Council Resolution on LZ1 & LZ2 High Cost of Home Insurance

[Punatang]

Apparently there is a difference between the Hazards demonstrated by the maps, and Risk and more importantly for insurers Probability of Risk.  

The Director of Hawaii USGS Volcano Observatory explained in detail at the town hall meeting which you can view here:   

https://www.facebook.com/100060751568908...740793790/

He starts at about 54 minutes on the timeline.

Expert says, when asked:

"Is this a risk map for the insurance agencies? and we say specifically, this is not a risk map" ... "We are not mapping risk"  (1:15:45 on timeline)

[dobanion]

No, not the hazard zone maps. That approach is different than what I'm suggesting. For a more accurate assessment of risk, I'm suggesting you can build a probability scale all over the island, a heat map essentially with gradients of risk. There are certain sections of the island you can see from the lines of steepest descent that concentrate the likihood of a flow coming though the area. For instance, there's a historical pathway for large eruptions that goes right through where Nanawale is today, but because of minor topographical differences, dogs to the east of Hawaiian Beaches (1840 eruption).

This would cover LZ2 and LZ3. For LZ1, ie on top of a rift zone, your risk is 10/10, period.

As for USGS, I know they have no interest in doing the work for the insurance companies and then getting held liable later, so of course they are going to say "not for risk assessment."

[leilanidude]

Lloyds of London?
They often insure the otherwise uninsurable, for a price.
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Lloyd's already went down that route and lost big time. Not only were there a lot of folks that had them, the subsidiary they utilized was not licensed in Hawaii. I did not have lava coverage and they tried to deny my claims (lava didn't overrun mine) as being caused by lava. Eventually they paid me and the result of the class-action lawsuit forced them to pay every claim that had been filed, plus reimburse ALL premiums paid. I got a nice, big check of refunded premiums just in time for last Christmas. I secured other coverage a couple years ago, not thru HPIA.

[HereOnThePrimalEdge]

plus reimburse ALL premiums paid.

Sweet!
I can imagine a scenario like this playing out in Lloyd’s executive offices when discussing the reaction of company shareholders, with apologies to Obi-Wan:

I felt a great disturbance in the Force, as if millions of voices suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.

[Punatang]

That sounds like a great map idea you have there dobanion. The USGS guy actually explained in the video why their map is not a good way to predict future flows. They have Sovereign Indemnity so he's not concerned with any liability.

[Rob Tucker]

Anything new on the homeowner's insurance front?

[terracore]

I don't know about LZ1 but the latest I heard on LZ2 is that with the largest insurer pulling out of the state we're pretty much left with Atlas who will insure a modest home for about $500/month. They also limit their coverage to $450k so it's problematic for people who want a mortgage above that amount.

To say that the banking and insurance industries are intertwined doesn't sufficiently describe how interrelated they are in the economy. The current interest rate environment is straining the banks and the insurance industry with it. People have already forgotten about the bank failures earlier this year and that more are possible. They are trying to shed risk wherever they can.

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So where is this heading?  One of the big drivers towards having a permitted residence was the ease at which one could insure it.  We're already hearing, if I can't get or afford insurance, why spend more on a permitted home?

[Rob Tucker]

We got a final demand for insurance from our lender who have notified us they will be placing insurance on our home at $300/mo. rate.

[terracore]

Do you mind sharing who the insurer is?

The approximate value of the insurance policy would also be useful but I understand if you don't want to share that. That in itself is complicated because the lender is only interested in securing their interest which is probably less than the total insurable value of the property. I know that replacement value of our home is much higher than the amount is insured for, but it satisfies the lender's interest.

[Rob Tucker]

I will have to find that out.