Under the Hawaii Insurance Guaranty Association Act, can members be assessed more than 10% of their annual direct written premium?

Under the Hawaii Insurance Guaranty Association Act, members are indeed restricted from being assessed more than 10% of their annual direct written premium. This limitation is designed to protect insurance companies and their policyholders from excessive financial burdens that could arise from the need to fund claims when an insurer becomes insolvent. The 10% cap provides a safeguard for the industry, ensuring that assessments remain manageable and do not jeopardize the financial stability of member insurers.

This structure encourages participation in the guaranty association while balancing the need for sufficient funds to cover claims. As a result, any assessment beyond this percentage could impose significant strain on the members, undermining the very purpose of the guaranty association, which is to provide a safety net for policyholders. Understanding this limit is crucial for grasping the operational dynamics of insurance regulation and the protective frameworks in place for insured parties.