HOUSE OF REPRESENTATIVES H.R. NO. 79 THIRTY-THIRD LEGISLATURE, 2025 STATE OF HAWAII HOUSE RESOLUTION 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.
HOUSE OF REPRESENTATIVES H.R. NO. 79
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
HOUSE OF REPRESENTATIVES
H.R. NO.
79
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
HOUSE RESOLUTION
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.
WHEREAS, the rates for hurricane insurance and regular homeowner policies in the State were already being driven up by disasters around the United States and the world when the deadly Maui wildfires happened in August 2023, putting the State on the radar of property and casualty insurance companies as a wildfire-prone state; and WHEREAS, property and casualty insurance companies that operate in the State pay to share their risk with the global reinsurance market, a system stressed by hurricanes and other catastrophes worldwide; and WHEREAS, there are only four standard insurance companies that write property and hurricane policies for condominiums in the State: State Farm only issues renewals and has not issued a new policy since Hurricane Iniki in 1992; First Insurance Co. of Hawaii and Dongbu Insurance continue to write policies; and Allianz limits its hurricane coverage to $10,000,000 per customer; and WHEREAS, a condominium building or complex carries a master hurricane policy to cover the cost to replace the property, which can total tens of millions of dollars in many cases, with annual premiums in the tens of thousands or even hundreds of thousands of dollars; and WHEREAS, during 2024, condominium associations in the State have seen one-year premium increases of three hundred to six hundred percent, which is four to seven times the previous cost, and a few buildings are experiencing increases of ten to fourteen times the previous year's cost; and WHEREAS, as a result, an estimated four hundred condominium associations on Oahu have elected to carry less than one hundred percent on their master insurance policies, which means they will not have enough money to rebuild if their properties are damaged or destroyed in a hurricane or other natural disaster; and WHEREAS, failure to maintain one hundred percent coverage can put a building on a blacklist with lenders, which makes it difficult if not impossible for a buyer to get a mortgage on a unit in that building; and WHEREAS, mortgage giants like Federal National Mortgage Association (commonly known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac), both of which purchase mortgages from banks and other lenders, require coverage of one hundred percent of a building's insurable value, which is why many banks will not lend on units with less than one hundred percent coverage; and WHEREAS, there are alternative insurance models, including mutual insurance and building life insurance models, that may provide viable solutions for condominium associations and condominium unit owners; now, therefore, BE IT RESOLVED by the House of Representatives of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, that the Insurance Commissioner is requested to conduct a study of alternative insurance models that may provide viable solutions for condominium associations and condominium unit owners in the State; and BE IT FURTHER RESOLVED that the study is requested to: (1) Develop comprehensive standards and requirements, including financial and maintenance requirements, for condominium associations, developers, and groups of condominium associations and developers, to the obtain the property insurance required under section 514B‑143, Hawaii Revised Statutes, through mutual insurance; and (2) Examine and evaluate the feasibility of implementing building life insurance as a model of property insurance, where the model: (A) Requires the condominium developer to obtain an insurance contract that meets the requirements of this paragraph for a period of no less than sixty years; (B) Allows a developer of a condominium to bind condominium associations by requiring that association bylaws include a clear maintenance schedule, reserve funds necessary to pay the costs of the maintenance schedule, and other minimum reserve requirements; (C) Requires insurers, when setting the premium rates, to consider factors such as the building materials used in the building's construction, ratio of concrete to glass in the buildings faade, maintenance schedule, siting of swimming pools, and other factors; (D) Requires insurance premiums to be paid into and kept in an escrow account that is held by a Hawaii escrow depository licensed under chapter 449, Hawaii Revised Statutes; (E) Allows for premium step increases; provided that the premium step increases are clear and predictable; (F) Requires insurers to cover the claims of the insured condominium necessary to restore the condominium to the extent necessary to meet all federal, state, and county requirements to allow habitation, as determined by applicable building inspectors; and (G) Requires legal safeguards similar to those used to bind traditional life insurers; and BE IT FURTHER RESOLVED that the Insurance Commissioner is requested to submit a report of the Commissioner's findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2026; and BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Commerce and Consumer Affairs and Insurance Commissioner. OFFERED BY: _____________________________
