| 47 | | - | SECTION 1. The legislature finds that reinsurance is a means of reducing an insurer's risk by establishing a contract that transfers risk to a reinsurance company, which assumes either a portion of or the entirety of one or more of the liabilities taken on by the initial insurer. The legislature further finds that rising global temperatures associated with climate change have increased severe weather events and, as a result, reinsurance companies are having to drastically raise their prices in order to assure coverage of future liabilities. In Florida, the Florida Hurricane Catastrophe Fund is a state trust fund that provides reimbursement to residential property insurance companies for a portion of their catastrophic hurricane losses, with reinsurance coverage provided to insurers at a lower cost than the private reinsurance market. Establishing a similar program in Hawaii may help homeowners and insurance companies address the increased risk of catastrophic events like the August 2023 Maui wildfires. The legislature also finds that it must weigh and consider the State's options within the current economic landscape, viewing this juncture as an opportunity to pursue insurance frameworks and programs that are innovative and existing outside the traditional insurance coverage pathways. The legislature posits that captive insurance subsidiaries are well positioned to manage risks efficiently, functioning as specialized risk management tools that move in the direction of increased regulatory compliance while promoting consistency and efficiency in local and global financial markets. The establishment of a working group to assess the viability of accessing global financial markets in pursuit of risk mitigation for the State, formation of conducive regulatory environments that will allow for the implementation of these specialized financial tools, and promotion of market stability and sustained growth can assist the legislature in generating innovative solutions that address the increasing insurance costs for consumers in the State. Accordingly, the purpose of this Act is to establish a working group within the department of commerce and consumer affairs to gather information to assist the legislature in generating innovative solutions that address the increasing insurance costs for consumers in the State. SECTION 2. (a) There is established within the department of commerce and consumer affairs a state reinsurance exploratory working group to assist the legislature in generating innovative solutions that address the increasing insurance costs for consumers in the State. (b) The working group shall consist of the following members or their designees: (1) The insurance commissioner, who shall serve as the chair of the working group; (2) The director of taxation; (3) One member appointed by the president of the senate; and (4) One member appointed by the speaker of the house of representatives. (c) The chair of the working group shall invite the following persons to be members of the working group: (1) A representative from an insurance company that sells property and casualty insurance in the State; (2) A representative of a reinsurance company that operates in the State; (3) A representative of the Hawaii Association of Realtors; (4) A representative of the Hawaii Insurers Council; (5) A representative of a bank that operates in the State; and (6) A representative of a mortgage lender that operates in the State. (d) The working group shall: (1) Evaluate existing insurance programs, including the regulatory and legal frameworks that govern these programs; (2) Assess any regulatory gaps and shortcomings of the current insurance system, including solvency requirements, long term investment schemes, capitalization standards, and existing government structures; (3) Review the State's existing ability to conduct risk assessments and the development of specialized risk assessment tools for different types of risks and industry operations in the State; (4) Identify areas where stakeholder engagement and investment can promote collaboration to address industry-specific issues; (5) Identify best practices and develop comprehensive policies to produce recommendations that will promote overall market growth; and (6) Establish mechanisms for ongoing monitoring, assess financial tools necessary for data collection, and form policies that remain responsive to market dynamics, fluctuations, and evolving regulatory challenges. (e) The members of the working group shall serve without compensation but shall be reimbursed for reasonable expenses, including travel expenses, necessary for the performance of their duties. (f) The working group shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2025. SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for administrative costs of the working group. The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act. SECTION 4. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37‑91 and 37‑93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in H.B. No. , will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. In addition, the appropriation contained in this Act will cause the general fund expenditure ceiling for fiscal year 2024‑2025 to be further exceeded by $ or per cent. The combined total amount of general fund appropriations contained in only these two Acts will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. The reasons for exceeding the general fund expenditure ceiling are that: (1) The appropriation made in this Act is necessary to serve the public interest; and (2) The appropriation made in this Act meets the needs addressed by this Act. SECTION 5. This Act shall take effect on July 1, 3000. |
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| 47 | + | SECTION 1. The legislature finds that reinsurance is a means of reducing an insurer's risk by establishing a contract that transfers risk to a reinsurance company, which assumes either a portion of or the entirety of one or more of the liabilities taken on by the initial insurer. The legislature further finds that rising global temperatures associated with climate change have increased severe weather events and, as a result, reinsurance companies are having to drastically raise their prices in order to assure coverage of future liabilities. In Florida, the Florida Hurricane Catastrophe Fund is a state trust fund that provides reimbursement to residential property insurance companies for a portion of their catastrophic hurricane losses, with reinsurance coverage provided to insurers at a lower cost than the private reinsurance market. Establishing a similar program in Hawaii may help homeowners and insurance companies address the increased risk of catastrophic events like the 2023 Maui wildfires. Accordingly, the purpose of this Act is to establish a working group to identify the feasibility of a state-run reinsurance program to offset the liabilities of private reinsurance companies as a means of ensuring affordable coverage for property owners against catastrophic events, such as wildfires or flooding. SECTION 2. (a) There is established within the department of commerce and consumer affairs a state reinsurance exploratory working group to explore the feasibility of establishing a state-run reinsurance program in Hawaii to ensure affordable coverage for property owners against catastrophic events such as wildfires or flooding. (b) The working group shall consist of the following members or their designees: (1) The insurance commissioner, who shall serve as the chair of the working group; and (2) The director of taxation. (c) The chair of the working shall invite the following persons to be members of the working group: (1) A representative from an insurance company that sells property and casualty insurance in Hawaii; (2) A representative of a reinsurance company that operates in Hawaii; (3) A representative of the Hawaii Association of Realtors; (4) A representative of the Hawaii Insurers Council; (5) A representative of a bank that operates in Hawaii; and (6) A representative of a mortgage lender that operates in Hawaii. (d) The members of the working group shall serve without compensation but shall be reimbursed for reasonable expenses, including travel expenses, necessary for the performance of their duties. (e) The working group shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2025. SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for administrative costs of the working group. The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act. SECTION 4. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37‑91 and 37‑93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in H.B. No. , will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. In addition, the appropriation contained in this Act will cause the general fund expenditure ceiling for fiscal year 2024‑2025 to be further exceeded by $ or per cent. The combined total amount of general fund appropriations contained in only these two Acts will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. The reasons for exceeding the general fund expenditure ceiling are that: (1) The appropriation made in this Act is necessary to serve the public interest; and (2) The appropriation made in this Act meets the needs addressed by this Act. SECTION 5. This Act shall take effect on July 1, 3000. |
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