Bill Text: HI SB804 | 2025 | Regular Session | Introduced
Bill Title: Relating To Insurance For Hawaii Condominium Properties.
Spectrum: Partisan Bill (Democrat 9-0)
Status: (Introduced) 2025-01-23 - Referred to CPN, WAM/JDC. [SB804 Detail]
Download: Hawaii-2025-SB804-Introduced.html
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THE SENATE |
S.B. NO. |
804 |
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THIRTY-THIRD LEGISLATURE, 2025 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO INSURANCE for hawaii condominium properties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that, before the Maui wildfires on August 8, 2023, the availability of condominium building master property insurance policy options within the condominium insurance marketplace was shrinking. Due in part to this shrinking, the cost of condominium building master insurance policies has increased exponentially, with insurers increasing deductible amounts from approximately $10,000 to $25,000 per unit, per occurrence, to as much as $250,000.
The legislature also finds that while the State has not experienced a direct major impact from a major hurricane since hurricane Iniki devastated Kauai and damaged homes along Oahu's leeward coast more than thirty years ago, mortgage lenders continue to require Hawaii homeowners to carry hurricane insurance, which can cost two to three times the amount of annual premiums of a conventional homeowner policy. The governor's emergency proclamation dated August 7, 2024, and updated on October 7, 2024, enabled the executive branch to provide additional options for condominium associations to purchase hurricane and property insurance for their buildings by authorizing:
(1) Loans to the Hawaii hurricane relief fund and the Hawaii property insurance association to facilitate the issuance of hurricane and property insurance policies to condominium associations; and
(2) The Hawaii hurricane relief fund to issue hurricane insurance policies for large condominium buildings, and to set policy limits.
The legislature acknowledges that although insurance coverage, excluding hurricane coverage, for condominium buildings is available in the standard insurance market, the availability of this coverage is not guaranteed. The city and county of Honolulu's requirement for mandatory fire sprinkler retrofits or alternative fire safety upgrades in older condominium properties that are subject to ordinance 18-14, as amended by ordinance 22-2, has resulted in higher insurance premiums and expenses for more than three hundred high-rise properties that are subject to that ordinance.
The purpose of this part is to require property insurers to offer specific discounts to condominium associations that undertake risk mitigation strategies that improve building safety and resilience by reducing the likelihood of significant damage and subsequent insurance claims.
SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new part to article 10E to be appropriately designated and to read as follows:
"Part . CONDOMINIUMS;
discounts for risk mitigation upgrades
§431:10E-A Definitions. As used in this part:
"Association" has the same meaning as in section 514B-3.
"Condominium" has the same meaning as in section 514B-3.
"Property insurer" means any entity providing property insurance in the State under this chapter.
§431:10E-B Insurance premiums; discounts for risk mitigation upgrades, strategies, and plans. Each property insurer that provides property insurance to an association pursuant to section 514B‑143(a)(1) shall offer discounts on the association's annual insurance premium if the association adopts the following risk mitigation upgrades:
(1) For the following disaster-resiliency upgrades, a discount equal to:
(A) $ for the installation of impact‑resistant windows;
(B) $ for the installation of flood barriers and sandbags;
(C) $ for the installation of drainage improvements and waterproofing of building foundations;
(D) $ for the use of fire-resistant materials;
(E) $ for the installation of sprinkler systems;
(F) $ for the creation of defensible space between the building and surrounding areas; and
(G) $ for seismic safety improvements;
(2) For the following planned maintenance improvements, a discount equal to:
(A) $ for the implementation of annual structural inspections;
(B) $ for the implementation of annual roof maintenance;
(C) $ for the implementation of annual sealing and waterproofing maintenance;
(D) $ for the implementation of annual heating, ventilation, and air conditioning maintenance;
(E) $ for the implementation of annual plumbing maintenance; and
(F) $ for the implementation of annual fire and safety system maintenance, including maintenance and testing of fire extinguishers, alarm systems, and elevator safety; and
(3) For the adoption of the following smart building technologies that enhance the building's resilience by providing real-time monitoring, a discount equal to:
(A) $ for the installation of leak detection sensors;
(B) $ for the installation of wind and seismic sensors;
(C) $ for the installation of smart smoke alarms that are connected to a central monitoring system;
(D) $ for the installation of automated sprinkler systems;
(E) $ for the installation of energy management and heating, ventilation, and air conditioning monitoring systems;
(F) $ for the installation of security systems that utilize smart building technologies; and
(G) $ for the installation of building health monitoring systems.
§431:10E-C Insurance premiums; discounts; disaster response plans. Each property insurer that provides property insurance to an association pursuant to section 514B‑143(a)(1) shall offer a discount on the association's annual insurance premium equal to $ if the association develops a comprehensive disaster response plan to minimize losses and claims in an emergency.
