It may have the same name as a Teletubby, but Hawaii's property insurers are watching Tropical Storm Lala with a level of attention the storm's current strength doesn't quite explain on its own. The system is still just a 40 mph tropical storm. What has carriers paying closer attention is where it's headed.
The National Hurricane Center said Lala formed early Thursday about 700 miles east-southeast of Hilo and is forecast to strengthen as it tracks west toward the Big Island through the weekend. A hurricane watch is now in effect for Hawaii County, meaning hurricane-force conditions are possible within 48 hours. Forecasters expect five to 10 inches of rain across the island chain, with isolated totals up to 20 inches, and have warned of flash flooding and landslides on the island's steep terrain.
No hurricane has made a confirmed landfall on Hawaii Island in the modern record, according to AccuWeather's hurricane team. Two tropical storms have come close: Iselle in 2014 and Darby in 2016 both made landfall near Pahala, but each had already weakened below hurricane strength by the time it reached land. The island's volcanic terrain tends to disrupt approaching cyclones before they can hit at full force. Landfall isn't required to cause damage, though — Hurricane Hone stayed roughly 50 miles offshore in August 2024 and still brought damaging wind and rain to the island.
Lala arrives at an awkward time for Hawaii's homeowners' market, which is still working through the 2023 Maui wildfires. That disaster destroyed more than 2,200 structures and drove insured losses past $3.2 billion, Insurance Business America reported at the time. Non-renewals followed, along with premium increases so steep that some condo associations saw annual costs rise by as much as 1,000%. The state responded by moving to revive the long-dormant Hawaii Hurricane Relief Fund, a mechanism first created after Hurricane Iniki in 1992.
Rates have kept climbing since. Insurance Business reported in January that statewide homeowners' multiperil premiums rose more than 13% in 2024. State Farm, the largest homeowners' writer in the state, won approval for a rate increase of up to 48.4% on hurricane and wind coverage affecting nearly 99,000 policyholders. Reinsurance costs are part of the story: one Hawaii-focused insurer disclosed a nearly 63% jump in its own reinsurance rates in a recent filing, and DTRIC has begun exiting the homeowners' market altogether.
Hurricane Iniki is still the benchmark for what a bad storm can do here, even though the exact cost is disputed. Figures range from about $1.8 billion, cited in Hawaii Department of Defense accounts, up to roughly $3.1 billion in estimates from NOAA and the Insurance Information Institute, with the gap largely coming down to inflation adjustments and what's counted. Either way, it remains the costliest natural disaster in state history. Iniki made landfall on Kauai in 1992 and never came close to the Big Island, which is exactly why this storm is being treated as unfamiliar territory rather than a repeat of anything on record.
AM Best director Chris Draghi has already flagged how much Hawaii's risk profile has shifted, telling Insurance Business America earlier this year that property rates are being reshaped by inflation, risk concentration and changing weather patterns, and that the 2023 wildfires gave insurers a "real world example" that reset how they view catastrophe risk in the state. A confirmed hurricane landfall on the Big Island would hand them a much bigger data point to work with.
Hawaii County Mayor Kimo Alameda told residents on social media to review their emergency plans and stock up on food, water, medication and fuel — standard civil-defense advice, but also a signal to brokers that business interruption and additional living expense claims could pile up fast if power and water service go down, as they did across Kauai during Iniki.
There's a less obvious exposure worth flagging too: rainfall-driven landslide and mudflow damage. That's typically excluded or narrowly covered under standard homeowners' policies, leaving claims to fall to the National Flood Insurance Program or the surplus lines market instead. Hawaii Island is also dealing with an active Kilauea eruption and a wildfire that had burned roughly 230 acres near Saddle Road as of midweek, according to AccuWeather. Adjusters may end up looking at a stacked, multi-peril event rather than a single storm claim.
Lala is still a watch, not a warning, and its final track - expected to pass near or just south of the island Saturday - will decide how big any claims picture gets. Catastrophe modelers generally hold off on loss estimates until a storm's path and intensity are more settled, so figures from firms like Moody's RMS, Verisk or Karen Clark & Company are unlikely to surface until later this week at the earliest. Given how little spare capacity Hawaii's private market has left since 2023, even a glancing blow could put the state's insurer-of-last-resort programs to a test sooner than anyone would like.
