REPORT TITLE:



DESCRIPTION:


 
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THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO NATURAL DISASTER RELIEF.



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

 1      SECTION 1.  The legislature finds that the Hawaii hurricane
 
 2 relief fund, which was enacted following Hurricane Iniki in 1992
 
 3 to solve a homeowner's property insurance crisis, is fulfulling
 
 4 its purposes and should be phased out within the next three
 
 5 years.
 
 6      This bill causes the Hawaii hurricane relief fund to end its
 
 7 hurricane insurance program by December 1, 2002.  This bill also
 
 8 creates on December 15, 2002, two new funds, an emergency natural
 
 9 disaster relief fund and a natural disaster loss mitigation fund,
 
10 which will receive the net moneys transferred from the Hawaii
 
11 hurricane relief fund.  Moneys in the emergency natural disaster
 
12 relief fund may be expended by the governor for relief following
 
13 a natural disaster.  Moneys in the natural disaster loss
 
14 mitigation fund may be expended by the director of commerce and
 
15 consumer affairs for natural disaster loss prevention efforts.
 
16 To protect the Hawaii hurricane relief fund's policyholders in
 
17 the event a hurricane should occur prior to December 1, 2002,
 
18 transfer of moneys from the Hawaii hurricane relief fund will not
 
19 occur until all of its payment obligations have been met.
 

 
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 1      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4      "§    . Emergency natural disaster relief fund.
 
 5      (a) On December 15, 2002, there shall be created an
 
 6 emergency natural disaster relief fund to be placed within the
 
 7 office of the governor for administrative purposes.  On December
 
 8 15, 2002, there shall be created in the treasury of the State the
 
 9 emergency natural disaster relief fund.
 
10      (b) If there has been no hurricane resulting in claims under
 
11 the Hawaii hurricane relief fund's policies prior to December 1,
 
12 2002, then no later than December 15, 2002, ninety-nine per cent
 
13 of the net moneys available to the Hawaii hurricane relief fund
 
14 shall be transferred to the emergency natural disaster relief
 
15 fund, and the remaining one per cent shall be transferred to the
 
16 natural disaster loss mitigation fund.  If there has been a
 
17 hurricane resulting in claims under the Hawaii hurricane relief
 
18 fund's policies prior to December 1, 2002, no moneys available to
 
19 the Hawaii hurricane relief fund shall be transferred to the
 
20 emergency natural disaster relief fund until after payment,
 
21 satisfaction, discharge, release, or termination of all
 
22 obligations of the Hawaii hurricane relief fund, including buy
 

 
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 1 not limited to obligations under its policies of hurricane
 
 2 property insurance, or its bonds, notes, or other indebtedness.
 
 3      (c) Interest or other earnings on moneys in the emergency
 
 4 natural disaster relief fund shall be credited to the emergency
 
 5 natural disaster relief fund; provided, however, that on the
 
 6 first day of July of each year beginning in 2003, one percent of
 
 7 the amount in the emergency natural disaster relief fund,
 
 8 calculated as of May 31 of that year, shall be transferred to the
 
 9 natural disaster loss mitigation fund.
 
10      (d)  Following the occurrence of a natural disaster in the
 
11 State and the declaration of an emergency by the governor, moneys
 
12 in the emergency natural disaster relief fund may be used by the
 
13 governor, not subject to chapter 103D, to mitigate the impact of
 
14 the damage caused by the natural disaster and to cause or assist
 
15 the recovery, repair, and rehabilitation of property, persons,
 
16 businesses, or institutions following the disaster.  Moneys may
 
17 be provided to any person, business, or governmental agency or
 
18 body in the form of aid, assistance, grants, or loans.  Moneys in
 
19 the emergency natural disaster relief fund may also be used to
 
20 pay the costs and expenses of administering and operating the
 
21 emergency natural disaster relief fund.
 
22      (e)  There shall be no liability on the part of and no cause
 

 
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 1 of action of any nature shall arise against the State or its
 
 2 officers or employees for any action taken by them in the
 
 3 performance of their powers and duties with respect to the Hawaii
 
 4 hurricane relief fund, the emergency natural disaster relief fund
 
 5 or the natural disaster loss mitigation fund.  Nothing in this
 
 6 section shall create an obligation, debt, claim, cause of action,
 
 7 claim for relief, charge, or any other liability of any kind
 
 8 whatsoever against the State or its officers and employees in
 
 9 favor of any person or entity without regard to whether that
 
10 person or entity did receive or could have received any benefits
 
11 from the Hawaii hurricane relief fund, the emergency natural
 
12 disaster relief fund, or the natural disaster loss mitigation
 
13 fund."
 
