REPORT TITLE:
Insurance Continuing Education


DESCRIPTION:
Prescribes minimum continuing education in approved subjects for
those in the insurance industry licensed by the DCCA.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1071
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE INSURANCE CODE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The purpose of this Act is to protect the
 
 2 public, maintain high standards of professional competence in the
 
 3 insurance industry, and improve the insurance skills and
 
 4 knowledge of general agents, subagents, solicitors, designated
 
 5 representatives, and nonresident agents licensed by the
 
 6 department of commerce and consumer affairs by prescribing
 
 7 minimum continuing education in approved subjects.
 
 8      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
 9 by adding to article 9 a new part to be appropriately designated
 
10 and to read as follows:
 
11                  "PART   . CONTINUING EDUCATION
 
12      431:9-A  Definitions.  As used in this part, unless the
 
13 context requires otherwise:
 
14      "Approved continuing education course" means a course that
 
15 has been approved by the commissioner or a course approved in at
 
16 least five other states.
 
17      "Approved course provider" means an organization or
 
18 individual that offers a continuing education course and has been
 
19 approved by the commissioner.
 
20      "Credit hour" means the value assigned to an hour of
 

 
Page 2                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 instruction in an approved continuing education course.
 
 2      "Licensee" means a general agent, subagent, solicitor,
 
 3 designated representative, or nonresident agent as defined in
 
 4 article 9.
 
 5      431:9-B  Prerequisites for license renewal.(a)  To
 
 6 qualify for a license renewal, a licensee shall:
 
 7      (1)  During the twenty-three months preceding a license
 
 8           renewal, complete the required number of credit hours
 
 9           as set forth in subsection (b) in approved continuing
 
10           education courses; and
 
11      (2)  Pay the fees as required under section 431:7-101.
 
12      (b)  The required number of credit hours shall be as
 
13 follows:
 
14      (1)  For a licensee authorized to sell classes of insurance
 
15           in only one of the following groups:
 
16           (A)  Life or disability; or
 
17           (B)  Property, marine and transportation, vehicle
 
18                general casualty, or surety;
 
19           the requisite number of credit hours shall be twenty
 
20           hours relating to the class of insurance for which the
 
21           license is held, including three credit hours relating
 
22           to the insurance code and insurance administrative
 
23           rules;
 

 
Page 3                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1      (2)  For a licensee with a license to sell classes of
 
 2           insurance in both groups in the subparagraphs of
 
 3           paragraph (1), the total requisite number of credit
 
 4           hours shall be thirty hours, of which:
 
 5           (A)  Twelve hours shall relate to paragraph (1)(A) of
 
 6                which three hours shall relate to the insurance
 
 7                code and administrative rules relating to the
 
 8                class of insurance for which the license is held;
 
 9                and
 
10           (B)  Eighteen hours shall relate to paragraph (1)(B) of
 
11                which three hours shall relate to the insurance
 
12                code and administrative rules relating to the
 
13                class of insurance for which the license is held.
 
14      (c)  Continuing education equivalents, as determined by and
 
15 approved by the commissioner, may include the teaching of
 
16 continuing education courses and holding certain professional
 
17 designations, but shall not include the use of carryover credit
 
18 hours earned in excess of the required hours in any two-year
 
19 renewal cycle.
 
20      (d)  Unless an extension of time has been granted in advance
 
21 by the commissioner, a licensee's failure to satisfy all of the
 
22 continuing education requirements one month prior to the renewal
 
23 date shall result in the license being automatically placed on an
 

 
Page 4                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 "inactive" status.  To reactivate a license, the licensee shall
 
 2 submit proof to the insurance division that the requisite number
 
 3 of credit hours have been completed.
 
 4      (e)  After a licensee completes an approved continuing
 
 5 education course, the approved course provider shall issue to the
 
 6 licensee a certificate of completion in a form approved by the
 
 7 commissioner that certifies that the licensee has successfully
 
 8 completed the course.  Both the licensee and a person authorized
 
 9 to sign on behalf of the approved course provider shall sign the
 
10 certificate of completion.  The licensee shall submit the
 
11 certificate of completion to the insurance division not later
 
12 than one month prior to the renewal date for the license.
 
