BILL REQ. #:  S-4501.1 

Read first time 01/22/08.   Referred to Committee on Consumer Protection & Housing.

     AN ACT Relating to condominium 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 liability insurance. Despite the fact that construction materials have improved and that defect claims reportedly have decreased in number, the price of condominium 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 insurance liability 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 liability insurance is established, with eleven 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 nine nonlegislative members of the task force, which shall include one member each from 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, 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 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 require an insuring entity, as defined in RCW 48.140.010, to report Washington state claims data for condominium construction liability claims.
     (a) Ninety days after the effective date of this act, an insuring entity shall electronically report claims data to the insurance commissioner in a format determined by the commissioner for the years 1996 through 2007. This report must include the following information:
     (i) Project size of the risk insured, according to number of units developed;
     (ii) Cause of loss;
     (iii) Total amount paid for the claim or claims, including defense costs;
     (iv) Type of contractor or developer;
     (v) For-profit or nonprofit status, if known; and
     (vi) Any other claims data the commissioner may reasonably require.
     (b) The commissioner may impose a fine of up to two hundred fifty dollars per day against any insuring entity, except a risk retention group, that violates the requirements of this section.
     (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.