The state has started to accept applications for hurricane insurance from condominium and townhouse associations that have been unable to secure full coverage on the regulated market.
Last August, Gov. Josh Green issued an emergency proclamation to stabilize the insurance market after condominium buildings were unable to secure full insurance coverage from one of the three companies operating in Hawaiʻi.
While the 2023 Maui fires and other global natural disasters are partly to blame — Chair of the Senate Commerce and Consumer Protection Committee Jarrett Keohokalole cited a key reason: aging buildings.
“When you take your car in for service, there are regular maintenance items. Most of the condominium buildings in the state, especially in Honolulu, are over 30 years old,” he said.
“So there are basic maintenance items that in some cases haven't been covered.”
These are things like replacing water pipes, which insurers have started paying closer attention to. The buildings that haven’t kept up with maintenance and are unable to secure full commercial and hurricane insurance find themselves “stuck in a downward spiral,” Keohokalole explained.
“It's harder to secure loans to make the repairs. It's harder to transact title in the building,” he said.
“It's harder to sell and buy. That affects values and it affects the assessments.”
That’s because lenders don’t want to loan money to buildings without insurance, but without those loans, buildings are unable to fund the needed repairs. Those who lose traditional insurance coverage have had to turn to unregulated surplus lines that can be extremely costly– sometimes doubling the cost of insurance for buildings.
That often means skyrocketing homeowner association fees for condo owners.
About 1200 associations in Hawaiʻi are without full hurricane insurance coverage.
The emergency proclamation allowed the Hawaiʻi Hurricane Relief Fund to issue hurricane insurance again, which it has not done since the early 2000s in the aftermath of Hurricane Iniki in 1992.
Now, HHRF is up and running again. So far, it’s received 80 applications.

“It is meant to stabilize the market, not replace the market,” Acting Hawaiʻi Insurance Commissioner Jerry Bump said.
Associations applying for the state-administered hurricane policy will need to have a commercial insurance policy, which covers things like fire and other situations. It will also need to obtain at least $10 million in hurricane coverage as a base, but has been rejected by at least two of the local insurers for the rest of their building coverage. The state program will cover up to an additional $90 million of coverage.
“We don't wanna be competing against those carriers that are still willing to do business,” Bump said.
“If they're willing to write the full coverage, they should be able to still write that. Some of those admitted carriers have kind of artificial caps on how much they're willing to write. We've heard anywhere from $10 million to $25 million is where they're comfortable writing. There are some that will write the full, but not very many. HHRF is providing an additional layer of capacity. And ideally at a price point that is less than the surplus lines market.”
The hope is that it will attract the traditional market back to the state as the program did in the 2000s.
Bump explained that while conditions are similar to the aftermath of Hurricane Iniki, there are a few differences. One is that Hawaii’s property insurance market is tied to global climate risk. That means a fire in California or a hurricane in Florida can impact the insurability of Hawaii properties.
“ Today’s challenges are kind of driven by global reinsurance conditions so not just the storm that occurred,” he said.
“Reinsurers themselves have pulled back or raised prices along many coastal markets due to climate-related risk inflation.”
Additionally, legislators passed a law this session that would get the Hawaii Property Insurance Association funding to start offering commercial insurance policies to those who have also had to turn to surplus lines. It currently is the insurer of last resort for homes in the lava-zone. Bump estimated that the program would come online around mid-fall of this year.
That same measure also includes funding to provide loans to condominiums to do needed maintenance repairs so they can obtain regular insurance policies.
Both the state-administered commercial and hurricane insurance programs heavily leverage “reinsurance”. That means that the state’s insurance will only keep a percentage of the actual risk on hand. The state’s program pays other insurers to insure the rest of the portfolio. Those reinsurance rates are largely what will drive the cost for buildings to obtain policies through the state-administered programs.
Thatʻs why buildings should not expect the rates from the HHRF to be lower than what they can find on the traditional market.
“ The state fund is not in the business of making a profit, so we're not intending to build in any kind of profit in our pricing,” Bump said.
“Ideally, as the HHRF enters into the market, that will also provide price pressure on the surplus lines carriers to reduce their price point and be more competitive– they don't want all their business going away to the HHRF as well.”
The measure is awaiting the governor’s signature, which is likely as it was not included on his intent to veto list.
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