HPIA seeks capital and loan authority to begin condo/commercial product; proposes $10M attachment and $20–50M initial capital

The Hawaii Property Insurance Association told the Joint Committee on Commerce and Consumer Protection on April 3, 2025, that it has about 2,200 policies in force and nearly $1 billion of total insured value, and that it needs an initial capital infusion to launch a commercial condo product that would attach above $10,000,000 of per‑location insured value.

HPIA plan administrator Terry Fabry told legislators, “HPIA has almost a billion dollars in exposure.” Fabry and other HPIA officials said the association currently has roughly $30,000,000 in capital, is paying reinsurance that in recent years has exceeded direct written premium, and has been drawing on its investment surplus to cover operating losses.

Why it matters: HPIA acts as a market‑of‑last‑resort in Hawaii for homeowners and has been proposed as a partner or parallel channel to HHRF for condominium association coverage. HPIA leaders said adding an all‑other‑perils commercial product that attaches above $10,000,000 could reduce pricing pressure in the private market and expand capacity, but that HPIA needs starter capital and reinsurance support.

HPIA’s proposal and capital requests HPIA presented a design to underwrite an all‑other‑perils commercial policy that would attach above a $10,000,000 base and scale to a per‑association limit (slides and presenters used $350,000,000 in modeled examples). HPIA asked the committees to consider providing $20,000,000–$50,000,000 in initial capital to stand up the product; HPIA said that capital would be loaned and would be used to absorb adverse development while reinsurance is placed. HPIA executives described a secondary option discussed with the state: reimbursable general obligation bonds issued through the state (the board described an example up to $200,000,000) that would only be released if demand justified issuance and a pledged revenue source (premiums) was identified. HPIA described the bonds as reimbursable and said, by statute and in consultation with BNF and the Attorney General, pledged premium revenue would be used for repayment so such bonds would not count against the state's CIP or debt ceiling in the board’s view; legislators asked for formal bond‑rating analysis.

Operational and governance details HPIA said it contracts with Marsh as plan administrator (contract expires 06/30/2027) and has moved from carrier‑hosted legacy systems to owning its own policy administration system; the board authorized a system replacement in spring 2024. HPIA said it uses reinsurance and a variety of transfer mechanisms (treaty, facultative, excessive loss) and that any commercial product would be designed to avoid direct competition with well‑engineered class‑A high‑rise risks. HPIA stated it would consider loans from HHRF and build rates with actuarial discipline; it also flagged that underwriting and operational eligibility rules that target specific resident‑level criteria would increase operational cost and slow program launch.

Legislators’ questions and follow up Lawmakers pressed HPIA and HHRF on three themes: (1) how to ensure scarce public or state‑backed capital first serves lower‑income or vulnerable residents rather than high‑value luxury towers; (2) how much capital is actually needed versus waiting to see market demand; and (3) whether issuance of reimbursable GO bonds could affect the state's credit rating. HPIA and HHRF officials said they will provide follow‑up analysis on portfolio composition at different per‑location caps (e.g., $100M, $200M, $350M) and on demand estimates; both entities also stressed uncertainty in current market trends and the need for reinsurance market support. No appropriation or bond authorization was approved at the hearing.