage? Well, and. And then it makes it less relevant because then it's much lower amount required. And then I was going to ask what percentage of home ownership in Hawaii is backed by a lender or mortgage?

I can tell you personally, based on the policies that I review, about 50% of them have a lender on them.

Okay, thank you.

All right, moving on to. So you're. Aware of what's going on in the market. And then the next question will be, well, what is HBA doing to address the market challenges? So I wanted to talk about four key strategic initiatives.

The first is kind of the basis for everything else and that is the implementation of a new policy Administration system. That's the system where we do our underwriting, billing, collection and claims. So this initiative was kicked off in July of 2024. It was a 16 month project and the system went live October 1st.

The goal was to increase efficiency and to be able to add or expand products with our old legacy system. It was over 32 years old. There was a lack of programming resources and we just couldn't add any new products to that system.

So the positives for the insureds with the new system is that we now are able to accept online electronic payment of their insurance premium. In the past we could only accept checks. Now we can accept payment by credit card and bcheck. We also allow for online claim reporting.

We also do electronic distribution of policies and billing notices to the mortgage companies and to the agencies. And that will help improve efficiency. Next up is the initiative to raise the maximum to dwelling limit for the homeowners and dwelling fire product. That request was filed with the insurance division last Friday.

The proposed effective date of the change is March 1st for new business and April 1st for renewals. And we've asked for a $650,000 dwelling limit. The third initiative is expanding the homeowners, or, excuse me, the condo unit owners product, the HO6. So HPIA currently has 17 HO6 policies on the books.

The limit has never been changed since the inception of the product in 1992. So the limits are woefully inadequate. So in the filing we are asking, we are looking to offer a dwelling limit of 100,000 and a loss assessment limit, 100,000. And that meets what the current market need is. It will also include additional deductible options.

The target filing date is this Friday and phase one will be for owner occupied units only. We'll see how it goes and then we can look at making changes and expanding it to condos that are long term rentals or secondary homes.

So the HO6 policy, it's 5,000 right now and you're going to move it up to 100,000.

Okay, so significant, significant because that's really where we see the biggest need in the market right now. With all of the changes in the condo master policy, it's pushed a lot of the claims to the HO6.

I think when we talked earlier, you said there's only like two or maybe 10 people that even have the $5,000 policy because it's so low. Isn't that right?

We have 17. 17, okay, 17. Yeah, yeah. Very few. And then the last initiative is the launching of the commercial property all other perils product for condos. That target filing date is the. Is January 31st, with a proposed effective date of April 1st. This is for all other perils, excluding hurricane.

And the product would be an excess product where HPIA would offer $90 million of coverage in excess of $10 million, similar to what HHRF had rolled out earlier this year.

This will require significant capital, but that will depend on the number of policies written, the usage of reinsurance, and whether or not the board opts to utilize the $30 million loan from HHRF. So we'll know more about this once we get to market. So that concludes our prepared remarks.

And then if there aren't any other questions on this, I'll turn it over to Ed for Hhrf.

My name is Ed Haig, Chair. Are there any more questions for HP before we move on?

I do have. Okay, so I guess same question as earlier. The. The HO6 product and the commercial property product. What's the assessment of the. Of the market and the demand on that?

How many more guys we're gonna get? How many more? What? Yeah, yeah. What do you think the increase is going to be?

I think that we're going to have a significant demand for the HO6 product because there's limited options out there today for condo unit owners, and many people just can't get coverage. So in the bad buildings, the ones with deferred maintenance and a lot of water problems, those people just can't get coverage.

And we know that they're going to.

Come to HBIA and the association itself requires that HO6 coverage. Is that why they need it? Yes. Okay. And they're not getting it because they want it. They need it because they need it.

So they might need coverage because their lender requires it, or the master policy has an all other perils deductible of $100,000. So they require those condo unit owners to have an HO6 policy to meet that limit.

Increase in retention from that loss assessment has really pushed a lot of the risk back onto the condo unit ownership. And so that's why we think there's going to be some pretty significant demand. Now, of course, their price increases are much smaller, but on a percentage Basis, it's pretty significant.

So that's why we think this would be a good product to help people moderate those costs.

So you get 17. Now we're expecting that this will help thousands of condo unit owners to, to have access to insurance that they can't get right now.

Okay, great.

But it's likely going to be more expensive than what they're used to. Any idea how much more expensive?

Based on the filing we're submitting it will be.

It has to be more expensive. It's going to be more. But the market is just dropping people because of claims. This is not a price competition issue.

It means they just can't get anything. So that's why they're sending an application to Terry's unit. They got declines from at least two regular carriers already or they got non. Renewed by their current carrier. So they actually can't get insurance.

So that's, that's why they're coming to us. So they've been turning to surplus lines. You're going to be an admitted carrier. I'm assuming that the product you're going to offer for the HO6 for 100k is going to be less than they're paying right now by turning to surplus lines.

Well, in many cases they can't even get coverage in surplus lines.

Okay.

Some of these guys.

Because surplus lines are dropping people for single claim. Yes. And it's very, very small policy. So excess and surplus lines markets like, like large policies, like writing the master policy. And so there's very, very limited capacity for these smaller.

So it's not like they're paying more now. They're not paying anything because no one will even cover them.

Okay. Okay, good idea. Any other.

Yeah. Can I ask about. So when, say if there's a leak in one of the pipes in the walls that's not due to an above tenant during construction, it just burst. That would be on the HOA to then reimburse for any damages that occurred to the individual dweller. And so some of.

So is this because some buildings have like a $250,000 deductible? And so as an individual owner, you're like stuck. You're like, well, how do I get all this paid for? And so in that case, would the individual dwelling insurance step in and cover some of that?

So the cause of loss if it's due to a pipe that is not related to a unit, that would be on the commercial policy. The commercial policy would respond to that. The deductible that applies in that policy would apply to that and those costs, of course, ultimately get allocated to each individual unit owner.

So we're seeing those deductibles, of course, they went up significantly during the hard market. Now they're starting to come back a little bit. Okay. But they're still high enough where, you know, if a loss happens within the unit, of course, the primary policy, then that's going to respond to that will be this condo owner units policy. Okay.

And that's where it covers for an additional loss assessment that can come back onto.

Got it. So what if I'm doing renovations in my unit, changing a toilet, whatever, something. A pipe busts and it ruins the unit below mine?

That's when this dwelling unit, well, you're protected on that. Your own contents would be covered under your own policy. And then the HOA policy would actually kick in after.

After that. Even though I caused the damage, my work crew caused the damage in my unit and it leaked down to the unit.

A little off topic here. I mean, if we want to.

Maybe I'm just thinking from a consumer protection.

I understand, but they're. This is a question for all insurance companies rather than just hpa. I don't want to burden them right now with that. Okay. I do have a question about. All insurance companies is the same. That's exactly what we're trying to afford. If it's a HPIA question, I think that's fair for this.

I think it's about reinsurance. Sure. Is that what we spoke about earlier? We did. Okay, go ahead and ask your question, but I don't want to get too far afield.

Okay, don't we. Aren't the reinsurers basically the same reinsurers that they've been. It's not like. So we have retailers who come in and out of the market, but the reinsurance entities, have they been basically the same and it's the same four. Is it the same finite amount of them?

So the reinsurance market is very large. There's players that come and go, and depending on the type of risk appetite they might have, you might have more capacity in one particular area, such as property insurance or casualty insurance. But it's a very vibrant and dynamic market. I would compare it similarly to like maybe the financial market.

There's a lot of new players that come in and then leave as capital becomes more available and opportunities become more available. But it's a very dynamic market and the number of reinsurers is quite significant. Why don't we move on to HHRF?