13      (f)  This section shall not apply to:
 
14      (1)  A licensee who holds only a limited license under
 
15           section 431:9-214;
 
16      (2)  A nonresident agent or broker whose state of domicile
 
17           has a reciprocity agreement with the State and waives
 
18           any continuing education requirement for Hawaii
 
19           licensees holding nonresident licenses; or
 
20      (3)  A licensee granted an exemption by the commissioner
 
21           from this section pursuant to rules adopted by the
 
22           commissioner.
 
23      431:9-C  Continuing education record keeping.(a)
 

 
Page 5                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 Licensees shall maintain their own continuing education records
 
 2 and shall keep the records for four years after completion of an
 
 3 approved continuing education course.
 
 4      (b)  Approved course providers shall maintain attendance
 
 5 records for five years for the commissioner to verify the
 
 6 attendance and course completion of all licensees enrolled in an
 
 7 approved course.  These course providers shall make the records
 
 8 available at all times to the commissioner.
 
 9      431:9-D  Nondiscrimination.  Continuing education courses
 
10 provided by insurers to their agents shall be subject to the same
 
11 standards, reviews, and credits as other continuing education
 
12 courses.  Nothing in this chapter is intended to preclude the
 
13 provision of continuing education courses by insurers to their
 
14 agents; provided that no credit will be given for any course
 
15 unless it is an approved continuing education course.
 
16      431:9-E  Penalty.(a)  The commissioner shall suspend,
 
17 revoke, or refuse to extend the license of any licensee who has
 
18 submitted an invalid, false, or fraudulent certificate of
 
19 completion, subject to the right of a licensee to have a hearing
 
20 as provided in section 431:2-308.
 
21      (b)  The commissioner shall revoke the approval of an
 
22 approved course provider who has issued a certificate of
 
23 completion to a licensee who has not attended the continuing
 

 
Page 6                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 education course or who has not met the course requirements,
 
 2 subject to the right of an approved course provider to have a
 
 3 hearing as provided in section 431:2-308."
 
 4      SECTION 3.  Chapter 431, Hawaii Revised Statutes, is amended
 
 5 by adding to article 9 a new section to be appropriately
 
 6 designated and to read as follows:
 
 7      "431:9-     Insurance licensing administration special
 
 8 fund.  (a)  There is established in the state treasury a special
 
 9 fund to be administered by the commissioner and to be designated
 
10 as the insurance licensing administration special fund.  All fees
 
11 and penalties collected pursuant to section 431:7-101 shall be
 
12 deposited into the fund to carry out the purposes of this
 
13 article.
 
14      (b)  The commissioner may hire a continuing education
 
15 licensing assistant who is exempt from chapters 76 and 77 for the
 
16 purposes of administering the continuing education program,
 
17 including:
 
18      (1)  Processing and maintaining certificates of completion;
 
19           and
 
20      (2)  Monitoring licensing and continuing education
 
21           compliance.
 
22      (c)  The commissioner may hire administrative personnel, who
 
23 shall assist the commissioner in administering this article.
 

 
Page 7                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1      (d)  The fund shall be used to compensate and reimburse the
 
 2 licensing assistant and administrative personnel hired under this
 
 3 article for:
 
 4      (1)  Salaries or wages;
 
 5      (2)  Actual travel expenses in amounts reasonable and
 
 6           customary for these expenses and approved by the
 
 7           commissioner; and
 
 8      (3)  A living expense at a rate of per diem reasonable and
 
 9           customary for this expense and approved by the
 
10           commissioner.
 
11      (e)  The fund may also be used for other expenses related to
 
12 licensing, including monitoring and regulating licensing
 
13 activities and continuing education requirements, and maintaining
 
14 a licensing database.
 
15      (f)  Moneys in the insurance licensing administration
 
16 special fund shall not revert to the general fund.
 
17      (g)  The commissioner shall report annually to the
 
18 legislature before the convening of each regular session as to
 
19 the fund administration and expenditures."
 
