[House Report 105-16]
[From the U.S. Government Publishing Office]
105th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 105-16
_______________________________________________________________________
TO CONSENT TO CERTAIN AMENDMENTS ENACTED BY THE LEGISLATURE OF THE
STATE OF HAWAII TO THE HAWAIIAN HOMES COMMISSION ACT, 1920
_______
March 11, 1997.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
[To accompany H.J. Res. 32]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the joint
resolution (H.J. Res. 32), to consent to certain amendments
enacted by the Legislature of the State of Hawaii to the
Hawaiian Homes Commission act, 1920 having considered the same,
report favorably thereon without amendment and recommend that
the joint resolution do pass.
PURPOSE OF THE BILL
The purpose of H.J. Res. 32 is to consent to certain
amendments enacted by the Legislature of the State of Hawaii to
the Hawaiian Homes Commission Act, 1920.
BACKGROUND AND NEED FOR LEGISLATION
Congress enacted the Hawaiian Homes Commission Act of 1920
to designate approximately 200,000 acres within the islands of
the then Territory of Hawaii for the exclusive use of native
Hawaiians. The Act defined native Hawaiians as descendants with
at least one-half blood quantum of individuals inhabiting the
Hawaiian Islands prior to 1778. The primary purpose of the Act
was to provide rural homesteads for native Hawaiians. However,
this was expanded in 1923 to include residential lots and the
demand for parcels for that purpose has continued to the
present.
The role of the Federal Government in the Hawaiian Homes
Commission became limited at the time of Hawaii Statehood in
1959. The responsibility for the Hawaiian Homes Commission was
largely devolved to the new State in the admissions act of
March 18, 1959, ``An Act to provide for the admission of the
State of Hawaii into the Union.'' However, Section 4 of the
admissions act requires Congressional consent to any changes to
the Hawaiian Homes Commission Act. Additionally, the Secretary
of the Interior's function became primarily ministerial,
involving the approval of land exchanges for private or public
lands of equal value, as permitted under the Hawaiian Homes
Commission Act.
In 1993 the State of Hawaii passed Act 339 to create a
Hawaii hurricane relief fund after the devastation of Hurricane
Iniki and included amendments to the Hawaiian Homes Commission
Act for native Hawaiians affected on Hawaiian Home Lands. This
first amendment will facilitate certain disaster relief
insurance and bonds for homeowners on Hawaiian Home lands. In
1994 the State of Hawaii enacted Act 37 to permit grandchildren
of a Native Hawaiian leaseholder to assume the remainder of a
home lease should that individual die. These proposed changes
have not taken effect as Congress has yet to approve these
measures.
Following is a summary of Act 339 of 1993 and Act 37 of
1994 which would change certain provisions of the Hawaiian
Homes Commission Act of 1920 (the full text of both measures
appear in the Appendix):
Act 339 of the Session Laws of Hawaii, 1993: This statute
establishes the Hawaiian Hurricane Relief Fund. Section 7 of
Act 339 authorizes the Department of Hawaiian Home Lands to
issue hurricane insurance coverage for lessees of Hawaiian Home
lands and revenue bonds to establish the necessary reserves for
payment of claims in excess of reserves. Section 15 provides
that consent requirement, if any, that applies to the Hawaiian
Home Lands provisions of the act shall not be deemed to affect
the validity of the other provision of the act.
Act 37 of the Session Laws of Hawaii, 1994: This statute
allows homestead lessees to designate as a successor to the
lease a grandchild who is at least 25 percent native Hawaiian.
Under the current law, as adopted by Hawaii in 1982, a lessee
may designate his or her spouse or children as a successor
under the lease if they are 25 percent native Hawaiian; the
bill would thus allow a similar designation with respect to
grandchildren.
The House of Representatives approved a measure identical
to H.J. Res. 32 as part of H.R. 1332 in the 104th Congress,
which was not acted on by the Senate prior to adjournment.
COMMITTEE ACTION
H.J. Res. 32 was introduced on January 21, 1997, by
Congressman Neil Abercrombie (D-HI) and cosponsored by
Congressman Eni F.H. Faleomavaega (D-AS) and Congressman Elton
Gallegly (R-CA). The bill was referred to the Committee on
Resources for consideration. On March 5, 1997, the Full
Resources Committee met to consider H.J. Res. 32. No amendments
were offered and the joint resolution was ordered favorably
reported to the House of Representatives by voice vote.
COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS
With respect to the requirements of clause 2(l)(3) of rule
XI of the Rules of the House of Representatives, and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee on Resources' oversight findings and
recommendations are reflected in the body of this report.
CONSTITUTIONAL AUTHORITY STATEMENT
Article I, section 8, and Article IV, section 3 of the
Constitution of the United States grants Congress the authority
to enact H.J. Res. 32.
COST OF THE LEGISLATION
Clause 7(a) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs which would be incurred in H.J. Res. 32.
However, clause 7(d) of that Rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 403 of the Congressional Budget Act of 1974.
COMPLIANCE WITH HOUSE RULE XI
1. With respect to the requirement of clause 2(l)(3)(B) of
rule XI of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, H.J.
Res. 32 does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
2. With respect to the requirement of clause 2(l)(3)(D) of
rule XI of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.J. Res. 32.
3. With respect to the requirement of clause 2(l)(3)(C) of
rule XI of the Rules of the House of Representatives and
section 403 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.J.
Res. 32 from the Director of the Congressional Budget Office.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 7, 1997.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.J. Res. 32, a joint
resolution to consent to certain amendments enacted by the
Legislature of the State of Hawaii to the Hawaiian Homes
Commission Act, 1920.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Victoria V.
Heid.
Sincerely,
June E. O'Neill, Director.
Enslosure.
