Requesting The Insurance Commissioner To Conduct A Study Of Alternative Insurance Models That May Provide Viable Solutions For Condominium Associations And Condominium Unit Owners In The State.
The resolution highlights critical issues regarding the financial sustainability of condominium associations in Hawaii, particularly in light of extreme weather events and increasing premiums. By conducting the proposed study, the Insurance Commissioner would aim to develop standards to help these associations obtain the necessary insurance while exploring models like mutual insurance and building life insurance. This could potentially protect homeowners and ensure buildings meet mortgage requirements while maintaining coverage against natural disasters, which is increasingly vital for the state's unique geographical context.
House Resolution 79 requests the Insurance Commissioner of Hawaii to conduct a comprehensive study of alternative insurance models that could help condominium associations and their unit owners address rising insurance costs. After the devastating Maui wildfires in 2023, there has been a significant increase in both hurricane insurance and homeowners' policy premiums in the state. The bill's discussion points to the limited number of insurance companies writing policies for condominiums, which has left many associations unable to maintain comprehensive insurance coverage. Reports indicate that premium increases have surged dramatically, leading to some associations carrying less than fully adequate coverage, which jeopardizes their ability to secure mortgages and rebuild after disasters.
Notably, the bill underscores the tension between adequate insurance coverage and financial feasibility for condominium associations. As rising costs limit their ability to secure sufficient coverage, many face the risk of being blacklisted by lenders, complicating associated real estate transactions. While proponents of the study argue that alternative insurance options could help mitigate these challenges, there may be debates regarding the best model to adopt, its implementation feasibility, and potential regulatory changes necessary to facilitate these options. The outcome of the study could significantly influence state laws regarding property insurance and condominium governance moving forward.