A bipartisan group of Hawaii legislators has introduced a bill that would require personal auto insurers to return "excessive profits" to policyholders, citing Florida's recent insurance reforms as a model for reducing rates and attracting new carriers to the market.
House Bill 2036 points to a 2023 Florida law requiring auto insurers to return excess profits to policyholders.
That measure prompted Progressive Corp., the largest private passenger auto carrier in Florida, to announce credits of up to $956 million for Florida drivers – a refund the company attributed to low hurricane activity in the past year.
Progressive said it expects to notify eligible policyholders by the end of February and is distributing the credits ahead of the timeline required under Florida's excess profits law.
Under Florida's framework, private passenger auto insurers must file annual profit reports with regulators by July 1. If a carrier's profits exceed statutory thresholds, it can be ordered to return the excess to policyholders.
The state requires insurers to disclose premiums, losses, loss adjustment expenses, development, and related costs for the three latest calendar accident years.
Under the Hawaii bill, profits would be considered excessive if an insurer's combined underwriting gain over the previous three years exceeds the anticipated underwriting profit plus 5% of earned premium for the calendar years under review.
The bill defines anticipated underwriting profit as total earned premium multiplied by the profit percentage projected in regulatory filings. Insurers would also be required to factor in investment income generated from Hawaii premiums when calculating returns.
If the insurance commissioner determines that an insurer's profits are excessive, the company would be entitled to a hearing. The insurer would then be required to issue refunds unless it can demonstrate that doing so would undermine the stability of one of its members or threaten its overall solvency.
Refunds could be delivered as cash or as credits toward future premium payments. Insurers would have 60 days to issue refunds after a final order is issued.
If a policyholder who received a credit cancels their policy before renewal, the insurer would be required to provide a cash refund instead.
The bill's introduction reflects growing legislative interest in regulating insurer profitability, particularly as consumers face rising premiums across personal lines.
Florida's approach has drawn attention from other states seeking mechanisms to ensure that favorable loss experience translates into tangible relief for policyholders.