H.J. Res. 32--A joint resolution to consent to certain amendments
enacted by the Legislature of the State of Hawaii to the
Hawaiian Homes Commission Act, 1920
H.J. Res. 32 would grant the consent of the United States
to a number of amendments to the Hawaiian Homes Commission Act,
1920, already adopted by the state of Hawaii. These amendments
generally concern the administration of the Hawaiian home
lands.
CBO estimates that enacting this resolution would have no
effect on the federal budget. Because the resolution would not
affect direct spending or receipts, pay-as-you-go procedures
would not apply. H.J. Res. 32 contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act of 1995 and would impose no costs on state, local,
or tribal governments.
The CBO staff contact for this estimate is Victoria V.
Heid. This estimate was approved by Robert A. Sunshine, Deputy
Assistant Director for Budget Analysis.
COMPLIANCE WITH PUBLIC LAW 104-4
H.J. Res. 32 contains no unfunded mandates.
CHANGES IN EXISTING LAW
If enacted, H.J. Res. 32 would make no changes in existing
law.
A P P E N D I X
----------
1. Act 339 of the Session Laws of Hawaii, 1993
ACT 339.--A Bill For an act relating to laws affecting insurance
Be It Enacted by the Legislature of the State of Hawaii:
Section 1. The legislature finds that new, creative, and
flexible mechanisms are necessary to insure against hurricane
losses in Hawaii in the aftermath of the devastation caused by
Hurricane Iniki and the worldwide insurance crisis. The
economic welfare of this State is dependent on the availability
of property insurance including coverage for catastrophic
losses in the event of another hurricane.
The legislature finds that without property insurance the
orderly growth and development of the State would be severely
impeded; that adequate insurance upon property is necessary to
enable homeowners and commercial owners to obtain financing for
the purchase and improvement of their property; and that while
the need for such insurance is increasing, the market for such
insurance is not adequate and is likely to become less adequate
in the future.
The purpose of this Act is to create the Hawaii hurricane
relief fund. The Hawaii hurricane relief fund will assess the
availability of insurance from all sources and be empowered to
take steps to provide coverage should the private market prove
unreliable.
The establishment of the Hawaii hurricane relief fund
serves a public purpose and is an essential government
function.
Section 2. The Hawaii Revised Statutes is amended by adding
a new chapter to be appropriately designated and to read as
follows:
``CHAPTER --HAWAII HURRICANE RELIEF FUND
``PART I.--GENERAL PROVISIONS
``Sec. -1. Definitions. As used in this chapter, unless
the context otherwise requires:
`` `Board' means the board of directors of the Hawaii
hurricane relief fund.
`` `Commissioner' means the insurance commissioner as
defined in section 431:2-102.
`` `Covered event' means each hurricane that directly
causes windstorm damage in the State.
`` `Deductible' or `mandatory deductible' means the amount
of loss assumed by the policyholder that is not included in the
coverages provided by the fund.
`` `Department' means the department of commerce and
consumer affairs.
`` `Director' means the director of finance.
`` `Eligible property' means:
``(1) Real property of one to four units used for
residential purposes and which is in insurable
condition, and tangible personal property located
therein or thereon as provided in the plan of operation
or any manual of rules and rates adopted under the plan
of operation; and
``(2) Real property used for business, commercial, or
industrial purposes which is in insurable condition
located therein or thereon as provided in the plan of
operation or any manual of rules and rates adopted
under the plan of operation.
`` `Fund' means the Hawaii hurricane relief fund
established by this chapter.
`` `Hurricane' means a storm that has been declared and
defined by the Central Pacific Hurricane Center of the National
Weather Service to be a hurricane.
`` `Plan of operation' means the plan for providing
hurricane property insurance as adopted by the board of
directors of the Hawaii hurricane relief fund, and any
amendments thereto, under section -7.
`` `Policy of hurricane property insurance' means a policy
or endorsement of insurance issued by the fund insuring only
against damage or loss to eligible property caused by a covered
event in excess of the deductible and up to $750,000 per risk
on real property of one to four units used for residential
purposes and up to $500,000 per risk on real property used for
business, commercial or industrial purposes, subject to the
limits defined by the plan of operation; provided that this
policy shall not include coverage for business interruption.
`` `Policy of property insurance' means a policy providing
`property insurance' as defined in section 431:1-206. For
purposes of this chapter, it includes `basic property
insurance' as provided under article 21 of chapter 431.
`` `Property insurance' means policies, riders, or
endorsements of insurance that provide indemnity, in whole or
in part, for the loss, destruction, or damage of eligible
property.
`` `Servicing facility' means any insurer engaged in
writing direct property insurance in this State and licensed in
this State, and any other party authorized to act in like
capacity on behalf of the fund.
``Sec. -2. Establishment of Hawaii hurricane relief fund.
There shall be a Hawaii hurricane relief fund to be placed
within the department of commerce and consumer affairs for
administrative purposes. The fund shall be a public body and a
body corporate and politic.
``Sec. -3. Board of directors. (a) The board of directors
of the fund shall consist of the insurance commissioner as an
ex officio voting member and six members appointed by the
governor in accordance with section 26-34. The board shall be
the policy making body of the fund. As such, the board shall be
responsible for establishing policies for the administration
and operation of the fund and the performance of other duties
and functions assigned to the fund.
``(b) Two members shall, by and with the advice and consent
of the senate, be appointed by the governor for a term of four
years; provided that of the initial appointees, one shall be
appointed for a two-year term. A vacancy on the authority of a
seat subject to this subsection shall be filled in accordance
with Article V, section 6, of the Constitution of the State of
Hawaii.
``(c) Two members shall, by and with the advice and consent
of the senate, be appointed by the governor from a list of
nominations submitted by the president of the senate. The
members appointed from a list of nominations of the president
of the senate shall serve for a term of four years; provided
that of the initial appointees, one shall be appointed for a
two-year term.
