Over the past few years, skyrocketing insurance premiums for high-rise condominiums—driven by global disasters and insurer losses—sparked widespread panic and rumors that fire sprinkler systems would become mandatory. This led to costly proposal requests for sprinkler installations until legislative and market changes, including revived insurance competition and the Hawai‘i Hurricane Relief Fund, helped stabilize rates.
Instead of a sprinkler mandate, Honolulu’s Fire and Life Safety Ordinance (Ordinance 18-14 and its amendments) allows older high-rises to either install sprinklers or pass a Fire and Life Safety Evaluation (FLSE). The FLSE assesses factors like compartmentation, fire alarms, and egress, with many buildings able to pass at far lower cost than installing sprinklers. As the insurance crisis cools, condo boards now face a balanced decision between full sprinkler installation and pursuing compliance through the FLSE.
The Fire and Life Safety Evaluation – Revisited
There has been a great deal of hype over the last two years regarding insurance for high-rise condominium buildings. Structural failure, wildfires and hurricanes have struck indiscriminately, causing hundreds of billions of dollars of losses. Insurance companies were left reeling from the losses and scrambled to reduce their risk by non-renewing scores of policies, both commercial and residential, to make up for their loss of reserves. Nearly everyone close to the insurance industry has a story about being forced into the secondary insurance market, with 500% to 1000% increases in premiums.
During this flurry of activity, there was a rumor that insurers would demand that every building has a fire sprinkler system installed. This rumor spread like wildfire throughout the condominium community resulting in a flood of requests for proposals for fire sprinkler installations. The prospect of reducing insurance premiums by adding a fire sprinkler system had people seriously considering spending $55,000 per condo unit to save their insurance. Many people expressed concern about the prospect of requiring people who are on fixed incomes to spend this much money. These concerns made it all the way to the Hawai’i State Senate.
THE SENATE TRIES TO STEP IN
Senator Fukunaga, who was on the Honolulu City Council when the Fire and Life Safety Evaluation (FLSE) legislation was approved, used her influence to get the Senate to do something to give insurance relief to condo owners. Her idea of forcing insurers to consider a passing score on the FLSE when setting a property’s rates was shot down due to fears that the three remaining insurers that are authorized to do business in Hawai’i would pull out, leaving us with only the secondary market. Ultimately the Senate resurrected the long-forgotten Hawai’i Hurricane Relief Fund to help bring affordable hurricane insurance to commercial properties that had been denied coverage by at least two state-licensed insurance carriers.
During this great purge of insurance risk and the rising premiums for the main companies licensed to do business in Hawai’i, there was a rebound in insurance company profits. 2023 and 2024 were record breaking years for insurance company profits. This has put a pause on the giant premium increases. Competition is kicking in to give some alternatives to condominium associations from alternative carriers. This reprieve in insurance rates has cooled the push for fire sprinkler systems and has renewed interest in passing the FLSE.
RECAP OF THE FIRE AND LIFE SAFETY ORDINANCE
In the place of an all-out fire sprinkler mandate, Ordinance 18-14 became effective on May 23, 2018. It was subsequently amended by ordinances 19-4, 20-48, 21-3, 21-14, 22-2 and 25-4. As amended, it requires existing high-rise buildings not protected by an automatic fire sprinkler system to EITHER install one OR pass a Fire and Life Safety Evaluation (FLSE). There are two significant deadlines for the FLSE process. The deadline to submit a completed evaluation was May 2, 2022. The deadline to pass the evaluation was originally May 2, 2024, and has been extended to May 3, 2038. However, building owners must meet with unit owners or tenants and submit a written plan to pass the evaluation by May 3, 2030.
CHANGES TO THE ORDINANCE WERE NOT SIGNIFICANT
Though there were many changes to the ordinance, none of them significantly changed the criteria for a passing score. The most significant changes were eliminating the need to conduct a vote to opt-out of sprinklers and changing the requirement to place a sign in the lobby announcing the building had chosen not to install sprinklers to a notice on the building’s website. The rest of the changes pushed the deadline back a little at a time.
CURRENT REQUIREMENTS
The FLSE is a prescriptive analysis that evaluates compartmentation, extinguishment, egress, general occupant safety and firefighter safety. Points are awarded in each of these categories based upon the conditions in the building being evaluated. Construction materials, finishes, separation walls, exit access, smoke management, extinguishing systems, etc. are evaluated. A deficiency in one category can sometimes be made up by getting points in another category.
There are a few items in the evaluation that will cause the entire building to fail. For example, a doorstop on door that is required to be closed will make the entire building fail. A non-compliant fire alarm system will also cause the building to fail. These are the two items found most often in evaluations. Doorstops are easily removed; the fire alarm system is a different story…
The fire alarm system’s main job is to notify occupants to exit the building. Unfortunately, the old-fashioned bell systems cannot be heard in the bedrooms of many of the units. Many residents of high-rise buildings have reported that they cannot hear the fire alarm system. This is why a voice evacuation fire alarm system with speakers in every bedroom and living space is required to pass the FLSE.
The evaluation itself is straightforward to a seasoned professional. There are, however, some areas where professional judgement must be exercised. It is these areas that make the difference in the outcome of the evaluation. An example of this is the requirement that a building not have any vertical openings between floors. The evaluation gives four choices for the evaluator to choose from: 1) Open 4 or more floors; 2) Open 2 or 3 floors; 3) Enclosed with less than 1 hour fire resistance; or 4) Enclosed with greater than 1 hour fire resistance. It has been our professional judgment (backed by the concurrence of people who were involved in devising the evaluation) that a pipe that penetrates a floor and is enclosed in a wall, is enclosed with less than one hour fire resistance earning it 0 points. Zero points can easily be overcome by achieving extra points from other categories. We have seen professional judgement that says a pipe enclosed in a wall that is not fire-stopped at each floor is a vertical opening of four or more floors, earning it a negative 14 points. One can see that this is a very conservative approach; an approach that guarantees the failure of the evaluation and was likely intended to entice a plumbing replacement project.
CAN EVERY BUILDING PASS THE EVALUATION?
After evaluating 159 buildings, it has been noted that every building can indeed pass the Fire and Life Safety Evaluation for a fraction of the cost of installing fire sprinklers. The most expensive modification that has been required is the installation of a new fire alarm system. However, this would be required when installing fire sprinklers anyway, since modifying a non-compliant system to monitor the sprinklers would trigger bringing the entire system up to code.
Now that the hype of the insurance crisis is subsiding, there is a real choice for residential high-rise condo boards to make, in either committing to installing a fire sprinkler system or opting out and passing the Fire and Life Safety Evaluation. Installing fire sprinklers improves safety but comes with a significant financial cost. The Fire and Life Safety Evaluation has its shortcomings but passing it greatly improves safety at a fraction of the cost to unit owners and satisfies the statutory requirement from the City and County of Honolulu.
