Hawaii tweaks captive insurance framework

Hawaii has updated its captive insurance framework to more closely align examination requirements with a captive’s risk profile.

Under Act 255, signed into law by Hawaii governor Josh Green on Tuesday (July 14), each captive (other than risk retention groups) will continue to undergo an examination within its first five years of licensure.

Thereafter, through 31 December 2031, the insurance commissioner may determine the need for future examinations based on regulatory judgment and the individual risk profile of each captive.

Beginning 1 January 2032, the five-year examination cycle will resume unless modified by future legislative action. Examination schedules for risk retention groups remain unaffected by Act 255.

The legislation also requires the insurance commissioner to report to the legislature in 2031 regarding the effectiveness of the discretionary examination framework.

“This legislation reflects Hawaii’s longstanding commitment to smart, principles-based regulation,” said Paul Shimomoto, president of the Hawaii Captive Insurance Council (HCIC).

“Act 255 provides the insurance commissioner with greater flexibility to allocate regulatory resources where they are most needed, while maintaining the strong oversight and financial integrity that captive owners have come to expect from Hawaii.”

The legislation was developed through collaboration among the Hawaii Insurance Division, HCIC, industry stakeholders, and the Hawaii State Legislature.

“This legislation is another example of Hawaii’s collaborative approach to captive regulation,” Shimomoto added. “Our regulators, legislators, and industry continue to work together to ensure that Hawaii remains an innovative, efficient, and globally competitive domicile.”

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