The council is calling for government action to combat rising property insurance premiums

A Honolulu City Council resolution requires state lawmakers to address what it calls “drastic” increases in property insurance premiums paid by homeowners across Oahu, particularly those who own condominiums.

Council Member Val Okimoto’s Resolution 242, which will be considered by the Council’s Executive and Legal Affairs Committee at 1 p.m. today, states that the insurance industry in the United States has been affected by devastating weather-related crises in recent years.

These disasters – including the devastating Maui wildfires on August 8, 2023, which caused an estimated $5.5 billion in damage in Lahaina and Kula – resulted in homeowners having to pay higher premiums to maintain insurance coverage, the report said Legislation.

“In 2023, the United States experienced a record 28 individual weather- or climate-related disasters, each causing more than $1 billion in damage,” the resolution states.

This year marked the fourth year in a row that the global reinsurance market reported losses exceeding $100 billion, and as global climate events increase, reinsurance rates nationwide have risen by up to 50 percent per year in recent years, largely accounting for these increased costs passed on to the policyholders.”

These impacts hit Hawaii homeowners hard, but those who own high-rise condominiums face unique challenges under the law.

“Only three insurers offer master policies to condominium associations in the state that cover the common areas of condominiums, and coverage is often limited to only 20 to 30 percent of a building’s hurricane exposure,” Resolution 242 states.

As a result, condo owners and their associations in particular have been forced to utilize “excess insurance” to cover the remaining portion of a building’s hurricane exposure, and these excess insurance policies have higher rates, resulting in more expensive master contract premiums and higher deductibles. “, says the resolution.

“These increased homeowners association insurance premiums, in some cases up to 1,000 percent higher, are passed on to condominium owners, resulting in drastic increases in maintenance fees… costing condominium owners hundreds of additional dollars each month,” the legislation states.

The resolution notes that in the previous legislative session, state legislatures introduced measures to address or stabilize rising property insurance premiums – specifically House Bill 2686 and Senate Bill 3234.

“The Legislature ultimately failed to pass or enact these measures,” the resolution states.

Still, Resolution 242 mentions the actions of Hawaii’s top elected official.

On June 28, Gov. Josh Green established the Executive and Legislative Branch Condominium and Property Insurance Task Force to assess and make recommendations on “the extreme challenges and complex issues” surrounding property insurance.

On August 7, based on the task force’s recommendations, the governor signed an emergency declaration aimed at stabilizing Hawaii’s volatile condo insurance market.

This measure would authorize the granting of loans to the Hawaii Hurricane Relief Fund and the Hawaii Property Insurance Association to facilitate the issuance of hurricane and property insurance policies to condominium communities.

The resolution would also allow HHRF to purchase hurricane insurance for large condominiums and set its own coverage limits.

But Okimoto says lawmakers need to do more.

“If property insurance premiums continue to rise, the impact on District 8 and Oahu as a whole will be significant. Homeowners, particularly condo owners and homes affiliated with a homeowners association, can expect monthly maintenance fees to double or triple due to increased insurance costs,” she told the Honolulu Star-Advertiser via email.

Regarding insurance premiums, Okimoto said she has spoken with residents of the community “and referred them to their state legislators, as they are the ones who have the jurisdiction to address issues of this nature through legislation,” she added.

The council, through its committees, will also consider possible changes to the mandatory fire sprinkler retrofit ordinance as part of two separate measures scheduled to be heard in council committees on Thursday.

At 9 a.m., the Public Safety Committee is scheduled to consider Honolulu Fire Department Bill 55, which relates to the adoption of the 2021 state fire code, subject to changes applicable to the city.

At 1 p.m., the Public Infrastructure and Technology Committee will consider Bill 62 on fire safety.

Meetings will be held at Honolulu Hale Council Chambers, 530 S. King St.