Honolulu, Hawaii

, 2002

RE: S.B. No. 2341

S.D. 1



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2341 entitled:


begs leave to report as follows:

The purpose of this measure is to allow condominium associations greater flexibility in complying with flood insurance requirements.

The Community Associations Institute and Sugar Beach Resort Board of Directors testified in support of this measure. The Department of Land and Natural Resources opposed the measure. The Department of Commerce and Consumer Affairs submitted comments.

Current law that establishes insurance requirements for condominium associations requires that condominiums located in an area designated as a flood hazard area by the federal Department of Housing and Urban Development be covered under a policy of flood insurance pursuant to the federal Flood Disaster Protection Act. The Act mandates flood insurance for all federally backed mortgages and mortgages and loans obtained through federally insured and regulated financial institutions. This measure deletes the reference to the federal law to allow for coverage under a policy of private flood insurance.

Your Committee finds that the National Flood Insurance Program (NFIP) allows condominium homeowners to obtain flood insurance from the NFIP or from private insurers. However, in order to qualify for coverage through the Federal Insurance Administration (FIA) for claims exceeding those covered by the private policy, the private flood insurance must have been obtained in compliance with NFIP purchase guidelines. Therefore, your Committee has amended this measure to require that a condominium flood insurance policy meet the requirements of the NFIP and the FIA, and to clarify that flood insurance is required for properties located in a special flood hazard area as delineated by maps issued by the Federal Management Emergency Agency.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2341, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2341, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,