HOUSE OF REPRESENTATIVES

H.R. NO.

39

TWENTY-NINTH LEGISLATURE, 2017

 

STATE OF HAWAII

 

 

 

 

 

HOUSE RESOLUTION

 

 

REQUESTING THE INSURANCE COMMISSIONER TO CONDUCT A FEASIBILITY STUDY RELATING TO INSURANCE POLICIES AND PREMIUMS FOR PROPERTIES THAT ARE CURRENTLY LOCATED WITHIN LAVA ZONES ON THE ISLAND OF HAWAII.

 

 

 


     WHEREAS, on the island of Hawaii, premiums for homeowners and fire insurance policies are subject to assumed risks assigned to areas described by the United States Geological Survey, a federal agency, as "lava zones"; and

 

     WHEREAS, the United States Geological Survey developed lava zone maps for the island of Hawaii solely for that agency's use and to define different volcanic activities for geological purposes; and

 

     WHEREAS, although the Civil Defense Agency, County of Hawaii, received permission to use the lava zone maps for its use and planning, lava zone maps were never intended to be used by private entities, including those in the insurance industry; and

 

     WHEREAS, there has not been any volcanic eruption activity in the populated areas of Lava Zone 1, which is located in the Puna District of the County of Hawaii, for over four hundred years; and

 

     WHEREAS, homeowner and fire insurance policies in Lava Zone 1 are written only by the Hawaii Property Insurance Association or through Lloyd's of London; and

 

     WHEREAS, premiums for the insurance policies in Lava Zone 1 are three to four times higher than premiums in other areas and cannot be supported or justified by loss history; and

 

     WHEREAS, the Hawaii Property Insurance Association has set excessively high premiums for Lava Zone 1 risks, which has the apparent consequence of covering losses that are not attributed to Lava Zone 1; and

 

     WHEREAS, there has never been a loss in Lava Zone 1 attributed directly to volcanic activity and insurance profits are being generated as a result of questionable practices; and

 

     WHEREAS, the inability to secure reasonable fire insurance severely impacts mortgage financing, which adversely affects the property values for all risks in Lava Zone 1; and

 

     WHEREAS, the creation of homeowners and dwelling insurance policies based on the Lava Zone 1 map discriminates against the community of Leilani Estates because Leilani Estates bears ninety-five per cent or more of all risks in Lava Zone 1; and

 

     WHEREAS, it may be appropriate for insurance policies and premiums to be based on actuarial loss studies and not on unrelated scientific studies and reports; and

 

     WHEREAS, although insurance companies decline to write policies in a very small area that was designated as a "lava zone" solely for scientific purposes, the companies continually write dwelling and fire insurance policies throughout the United States in areas where hurricanes, tornadoes, earthquakes, wildland fires, and other natural disasters occur at the cost of millions of dollars of losses on an annual basis; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-ninth Legislature of the State of Hawaii, Regular Session of 2017, that the Insurance Commissioner is requested to conduct a feasibility study relating to insurance policies and premiums for properties that are currently located within lava zones on the island of Hawaii; and

     BE IT FURTHER RESOLVED that the Legislature requests that the study evaluate whether insurance companies should be:

 

     (1)  Required to base homeowner and dwelling fire insurance policies and rates on actuarial studies of losses based on historical data for the areas where the homes and dwellings are located; and

 

     (2)  Prohibited from basing homeowner and dwelling fire insurance policies and rates on maps, reports, studies, or evaluations that have been conducted strictly for scientific or civil defense purposes; and

 

     BE IT FURTHER RESOLVED that the Insurance Commissioner is requested to prepare a report that includes the feasibility study's findings and recommendations and submit the report to the Legislature no later than twenty days before the convening of the Regular Session of 2018; and

 

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Insurance Commissioner, the Governor, and the Mayor of the County of Hawaii.

 

 

 

 

OFFERED BY:

_____________________________

 

 

Report Title: 

Insurance Commissioner; Property Insurance; Lava Zones