January 15, 2025
Hawai‘i lawmakers began the 2025 legislative session on Wednesday with a commitment to stabilize the state’s property insurance market, which has been significantly impacted by natural disasters such as hurricanes, wildfires, and other extreme weather events both locally and globally.
The rising cost of reinsurance — insurance that companies purchase to cover their own risks — is a key factor in the higher property insurance premiums. Natural disasters in places like Florida, North Carolina, and California have contributed to the increase in reinsurance rates, prompting insurers to raise prices or even stop offering policies in Hawai‘i.
Senate President Ron Kouchi highlighted the worsening trend, stating that insurance companies had already begun viewing Hawai‘i as a high-risk state prior to the devastating wildfires on Maui in August 2023. The situation has been further exacerbated by recent wildfires near Los Angeles, which have caused significant damage. According to a preliminary estimate by AccuWeather, the economic losses from those fires could range between $135 billion and $150 billion, potentially the highest in U.S. history.
“The situation is incredibly complicated and dynamic,” said state Sen. Jarrett Keohokalole, chair of the Senate Commerce and Consumer Protection Committee. “We don’t have any certainty, for example, on what the fires in Los Angeles are going to cause in the insurance market, in part because the fires are not even extinguished yet.”
Keohokalole added, “It’s unclear at this point whether we’re at the bottom or things could get worse. What we can expect is that these larger and larger scale disasters are going to continue to increase in frequency, and we need to be prepared for it.”
In response, Senate Democrats plan to propose reintroducing programs that were established after Hurricane Iniki devastated Kaua‘i in 1992. Following the hurricane, the state created the Hawaii Hurricane Relief Fund, which provided hurricane insurance to over 155,000 policyholders across the state for a decade. While private insurers returned to the market after that time, the state fund was funded through premiums, assessments on insurers, and a special mortgage recording fee. However, bonds to help the fund operate were never issued.
Keohokalole emphasized that while the state has limited resources, ensuring that Hawaii homeowners can access insurance locally is crucial. “We can’t expect kupuna on fixed incomes or families that are struggling right now to be able to pay whatever the market dictates globally, when Hawaii is a tsunami risk state, a wildfire risk state, and a hurricane risk state,” he said.
Lawmakers are also expected to address long-term strategies for improving fire safety and resilience in homes, helping residents better prepare for future disasters.
The state’s condominium owners have been particularly hard hit by the instability of the insurance market. Some condo boards have been forced to reduce coverage due to rising premiums, which has created challenges for homeowners trying to obtain financing. Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages, only purchase loans for condos that have full replacement value insurance. This has led to difficulties securing mortgages for those units.
Keohokalole stressed the importance of finding a solution this legislative session, which concludes in May. “We need to deliver something,” he said.
Kouchi added that without insurance, potential homeowners would be unable to secure mortgages, making homeownership more difficult in a state where the median price of a single-family home exceeds $1 million in most counties. “This would be a tremendous impediment,” he said.
As Hawai‘i continues to face the impact of natural disasters, lawmakers say they remain focused on finding solutions to ensure homeowners can access affordable property insurance and maintain financial stability.