14      SECTION 3.  The Hawaii Revised Statutes is amended by adding
 
15 a new chapter to be appropriately designated and to read as
 
16 follows:
 
17      "§    . Natural disaster loss mitigation fund.
 
18      (a) On December 15, 2002, there shall be created a natural
 
19 disaster loss mitigation fund to be placed within the department
 
20 of commerce and consumer affairs for administrative purposes.  On
 
21 December 15, 2002, there shall be created in the treasury of the
 
22 State the natural disaster loss mitigation fund.
 

 
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 1      (b) If there has been no hurricane resulting in claims under
 
 2 the Hawaii hurricane relief fund's policies prior to December 1,
 
 3 2002, then no later than December 15, 2002, one per cent of the
 
 4 net moneys available to the Hawaii hurricane relief fund shall be
 
 5 transferred to the natural disaster loss mitigation fund, and the
 
 6 remaining ninety-nine per cent shall be transferred to the
 
 7 emergency natural disaster relief fund.  If there has been a
 
 8 hurricane resulting in claims under the Hawaii hurricane relief
 
 9 fund's policies prior to December 1, 2002, no moneys available to
 
10 the Hawaii hurricane relief fund shall be transferred to the
 
11 natural disaster relief fund until after payment, satisfaction,
 
12 discharge, release, or termination of all obligations of the
 
13 Hawaii hurricane relief fund, including but not limited to
 
14 obligations under its policies of hurricane property insurance,
 
15 or its bonds, notes, or other indebtedness.
 
16      (c)  On the first day of July of each year beginning in
 
17 2003, one percent of the amount in the emergency natural disaster
 
18 relief fund, calculated as of May 31 of that year, shall be
 
19 transferred to the natural disaster loss mitigation fund.
 
20      (d) Interest or other earnings on moneys in the natural
 
21 disaster loss mitigation fund shall be credited to the natural
 
22 disaster loss mitigation fund.  Investments in the natural
 

 
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 1 disaster loss mitigation fund shall be subject to article 6 of
 
 2 chapter 431.
 
 3      (e)  Moneys in the natural disaster loss mitigation fund may
 
 4 be used by the director of commerce and consumer affairs, not
 
 5 subject to chapter 103D, to mitigate or reduce the risk of loss
 
 6 or damage to property that may result from future natural
 
 7 disasters.  Moneys may be provided to any person, business, or
 
 8 governmental agency or body in the form of aid, assistance,
 
 9 grants, or loans.  Moneys in the natural disaster loss mitigation
 
10 fund may also be used to pay the costs and expenses of
 
11 administering an operating the natural disaster loss mitigation
 
12 fund.
 
13      (f)  There shall be no liability on the part of and no cause
 
14 of action of any nature shall arise against the State or its
 
15 officers or employees for any action taken by them in the
 
16 performance of their powers and duties with respect to the Hawaii
 
17 hurricane relief fund, the emergency natural disaster relief fund
 
18 or the natural disaster loss mitigation fund.  Nothing in this
 
19 section shall create an obligation, debt, claim, cause of action,
 
20 claim for relief, charge, or any other liability of any kind
 
21 whatsoever against the State or its officers and employees in
 
22 favor of any person or entity without regard to whether that
 

 
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 1 person or entity did receive or could have received any benefits
 
 2 from the Hawaii hurricane relief fund, the emergency natural
 
 3 disaster relief fund, or the natural disaster loss mitigation
 
 4 fund."
 
 5      SECTION 4.  Chapter 431P, Hawaii Revised Statutes, is
 
 6 amended by adding a new section to be appropriately designated
 
 7 and to read as follows:
 
 8      "§431P  .  Termination of fund operations.
 
