RELATING TO CLIMATE-FRIENDLY INSURERS.

SB2452

THE SENATE

S.B. NO.

2452

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO climate-friendly INSURers
.

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

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SECTION 1.
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This Act shall
be known and may be cited as the "Climate-Friendly Insurers Act of 2026".

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SECTION 2.
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The legislature finds that consumers pay premiums year after year to insurers
to protect them when disaster strikes, but insurers across the country are
increasingly not holding up their end of the bargain.
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Climate‑related disasters such as
hurricanes, wildfires, and floods are becoming more frequent and severe,
leading to higher disaster losses.
�
In
response, many insurers have raised premiums and deductibles, reduced coverage,
denied more claims, or withdrawn from high-risk areas, shifting climate risks
onto homeowners, renters, and businesses.
�

These changes particularly impact communities that are already
vulnerable to economic instability and natural disasters.

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The legislature further finds that while
this unfolds, insurers have continued to underwrite and invest in fossil fuel
expansion that contributes to growing climate risks that are burdening consumers
and threatening financial markets.
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Fossil
fuel companies depend on insurance coverage to operate, and insurers remain key
financial backers of new coal, oil, and gas infrastructure.
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Scientific research indicates that a
significant portion of known fossil fuel reserves must remain unused to limit
global warming, and groups like the International Energy Agency have warned
that no new fossil fuel supply projects are compatible with limiting global
warming below two degrees centigrade.

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The legislature further finds that major United
States insurers collectively hold hundreds of billions of dollars in fossil
fuel-related assets, increasing their exposure to climate-related financial
risks, while they cite climate-driven disasters as justification for raising
premiums, reducing coverage, or completely withdrawing from markets.
�
To ensure that households can maintain
affordable property insurance, insurers must align their investments and
underwriting with science-based emissions targets -- meaning they are in line
with what the latest climate science deems necessary to meet the goals of the
Paris Agreement and avoid the worst impacts of climate change.
�

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Accordingly, the purpose of this Act is to
promote a stable, affordable, and resilient insurance market in the State by
addressing climate-related financial risks associated with insurer underwriting
and investment practices and by requiring enhanced transparency and regulatory
oversight.

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SECTION 3.
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Chapter 431, Hawaii Revised Statutes, is amended by adding a new part to
article 10E to be appropriately designated and to read as follows:

"
Part
.
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Climate Friendly
insurers act

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�
431:10E-A
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Definitions.

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As used in this part:

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"Commissioner" means the insurance
commissioner of the State.

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"Financed emissions" means
greenhouse gas emissions associated with insurer investments in fossil fuel
companies and fossil fuel projects, as defined by the department of commerce
and consumer affairs, in consultation with the department of health.

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"Fossil fuel" means a
carbon-based energy source formed in the earth's crust from decayed organic
material, including but not limited to petroleum, crude oil, natural gas, and
coal.

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"Fossil fuel company" means any
entity, including but not limited to corporations, limited liability companies,
partnerships, joint ventures, trusts, special purpose vehicles, private equity
funds, subsidiaries, associates, affiliates, or any other legal, financial, or
organizational structure, that derives ten per cent or more of its revenue from
any new or existing fossil fuel project.

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"Fossil fuel project" means a project,
undertaking, activity, or investment designed to facilitate any significant
action with respect to fossil fuels or any byproduct thereof for commercial
purposes, including but not limited to:

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(1)
�
Upstream
activities: exploration, extraction, drilling, mining, production, collection,
gathering, development, redevelopment, expansion, or construction of mines,
fields, wells, rigs, platforms, or any other related infrastructure;

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(2)
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Midstream
activities: refining, processing, exportation, transportation, storage,
petrochemical manufacturing, or any other distribution infrastructure or
logistics including construction of pipelines, terminals, power plants, or
compressors; and

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(3)
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Downstream
activities: power, heat, or cooling generation facilities and fossil fuel-powered
manufacturing under North American Industry Classification System codes: 221112
(Fossil Fuel Electric Power Generation), 325110 (Petrochemical Manufacturing),
and 324199 (All Other Petroleum and Coal Products Manufacturing).

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"Insured emissions" means
greenhouse gas emissions associated with insurer underwriting in fossil fuel
companies and fossil fuel projects, as defined by the department of commerce
and consumer affairs, in consultation with the department of health.

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"Insurer" means any person, firm,
association, or corporation duly licensed to transact a property or casualty
insurance business in this State.

