In the wake of the recent Lahaina wildfire and other natural disasters, Hawaii is facing yet another emergency – this time, it’s the skyrocketing insurance costs for condominium owners that are causing concern. The crisis initially hit older high-rise condominiums, particularly those with maintenance or safety issues that had been neglected. However, the problem has now spread to townhome owners across the state, who are experiencing massive premium increases.
Governor Josh Green has declared an emergency order to address this pressing issue. The state is stepping in to provide insurance coverage, much like it did in the past when insurers pulled out of the market after Hurricane Iniki or refused to cover properties threatened by volcanic activity. This move is aimed at stabilizing the insurance market and protecting residents who are struggling to afford the rising costs.
One example of the impact of these premium increases is Xandria Trent’s subdivision in Mililani Mauka, where neighbors were shocked to learn that their insurance policy premium was going up by more than 300%, with a hefty $4,670 due by September first. Many residents are finding it difficult to come up with the funds to pay for these sudden and drastic increases, with some having to take out loans or dip into their retirement savings.
The effects of these rising insurance costs are already being felt in the real estate market, with Chad Takesue, Chief Sales Officer at Locations LLC, noting a decline in sales of condos and townhouses. The affordability issue exacerbated by the insurance crisis is making it harder for potential buyers to enter the market, further impacting the housing industry in Hawaii.
The emergency order was requested by Insurance Commissioner Gordon Ito, House Speaker Scott Saiki, and State Senator Jarrett Keohokalole after legislative efforts to address the crisis failed during the last session. Keohokalole emphasized the severity of the situation, stating that for those in townhouses or condominiums facing double or triple insurance costs, it is indeed a crisis.
The order allows for funds to flow into state insurance programs that can purchase insurance and offer it to condo associations. The goal is to create an insurer of last resort, stepping in when affordable private insurance is not available. While this may not be a complete solution, it provides a layer of protection for condos in need of insurance coverage.
Looking ahead, the hope is that the insurance industry will stabilize, allowing private insurers to once again take over the business. By providing temporary state insurance coverage, the government aims to bridge the gap until a more sustainable solution can be found. Ultimately, the goal is to protect homeowners and ensure the stability of the insurance market in Hawaii.
As the state works to address this crisis, it is crucial for residents to stay informed and advocate for solutions that will benefit all homeowners. By coming together and working towards a common goal, Hawaii can overcome this challenge and create a more secure future for condominium owners across the state.