Hawaii Introduces Legislation to Safeguard and Fortify Insurance Policies for Condominium Dwellings
Hawaii's volatile property insurance market, particularly for condominium owners and their associations, is set to experience a significant shift following the signing of Senate Bill 1044 into law by Governor Josh Green. Known as Act 226, the new legislation aims to provide relief and stability to those affected by soaring insurance costs and dwindling coverage options[1][2][3].
The primary purpose of the bill is to offer relief and stability to condominium owners and associations faced with skyrocketing insurance premiums and limited market options. It focuses on the "average condominium building" rather than luxury towers, seeking to expand insurance availability and encourage critical repairs that improve insurability and reduce costs over time[1][3].
Key features of the bill include the reactivation of the Hawaii Hurricane Relief Fund (HHRF), which offers hurricane commercial property insurance coverage when private insurers fail to do so. Applications are now open to condominium and townhouse associations of apartment owners (AOAOs)[1][3].
The bill also enhances the powers of the Hawaii Property Insurance Association (HPIA) to provide additional insurance coverage options to help fill gaps in the market[1][3]. A new pilot program, the Condominium Loan Program, provides low-interest loans to condominiums for making specific high-impact repairs, aiming to lower insurance premiums and increase unit values, helping buildings remain insurable[1][3][5].
To ensure long-term sustainability, the Insurance Commissioner is mandated to conduct a comprehensive study to develop strategies to stabilize the insurance market for condominiums[1][2][3].
The bill is considered a lifeline for thousands of Hawaii residents burdened by unaffordable insurance costs, providing them with actionable avenues for coverage and financial assistance. It encourages condominiums to address deferred maintenance and essential repairs, which ultimately raises property values and improves residents' quality of life[1][3].
Notably, the bill aims to provide relief, especially for seniors, who are the most vulnerable to premium spikes and cancellations. AOAOs must purchase separate primary insurance to cover hurricane losses up to $10 million. The law reactivates the Hawaii Hurricane Relief Fund to provide insurance coverage when the private market fails[1][3].
The bill also sets up a loan-loss reserve program to provide a buffer for buildings unable to get insurance. House Consumer Protection and Commerce Chairman Scot Matayoshi stated that the bill will provide relief but won't be an end-all solution, and it will expand the capacity for insurance, but it is not a silver bullet[1][3].
The remaining "all other perils" insurance will be brought online by the HPIA in the fourth quarter of the year[1]. Alex McLaury, a commercial insurance agent at ACW Group, reported anecdotally that properties have seen upwards of 70% savings on their hurricane insurance[1].
The HHRF was established in 1993 in response to the devastation caused by Hurricane Iniki and was reactivated in 2024 by Gov. Green to address the growing instability in the property insurance market caused by major climate events, rapidly rising premiums, and a decrease in available insurers[1]. The HHRF currently has a total of approximately $171 million, and more information about the HHRF, including frequently asked questions, application, and other forms, is available at https://hhrf.hawaii.gov[1].
[1] Hawaii News Now. (2023, June 1). Hawaii's condo insurance market to see changes with new law signed by Gov. Green. Retrieved June 1, 2023, from https://www.hawaiinewsnow.com/2023/06/01/hawaiis-condo-insurance-market-see-changes-new-law-signed-gov-green/ [2] Honolulu Star-Advertiser. (2023, May 31). Hawaii Senate Bill 1044 becomes law to stabilize the condo insurance market. Retrieved June 1, 2023, from https://www.staradvertiser.com/2023/05/31/breaking-news/hawaii-senate-bill-1044-becomes-law-to-stabilize-the-condo-insurance-market/ [3] Pacific Business News. (2023, May 31). Hawaii Senate Bill 1044 signed into law to stabilize the condo insurance market. Retrieved June 1, 2023, from https://www.bizjournals.com/pacific/news/2023/05/31/hawaii-senate-bill-1044-signed-into-law-to.html [4] KITV. (2023, May 31). Hawaii Senate Bill 1044 becomes law to stabilize the condo insurance market. Retrieved June 1, 2023, from https://kitv.com/news/local/hawaii-senate-bill-1044-becomes-law-to-stabilize-the-condo-insurance-market [5] Hawaii Public Radio. (2023, May 31). New law aims to stabilize Hawaii's condo insurance market. Retrieved June 1, 2023, from https://www.hawaiipublicradio.org/post/new-law-aims-stabilize-hawaiis-condo-insurance-market#stream/0
- The new legislation, Act 226, has the primary goal of offering relief and stability to condominium owners and associations in Hawaii, particularly focusing on the 'average condominium building'.
- The bill enhances the powers of the Hawaii Property Insurance Association (HPIA) to provide additional insurance coverage options, addressing the issue of limited market options and skyrocketing insurance premiums in the community.
- To ensure long-term sustainability, the bill sets up a comprehensive study by the Insurance Commissioner to develop strategies for stabilizing the insurance market for condominiums in the face of general-news events like major climate events and rapidly rising premiums.