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"New fossil fuel project" means a
fossil fuel project in excess of what is in or approved for development as of
July 1, 2026, including projects designed to expand the use of or generate
new infrastructure for production from existing reserves.
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"New fossil fuel project" does not
include modifications made solely to increase safety or reduce carbon
intensity, such as to reduce fugitive or vented emissions; provided that such
modifications do not expand the fossil fuel supply base.

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"Science-based climate mitigation
targets" means absolute emissions reduction targets that are in line with
limiting global temperature rise to 1.5 degrees centigrade above pre‑industrial
levels, as defined by the department of commerce and consumer affairs, in
consultation with the department of health.

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431:10E-B
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Financed emissions; insured emissions;

science‑based
climate mitigation targets
;
definitions; rules; guidance.
�
(a)
�

The department of commerce and consumer affairs in consultation with
the department of health shall define "financed emissions".
�
The department of commerce and consumer
affairs may, by rule or guidance, designate additional asset classes, sectors,
or investment types to be included for the purpose of calculating financed
emissions, including but not limited to high-emitting industries,
carbon-intensive supply chains, and emissions-intensive utilities.
�
In establishing a definition under this
subsection, the department of commerce and consumer affairs shall consider:

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(1)
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Internationally
recognized standards for financed emissions accounting, including those issued
by the Partnership for Carbon Accounting Financials;

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(2)
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The
availability and quality

of

emissions

data

from

subsidiary,

joint

venture,

or portfolio companies and asset classes;

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(3)
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The

proportional contribution of investment activities
to an insurer's overall greenhouse gas footprint;

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(4)
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The
need to provide consistent, comparable, verifiable, and transparent emissions
disclosures and disclosure standards across the insurance sector;

and

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(5)
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Alignment
with state climate policy objectives, including emissions reduction targets,
climate risk mitigation strategies, and sector-specific decarbonization
targets.

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(b)
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The
department of commerce and consumer affairs in consultation with the department
of health shall define "insured emissions", which shall include, at a
minimum, underwriting fossil fuel companies and fossil fuel projects.
�
The department of commerce and consumer
affairs may, by rule or guidance, designate additional asset classes, sectors,
or investment types to be included for the purpose of calculating insured
emissions, including but not limited to high-emitting industries, carbon‑intensive
supply chains, and emissions‑intensive utilities.
�
In establishing a definition under this
subsection, the department of commerce and consumer affairs shall consider:

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(1)
�
Methodologies
for attributing greenhouse gas emissions to insurance underwriting activities,
including the methodology issued by the Partnership for

Carbon

Accounting

Financials

for

insurance-associated

emissions, and guidance from
international initiatives such as the Forum for Insurance Transition to
Net-Zero and the Science Based Targets initiative;

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(2)
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Distinctions

among lines of business, including whether
the underwriting pertains to high-emitting sectors such as fossil fuel
exploration, extraction, processing, exporting, transporting, and any other
significant action with respect to oil, natural gas, coal, or any byproduct
thereof;

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(3)
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The
extent to which emissions attributable to underwriting can be reasonably
measured, estimated, or modeled using available data;

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(4)
�
The

need

to

provide

consistent,

comparable,

verifiable,

assured,

and

transparent emissions disclosures and
disclosure standards across the insurance sector;

and

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(5)
�
Alignment
with state climate policy objectives, including emissions reduction targets,
climate risk mitigation strategies, and sector-specific decarbonization
targets.

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(c)
�
The
department of commerce and consumer affairs in consultation with the department
of health shall define "science-based climate mitigation
targets".
�
In establishing a
definition under this subsection, the department of commerce and consumer
affairs shall:

����
(1)
�
Consider
peer-reviewed, science-based methodologies and criteria developed by recognized
and reputable standard-setting bodies, including the Science Based Targets
initiative, the Intergovernmental Panel on Climate Change, and relevant
international agreements such as the 2015 Paris Climate Accords;

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(2)
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Cover
Scopes 1, 2, and 3 greenhouse gas emissions, as defined by the Greenhouse Gas
Protocol, and consistent with best available accounting and disclosure
practices, for example, the accounting methodologies issued by the Partnership
for Carbon Accounting Financials for financed emissions and insurance‑associated
emissions;

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(3)
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Incorporate
time-bound goals, including near-term (e.g. 2030) and longer-term (e.g. net
zero by 2050 or earlier) benchmarks;

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(4)
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Account
for the proportional contributions, impacts, and capabilities of regulated
entities in contributing to statewide emissions reductions;

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(5)
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Require
that targets do not rely on carbon offsets, avoided emissions claims, or
unproven greenhouse gas removal technologies;

