Hawaii County Council members were lukewarm Tuesday about a proposal to investigate ways to manage home insurance rates in Lava Zones 1 and 2.
During a meeting of the Committee on Governmental Operations, Relations and Economic Development, Puna Councilman Matt Kaneali‘i-Kleinfelder presented a resolution calling for the Department of Finance to conduct a study addressing the lack of affordable property insurance in high-risk lava zones.
Calling the resolution “good social policy,” Kaneali‘i-Kleinfelder said the 2018 Kilauea eruption exacerbated the already high insurance rates within Lava Zones 1 and 2 — a $350,000 home, he said, can incur yearly insurance costs of more than $4,000 — and he expects rates will continue to increase until many residents are priced out entirely.
Meanwhile, only one insurance provider, the Hawaii Property Insurance Association, will offer coverage to new clients, which allows HPIA to set its prices high.
“When your insurance is a factor for whether you can continue to live in the home that you’ve lived in for your entire life, that’s a problem,” Kaneali‘i-Kleinfelder said.
Kaneali‘i-Kleinfelder said he hopes his resolution can allow Hawaii County to explore potential ways to stabilize insurance rates within those lava zones.
In particular, he suggested that the county code grants legal authority to the county to establish a captive insurance company that could set limits on insurance prices.
However, Kaneali‘i-Kleinfelder’s fellow council members were less than enthusiastic about the resolution. While all of them agreed something should be done about the rising insurance costs, many questioned whether the county can or should be the one to do it.
Hilo Councilman Aaron Chung said he would only offer “token support” for the resolution, and questioned whether the issue would be better addressed by the state insurance commissioner. Chung said that, while the intent of the resolution is admirable, it is too vague to be of significant value.
“No offense to anybody in the room, but this is not good social policy,” Chung said.
Other council members agreed with Chung. Puna Councilwoman Ashley Kierkiewicz suggested the resolution be amended to instead request the insurance commissioner to conduct the study, rather than the county Finance Department.
Finance Director Deanna Sako also was perplexed by the resolution, saying she had “no idea” how such a study could even be conducted.
Sako also said she is not confident that the county code provisions for captive insurance companies are intended to be used to insure other parties’ properties. The code could be interpreted as only applying to county properties, she said.
Ultimately, the committee voted unanimously to forward the resolution to the full council with a positive recommendation, albeit with strong suggestions to pass the issue along to the state.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
