Emergency declared over Hawaii condo association insurance rates

OFFICE OF THE GOVERNOR
STATE OF HAWAI’I
PROCLAMATION RELATING TO
CONDOMINIUM INSURANCE STABILIZATION
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 ofthe 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 Hawai’i, 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 ofthe 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 Hawai’i 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 policies 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;
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:
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I. State Cooperation
Under subsection 127412(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 127A13(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;
Section 37-41 , HRS, appropriations to revert to state treasury; exceptions, to
the extent that appropriations lapse at the end of the fiscal year prior to completion of
the emergency actions.
Subsection 37-74(d)(1), HRS, program execution, to the extent necessary to
provide funding to complete the emergency actions.
Chapter 76, HRS, civil service law, to the extent necessary to allow qualified
personnel to be hired that would be directly involved in the expeditious and efficient
execution of emergency actions.
Chapter 89, HRS, collective bargaining in public employment, to the extent
that compliance with this chapter requires additional time detrimental to the expeditious
and efficient execution of emergency actions.
Chapter 89C, HRS, public officers and employees excluded from collective
bargaining, to the extent that compliance with this chapter requires additional time
detrimental to the expeditious and efficient execution of emergency actions.
Section 103-53, HRS, contracts with the State or counties; tax clearances,
assignments, to the extent that compliance requires additional time detrimental to the
expeditious and efficient execution of emergency actions.
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Section 103-55, HRS, wages, hours, and working conditions of employees
of contractors performing services, to the extent that compliance requires additional
time detrimental to the expeditious and efficient execution of emergency actions.
Chapter 103D, HRS, Hawaii public procurement code, to the extent that
compliance might delay the State in quickly obtaining the goods and services needed to
address the emergency.
Section 1 27A-30, HRS, rental or sale of essential commodities during a state
of emergency; prohibition against price increases, because the automatic statewide
invocation of this provision is not needed for this emergency. This Proclamation does
not affect the invocation and suspensions of section 1 27A-30, HRS, contained in the
July 1 9, 2024, Sixteenth Proclamation Relating to Wildfires.
Section 431 P-I , HRS, definitions, to the extent necessary to eliminate the
phrase “of one to four units” from the definition of “Eligible property” to allow HHRF to
issue master policies to condominium associations.
Section 431 P-I , HRS, definitions, to the extent necessary to eliminate the
monetary coverage limits and other limitations from the definition of “Policy of hurricane
property insurance” to allow HHRF to set its own coverage limits for master policies
issued to condominium associations.
Section 431P-IO(a), coverage available from the fund; deductible, to the
extent necessary to eliminate the monetary coverage limits and other limitations to allow
HHRF to set its own coverage limits for master policies issued to condominium
associations.
Ill. Severability
If any provision of this Proclamation is rendered or declared illegal for any
reason, or shall be invalid or unenforceable, such provision shall be modified or deleted,
and the remainder of this Proclamation and the application of such provision to other
persons or circumstances shall not be affected thereby but shall be enforced to the
greatest extent permitted by applicable law.
IV. Enforcement
No provision of this Proclamation, or any rule or regulation hereunder, shall be
construed as authorizing any private right of action to enforce any requirement of this
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Proclamation, or of any rule or regulation. Unless the Governor, Director of Emergency
Management, or their designee issues an express order to a non-judicial public officer,
no provision of this Proclamation, or any rule or regulation hereunder, shall be
construed as imposing any ministerial duty upon any non-judicial public officer and shall
not bind the officer to any specific course of action or planning in response to the
emergency or interfere with the officer’s authority to utilize his or her discretion.
I FURTHER DECLARE that this Proclamation is not intended to create, and does
not create, any rights or benefits, whether substantive or procedural, or enforceable at
law or in equity, against the State of Hawaii, the counties of this State, or any State or
County agencies, departments, entities, officers, employees, or any other person.
I FURTHER DECLARE that the disaster emergency relief period shall
commence immediately and continue through October 6, 2024, unless terminated or
superseded by separate proclamation, whichever shall occur first. Notwithstanding the
termination of a disaster emergency relief period, any contracts, agreements,
procurements, programs, or employment of personnel entered into, started, amended,
or continued by reason of the provisions of the proclamation relating to this emergency
shall continue in full force and effect.
Done at the State Capitol, this 7th day of August, 2024
Josh reen, M.D.
Governor of Hawai’i