Hawaii's Insurance Crisis as Premiums Nearly Quadruple

by Giulia Carbonaro, Newsweek, Apr 18, 2024

The cost of homeowners insurance has been rising in Hawaii, which less than a year ago was struck by devastating fires that caused millions in damages for thousands of residents.

On August 8, fueled by dry conditions and strong winds from passing Hurricane Dora, wildfires erupted, swiftly engulfing the historic town of Lahaina and surrounding areas. The deadliest fire in the country in a century claimed 101 lives on Maui. It was the deadliest U.S. wildfire since California's Camp Fire in 2018 killed 85.

The fires resulted in the loss of thousands of properties and caused an estimated $6 billion in property damage, according to the Economic Research Organization at the University of Hawaii.

Homeowners insurance has been rising across the country partly due to inflation and partly due to the increased risk of extreme weather events.

According to data from the National Association of Insurance Commissioners (NAIC), the average homeowners insurance premium in Hawaii has gone from $957 in 2012—at the time, below the national average of $1,034—to $1,299 in 2021—below the national average of $1,411.

Between 2022 and 2023, the average written premiums in Hawaii and the rest of the country have continued climbing. In 2022, according to data from the Insurance Information Institute (Triple-I), the average cost of homeowners insurance went up to $1,355. A year later, it jumped to $1,445. At the same time, it remained below the national average of $1,500 in 2022 and $1,650 in 2023.

According to S&P Global, the average approved rate increase for Hawaii policyholders was 5.4 percent in 2022 and 5.6 in 2023.

"Premiums changes are the result of inflation, increased costs to rebuild and risk," a spokesperson for Triple-I told Newsweek.

Sue Savio, president and owner of Insurance Associates and former president of the Hawaii Independent Insurance Agents Association, told Insurance Business America that insurance costs for condominiums have risen by 100 percent to 1,000 percent in certain areas.

Cj Paet, vice president of operations for Cadmus Properties, told local news website KITV 4 Island News that premiums for one condominium in the Piikoi area managed by his company have jumped from $70,000 to $270,000 a year.

According to Paet, premiums were already rising before the fires. As of October 2023, more than 3,700 homeowners had filed insurance claims linked to the Lahaina wildfires for a total of more than $1 billion. Some 1,500 suffered the total loss of their homes.Many of the claims are still being processed.

Are you a homeowner in Hawaii struggling with rising insurance premiums? Contact g.carbonaro@newsweek.com to share your experience.