Thank you. My name is Ed Hake. And I'm Chair of HHRF. And I'll briefly say thank you a few times. Thanks to both the chairs for your leadership. This doesn't happen without good guidance as to what's expected and how to proceed. And then I'll thank Commissioner Psyche and Deputy Jerry Bung.

The amount of details that underlie all this work is phenomenal. And again, their guidance and leadership, it's not possible to do without being well synchronized. And then lastly, I'll thank Team Aon. That's Paul Eaton and Dan Chun. We touched on reinsurance. Dan's in the reinsurance. But Paul is the consultant that really put this all together.

And in my estimation, one of the most effective things he did was come in from Chicago on a regular basis and really communicate well with our Hawaii community, which demands a lot of folks. And his schedule during that travel was robust, flying back and forth.

He said this most recent trip, he was delighted because it was 85 degrees warmer, even though we're close to the office. So I'll stop there and turn to Paul for the slide deck. But really want to say thanks again. I know initially there was high expectations and your patience as this.

Came to fruition. It's much appreciated.

Thanks Ed, for the kind words. Yeah, Paul Eaton representing HHRF and to some extent representing AON, but representing HHRF. And thank you Committee for your time. We have. It's the other stack of papers and it's up on the screen. Probably be easier for you to read the papers in front of you.

There of course, was a team effort. I want to acknowledge a tremendous number of people both at AON, the board of the HHRF and here in the local community. The insurance agents, the insurance companies, the executives.

There were a lot of people that basically on a volunteer basis contributed to helping us make the right decisions and get operations going quickly enough that we were providing insurance in time for the 2025 hurricane season. So thank you for the kind words. And again, there were a lot of people involved.

So what I'm going to do is provide a background into the framework that we use to make the decisions that we made, go through a review of what those decisions look like and what the HHRF is now doing now that it's up and running, estimate our impact in the marketplace so far as we've been able to collect data about that and end on some discussion of the HHRS current financial situation based on projections of how many policies that we've issued and where we think the HHRF might be going along the way.

Happy to take any questions. Okay, so this is the agenda, hopefully that is compatible with what I just said. So going forward to slide four just says operational goals. I want to emphasize these things because these are what sit in the background of what decisions we made and why we made those decisions.

For the committee's reference, this is not about necessarily a retrospective on what we did, but I want to make you aware of the types of trade offs that were involved in what we put together and why.

So that if and when you're in a position to consider further legislative action, you have some background on, hey, what did we already do? Why did we do it and what does that suggest pros and cons are of future decisions that might need to be made trying to make sure that the marketplace here is functioning well. Right.

So first of all, we wanted to go as fast as possible. There was an emergency proclamation. We were obviously under some time duress. And so one, we wanted to get operational as quickly as possible to help as many policyholders in Hawaii as we could, as quick as soon as we could. Also, there was the hurricane season.

It doesn't wait for you to get your policy up and running. It has certain dates associated with it.

The primary problem that we wanted to address was the availability of insurance to AOAOs, especially to make sure that they could get full limits on their buildings that would allow for the unit owners in those buildings to be able to get mortgages or sell to buyers that would have mortgages. There was an availability crisis in the market.

That was the most prominent thing is our understanding that needed to be solved secondarily to stabilization of the marketplace as far as pricing is concerned, that I think you probably are well aware.

But there were significant increases in price from 2020 through 2024 in some cases, like 5x changes in the amount of insurance premium an AOAO was paying. And obviously that gets passed down to the unit owners. That's a very painful financial situation to have to deal with.

So our ability to, I use the word leverage here, ideally we're able to put some insurance products into the marketplace that stabilize the pricing and have impacts across the market that are broader than the HHRF itself. And I'll get into our estimation of how that worked. We want to minimize the harm to the existing insurance marketplace.

I want to make sure that that is heavily emphasized. First of all, you have a fragile insurance marketplace here in Hawaii, especially if I focus on the market for the AOAOs and if we're focused on the licensed called the admitted insurers here in Hawaii that are regulated by the division. Right.

That there's only three companies and it's a relatively fragile marketplace. And the ability for the HHRF to put products in play that would severely limit the ability of those admitted insurers to compete is real. So we want to make sure that there's not collateral damage to the marketplace.

We want to ensure that those, those three companies effectively can continue to be successful serving Hawaii while providing the backstop and stabilization that we're hoping HHRF could provide.

And then the last one is, and I think this was an emphasis that was brought up early and I understand it very clearly, having been here on island quite a bit over the last year. We. We wanted to make sure that the implementation of our operations relied on people local here in Hawaii.

So partnerships with businesses and people here in Hawaii, not all art sourced to global or mainland companies or something like that. So those were our design priorities in terms of what we put together. Any questions on any of that? It's all kind of background. Okay, thank you. So then this is.

I hope the shapes are not confusing in any way, but this is a diagram of what The HHRF looks like today. The first thing I emphasize is that the HHRF has no employees. IT is a 100% outsourced operational model.

There's pros and cons to that, of course, but one of the pros is we were able to get set up very quickly, which is one of the things that we wanted to accomplish. And also it means that the HHRF can shift design very quickly, including the pilot.

It got sunset in the early 2000s because it was no longer necessary. I don't want to get ahead of ourselves, but if it becomes no longer necessary again, say 5 or 10 years from now, the ability to sunset it easily and not have to worry about, you know, basically firing employees that were.

So these partnerships are a way to get it set up quickly and allow it to be changed easily. So on the left, we have producers, effectively insurance agents. How does somebody get an insurance policy from the hhrf?

They have to work through agents in the state of Hawaii that are licensed and regulated by the division where those agents need a way to interact with the Hhrf. We have two different vendors that are providing that service. One is Hemi, that's Hemec insurance managers. The other is Zephyr Insurance Company.

Both of those are insurers and managing agents that are operating here in Hawaii. So that's how business comes into the Hhrf. So people get quotes and can actually get issued an insurance policy.

What I'll call it, if that's the front end of the business, the back end of the business is the Administration, accounting statements, working with the auditors, things of that nature. That's provided by Marsh. Marsh won the RFP for that work. They already had the experience doing that for the hpia.

So they're not taking over Administration for the Hhrf. And by the way, now that the HHRF is up and running and operational effectively, the Aon consulting team is. Our engagement has come to an end, hopefully with my participation in this presentation. And Marsh is picking up full operational Administration duties for the Hhrf.

In the event of a hurricane, we need to settle claims. We have two companies that are helping us with that. We picked two because that gives us some redundancy in the event of a large hurricane. You want to have lots of capacity to make sure the claims can get settled and in an orderly fashion.

Crawford and Sedgwick, this is the. What they have local offices, but these are national level companies that are headquartered on the mainland. That's actually a pro versus a con in this case. Because it helps to ensure that their phones are able to ring even after a hurricane happens because they're not dependent on local infrastructure here in Hawaii.

So again, it's about redundancy the day after a catastrophe happens. Then on the bottom, there's a little bit about Aon as the reinsurance broker and bank of Hawaii as the investment advisor. Again, our consulting team at Aon helped set all of this up.

So that was set up and operational as of the third week of June and started writing policies as of June 24th. Our goal was June 1st, so we were three weeks late on the goal. But we did come in on time to get ahead of the 2025 hurricane season. So that has been up and running since June.

Are there any questions about the operational setup? This is what we accomplished effectively. Okay, thank you. A brief on slide 7. Comment on some changes.

Since there was a sprint to the finish line to get up and running, we knew that what we got up and running as of June wouldn't be perfect and there would be need to adapt to the marketplace. This slide is mentioning three adaptations based on agent agency consumer feedback.

We made a few small changes to the program that were implemented via permission from the division as of the 15th of this month. So we increased the limits that we're providing from 90 million to 140 million. And there was a lot of requests for policies that could be renewed or issued on something other than an annualized basis.

So what we have allowed for is you have to buy an annual policy from the Hhrf. And this is all explained on the on the website. But you have to buy a policy for a year from the Hhrf.

