Relief From Soaring Hawaii Property Insurance Costs Is Elusive

More affordable solutions to exorbitant homeowner insurance policy costs in Hawaii don’t appear near under an emergency state effort initiated in 2024.

Members of two legislative committees Monday expressed frustration instead of optimism over the initiative to have a pair of state insurance programs provide relief to homeowners who since 2024 have been forced to pay staggering premium increases or opt for reduced or no coverage.

“We’re in an emergency, but we’re not moving like there’s an emergency, ” Sen. Jarrett Keohokalole, chair of the Senate Committee on Commerce and Consumer Protection, told board leaders of the Hawaii Hurricane Relief Fund during a briefing at the state Capitol.

Gov. Josh Green signed an emergency proclamation in August to help the Hurricane Relief Fund and another insurance program established by the state decades ago sell policies to Hawaii condominium associations in an effort to relieve many owners from paying skyrocketing insurance premiums.

Representatives of the Hawaii Property Insurance Association told members of the Senate committee and the House Committee on Consumer Protection and Commerce that it likely would take more than a year from now to be ready to begin writing condo building policies, though serious challenges that include obtaining enough capital to offer such insurance remain.

Teri Fabry, HPIA’s plan administrator, explained that the program is already “very thinly ” capitalized for its biggest current line of business insuring homes in the highest-risk lava zones on Hawaii island.

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HPIA, established in 1991 to provide insurance against lava damage after two destructive flows in the 1980s, has about 2, 200 policies covering property valued at about $900 million. The nonprofit association had about $34 million in reserves at the end of 2024, and lost about $14 million since 2018 with losses in six of the past seven years.

Fabry said HPIA has not completed an assessment of what it would take to begin writing condo policies but that she has heard estimates that it could require anywhere from $30 million to over $2 billion in capital depending on the scope of coverage.

What’s more is that if HPIA’s board decides to write condo polices, the coverage isn’t expected to be less expensive than what can be found in the regular market.

That’s largely because HPIA does not get public subsidies, is a relatively small entity and faces the same cost spikes to buy reinsurance that reduces exposure against catastrophic losses. The nonprofit was created to be a market of last resort when a property owner cannot find an insurance company willing to provide coverage.

“We’re not the last resort yet for (condo property owners ), ” Matthew Cheung, HPIA board chair, said during the briefing.

Sen. Angus McKelvey (D, West Maui-Maalaea-South Maui ) expressed doubt that Hawaii condo owners would see relief through HPIA.

“The more I hear about it, the more I think you are not really set up at all to do this, ” he said.

Cheung said in response, “You are absolutely correct.”

Members of the two committees had more troubling concerns with Hurricane Relief Fund leaders expanding to provide property insurance coverage for other perils.

Ed Haik, the hurricane insurance program’s board chair, said insurance firm Aon has been selected to assess how to go about providing condo property insurance, though a contract for the work has not yet been signed.

Keohokalole (D, Kaneohe-­Kailua ) said it doesn’t appear that the work, overseen by the state Insurance Division, is on any kind of fast track despite the governor’s emergency proclamation being issued in August.

“If you have emergency authority, I’m not quite understanding what the holdup is, ” he said.

“We need solutions now, ” McKelvey added.

Rep. Scot Matayoshi, chair of the House Committee on Consumer Protection and Commerce, suggested that perhaps pursuing a different consultant or engaging with insurance companies to provide desired policies would help deliver results quicker.

“It feels like we’re getting delayed in getting people the relief that we need to get them while we wait for the terms for a contract to perform a study, ” said Matayo ­shi (D, Kaneohe-­Maunawili ). “Why are we reinventing the wheel here ? This doesn’t make any sense to me.”

Haik said the board will convey the call for urgency to Aon, but also said that any expansion by the Hurricane Relief Fund, which was established in 1993 after insurance market distortions in the wake of Hurricane Iniki and has a roughly $170 million current balance, would not likely produce less costly premiums for consumers.

“The market is what the market bears, ” he said. “And as long as major losses are occurring in major markets, it makes it difficult to get people to offer less expensive insurance than they currently are.”

The cost of reinsurance, which is affected by property damage globally, is a big reason for this. Also, the Aug. 8, 2023, Maui wildfire disaster, which caused an estimated $3.3 billion in insured losses, has made Hawaii a higher-risk state for coverage. The recent and ongoing California wildfires also are going to affect reinsurance costs.

“I would say there is no magic bullet, ” Haik said.

Hawaii lawmakers have introduce several bills aimed at trying to address the issue as well.

Some of them are :—Senate Bill 1376 and House Bill 1057, which would expand powers for the two state property insurance programs and loan $50 million to HPIA mainly to buy reinsurance.—SB 804 and HB 590, which would require property insurers to offer condo association policy discounts for properties that mitigate loss risks or develop comprehensive disaster response plans. These bills also would require condo property insurers to justify premium increases over 10 %.—SB 805, which would establish the Hawaii Condominium Mutual Insurance Co. to provide property and casualty insurance to high-rise condo properties, and establish a loan fund to assist condo associations experiencing high insurance costs.—SB 842 and HB 490, which requires the state insurance commissioner to develop comprehensive standards and requirements for condo associations and developers to obtain property insurance through self-insurance and mutual insurance.—SB 1590 and HB 1474, which would establish a $1 million state Insurance Affordability Assistance Pilot Program to assist homeowners who demonstrate financial hardship and have sudden property insurance premium increases. Eligible homeowners could receive one-time grants up to $5, 000 per household or 50 % of a premium increase, whichever is less.

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