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(6)
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Align
with state climate policy objectives, including emissions reduction targets,
climate risk mitigation and adaptation strategies, and sector-specific
decarbonization targets; and

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(7)
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Provide
for periodic review and updating of targets based on evolving climate science,
sector-specific developments, and real-world performance data.
�

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431:10E-C
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Implementation of climate leadership targets
for covered insurers.
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(a)
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This part shall apply to covered insurers
which includes insurers who:

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(1)
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Report
over $10,000,000 of direct property and casualty premiums written in the State
on its annual schedule "T" filing with the National Association of
Insurance Commissioners;

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(2)
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Engage
in activities or investments that may expose the insurer to a heightened level
of risk from the physical or transition effects of climate change; or

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(3)
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The
commissioner determines that applicability of this section to the insurer would
be in the public interest.

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(b)
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The
commissioner shall:

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(1)
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By
July 1, 2027, develop and implement a process for covered insurers to file
reports under subsection (c);

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(2)
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Align
covered insurer investment and underwriting activities with science-based
climate mitigation targets, including by:

���������
(A)
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Prohibiting
covered insurers from underwriting or investing in any new fossil fuel projects
after July 1, 2026;

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(B)
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Directing
covered insurers to unwind and terminate any outstanding or pending commitments
or negotiations to underwrite or invest in new fossil fuel projects by July 1,
2028;

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(C)
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Directing
covered insurers to phase out all underwriting and investing for any existing fossil
fuel projects and fossil fuel companies by 2035, and establish short-, medium-,
and long‑term benchmarks; and

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(D)
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Any
other requirements deemed necessary by the commissioner to align covered
insurers' investments and underwriting with science-based climate mitigation
targets, including developing and implementing enterprises-wide transition
plans;

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(3)
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By
July 1, 2027, develop and implement a process for covered insurers to certify
under subsection (d), as a condition of licensure in the State, that the
covered insurer meets the requirements of this section, which may include
mandatory transition plans and progress; and

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(4)
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Annually
review the reports and certifications required under this section, and compile
and post the information in the reports and certifications on the official
website of the insurance division within three months of receiving the reports
and certifications.

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(c)
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By
December 31, 2026, and annually thereafter, covered insurers shall submit,
within six months of the end of each fiscal year, a report to the commissioner
disclosing:

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(1)
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The
covered insurer's investments in any fossil fuel company, fossil fuel project,
or new fossil fuel project;

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(2)
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The
financed emissions from all the covered insurer's investments in the previous
fiscal year;

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(3)
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The
covered insurer's underwriting for any fossil fuel company, fossil fuel
project, or new fossil fuel project, in terms of total gross premiums in
dollars, disaggregated by company and project in a format determined by the commissioner;

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(4)
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The
insured emissions from all the covered insurer's underwriting in the previous
reporting year;

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(5)
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The
timelines, strategies, and methodologies the covered insurer has implemented to
comply with the requirements of this part;

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(6)
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The
progress the covered insurer has made towards achieving these requirements,
including specific milestones; and

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(7)
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Any
other information the commissioner deems necessary to effectively implement and
enforce any rule or regulation adopted pursuant to this part, which the commissioner
shall publish in advance.

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(d)
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As
part of the annual report required under subsection (c), the chief executive
officer or chief financial officer of a covered insurer shall certify the
accuracy of the information contained in the report and that the covered insurer
has:

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(1)
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Ceased
or made progress towards cessation of underwriting and investment in any fossil
fuel project;

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(2)
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Relinquished
or made progress in relinquishing any direct or indirect stake in any fossil
fuel company or fossil fuel project; and

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(3)
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Not
invested in or underwritten any new fossil fuel project.

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(e)
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The
commissioner may contract with third parties and may charge fees to the covered
insurer as may be reasonably necessary to assist in the review of the covered
insurer's filings under this section.

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431:10E-D
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Compliance and penalties.
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(a)
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Any
covered insurer that fails to comply with the reporting requirements,
divestment obligations, or underwriting prohibitions under this part shall be
subject to, at the discretion of the commissioner, one or more of the
following:

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(1)
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Administrative
penalties:

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(A)
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Equivalent
to the covered insurer's fractional share of the property and casualty
insurance market in the State based on total premiums written multiplied by the
insurer's net profits generated from the covered insurer's enterprise‑wide
operations within the State in the violation year;

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(B)
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Up
to an additional 0.01 per cent of the violation year's net profits generated
from the covered insurer's enterprise-wide operations within the State per day
of a continuing violation; and

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(C)
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Up
to twenty-five per cent of premiums collected underwriting any new fossil fuel
project;

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(2)
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Prohibition
on declaring or distributing any dividends to shareholders or any bonus,
incentive compensation, or other variable remuneration to executive officers or
board members without the prior written approval of the commissioner;

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(3)
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One
hundred fifty per cent increase in annual fees for licensing, exams, and
renewals in each year of violation; or

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(4)
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Restriction,
suspension, or revocation of the insurer's license to do business in the State,
including limitations on the amount of premiums written in the State or
limitations on other lines of business conducted in the State.