§431:10E-D Rules. The commissioner shall adopt rules pursuant to chapter 91 necessary to implement this part, including rules that specify the requirements that an association must meet to qualify for the discounts specified in sections 431:10E-B and 431:10E-C."
PART II
Accordingly, the purpose of this part is to regulate insurance premium increases for condominium properties that have undertaken life safety evaluations and are installing or have installed fire safety upgrades.
SECTION 4. Chapter 431, Hawaii Revised Statutes, is amended by adding a new part to article 10E to be appropriately designated and to read as follows:
"Part . INSURANCE
PREMIUM INCREASES
§431:10E-AA Definitions. As used in this part:
"Condominium" has the same meaning as in section 514B-3.
(1) Located in a county that has adopted an ordinance that amends the state fire code by:
(A) Authorizing the use of fire prevention and fire safety systems as an alternative to the use of an approved automatic sprinkler system; and
(B) Requiring the condominium to receive an acceptable score on a building fire and life safety evaluation for the alternative to the required use of an approved automatic sprinkler system; and
(2) That has either:
(A) Received and is currently maintaining an acceptable score on a building fire and life safety evaluation for the alternative to the required use of an approved automatic sprinkler system; or
(B) Completed a building fire and life safety evaluation for the alternative to the required use of an approved automatic sprinkler system and:
(i) Is actively pursuing the recommendations of the evaluation by hiring a licensed design professional;
(ii) Is actively pursuing a permit for the improvements; and
(iii) Will complete the improvements by the beginning of the next property insurance policy period.
"Premium increase" means any upward adjustment in the insurance premiums charged by a property insurer for coverage on a condominium property.
"Property insurer" means any entity providing property insurance in the State under this chapter.
§431:10E-BB Insurance premium adjustment. (a) Any property insurance premium increase applicable to a condominium shall be:
(1) Based on actuarial justifications that reflect actual risk reduction resulting from upgraded fire safety improvements installed in conjunction with a building fire and life safety evaluation; and
(2) Accompanied by a detailed written explanation, including actuarial data and risk assessments supporting the increase.
(b) No property insurance premium applicable to a condominium that has received or is actively pursuing an acceptable score on a building fire and life safety evaluation shall be increased by more than ten per cent from the previous year unless the property insurer demonstrates, through independently verified data, that an amount in excess of ten per cent is necessary due to external factors, including natural disaster risk assessments or market‑wide claims experience.
§431:10E-CC Filing and oversight requirements. (a) Each condominium property insurer shall file an annual report with the commissioner detailing and providing justification for all condominium premium increases, including but not limited to:
(1) Any actuarial data used to justify a premium increase; and
(2) A summary of any predictive modeling tools and techniques, including catastrophe modeling, used to justify a premium increase; provided that the summary shall include a description of each modeling tool or technique, the results of the modeling done using the tool or technique, and an explanation of why those results justify a premium increase.
(b) If a property insurer believes that any portion of the report filed pursuant to subsection (a) includes proprietary information that should be withheld from disclosure as confidential, then the property insurer shall inform the commissioner in writing and provide justification to support the property insurer's claim.
(c) The commissioner shall review the information submitted pursuant to subsection (b) and determine whether the information should be withheld from disclosure as confidential. The commissioner's decision shall be final. If the commissioner determines that the information is confidential, the information shall be exempt from public disclosure to the extent permitted by chapter 92F.
(d) The commissioner shall make all reports available to the public on the insurance division's website; provided that any portion of the report deemed confidential pursuant to subsection (c) shall not be disclosed.
(e) The commissioner shall review property insurer filings to ensure compliance with this part and investigate complaints of unjustified premium increases.
§431:10E-DD Penalties. (a) Any property insurer that imposes a premium increase in violation of section 431:10E-BB shall:
(1) Be subject to a fine of up to $10,000 per violation; and
(2) Refund excessive increases in premium payments.
(b) The commissioner may suspend or revoke the license to operate in Hawaii of any property insurer that commits five or more violations of this part within a ten-year period."
PART III
SECTION 5. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
SECTION 6. In codifying the new sections added by sections 2 and 4 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
SECTION 7. This Act shall take effect on July 1, 2025.
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INTRODUCED BY: |
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Report Title:
Condominiums; Property Insurance; Insurance Premiums; Discounts; Risk Mitigation Upgrades; Disaster Response Plans; Fire and Life Safety Evaluation
Description:
Requires property insurers to offer discounts on a condominium association's annual insurance premium if the association adopts specific risk mitigation upgrades or develops comprehensive disaster response plans. Requires property insurers of condominiums to base premium increases on actuarial justifications that reflect actual risk reduction resulting from upgraded fire safety improvements installed in conjunction with a building fire and life safety evaluation. Requires property insurers of condominiums to justify premium increases above 10%. Requires property insurers of condominiums to publicly report premium increases each year.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