``(d) Two members shall, by and with the advice and consent
of the senate, be appointed by the governor from a list of
nominations submitted by the speaker of the house of
representatives. The members appointed from a list of
nominations of the speaker of the house of representatives
shall serve for a term of four years; provided that of the
initial appointees, one shall be appointed for a two-year term.
``(e) The governor shall select a chairperson and vice-
chairperson from among the members.
``(f) The board shall meet as often as necessary to
formulate and implement strategies and plans of operations in
furtherance of this chapter. Upon its appointment, the board
shall adopt an interim plan of operation within ninety days.
``(g) The appointed directors shall receive no compensation
for services, but shall be entitled to reimbursement of
necessary expenses, including travel expenses, incurred in the
performance of their duties.
``(h) The board may appoint, not subject to chapters 76 and
77, and executive director of the fund whose salary shall be
set by the board. The board may employ, not subject to chapters
76 and 77, technical experts and officers, agents and
employees, permanent or temporary, as required. The board may
also contract with persons, not subject to chapters 76, 77, and
78 when in the determination of the board, the services to be
performed are unique and essential to the execution of the
functions of the fund; provided that no individual contract
shall be for a period longer than two years per term.
``Sec. -4. Planning and assessment functions of the fund;
discretion to provide insurance. (a) The fund shall be
responsible for monitoring the availability of property
insurance, including insurance for covered events, in this
State. If at any time the board determines, in its sole
discretion, that the private insurance market is not making
such insurance reasonably available to consumers in this State,
the fund may offer policies of hurricane property insurance for
sale in accordance with this chapter.
``(b) Nothing in subsection (a) shall prohibit the board
from exercising its powers to develop plans and procedures for
the operation and management of the fund without regard to the
determination of the board as to the availability of insurance
in the private market.
``Sec. -5. Powers, duties, and functions. (a) The Hawaii
hurricane relief fund shall have the following general powers:
``(1) To sue and be sued;
``(2) To make and alter policies for its organization
and internal administration;
``(3) To adopt rules in accordance with chapter 91 to
effectuate the purposes of this chapter;
``(4) To borrow moneys; including but not limited to
moneys from state or federal sources and to issue notes
or other obligations of the fund for the purposes of
providing funds for any of its purposes as authorized
by the legislature from time to time;
``(5) To pledge or assign all or any part of the
moneys, rents, charges, or other revenue and any
proceeds derived by the fund; and
``(6) Enter into contracts as necessary to effectuate
the purposes of this chapter.
``(b) In addition to the general powers under subsection
(a), the fund shall have the specific power to:
``(1) Adopt and administer a plan of operation in
accordance with section -7, and a manual of rules and
rates to provide persons having an insurable interest
in eligible property with insurance coverage provided
by the fund;
``(2) Authorize the provision of hurricane coverage
by the fund for tangible personal property located in
or on real property used for business, commercial, or
industrial purposes and establish limits of liability
for specific coverages within the range of authorized
coverage;
``(3) Adopt actuarially sound rates based on
reasonable assumptions relative to expectations of
hurricane frequency and severity for all coverage
provided under policies or endorsements issued by the
fund. Rates adopted shall be subject to approval by the
commissioner pursuant to article 14 of chapter 431.
Rates adopted shall provide for classification of risks
and shall include past and prospective losses and
expense experience in this State;
``(4) Adopt procedures, guidelines, and surcharges
applicable to hurricane policies issued in connection
with an underlying property policy issued by an
unauthorized insurer;
``(5) Adopt any form of insurance policy necessary
for providing hurricane property insurance by the fund,
with the approval of the commissioner;
``(6) Issue insurance policies and pay claims for
coverage over the mandatory deductible;
``(7) Require every licensed insurer transacting
direct property insurance business in this State to act
as a servicing facility, and by contract with such
insurer authorize such insurer to inspect eligible
properties, service policies and policyholders of
hurricane property insurance, provide claim services,
and perform any other duties as authorized by the fund
for applicants to the fund and those insured by it;
``(8)(A) Assess annually all licensed property or
casualty insurers the amounts which, together with the
other assets of the fund, are sufficient to meet all
necessary obligations of the fund. The assessment shall
be made on the insurer's gross direct written premiums
for property and casualty insurance in Hawaii for the
preceding calendar year. The rate of assessment in a
year in which a covered event has not occurred shall be
3.75 percent and shall not include the insurer's gross
direct written premiums for motor vehicle insurance in
Hawaii; provided that the rate of assessment may be
increased to an amount not to exceed five percent and
may include the insurer's gross direct written premiums
for motor vehicle insurance in Hawaii following a
covered event. An insurer authorized to provide
comparable coverage under section -10(b) shall be
assessed an amount that excluded gross direct written
premiums for property insurance in Hawaii.
``(B) In the event of a loss from a covered event the
fund, in addition to the annual assessment in paragraph
(A), shall assess those insurers which wrote property
insurance coverage during the year immediately
preceding the year of the covered event in proportion
to each insurer's share of the total property premium
during that year. However, in no event shall the total
assessment exceed $500,000,000 in the aggregate;
provided that a separate assessment shall be made for
each covered event. An insurer authorized to provide
comparable coverage under section -10(b) shall be
exempted from this subparagraph.
``(C) Each insurer shall be notified of any
assessment not later than thirty days before it is due.