 9      The fund shall stop writing new and renewal policies of
 
10 hurricane property insurance on December 1, 2001 and shall
 
11 provide no insurance coverage after December 1, 2002.  All fund
 
12 operations shall cease upon payment, satisfaction, discharge,
 
13 release, or termination of all obligations of the fund, including
 
14 but not limited to obligations under its policies of hurricane
 
15 property insurance, or its bonds, notes, or other indebtedness.
 
16 If bonds, notes, or other indebtedness have been issued by or on
 
17 behalf of the fund prior to December 1, 2002, the fund shall
 
18 cause the bonds, notes, or other indebtedness to be paid down,
 
19 retired, or defeased prior to December 1, 2002."
 
20      SECTION 5.  Chapter 431P, Hawaii Revised Statutes, is
 
21 amended by adding a new section to be appropriately designated
 
22 and to read as follows:
 

 
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 1      "§431P-  .  Transfer of net moneys following termination of
 
 2 fund insurance operations.  If there has been no hurricane
 
 3 resulting in claims under the Hawaii hurricane relief fund's
 
 4 policies prior to December 1, 2002, then no later than
 
 5 December 15, 2002, ninety-nine per cent of the net moneys in the
 
 6 hurricane reserve trust fund shall be transferred to the
 
 7 emergency natural disaster relief fund, and the remaining one per
 
 8 cent shall be transferred to the natural disaster loss mitigation
 
 9 fund.  If there has been a hurricane resulting in claims under
 
10 the Hawaii hurricane relief fund's policies prior to December 1,
 
11 2002, no moneys available to the Hawaii hurricane relief fund
 
12 shall be transferred to the emergency natural disaster relief
 
13 fund and the natural disaster loss mitigation fund until after
 
14 payment, satisfaction, discharge, release, or termination of all
 
15 obligations of the Hawaii hurricane relief fund, including but
 
16 not limited to obligations under its policies of hurricane
 
17 property insurance, or its bonds, notes, or other indebtedness."
 
18      SECTION 6.  Section 431P-16, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "§431P-16  Establishment of trust funds.
 
21      (a)  The fund shall establish outside the state treasury a
 
22 hurricane reserve trust fund and any accounts thereunder and any
 

 
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 1 other trust fund or account necessary to carry out the purposes
 
 2 of this chapter.  Moneys deposited in the hurricane reserve trust
 
 3 fund and any accounts thereunder or any other trust fund or
 
 4 account shall be held by the fund, as trustee, in a depository as
 
 5 defined in section 38-1 or according to a similar arrangement at
 
 6 the discretion of the board, including, but not limited to, trust
 
 7 or custodial accounts created for the benefit of the fund's
 
 8 secured parties under contractual claims financing arrangements.
 
 9 These moneys may be invested and reinvested in accordance with
 
10 the plan of operation.  Disbursements from the trust funds shall
 
11 not be subject to chapter 103D and shall be made in accordance
 
12 with procedures adopted by the board.
 
13      (b)  The hurricane reserve trust fund shall receive deposits
 
14 of the special mortgage recording fee established by this
 
15 chapter.  The special mortgage recording fee shall be imposed on
 
16 each mortgage and each amendment to a mortgage which, in each
 
17 case, increases the principal amount of the secured debt and
 
18 which is recorded in the bureau of conveyances of the State under
 
19 chapter 502 or filed with the assistant registrar of the land
 
20 court of the State under chapter 501.
 
21      The special mortgage recording fee shall be an amount equal
 
22 to one-tenth of one per cent of the stated principal amount of
 

 
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 1 the debt secured by the mortgage or, in the case of an amendment
 
 2 or refinancing of a mortgage, an amount equal to one-tenth of one
 
 3 per cent of the amount of the increase of the stated principal
 
 4 amount of the secured debt; provided that the board may establish
 
 5 a lower special mortgage recording fee amount pursuant to section
 
 6 431P-5(b)(14).  With respect to an open end revolving loan, the
 
 7 principal amount of the debt on which the special mortgage
 
 8 recording fee is calculated shall be the maximum amount which may
 
 9 be outstanding under the loan at any one time.  With respect to a
 
10 mortgage securing a nonmonetary or inchoate obligation, the
 
11 principal amount of the debt on which the special mortgage
 
12 recording fee is calculated shall be the monetary amount which
 
13 the mortgagee attributes to the obligation.  If the debt is
 
14 stated in a foreign currency, it shall be converted to U.S.
 