But if you decide to renew that before the year is up for a new policy, we'll give you a credit for the portion you didn't use. What everybody needs to understand is that it's seasonally adjusted because hurricanes do not have it evenly across the year.

So if you had a policy from June to December and you try to renew it in January, you won't get a 50% credit because you've used up like 90% of the policy because that's when the historical record says the hurricanes actually happened.

But nonetheless, there is credit that's provided for renewing a policy before the one year comes up. Again, the main point of this slide is just to emphasize we've heard feedback from and about the marketplace and tried to adapt to that quickly to make sure that we're providing a product that's relevant.

Any questions so far?

Thank you all Right. This is, I think and hope, the most interesting part of what we've done here. One of the things I want to emphasize is much of the data in this section is not data that what I'll say belongs to us.

Great.

This is not even data that we at the HHRF or even the division is able to collect. This data was assembled via voluntary contribution from people that took my phone calls. And so I want to.

I won't say anybody explicitly, but I want to acknowledge, again, people around the state of Hawaii contributed to the success of the program by providing information that was necessary for us to put things like this together so that we could estimate if we're actually having an impact in the marketplace.

So this slide, Slide 9, are that this reflects the statistics about the program itself for a moment before we get into the full marketplace. 229 applications received since we went live that third week of June. We estimate somewhere between 1800 and 2000 aoaos in the state of Hawaii.

So somewhere between 10 and 15% of aoaos have requested a quote for a policy. So that's a significant amount of market interest as far as that goes. Sixteen of those applications were rejected. Most of those applications were rejected simply because somebody didn't do the application. Right. And they got it reissued, for example.

So one of the rejections was, I think we had an actual building manager submit an application, and we had to go back and say, no, no, you have to go through an agent. This is only through agents that we issue this, our policies.

A couple of others had incomplete information on the application, and so we kicked it back and said, hey, you got to finish the application. And in some cases they didn't. So why they didn't come back to us. But anyway, 16 out of 229, pretty low percentage. So then at the bottom here, first 52 policies we've issued.

There are 52 live HHRF policies at this point in the year. That represents 1.4 billion of insured limits deployed, and we've collected $1.7 million worth of premium as reflects that part of the program. Representative, May I have one of the paper copies there?

Senator McKelvey?

Oh, you see, I'm blind. I see you squinting at the monitor. I don't think it's doing you any good.

Sorry for the. The diversion. So. So, Paul? Yes. Do you know. So these are 52 condominium. These are 52 condominiums? Yes. Do you know how many units we're talking about?

So the. It's. Sorry, not all condos are created. I have an estimate of.

Because these are relatively larger condominiums. So more people. I'm just trying to get a sense of how many people are saving money.

Yep. So. And I'm going to kind of draw circles on that and start small and get bigger. Is it? So the bigger the circle, the more it's an estimate or a guess versus right. But. So right. We have 52 policies issued on the right side of that slide.

It says that the average quoted policy is for $53 million of insurance. But the average issued policy, who actually buys from us, it's more in the 20s. And this will be relevant on the next slide in a moment. One of the things we're noticing is the private market wants these policies just like you have kids.

Like you give something to one kid and the other kid wants it and the whole bit. So the market is kind of working like that. People didn't want these policies. There were sub limits in play. The surplus lines, the whole bit.

We all know the problems that have been dealt with by the people in Hawaii dealing with this marketplace. As soon as the HHRF comes online with pricing that is in a lot of cases less than what's being charged in the surplus lines market, at least suddenly the surplus lines market still wants those policies.

They're beating our prices, not just matching beating our prices. Right. So the reason the average policy actually issued by the HHRF is so small, only the 20 minutes. Half this 20 million, half the size of the policies that we're quoting is the place where the private market surplus line is mostly is what I'm talking about.

Doesn't want the policy is where the total number of premium dollars is at or below 25,000.at or below $25,000. It's too small. The fish is too small and they throw it back. And that's.

That's, that's annually?

Yes.

So when the annual premium is less than 25,000, the foreign unregulated carriers are not as interested.

Exactly. And that's what our statistics are showing is it is about at that 20 to 30 million dollars of insurance level where the premium becomes that small.

So if the building needs more than $30 million of insurance, and again we've got that 10 million threshold that we can talk about, which means the building is roughly bigger than 30 or 40 million dollars in terms of its total size.

The private market wants that building and is basically beating the HHRF's price in order to keep that policy in their book of business instead of coming over the HHRF.

So maybe they were ripping condo unit owners off and there's a public option now. And their pencils and they are deciding. To lower the prices.

Or maybe it was just that there wasn't market access and you're going to. Show how many millions of dollars actually has been saved.

That's coming up exactly on the next slide. So what I want to mention is on the 52 policies that we've issued, they are smaller buildings in terms of what we're able to serve technically. Right. So these might be buildings with I'll estimate 30 to 50 units per building. Right. So 50 times 50.

Maybe there's 250 individual condo units. There's some guesswork here are involved in, hey, their building bought an HHRF policy. There's a whole bunch of other buildings that are bigger and so represent a whole lot more units that are getting pricing that's better than the HHRF because we simply came online.

Right?

Yeah.

Which is great. It's great. Exactly. So I guess I thank you for that explanation. Yes, that was a helpful sort of. It was a helpful explanation that, I guess. Will you get to the question like, do you have an estimated number of.

Yeah, now there are 2500 and 5000.

Now I think what I'm hearing from you is there are now two. There are two answers to that question. There are the people whose buildings have now taken our public HHRF option. Right. And then there are the people in the buildings whose existing carrier said, hey, we still want your business.

Turns out we can also give you a discount compared to what you were paying before.

Stay with us. Correct. And there's a third bucket. And that third bucket is things are. This is again, estimates trending towards guesses. The third bucket is we have had an impact on the market overall. And so if you talk to agents, it depends what agent you're talking to and it depends what business you're talking about.

But prices are down. And Scott had this on one of the slides for the hbia, but prices are down depending on what we're talking about, 30 to 70%. So give you an example, Wood frame. And don't worry too much about exactly how insurance pricing works.

But Wood frame aoaos were coming in at 90 cents per hundred dollars of coverage at the peak of the market. I talked to several agents and I heard the following. One agent told me Wood frame is now 40 cents per hundred. That's less than half. That's like 60% off. Right.

At the other end of the spectrum, a different agent told me 27 cents per hundred. That's two thirds off in terms of pricing today versus peak 18 months ago. Right. How much is the overall pricing in the marketplace coming down because General market conditions and how much is that being accelerated because the HHRF came in?

And so we're providing more capacity, we're providing a price ceiling and there are knock on effects where the insurers that are looking for opportunities to maintain the total size of their book of business are going to have to compete a little bit. Right. And that means they're going to have to sharpen their pencils.

So again this is what agents are telling me. I don't have hard data on building by building basis to say oh here's what you paid two years ago, here's what you're paying today.

So there's a little bit of we have to trust the information that the agents are providing us but it's good signal and that suggests that there's a lot of savings across the market. Even when somebody didn't get an HHRF.

Quote. It makes sense because we provided competition in the market and the market responded.

Accordingly. We need to be doing the same thing with PCI HPIA that they should be expanded. Just you guys expanding potentially could force pencil sharpening and then to start writing policies in areas which they're pulling.

Out. And this works when there's no capacity in the market for that government to come in and add capacity in areas where there is already capacity. Us adding additional capacity won't necessarily fluctuate the prices like that I think.

But I mean I think the Senator is right that in areas where there's a lack of admitted carriers capacity coverage and people are turning to surplus lines, if the government steps in and adds that capacity then it creates competition in the market and people respond accordingly. So this is great news. I do have a question on the.

