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THE SENATE |
S.B. NO. |
2686 |
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THIRTY-THIRD LEGISLATURE, 2026 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to condominiums.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
The legislature further finds that board members and unit owners should be afforded the opportunity to obtain information about factors contributing to condominium insurance premium increases and disclosures of broker commissions related to association insurance policies and the undertaking of large projects. The legislature also finds that associations filing of a one-page transparency summary for any large project over $200,000 would provide a level of insight for unit owners that mirrors government procurement disclosures.
Accordingly, the purpose of this Act is to require:
(1) An insurance producer to disclose a description of services to be provided, and compensation and commission to be received, before the procurement, placement, or renewal of any insurance policy purchased by a condominium association, and incorporates verification procedures into annual audit requirements;
(2) At least two competitive quotes from insurance producers for any association insurance policy procurement, placement, or renewal with an annual premium greater than $250,000; and
(3) The board of directors to prepare and disclose to unit owners a one-page project summary for any capital improvement, repair, or maintenance project authorized with an estimated cost greater than $200,000.
SECTION 2. Chapter 514B, Hawaii Revised Statutes, is amended by adding a new section to part VI be appropriately designated and to read as follows:
"§514B- Insurance and project disclosures;
requirements. (a)
Before the procurement, placement, or renewal of any insurance policy purchased
by an association, an insurance producer shall disclose to the association's
board of directors, on a form prescribed by the real estate commission, the
following information:
(1) A description of the services to be
provided under the insurance policy pursuant to the contract or arrangement;
(2) A description of all direct and
indirect compensation, either in the aggregate or by service, that the
insurance producer reasonably expects to receive in connection with the
services described in paragraph (1); and
(3) A description of the total
commission the insurance producer expects to receive, which shall be expressed
in a dollar amount and the percentage of the total compensation for the
insurance policy;
The
association shall make the disclosure available for unit owners pursuant to
section 514B-154. The disclosure required under this subsection
shall be included in the association's annual financial statements and audit
under section 514B-150.
(b) For any association insurance policy
procurement, placement, or renewal with an annual premium greater than
$250,000, the board shall obtain at least two competitive quotes from qualified
insurance producers before procurement, placement, or renewal of an insurance
policy.
(c) For any capital improvement, repair, or
maintenance project authorized by the board with an estimated cost greater than
$200,000, the board shall prepare and disclose to the unit owners a one-page
project summary that includes:
(1) Total project cost;
(2) The funding source or financing
mechanism;
(3) A list and description of all
approved change orders; and
(4) All compensation paid to
consultants, brokers, contractors, and other professional service providers.
The summary shall be provided to all
unit owners within sixty days of project approval and shall be maintained with
the association's records under section 514B-152.
(d) As used in this section:
"Commission"
means any compensation, service fee, brokerage fee, or other valuable
consideration received by an insurance producer
for selling, soliciting, or negotiating insurance in this State and does not
include compensation paid solely for direct administrative or claims-related
services.
"Insurance
producer" shall have the same meaning as defined in section 431:9A-102."
SECTION 3. Section 514B-150, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The
association shall require [an]:
(1) An annual audit of the association financial
accounts, including verification of compliance with the insurance producer
disclosure requirements under section 514B- ; and [no]
(2) Not less than one annual unannounced verification of
the association's cash balance by a public accountant;
provided that if the association is comprised of less than twenty units, the annual audit and the annual unannounced cash balance verification may be waived at an association meeting by a vote of a majority of the unit owners."
SECTION
4. This Act does not affect rights and
duties that matured, penalties that were incurred, and proceedings that were
begun before its effective date.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
Condominiums; Associations of Apartment Owners; Board; Insurance; Disclosures; Commissions
Description:
Requires an insurance producer to disclose a description of services to be provided, and compensation and commission to be received, before the procurement, placement, or renewal of any insurance policy purchased by a condominium association, and incorporates verification procedures into annual audit requirements. Requires at least two competitive quotes from insurance producers for any association insurance policy procurement, placement, or renewal with an annual premium greater than $250,000. Requires the board of directors to prepare and disclose to unit owners a one-page project summary for any capital improvement, repair, or maintenance project authorized with an estimated cost greater than $200,000.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.