The fund may exempt or differ, in whole or in part, the
assessment of any insurer if the assessment would cause
the insurer's financial statement to reflect amounts of
capital or surplus less than the minimum amounts
required for a certificate of authority by this
jurisdiction;
``(9) Develop a program of incentives to encourage
insurers to provide policies of hurricane property
insurance in the event the commissioner authorizes the
provision of comparable insurance pursuant to section
-10(b); which may include, but are not limited to,
exemption of the insurer's gross direct written premium
for property insurance from the annual assessment
pursuant to section -5(b)(8)(A);
``(10) Develop a credit against the annual assessment
based on the difference between premiums written in
1993 and the premiums written in 1992 by each property
insurer;
``(11) Develop procedures regarding policies written
by unauthorized insurers comparable to the assessments,
and other contributions made by insurers authorized to
do business in this State;
``(12) Accumulate reserves or funds, including the
investment income thereon, to be used for paying
expenses, making loans, and paying valid claims for
covered events insured by the fund; and
``(13) Collect and maintain statistical and other
data as may be required by the commissioner.
``Sec. -6. Advisory committee. To assist it in
implementing this chapter the fund may appoint an advisory
committee consisting of:
``(1) Not less than one individual who is employed or
trained as a meteorologist and possesses knowledge of
the history, trends, and nature of windstorms in the
Pacific Ocean;
``(2) Not less than one individual who is a member of
the American academy of actuaries; and
``(3) Not less than one individual who is a
structural engineer licensed to practice in the State
and is knowledgeable about local community building
codes.
``The fund may establish additional advisory committees as
it may deem necessary in furtherance of this chapter.
``Sec. -7. Plan of operation. (a) The fund shall adopt a
plan of operation, and a manual of rules and rates necessary or
suitable to ensure both the solvency and the reasonable and
equitable administration of the fund.
``(b) If the fund fails to adopt a plan of operation, or
the fund fails to adopt amendments to the plan of operation,
the commissioner shall adopt a plan of operation or make
amendments necessary to carry out the purposes of this chapter.
Any plan of operation, or amendment, adopted by rule of the
commissioner, shall continue in full force and effect until the
rule is superseded by a plan of operation, or amendment,
adopted by a majority vote of all members of the fund's board,
and approved by the commissioner.
``(c) The plan of operation shall:
``(1) Establish procedures for performance of all
powers and duties of the fund;
``(2) Establish procedures for providing notice to
all persons with interests insurable by the fund in the
Sate of the type of insurance available from the fund
in the event the fund offers insurance;
``(3) Provide for and adopt all necessary forms,
including insurance policies to be used by and on
behalf of the fund, for use by the fund and servicing
facilities;
``(4) Adopt actuarially sound rates, based on
reasonable assumptions relative to expectations of
hurricane frequency and severity, to be charged for
insurance provided by the fund, in accordance with
article 14 of chapter 431;
``(5) Publish manuals of rules, rates, and rating and
classification plans, which shall address mandatory
deductibles, limits of coverage, and the classification
of risks and rate modifications based on the exposure
of insureds;
``(6) Establish procedures for receiving and
servicing applications to the fund;
``(7) Establish procedures for processing and
maintaining records of the fund relating to its
financial transactions, its agents, its employees, its
operations, and all transactions with any servicing
facility;
``(8) Establish procedures for the collection and
remittance of the premiums and return of unearned
premiums where applicable;
``(9) Establish procedures for the payment of valid
claims;
``(10) Establish procedures for prorating available
funds pursuant to section -15;
``(11) Establish procedures for obtaining
reinsurance;
``(12) Establish procedures to borrow funds; and
``(13) Develop a plan for the investment of moneys
held by the fund subject to the limitations in article
6 of chapter 431.
``Sec. -8. Annual statements. (a) The fund shall submit
to the commissioner each year, not later than one hundred
twenty days after the end of the fund's fiscal year, a
financial report in a form approved by the commissioner.
(b) The commissioner may require other reports concerning
risks insured by the fund as the commissioner deems
appropriate.
``Sec. -9. Powers of the commissioner. (a) For the
purpose of ascertaining the fund's condition or compliance with
this chapter, the commissioner shall examine the accounts,
records, documents, and transactions of the fund at least once
every three years commencing at the time the fund starts
issuing policies of hurricane property insurance or more often
if the commissioner deems advisable. The fund shall pay all
reasonable and actually incurred expenses of the examination in
accordance with section 431:2-306(b).
``(b) The commissioner may exercise all of the
commissioner's powers provided by law in the supervision and
regulation of the fund, any servicing facility, and any other
person or entity subject to the jurisdiction of the
commissioner.
``Sec. -10. Coverage available from the fund; deductible.
(a) Policies issued by the fund shall provide a maximum
aggregate coverage up to of $750,000 per risk on real property
of one to four units used for residential purposes and $500,000
per risk for real property used for business, commercial, and
industrial purposes and shall provide for a mandatory
deductible. The deductible amount for residential personal
property policies shall be the greater of $1,000 or one per
cent of the insured value or the greater of $2,000 or two per
cent of the insured value; provided that the board may
establish higher deductible limits. The deductible amount for
commercial property policies shall be the greater of $5,000 or
five per cent of the insured value or an amount equivalent to
the all other perils deductible of the underlying policy of
property insurance; provided that the board may establish
higher deductible limits.
``(b) Upon the authorization of the commissioner, insurers
may provided standard extended coverage endorsements, including
coverage of hurricane risks, subject to the fund's program for
incentives and credits; provided that in the absence of such
authorization no other policy of property insurance or
endorsement to a policy of property insurance on eligible
property located in this State shall be issued to provide
insurance for damages or losses caused by a covered event if
such coverage is offered by the fund.
``Sec. -11. Underlying policy required; hurricane
coverage shall be provided. (a) Any eligible property for which
coverage is sought from the fund shall already be insured by an
underlying policy of property insurance as defined in section
431:1-206 or article 21 of chapter 431 but excluding the
covered event. Every underlying policy of property insurance
provided by an unauthorized insurer shall be subject to the
procedures, guidelines and surcharges as provided in the plan
of operation.
``(b) The fund shall not deny any application for hurricane
property insurance on any property eligible under subsection
(a).
