The market isn’t yet in a state of crisis, but it is at a high risk and is aiming to avoid arriving there.
Homeowners insurance customers on the Big Island of Hawaii’s East Rift Zone are still making progress in their recovery following the unprecedented eruption of the Kilauea volcano five years ago in 2018 but are now facing new challenges in terms of sky-high coverage rates.
Insurers have started leaving the home, condo and renters markets in the state.
In July, the Hawaii Department of Commerce and Consumer Affairs announced that Universal Property and Casualty, a homeowners insurance company based in Florida, had chosen to step out of the state’s market. As of the start of this month, it has already stopped renewing policies. It will take thirteen months for it to fully withdraw from the market, with the final policies in effect until August 31, 2024.
This is expected to affect about 1,500 policies across the state, and of them, 2 out of every 3 are on the Big Island. This includes about 900 of those 1,000 policies being located within lava zones 1 and 2. As a result, residents of Puna have only one choice from which to purchase their coverage, the Hawaii Property Insurance Association.
That homeowners insurance provider is an unincorporated association meant to be used as a last resort.
It was first created in 1991 in order to provide property owners and renters with appropriate and reasonable premiums for coverage in lava zones 1 and 2 for individuals unable to purchase coverage in the private market.
Unfortunately, some residents of Puna who had previously been covered through Universal are discovering that the rates they are offered through the association are between four and ten times higher than what they had previously paid. This, according to the Hawaiian Shores Community Association’s president of the board of directors Eileen O’Hara, who is also a former member of the city Council. She shared this data on August 15 during a Council meeting.
The Council is now concerned that with homeowners insurance premiums that high, it could hold back recovery efforts from the 2018 eruption and could lead residents to leave the region as high home prices and premiums become impossible for them to afford.
