The distant-second largest insurer of homes in Hawaii was Tokio Marine Holdings, with a market share of just 13%. Northbrook-based Allstate, the second-largest homeowners’ insurer in the U.S. after State Farm, was fourth-largest in Hawaii, with a share of just 7%.

Moody’s Investors Service estimated Aug. 14 that the Maui wildfires would cost insurers collectively at least $1 billion. State Farm doesn’t do much commercial property insurance in Hawaii, and that category makes up a portion of that total.

But most of the substantial price tag is tied to the high average home value of $1.5 million in Lahaina, the Maui community most affected by the fires. The cost to cover policyholders could reach $300 million for State Farm based on its market share.

To put those figures in perspective, all insurers in Hawaii collected just $632 million in homeowners’ and commercial property premiums in 2021, according to the NAIC.

A State Farm spokeswoman had no comment on the estimated cost. “In the midst of the catastrophic wildfires in Maui, our singular focus is on serving our customers,” she emailed.

State Farm is privately held and discloses its financial results once a year. With a net worth of $131 billion at the end of 2022, it can easily absorb the Hawaii costs.

But for the industry across the country, Hawaii’s highly unusual fire damages add to a pile of property claims that are well up from last year. A higher-than-normal number of high-intensity weather events have occurred in a large number of states. 

Publicly traded Allstate absorbed $3.6 billion in homeowners’ insurance losses due to weather-related catastrophes in the first half of the year, up 177% from $1.3 billion during the same time frame last year.

Exacerbating the costs tied to Maui’s recovery are issues specific to the remote Hawaiian islands, according to Moody’s.

“Construction costs are typically high in Hawaii because most building materials need to be brought to the islands,” according to the ratings agency’s report. “But construction materials and labor costs increased significantly during the pandemic, and the increase is driving higher property replacement costs, which feeds through to higher homeowners’ and commercial property claims. Maui may need construction workers from other Hawaiian Islands or from the U.S. mainland, and construction workers may face their own housing shortages. The increase in demand for construction labor and materials following the wildfires is likely to lead to higher insured losses.”

Another factor is the high cost of providing shelter for residents whose homes are destroyed or uninhabitable while the buildings are being rebuilt.

Unknown is whether State Farm passed off any of its Hawaii exposure to reinsurers, companies that provide coverage to direct insurers for a price. If so, that would reduce the cost to State Farm.

The spokeswoman didn’t comment on that.