15 dollars using an exchange rate published in a newspaper of
 
16 general circulation in this State within one week prior to
 
17 recordation of the mortgage or amendment of mortgage.
 
18      The special mortgage recording fee shall be in addition to
 
19 any applicable fees under chapter 501 or 502.  The special
 
20 mortgage recording fee shall be submitted to and collected by the
 
21 bureau of conveyances or the assistant registrar of the land
 
22 court of the State and shall be deposited into the hurricane
 

 
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 1 reserve trust fund.  The special mortgage recording fee shall be
 
 2 submitted at the time the mortgage or amendment of mortgage is
 
 3 recorded together with any related forms or certifications
 
 4 required by the bureau of conveyances or the assistant registrar
 
 5 of the land court of the State.
 
 6      (c)  The Hawaii hurricane relief fund shall implement the
 
 7 assessments of all property and casualty insurers as authorized
 
 8 by section 431P-5(b)(8)(A) and (B) and the proceeds from the
 
 9 assessments shall be deposited into the hurricane reserve trust
 
10 fund or into trust or custodial accounts, created for the benefit
 
11 of the fund's secured parties, that are held inside or outside
 
12 the hurricane reserve trust fund.
 
13      (d)  If the Hawaii hurricane relief fund offers to issue
 
14 policies of hurricane property insurance, the premiums for the
 
15 policies shall be deposited into the hurricane reserve trust
 
16 fund.
 
17      (e)  Should the moneys in the hurricane reserve trust fund
 
18 be insufficient to pay claims arising out of a covered event, the
 
19 Hawaii hurricane relief fund is authorized to levy a surcharge
 
20 not to exceed seven and one-half per cent a year on premiums
 
21 charged for all property and casualty insurance policies issued
 
22 for risks insured in this State.  These moneys may be deposited
 

 
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 1 into the hurricane reserve trust fund or into trust or custodial
 
 2 accounts, created for the benefit of the fund's secured parties,
 
 3 that are held inside or outside the hurricane reserve trust fund.
 
 4 The formula to calculate the amount and period of the surcharge
 
 5 and the procedures and methodology for payment of claims during
 
 6 periods of insufficiency of moneys for such purpose shall be
 
 7 provided in the plan of operation.  The amount and reason for any
 
 8 surcharge made pursuant to this subsection shall be separately
 
 9 stated on any billing sent to an insured.  The surcharge shall
 
10 not be considered premiums for any other purpose, including the
 
11 computation of gross premium tax or the determination of agents'
 
12 commissions.
 
13      (f)  Any proceeds, experience refunds, or other return funds
 
14 under reinsurance shall be deposited into the hurricane reserve
 
15 trust fund.
 
16      (g)  Any proceeds from loans or other moneys from the
 
17 federal government, any proceeds from bonds issued pursuant to
 
18 this chapter loaned by the director to the Hawaii hurricane
 
19 relief fund, and other monies as the State may make available
 
20 from time to time shall be deposited into the hurricane reserve
 
21 trust fund.
 
22      (h)  Moneys in the hurricane reserve trust fund or in trust
 

 
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 1 or custodial accounts, created for the benefit of the fund's
 
 2 secured parties, shall be expended by the Hawaii hurricane relief
 
 3 fund or its authorized designee and used solely for the purposes
 
 4 of this chapter. 
 
 5      [(i)  Solely upon dissolution of the Hawaii hurricane relief
 
 6 fund, the net moneys in the hurricane reserve trust fund shall
 
 7 revert to the state general fund, after any payments by the fund
 
 8 on behalf of licensed property and casualty insurers or the State
 
 9 that are required to be made pursuant to any federal disaster
 
10 insurance program enacted to provide insurance or reinsurance for
 
11 hurricane risks.  In the event such moneys are paid on behalf of
 
12 licensed property and casualty insurers, payment shall be made in
 
13 proportion to the premiums from policies of hurricane property
 
14 insurance serviced by the insurers in the twelve months prior to
 
15 dissolution of the fund.]"
 
16      SECTION 7.  Statutory material to be repealed is bracketed.
 
17 New statutory material is underscored.
 
18      SECTION 8.  This Act shall take effect upon its approval.
 
19 
 
20                           INTRODUCED BY:  _______________________
 

 
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