Hawai'i is routing $200 million in 2023 Maui wildfire insurance proceeds through its state risk-management fund to rebuild Lahaina.
A bill that cleared the Hawaii Legislature, S.B. 2930 (introduced by Senators Angus McKelvey, Stanley Chang, and Troy Hashimoto), would raise the expenditure ceiling on the State Risk Management Revolving Fund, established under section 41D-4 of the Hawaii Revised Statutes. The fund holds the property and liability insurance proceeds the state received after state facilities and other property in Lahaina were damaged or destroyed in the 2023 Maui wildfires. According to the bill's findings, those proceeds are "intended to be used to repair, rebuild, and restore impacted state facilities and infrastructure."
For the insurance industry, the bill is a window into the back end of catastrophe recovery - what happens to a large property and liability payout once the claim is settled. Rather than a private carrier disbursing to a private insured, here a state risk-management program holds the proceeds, and a legislative spending limit has kept them from being deployed more than two years after the loss. The bill's purpose is to free that money: it would increase the expenditure ceiling and appropriate funds so the Department of Accounting and General Services, through its state risk management and insurance administration, can expend and distribute the wildfire proceeds.
The bill directs roughly $200 million across four Lahaina projects for fiscal year 2026-2027, all drawn from the fund: $146 million for the King Kamehameha III elementary school; $30 million for offsite infrastructure around the school; $12 million for surrounding roadways; and $12 million to restore the Lahaina small boat harbor, including piers, loading docks, electrical systems, and pavement resurfacing. The school appropriation is contingent on at least $48 million being matched by federal funds, and any reimbursed money must be returned to the fund it came from.
The bill ties the higher spending ceiling to coordination and controls. It requires a "master coordinated project plan," warning in its findings that, absent coordinated planning, rebuilding could proceed "within silos" and lead to duplicate work, extended timelines, and inefficient use of the proceeds. No money can be spent on a project until its full cost is secured, as determined by the state comptroller. The School Facilities Authority would manage the school build and report monthly to the governor and Legislature, and if it risks missing deadlines tied to federal matching funds, the governor could shift the project to another agency.
The takeaway for risk managers and claims professionals is less about new regulation - the bill imposes nothing new on carriers - and more about scale and process. It shows how a public entity recovers from a catastrophic wildfire loss, how property and liability proceeds move through a state risk-management fund, and how appropriation rules can stall recovery long after insurers pay. The bill does not reproduce or interpret any insurance policy clauses; it deals with the proceeds, not the underlying coverage terms.
The bill sets a July 1, 2026 effective date and, as of early June, was awaiting action by Gov. Josh Green; under Hawaii's process he has until mid-July to sign it, veto it, or let it become law without his signature.
