Report Title:

Hurricane Reserve Trust Fund; Fund Transfers Limited

Description:

Restores limitations upon appropriations from the Hurricane Reserve Trust Fund that were repealed by Act 179, SLH 2002. Repeals the Act's grant of immunity from liability for transfers of HRTF moneys to the General Fund. Authorizes an action for breach of trust.

THE SENATE

S.B. NO.

310

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE HAWAII HURRICANE RELIEF FUND.

 

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

SECTION 1. The Hawaii hurricane relief fund (HHRF) established in chapter 431P, Hawaii Revised Statutes (HRS), 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 HHRF were deposited into the hurricane reserve trust fund (HRTF) established by section 431P-16, HRS. Other moneys deposited into the HRTF include the now-discontinued special mortgage recording fee, assessments made by the HHRF 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, and proceeds from loans or other moneys from the federal government from bonds.

Although the HHRF 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 HRTF should not viewed as a source of "unused" funds that may be tapped to fund other state programs, despite the difficult economic conditions that currently face Hawaii.

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

The legislature further finds that the HRTF provides a source of funds for future affordable hurricane insurance if private insurers stop writing property insurance that includes hurricane coverage. 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 HRTF and making lawful expenditures therefrom, such as those outlined in section 431P-5(b)(12), HRS, the HHRF should keep in mind the objective to preserve and grow the fund to provide adequate protection when another hurricane such as Iniki strikes the islands and causes extensive damage.

Pursuant to section 431P-16(a), HRS, the HHRF holds all moneys in the HRTF in trust. The legislature reaffirms that the beneficiaries of that trust are the people of Hawaii and that the HRTF is a public trust to which the HHRF and the State of Hawaii owe the fiduciary duties of a trustee.

SECTION 2. Section 431P-14, Hawaii Revised Statutes, is amended to read as follows:

"§431P-14 Immunity and limitation on liability. 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.

Notwithstanding the foregoing, any citizen of the State may commence a proceeding in the circuit court to enjoin any action or omission by the fund or its agents, employees, or board, the State, or the commissioner or the commissioner's representative, that would constitute a breach of any of the trusts established in this chapter."

SECTION 3. 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] the net 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 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 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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