``(c) The fund shall renew any policy provided payment of
the applicable renewal premium is received by the fund on or
before the expiration date stated in the policy. The fund may
nonrenew a policy on the grounds the property is no longer
covered by an underlying policy of property insurance. The
policy issued by the fund shall not provide coverage in the
event that there is no underlying policy of property insurance
at the time of loss. In such case, any unearned premiums shall
be returned to the policyholder on a pro rata basis.
``Sec. -12. Mitigation. The fund shall develop a
comprehensive loss reduction plan for the hurricane peril. The
plan shall include standards for new residential and commercial
structures and separate standards for existing residential and
commercial structures. The plan shall provide a timetable for
implementation of mandatory loss mitigation measures for both
new and existing structures.
``Sec. -13. Appeals. (a) Any applicant or policyholder
adversely affected by a decision of the fund shall have the
right to appeal to the fund's board within thirty days after
the decision. The application for an appeal shall specify how
the person making the appeal was aggrieved and the grounds upon
which relief is demanded. The decision of the board shall be
deemed final.
``(b) Any final action, decision, or order of the board
under this chapter shall be subject to judicial review by the
circuit court.
``Sec. -14. Immunity and limitation on liability. There
shall be no liability on the part of, and no cause of action of
any nature shall arise against, any servicing facility; the
fund or its agents, employees, or its board; the State; the
commissioner; or the commissioner's representatives for any
action taken by them in the performance of their powers and
duties under this chapter; provided that this section shall not
be construed to prohibit any exercise of the commissioner's
power pursuant to this chapter or any other law or rule adopted
pursuant to law, chapters 661 and 662, and any other law to the
contrary notwithstanding. Nothing in this chapter shall create
an obligation, debt, claim, cause of action, claim for relief,
charge, or any other liability of any kind whatsoever in favor
of any person or entity without regard to whether that person
or entity received any benefits under this chapter, against the
State, or its officers and employees. The State and its
officers and employees shall not be liable for the results of
any application, denial of application, claim, loss, or other
benefits provided by the fund pursuant to this chapter. Nothing
in this chapter shall be construed as authorizing any claim
against the State whatsoever, nor shall this chapter be
construed as authorizing any claim against the fund in excess
of any note, loan, liability, or other obligation incurred by
the fund.
``Sec. -15. Exemption from property and liability
insurance guaranty association; insolvency of fund.
Notwithstanding any other provision of law to the contrary,
neither the fund nor its policyholders shall be subject to the
provisions of or be eligible for, the benefits provided in
sections 431:16-101 to 117 inclusive. If the total amount
available at any time to the fund is insufficient to make all
necessary payments, the moneys available shall be prorated and
the unpaid portion shall be paid as soon thereafter as moneys
become available.
``Sec. -16. Establishment of hurricane reserve trust
fund. (a) There is created in the treasury of the State the
hurricane reserve trust fund to be administered by the Hawaii
hurricane relief fund, into which shall be deposited the
special mortgage recording fee established by this chapter. The
special mortgage recording fee shall be imposed on each
mortgage and each amendment to a mortgage which increases the
principal amount of the secured debt which is recorded in the
bureau of conveyances of the State under chapter 502 or filed
with the assistance registrar of the land court of the State
under chapter 501.
``The special fee shall be in an amount equal to one-tenth
of one per cent of the stated principal amount of the debt
secured by the mortgage or, in the case of an amendment of a
mortgage, an amount equal to one-tenth of one per cent of the
amount of the increase of the stated principal debt.
``The special fee shall be in addition to any applicable
fees under chapter 501 or 502. The special fees shall be
collected by escrow depositories licensed under chapter 449, or
financial institutions authorized to engage in the escrow
business, or persons and companies permitted to engage in
limited escrow transactions under section 449-3. The special
mortgage recording fees shall be collected prior to recordation
of the mortgage with the bureau of conveyances or the assistant
registrar of the land court of the State and shall be deposited
into the hurricane reserve trust fund. The bureau of
conveyances and the assistant registrar of the land court may
also collect and transmit any special fees for deposit into the
hurricane reserve trust fund.
``(b) The fund shall implement the annual assessment of all
licensed property and casualty insurers as authorized by
section -5(b)(8)(A) and the proceeds from the assessments shall
be deposited into the hurricane reserve fund.
``(c) If the fund offers to issue policies of hurricane
property insurance, the premiums for such policies shall be
deposited into the hurricane reserve trust fund.
``(d) Should the moneys in the hurricane reserve trust fund
be insufficient to pay claims arising out of a covered event,
the fund is authorize to levy a surcharge not to exceed seven
and one-half per cent a year on premiums charged for policies
issued by all licensed property and casualty insurers. These
moneys may be used for purposes as directed by the board,
including but no limited to the payment of debt service and
principal on a contract of financial reinsurance. The formula
to calculate the amount and period of the surcharge and the
procedures and methodology for payment of claims during periods
of insufficiency of moneys for such purpose shall be provided
in the plan of operation.
``(e) Any proceeds from loans or other moneys from the
federal government, any proceeds from bonds issued pursuant to
this Act loaned by the director of finance to the Hawaii
hurricane relief fund, and such other moneys as the State may
make available from time to time shall be deposited into the
hurricane reserve trust fund.
``(f) Moneys in the hurricane reserve trust fund shall be
expended by the fund and used solely for the purposes of this
chapter.
``(g) Upon dissolution of the fund, the net moneys of the
hurricane reserve trust fund shall revert to the state general
fund.
``Sec. -17. Additional notice requirement. Thirteen
months prior to discontinuation of writing property insurance
coverage, an insurer shall file an affidavit with the
commissioner stating the reasons for the discontinuation.
``Sec. -18. Exemption for Hawaiian home lands. Nothing in
this chapter shall prohibit or limit any person from obtaining
insurance for property subject to the Hawaiian Homes Commission
Act of 1920, as amended, from any insurer other than the fund
if such insurance is deemed sufficient by the commissioner.''.