So it's interesting that you quote, Average quote is 53 million. Average bound policy is 27 million. And what you said is it me? Well, I think it might be a bit of a post hoc problem here. But you're saying that they don't, they're not bothering with anything under 25,000 in insurance premiums collected here.

And that was sort of the link. I think that and running this by you, don't tell me if it's practical but I think that what might be happening is those are just the smaller buildings that are less well maintained to that may have a less professional property manager that may have fewer, you know, may have more maintenance.

Maintenance issues. We've noticed that the smaller AOA, the 5610 unit AOA, tend to be less maintained than the larger units that have a little more accountability and governance or more professional governance. So could that be one of the reasons why.

The. Yes. Okay. Yeah. So I, I have a hard data point here from hard data, like it's still from conversations, but both via our reinsurance team and some, you know, market Intel across the, the broader marketplace, as well as my discussions on IS agents.

There has been indication of a $25,000 threshold like that might be an underwriting rule for some of these surplus lines companies where their underwriters are told, hey, if it's below 25,000, we just don't want it. That's not for every surplus lines insurer that.

But there's at least a company or two out there that has a hard line and $25,000 is the line. Right.

So then are the things that you're bringing up Chair relevant? Definitely, I think so. And separating all of that out, I'm an actuary, so I want to be careful where I don't have like the hard data to say for sure.

Right. I just want to make sure we're distinguishing between. It's not like insurance companies are saying, oh, it's small, it's not worth their time. It's more that they're setting a benchmark where under that benchmark the problems would probably be amplified. So they're setting a benchmark, but it's not a.

If this is too little money for us, it's a. I think people under this benchmark are going to have more issues than we're willing to deal with. I just want to make sure we're focusing on the real issues, which are the deferred maintenance costs of the smaller buildings, rather than the fact that they're small.

I agree with your premise and what I'll say is what I have is a hard data point about this threshold. I have less intelligence about the details or nuances,

But that's good enough. For, I mean, that's, that's not good enough, but it's good information to. Understand. Yeah. Because the, the bill we passed last year has a condo loan. Element. Right.

And if we need to specifically target a segment of the condo market because they just can't get any support, then we don't have unlimited money to do. This. Right. And so this is good to know. I still would like an answer to my first question if, if you have it.

I mean, because we know the average size of the, the condos that are getting covered. I, I would like if you can provide it enough like an average number of units so that we.

Can. You. Got. Don't tell everybody how many. People.

25 to 50 would be a fair range times 50 policies is 1250 to 2500 individual units in the 50 policies.

Yeah. But you, you could probably give us an exact number, right? I mean I'm sure you have the details.

How many. Units I guess you. Could go through each 50. Policies.

I mean this is the Legislature. We want to know how many people we helped.

Five to 10 buildings with condos in West Maui disappear.

But a big bulk of the condominiums fall in that not mega huge Honolulu, but still way bigger than deferred maintenance has been an issue that is more allegorical, but I hate to say it, it's a lot of it in the name rounds has been economics economically placed in front of diligence.

But the deferred maintenance is a systemic issue I think because of that. But those are the units, the bulk of the units. Not the little micro tiny guys, but not also the big huge.

Those are the ones that I'm hoping we can get some additional support for because they're the ones who often the markets, like you said, it isn't worth their time. It's not worth our time. I mean that's what they said in a technical way.

But it's not worth their time for such a small policy to deal with the claims and everything else they're going to go for. So how do we create a mechanism whereby the market just doesn't say, okay, you're all too small, no incentives, we're just going to kind of pull out of it.

The risk is not worth the juice, isn't worth the Squeeze, right?

That's what I'm saying. If it's the deferred maintenance portion, I'm hoping that if we can focus more on the deferred maintenance then money's money. If the smaller condos are proven to be better risks for insurance companies, they may move that $25,000 number down. If we can address the actual underlying issue.

It's not that they're too small to deal with. They'll probably deal with them if they're, you know, well maintained. So I'm hoping that that's the actual issue. I just want to focus on the actual problem here.

We can go straight into that. I have a couple other details if you're willing to give me five to ten minutes to go through a couple of other points that kind of paint the bigger Picture and then we get back to some of these specific questions, if that's okay. I'm not asking the question.

I just want to finish painting the like overall outline for you and let you.

And then see how that affects the rest of the question. Yeah, sorry.

I'll work with the vendors to try to come to get an estimate of the number of insurance.

Yeah, thank you.

So the slide 10. These are a couple of anecdotes, right? Agents gave me three specific, like, hey, I had a 17 story building built in the 70s that we used the HHRF to save them $40,000. That's their savings. The big one at the bottom is.

And this one actually went with not the Hhrf, but using the HHRF quote, the agent was able to get a savings to the building of $170,000. That's real money, Right. If I then expand this to slide 11 Again, this is volunteer data from agents that are trying to help us make an estimation.

The HHR savings there at the top of $2.2 million, that is what was the price the building was paying last year. This year they bought an HHRF policy. So how much money did they save getting an HHR policy? So we've saved $2.2 million across the 50 policies that we've issued. Right?

That's in aggregate across the SO50 buildings to $2.2 million. The next one is the market savings. This is an agent or a couple of agents providing data to us that are saying we use the HHR policy to bring down the quotes from the other companies. We did not buy an HHRF policy.

We got all of our insurance, whether it's surplus lines or whoever they went with. Right. That estimated savings is 5 million. This mixed is where it was a really big building, more than the HHRF was able to insure by itself. And so there's a little bit of both in there. The total savings is nearly 8 million.

Where the average. This data doesn't line up with the data a couple slides ago that said we'd issue 200 quotes because one is HHRF data. This is data being volunteered by the agents. Anyway, it still is useful across this data set that the agents are providing to us.

The buildings that are getting HHRF quotes are saving $100,000 per building. That's on average the Max savings we can document is 469,300. So that's real. Right. That's a lot of money that's being saved.

And there's that bucket through that three that I mentioned to Seneca Hokulele a couple moments ago about there's other savings that are harder for us to document when it comes to the idea that the market is down 30405060% depending which agent you talk to and what part of the market we're talking about.

And that represents the whole marketplace. So basically everybody's that's renewed. That could be 50 to 75,000 condominiums across, you know, 1500 buildings. Not all of those were touched by the HHRF. But if we have had market impact, that's bringing all of that price down.

And along the way we've done that while requiring that basically, if you can get a policy in the admitted market, you have to buy that policy.

And so we're avoiding competing, remember the whole do no harm issue in terms of our design principles along the way, we're trying to maximize the extent to which we don't harm the existing players that are regulated by the division here.

So then this is the last piece that gets into part of an answer to some of the questions that have been asked. Right. Slide 13. Our eligibility rules are very simple. So simplicity keeps cost down and was important for us to get set up fast.

The more complicated the program, the more we have to take time to get it set up and running properly. So in order for us to be ready to go by June, which is something we accomplished, we had to keep it simple. Eligibility basically is you're an aoao, as you know, like technically documented by the state.

You have full coverage. Full coverage can include the HHRF. But you can't just buy an HHRF policy and then not have your other. So you have to have your non hurricane covered. And the HHRF has that $10 million threshold. You have to have the below 10 million covered. Also, you have to be fully insured.

You have to be an ao. You have to be fully insured when you add in the HHRF coverage and that's kind of it. So you could be Wood frame, you can be construction, sorry, concrete, you know, fire resistive construction. You can be on any of the islands.

You can be low rise, you can be high rise, you can have deferred maintenance issues. There's nothing in here about exterior inspections, windows, roofs.

The reason we were able to implement a policy that can even be sold to all the buildings with the deferred maintenance issues because there's plenty of high rises that were built pre1980, Pre1970 that are going to have some of these issues, right?

The reason we're able to issue a policy to those individuals without a ton of underwriting rules, without inspections, contracts, without hiring underwriters, is because of that 10 million threshold. So there's pros and cons to that, right? That is part like we had to do that to be ready as fast as we were ready. It was incredibly important.

