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Give back
hurricane
money,
gov says

He says return the
relief fund's $175 million
to homeowners who paid

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By Richard Borreca
Star-Bulletin

Gov. Ben Cayetano is proposing that homeowners get refunds when the state closes the Hawaii Hurricane Relief Fund.

The state is still working out the specific details, Cayetano said. But, he stressed, the money left in the fund should be returned to the homeowners who paid for the insurance.

According to the state law that set up the hurricane relief fund, the money left in the fund when it closes was to be turned over to the state.

The fund now has $175 million, which represents the contributions of about 80,000 homeowners, according to Kathryn Matayoshi, director of the state commerce and consumer affairs department.

When the 2000 hurricane season ended Nov. 30, the fund stopped issuing new policies. The fund will phase out as the 80,000 existing policies lapse, Matayoshi said.

The state fund was created in 1993 when most private insurers dropped the Hawaii market after Hurricane Iniki spawned more than $1.3 billion in claims in 1992. At the time, most firms refused to insure Hawaii property, and homeowners had no place to get storm-damage coverage, prompting mortgage lenders to foreclose on their loans.

Since then, most insurance companies have returned to the local home insurance market.

Matayoshi said the money collected each year was used to buy a reinsurance policy and a credit line in case of a hurricane. The excess money was kept in the fund.

The rebate would depend on what is now in the hurricane fund.

The fund will remain with a small carry-over balance, she said, in case it needs to be brought back to life.

"We don't want to be in a position when there is another crisis and homeowners can't get insurance," she said.

The state is also still figuring out how to divide the rebates. Because the fund has been in existence since 1993 and homeowners have come and gone from the fund and paid different amounts depending on the value of their property, the state doesn't have the records to show how much everyone paid into the fund.

The state is figuring out a way that is efficient and fair, Matayoshi said.

Cayetano dismissed suggestions that the hurricane-relief money be used to pay for state-worker pay raises or other continuing expenses, because the fund rebate would be a one-time event and once the money was distributed, there would not be anything left for another year of payments.

"The state is not an insurance company," Matayoshi said. "The fund was created for a crisis, and we aren't in this to make money."