STAND. COM. REP. NO. 67

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 665
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Economic Development and Business
Concerns, to which was referred H.B. No. 665 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this bill is to provide for the repeal of the
Hawaii Hurricane Relief Fund (HHRF) on July 1, 1999, by:

     (1)  Establishing:

          (a)  The Hurricane Relief Loan Fund to provide loans to
               strengthen or "hurricane-proof" homes at risk to
               hurricane damage;

          (b)  The Hurricane Relief Administrative Procedures
               Loan Committee (Loan Committee) to administer the
               Hurricane Relief Loan Fund; and

          (c)  The Hurricane Loss Projection Methodology
               Commission (Methodology Commission) to improve the
               accuracy and reliability of hurricane loss
               projections;

          and

     (2)  Transferring as of June 30, 1999, all unencumbered and
          unexpended funds in the Hurricane Reserve Trust Fund to
          the general fund, provided $10,000,000 in the Hurricane

 
 
                                 STAND. COM. REP. NO. 67
                                 Page 2

 
          Reserve Trust Fund is transferred to the Hurricane
          Relief Loan Fund.

     Testimony in support of this measure was submitted by
Armstrong Builders, Ltd., Willocks Construction Corporation, the
Hawaii Operating Engineers Industry Stabilization Fund, the
Contractors Association of Kauai, JK Electric Inc, Hidano
Construction, Inc., and the Building Industry Association of
Hawaii.  Testimony in opposition to the measure was received from
the Hawaii Insurers Council.  The Department of Commerce and
Consumer Affairs, the HHRF, and Hurricane Protection Systems,
Inc., submitted comments on the measure.

     Your Committee finds that the HHRF was meant to be a
temporary solution to the unavailability of hurricane insurance
and that it is necessary to examine whether the HHRF has served
its intended purpose.  This bill provides an orderly transition
for the repeal of the HHRF and establishes sound and feasible
alternatives to the HHRF.

     Among other things, your Committee has amended this bill by:

     (1)  Repealing the HHRF on June 30, 2001;

     (2)  Requiring the Insurance Commissioner to provide for the
          internal restructuring and scaling back of the HHRF
          within a two-year period ending on June 30, 2001;

     (3)  Establishing the Natural Disaster Loss Mitigation Fund
          to mitigate losses incurred from natural disasters in
          the State;

     (4)  Transferring as of June 30, 2001, all unencumbered and
          unexpended funds in the Hurricane Reserve Trust Fund to
          the Natural Disaster Loss Mitigation Fund, provided
          that $30,000,000 in the Hurricane Reserve Trust Fund is
          transferred to the Hurricane Relief Loan Fund on June
          30, 1999;

     (5)  Requiring applicants for a loan from the Hurricane
          Relief Loan Fund to submit plans, specifications, and
          standards for work on their real property to the
          Methodology Commission;

     (6)  Authorizing the Loan Committee to offer grants up to 50
          percent of the applicant's requested loan amount;

     (7)  Changing the composition of the Methodology Commission;
          and

 
                                 STAND. COM. REP. NO. 67
                                 Page 3

 
     (8)  Changing the hurricane loss projection standards and
          guidelines.

In addition, technical, nonsubstantive amendments were made for
clarity, consistency, and style.

     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of H.B. No. 665, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 665, H.D. 1, and be referred to the Committee
on Consumer Protection and Commerce.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development and Business
                                   Concerns,



                                   ______________________________
                                   ROBERT N. HERKES, Chair