There's one other thing that I want to point out here that's very relevant about the below 10 million market. Agent Feedback and actually speaking with some of the insurers on the island too, the below 10 million market starts getting into that small premium problem. So the marketplace below 10 million, it's all or nothing.

Above 10 million, you can get separate policies for hurricane and non hurricane. You remember Terry described what layering looks like. You can get layers of insurance risk for, you know, 50 million here, 50 million there. You got a $100 million building or $200 million building, whatever it is, below 10 million, it's all or nothing.

The insurance company wants the whole policy. They want the hurricane, they want the non hurricane, they want all of it. And the reason is to make sure that the total dollars are big enough for them to care. And once you get above 10 million, now, the coverage can be broken into pieces. Hurricane, non hurricane layers, et cetera.

This is relevant when we're deciding about this threshold of where we hit, because clearly we came in with a policy that only applies above 10 million. And part of the reason is, and I've spoken With agents below 10 million, you can buy a non hurricane. So pretend we had an HHR policy for the below 10 million.

Then you would have to buy the non hurricane from somebody else. And there are companies that will sell that to you for the same price as the whole thing. So then they basically are making it so you can't buy the HHR policy because they're not. It's like, okay, the price might be $23,000 to cover the whole thing.

And you say, okay, well take the hurricane out because I'm going to buy an HHRF policy. And they say, great, $22,000 for a thousand dollars. I can't get $10 million of insurance from the HHRF. There's no way we would be able to make that pricing work. So again, getting to like, why?

Especially on the time frame that was important to us, we did not. We, we stepped above the 10 million threshold. The agent feedback was we would not be able to be impactful in that below 10 million part of the market because of what the other insurers are doing. And you can't have just a hurricane policy.

It just won't work.

You gotta have the other stuff too. Can that be changed via a joint product between the HHRF and the hpia? Possibly, maybe. Probably. That's going to take a long time to implement because that below 10 million you've got lots of deferred maintenance issues, you need lots of underwriting, you need inspections.

It's a much more expensive product to implement and to operate. And by the way, the losses, the loss potential in that 0 to 10 million range are significant, which means I don't work for or represent the HPIA.

But looking at their charts, $30 million of surplus and having an understanding the reinsurance market appetite for the non hurricane risk below 10 million, the HPIA is not going to be in a good position to offer very many policies in that band before they're going to need money because the $30 million isn't going to cut it.

That's for the HPIA to comment on just as a general. So that means that you need, it can be solved, but you need time and you need to be thinking very carefully about the financial resources to stand these things, things up. 14 is I think highly relevant to some of the questions that were coming up. Right.

So this is our estimate. We're representing probably 70 to 80% of the market here. The totals in that AOAO count column are coming up to maybe you know, 1300 AOAOs. And again the total market is between 1800 and 2000. But this is where we have Hart data. So where is the HHRF applicable?

Whether we issued a policy or not, whether we issued a quote or not, we estimate there's in the neighborhood of 4 to 500 AOAOs. Below 10 million, they're going to have an average of 10 units per AOAO.

So there's about 5,000 condominium owners that we're currently not serving other than bringing capacity into the market that brought General market pricing down. Right. But I want to acknowledge that the HHRF policy as it exists today is not relevant to those, those unit owners. Above that 10 million we've got 1,000 or more AO's.

Again, this, this data is maybe 70% of the market for the, for the 10 to $150 million range, which is where the HHRF is currently offering limits because we have a $140 million policy. Right.

So if you have $140 million of available insurance and that sits above the $10 million attachment, if I may then, okay, that's from 10 to 150. The AOAOs in that band, we estimate there's 800 or more of those AOAOs. A huge proportion of those. You see the pre1980 statistic.

There are older buildings, so there's a lot of deferred maintenance in that section. We estimate 80 units on average per AOAO. In that range, 65,000 potential condo unit owners. That's where the HHRF policy is relevant. Obviously there's way more. We've issued 200 some policies. There's way more of those than we've issued policies.

We haven't impacted all of them, but our policy is relevant to them and is potentially affecting the prices that they're paying. And then above the 150 million, there's a handful of AOAOs that are like mega AOAOs. They're going to have four, you Know34 or 500 units across the entire development.

So we estimate 25,000 condo owners in that segment. Those buildings trend newer, by the way. You can see in the, in the year built data. The HHRF is relevant to those buildings, but they would need additional insurance coverage beyond what the HHRF is going to provide.

So, Senator, to your question, we have not issued policies to 65,000 condo owners. Like, not even close. Like, like Ed was saying, you know, maybe we're affecting a thousand or 2000 individual unit owners and we can source that data and get it to an email.

But the part of the marketplace where we are directly relevant is, you know, up to 90,000 unit owners. And remember, that's, this is just where we have hard data in the AON exposure set. There's another 30% of the market that we're not able to track. So if it's, you know, these are kind of like rounded down estimates.

Any questions about any of that? I've gone through a lot with the Committee here. The last four or five.

And I again appreciate the time and attention focusing on all the details here.

I'm going to have questions about the 10 million mark, but.

Slide 15 is just about. This is your marketplace across the state. What like where are the buildings? How old are the buildings? And this is everybody. This is everybody. This is not the HHR effort. This is just our data.

How many condos were Miller Line? Exactly. I'm like Kihei Lahaina and we're like 2%.

And one thing is this is, this is showing 5,000 buildings. Remember our upper end is estimate is 2,000 AOAOs. You know, many AO's have more than one building. Right? So that's a building versus AOAO. Just understand how the counting is happening here.

Right? That might be. It's the AOA structure of middle army.

Okay. So, so yeah, if you have lots, if it's a, if it's a like walk up AOAO, or you have lots of low rise buildings that AOAO might have a dozen buildings in it, but it's one AOAO.

Okay.

Yeah, it's an AOEO count.

So the, the last piece is in some ways the most technical piece, but it's important about the financial resources of the HHRF. Slide 17. What I would ask you to focus on is these multipliers that are in on the top half of the slide. What this is looking at is Aon's data on hurricane model performance.

What we've seen across actual hurricanes that have made landfall across our book of business over the last five year old.

The five year period from 2017 to 2022, on average the models were low somewhere between, you know, that the multiplier 1.4 to 2, which means somewhere that the model performance was somewhere between estimating half of the loss to about two thirds of the loss.

This is relevant because we're using these models to estimate the financial loss wherewithal of the HHRF. Right. So if we go to the next slide, there's a lot of numbers here. I think the relevant stuff is just at the bottom. What we're doing is we're saying, hey, we issued 52 policies and we're half a year in.

So let's do something really naive and simple and say, well if it's 50 at half a year, maybe it'll be hundred at a full year. So if we fast forward to June, let's pretend we've issued 100 policies via the HHRF.

If we look at the estimated losses the HHRF would be on the hook for in the event of a large land falling hurricane. We get to the possibility that between the current reinsurance purchase plus the HHRS financial resources, after making a $30 million loan to the HPIA, the HHRF is approximately fully committed.

So let's nuance these comments very carefully because I know them on the public record here. We can issue more than 100 policies. The way to do that is to buy more reinsurance to increase the HHRF's capacity. And that reinsurance has been relatively affordable. It's covered in the rates that the HHRF is charging.

So once we get to like long run book size and pricing, the HHRF should be self sustainable. Right.

So you can, if, if we get to that hundred policies, then what we can do is say let's buy more reinsurance and let's make sure that the additional reinsurance spend is appropriately covered in the prices that we're charging and we can continue to lever up reinsurance and get to 200 or 300 or 400 policies as necessary.

We estimate this is back to the spring conversation that we had. Our estimated AON is we could potentially build like right now you have $50 million of reinsurance coverage. It's all you need. You only got 50 policies, right. We estimate that over time you could build to market interest reinsurance market interest, providing a billion dollars in coverage.

