Hawaii Hurricane Relief Fund aims to issue first hurricane policies in June using $170M capital and reinsurance; lawmakers press for needs-based limits

The Hawaii Hurricane Relief Fund (HHRF) board told members of the House Committee on Consumer Protection & Commerce and the Senate Consumer Protection and Commerce Committee on April 3 that it intends to begin issuing excess hurricane coverage for condominium associations in June 2025, using the fund’s existing $170,000,000 capital supplemented by purchased reinsurance.

The update, delivered by Mike Nonaka, vice chair of the HHRF board, and consultants from Aon, outlined a phased rollout that would initially prioritize fire‑resistive, concrete high‑rise condominium associations while work continues on forms, underwriting guidelines and the servicing model that will determine how agents will obtain quotes and policyholders will buy coverage.

The board and Aon emphasized the central role of reinsurance in extending the HHRF’s claim‑paying capacity. Aon representatives said the $170 million is sufficient to launch operations and cover start‑up costs but is unlikely to be adequate to pay full claims in a severe event without leveraging reinsurance (treaty or facultative coverage, catastrophe bonds, parametric structures and other instruments). Aon estimated that, with appropriate reinsurance, the HHRF could support roughly 300 associations representing more than $10 billion of deployed insurance limit — roughly 15% of an estimated market of about 2,000 associations.

Legislators focused on eligibility rules and market effects. Rep. Iwo Moro asked whether HHRF insurance would be available only after an association is declined by an admitted carrier; Aon and board members said language in Senate Bill 1044 would require that an association be declined by a licensed insurer (an admitted carrier) before HHRF supplemental limits attach. Presenters clarified that the HHRF policy is designed to attach after whatever admitted carrier limit the association can obtain.

Lawmakers also pressed the board about a $350,000,000 per‑association cap shown in HHRF materials. Board members and Aon said the cap on the slide was a public, illustrative “up to” number used to show potential coverage sizing to reinsurance partners; they said it does not necessarily reflect a commitment to prioritize higher‑value buildings. Several legislators urged either lowering the cap or structuring limits to avoid using public funds to subsidize very high‑value, luxury associations and to preserve capacity for smaller, potentially more vulnerable associations.

On demand, Aon said the HHRF cannot now predict exact uptake: the private market appears to be easing in many segments and could supply coverage at or near the HHRF’s actuarial floor, which would reduce demand for the HHRF product. The consultants noted an industry estimate that roughly 60% of Hawaii associations are currently placed in the surplus lines market and that many of those associations are choosing less than full coverage for affordability reasons; the number of associations in Hawaii was approximated at 2,000.

Funding and next steps: presenters said the HHRF will finalize its servicing model and submit underwriting guidelines, policy forms and a rating manual to the Hawaii Insurance Division (HID) in mid‑April, with a goal of issuing the first policy in June 2025. The board discussed a legislative financing option: reimbursable general‑obligation bonds (the board described a possible $200,000,000 authorization) that would be issued only if and when the HHRF requested them, and that would be repaid from insurance premium revenues. Presenters said they had discussed the legal and fiscal mechanics with B&F and the Attorney General; committee members asked staff to confirm whether such bonds would affect the state’s credit metrics.

Why it matters: many condominium associations in Hawaii face steep premium increases or coverage shortages that can impair refinancing and real‑estate transactions. The HHRF is designed to provide supplemental hurricane capacity to narrow coverage gaps, support transactions and introduce competitive pressure into the marketplace while aiming to be actuarially self‑supporting.

What remains unresolved: whether the HHRF should start with higher‑limit, concrete high‑rise associations or set lower per‑association caps to prioritize smaller and lower‑income communities; the degree of additional capital the HHRF should hold versus buy in reinsurance; and formal eligibility rules the board will adopt when it files forms with the Insurance Division. The board and consultants committed to provide follow‑up analyses (examples included the impact of alternative per‑location caps such as $40 million versus $350 million) and additional market‑demand estimates to the committees.