State Senate Strips Lava Zone Insurance Bill, Orders Study Instead

Homeowners in lava zones 1 and 2 who hoped for state help with crushing insurance premiums got a study instead. The Hawaii Senate's Committee on Commerce and Consumer Protection voted unanimously Tuesday to strip House Bill 20 of its core provisions, replacing the "substantive language" with a directive to the Legislative Reference Bureau to examine whether the bill's approach is even workable.

HB 20, introduced by state Rep. Greggor Ilagan of Puna, was designed as a stopgap for disadvantaged residents in Puna and Ka'u who have faced drastic rate hikes since the 2018 Kilauea eruption in lower Puna. The bill proposed creating a "lava zone insurance fund" to subsidize property insurance premiums for those living in the highest-risk volcanic areas. Before its amendment, the bill declared that subsidizing premiums "will promote fairness, affordability and accessibility in the insurance market," and would work toward "encouraging home ownership and community resilience in these unique geographic areas."

The committee's amendment removes all of that. Rather than launching a subsidy program, lawmakers directed the Legislative Reference Bureau, a nonpartisan legislative service agency that provides legal and policy research to the Legislature, to conduct a study about the bill's practicality and implications. The committee also recommended including a provision to fund that study, though no dollar figure was specified.

The pivot came after Hawaii Insurance Commissioner Scott Saiki submitted written testimony opposing the bill before Tuesday's session. "While the department recognizes the significant insurance affordability challenges faced by homeowners in high-risk volcanic hazard areas," Saiki wrote, "(this bill) raises significant regulatory, fiscal, and market concerns." Among those concerns: that subsidized premiums could encourage more people to settle in areas under the greatest threat of lava inundation, leaving them reliant on government assistance to survive.

HB 20 passed the state House at the beginning of March and was transmitted to the Senate on March 6. The unanimous committee vote to gut its provisions marks a significant setback for the measure, which must now wait on a study before any real relief for lava-zone homeowners can move forward.