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HCR 85

REQUESTING THE INSURANCE COMMISSIONER TO CONDUCT A STUDY OF ALTERNATIVE INSURANCE MODELS THAT MAY PROVIDE VIABLE SOLUTIONS FOR CONDOMINIUM ASSOCIATIONS AND CONDOMINIUM UNIT OWNERS IN THE STATE.

2025 Regular Session Introduced by Terez Amato and 6 co-sponsors

HCR 85 directs the Insurance Commissioner to study two alternative condo insurance models—mutual coverage and building life insurance—to address rising costs and coverage gaps.

The committee(s) on CPC recommend(s) that the measure be deferred.
#alternativeinsurancemodels #condominiumassociations #insurance #insurancecommissioner #study
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Bill Summary · HCR 85

Summary of HCR 85 (2025)

What this bill is

  • Type: Concurrent resolution requesting a study by the Hawaii Insurance Commissioner.
  • Purpose: To explore alternative insurance models that could provide viable options for condominium associations and condominium unit owners amid rising property and casualty insurance costs and limited coverage options.
  • Status: In 2025, the House Committee on Consumer Protection & Commerce (CPC) recommended deferral. The measure was introduced February 24, 2025 and is scheduled for CPC consideration; it references a companion bill HR 79. If advanced, the Commissioner would prepare a findings report ahead of the 2026 legislative session.

Context and motivation

  • Rising insurance costs and limited insurer availability for Hawaii condominiums, including:
    • Only a few insurers actively writing condo property/hurricane policies in Hawaii; some have not issued new policies for decades.
    • High premium increases in 2024 (reported increases of 300–600%, and even up to 10–14 times for some buildings).
    • Many associations carrying less than 100% of insurable value, creating mortgage lending and reconstruction challenges.
    • Mortgage guarantors like Fannie Mae and Freddie Mac require 100% coverage, influencing lender willingness to finance units in under-covered buildings.

Key provisions and proposed study topics

HCR 85 directs the Insurance Commissioner to study and report on two main potential models, including concrete standards and feasibility:

  1. Mutual Insurance Model

    • Develop comprehensive standards and requirements for condo associations, developers, or groups to obtain the required property insurance through a mutual insurance arrangement.
    • Standards would cover financial health, maintenance obligations, and other prerequisites to participate in mutual coverage.

  2. Building Life Insurance Model

    • Feasibility of a life-insurance-based approach for building coverage with specific structural and governance requirements, including:
      • A developer-mandated insurance contract lasting at least 60 years.
      • Association bylaws requiring a clear maintenance schedule, adequate reserve funds, and minimum reserves.
      • Premiums determined with consideration of construction materials, façade composition (e.g., concrete vs. glass), maintenance schedules, pool siting, and other factors. Premiums to be paid into an escrow account held by a licensed Hawaii escrow depository (chapter 449, HRS).
      • Allowance for step increases in premiums, provided increases are clear and predictable.
      • Insurer coverage to restore to the extent necessary to meet federal/state/county habitation requirements as determined by building inspectors.
      • Legal safeguards similar to those used for binding traditional life insurers.

Additional process elements:
- The Commissioner would develop standards for entities seeking to utilize these models and would include financial and maintenance requirements.
- The Commissioner would prepare a report with findings, recommendations, and any proposed legislation.

Who would be affected

  • Condominium associations, developers, and groups of associations seeking alternative insurance arrangements.
  • Insurance carriers and mutual insurers considering participation in new models.
  • Condominium unit owners, especially those in buildings with rising or unstable insurance premiums.
  • Mortgage lenders (e.g., Fannie Mae/Freddie Mac) indirectly, as shifts in coverage requirements could influence lending eligibility and appraisal considerations.
  • Hawaii’s public and private insurance regulatory framework, including the Director of Commerce and Consumer Affairs.

Timeline and procedural notes

  • Report due: No later than 20 days before the convening of the Regular Session of 2026.
  • Process: Joint consideration by the Legislature (House and Senate) with referral to CPC and potentially other committees (FIN noted in referral history).
  • Recent actions:
    • 3/20/2025: CPC recommended deferral.
    • 3/17/2025: Scheduled CPC hearing for 3/20/25.
    • Related: HR 79 (companion bill).

Sponsors and related bills

  • Primary sponsors: AMATO, REYES ODA, IWAMOTO, MATSUMOTO, SHIMIZU, WARD (with Muraoka as a cosponsor).
  • Related: HR 79 (companion).

Bottom line

HCR 85 seeks a formal, regulator-led study of alternative condominium insurance models (mutual insurance and building life insurance) to address affordability and coverage gaps in Hawaii’s condo market. The aim is to establish standards, assess feasibility, and identify legislative options, with a formal report due ahead of the 2026 session. As of the latest committee action, the measure was deferred, meaning it will require further consideration to move forward.

Compiled from official sources — confirm details with the bill’s official record.

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