City Council urges state action on rising Hawaii property insurance costs

A Honolulu City Council resolution wants state lawmakers to address what it deems are “drastic ” increases in property insurance premiums paid by homeowners across Oahu, particularly for those who own condominiums.

Council member Val Okimoto’s Resolution 242, under review at 1 p.m. today by the Council’s Committee on Executive Matters and Legal Affairs, asserts devastating weather-related crises in recent years affected the insurance industry in the United States.

Those catastrophes—including the devastating Aug. 8, 2023, Maui wildfires, which caused an estimated $5.5 billion in damage to Lahaina and Kula—resulted in homeowners having to pay higher premiums to retain insurance coverage, the legislation states.

“In 2023, the United States experienced a record high of 28 separate weather-or climate-related disasters that each resulted in over $1 billion in damages, ” the resolution states.

That year, “the global reinsurance market experienced over $100 billion in losses for the fourth consecutive year in a row, and due to the increase in worldwide climate events, reinsurance rates nationwide have increased as much as 50 percent per year in recent years, and these increased costs have largely been passed on to policyholders.”

Those impacts hit Hawaii homeowners hard, but unique challenges exist for those who own high-rise condos, the legislation states.

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“Only three insurers are offering master policies, which cover condominium common areas, to condominium associations in the state, and coverage is often limited to only 20 to 30 percent of a building’s hurricane exposure, ” Resolution 242 states.

As a result, condo owners and their associations in particular have been forced to use “surplus lines insurers to cover the remaining portion of a building’s hurricane exposure, and these surplus lines have higher rates that result in more costly master policy premiums and higher deductibles, ” the resolution states.

“These increased premiums for condominium association insurance, which in some cases are up to 1, 000 percent higher, are passed on to the condominium owners, resulting in drastic increases in maintenance fees … costing condominium owners hundreds of additional dollars each month, ” the legislation states.

The resolution notes that during the previous legislative session, state lawmakers introduced measures to address or stabilize rising property insurance premiums—notably House Bill 2686 and Senate Bill 3234.

“The Legislature ultimately failed to pass or enact these measures, ” the resolution states.

Still, Resolution 242 notes actions taken by Hawaii’s top elected official.

On June 28 Gov. Josh Green established the Executive and Legislative Condo and Property Insurance Task Force to evaluate and make recommendations “on the extreme challenges and complex issues ” surrounding property insurance.

By Aug. 7 the governor, based on task force recommendations, signed an emergency proclamation aimed at stabilizing Hawaii’s volatile condominium insurance market.

That action would allow loans to be made to the Hawaii Hurricane Relief Fund and the Hawaii Property Insurance Association to facilitate the issuance of hurricane and property insurance policies to condominium associations.

It would also allow HHRF to issue hurricane insurance policies for large condominium buildings and set its own coverage limits, according to the resolution.

But Okimoto says the Legislature needs to do more.

“If property insurance premiums continue to rise, the impact on District 8 and Oahu as a whole will be significant. Homeowners, particularly condominium owners and homes affiliated with a homeowners association, may face monthly maintenance fees that double or triple due to increased insurance costs, ” she told the Honolulu Star-Advertiser via email.

On the matter of insurance premiums, Okimoto said that she’s spoken to residents in the community “and referred them to their state Legislators as they are the ones who have purview to address issues of this nature through legislation, ” she added.

The Council, via its committees, will also consider possible amendments to the mandatory fire sprinkler retrofit ordinance under two separate measures to be heard in Council committees Thursday.

At 9 a.m. the Public Safety Committee is scheduled to review the Honolulu Fire Department’s Bill 55, relating to the adoption of the 2021 state fire code subject to amendments that apply to the city.

At 1 p.m. the Public Infrastructure and Technology Committee will review Bill 62, relating to fire safety.

The meetings will be held at Honolulu Hale’s Council chambers, 530 S. King St.

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