Hurricane fund still in business
| • | We can't let hurricane relief fall prey to politics |
The Hawai'i Hurricane Relief Fund is not ending December 2001; only suspending insurance operations for now. It will work on hazard mitigation, and it still has 45,000 policyholders to phase out.
The relief fund's 1994-2000 audited financial statements reveal more money paid out to buy reinsurance coverage than was received from policyholder premiums. This suggests it is wrong to assume a large fund of premiums is left over for rebate to policyholders.
Policyholders paid in $315 million; HHRF paid out $358 million. The gap was covered by other fees and assessments, including about $90 million from insurers, $90 million from businesses' worker's comp/liability policy charges, plus $52 million from mortgage recording fees.
While the Legislature is not now planning to use the reserve, it has targeted some of the annual interest for such things as hazard mitigation, reinvestment and some payments to offset general fund expenses such as Civil Defense.
The relief fund board wants to keep the reserve intact for the next crisis.
The higher the reserve, the less needs to be purchased on the international market, reducing expense outlay.
In addition, the relief fund says $195 million is not large compared to peak total exposure of $10 billion dollars in potential O'ahu losses.
Taking some or all of the $195 million today could simply mean it will have to be re-collected following a storm, resulting in higher initial premiums, fees and assessments.