WHEREAS, the rates for hurricane insurance and regular homeowner policies in the State were already being driven up by disasters around the United States and the world when the deadly Maui wildfires happened in August 2023, putting the State on the radar of property and casualty insurance companies as a wildfire-prone state; and
WHEREAS, property and casualty insurance companies that operate in the State pay to share their risk with the global reinsurance market, a system stressed by hurricanes and other catastrophes worldwide; and
WHEREAS, there are only four standard insurance companies that write property and hurricane policies for condominiums in the State: State Farm only issues renewals and has not issued a new policy since Hurricane Iniki in 1992; First Insurance Co. of Hawaii and Dongbu Insurance continue to write policies; and Allianz limits its hurricane coverage to $10,000,000 per customer; and
WHEREAS, a condominium building or complex carries a master hurricane policy to cover the cost to replace the property, which can total tens of millions of dollars in many cases, with annual premiums in the tens of thousands or even hundreds of thousands of dollars; and
WHEREAS, during 2024, condominium associations in the State have seen one-year premium increases of three hundred to six hundred percent, which is four to seven times the previous cost, and a few buildings are experiencing increases of ten to fourteen times the previous year's cost; and
WHEREAS, as a result, an estimated four hundred condominium associations on Oahu have elected to carry less than one hundred percent on their master insurance policies, which means they will not have enough money to rebuild if their properties are damaged or destroyed in a hurricane or other natural disaster; and
WHEREAS, failure to maintain one hundred percent coverage can put a building on a blacklist with lenders, which makes it difficult if not impossible for a buyer to get a mortgage on a unit in that building; and
WHEREAS, mortgage giants like Federal National Mortgage Association (commonly known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac), both of which purchase mortgages from banks and other lenders, require coverage of one hundred percent of a building's insurable value, which is why many banks will not lend on units with less than one hundred percent coverage; and
WHEREAS, there are alternative insurance models, including mutual insurance and building life insurance models, that may provide viable solutions for condominium associations and condominium unit owners; now, therefore,
BE IT RESOLVED by the House of Representatives of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, that the Insurance Commissioner is requested to conduct a study of alternative insurance models that may provide viable solutions for condominium associations and condominium unit owners in the State; and
BE IT FURTHER RESOLVED that the study is requested to:
(1) Develop comprehensive standards and requirements, including financial and maintenance requirements, for condominium associations, developers, and groups of condominium associations and developers, to the obtain the property insurance required under section 514B‑143, Hawaii Revised Statutes, through mutual insurance; and
(2) Examine and evaluate the feasibility of implementing building life insurance as a model of property insurance, where the model:
(A) Requires the condominium developer to obtain an insurance contract that meets the requirements of this paragraph for a period of no less than sixty years;
(B) Allows a developer of a condominium to bind condominium associations by requiring that association bylaws include a clear maintenance schedule, reserve funds necessary to pay the costs of the maintenance schedule, and other minimum reserve requirements;
(C) Requires insurers, when setting the premium rates, to consider factors such as the building materials used in the building's construction, ratio of concrete to glass in the buildings faade, maintenance schedule, siting of swimming pools, and other factors;
(D) Requires insurance premiums to be paid into and kept in an escrow account that is held by a Hawaii escrow depository licensed under chapter 449, Hawaii Revised Statutes;
(E) Allows for premium step increases; provided that the premium step increases are clear and predictable;
(F) Requires insurers to cover the claims of the insured condominium necessary to restore the condominium to the extent necessary to meet all federal, state, and county requirements to allow habitation, as determined by applicable building inspectors; and
(G) Requires legal safeguards similar to those used to bind traditional life insurers; and
BE IT FURTHER RESOLVED that the Insurance Commissioner is requested to submit a report of the Commissioner's findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2026; and
BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Commerce and Consumer Affairs and Insurance Commissioner.
OFFERED BY: _____________________________
OFFERED BY:
_____________________________
Report Title: Insurance Commissioner; Condominium Associations; Insurance; Alternative Insurance Models; Study
Report Title:
Insurance Commissioner; Condominium Associations; Insurance; Alternative Insurance Models; Study