Section 3. Chapter 46, Hawaii Revised Statutes, is amended
by adding a new section to be appropriately designated and to
read as follows:
``Sec. 46- . Homeowners insurance. (a) Notwithstanding any
law to the contrary, a county, either alone or together with
any other county or counties, may:
``(1) Form an insurance company, association
(nonprofit or otherwise), fund, or trust;
``(2) Acquire an existing insurance company;
``(3) Enter into arrangements with one or more
insurance companies; or
``(4) Any combination of the foregoing; upon such
terms and conditions and for such periods, as the
council of the county shall approve by ordinance or
resolution, or both, to provide homeowner insurance,
including hurricane coverage, for residents of the
county or counties participating in such undertaking.
Such undertaking shall be subject to the provision of
chapter , including, but not limited to, section -
10(b), and chapter 431.
``(b) Any county participating in an undertaking as
authorized under subsection (a) may:
``(1) Issue general obligation bonds under chapter 47
to establish necessary reserves to provide for the
payment of claims in excess of reserves and for other
related purposes;
``(2) Invest funds held in reserve, which are not
required for immediate disbursement, in property or
securities in which savings banks may legally invest
funds subject to their control or as the council of the
county may authorize pursuant to ordinance or
resolution; and
``(3) Issue general obligation bonds under chapter 47
to pay any liability incurred that is self-insured or
uninsured by that county, including without
limitations, liabilities for damage to property,
comprehensive liability, environmental, or other
losses.
``(c) If no homeowner insurance is provided pursuant to
this section within two years of the effective date of this
section, this section shall cease to be in effect; provided
that any county participating in any undertaking to provide
homeowner insurance under this section wihin that two year
period may continue to do so thereafter.''.
Section 4. Chapter 431, Hawaii Revised Statutes, is amended
by adding to article 19 a new section to be appropriately
designated and to read as follows:
``Sec. 431:19- . Personal lines insurance. (a)
Notwithstanding the provisions of section 431:19-102(a), a
captive insurance company may be licensed to provide personal
lines coverage for unrelated risks if the commissioner deems
that extraordinary circumstances exist which make the provision
of this coverage by a captive insurance company appropriate and
in the best interest of the public. In determining whether such
extraordinary circumstances exist, the commissioner shall
consider the following factors:
``(1) The extent to which the particular coverage is
available in the voluntary market;
``(2) The existence of a relationship between the
parent of the captive insurance company and the
proposed policyholders other than that of insurer to
insured;
``(3) Whether the captive insurance company has
sufficient capitalization to insure the proposed risks;
and
``(4) Any other factors which the commissioner deems
appropriate.
``(b) Any captive insurance company formed pursuant to this
section shall be subject to articles 5, 10, 10A, 10B, 10C, 10D,
10E, 10F, 10G, 12, 15, and 17 of chapter 431 in addition to all
other applicable law.''.
Section 5. Section 39-51, Hawaii Revised Statutes, is
amended to read as follows:
1. By adding a new definition to be appropriately inserted
and to read as follows:
`` `System' means an organized plan or arrangement under
which one or more undertakings are operated or implemented as a
harmonious whole.''
2. By amending the definition of ``undertaking'' to read as
follows:
`` `Undertaking' means any public works and properties,
improvement, or system, tangible or intangible, owned or
operated by the State or a department thereof, [and from which
the State or department may derive revenues, or with respect to
which the State or department may derive user taxes.] and any
public activity, policy, or program undertaken by the State or
a department thereof, and from which the State or department
may derive revenues, or with respect to which the State or
department may derive user taxes.''
Section 6. Section 431:13-104, Hawaii Revised Statutes, is
amended to read as follows:
``Sec. 431:13-104. Favored agent or insurer; coercion of
debtors. (a) No person may require as a condition precedent to
the lending of money or extension of credit, or any renewal
thereof, that the person to whom such money or credit is
extended or whose obligation a creditor is to acquire or
finance, negotiate any contract of insurance, or renewal
thereof, through a particular insurer or group of insurers or
agent or broker or group of agents or brokers.
``(b) No person who lends money or extends credit may:
``(1) Solicit insurance for the protection of real
property, after a person indicates interest in securing
a first mortgage credit extension, until such person
has received a commitment in writing from the lender as
to a loan or credit extension;
``(2) Unreasonably reject a contract of insurance
furnished by the borrower for the protection of the
property securing the credit or lien. A rejection shall
not be deemed unreasonable if it is based on reasonable
standards, uniformly applied, relating to the extent of
coverage required and the financial soundness and the
services of an insurer. Such standards shall not
discriminate against any particular type of insurer,
nor shall such standards call for rejection of an
insurance contract because the contract contains
coverage in addition to that required in the credit
transaction;
``(3) Require that any borrower, mortgagor,
purchaser, insurer, broker or agent pay a separate
charge, in connection with the handling of any contract
of insurance required as a security for a loan on real
estate, or pay a separate charge to substitute the
insurance policy of one insurer for that of another.
This paragraph does not include the interest which may
be charged on premium loans or premium advancements in
accordance with the terms of the loan or credit
document;
``(4) Use or disclose, without the prior written
consent of the borrower, mortgagor or purchaser taken
at a time other than the making of the loan or
extension of credit, information relative to a contract
of insurance which is required by the credit
transaction, for the purpose of replacing the
insurance;
``(5) Require any procedures or conditions of duly
licensed agents, brokers or insurers not customarily
required of those agents, brokers or insurers
affiliated or in any way connected with the person who
lends money or extends credit.
