After a hurricane loss, insurance companies that use Fund policies to cover the peril of hurricane may be assessed an amount equal to a percentage of Fund's total exposure. In addition to the post-loss formula, the Fund may increase the annual assessment on the property and casualty insurance industry and impose a surcharge on property and casualty premiums. However, the Fund's board of directors has found ways to make certain that money for a hurricane loss is there when needed. Some of these financing methods require expenditure of Fund revenues. For example, the Fund purchases reinsurance.
Reinsurance is insurance for insurance companies.
Just as private insurers may purchase reinsurance against catastrophic loss, so too may the Fund. The answer is that it depends on the size of the loss. A very large hurricane striking a densely populated area, such as central Honolulu, could cause losses in excess of Fund's financing program. In such an event, moneys available to the Fund must be prorated. The Fund's financing program was sized to finance a hurricane like Hurricane Iniki striking a neighbor island.