Hawaii State Government Made Current Lava Disaster Worse Through Insurance Regulations

See A Housing Boom, Then a Volcanic Eruption: Hawaii’s Legislature creates a perverse incentive to live in high-risk lava zones Keli‘i Akina in The WSJ. He is president and CEO of the Grassroot Institute of Hawaii. Excerpts:

"you might wonder why some Hawaii residents have chosen to live at the foot of an active volcano. The strange truth is that the state government encourages them."

"The destruction caused in the early 1990s cost private insurers millions of dollars, prompting them to stop insuring property in the most vulnerable areas"

"Unfortunately, the Hawaii state government stepped in. In 1991 the legislature created the nonprofit Hawaii Property Insurance Association, which provides policies to people who can’t buy them on the market. But private insurers are forced to join the HPIA as a condition of doing business in the state. They split the HPIA’s expenses, profits and losses in proportion to their market share. In essence, Hawaii law requires all private insurers to pool their resources to subsidize policies in Lava Zones 1 and 2."

"The result was a housing boom on the edge of an active volcano. By 2008 there were more than 2,400 HPIA policies in the area, providing more than $700 million of insurance to the highest-risk lava zones in Hawaii."

"Hawaii’s lawmakers put citizens in danger by giving them an incentive to live in an area that the market had deemed too risky to insure."