That billion dollars in coverage would be more than enough to write $30 billion worth of building limits. Right now you've written a billion and a half. So you can become quite a bit bigger in the HHRF via more. There's the whole like buy the reinsurance, lever it up, check the pricing, all of that.

So as of right now, without. So if we're going to look at the current financial resources of the HHRF, the current projection for how big we're going to get and the current reinsurance situation and making sure that there's $30 million available to provide to the HPIA.

I would look at that and say if I'm going to do a simple financial means estimation, I will call the HHRF fully committed without making other decisions about invoking additional financial resources.

And I think it's very important for the Committee to understand that when you're making decisions about what the HHRF should be doing and how the HHRF resources can be committed to benefit the community. Thank you for being very patient. Those were the comments that. I can't hear you.

Thank you for that. The other. So that last piece is, you know, the most important part and I would like you to, if you could help, Help clarify for. I need you to explain that part to a monkey so that we all can make sure we understand. Because I'm not sure I completely understand.

The talking about the financial capacity. Yeah. Especially when you get to the other. Other. Other options or other decisions. You know, I mean, what I think. I hear from you is the plan we put together last year is a. Could potentially be tapped out here pretty shortly. And then we're gonna have to decide what to do.

But what you're saying is we can just buy more reinsurance and factor that cost into the future policies to repay that reinsurance, Right.

If your answer could also include the data point that you brought back earlier of the reinsurance market naturally going down, I assume that if reinsurance gets cheaper, we could also add capacity as we kind of re up our own policies as well, Right?

Yes.

Okay.

Yes.

Yeah. So the. What I'm encouraging you to think very carefully about is the, again, the pros and cons idea of what decisions we make and how we deploy the HHRS capacity.

Reserving the HHRS capacity as much as possible to sit behind insurance policies, possibly levered up via reinsurance support is a very important part of how it can, and I don't want to use the word should. It's not for me to decide. It's a very important component to how the HHRF can be deployed.

So looking at the HHRF, their ability to, say, make loans to the HPIA, to fortify the HPIA's financial position, there's the provisions in SB 1044 about, you know, up to $30 million in loans or something like that. And we've incorporated that into our analysis here. I think that's viable.

I would encourage you to not put any other legislation in without careful consideration that looks at, say, loaning more than that 30 million to the HPA, again, without careful consideration. And yes, you can continue to lever up with reinsurance, but the important verb there is lever.

What you want to do is have as much capital as possible in the Hhrf.

If you think of the ability of the HHRF to pay claims as kind of a stacking of funds, the bottom layer of that stack is the HHRF's own money, 160 million, maybe down to 130 if they loan the HPA some money, something like that.

Right.

Then the layers above that are the reinsurance. And so if you thin out the amount of money the HHRF has itself, then the reinsurance needs to be. Kind. Of more in the money. Right. It comes closer to the loss attachment position, which basically means an even smaller hurricane could force the reinsurers to pay. Why is that relevant?

So trying to make like as simple as possible. Who cares? Why am I talking about this? Why is this relevant? This is relevant because you're. The reinsurance pricing can move very quickly, at least as quickly as the surplus lines market.

And so if all the HHRF turns into is a pass through of reinsurance capacity, we have lost our ability to stabilize the market because our pricing is going to whiplash with the market.

So having that large basis of capital for the HHRF and just putting reinsurance above that allows you to continue to provide stabilization because you're deploying the reinsurance in the upper areas of that risk profile is where the reinsurance is. The word we use in the industry is more accretive. In other words, it's more affordable per unit risk.

So I think that's very important. And that's why you want the HHRF to be in a very healthy financial position in terms of its own bank account.

Don't pull the Jenga block out with reinsurance. Right.

Don't spread too thin wasting our money. On for 30 million for these guys though. No. That makes sense.

Yeah.

I appreciate the monkey explanation. Yeah, no problem. Well, I got the feedback at the last hearing. It's like too much insurance talk. Right. So hopefully I'm doing a better job.

Are you. Is reinsurance acquisition purchasing regulated like other, you know, by the insurance commission's office? Do you have the ability to go to any reinsurance entity around the world and negotiate with them and the due diligence it's upon you to do that? In other words, are there any regulatory short.

Short. Short answer? It is. It's not completely unregulated, so there's a couple layers. The short answer is yes. The HHRF can engage with virtually any reinsurance operation it wants. Right. They can buy reinsurance from anybody. Now, some reinsurers are better financial partners than others. Right. It's just some of them are more prudent.

Managers of money is like any marketplace, right? There's good ones and there's less good ones on the public record. So the first of all, the reinsurers themselves sit in different places. Some of them live in the United States, some of them are in Bermuda, some of them are in Europe.

Each of those jurisdictions has regulatory regimes that govern the amount of risks those reinsurers can take and the amount of capital they need to be deemed healthy balance sheets. Those regulations are highly complicated and required. But that's why a reinsurance broker comes and helps you to understand the financial strength of any reinsurance partner that you have.

The other place where there is regulation is different types of reinsurers get different levels of, I'll call it credit in terms of the financial statements that an insurance company prepares. And so in summary, insurers are that their, their ability to get full credit only comes onto the financial statements of the company buying from them if they're collateralized.

In other words, it's like, hey, we don't believe in your numbers by themselves. And so if you're offering us $50 million of reinsurance, you gotta put $50 million in escrow somewhere.

That way we know the money's there. Another reason to make sure you're well financed.

Yeah, yeah, exactly. So anyway, there are layers of regulation that I hopefully have painted a reasonable picture of. But in general, it's a much more open marketplace than what your domestic and licensed and admitted insurance companies here are doing under the auspices of the division.

For example.

We should clarify that state, states do not, for the most part, do not regulate reinsurers because reinsurers are alien entities. And as you mentioned, they're primarily following places like Bermuda, Cayman Islands, UK in foreign countries, alien countries.

And there's a pseudo regulation of sorts that so many insurance, maybe many reinsurance companies will get a financial strength rating from a company like AM Best or S and P or Fitch or Moody's or whatever. They'll get those financial strength ratings in order to have a third party verify that they're a strong, well run company. Right.

So that's not regulation, but it is a third party evaluation of the ability of a reinsurer to deliver on its financial commitments.

I do want to. We're going to harp at the 10 million, but why don't you go first?

So when the public reads this slide and then they see estimated loss up to, well, there's the estimated loss of 5 to 25 million and then the maximum possible loss is up to 50 million. And then the savings that we purported to save people was on the earlier slide, I think 7 or almost $8 million. Yeah.

Does it look like we lost 50 million to save 8 million? Does it look like. I don't. I just want to make sure. How do we do those numbers relate to each other?

And are they totally unrelated? Yeah, maybe not totally unrelated. Mostly unrelated. At least the loss, what the word loss there means is if a massive hurricane hits, so the line above it says that target. We want to make sure that the HHRF is financially sound in the event of a target $20 billion hurricane hitting Hawaii at least.

So if a $20 billion hurricane hit Hawaii, we estimate that the HHRF would be on the hook for between 5 and $50 million. They have the financial resources to cover.

So you'd be okay.

Right. And Even, you know, six months from now, if there are 100 policies, there'd be maybe a 65 to $125 million loss. If a $20 billion hurricane hit Hawaii, you still got the financial resources to cover. Be about out of money at that point. Which is why we say you're potentially fully committed without.

And then again, we're back to the whole buy more reinsurance and all the other things we talked about a few minutes ago.

Thank you, Chair. Just a reminder is how much general funds did we invest in this program?

Because I thought it was a credit limit. HHRF had its own funds set aside when HHRF disbanded in the 90s is 2000. They had, I'm sorry, 170 million. Was that about how much they were sitting on? And that amount was there for them to now deploy to buy reinsurance to stand itself up.

