§431P-5  Powers, duties, andfunctions.  (a)  The Hawaii hurricane relief fund shall have the followinggeneral powers:

(1)  To sue and be sued;

(2)  To make and alter policies for its organizationand internal administration;

(3)  To adopt rules in accordance with chapter 91 toeffectuate the purposes of this chapter;

(4)  To borrow moneys, including but not limited tomoneys from state or federal sources and to issue notes or other obligations ofthe fund for the purposes of providing funds for any of its purposes asauthorized by the legislature from time to time;

(5)  To pledge, assign, or grant a security interestin all or any part of the moneys, rents, charges, assessments, or other revenueand any proceeds thereof derived by the fund; provided that any pledge,assignment, or grant of security interest shall constitute a lien and securityinterest on such money, rents, charges, assessments, or other revenue, and anyproceeds thereof to the extent and with the priority set forth in the documentestablishing the pledge, assignment, or security interest, without thenecessity for physical delivery, recording, or further act; and providedfurther that in effectuating any pledge, assignment, or grant of securityinterest, the fund may do either or both of the following:

(A)  Transfer possession of collateral to itssecured parties; or

(B)  Execute and cause to be filed at thebureau of conveyances of the State of Hawaii, Uniform Commercial Code financingstatements for the purpose of providing notice to third parties of a pledge,assignment, or grant of security interest; provided that any failure to file afinancing statement or the filing of a financing statement that containsincomplete or inaccurate information shall not affect the perfected lien and securityinterest of the pledge, assignment, or grant of security interest; and

(6)  Enter into contracts as necessary to effectuatethe purposes of this chapter.

(b)  In addition to the general powers undersubsection (a), the fund shall have the specific power to:

(1)  Adopt and administer a plan of operation inaccordance with section 431P-7, and a manual of rules and rates to providepersons having an insurable interest in eligible property with insurancecoverage provided by the fund;

(2)  Authorize the provision of hurricane coverage bythe fund for real property and tangible personal property located in or on realproperty and establish limits of liability for specific coverages within therange of authorized coverage;

(3)  Adopt actuarially sound rates based on reasonableassumptions relative to expectations of hurricane frequency and severity forall coverage provided under policies or endorsements issued by the fund.  Ratesadopted shall be subject to approval by the commissioner pursuant to article 14of chapter 431.  Rates adopted shall provide for classification of risks andshall include past and prospective losses and expense experience in this State;

(4)  Adopt procedures, guidelines, and surchargesapplicable to policies of hurricane property insurance issued in connectionwith an underlying property policy issued by an unauthorized insurer;

(5)  Adopt any form of insurance policy necessary forproviding policies of hurricane property insurance by the fund, with theapproval of the commissioner;

(6)  Issue policies of hurricane property insuranceand pay claims for coverage over the mandatory deductible or other deductibleprovided in the plan of operation or any manual of rules and rates adoptedunder the plan of operation;

(7)  Require every licensed property and casualtyinsurer transacting direct property insurance business in this State to act asa servicing facility, and by contract with that insurer authorize the insurerto inspect eligible properties, service policies and policyholders of hurricaneproperty insurance, provide claim services, and perform any other duties asauthorized by the fund for applicants to the fund and those insured by it;

(8)  (A)  Assess all licensed property and casualtyinsurers the amounts which, together with the other assets of the fund, aresufficient to meet all necessary obligations of the fund.  The assessment shallbe made on the insurer's gross direct written premiums for property andcasualty insurance in this State for the preceding calendar year.  The rate ofassessment in a year in which a covered event has not occurred shall be 3.75per cent and shall not include the insurer's gross direct written premiums formotor vehicle insurance in this State; provided that following a covered event,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 motorvehicle insurance in this State.  This increase shall remain in effect untilsuch time as all claims and other obligations, including but not limited tobonds and notes, arising out of a covered event shall have been fullydischarged.  An insurer authorized to provide comparable coverage under section431P-10(b) and which is providing hurricane property insurance in the Stateshall be assessed an amount that excludes gross direct written premiums forproperty insurance in this State.  The assessment for a year in which a coveredevent has not occurred shall be collected quarterly during each calendar year;