``(c) Every person who lends money or extends credit
and who solicits insurance on real and personal
property subject to subsection (b) must explain to the
borrower in writing that the insurance related to such
credit extension may be purchased from an insurer or
agent of the borrower's choice, subject only to the
lender's right to reject a given insurer or agent as
provided in subsection (b)(2). Compliance with
disclosures as to insurance required by Truth-In-
Lending laws or comparable state laws shall be in
compliance with this paragraph.
``This requirement for a commitment shall not apply in
cases where the premium for the required insurance is to be
financed as part of the loan or extension of credit involving
personal property transactions.
``(d) The commissioner shall have the power to examine and
investigate those insurance related activities of any person
whom the commissioner believes may be in violation of this
section. Any affected person may submit to the commissioner a
complaint or material pertinent to the enforcement of this
section.
``(e) Nothing in this section shall prevent a person who
lends money or extends credit from placing insurance on real or
personal property in the event the mortgagor, borrower or
purchaser has failed to provide required insurance in
accordance with the terms of the loan or credit document.
``(f) Nothing contained in this section shall apply to
credit life or credit disability insurance.
``(g) Nothing in this section shall prevent a person who
lends money or extends credit from assisting a mortgagor,
borrower or purchaser in obtaining homeowners insurance where
the borrower requests such assistance in writing. Nothing in
this section shall prevent a person who lends money or extends
credit from referring a mortgagor, borrower, or purchaser to
the Hawaii hurricane relief fund.''.
Section 7. Section 219.1 of the Hawaii Homes Commission Act
of 1920, as amended, is amended to read as follows:
``Sec. 219.1 General assistance. (a) The department is
authorized to carry on any activities it deems necessary to
assist the lessees in obtaining maximum utilization of the
leased lands, including taking any steps necessary to develop
these lands for their highest and best use commensurate with
the purposes for which the land is being leased as provided for
in section 207, and assisting the lessees in all phases of
farming, ranching, and aquaculture operations and the marketing
of their agriculture of aquacultural produce and livestock.
``(b) Notwithstanding any law to the contrary, the
department either alone or together with any other governmental
agency, may:
``(1) Form an insurance company, association
(nonprofit or otherwise), pool, or trust;
``(2) Acquire an existing insurance company;
``(3) Enter into arrangements with one or more
insurance companies; or
``(4) Undertake any combination of the foregoing;
upon such terms and conditions and for such periods, as
the commission shall approve, to provide homeowner
protection, including hurricane coverage, for lessees
participating in such undertaking. Such undertaking
shall be subject to the provisions of chapter ,
including but not limited to section -10(b), and
chapter 431.
``(c) The department, if experiencing any of the power as
authorized under subsection (b) may:
``(1) Issue revenue bonds under and pursuant to part
III of chapter 39, Hawaii Revised Statutes, to
establish necessary reserves to provide for the payment
of claims in excess of reserves and for other related
purposes; or to pay any liability incurred that is
self-insured or uninsured by the commission including
without limitations, liabilities for damage to
property, comprehensive liability, environmental, or
other losses; and
``(2) Invest funds held in reserve, which are not
required for immediate disbursement, in property or
securities in which savings banks may legally invest
funds subject to their control or as the commission may
authorize by resolution.''.
Section 8. Article 17 of chapter 431, Hawaii Revised
Statutes, is repealed.
Section 9. Chapter 479, Hawaii Revised Statutes, is
repealed.
Section 10. (a) The director may establish a loan program
to assist the Hawaii hurricane relief fund in carrying out the
plan of operation, and may make loans to the Hawaii hurricane
relief fund. There is hereby created in the treasury of the
State a separate and special fund to be designated as the
hurricane bond loan fund of this Act.
(b) The department of budget and finance, with the approval
of the governor, is authorized to issue in the name of the
department revenue bonds at such times and in such amount or
amounts not to exceed $200,000,000 in aggregate principal as
may be requested and deemed necessary by the commissioner for
the purposes of the Hawaii hurricane relief fund. All such
bonds shall be issued pursuant to part III of chapter 39,
except as provided in this section.
(c) The resolution or certificate providing for the
issuance of the bonds may provide that all or part of the
proceeds may be held and invested in the hurricane bond loan
fund until needed for the purposes of the Hawaii hurricane
relief fund. For purposes of providing a source of revenue or
security for these bonds, the director may pledge funds
deposited or to be deposited in the hurricane bond loan fund to
the payment or security of the bonds, and the pledge shall
constitute a lien and security interest on the moneys in the
hurricane bond loan fund to the extent and with the priority
set forth in the document establishing the pledge, without the
necessity for physical delivery, recording, or other further
act. No revenue bonds may be issued pursuant to this section
unless the director of finance shall first make a determination
based on information provided by the commissioner that there
are sufficient revenues and other assets to pay debt service on
the revenue bonds.
(d) The director of finance is authorized to issue
reimbursable general obligation bonds in the principal amount
of $200,000,000, or so much thereof as may be requested and
deemed necessary by the commissioner for the purposes of the
Hawaii hurricane relief fund, and the same sum is appropriated
for fiscal year 1993-1994 for deposit into the hurricane
reserve trust fund. The commissioner, upon the commissioner's
determination that it is advisable to transfer funds from the
hurricane reserve trust fund, shall reimburse the state general
fund for payment of debt service on general obligation bonds
authorized and issued under this section.
Section 11. The state supreme court shall have exclusive
and original jurisdiction over any controversy or dispute
regarding the financing of the Hawaii hurricane relief fund and
the hurricane reserve trust fund through the issuance of
revenue bonds or general obligation bonds, and the security
provisions thereof and the imposition and collection of any
rates and charges to repay or provide security for the bonds;
provided that the jurisdiction be limited to the applicability
of Article VII of the Constitution of the State of Hawaii to
these matters.
Section 12. All Acts passed by the legislature during this
Regular Session of 1993, whether enacted before or after the
effective date of this Act, shall be amended to conform to this
act unless such acts specifically provide that this Act is
being amended.
