A property insurance bill that reactivates the Hawaii Hurricane Relief Fund (HHRF) and expands the authority of the state’s insurer of last resort has been approved by the Hawaii Legislature and is awaiting the signature of Gov. Josh Green (pictured above).
The governor recently signed a separate law extending notification periods for property insurance cancellations.
Senate Bill 1044 would extend the Hawaii Property Insurance Association’s capacity to write policies for certain properties struggling to secure coverage. Eligibility will be determined by either the association or the insurance commissioner.
The expansion is intended as a temporary measure and will be subject to a five-year limit. The legislation also requires the state’s insurance commissioner to study longer-term insurance solutions.
The bill proposes reactivating the HHRF, granting it expanded authority to provide coverage for condominiums. Historically, the hurricane fund was partially financed by a special mortgage recording fee, a structure lawmakers criticized as regressive because buyers financing a greater portion of their home purchase paid higher fees than those making larger down payments or buying with cash.
If enacted, SB 1044 would replace the previous funding structure with a flat fee assessed on a per-document basis. According to the bill, this method is intended to distribute costs more evenly. The fund’s board would retain discretion over when to end the fee collection.
Green has not yet signed SB 1044, which was engrossed on May 2. However, he is expected to approve the measure, having previously supported efforts to stabilize Hawaii’s property insurance market.
In August 2024, Green signed a proclamation endorsing the expanded role of the hurricane fund and the insurer of last resort in providing condo coverage.
While SB 1044 awaits executive action, Green signed SB 752 into law on May 29, enacting new requirements for insurance cancellation notifications. Under the new law, residential property insurers, including those covering multifamily buildings, must provide at least 20 days' written notice before canceling a policy.
Cancellations due to nonpayment will continue to follow the previous 10-day notice period. The 30-day notice period for nonrenewal remains unchanged, as specified in the legislation.
The reactivation of the HHRF comes in response to significant challenges in Hawaii's property insurance market. The fund, established in 1993 after Hurricane Iniki, had been dormant since 2002. Its revival aims to address the difficulties faced by condominium associations in securing affordable hurricane coverage.
Condominium insurance premiums in Hawaii have experienced substantial increases, with some complexes reporting annual costs rising from less than $150,000 to over $1 million. Factors contributing to these increases include rising reinsurance and loss costs, as well as the aftermath of the August 2023 wildfires.
To address funding for the HHRF, lawmakers are considering replacing the previous mortgage recording fee with a flat fee assessed on a per-document basis. This approach aims to distribute costs more evenly among property owners and provide a more equitable funding mechanism for the hurricane fund.
The property insurance crisis in Hawaii has also impacted the mortgage market. Federal lenders like Fannie Mae and Freddie Mac require 100% windstorm coverage for properties, a standard that has become increasingly difficult to meet due to soaring insurance premiums.
This situation has led to challenges in securing mortgages for condominiums, as underinsured properties may not meet the lending criteria set by these federal entities.
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