(B)  In the event of a loss from a coveredevent the fund, in addition to the assessment in subparagraph (A), shall assessthose insurers which acted as servicing facilities during the twelve monthsending at the start of the month preceding the month in which the covered eventoccurs.  The total assessment shall be a fixed percentage of the total coverageprovided by the fund under its policies of hurricane property insurance duringthe month preceding the month in which the covered event occurs.  Thepercentage to be used in calculating the total assessment shall be as follows:

(i)  For calendar year 1998, a percentage asfixed by the board in the plan of operation, but in no event shall the totalassessment exceed $500,000,000;

(ii)  For calendar year 1999, 1.125 per cent;

(iii)  For calendar year 2000, 1.25 per cent; and

(iv)  For calendar year 2001, and each calendaryear thereafter, 1.5 per cent.

A separate total assessment shall bemade for each covered event.  The total assessment shall be allocated to eachservicing facility based on the proportion of the total amount of the fund'sgross direct written premiums for policies of hurricane property insuranceserviced by each servicing facility to the total amount of the fund's grossdirect written premiums for policies of hurricane property insurance, in eachcase, during the twelve months ending at the start of the month preceding themonth in which the covered event occurs.  Assessments made under thissubparagraph and those under subparagraph (A) in a year in which a coveredevent has occurred are due from each insurer based on assessment proceduresestablished by the fund to meet its obligations to policyholders in a timelymanner; and

(C)  The fund may exempt or defer, in whole orin part, the assessment of any insurer if the assessment would cause theinsurer's financial statement to reflect amounts of capital or surplus lessthan the minimum amounts required for a certificate of authority in this State;

(9)  Develop a program of incentives to encourageinsurers to provide policies of hurricane property insurance in the event thecommissioner authorizes the provision of comparable insurance pursuant tosection 431P-10(b) which may include but are not limited to exemption of theinsurer's gross direct written premium for property insurance from theassessment pursuant to paragraph (8)(A);

(10)  Develop a credit based on the difference betweenpremiums written in 1993 and the premiums written in 1992 by each propertyinsurer against the assessment for gross direct written premiums written in1993;

(11)  Develop procedures regarding policies written byunauthorized insurers comparable to the assessments, surcharges, and othercontributions made by insurers authorized to do business in this State;

(12)  Accumulate reserves or funds, including theinvestment income thereon, to be used for paying expenses, making or repayingloans or other obligations of the fund, providing loss mitigation incentives,and paying valid claims for covered events insured by the fund;

(13)  Collect and maintain statistical and other dataas may be required by the commissioner;

(14)  Exempt mortgage transactions from payments of thespecial mortgage recording fee and provide for maximum limits on or, uniformreduction of the special mortgage recording fee, pursuant to rules adopted bythe board;

(15)  Suspend or reactivate the special mortgagerecording fee pursuant to resolution of the board;

(16)  Impose fines for each incident of nonpayment ofamounts due to the fund under this chapter; provided that the fines shall notexceed twenty-five per cent of the amount then due;

(17)  Create loss mitigation incentives, including butnot limited to premium credits, premium rebates, loans, or cash payments;

(18)  Enter into claims financing transactions,including but not limited to reinsurance transactions, debt transactions, andother transactions incorporating elements of reinsurance, insurance, debt, orequity;

(19)  Establish business and corporate entities ororganizations pursuant to the purposes of this chapter; and

(20)  Perform any and all acts reasonably necessary tocarry out the purposes of this chapter. [L 1993, c 339, pt of §2; am L Sp 1995,c 17, §2; am L 1996, c 307, §7; am L 1998, c 106, §4 and c 304, §2; am L 2001,c 153, §1]