HOUSE OF REPRESENTATIVES	H.R. NO.	154
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII

HOUSE RESOLUTION

 

 

REQUESTING THE governor to convene a working group to EXPLORE RISK TRANSFER OPPORTUNITIES IN THE EVENT OF A SEVERE disaster.

 

 

 

     WHEREAS, the Hawaii Hurricane Relief Fund stopped writing hurricane insurance in 2002 and has since been operationally dormant; and

 

     WHEREAS, the Hawaii Hurricane Relief Fund has a reserve in the amount of approximately $183,000,000, which is invested in bonds and the interest income of which is transferred annually to the general fund; and

 

     WHEREAS, the Hawaii Hurricane Relief Fund will reenter the market in response to a future scarcity in hurricane insurance that may arise after a severe hurricane; and

 

     WHEREAS, if the Hawaii Hurricane Relief Fund redeploys in the market, it will face a large potential property loss exposure in the tens of billions of dollars in the event of a severe hurricane; and

 

     WHEREAS, a severe hurricane would also create significant economic loss for the public, businesses, and government in Hawaii; and

 

     WHEREAS, the Hawaii Hurricane Relief Fund was designed to handle a moderate hurricane loss comparable to Hurricane Iniki's striking of Kauai, but in fact it faces potential losses far in excess of its funding capacity; and

 

     WHEREAS, the Hawaii Hurricane Relief Fund has in the past explored reinsurance risk transfer options under which a significant amount of money could be paid into the Fund in the event of a severe hurricane, thus further capitalizing the reserve for the benefit of the people of Hawaii; and

 

     WHEREAS, the Hawaii Hurricane Relief Fund did not pursue such risk transfer options in the past because it did not want to spend down principal for that purpose; and

 

     WHEREAS, the concept of risk transfer is different from debt financing in that long-term liabilities are not created for the Hawaii Hurricane Relief Fund or the State of Hawaii; and

 

     WHEREAS, the Hawaii Hurricane Relief Fund could benefit from a transaction to increase capitalization of its reserve and therefore should explore current risk transfer options and consider whether to enter into such a transaction; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-eighth Legislature of the State of Hawaii, Regular Session of 2015, that the Governor is requested to convene a working group that includes the State Sustainability Coordinator and representatives from the Hawaii Hurricane Relief Fund to explore risk transfer opportunities that could increase moneys available in the event of a severe disaster; and

 

     BE IT FURTHER RESOLVED that the Governor, through the working group, submit findings and recommendations, including any proposed legislation, to the Legislature not later than twenty days prior to the convening of the Regular Session of 2016; and

 

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor, the Chairperson of the Board of Directors of the Hawaii Hurricane Relief Fund, the Insurance Commissioner, and the State Sustainability Coordinator.

 

 

 

OFFERED BY:

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Report Title: 

Working Group; Risk Transfer