Insurance companies now have more incentives to provide condominium coverage after Gov. Josh Green signed a bill on Monday that he hopes will lower rates for condos across the islands — especially after their rates soared and insurance companies left following the 2023 Maui wildfires.

By signing the latest version of Senate Bill 1044 into law as Act 296, Green said that Hawaii is now better positioned than other states to see condo insurance stabilize — encouraging insurance companies to return and provide more competitive rates.

SB 1044 came out of a task force comprised of representatives of condo boards, actuarials, insurance representatives, state insurance officials and others that began meeting two years ago following the Aug. 8, 2023, Maui wildfires that caused $13 billion in damage and led to $3 billion in insurance payouts and an exodus of insurance companies.

Act 296 reactivates the dormant Hawai‘i Hurricane Relief Fund to provide hurricane coverage for condo associations that have been denied hurricane insurance.

It requires no additional taxpayer funding because the coverage will come out of revenue already in the Hawai‘i Hurricane Relief Fund, said state Sen. Jarrett Keohokalole (D, Kaneohe-­Kailua), chair of the Senate Commerce and Consumer Affairs Committee.

The fund was created in 1993 after Hurricane Iniki devastated Kauai, Green said, “so the market didn’t get out of control, so that people didn’t lose the value of their condos, so they didn’t have to leave Hawaii.”

Act 296 also creates a pilot, low-interest rate loan program to help aging condos pay for backlogged repairs that make them difficult to insure — or can only find insurance at increasingly skyrocketing rates.

It’s focused on helping the “average Hawaii residents living in a condo” over owners of high-rise luxury condos, said state Rep. Scot Matayoshi (D, Kaneohe-Maunawili), who chairs the House Consumer Protection and Commerce Committee.

Insurers who were part of a two-year-old task force looking at ways to lower insurance rates said the threat that old water pipes could burst and flood units represented the main risk for insurance companies, Matayoshi said.

By upgrading aging buildings, Matayoshi hopes condo associations will be able to purchase less expensive insurance coverage.

Just since June 24, the loan program has received applications from 80 condo associations for backlogged repairs and 10 of them already have been accepted, Acting Insurance Commissioner Jerry Bump said at Monday’s bill-signing ceremony.

Sen. Keohokalole said that Sunday’s wildfire in Maili represents the ongoing threats to Hawaii and the insurance problems that follow.

“All the Lahaina memories came rushing back,” Keohokalole said. “It’s a reminder of how vulnerable we all are to disaster and how important it is to have insurance.”

Act 296 was meant to address a “silent crisis that’s pushing thousands of residents to the brink, skyrocketing insurance costs with no alternatives in sight,” he said.

It provides relief “especially for seniors with no alternatives that are the most vulnerable to the price spikes or the cancellations that we’ve been seeing throughout the community,” Keohokalole said.

Green said, “it has become increasingly clear that our housing market was unstable. After the (Maui) fires, the difference in insuring ourselves was setting the condo market upside down. … It effects tens of thousands if not hundreds of thousands of our citizens.”

Green hopes Act 296 and the new, higher increase in the hotel room tax to fund Hawaii’s wildfire and climate change mitigation efforts will combine to convince insurance companies to return and reinvest in Hawaii’s insurance market, especially for condominiums.

It will turn “an unstable” insurance market into a “solid” one, Green said.

Keohokalole said: “It also sets up a fire wall to potentially protect hundreds of thousands of residents whose lives could be thrown into disarray if there is a broader insurance market cancellation or another catastrophe like Lahaina.”

Act 296 was aimed at “a complicated matter that affects a lot of local people,” Keohokalole said, and “to fix something that makes life better for local people.”

Keohokalole called the new law “the most complicated bill I’ve ever worked on. But it’s really important.”