Relating To Insurance Of Last Resort.
SB1140 establishes a new Hawaii Fair Access to Insurance Requirements (FAIR) Program, or insurer-of-last-resort program, for residential property insurance in high-risk areas. The bill is designed to help homeowners, condominium owners, and apartment dwellers who cannot obtain coverage in the regular market because of wildfire, hurricane, flood, or other catastrophic risk exposure. It places the program within the Department of Commerce and Consumer Affairs (DCCA), which would oversee rules, eligibility, coverage standards, premium-setting methodologies, consumer protections, audits, and reporting.
Rather than creating a fully state-run insurer, the bill requires DCCA to contract with a “primarily domiciled Hawaii insurance company” to administer the program. The selected insurer would use a mix of private and state-supported reinsurance tools, including the Hawaii hurricane relief fund, and could also benefit from revenue bonds authorized by the Legislature. If bonds are issued, the bill directs the creation of a premium stabilization fund to support affordability, administrative costs, and premium subsidies or adjustments. The bill also includes an incentive program for resilient construction measures such as hurricane-resistant roofs, elevated foundations, and fire-resistant materials.
The bill would add a new chapter to the Hawaii Revised Statutes creating a formal last-resort property insurance framework for residential properties in designated high-risk areas. It expands DCCA’s regulatory role by giving the director authority to adopt rules, select and monitor the administering insurer, impose penalties for noncompliance, resolve coverage disputes, and report annually to the Legislature. It also authorizes the use of revenue bonds, subject to legislative approval and chapter 39 requirements, and establishes a premium stabilization fund if bonds are issued. The program would affect homeowners and other residential policyholders in high-risk zones, as well as a Hawaii-domiciled insurer selected to run the program and any reinsurance partners involved.
The available voting history suggests generally favorable committee sentiment: the Senate Commerce and Consumer Protection Committee passed the bill with amendments by a 3-0 vote. The bill’s findings and structure indicate a policy preference for a private-sector-administered solution rather than a direct state-run insurance program, reflecting an effort to address affordability and market access while limiting state operational burden. No committee transcript excerpts were provided, so the record here shows support but not detailed debate.
The main policy tension in SB1140 is how to balance access and affordability against financial risk and administrative complexity. Supporters appear to favor using a locally domiciled private insurer with stronger reinsurance access and operational capacity, while still keeping state oversight through DCCA. Potential points of contention include the use of state-supported reinsurance, the authorization of revenue bonds, the creation of a premium stabilization fund, and the extent of state exposure if the program is underfunded or faces catastrophic losses. Another possible issue is the bill’s reliance on a single selected insurer and the director’s broad authority over disputes, penalties, and program design, which could raise concerns about accountability, market competition, and implementation details.