Report Title:

Relating to the Hurricane Relief Fund

Description:

Amends language in Act 179, SLH 2002, which allowed the legislature to skim all interest from HRTF and transfer it to the general fund. Provides the public with the right to bring a cause of action to enjoin the State from breaching its fiduciary duty in managing the HRTF. Repeals immunity provisions for transfers of funds from the hurricane reserve trust fund to the general fund.

HOUSE OF REPRESENTATIVES

H.B. NO.

590

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the hurricane relief fund.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii hurricane relief fund, found in chapter 431P, Hawaii Revised Statutes, was originally created to provide hurricane insurance coverage to Hawaii homeowners during a period when private insurance was unavailable or prohibitively expensive. The premiums from all policies issued by the Hawaii hurricane relief fund were deposited into the hurricane trust reserve fund established by section 431P-16, Hawaii Revised Statutes. Other moneys deposited into the hurricane trust reserve fund include the now-discontinued special mortgage recording fee, assessments made by the hurricane relief fund against all licensed property and casualty insurers pursuant to section 431P-5(b)(8)(A) and (B), reinsurance proceeds, experience refunds or other return funds under reinsurance, proceeds from loans or other moneys from the federal government from bonds, and so forth.

Although the Hawaii hurricane relief fund no longer issues hurricane insurance policies, and, therefore, would not need to pay for specific claims should hurricane damage occur, the legislature finds that the hurricane reserve trust fund should not be seen as a source of "unused" funds that may be tapped into to fund other state programs, despite the difficult economic conditions that currently face Hawaii.

The legislature finds that one of the main purposes of the hurricane reserve trust fund is to serve as a "rainy day" fund to provide disaster assistance and relief when, and not if, a major hurricane hits Hawaii and causes extensive property damage.

The legislature further finds that the hurricane reserve trust fund provides a source of funds for future affordable hurricane insurance if private insurers stop writing property insurance that includes coverage for hurricanes. This may occur if a large enough hurricane strikes Hawaii or if the insurance or reinsurance markets harden following catastrophic events worldwide.

Therefore, in administering the hurricane reserve trust fund and making lawful expenditures therefrom, such as those outlined in section 431P-5(b)(12), Hawaii Revised Statutes, the objective of the hurricane relief fund should be to preserve and increase the fund to provide adequate protection in the event that another hurricane such as Iniki strikes the islands and causes extensive damage.

According to section 431P-16(a), Hawaii Revised Statutes, the hurricane relief fund holds all moneys in the hurricane reserve trust fund as trustee of those funds. The legislature reaffirms that the "beneficiaries" of that trust are the people of Hawaii and that the hurricane reserve trust fund is a public trust to which the hurricane relief fund and the State of Hawaii owe the fiduciary duties of a trustee.

SECTION 2. Section 431P-16, Hawaii Revised Statutes, is amended by amending subsection (i) to read as follows:

"(i) [Moneys in the hurricane reserve trust fund may be:

(1) Disbursed] Solely upon dissolution of the Hawaii hurricane relief fund[; provided that:

(A) The net] the moneys in the hurricane reserve trust fund shall revert to the state general fund, after any payments by the fund on behalf of licensed property and casualty insurers or the State that are required to be made pursuant to any federal disaster insurance program enacted to provide insurance or reinsurance for hurricane risks [are completed; and

(B) If]. In the event such moneys are paid on behalf of licensed property and casualty insurers, payment shall be made in proportion to the premiums from policies of hurricane property insurance serviced by the insurers in the twelve months prior to dissolution of the fund[; or

(2) Deposited to the loss mitigation grant fund established under section 431:22-102;

provided that all interest earned from the principal in the hurricane reserve trust fund shall be transferred and deposited into the general fund each year that the hurricane reserve trust fund remains in existence]."

SECTION 3. Section 431P-14, Hawaii Revised Statutes, is amended to read as follows:

"431P-14 Immunity and limitation on liability. (a) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any servicing facility or its authorized insurance producers; the fund or its agents, employees, or board; the State; the commissioner; or the commissioner's representatives for any action taken by them in the performance of their powers and duties under this chapter; provided that this section shall not be construed to prohibit any exercise of the commissioner's power pursuant to this chapter or any other law or rule adopted pursuant to law or chapters 661 and 662, any other law to the contrary notwithstanding. Nothing in this chapter shall create an obligation, debt, claim, cause of action, claim for relief, charge, or any other liability of any kind whatsoever in favor of any person or entity without regard to whether that person or entity received any benefits under this chapter, against the State, or its officers and employees. The State and its officers and employees shall not be liable for the results of any application, denial of application, claim, loss, or other benefits provided by the fund pursuant to this chapter. Nothing in this chapter shall be construed as authorizing any claim against the State whatsoever, nor shall this chapter be construed as authorizing any claim against the fund in excess of any note, loan, liability, or other obligation incurred by the fund. Nothing in this section shall be construed to alter any obligation to pay assessments or charges authorized to be imposed or levied by the board pursuant to this chapter. The fund shall be subject to chapter 431 only as provided for in this chapter.

(b) Notwithstanding subsection (a), any citizen of the State shall have standing to commence a proceeding in circuit court to enjoin any action or omission by the fund, its agents, employees, board, the State, the commissioner, or the commissioner's representatives for any breach of trust created under this chapter."

SECTION 4. Act 179, Session Laws of Hawaii 2002, is amended by repealing section 8.

["SECTION 8. There shall be no cause of action, claim for damages or relief, charge, or any other liability of any kind whatsoever created against the state, the Hawaii hurricane relief fund, the Hawaii hurricane relief fund's board and its members, or their respective agents, or employees, by or relating to the transfer of any moneys from the hurricane reserve trust fund to the general fund."]

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:

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