Executive Summary

Over the past several decades, the United States has experienced a dramatic rise in the frequency, severity, and geographic reach of climate-driven disasters—from hurricanes and floods, to wildfires and extreme heat.

These tragic events devastate communities and take lives. They also strain the financial infrastructure that underpins recovery: the property insurance system.

As disaster claims mount, private insurers are taking in record profits while adopting strategies that harm consumers. These tactics include pleading depletion of capital reserves despite record CEO pay, retreating from high-risk markets, or sharply increasing premiums. 

In a self-reinforcing cycle, these firms then reinvest their profits into the very fossil fuel companies that intensify the climate disasters that force them to abandon vulnerable markets.

In the wake of this abandonment, federal and state governments have been forced to intervene with a patchwork of strategies, ranging from legislative reforms and public “insurers of last resort,” to expansion of programs like the National Flood Insurance Program (NFIP). 

At the same time, legal doctrines such as subrogation, shifting norms in public-private responsibility, and the growing role of catastrophe modeling are redefining how insurance works in the age of accelerating climate change. 

These pressures are more acute in Hawaiʻi: over 60 percent of our housing stock was constructed before 1990. This aging housing stock carries added risk, and requires regular maintenance and costly resilience upgrades. These are major financial barriers for many in a state with some of the highest housing costs in the U.S.

Additionally, 40 percent of Hawaiʻi’s available housing stock is in multifamily buildings, structures that require property insurance not just as a financial safeguard, but as a precondition for mobility, homeownership and equity. Without insurance, rents increase, mortgages collapse, units become unsellable, and entire condominium associations can be left exposed to catastrophic risk.

Two major sets of factors interact to drive instability in Hawaiʻi’s insurance sector: 

• Property-specific issues, such as building age, deferred maintenance and loss history; and 

• Systemic dynamics, such as global reinsurance markets, catastrophe risk and regulatory constraints. 

Between 2018 and 2023, nonrenewals for insurance policies increased by nearly 216 percent across the state. Between 2021 to 2024, Hawaiʻi homeowners saw an average increase in insurance premiums of 12 percent, and condo Home Owners Associations have seen an average increase of 16 percent, with fee increases ranging from $1 to more than $2,000.

This report investigates how climate change is reshaping the structure, function and equity of insurance markets—nationally and in Hawaiʻi. It explores:

• The historical interaction between climate disasters, market retrenchment and government intervention;

• The particular vulnerabilities facing Hawaiʻi’s housing insurance system;

• The legal, regulatory, and market tools being mobilized to manage escalating risk; and

• The equity and governance implications of an insurance market in retreat.

By analyzing both past disasters and unfolding crises, the report captures a system in flux—where each disaster reshapes not only the built environment but also the financial rules, legal responsibilities, and social norms that determine who is protected, who pays for recovery, and who is left behind. 

To build a more resilient and equitable future for Hawaiʻi’s residents, this report recommends: 

1. Enabling the state to subrogate companies most responsible for climate disasters; 

2. Reshaping land use patterns to create natural resiliency buffers; 

3. Retrofitting older housing stock to withstand climate impacts; 

4. Adopting and enforcing updated building codes for new construction; and 

5. Expanding education on risk management and available resources to help households and communities take preventative measures.