Climate disasters strain Hawaii’s insurance with higher rates, coverage gaps

Will the latest Kona low storms further strain Hawaii's home insurance market, resulting in greater gaps in coverage?

The Insurance Fairness Project released a report Thursday detailing how costly climate disasters will shift Hawaii's risk profile, resulting in even higher property insurance rates. This, in turn, will worsen Hawaii's insurance crisis, leaving homeowners to pay the price.

Hundreds of thousands of properties in Hawaii do not currently qualify for flood insurance, the report noted, and many remain uninsured or underinsured despite these growing environmental risks.

Hawaii farmers, for instance, do not qualify for federal crop insurance since it is only available to large-scale, single-crop farms more commonly found on the U.S. continent.

"Hawaii is one of the states on the frontlines of the climate crisis, and the insurance system simply isn't built to keep up," said TJ Helmstetter, spokesperson for the Insurance Fairness Project, described as a national information hub. "Families are being priced out of protection, farmers are left without viable options, and entire communities are one disaster away from financial ruin."

Policymakers have a narrowing window to close these dangerous coverage gaps, he added, and to ensure families are not shouldering the entire bill.

These extreme weather events are becoming more frequent and more costly, the report noted, while insurance markets are struggling to keep pace, leaving Hawaii residents vulnerable to financial ruin when disaster strikes.

The Hawaii Insurance Division, however, said the Insurance Fairness Project report is an advocacy analysis, and that some of its statements are not based on data that it collected or verified.

"Like every other state in the U.S., Hawaii is experiencing increased pressure on its insurance market driven by a combination of factors," said the division in a written statement, "including catastrophe risk, reinsurance costs, inflation, and property-specific vulnerabilities.

The division added that some of the specific claims in the report should be "viewed with caution."

Coverage gaps

The cost of property insurance in Hawaii has only gotten more expensive, the report said, in the aftermath of recent, extreme weather-related events.

While the report said some home insurance providers hiked average premiums by more than 50% last year, following the Maui wildfires of August 2023, the Hawaii Insurance Division said that may reflect individual cases or limited datasets, but not necessarily statewide averages.

"Premium changes vary significantly by insurer, location and risk profile," said the division.

Insurance claims for the recent Kona low storms, meanwhile, are likely still being worked out, for those who were covered.

The back-to-back storms which occurred over two weekends in March resulted in extensive damage, flooding hundreds of properties, including homes, schools, farms and businesses.

The torrential rains resulted in mudslides, landslides and sinkholes, damaging Hawaii roadways - and the closure of Kula Hospital on Maui.

Hawaii's coverage gaps became clear in the aftermath of the storms, as most homeowners and renters learned their standard insurance policies were not accompanied by separate flood insurance to cover claims for floodwaters from the ground up.

According to the report, only 4.2% of properties statewide actually carry flood insurance. Some property owners do not have flood insurance because it is too expensive or because they were denied.

Hawaii farmers, meanwhile, are unable to find insurance policies that match their needs, the report said. Federal crop insurance is only available to large-scale, single-crop farms, but most farms in the Hawaiian isles grow diverse crops, and are a median size of 5 acres due to limited land availability.

The options are also prohibitively expensive, the report said. A small, family-run farm facing $2,000 a year in insurance premiums likely will opt to go without it.

"This extreme gap in coverage is especially concerning given how quickly flooding can occur in the islands," said the report, "where intense rainfall can overwhelm landscapes within minutes."

Critical infrastructure

At the same time, the report said, the recent storms "exposed critical vulnerabilities" in infrastructure across the state.

"Floodwaters overwhelmed drainage systems not designed to carry this amount of water, inundating neighborhoods and damaging essential infrastructure," said the report. "Roads were washed out, and water systems were compromised throughout multiple zip codes. Residents on Oahu were advised to boil their tap water before use and stockpile drinking water for up to two weeks due to contamination risks."

Additionally, the report mentioned that Wahiawa Dam on Oahu, a 120-year-old dam owned by Dole Food Co., had accumulated fines since 2009 for not complying with safety standards.

City officials issued an evacuation notice for Waialua and Haleiwa residents during the second Kona low storm, warning that Wahiawa Dam failure was in progress or expected, which put communities on edge.

The dam ultimately did not fail during the Kona low storms, but the state is now moving to acquire it to make necessary upgrades.

These critical infrastructure weaknesses, the report said, make extreme weather disasters more costly.

"These risks to public health and safety highlight the need to update and maintain private and public infrastructure," the report said. "The aftermath also surfaced gaps in the government's ability to hold private companies and landowners accountable for risky or negligent behavior that creates or worsens risks."

State leaders have responded, the group noted, but are not keeping pace with the rapidly escalating problem.

In 2025, Gov. Josh Green convened a task force to develop strategies for stabilizing the insurance market.

That year, the state Legislature passed a Senate bill that became Act 296, which reactivated the Hawaii Hurricane Relief Fund to provide insurance coverage in scenarios where the private market fails to do so.

As of April 3, the Hawaii Hurricane Relief Fund has issued 97 policies totaling about $2.7 million to condominium properties seeking hurricane property coverage, the state Insurance Division said.

Several legislative bills were introduced this session related to property insurance.

Among them are Senate Bill 2960, which establishes a minimum time frame of 24 months following loss for policyholders to submit documentation for full replacement costs of their homes. It also would allow extensions for good cause.

Senate Bill 1166 seeks to recover climate-related losses from a "responsible party" such as major oil and gas corporations.

The Hawaii Property Insurance Association, the Hawaii Hurricane Relief Fund, or any private insurer would be allowed to bring civil action claims against responsible parties for losses resulting from climate change related disasters.

In December, the Hawaii Appleseed Center also released a report on how escalating climate disasters are reshaping the insurance market, and how they would impact working families, kupuna, and fixed-income households.

That report also warned that without swift action, escalating climate disasters would leave Hawaii homes uninsured.

The Hawaii Insurance Division said it would "continue to monitor market conditions, review rate filings, assist consumers, and work with policymakers and stakeholders to improve access to coverage while maintaining a stable and competitive insurance market."