Hawaii HHRF outlines plans to provide hurricane insurance to condo associations

The recent meeting of the Senate Committee on Commerce and Consumer Protection in Hawaii highlighted significant developments regarding the Hawaii Hurricane Relief Fund (HHRF), which aims to address the pressing insurance needs of condominium associations in the state.

During the session, Mike Nonaka, vice chair of the HHRF board, presented an update on the fund's current status and future plans. The board, which convened in July 2024, has determined that there is an urgent need to reactivate the HHRF to alleviate the scarcity of hurricane insurance coverage for condo associations. This decision comes in response to findings from the condo and property insurance task force and extensive consultations with industry representatives.

The HHRF is set to provide excess hurricane capacity for condo associations, enabling them to secure higher coverage limits and facilitating real estate transactions. The initial focus will be on fire-resistive concrete high-rise buildings, with plans to expand coverage to other types of structures in the future. The board aims to issue the first policies by June 2025, contingent upon finalizing operational details and securing necessary reinsurance.

A key point of discussion was the financial structure of the HHRF. Currently, the fund has $170 million available, which will be supplemented by reinsurance to enhance its capacity to pay claims. The board is exploring various reinsurance options to ensure the fund can withstand potential catastrophic events. The acting insurance commissioner noted that approximately 60% of condo associations are currently relying on surplus lines coverage, indicating a significant market need for the HHRF's offerings.

Committee members raised questions about eligibility for HHRF policies, particularly regarding the requirement for associations to be declined coverage by licensed insurers before accessing HHRF products. This stipulation aims to ensure that the fund serves those most in need, particularly as many associations face skyrocketing insurance costs.

The discussions underscored the critical role the HHRF will play in stabilizing the insurance market for condominium associations in Hawaii, providing much-needed support as the state navigates ongoing challenges in the insurance landscape. As the HHRF moves forward, its success will be closely monitored, with implications for homeowners and the broader community at stake.