20      SECTION 4.  Section 431:7-101, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "431:7-101  Fees.(a)  The commissioner shall collect in
 
23 advance the following fees:
 

 
Page 8                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1      (1)  Certificate of authority:  Issuance....[$600] $900
 
 2      (2)  Organization of domestic insurers and affiliated
 
 3           corporations:
 
 4           (A)  Application and all other papers required for
 
 5                issuance of solicitation permit,
 
 6                filing..........................[$1,000] $1,500
 
 7           (B)  Issuance of solicitation permit.....[$100] $150
 
 8      (3)  General agent's license:
 
 9           (A)  Issuance, regular license............[$50] $75
 
10           (B)  Issuance, temporary license..........[$50] $75
 
11      (4)  Subagent's license:
 
12           (A)  Issuance, regular license............[$50] $75
 
13           (B)  Issuance, temporary license..........[$50] $75
 
14      (5)  Nonresident agent's or broker's license:
 
15           Issuance...................................[$40] $60
 
16      (6)  Solicitor's license: Issuance..............[$40] $60
 
17      (7)  Independent adjuster's license: Issuance...[$40] $60
 
18      (8)  Public adjuster's license: Issuance........[$40] $60
 
19      (9)  Workers' compensation claims adjuster's limited
 
20           license: Issuance..........................[$40] $60
 
21     (10)  Limited license issued pursuant to section
 
22           431:9-214(c): Issuance.....................[$40] $60
 
23     (11)  Managing general agent's license:
 

 
Page 9                                                     1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1           Issuance..................................[$50] $75
 
 2     (12)  Reinsurance intermediary's license:
 
 3           Issuance..................................[$50] $75
 
 4     (13)  Surplus line broker's license: Issuance..[$100] $150
 
 5     (14)  Examination for license:  For each examination, a fee
 
 6           to be established by the commissioner.
 
 7      (b)  The fees for services of the department of commerce and
 
 8 consumer affairs subsequent to the issuance of a certificate of
 
 9 authority or a license are as follows:
 
10      (1)  [$400] $600 per year for all services (including
 
11           extension of the certificate of authority) for an
 
12           authorized insurer.
 
13      (2)  [$50] $75 per year for all services (including
 
14           extension of the license) for a regularly licensed
 
15           general agent.
 
16      (3)  [$50] $75 per year for all services (including
 
17           extension of the license) for a regularly licensed
 
18           subagent.
 
19      (4)  [$30] $45 per year for all services (including
 
20           extension of the license) for a regularly licensed
 
21           nonresident agent or broker.
 
22      (5)  [$20] $30 per year for all services (including
 
23           extension of the license) for a regularly licensed
 

 
Page 10                                                    1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1           solicitor.
 
 2      (6)  [$30] $45 per year for all services (including
 
 3           extension of the license) for a regularly licensed
 
 4           independent adjuster.
 
 5      (7)  [$30] $45 per year for all services (including
 
 6           extension of the license) for a regularly licensed
 
 7           public adjuster.
 
 8      (8)  [$30] $45 per year for all services (including
 
 9           extension of the license) for a regularly limited
 
10           licensed workers' compensation claims adjuster.
 
11      (9)  [$30] $45 per year for all services (including
 
12           extension of the license) for a limited license issued
 
13           pursuant to section 431:9-214(c).
 
14     (10)  [$50] $75 per year for all services (including
 
15           extension of the license) for a regularly licensed
 
16           managing general agent.
 
17     (11)  [$50] $75 per year for all services (including
 
18           extension of the license) for a regularly licensed
 
19           reinsurance intermediary.
 
20     (12)  [$30] $45 per year for all services (including
 
21           extension of the license) for a licensed surplus line
 
22           broker.
 
23     (13)  The services referred to in paragraphs (1) to (12)
 

 
Page 11                                                    1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1           shall not include services in connection with
 
 2           examinations, investigations, hearings, appeals, and
 
 3           deposits with a depository other than the department of
 
 4           commerce and consumer affairs.
 
 5      (c)  The commissioner shall notify the holder of the
 
 6 certificate of authority issued under article 3 or the license
 
 7 issued under article 9 by written notice at least thirty days
 
 8 prior to the extension date of such certificate or license. If
 
 9 the fee is not paid before or on the extension date, the fee will
 
10 be increased by a penalty in the amount of fifty per cent of the
 
11 fee.  If the fee and the penalty are not paid within the thirty
 
12 days immediately following the extension date, the commissioner
 
13 may revoke, suspend, or inactivate the certificate of authority
 
14 or license and shall not reissue, remove the suspension of, or
 
15 reactivate the certificate of authority or license until the fee
 
16 and penalty have been paid.
 
