On January 23, 2017, Hawaii lawmakers introduced a bill to
establish a pilot parametric disaster insurance program aimed at
preventing potential liquidity gaps between federal assistance and
total economic losses in the event of a serious natural disaster.
Parametric or index-based insurance programs peg claims to specific
characteristics of natural disasters rather than the usual
insurance arrangement basing payouts on actual losses sustained.
The bill lists one example of a metric to determine whether
coverage under a parametric disaster program would be
triggered—if the maximum wind speed of a hurricane as it
passes through a specific part of the islands reaches a certain
threshold, coverage attaches.
If passed, would
establish a three-year parametric disaster insurance pilot program
and empower the state to research and purchase parametric disaster
insurance. A parametric disaster insurance special fund would be
financed with interest earned on the principal in the currently
existing hurricane reserve trust fund, any money paid out under
parametric disaster insurance policies, and any appropriations made
by the state legislature. The bill further requires a report to the
legislature on the pilot program due by December 1, 2019, and calls
for the repeal of the program on June 30, 2020. A companion bill,
S.B. 799, was introduced in the state senate on January 20,
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