SB 1575: Insurance; Condominiums; Rates; Surplus Lines Insurance; Admitted Insurers

A BILL FOR AN ACT

RELATING TO INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 14 to be appropriately designated and to read as follows:

     "§431:14-    Exception for condominium master insurance or condominium master hurricane insurance.  (a)  Notwithstanding any provision of this article to the contrary, in the event that an existing condominium master insurance policy or condominium master hurricane insurance policy procured by a condominium association or its board of directors, whether wholly or partially, is issued by a surplus lines insurer, an admitted insurer may offer such policies at an amount of no more than fifty per cent of the amount charged by the surplus lines insurer; provided that:

     (1)  The condominium association has been covered by a condominium master insurance policy or condominium master hurricane insurance policy, whether wholly or partially, issued by a surplus lines insurer for no less than the preceding three years;

     (2)  The admitted insurer shall not charge the condominium association the amount authorized under this section for longer than six years; and

     (3)  The admitted insurer may require the condominium association to deposit a specific amount in the association's replacement reserves fund or to make certain maintenance and repairs.

     (b)  As used in this section, "condominium association" has the same meaning as association as defined in section 514B-3."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 2050.

Report Title:

Insurance; Condominiums; Rates; Surplus Lines Insurance; Admitted Insurers

Description:

Allows authorized insurers in the State to offer building and hurricane damage insurance for condominium buildings at a lesser rate than the building's prior surplus lines insurance policy for the same coverage.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 14 to be appropriately designated and to read as follows:

     "§431:14-     Exception for condominium master insurance or condominium master hurricane insurance.  (a)  Notwithstanding any provision of this article to the contrary, in the event that an existing condominium master insurance policy or condominium master hurricane insurance policy procured by a condominium association or its board of directors, whether wholly or partially, is issued by a surplus lines insurer, an admitted insurer may offer such policies at an amount of no more than fifty per cent of the amount charged by the surplus lines insurer; provided that:

     (1)  The condominium association has been covered by a condominium master insurance policy or condominium master hurricane insurance policy, whether wholly or partially, issued by a surplus lines insurer for no less than the preceding three years;

     (2)  The admitted insurer shall not charge the condominium association the amount authorized under this section for longer than six years; and

     (3)  The admitted insurer may require the condominium association to deposit a specific amount in the association's replacement reserves fund or to make certain maintenance and repairs.

     (b)  As used in this section, "condominium association" has the same meaning as association as defined in section 514B-3."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

Insurance; Condominiums; Rates; Surplus Lines Insurance; Admitted Insurers

Description:

Allows authorized insurers in the State to offer building and hurricane damage insurance for condominium buildings at a lesser rate than the building's prior surplus lines insurance policy for the same coverage.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 796

Honolulu, Hawaii

RE:    S.B. No. 1575

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1575 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose and intent of this measure is to allow authorized insurers in the State to offer building and hurricane damage insurance for condominium buildings at a lesser rate than the building's prior surplus lines insurance policy for the same coverage.

     Your Committee received testimony in support of this measure from one individual.

     Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs and one individual.

     Your Committee finds that there are two main classes of property insurance providers operating in the State.  There are admitted insurers, who are regulated by the Insurance Division of the Department of Commerce and Consumer Affairs, and surplus lines insurers, who are not subject to the same regulations and commonly provide coverage to properties that carry high risks.  Surplus lines insurers are able to charge higher premiums to condominium associations purchasing surplus lines policies because of the lack of other options available to the association.  In addition to paying extra for coverage, surplus lines customers do not enjoy the same protections afforded to customers of admitted insurers that are overseen and held accountable by the state regulatory agency.  This measure will address this issue by incentivizing admitted property insurers in the State to provide the same coverage for certain types of risks that were previously only taken on by surplus lines insurers, such as hurricane insurance, at a lower cost to the customer.

     Your Committee has amended this measure by inserting an effective date of July 1, 2050, to encourage further discussion.

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1575, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1575, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,