Lava zone 2 insurance

[Punaperson]

I had a prior commitment, and couldn't go the meeting last night about the homeowners' insurance situation.  Was anyone else able to attend, and could give a condensed version ?

[Rob Tucker]

The condensed version of the insurance industry speaker was..... not much of anything. He explained why the rates went up. I heard no no new proposals.

[terracore]

Here's a home insurance article at the national level:

https://archive.fo/V5TKp

The article gives examples where the higher rates are affecting the real estate market and specifically new construction. With mortgage rates @ 7-8% and insurance costs tripling more people get priced out of home ownership.

[randomq]

Is insurance just enabling unsafe homes in unsafe places? Draining money out of Hawaii? Maybe we'd be better served by concrete, steel, rock, or earthen homes.

[Deckman]

I went to the meeting and was please with the turn out. Very disappointed in the Commissioner's speech. Eileen Ohara had posted this report on NextDoor:

"Event was Packed...128 signed in and probably another 30+ who didn't. Zoom had 80 hits and crashed for a bit during the Insurance Commissioner's presentation. HI Tracker had 50 or 60 people following but I was told that audio was garbled in the virtual efforts to deliver the meeting. Lots of good suggestions and questions but basically no solutions in sight for the short term.

Problems noted with HPIA: HPIA needs to upgrade its software to allow for payment plans. If you let your insurance lap, you won't be eligible for HPIA. The whole state is now subject to natural disasters so HPIA needs to be reorganized. A broader pool of policy holders would spread the risk over more people. HPIA doesn't provide commercial insurance, yet all of Pahoa Town is in lava zone 2.

Suggestions included decoupling lava insurance from other property insurance (flood, hurricane) to make it more affordable. Looking into joining forces with other areas of the country grappling with insurance issues. Mention of Florida's refusal to approve absurd rates like now being quoted in lava zones 1& 2. Maui is seeking a moratorium on foreclosures due to fires.....could that extend to Lower Puna? Not all lava zone 2 is feeling this impact, Why? USGS emphasized that the development of lava zones is not based on actual risk. Yet, the insurance industry has used them as a risk analysis. We don't have sufficient historical data on eruptions to do risk analysis. The lines between zones do not follow geographic boundaries, nor are the zones delineated specifically down to the TMK level. Volcanologists intended maps to be a general visual aid for folks to understand our volcanos' behaviors, and were not intended to create bias or harm.

The County is sitting on $55m of $60m awarded by state legislature in 2019 for Lava recovery (2018 event is why we're in this insurance crisis), and could stand up a rebate program short term with some of that money, but our Lower Puna Councilmember feels the 2 issues (recovery and current insurance crisis) are separate issues and continues to prevent expenditure of those funds, yet we're 5 years out from end of 2018 event and still unrecovered. There will likely NOT be a special session called so the state legislature will not address problem until its 2024 Jan-May session, so nothing likely to happen in the short run. According to a small online survey by Hawaiian Shores, close to half of the homeowners have mortgages. Of those who don't have mortgages, many will opt to go uninsured due to HPIA's cooperating insurers quoting new policies prices that are 4 to 10 times the price paid previously to Universal. Those already with HPIA have been informed they'll receive a 25% increase next renewal, but those policies are still not equivalent to new quoted policy costs. Much of HPIA's financial info doesn’t make sense and there's limited financial info made available for this nonprofit association of insurers.

For those who opt to go uninsured, this means they'll be screwed if a hurricane hits or a fire event happens, plus they become ineligible for HPIA in the future. Those with mortgages will lose homes to foreclosures or fork out large sums of money ? which many in this area can't afford. There could be 1500 homes in the later situation so that could trigger a big sell off crashing Puna's real estate market and leaving us with more empty homes for potential squatters.....a problem our County and State government has done little to combat. Foreclosure notices will start next month and government response is moving at a snail's ? pace."

[randomq]

"The County is sitting on $55m of $60m awarded by state legislature in 2019 for Lava recovery"

That's just depressing and shameful.

[MyManao]

It seems to me the cost of insurance in a hazardous area needs to reflect the actual costs imposed by those hazards, and in doing so serve to encourage folks to grow their dreams in other, more stable, areas. HPIA is a State run entitlement program that was propped up when Kalapana was destroyed and private insurance companies were poised to charge folks according to the risk they were taking. If there is a 'crisis' it is only in that the State is coming to grips with that fact and adjusting the program accordingly.

The National Flood Insurance Program is in a similar position. Where in earlier days someone could build in flood zones and when inundated get a payout and build again, and again, now, with a massive amount of debt, the feds are learning to steer folks out of floodplains, as I imagine so is State, our lava inundation zones. It’s a slow process, but I suspect in the long term the goal is to discourage folks from living in LZ1 and LZ2. And, eventually, they will.

Either that, or the State needs to reconcile the fact that they are providing subsidies to a special class, and broaden it to encompass all forms of risk. Otherwise once someone challenges HPIA in court the entire program could collapse.

[Obie]

The National Flood Insurance Program Is funded by the people who buy flood insurance. In my home town on the Ohio river they finally came in and offered 3 choices.
Buy out at market value.
Raise your house out of the flood level.
You are on your own, we will never pay again.

[MyManao]

The National Flood Insurance Program Is funded by the people who buy flood insurance..

Actually.. from.. https://en.wikipedia.org/wiki/National_F...ce_Program

The cost of the insurance program was fully covered by its premiums until the end of 2004, but it has had to steadily borrow funds since, primarily due to  Hurricane Katrina and Hurricane Sandy, accumulating $25 billion of debt by August 2017. In October 2017, Congress cancelled $16 billion of NFIP debt, making it possible for the program to pay claims. The NFIP owes $20.525 billion to the U.S. as of December 2020.

And, I think, it's that debt that has caused the program to back away from its earlier willingness to allow people to rebuild over and over again..