The devastating wildfires in Hawaii have come at a time of upheaval for the insurance industry, in a place that had not been considered very risky by underwriters.

The state’s residents have generally paid low home insurance rates — the cheapest in the country, according to Bankrate, a consumer financial services company — because there are relatively few natural disasters in Hawaii, with the private sector on stronger footing than in states like Florida and California. In recent years, both states have been more prone to extreme weather events than Hawaii.

But the deadly fires in Maui this week, which destroyed thousands of homes and will take what the state’s governor said would be billions of dollars to rebuild from, may make insurance companies reconsider policy rates and coverage, as they have in more disaster-prone areas.

Insurance rates are set on a state level, with varying degrees of government regulation and intervention. Typically, states like Hawaii that have strong private insurance markets have not needed forceful state involvement on rates.

After Hurricane Iniki hit Hawaii in 1992, the Legislature created a fund to provide hurricane insurance to homeowners. But that fund ceased operations in 2002 because the private market had returned to full strength.

More broadly across the United States, some private insurers have begun retreating as natural disasters have mounted, leaving the overall market in peril.

State Farm, the largest homeowner insurance provider in California, announced in May that it would no longer sell coverage there. In Florida, homeowners have struggled to find storm coverage as insurers have pulled out because of the risks arising from climate change.

For Hawaii’s relatively robust private insurance market, there’s reason to think things could become more precarious moving forward, although companies will need time to consider new data in estimating their future losses.

“I think insurers are going to start factoring in the increased frequency and severity of wildfires,” said David Marlett, a professor of risk management at Appalachian State University. “You’ve already seen that in California.”

Adding to the complexities, there is also uncertainty in the global reinsurance market, a crucial backstop for private insurers.

Reinsurance companies, which are essentially the insurers for insurance companies, have been in turmoil as risks and costs have mounted. Prices for reinsurance have soared in 2023, leading insurers to cut coverage in various areas and stop covering some types of damage.