We can't let hurricane relief fall prey to politics

By Gerald Peters

At the Hawai'i Legislature this year, the crucial matter of disaster preparation has been turned into yet another target for partisan rhetoric and political games.

As Kaua'i County employees shuddered behind pillars of the county building in September 1992, they watched Hurricane 'Iniki passed directly above them. Advertiser library photo • Sept. 11, 1992

"Give it all back; let homeowners fend for themselves" is one mantra.

Meanwhile, Democratic leaders in both houses are much more cautious. Their approach maintains that the hurricane fund should be used as originally intended — to help Hawai'i homeowners prepare for the inevitability of the next hurricane.

To be fair, many opponents of the Democrats' "safe" approach sincerely believe the fund is not needed.

They propose a radical, but politically appealing, approach: close it down, pass out the money.

That might be a good idea if:

• You could count on insurers not to abandon our homeowners again so you wouldn't still need a state safety net.
• You could make a black-and-white conclusion that a rebate was actually due or do able.
• Homeowners hadn't already received a $40 million windfall to insure their homes over what they paid in.
• The 80 percent of our existing homes and town houses built before the 1990s were not in need of strengthening.

Rebaters essentially are betting that El Nino, due back soon, won't bring a storm before the 2002 elections. They're betting that voters won't realize Democrats are actually taking the harder political road: protecting homeowners and investing in the future.

Meanwhile, the governor's idea to create scholarships via interest earned on the hurricane fund (as well as tobacco funds) was portrayed as a raid on the $195 million in the hurricane fund.

The administration tried to make it clear that the governor's proposal was to use the earned interest only. The governor agreed that the principal should stay in a rainy-day fund, ready for the day the hurricane fund would have to return to writing policies. He looked at, but quickly cut off, earlier ideas for a partial rebate.

We're told the phone calls poured in: "Don't let them spend it on scholarships; keep it safe; use it for the intended purpose, or give it back."

Veteran Democratic lawmakers studied the issue and steadfastly opposed plans that would leave homeowners unprepared and unprotected. They became convinced that the hurricane fund no longer can be seen as temporary. Expected federal legislation to create a national hurricane insurance program has failed.

They also concluded that we must not endanger our standing with the Federal Emergency Management Agency by politicizing its reserve.

They know that pulling the rug out from under the $1.5 million federal investment last year in state and county hazard mitigation programs won't sit right with FEMA.

You have to credit Senate Consumer Protection Committee Chairman Ron Menor, who came up with the framework for a long-term hurricane readiness strategy that was sent to a conference committee this past week.

Those who want to raid or rebate this fund and its $195 million reserve might stop to consider whether it is still essential for states to help homeowners prepare for a future insurance crisis with "safety nets" like the hurricane relief fund.

If they did, there might not be so many misconceptions about rebates and scholarship plans.

All this does is politicize the debate and cloud the issues.

"Mr. Speaker, this bill establishes a pilot program to provide (matching) grants to homeowners for installation of hurricane protection devices. In the long run, this kind of initiative will provide greater security and protection to Hawai'i's residents than return of a few dollars apiece.

"This fact is, Mr. Speaker, there will be another hurricane whether we like it or not. We just don't know when. We were lucky enough the last time to find a solution. Mr. Speaker, let us not tempt fate and let our hot air blow it all away. Thank you."

With that, House Majority Floor Leader Marcus Oshiro concluded his speech in support of keeping the hurricane relief fund in place for the next disaster.

The damage to road signs and utility poles on a stretch of road near Waipouli, Kaua'i, reflects the devastation that Hurricane ÎIniki left all over the island. It provides a powerful reminder of Hawai'i's need to have emergency monies in place when future disasters strike. Advertiser library photo • Sept. 11, 1992

Most legislators, Insurance Commissioner Wayne Metcalf, hurricane relief fund officials and even critics such as us have concluded nothing has really changed since Hurricane 'Iniki. A future crisis is probable. Hawai'i needs a public-sector agency and reserve to fall back on.

This agency can manage crisis readiness with programs that lower overall risk. This, in turn, helps stabilize future coverage availability and rates.

Nevertheless, a Republican bloc (13 House members and three senators) remains determined to push a rebate and is unconvinced that dissolving the relief fund or passing on rebates to policyholders might be the wrong move at this time.

This is despite the fact that policyholders represent only 58 percent of the picture.

In addition, the Republicans seem to be against other majority-sponsored bills that might help retirees, veterans, multi-generation families and others prepare their homes for a hurricane.

Why?

Metcalf recently voiced serious concerns about the fund's exit from policy-writing and the resulting concentration of hurricane risk at a start-up company, Zephyr Insurance.

Nine years after 'Iniki, insurers such as Allstate and Island are still not writing hurricane policies.

The retroactive grants for state hurricane relief fund policyholders to install wind damage mitigation devices like hurricane clips and storm panels will also make homes more insurable, thus lowering annual rates.

The relief fund is still needed at this point with its future-oriented risk and rate management programs.

Policyholders have received what they paid for: subsidized premium rates below true market levels. Rebates are virtually impossible to achieve, would be small, require bigger government staffing and face potentially protracted legal challenges by various classes of contributors and their lawyers.

Rather than rebates, any future return would probably have to go via the state General Fund and then variable tax credits. But even in that case, not everyone would be eligible. Yikes!

So, after years of trying to untangle this complex, intellectually challenging puzzle, we still have questions.

Gerald Peters is coordinator of the Hazard Mitigation Ad Hoc Task Force; president of Hurricane Protection Systems, and a management consultant in Hawai'i for 22 years.