Stabilization of Property Insurance (Hawaii) — Temporary Funding and Association Authority
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Amendments and authorizations to enable state insurance entities to provide temporary property insurance coverage and funding mechanisms to stabilize Hawaii's property insurance market following market failures; affects condominium associations, insurers, lenders, and related parties in Hawaii.
Directs the Insurance Commissioner to conduct a study to identify or develop long-term solutions to stabilize the State's property insurance market and report findings to the legislature in 2026 and 2027.
Modifies provisions governing the hurricane reserve trust fund, including sources of deposits, allowed accounts, and surcharge authority after a covered event.
Appropriates $50,000,000 from the general fund as a loan to the Hawaii Property Insurance Association for startup, solvency, and reinsurance purchase.
Appropriates $100,000 for the Insurance Commissioner to conduct the mandated study.
Establishes a temporary recording fee (replacing prior 'special mortgage recording fee' references) to be deposited into the hurricane reserve trust fund and adjusts disposition of bureau of conveyances fees.
Coverage Criteria and Operational Rules
Association coverage criteria
The association's plan of operation must include the following operational underwriting and administrative provisions:
optional_powers
- coverage_expansion: Association may add additional insurance coverages with commissioner approval, including commercial risks up to plan limits.
- operational_powers: Association may employ or retain persons, contract with member insurers, borrow funds, sue or be sued, and take other powers as provided in statute.
Association coverage eligibility and limits
Eligibility and scope of coverages under the association plan of operation:
pre-issuance/renewal requirements referenced in statute
Temporary recording fee requirements
Operational requirements regarding the temporary recording fee:
text references insurer obligations in statute (fragmented)
Temporary recording fee operational criteria
Operational criteria described in these chunks:
text fragmented in source
Temporary recording fee provisions
Stated application and administrative controls for the temporary recording fee:
Temporary recording fee provisions (partial)
Fee application and board actions
source contains truncated procedural details
Temporary recording fee provisions
Imposition and administration of temporary recording fee
text fragmented across source chunks
Temporary recording fee application
Fee imposition and board authority
Temporary recording fee criteria
Conditions and scope for the temporary recording fee:
source contains placeholder language for maximum amount
exact duration not specified in excerpt
Temporary recording fee rules (excerpt)
Rules established in this excerpt:
excerpt incomplete regarding limits/conditions
Temporary recording fee criteria
Operational criteria for the temporary recording fee as provided in the bill text:
board may act unilaterally to reduce/terminate
Hurricane property insurance coverage and fund operations
Coverage limits, deductible rules, and conditions for multi-peril coverage and insurer authorization:
multiple deductible references in source
Fund coverage and post-event funding mechanisms
Eligibility and offering rules for hurricane property insurance by the fund:
Codes, Limits, and Surcharge Metrics
| SURCHARGE | Surcharge on premiums to recoup assessments (not considered premium for other purposes) |
| No clinical/coding content in this administrative policy portion. |
Provider Actions, Billing, and Administrative Authority
Expanded authority and funding for HPIA and HHRF
Authorizes HPIA and HHRF to expand underwriting authority and establish temporary funding mechanisms, including a temporary recording fee and insurer assessments, to provide additional property coverages when the standard market fails.
Pre-issuance/renewal condominium documentation and inspection
Applicants for condominium coverage (initial or renewal) must provide the condominium association's declarations, bylaws, and documents describing the association's claims payment process, and must cause inspections consistent with the plan of operation's inspection and reporting standards.
- Provide association declarations, bylaws, or other documents describing claims payment processes and allocation between association and unit owners.
- Cause inspections consistent with inspection and reporting standards set in the plan of operation.
Assessment recoupment via premium surcharge (up to 2%)
Member insurers and licensed property and casualty insurers may surcharge premiums to recoup assessments and may continue to surcharge until full recoupment; the association establishes the surcharge and it shall not exceed 2% of total premiums per policy.
- Surcharge is recovered via premiums for property and casualty insurance (excluding motor vehicle insurance).
- Surcharge established by the association shall not exceed two percent of total premiums charged per policy.
- Any excess recovery is credited pro rata to policyholders' premiums in the succeeding year unless used to pay a subsequent assessment.
Board authority to activate/reduce/terminate temporary recording fee
The board may activate, reduce, or terminate collection of the temporary recording fee as provided in the statute; the surcharge and reason must be separately stated on any billing sent to an insured and is not considered premium for other purposes.
- Board may activate, reduce, or terminate collection of the temporary recording fee.
- Amount and reason for any surcharge must be separately stated on billings to insureds.
- Surcharge shall not be considered a premium for purposes such as gross premium tax or producer commissions.
Board activation/reduction/termination authority (fee obligations on insurers)
The board is authorized to activate, reduce, or terminate the temporary recording fee under the procedures in this section; licensed property and casualty insurers are subject to the billing and treatment requirements for the surcharge.
- Board action governed by statutory section establishing fee procedures.
- Each licensed property and casualty insurer must comply with separate-statement billing and non-premium treatment of the surcharge.
Board authority and scope for temporary recording fee
The board may, under the section's provisions, activate, reduce, or terminate the temporary recording fee; the fee shall be imposed on each document recorded with the bureau of conveyances or filed with the assistant registrar of the land court when established.
- Fee imposed on each document recorded with the bureau of conveyances or filed with the assistant registrar of the land court of the State.
- Board may set, activate, reduce, or terminate collection as provided in the statute.
Board set fee amount when establishing/reactivating temporary recording fee
If the board establishes or reactivates the temporary recording fee, it shall set the amount of the fee and may activate, reduce, or terminate collection; licensees must follow the statute's billing and treatment rules for the surcharge.
