Bill Text: HI HB714 | 2019 | Regular Session | Amended
Bill Title: Relating To Natural Disaster Protection.
Spectrum: Partisan Bill (Democrat 10-0)
Status: (Introduced - Dead) 2019-02-05 - Passed Second Reading as amended in HD 1 and referred to the committee(s) on CPC with none voting aye with reservations; none voting no (0) and Representative(s) Say, Thielen excused (2). [HB714 Detail]
Download: Hawaii-2019-HB714-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
714 |
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THIRTIETH LEGISLATURE, 2019 |
H.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO NATURAL DISASTER PROTECTION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii is highly exposed to natural disasters, yet there is a gap between the State's exposure to disasters and its investment in post-disaster financing. Currently, Hawaii relies on federal funding from the Federal Emergency Management Agency and the National Flood Insurance Program to support disaster recovery. Limited federal disaster assistance creates a liquidity gap that deepens the economic disruption for Hawaii's economy.
The legislature also finds that total losses from a storm making landfall near Waikiki with the same strength as Hurricane Iniki could cost twenty to forty billion dollars in direct economic losses, which represents almost fifty per cent of the state gross domestic product and over three years of total government spending. If a catastrophic event occurs, the federal government does not have the authority to go beyond providing financial assistance to rebuild public facilities, small temporary housing allowances to families left homeless, and Small Business Administration loans to rebuild homes and businesses. Although some property losses will be covered by personal insurance, the vast majority of losses will fall on the State and counties, and thus, the taxpayers. The State is not prepared to absorb tens of billions of dollars in damages and lost tax revenue. However, a parametric insurance transfer could move residual risk off the State's budget and onto the private sector.
Parametric, or index-based, insurance solutions settle claims on the characteristics of a disaster, as opposed to the loss sustained from the disaster. Unlike traditional insurance, parametric solutions do not require lengthy loss adjustment processes, and they enable rapid disbursements of payouts to maximize liquidity and allow for flexibility in the use of the proceeds. Payouts can occur quickly, in as few as ten to twenty-one days. The trigger for parametric insurance coverage in Hawaii for a natural disaster could be based on the maximum wind speed of the hurricane as it passes through a specific covered area such as the Ala Wai watershed. An example of a specific trigger would be that any hurricane with one-minute maximum winds of ninety-six miles per hour or higher as it passes through a designated area would result in a payout.
Further, the payment will not be subject to the limitations faced by federal disaster relief and can be used for any purpose, such as emergency response costs, replacing lost tax revenue, and funding of increased insurance costs. In 2014, a category five cyclone swept across Tonga, but because it had a parametric insurance program, the nation received an immediate payout of $1,270,000 towards disaster recovery.
The purpose of this Act is to:
(2) Appropriate funds for the feasibility study.
(1) Types of parametric disaster insurance policies available to the State;
(2) The costs for these policies; and
(3) Any other information the social science research institute deems necessary.
SECTION 3. The social science research institute at the University of Hawaii at Manoa shall submit its feasibility study, as required by this Act, together with its findings and recommendations, including proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2021.
SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2019-2020 and the same sum or so much thereof as may be necessary for fiscal year 2020-2021 for the social science research institute at the University of Hawaii to conduct a feasibility study as required by this Act.
The sums appropriated shall be expended by the University of Hawaii for the purposes of this Act.
SECTION 5. This Act shall take effect on January 1, 2050.
Report Title:
Parametric Disaster Insurance; UH; Feasibility Study; Appropriation
Description:
Requires the Social Science Research Institute of the University of Hawaii to conduct a study to determine whether the use of parametric disaster insurance policies for the State is feasible, practical, affordable, and in the public interest. Appropriates funds. (HB714 HD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