So we actually didn't spend any general funds on this. And we just said credit limit. Did something with a credit limit at some point.

But it's fine. I don't think we adjust the. Any kind of credit limit.

Paul, do you want to. Well, the, the, as I recall the Bill. Right. As before, there's a provision in there that allows the HHRF to potentially issue $30 million worth of bonds that potentially would help cover the loan to the hpia, for example. Right, but we didn't tell. Not, not yet, at least. We have not. Right.

We have not issued bonds and at this point, HHRF has not asked for any money from the state whatsoever. And it's. We're projecting the HHR should be roughly a break even by the end of the year.

Again, if we hit this, you know, 100 policies inclusive of all the fees and everything of having gotten stood up this first year. And then after that, you should, you should be actually collecting money in excess of your expenses until the event of a hurricane.

Thanks. Yes, please.

You mentioned that base of HHRF's own funds. Are there actual requirements around how much of that we have to have? And if we experience that maximum plausible loss and have to do a big payout, how do we recapitalize the HHRF?

Good questions. The first is no, you're the HHRF is actually not an insurance company that has to follow all of the rules that the division sets up for real insurance companies. It's kind of like this special purpose vehicle created by legislation. So there is no. And it creates some trickiness.

When we do this evaluation, we are trying to provide financial numbers as if this was an insurance company. And that's why we're doing things like okay, what do we mean by how much money the HHRF needs? Well, let's say you got to cover a $20 billion hurricane. That seems prudent because that's a very real possibility, very rare.

Haven't had a. Anyway, knock on Wood, the whole bit. So the first part of the answer is there's no requirement, but there is prudence. And so we've tried to bring in other regimes like pretend you were a private insurance company that had to follow normal rules. How much capital would you need then?

If the HHRF runs out of money, where does it get money? The HHRF has actually a very aggressive set of compared to other state pools in terms of recapitalization mechanisms. But the first and easiest one to consider is what's called assessments.

You basically pick the pockets of the insurance companies in the state, which is not a very nice thing to do. Right. And those insurance companies are not necessarily sitting on gigantic amounts of money just ready for the HHRF to come take from them.

And those insurance companies then need to figure out how to and again, like the day after a massive hurricane, those companies are probably going to be dealing with some financial hurt themselves. But the first line of defense is, as you will, is the assessment mechanism that the HHRF has. There are.

The next one is there's some additional bonding capacity. And the details of that and how the new bill affects that is beyond my memory and I'm not a legal advisor.

But the HHRF does have bonding capacity where effectively you would issue bonds with some kind of payback period and a coupon associated and you would recapitalize off those bonds and then have to use the premiums you're charging to pay off those bonds over time.

And then there like when the HHRF was first set up, there was a special fee. I think it was like a mortgage recording fee or something like that. So there are some small.

That doesn't create a lot of financial resources in a short amount of time, but it can be used to say over a five or ten year period like it was in the 90s to start to, you know, $5 million a year over ten years equals $50 million.

So those fees can accumulate to realistic amounts of money in a reasonable amount of time. The biggest issue you're facing with while you're waiting for that is if a second hurricane came. So you're kind of rolling the dice against, waiting for, hoping that the next hurricane is again a 30 year off kind of an event.

And so we, and we made, we made cleanup changes to all of those assessment mechanisms and fees and things last year. But do you, I mean, the reason we had the 170 million in the Hurricane Fund available was because from 1993 when the Hurricane Fund was conceived to 2000 when it went dormant, no hurricane hit.

And the 170 is the sum of the premiums that were collected along the way. Right, right. Okay. So the, so if we get hit, then we're in trouble. If we get hit and then hit again, then we're in big trouble.

If we don't get hit, then the fun accrues and then we may over time potentially have more capacity available to make more decisions about how we'd like to deploy access.

That's exactly right. Is the pricing that the HHRF is currently charging is, you know, is established at break even, looking at certain costs and so forth. But when a hurricane doesn't come, that means that you're accumulating the dollars, you're basically saving up over time for when the hurricane does come.

So those dollars should accumulate over time as long as the HHRF is active selling policies and there's no hurricane to pay.

Just to clarify though, so the Fund grows by the premium that the HHRF collects. The interest that's earned on that fund doesn't stay in HHRF, that's remitted to the state. The General Fund goes into the General Fund. Right, Right. Yeah. So it's only growing by the premiums that HHR is collecting while it's active.

It's a good, good detail. If we send it back to you guys, it would create more resource, right?

Yeah. I mean the interest on the 170 million is millions itself. I can earn 3 to 5 or something. I mean, so, so if so effectively the HHRF has been paying money into the General Fund, not not taking money from it.

And if you left that interest in the HHRF bank account, it would accumulate more quickly for sure.

That seems better to help homeowners in the state getting wealthier.

That's your good point for us.

From the Right side of the table.

Okay. I do have, and we talked about this earlier, but I do have questions about the $10 million mark. Yep. Especially when I saw that you guys raised the capacity, the coverage limit from 90 million to 140 million. Clearly HHRF does have some added capacity past the point where we had talked about it during session.

The $10 million mark. Well, I guess let's start with the basics. In the admitted market right now, is there sufficient capacity to ensure all condos under that 10 million mark or close to it, or are condo associations heading into the surplus lines market for that to reach that $10 million mark?

That there's.

I would estimate that's less a capacity question and more an appetite question. And it has to do with. There are a lot of admitted policies issued, either complete coverage that includes the 10 million or up to the 10 million or, you know, for buildings that are below the 10 million thresh.

There are some parts of the market that the admitted lines don't like as much. For example, Wood frame is something I've heard from agents, for example, is more likely to end up in surplus lines market. Is it an issue that the admitted market doesn't have capacity or is it that they don't have the.

They don't want that risk because it's very high risk and it is more difficult for them to adjust pricing to get pricing right on some of those more vulnerable aoa. That's a question where I can't.

I should say, I can't answer it definitively. Right. Seems like you're drawing a fine line there between capacity and unwillingness to. I mean, do they not have capacity because it's so difficult for them to do it that they kind of can't. I mean. Yeah, we're splitting hairs here. So potentially currently in the market. Yeah.

You're saying that there's not enough. There are not enough admitted carriers offering under $10 million to cover all AOLs that want that needed.

As a strict statement, I agree with that. I would add two things to it. One is, and I learned about this Monday and I sent an email to the company, but I haven't had a chance to actually hook up with them. Some of them might be offline for the holidays already.

My understanding is a company is coming online new to the admitted market, so you're going from three to four. When is that happening? What are the details? I heard a rumor that they might be targeting the 10 million and below with admitted capacity. So this is new. It's not my position to speak More about that.

I was not able to contact the company successfully to get the details and also get permission to speak publicly about anything more than that. So at this point, call it a rumor, but it's a very positive rumor. Also heard similarly about a new surplus lines company offering capacity that may be targeting the same market segment. So that's.

And back to the pro con discussion. By the way, one of the things we discussed last spring was the potential to set up what we call the facility that would possibly bring multiple new insurers to Hawaii. The success of the HHRF in bringing pricing down has led to a lack of interest to come to Hawaii.

Pros and cons. So that's all informal conversations that we've had through the AON network trying to entice partners to come start looking at building a facility and bringing new insurers here. But there is this rumor, new admitted lines and new surplus lines, one of each. The details of that is kind of a wait and see situation.

So is all of the market below 10 million coverable in the admitted market? I think the simple answer to that is no. The Wood frame is the part most likely to be avoided by the admitted market. Here's what the agents told me when I kind of had. And by the way, this is what the agents told me.

I would highly recommend additional conversations with the insurers themselves. They I've received a lot of collective support from the insurers and the insurance companies. They're a little more careful about what they say because they're protecting their commercial interests. Right. So anyway, have conversations with. With the industry itself from the agent perspective, based on conversations that I had.