- Board required to set the fee amount when establishing or reactivating the temporary recording fee.
- Licensed property and casualty insurers are referenced in relation to the fee's administration and billing.
Fee amount setting and deposit of proceeds to hurricane reserve trust fund
The statute authorizes the board to activate, reduce, or terminate the temporary recording fee and requires the board to set the fee amount if established or reactivated; proceeds are deposited into a separate account of the hurricane reserve trust fund.
- Board shall set the amount of the fee if it establishes or reactivates the temporary recording fee.
- All proceeds are deposited into a separate account of the hurricane reserve trust fund.
Temporary recording fee applicability to recorded/filed documents
The board may activate, reduce, or terminate collection of the temporary recording fee as provided; the temporary recording fee is imposed on each recorded or filed document with the bureau of conveyances or land court assistant registrar.
- Fee applies to each document recorded with the bureau of conveyances or filed with the assistant registrar of the land court.
- Board retains authority to activate, reduce, or terminate collection under the section.
Board must set fee amount; insurers included in administration
The board may activate, reduce, or terminate the temporary recording fee; if established or reactivated, the board must set the fee amount and licensed property and casualty insurers are included in the section's administrative references.
- Board duty to set fee amount upon establishment/reactivation.
- Licensed property and casualty insurers are addressed in relation to the fee's operation.
Board authority to activate/reduce/terminate and per-document fee imposition
Board authority permits activation, reduction, or termination of the temporary recording fee and requires the board to set the fee amount when enacted; the fee is imposed on each document recorded or filed in the State's conveyance or land court systems.
- Board retains broad authority over activation, reduction, and termination.
- Fee applies per recorded document or filing with the assistant registrar of the land court.
Per-document fee and deposit to hurricane reserve trust fund
The board may activate, reduce, or terminate collection of the temporary recording fee; when imposed, the fee is applied to each document recorded with the bureau of conveyances or filed with the assistant registrar of the land court and proceeds are deposited into the hurricane reserve trust fund.
- Fee imposed on each recorded or filed document.
- Proceeds deposited into a separate account of the hurricane reserve trust fund.
Servicing facility contracting with licensed insurers
Fund may contract with one or more licensed property and casualty insurers to serve as servicing facilities to inspect properties, service policies and policyholders, provide claims services, and perform duties authorized by the fund.
- Contracted servicing facilities may inspect eligible properties and provide claims services.
- Servicing facilities serve applicants to the fund and those insured by it as authorized by the fund.
Surcharge collection, separate billing disclosure, and non-premium treatment
The fund may establish procedures for insurers to collect a post-event surcharge from customers; the amount and reason for any surcharge must be separately stated on billings and the surcharge is not considered premium for tax or commission purposes.
- Surcharge after a covered event may be levied up to 7.5% per year on premiums for property and casualty policies to cover fund obligations.
- Surcharge proceeds may be deposited into the hurricane reserve trust fund or trust/custodial accounts for secured parties.
- Fund may set procedures for insurers to collect the surcharge from customers; surcharge must be separately stated and is not premium for tax/commission calculations.
Permitted deposits and holding/disbursement of hurricane reserve trust fund proceeds
Moneys deposited into the hurricane reserve trust fund may include assessments, premiums, reinsurance proceeds, federal loans, bond proceeds, and the temporary recording fee; funds and accounts may be held by the fund as trustee in depositories or trust/custodial accounts and disbursed according to board procedures.
- Permitted deposit sources: assessments, premiums, reinsurance proceeds, federal loans, bond proceeds, and temporary recording fee.
- Moneys held by the fund as trustee in depositories or similar arrangements; accounts may be created for benefit of secured parties and disbursed per board procedures.
Definitions
Background, Funding, and Appropriations
This Act includes targeted appropriations to support short-term capitalization and a mandated study to inform longer-term stabilization of the State's property insurance market. Specifically, $50,000,000 is appropriated from the general fund as a loan to the Hawaii Property Insurance Association (HPIA) for administrative and startup costs, minimum solvency needs, and the purchase of reinsurance; those moneys will be deposited into the HPIA reserve trust fund and repaid to the general fund under the repayment procedures in statute. In addition, the Insurance Commissioner is directed to conduct a study and report findings to the legislature in 2026 and 2027, and $100,000 is appropriated to the Insurance Division for the cost of that study.
The bill sets specific fund replenishment and assessment parameters for the Hawaii Hurricane Relief Fund. If net accumulated moneys fall below $400,000,000, the fund must establish rates (subject to commissioner approval) to replenish the balance to a target of $500,000,000 as promptly as reasonably practicable; the director of finance will seek additional commitments when the balance is below the $400,000,000 trigger. The board is authorized to secure aggregate commitments totaling $500,000,000 from federal commitments, financial institutions, revenue bonds, or a combination thereof before exercising certain rate controls. Following a covered event, the board may levy post-event surcharges on property and casualty premiums of up to 7.5% per year, and in non-event years assessments are governed by the percentage limits set elsewhere (including a beginning January 1, 2026 percentage not to exceed 1.5% for certain assessment components).
Revision History and Effective Dates
Act takes effect on July 1, 2025.
Insurance Commissioner to submit study findings and recommendations, including proposed legislation, to the legislature for the 2026 session (reports due no later than twenty days prior to convening of the 2026 regular session).
Insurance Commissioner to submit follow-up study findings and recommendations, including proposed legislation, to the legislature for the 2027 session (reports due no later than twenty days prior to convening of the 2027 regular session).
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