Kokua Line: Can Hawaii stem condo-insurance crisis?

Question : Is the state aware of the soaring insurance premiums condominiums in Hawaii are facing ? I am the HOA president of a 7-story, 35-unit condo in the McCully area. From 2021 to 2024, we are facing a 225 % cost in insurance premiums ($35, 000 to $114, 000 ), with a deductible that increased 200 % ($25, 000 to $75, 000 ). This is for the condo's master policy, to cover costs to replace the building. Our building has made no claim that would explain this increase. Our insurance broker said the reasons were the Maui wildfires, a condo-building collapse in Florida and all the natural disasters on the continent last year. There are only three or four companies that underwrite master policies in Hawaii. Is there anything the state can do about this, aligning with its stated commitment to affordable housing ? Rising utility costs and insurance costs paid by condo owners are a factor in affordable housing because these costs get passed down to the renter if the condo is a rental. And if the unit is owner-occupied it leaves the owner really pinched because they still have to pay their mortgage plus all these other expenses, not to mention insurance for their individual unit, which is separate from the master policy. It seems like the insurance companies can just charge whatever they want.

Answer : Yes, what's described as a crisis in Hawaii's condominium insurance industry is getting growing attention, including from lawmakers. Bills moving in the state House and Senate aim to stabilize the market by expanding the authority of "the markets of last resort, " the Hawaii Property Insurance Association and the Hawaii Hurricane Relief Fund, until the standard insurance market improves. Under the bills, funding for expanded coverage through the HPIA and the HHRF would come from higher transient accommodation taxes on transient vacation rentals, a property insurance surcharge on the conveyance tax, reactivating an assessment on insurers and reactivating a special mortgage recording fee. The first two would fund the HPIA and the latter two, the HHRF.

To be clear, SB3234 SD1, HD1 and HB2686 HD1, SD1 focus on increasing the availability of condo property and hurricane insurance, not on lowering the price, although premiums may fall in a few years if there are fewer big claims and more insurers in the marketplace.

The bills or testimony supporting them cite the reasons you mentioned for rising premiums, deductibles and policy-renewal rejections, especially for master policies, but also say inadequate maintenance of aging Hawaii condominium buildings is a big cause. Buildings failing to replace aging water pipes are one example.

While condo master policies should cover 100 % of replacement costs for common areas or facilities, some associations say their members can no longer afford full coverage, leaving their buildings dangerously underinsured. This creates problems not only for current owners and renters, but also prospective buyers who pass up the building because their mortgage financing requires full insurance. This hurts sellers too.

Most public testimony submitted is in favor of the bills, which are described as stop-gap measures meant to provide access to insurance of last resort while condo associations catch up on deferred maintenance that should allow them to qualify for cheaper standard policies in the future.

Condo owners submitted testimony about increases in master policy premiums even steeper than you described. An owner in Hawaii Kai testified their building's insurer declined to renew their master policy after suffering losses on Maui, and the condo board had to cobble together coverage from multiple insurers. The annual bill rose from $343, 500 to $3.5 million. Others spoke of owners who can't keep up with high monthly maintenance fees and special assessments needed to cover the rising cost of insurance and therefore risk losing their long-time homes.

The bills do have a few detractors, including testimony that decried the proposed doubling of a special mortgage recording fee, the conveyance tax surcharge and an increase in the TAT to fund the expanded insurance coverage. Some said lawmakers should try harder to reduce costs for consumers and require more of standard insurance companies.

Read the bills and testimony at by searching for SB3234 and HB2686.

Mahalo On behalf of Alex, who is blind, thank you to the city bus drivers for getting him home safely from Honolulu to Waipio. On Friday afternoon, he got on the E bus at Alapai Street about 2 :15 p.m. When the bus got to his stop at Paiva and Hiapo, the female bus driver walked him across the busy Waipahu street to the other side to wait for bus No. 433. Alex got on bus No. 433 at about 3 :08 pm. The male driver let Alex off at the correct stop—Waipio Uka and Kulewa. The driver made sure Alex was OK since cars illegally park at the curb of that bus stop, blocking the curb and asphalt pathway. Blind people use a cane to feel for curbs and such. It was Alex's first time traveling alone on that route. He made it home safely.—Mahalo, Alex's friend------Write to Kokua Line at Honolulu Star-Advertiser, 500 Ala Moana Blvd., Suite 7-500, Honolulu, HI 96813 ; call 808-529-4773 ; or email kokualine @staradvertiser.com.------

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