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(b)
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Any
covered insurer that fails to comply with the reporting requirements,
divestment obligations, or underwriting prohibitions under this part shall be
required to report semi‑annually to the commissioner and submit a
compliance plan until the commissioner determines the covered insurer is in
compliance with this part.

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(c)
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Any
covered insurer that fails to comply with this part three times within five
years may be subject to additional penalties available to and at the discretion
of the commissioner under state law.

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(d)
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All
penalties collected pursuant to this section shall be deposited into the
climate-friendly insurers special fund.

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431:10E-E
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Climate-friendly insurers special fund.
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(a)
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There
is established in the treasury of the State of Hawaii the climate-friendly
insurers special fund into which shall be deposited:

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(1)
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Appropriations
by the legislature;

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(2)
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Fees
and penalties collected pursuant to section 431:10E-D; and

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(3)
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Any
interest earned on the balance of the special fund.

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(b)
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The
climate-friendly insurers special fund shall be administered by the commissioner
who may transfer funds to other departments or state-administered funds for the
purpose of financing projects and initiatives designed to avoid, limit, or
adapt to negative impacts caused by climate change, including for the benefit
of households residing in and businesses located in low- and-moderate-income
communities or disadvantaged communities.

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431:10E-F
�
Reporting.
�
(a)
�
The
commissioner shall submit a report to the legislature and governor no later
than twenty days prior to the convening of the regular session of
2029
and every two years thereafter.
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The
report shall also be made available to the public and posted on the official
website of the insurance division.
�
The
report shall disclose, for the preceding two calendar years, the commissioner's:

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(1)
�
Efforts
to implement section 431:10E-C, including anonymized and aggregated data on insurer
investments in and underwriting of fossil fuel companies and fossil fuel
projects, financed emissions, and insured emissions;

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(2)
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Regulatory
and supervisory actions taken, if any, to bolster the resilience of insurers to
the physical impacts of climate change;

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(3)
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Regulatory
and supervisory actions planned, if any, to bolster the resilience of insurers
to the physical impacts of climate change;

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(4)
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Violations
of section 431:10E-C, and any penalties assessed as a result, anonymized and
aggregated; and

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(5)
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The
effects, if any, that insurers' efforts to address climate risk have had on the
affordability and availability of insurance for low-income communities,
communities of color, and other traditionally underserved communities in the State.

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(b)
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The
report shall also summarize available information
regarding:

����
(1)
�
Insurer
and insurance market readiness for climate change and the energy transition;

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(2)
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Major
sources of climate risk faced by insurers;

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(3)
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Any
gaps related to climate risk that the commissioner intends to address; and

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(4)
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Any
proposed legislation to allow the commissioner to further address climate risk.

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431:10E-G
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Rules.
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The commissioner may adopt rules and regulations as may be reasonably
necessary to implement this part."

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SECTION
4
.
�
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 2026-2027 to be
deposited into the
climate-friendly insurers special fund
.

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SECTION
5
.
�
There is appropriated out of the
climate‑friendly
insurers special fund
the sum of $
or so much thereof as may be necessary for fiscal year 2026-2027 for the
purposes of this Act.

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The
sum appropriated shall be expended by the insurance commissioner for the
purposes of this Act.

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SECTION 6.
�

In codifying the new sections added by section 3 of this Act, the
revisor of statutes shall substitute appropriate section numbers for the
letters used in designating the new sections in this Act.

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SECTION 7.
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This Act shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

DCCA; DOH; Insurance Commissioner; Climate-Friendly Insurers
Act of 2026; Fossil Fuels; Insurance; Climate-Friendly Insurers Special Fund; Rules;
Appropriation

Description:

Establishes requirements for certain insurers to address
climate-related financial risk by limiting underwriting and investment in
fossil fuel projects and by requiring reporting, certification, and regulatory
oversight.
�
Requires the Department of
Commerce and Consumer Affairs, in consultation with the Department of Health,
to define certain terms by rule or guidance.
�

Establishes the Climate-Friendly Insurers Special Fund.
�
Appropriates funds.

The summary description
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not legislation or evidence of legislative intent.