THIRD PROCLAMATION RELATING TO CONDOMINIUM INSURANCE STABIUZATION
from Office of the Governor, Dec 3, 2024
By the authority vested in me by the Constitution and laws of the State of Hawai’i, to provide relief for disaster damages, losses, and suffering, and to protect the health, safety, and welfare of the people, I, JOSH GREEN, M.D., Governor of the State of Hawaii, hereby determine, designate and proclaim as follows:
WHEREAS, under chapter 127A, Hawaii Revised Statutes (HRS), emergency powers are conferred on the Governor of the State of Hawaii to respond to disasters or emergencies, and generally to protect the public health, safety, and welfare, and to preserve the lives, property, and environment of the State.
WHEREAS, in 2023, the U.S. experienced 28 separate weather or climate disasters that each resulted in at least $1 billion in damages;
WHEREAS, in 2023, the reinsurance market had over $100 billion in losses for the 4th consecutive year in a row;
WHEREAS, due to the increase in worldwide climate events, reinsurance has become more expensive and less available. Reinsurance rates have increased 20-50% per year for the past few years. Primary insurers have passed these increased costs on to policyholders;
WHEREAS, in Hawaii, condominium associations are facing the challenge of limited insurance options for hurricane insurance because of the tightening reinsurance market;
WHEREAS, only 3 insurers are offering master policies, which insure the common areas of the condominium, to condominium associations in Hawaii, often covering just 20-30% of a building’s hurricane exposure;
WHEREAS, this has forced associations to use surplus lines insurers to cover the rest of the building’s hurricane exposure, at higher rates not approved by the Insurance Commissioner, pushing up master policy premiums and deductibles;
WHEREAS, the State of Hawaii Insurance Division is not authorized to regulate the rates charged by surplus lines insurers. These rates contribute significantly to the increase in condominium associations’ master policy premiums;
WHEREAS, due to the substantial increases in master policy premiums, certain condominium associations have chosen to insure the building for less than full value or not at all;
WHEREAS, if the building is not fully insured, many mortgage lenders will not issue loans on the individual units, preventing purchases or sales of units within that building, Individual unit owners selling their units in these buildings would be forced to find an all-cash buyer. Individual unit buyers would be unable to obtain mortgages to buy units in these buildings. Individual unit owners would also not be able to obtain a home equity loans;
WHEREAS, even before the Maui wildfires, insurance rates in Hawaii and nationwide have started to increase since 2021. The Maui wildfires are starting to have an impact on the insurance market in terms of further increasing the cost of premiums; and
WHEREAS, the current state of the condominium insurance market will likely result in substantial injury or harm to the population, or substantial damage to or loss of property, and therefore constitutes an emergency under section 127A-2, HRS;
WHEREAS, to immediately stabilize the State’s condominium insurance market, the Executive and Legislative Condo and Property Insurance Task Force (Task Force) has proposed allowing the Hawaii Hurricane Relief Fund (HHRF) and the Hawaii Property Insurance Association (HPIA) to issue master policies to condominium associations;
WHEREAS, to equip HHRF and HPIA to issue master polices to condominium associations, the Task Force has also proposed the issuing of a loan to HHRF and HPIA for startup administration costs and to obtain reinsurance;
WHEREAS, without the suspension of laws under an emergency proclamation, the stabilization measure cannot be implemented in an efficient and timely manner; 2
WHEREAS, on August 7, 2024, I issued the Proclamation Relating to Condominium Insurance Stabilization;
WHEREAS, on October 4, 2024, I issued the Second Proclamation Relating to Condominium Insurance Stabilization; and
WHEREAS, it is necessary to supplement the Second Proclamation Relating to Condominium Insurance Stabilization because emergency conditions continue to exist throughout the State;
NOW, THEREFORE, I, JOSH GREEN, M.D., Governor of the State of Hawaii, hereby determine and proclaim that an emergency or disaster contemplated by section 127A-14, HRS, has occurred in the State of Hawaii. I hereby authorize and invoke the following emergency provisions, if not already effective by virtue of this Proclamation:
I. State Cooperation
Under subsection 127A-12(b), HRS, I hereby direct all state agencies and officers to cooperate with and extend services, materials, and facilities as may be required to assist in all efforts to address the objectives of this Proclamation.
II. Suspension of Laws
I hereby exercise my authority under paragraph 127A-13(a)(2) and 127A-13(a)(3), HRS, and suspend the following state laws, as allowed by federal law, only to the extent necessary to allow HPIA and HHRF issue master policies to condominium associations:
Section 36-24, HRS, loans to state and county agencies, to the extent necessary to allow loans to be issued to the Department of Commerce and Consumer Affairs and HHRF without a requirement that they be bond-issuing agencies….
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