HB1341 creates a new Hawaii insurance premium tax credit for insurers that provide full property coverage to condominium owners and condominium associations. To qualify, the policy must cover 100 percent of the insurable value and include windstorm, hurricane, hail, flood, fire, and localized perils. The credit is set at 20 percent of the insurance premium tax otherwise due, increasing to 30 percent for insurers incorporated in Hawaii.
The bill is aimed at addressing the difficulty many condominium associations face in obtaining affordable full-coverage insurance, especially for older buildings with deferred maintenance. The legislature states that rising hurricane insurance costs have led some associations to carry less than full coverage, which can interfere with financing and sales because federally backed lending programs require full insurance coverage. The bill applies to taxable years beginning after December 31, 2025, and caps total annual credits at $5 million.
Impact
HB1341 would amend chapter 431, Hawaii Revised Statutes, by adding a new nonrefundable tax credit administered by the insurance commissioner. It would affect licensed or authorized property and casualty insurers that write qualifying condominium policies, and it would require the commissioner to establish application, certification, documentation, and monitoring procedures. The credit would reduce insurance premium tax liability under section 431:7-202, with special treatment for insurers incorporated in Hawaii, and claims would have to be filed within 12 months after the close of the taxable year.
Sentiment
The bill appears to have a generally supportive policy rationale, focused on improving condominium insurance availability, stabilizing housing finance, and helping residents buy, sell, and mortgage condominium units. The findings frame the measure as a response to a real market problem affecting older condominium buildings and rising hurricane-related premiums. No committee votes or hearing transcripts were provided, so there is no recorded public debate in the supplied materials, but the bill’s referral to ECD, CPC, and FIN suggests it was being considered for its economic, consumer protection, and fiscal implications.
Contention
The main points of potential contention are fiscal cost and market design. The bill creates a capped tax expenditure of up to $5 million per year, which may raise concerns about reduced state revenue and whether the incentive is the most effective way to address condominium insurance shortages. Another possible issue is whether the credit will meaningfully induce insurers to write full-coverage policies for older, higher-risk buildings, and whether the preference for Hawaii-incorporated insurers could be viewed as favoring local companies over out-of-state competitors. The bill text itself does not identify opponents, but these are the likely policy tradeoffs embedded in the proposal.