Hawaii’s insurers have thrown their support behind a bill that includes a tax levy on the state’s short-term rental (STR) investors intended to partly fund its insurers of last resort.
The bill is a “solid first step” in tackling what Hawaii Insurers Council president Alison Ueoka described as a societal housing issue, the trade association leader told IBA.
“Hawaii Insurers Council supports this bill as a means to stabilize the property insurance market for all who live in Hawaii,” Ueoka said. “Specifically this bill addresses insurability of condominium buildings in disrepair and scarcity of hurricane insurance which is impacting mortgage lenders.”
HB2686 got its first senate reading and advanced in the house on Tuesday. Measures in the bill were pieced together by a stakeholder working group.
Other measures in the bill include the reinstatement of a special mortgage recording fee and the expansion of the remit of insurers of last resort, the Hawaii Property Insurance Association (HPIA) and the Hawaii Hurricane Relief fund.
It comes as Hawaii has faced up to a property insurance crisis, with insurance costs to cover condo buildings having soared by up to 1,000% in recent months. Unit owners have also struggled to secure cover for their individual dwellings.
Wind and ageing buildings are two factors that have been attributed to spiking insurance costs, which have risen since last year’s devastating Maui wildfires.
The insurance problem has threatened to disrupt the mortgage market in the state, with federal lenders Fannie Mae and Freddie Mac requiring 100% windstorm coverage for properties in the state. Many insurance buyers have been forced to cut corners on this due to the towering financial weight of insurance premiums.
Tensions between residents and short term rental (STR) owners plus mainland property owners have flared since wildfires tore through Maui last August, amid anger at empty units amid a housing crisis.
The economic cost of the fires could hit $6 billion, Moody’s RMS has estimated.
STR and property investors have been under threat from Hawaii Governor Josh Green, who has been under pressure to tackle the housing cost and availability crisis.
“We have too many short-term rentals owned by too many individuals on the mainland, and it is b***s***,” Green said at a February briefing.
Just 14,000 of the state’s 89,000 STRs are legal, Green said, as he unveiled a plan to encourage mainlanders out, locals in.
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