Condo owners are facing soaring insurance premiums as companies across the country cancel coverage due to growing risks from climate change. That was the topic of a recent town hall meeting on Oʻahu hosted by state lawmakers whose districts largely comprise condo dwellers.
House Speaker Scott Saiki said a town hall attendee reported their condo building insurance will be increasing from $345,000 to $3.4 million.
"I think it's important to emphasize that what is happening in Hawaiʻi is what has happened throughout the United States and specifically within the coastal areas," Saiki told The Conversation.
"My understanding is that the Lahaina wildfire put Hawaiʻi on the radar within the insurance industry. When the wildfire occurred, it brought attention to our situation and all of the natural disaster risks that we face here," Saiki said.
Saiki said that only three companies provide new property insurance policies for condominium buildings and single-family homes. One of those three is threatening to stop issuing policies.
"If that happens, it would be disastrous because then we'd basically be left with two insurance companies. And this is part of the reason why insurance premiums are increasing here. It's a combination of the increased risk, plus the lack of capacity within the insurance industry," Saiki said.
He shared the latest about legislative efforts to stabilize the market by beefing up the Hawaiʻi Hurricane Relief Fund and a second fund that could provide stopgap insurance coverage for underinsured buildings. House Bill 2686 advanced in the House and had its first Senate hearing Tuesday.
It's not just condo owners affected by the looming insurance crisis. Renters report that landlords are looking to pass on the insurance costs — and single-family homeowners are starting to report policy cancellations.
Plus, the risks associated with underinsured condo buildings can trickle down to buyers and sellers who may find it difficult to secure financing.
"If you have a unit and want to sell it to someone who needs to take out a mortgage to buy the unit, that buyer probably would not get financing to make that purchase. So this situation has some really, really serious ramifications not just within condo buildings, but within the banking industry."
This story aired on The Conversation on March 19, 2024. The Conversation airs weekdays at 11 a.m. on HPR-1. Sophia McCullough adapted this story for the web.
