Hawaii-2024-HB1728-Introduced

HOUSE OF REPRESENTATIVES	H.B. NO.	1728
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII

A BILL FOR AN ACT

relating to condominium insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that condominiums play a vital role in Hawaii's economy and housing. According to the department of commerce and consumers affairs, Hawaii had 1,826 condominium associations representing 173,036 units in 2021. Hundreds of condominium buildings are aged and in need of repair. Due to deferred maintenance, aged condominium buildings are rejected by standard insurers and choose insurers on the secondary market with more expensive premiums.

The legislature also finds that recent rate increases for hurricane insurance policies have caused the condominium associations to opt for less than full coverage. Because federally insured lending programs such as Fannie Mae and Freddie Mac require insurance with one hundred per cent of the insurable value coverage, people of Hawaii are unable to buy, sell, or obtain a mortgage for condominium units. Through incentivizing insurers to provide full coverage to condominiums, Hawaii residents would have better access to financing when buying a home in the State and gain homeownership in their communities.

The purpose of this Act is to establish tax credits for insurers providing full property coverage to owners and associations of condominiums in the amount equal to twenty per cent of the insurance premium, and to incentivize local insurers by providing additional ten per cent tax credits.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§431-_ Tax credit for condominium insurance policies. (a) Insurers providing full property coverage amounting to one hundred per cent of the insurable value, to specifically include coverage for windstorm, hurricane, hail, flood, fire and localized perils, to owners and associations of condominiums as defined under section 514B-3 within the State, may claim as a nonrefundable credit against the tax imposed under section 431:7-202, in an amount equal to 20 per cent of the insurance premium tax otherwise due on the premium for the taxable year; and 30 per cent of the insurance premium tax otherwise due on the premium written by insurers incorporated in the State. The aggregate amount of all tax credits in any tax year that may be claimed by insurers pursuant to this section shall not exceed fifty thousand dollars.

(b) The credit allowed by this section is available only to an insurer licensed or authorized to do business in the State with respect to a property and casualty insurance policy providing full coverage as defined in subsection (a).

(c) A licensed insurer who claims the credit allowed by this section shall provide information required by the insurance division of the department of commerce and consumer affairs to demonstrate that the taxpayer is eligible for the credit and that the amount paid for premiums for which the credit is claimed was not excluded from the licensed insurer's gross income for the taxable year. The division shall establish a process for which licensed insurers may make an application for a tax credit certificate to claim any tax credit provided for by this section. The tax credit certificate issued by the division shall reserve the appropriate allocation of tax credits for the insurer to which a certificate is issued. An insurer seeking such certificate for reservation of tax credits for the writing of a policy pursuant to subsection (a) shall make application to the division in the manner prescribed by the division. The division shall review the applications received and subsequently issue a tax credit certificate to the insurer reserving the appropriate allocation of tax credits for the insurer. The division shall reserve the tax credits provided for by this section in the order in which the division receives the application for tax credit certificates, and for the benefit of the appropriate insurer, provided the application is approved by the division.

(d) The tax credit allowed under this section for a taxable year may be claimed only once for any one structure, regardless of the number of policies written on the structure.

(e) The division shall take the action necessary to monitor and examine the use of the credit claims under this section."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2024.

INTRODUCED BY:	_____________________________