Soaring insurance premiums are bedeviling condominiums across the state, and Gov. Josh Green, with the urging of a legislative task force, has declared it a crisis. The governor invoked an emergency proclamation Wednesday to allow the state to provide “last resort” insurance for condo and townhouse associations that have seen their rates for full coverage double, triple, and in some extreme cases, skyrocket by even bigger multiples.
It’s a welcome move to aid condominium dwellers, in that it is designed to stabilize the insurance market, which is contracting, in part, because of enormous payouts triggered by the Lahaina fire disaster, as well as a ballooning number of other destructive, and costly, fire-, flood- and hurricane- triggered disasters nationwide. The added availability of insurance will help keep rates from rising even higher, providing some relief for beleaguered owners’ associations.
In one example, the homeowners association president of a seven-story, 35-unit McCully condominium told the Star-Advertiser that in 2024, insurance premiums for the condo’s master policy covering building replacement costs more than tripled, to $114,000, up from $35,000 in 2021.
Calling the disaster-triggered surge in condo insurance rates “an unbearable burden on homeowners across our state,” the governor stated, “This emergency proclamation is a critical step to stabilize our insurance market and protect our residents from further financial strain.”
However, the state’s assistance isn’t a subsidy, but rather a loan to insurance funds. It isn’t guaranteed to reduce costs, and it won’t solve an underlying problem that’s also triggering rate increases — neglected maintenance on aging buildings and alarming risks that exist for others that were built before current safety codes were imposed on buildings.
Rising insurance costs and the emergency proclamation they triggered must serve as a wake-up call for condo owners and condo associations in buildings that don’t meet current fire- and hurricane- safety requirements, or in many cases, have dangerously aging or deteriorating structural issues.
Insurance may allow owners to continue living in a building, or to buy and sell a property, but it doesn’t save lives or preserve property, as does adding sprinklers, strengthening hurricane-vulnerable elements and repairing deteriorated columns, roofs and lanai.
Green’s emergency proclamation authorizes the state to loan money to the Hawaii Hurricane Relief Fund and the Hawaii Property Insurance Association, using the funds to issue hurricane and property insurance policies to condo associations. The mechanism for the process already exists for both entities, which were set up to provide “last resort” policies for homeowners who can’t obtain insurance on the private market. The proclamation also raises limits on insurance coverage, which were otherwise too low to apply to large condo associations.
The amount of money that will be loaned and timetable for providing the insurance hasn’t been declared. However, there is about $170 million currently in the hurricane relief fund, and the recommendations of a recently formed condo insurance task force were based on legislation that would have authorized lending $60 million to the effort.
The task force, led by state Insurance Commissioner Gordon Ito, House Speaker Scott Saiki and Sen. Jarrett Keohokalole, based recommendations on a proposed compromise draft of House Bill 2686, which stalled this past session in conference committee.
The measures were described then as “stop-gap” strategies to provide insurance of last resort to condo associations, so that they could catch up on deferred maintenance and qualify for standard policies.
The task force is expected to continue looking for ways to mitigate the rising costs of condo insurance. In doing so, its members must focus not on make-do solutions, but on avenues for driving maintenance and retrofitting activity forward.
Legislation that increases support for retrofits of owner-occupied structures that house lower- and middle-income households may be justified, as are strict code enforcement and safety mandates. Oahu’s sprinkler law is a not-altogether-satisfying example: It requires sprinklers or meeting an alternative “life-safety” standard — an alternative that’s not preferred by insurers — and gives condo owners until 2030 to meet the lesser standard, and until 2038 to get sprinklers installed. That’s a long wait, but does allow owners to plan and put money aside for needed fixes.
The alternative is increased risk, and in some cases, astronomical insurance costs — which could be better spent on retrofits.
As the state prepares to put its emergency proclamation in play, the governor, task force members, condominium owners and insurers must cooperate to ensure that the state channels its resources to not only control costs, but also boost safety.
