SB2242

THE SENATE	S.B. NO.	2242
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII

A BILL FOR AN ACT

Relating to Insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the August 2023 wildfire on the island of Maui devastated the historic town of Lahaina. However, one wooden house in the center of Lahaina, now known as the "Miracle House", survived the wildfire relatively unscathed due to certain loss-control measures the owner implemented.

The "Miracle House" recently underwent a renovation, which specifically included removing the landscaping directly surrounding the house and replacing it with river stones, which experts determined made the biggest difference in protecting the house from the wildfire. Wildfire experts also maintain that the "zone zero" or "ember ignition zone" is a key factor in identifying whether homes are more susceptible to fire damage. For example, removing combustible materials, like wood fences, bushes, and dry grass, within a five-foot radius directly surrounding the house can reduce certain fire risks.

The legislature also finds that many Lahaina residents did not have homeowner's insurance. The legislature believes that the high cost of homeowner's insurance premiums in the State may be one factor that deters homeowners from obtaining coverage. A recent analysis revealed that Hawaii has been historically lucrative for insurers as they have been raising premium rates without having to pay out many claims. As a result, the State had the highest homeowner's insurance markup rates of any state from 1996 to 2021.

The legislature also finds that many insurers have loss-control programs that are designed to help policyholders reduce risks of damage and loss from certain perils. These programs benefit both the policyholder, who is rewarded with reductions to their insurance premium rates, and the insurer, who is less likely to have to pay out on claims.

Accordingly, the purpose of this measure is to require homeowners insurers to establish a loss-control program aimed at reducing the risk of loss or mitigating damage to insured property caused by the peril of fire, including fire caused by wildfires, lava, or both, with discounted premium rates for policyholders who implement certain loss-control measures.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10E to be appropriately designated and to read as follows:

"§431:10E- Homeowners insurance; loss-control program; premium reduction for fire safety. (a) Beginning January 1, 2025, and in accordance with rules adopted by the commissioner, a homeowners insurer shall grant to an applicant a discount in the applicant's homeowners insurance premiums for insured property upon receipt of written verification from the applicant that, at the insured property, the applicant has implemented loss-control measures to lessen or minimize an insured loss from the perils of fire, including fire caused by wildfire, lava, or both, including:

(1) Removal of flammable material, debris, and vegetation within certain perimeters of the insured property;

(2) Removal of risk of fire caused by lava; and

(3) Use of inflammable material in the construction or renovation of the insured property.

(b) The commissioner shall prescribe the requirements for determining that insured property was constructed or renovated with inflammable material.

(d) For purposes of this section, "homeowners insurance" and "homeowners insurer" have the same meanings as defined in section 431:14-110.8(c)."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

Report Title:

Insurance Commissioner; Homeowners Insurance; Loss-Control Program; Discounted Premium Rates; Fire; Wildfire; Lava; Rulemaking

Description:

Beginning 1/1/2025, requires homeowners insurers to establish a loss-control program aimed at reducing the risk of the loss or mitigating damage to the insured property caused by the peril of fire, including fire caused by wildfire, lava, or both, with discounted premium rates for policyholders who implement certain loss-control measures. Requires the Insurance Commissioner to adopt rules.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.