Number one, there's this issue that it is very hard for the HHRF to make a difference below 10 million because below 10 million it's an all or nothing policy. So it doesn't matter if we come online with hurricane policy. We can't get the partner coverage in the non hurricane.

The second issue about below 10 million is that's not where the problem was. The problem was above 10 million. Now, I want to be very careful. I'm speaking in general about the total market. I guarantee there is somebody who's either watching this or will get a snippet in the news.

Some quote from this guy at Aon and they're paying a lot more in insurance costs and they're going to throw the remote at the tv. Right? So I want to be.

I'm not being deaf to the reality that a lot of people, even in the below 10 million are paying more in insurance costs than they were paying in 2019 and 2020. But in general their rates did not go up as much and so they have a less critical problem to be solved. They still would benefit.

And then the third piece is the stabilization of pricing that we're providing is having trickle down effects. Again to the the matter of like agents quoting the 90 cents per hundred down to 4030 or 27 cents per hundred, that's significant savings that that is being potentially realized by these owners below 10 million.

Many of the below 10 million, I think 60% on our market data, they're not true fire resistive but they are blocked. They're not Wood frame. The admitted carriers are writing those policies now. What about the block below 10 million with deferred maintenance? That's cutting the data too fine.

I can't give an answer to that, but there definitely is, let's estimate between 40 and 60% of that below 10 million market is getting served in the admitted lines marketplace is my best guess based on agent conversations, not hard data.

So don't get me wrong, I think you guys have done a great job. I think that the lowest hanging fruit has been addressed here and I appreciate the trickle down effects. Yeah, this is not necessarily a comment about business acumen or business decision which I think you guys probably made the right one.

This is more of a policy discussion. Understood. And when we look at, I mean we were talking about how $25,000 or less in premiums, they don't even want to bother with them. It's kind of the small guys that I'm worried about. Understood. And that 10 million dollar mark goes across the entire spectrum of the condos being insured.

But it's really the kind of the smaller condos that I'm worried about. Yeah, those are probably the ones that are not getting the 10 million dollar from getting up to that $10 million mark through admin carriers and are having to turn to surplus lines. So they're kind of getting hit before they come to you folks for help.

Which is great that you folks are going to help them. But if they are under $10 million or just over it or around that area, they're still getting slammed pretty hard and HHRF is not giving them the kind of relief they need.

I understand the can of worms that comes with insuring underneath that amount, but when I see HHRF continuing to expand upwards from 90 to 140 and then maybe even beyond that, you're using your capacity to continue to insure more and more Expensive buildings that have lower and lower risk probably.

I'm wondering why instead of expanding from 90 to 140 we didn't expand downwards in some capacities to try to ensure those under $10 million aoaos with those resources.

So the. I'll give kind of two layers to the answer. The first is what you just said. There's actually relatively little risk now that we've got a portfolio in place and we're seeing the kinds of policies that we're writing, the kinds of buildings and so forth, the change.

And also where we're like most of our coverage is like 20 million. So it's $30 million AOAOS. Right. They're asking for $20 million of coverage above the 10 having a handful of policies. We've got half a dozen policy requests for, you know, the. In the 120 to 140 range.

It was very low risk to increase it so low cost. It was a quick notice to the division to get it approved and it's very low risk in terms of the additional capacity hit to the HHRF. And we are.

Dan had to sit on the phone with a bunch of reinsurers and say hey guys, by the way, we're doing 140 now and not 90. But like that's his job so not worried about it. That's an important part of the answer is it wasn't that much more risk and it wasn't that much more cost.

Then the next part of the answer is back to at least according to the agents, we can't impact the market below 10 million by ourselves because they can't sell a hurricane policy below 10 million effectively. And the admitted market is for the larger buildings where they just need that first 10 million dollar layer.

There's actually a lot of coverage for that in the admitted market. Decent amount at least for the buildings, the AIOs, sorry that are completely below 10 million.

The agent feedback is we cannot like it was less of a problem to begin with and we can't impact that market by ourselves because you can't get a hurricane only policy because there's nothing to sell next to it. So it wouldn't matter if we.

So it would cost us a tremendous amount of expense to make that policy available. And it's likely the case that we wouldn't be able to sell any of them because the rest of the market won't complement it with the non hurricane coverage.

I think if you really want to focus on that below 10 million and you have to do so very carefully like a couple of agents basically said well you got to go to Committee and tell them that there's not an issue in that, in that part of the market. Like well that's for.

I'm not going to get that. That's because again I know there are owners in buildings and AIOs below 10 million that don't feel that way. So some of this is all relative. But if we're going to solve below 10 million, there's two things that have to be thought through very carefully.

The first is you have to have a companion product to the HHRF for the non hurricane coverage. Maybe the HPIA is viable for that their financial resources. There's a lot of loss in that zero to $10 million layer and it's frequent loss.

So it can be very damaging to the shock short term balance sheet of an insurance company. It's not like the whopper hurricanes that come 10, 20, 30 years on or whatever. So you have to manage the financial impact very, very carefully.

The other component is we are now deploying a more full spectrum product into the marketplace and it will be much more difficult to dictate that that product does not compete with the relatively fragile capacity that you already have in the admitted market. So we've been successful enough that there's rumors one new company is coming in.

That's a good trend in the right direction. Would that company still be coming in if the HPIA and HHRF were jointly operating on in 2026 getting a below 10 million policy online? I, I don't know that's a counterfactual.

But it's something I would ask the Committee to think through very carefully. Okay, that's fair, I guess. Yes. What I was at this, this summer, I'm talking about this issue. Obviously it's going on everywhere. I think people should know that.

But one of the things they talked about that they're doing is condominium associations groups are coming together and forming collectives, if you will. Okay, they're forming. Is that something that they could do in Hawaii? So. Right. I got 310 mil under $10 million buildings right next to each other.

I could come like I guess on one of the other states you can come and form your own co op. Yes. Create that sandwich and even self insure some elements of it. But you're not.

If they were to do that here and come to you saying our three combined AOAs have come up and we want to come ask for policy coverage is now $20 million now could the HHRF and the products and everything be made available to the. So that we can start to move people.

We can get them to people like in other states. We're going to come together and in my area it's natural because all these condominiums are aligned along the same and of course hurricane is important because they're bottom on the ocean. Right. So they can come together and form a block.

Now we have four properties which would normally come in below 10 million, but now we're above. Is that something that we could start to move on here? So to kind of move the needle as we look at you said very carefully legislation which will probably have implementation and other things going on.

What I would put into the public comments about that is that is theoretically viable. And there are examples, right. Risk retention groups, group settings that, you know, they, they come together, they do a pooling arrangement. Put a captive on that. Pooling. Pooling. Those are relatively sophisticated financial structures.

You're going to need professional advisors to set it up which is going to incur some cost. Right. And then could that captive or that could the HHR provide a policy to that pooled set of risk? Yes. Could they. The details of that I'm not in a position to comment on.

I'm not asking to.

This is. Is launch of an idea. Yeah. Is it. Is it theoretically possible? Yes. Might it be a good solution? I would advise additional conversations with members of the insurance industry around Hawaii to have some. Really. And by the way, Marsh has a. Has a captives team.

I think Aon has a captives. Right. So. So that's what came. It was an in coil book meeting. So I'm sure you guys. We'll talk more later.

But it's. With multiple different HOAs and creating a risk pool via a captive that could potentially help on the lower end. Right. Where all that loss is trapped. You know, you have a building with $50,000 premium. Well, that's the average cost of one property damage claim. Right.

So that's where we want to try to potentially build little companies within shared HOAs.

Yeah. And we're a little bit over time, so. Okay. Thank you all for coming. We really appreciate your time. Thank you Members for attending. And we are adjourned.