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THE SENATE |
S.B. NO. |
842 |
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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.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii's condominium unit owners face increasing challenges in obtaining adequate and affordable insurance coverage for their properties. In many cases, insurance rates have increased by more than one thousand three hundred per cent in a single year.
The legislature further finds that alternative insurance models, including self-insurance, mutual insurance, and investment-based protection programs, may provide viable solutions for condominium associations and owners. Establishing clear standards and requirements for these alternative models is essential to protect condominium owners while ensuring the financial stability and sustainability of the programs.
Accordingly, the purpose of this Act is to require the insurance commissioner to:
(1) Develop comprehensive standards and requirements for condominium associations and developers to the obtain property insurance through self‑insurance and mutual insurance;
(2) Examine and evaluate the feasibility of implementing guaranteed buyback programs and investment-based protection funds for condominiums; and
(3) Submit 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.
SECTION 2. (a) The insurance commissioner shall:
(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 self‑insurance and mutual insurance; and
(2) Examine and evaluate the feasibility of implementing:
(A) Guaranteed buyback programs and investment-based protection funds for condominiums; and
(B) An alternative model for condominiums in which:
(i) Unit owners deposit extra moneys each month into a fund, which accumulates interest;
(ii) The fund accumulates interest; and
(iii) Moneys in the fund may be used for major repairs, guaranteed buyback at a minimum value, emergency situations, and future down payments on other properties.
(b) The standards and requirements developed under subsection (a)(1) shall comply with the requirements of federally chartered mortgage lending entities, such as Fannie Mae and Freddie Mac, to allow unit owners and potential unit purchasers to qualify for a mortgage.
(c) The insurance commissioner shall submit a
report of its 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.
(d) As used in this Act:
"Condominium association" has the same meaning as "association" in section 514B-3, Hawaii Revised Statutes.
"Developer" has the same meaning as in section 514B-3, Hawaii Revised Statutes.
"Unit owner" has the same meaning as in section 514B-3, Hawaii Revised Statutes.
SECTION 3. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
Condominiums; Developers; Insurance Commissioner; Mutual Insurance; Self-Insurance; Study
Description:
Requires the Insurance Commissioner to develop comprehensive standards and requirements for condominium associations and developers to obtain property insurance through self-insurance and mutual insurance, and examine and evaluate the feasibility of implementing guaranteed buyback programs and investment-based protection funds.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.