Section 13. If any provision of this Act, or the
application thereof to any person or circumstance is held
invalid, the invalidity does not affect other provisions or
applications of the Act which can be given effect without the
invalid provision of application, and to this end the
provisions of this Act are severable.
Section 14. There is appropriated out of the general
revenues of the State of Hawaii the sum of $100,000, or so much
thereof as may be necessary for fiscal year 1993-1994, to carry
out the purposes of this Act, including the hiring of necessary
staff. The sum appropriated shall be expended by the director
of commerce and consumer affairs.
Section 15. The provisions of the amendments made by this
Act to the Hawaiian Homes Commission Act of 1920, as amended,
are declared to be severable and if any section, clause, or
phrase, or the application thereof to any person or
circumstance is held to be invalid or ineffective because there
is a requirement of having the consent of the United States to
take effect, then that portion only shall take effect upon the
granting of consent by the United States and the effectiveness
of the remainder of these amendments or the application thereof
shall not be affected.
Section 16. Statutory material to be repealed is bracketed.
New statutory material is underscored.
Section 17. This Act shall take effect upon its approval;
provided that section -16(a) of chapter , Hawaii Revised
Statutes, and sections 10 and 14 of this act shall take effect
on July 1, 1993.
(Approved June 30, 1993.)
37. Act of the Session Laws of Hawaii, 1994
ACT 37.--A Bill for an act relating to the Hawaiian Homes Commission
Act, 1920, as amended.
Be It Enacted by the Legislature of the State of Hawaii:
Section 1. Section 209, Hawaiian Homes Commission Act,
1920, as amended, is amended by amending subsection (a) to read
as follows:
``(a) Upon the death of the lessee, the lessee's interest
in the tract or tracts and the improvements thereon, including
growing crops and aquacultural stock (either on the tract or in
any collective contract or program to which the lessee is a
party by virtue of the lessee's interest in the tract or
tracts), shall vest in the relatives of the decedent as
provided in this paragraph. From the following relatives of the
lessee who are (1) at least one-quarter Hawaiian, husband,
wife, [or] children, or grandchildren, or (2) native Hawaiian,
father and mother, widows or widows of the children,
[grandchildren,] brothers and sisters, widows or widowers of
the brothers and sisters, or nieces and nephews,--the lessee
shall designate the person or persons to whom the lessee
directs the lessee's interest in the tract or tracts to vest
upon the lessee's death. The Hawaiian blood requirements shall
not apply to the descendants of those who are not native
Hawaiians but who were entitled to the leased lands or under
section 3 of the Act of May 16, 1934 (48 Stat. 777, 779), as
amended, or under section 3 of the Act of July 9, 1952 (66
Stat. 511, 513). In all cases that person or persons need not
be eighteen years of age. The designation shall be in writing,
may be specified at the time of execution of the lease with a
right in the lessee in manner to change the beneficiary at any
time and shall be filed with the department and approved by the
department in order to be effective to vest the interests in
the successor or successors so named.
``In case of the death of any lessee, except as hereinabove
provided, who has failed to specify a successor or successors
as approved by the department, the department may select from
only the following qualified relatives of the decedent:
``(1) Husband or wife; or
``(2) If there is no husband and wife, then the
children; or
``(3) If there is no husband, wife, or child, then
the grandchildren; or
``[(3)] (4) If there is no husband, wife, [or] child,
or grandchild, then from the following relatives of the
lessee who are native Hawaiian: father and mother,
widows or widowers of the children, [grandchildren,]
brothers and sisters, widows or widowers of the
brothers and sisters, or nieces and nephews.
The rights to the use and occupancy of the tract or tracts may
be made effective as of the date of the death of the lessee.
``In the case of the death of a lessee leaving no
designated successor or successors, husband, wife, children,
grandchildren, or relative qualified to be a lessee of Hawaiian
home lands, the land subject to the lease shall resume its
status as unleased Hawaiian home lands and the department if
authorized to lease the land to a native Hawaiian as provided
in this Act.
``Upon the death of a lessee who has not designated a
successor and who leaves a spouse not qualified to succeed to
the lease or children of qualified to the lease, or upon the
death of a lessee leaving no relative qualified to be a lessee
of Hawaii home lands, or the cancellation of a lease by the
department, or the surrender of a lease by the lessee, the
department shall appraise the value of all the improvements and
growing crops or improvements and aquacultural stock, as the
cases may be, and shall pay to the nonqualified spouse or the
nonqualified children as the lessee shall have designated prior
to the lessee's death, or to the legal representative of the
deceased lessee, or to the previous lessee, as the case may be,
the value thereof, less any indebtedness to the department, or
for taxes, or for any other indebtedness to the department, or
for taxes, or for any other indebtedness the payment of which
has been assured by the department, owed by the deceased lessee
or the previous lessee. These payments shall be made out of the
Hawaiian home loan fund and shall be considered and advance
therefrom and shall be repaid by the successor or successors to
the tract involved. If available cash in the Hawaiian home loan
fund is insufficient to make these payments, payments may be
advanced from the Hawaiian home general loan fund and shall be
repaid by the successor or successors to the tract involved;
provided that any repayment for advances made from the Hawaiian
home general loan fund shall be at the interest rate
established by the department for loans made from the Hawaiian
home general loan fund.
``The appraisal shall be made by three appraisers, one of
whom shall be named by the department, one by the previous
lessee or the legal representative of the deceased lessee, as
the case may be, and the third shall be selected by the two
appraisers aforementioned.''.
Section 2. Statutory material to be repealed is bracketed.
New statutory material is underscored.
Section 3. This Act shall take effect upon approval by the
governor of the State of Hawaii with the consent of the United
States Congress.
(Approved April 28, 1994.)