BILL REQ. #:  S-5193.1 

READ FIRST TIME 02/07/08.   

     AN ACT Relating to condominium construction liability insurance; creating new sections; and providing an expiration date.

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

NEW SECTION.  Sec. 1   The legislature finds that creating affordable housing to address the needs of Washington's workforce is a top priority, and that creating such housing not only benefits working families, but society as a whole. However, there are many barriers in creating such affordable housing and it is in the best interest of the state to determine what those barriers are and how they can be alleviated. Of particular concern in developing workforce housing is the cost of condominium construction liability insurance. Despite the fact that construction materials have improved and that defect claims reportedly have decreased in number, the price of condominium construction liability insurance has not dropped, creating a huge financial burden for affordable housing developers and nonprofit affordable housing developers in particular. Therefore, the legislature declares it to be in the public interest to convene a task force to review condominium construction liability insurance products to help determine how these products can be more competitively priced, allowing more affordable housing units to be developed throughout the state.

NEW SECTION.  Sec. 2   (1)(a) A legislative task force on condominium construction liability insurance is established, with thirteen members as provided in this subsection. The office of the insurance commissioner shall convene the task force with the following members:
     (i) The majority leader of the senate shall appoint one member from the senate.
     (ii) The speaker of the house of representatives shall appoint one member from the house of representatives.
     (iii) The majority leader of the senate and the speaker of the house of representatives shall jointly appoint eleven nonlegislative members of the task force, which shall include one member each from the office of the insurance commissioner, the master builders association, the building industry association of Washington, the association of general contractors, the Washington low income housing alliance, a nonprofit housing developer, a for-profit housing developer, a condominium owners' association, and a lender, and two members representing the interests of the insurance industry.
     (b) The task force shall elect its cochairs from among its membership. The office of the insurance commissioner shall convene the initial meeting of the task force.
     (2) The task force shall study condominium construction liability insurance including, but not limited to, the following:
     (a) The type and number of construction defect claims that are filed against condominium developers, including contractors and their subcontractors;
     (b) The difference, if any, in the claim experience between for-profit and nonprofit developers;
     (c) The number and type of entities that are providing construction liability insurance to condominium developers in the Washington market;
     (d) The type of insurance packages that are available in the market for new condominium construction projects;
     (e) How to increase the number of entities offering construction liability insurance for condominium developers with a goal of making insurance rates more affordable through increased competition;
     (f) Compare Washington's market to other states in terms of number of entities offering construction liability insurance for condominium developers and the availability and affordability of such coverage.
     (3) To support the work of the task force, the office of the insurance commissioner shall invite authorized insurers who offer construction liability insurance for condominium developers to participate in the voluntary submission of claims data for condominium construction liability claims. To further support the work of the task force, the insurance commissioner shall invite the surplus line association of Washington to participate in obtaining the voluntary submission of claims data for condominium construction liability claims from unauthorized insurers who offer construction liability insurance for condominium developers. The task force shall determine the scope and extent of the claims data to be requested, as well as the format for submission.
     (4) Legislative members of the task force must be reimbursed for travel expenses in accordance with RCW 44.04.120.
     (5) The task force shall report its findings and recommendations, including recommendations on any proposed legislation, to the legislature by December 1, 2009.
     (6) This section expires July 1, 2010.