Efforts in the state Legislature to forestall an impending explosion of property insurance costs in lower Puna appear to have largely petered out.
Puna Rep. Greggor Ilagan introduced this legislative session 10 separate bills aimed at alleviating home insurance rates in Lava Zones 1 and 2, where rates are expected to double or even quadruple after the area’s last major provider, Universal Property and Casualty Insurance Co. of Florida, withdraws from the state in August.
In the absence of any other providers, homeowners in Lava Zones 1 and 2 will be left to seek insurance from the state-run Hawaii Property Insurance Association, a provider of last resort that specifically formed to provide basic property insurance in those lava zones, but whose rates have ballooned over the last few years to thousands of dollars per year.
While Ilagan’s 10 bills sought a wide variety of solutions to remedy the crisis, all but three of them are dead in the water, having made little to no progress since the start of the legislative session.
The three surviving bills, while possibly offering solutions in the longer term, likely will provide little relief to residents staring down the barrel of a massive rate hike this year.
“I hope we can pass them, but they’re not going to be much help to the folks worried about this,” Ilagan told the Tribune-herald. “What they need are subsidies, what they need are lower premiums, what they need is better access to insurance.”
The three surviving bills are House Bills 2048, 2049 and 2056, which either make policy changes to HPIA or would initiate studies for a possible future solution to the insurance crisis somewhere down the line.
HB 2048 would change the composition of the HPIA board, increasing its number of public members from three to four and requiring them to be appointed by the House speaker and Senate president, instead of the state insurance commissioner. HB 2049 would require HPIA to be more transparent about its board membership and to post annual reports about its activities.
Meanwhile, HB 2056 would form a working group that would investigate the feasibility of a state-run reinsurance program, which could help insulate providers from the liabilities of operating in high-risk areas like Lava Zones 1 and 2. While the bill specifies that a report from that working group would be ready by 2025, Ilagan was blunt: “I feel like it’ll take longer. I have my doubts about 2025.”
The stalled bills — which aren’t technically dead yet, but have a little under two weeks to make it through multiple as-yet-unscheduled committee hearings and three readings in the House, which historically speaking is unlikely — included more immediate fixes such as establishing a state insurance fund to subsidize residents’ premiums, capping premiums on Lava Zone 1 and 2 properties, or even just prohibiting insurers from refusing coverage to an applicant because they live in a lava zone.
Ilagan said those measures did not receive support from other legislators, and admitted that some of them likely spooked the insurance industry in Hawaii.
While Ilagan was somewhat sanguine about the situation — he noted that only five of the 20 bills he’s introduced this session are still alive, a hit rate he described as “typical” for the legislative process — he said Puna lawmakers are always working uphill to get anything for their district.
Ilagan pointed out that another bill — HB 2686, which would stabilize HPIA insurance rates for condominiums — is still alive and progressing in the Legislature and contrasted that with the lack of support for a Puna-specific measure.
“This is the only district that has these lava zones — this one and parts of (District 5),” Ilagan said. “So, you have one or two representatives versus 35 Oahu representatives. … It’s hard to imagine that anyone else would introduce a bill for Lava Zones 1 and 2 if it’s not their district.”
“We’re sort of a ‘we don’t count’ district,” said Andrea Rosanoff, chair of the Puna Citizens for Affordable and Sustainable Property Insurance. “We’re always being written off, even though we’re the fastest-growing district in the state, and the last affordable place to live.”
Rosanoff said HB 2056 is still a useful bill in the long run, explaining that HPIA’s reinsurance rates have been disproportionately high since 2014 and eventually dominoed into the current crisis.
“I think it’s a good idea for the state to study what that state-run reinsurance would mean for the state, for the economy,” Rosanoff said.
“But for people living here, it’s not looking good,” Rosanoff went on. “It’s not good for the stability of the community.”
While Ilagan was remorseful that most of his bills have failed, he said he will try again next year.
He added that this year’s state budget is tight, with Lahaina wildfire relief projects and a $150 million bill for retroactive hazard pay for public school workers during COVID-19 eating up a large chunk of available funds, but hopes next year might have more room for Puna.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
