SB 842

THE SENATE
S.B. NO.
842
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
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.
INTRODUCED BY:
_____________________________
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.