17      (d)  All fees and penalties shall be [remitted by the
 
18 commissioner to the director of finance not later than the first
 
19 business day following collection, and shall be placed] deposited
 
20 to the credit of the [general fund.] insurance licensing
 
21 administration special fund."
 
22      SECTION 5.  Section 431:9-232, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
Page 12                                                    1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1      "431:9-232  Extension of licenses.(a)  [If the licensee
 
 2 is qualified for the license, the license shall be extended.]
 
 3 Prior to the extension of a license, each licensee shall annually
 
 4 pay the fee required in section 431:7-101 and shall meet the
 
 5 requirement of section 431:9-B.
 
 6      (b)  [No license shall contain an expiration date, but all
 
 7 licenses must be extended from time to time in order to continue
 
 8 to be valid.]  A license shall expire if a licensee fails to pay
 
 9 the fee or meet the requirements of section 431:9-B.
 
10      (c) (1)  When the commissioner issues or extends a license,      
 
11           the commissioner shall:
 
12           (A)  Determine the extension date; the extension date
 
13                is that date prior to which the license must be
 
14                extended[,]; and
 
15           (B)  Notify the licensee in writing.
 
16 This date shall be any date not less than one year and not more
 
17 than three years after the date of issue or extension[.] of
 
18 license."
 
19      SECTION 6.  During fiscal years 1999-2000 and 2000-2001,
 
20 there shall be an assessment of all insurers, general agents,
 
21 subagents, nonresident agents and brokers, solicitors, adjusters,
 
22 limited licensees under section 431:9-214(c), Hawaii Revised
 
23 Statutes, managing general agents, reinsurance intermediaries,
 

 
Page 13                                                    1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 surplus lines brokers and designated representatives.  The
 
 2 assessment shall be fifty per cent of the fees amount listed in
 
 3 section 431:7-101, Hawaii Revised Statutes, prior to the
 
 4 enactment of this Act.  The assessment shall be made on August 1,
 
 5 1999, and August 1, 2000, and shall be due on September 1, 1999,
 
 6 and September 1, 2000, respectfully.
 
 7      If the assessment is not paid when due, the assessment will
 
 8 be increased by a penalty of fifty per cent of the assessment.
 
 9 If the assessment and the penalty are not paid within thirty days
 
10 following the due date of September 1, the commissioner may
 
11 revoke, suspend, or inactivate the certificate of authority or
 
12 license and shall not reissue, remove the suspension of, or
 
13 reactivate the certificate of authority or license until the
 
14 assessment and penalty have been paid.
 
15      SECTION 7.  There is appropriated out of the insurance
 
16 licensing administration special fund the sum of $1,500,000 or so
 
17 much thereof as may be necessary for fiscal year 1999-2000 and
 
18 the sum of $1,500,000 or so much thereof as may be necessary for
 
19 fiscal year 2000-2001 to carry out the purposes of this Act.
 
20      SECTION 8.  The sums appropriated shall be expended by the
 
21 department of commerce and consumer affairs for the purposes of
 
22 this Act.
 
23      SECTION 9.  In codifying the new part added to article 9 of
 

 
Page 14                                                    1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 chapter 431, Hawaii Revised Statutes, by section 2 of this Act,
 
 2 and in subsequent references to such sections in this Act, the
 
 3 revisor of statutes shall substitute appropriate section numbers
 
 4 for the letters used in designating the new sections in this Act.
 
 5      SECTION 10.  If any provision of this Act, or the
 
 6 application thereof to any person or circumstance is held
 
 7 invalid, the invalidity does not affect other provisions or
 
 8 applications of the Act which can be given effect without the
 
 9 invalid provision or application, and to this end the provisions
 
10 of this Act are severable.
 
11      SECTION 11.  Statutory material to be repealed is bracketed.
 
12 New statutory material is underscored.
 
13      SECTION 12.  This Act shall take effect on July 1, 1999,
 
14 except that:
 
15      (1)  Sections 431:9-B and 431:9-C contained in section 2 of
 
16           this Act shall become effective on January 1, 2001; and
 
17      (2)  The twenty-three-month period to meet the continuing
 
18           education requirements shall commence upon the first
 
19           license renewal of a general agent, subagent,
 
20           solicitor, designated representative, or non-resident
 
21           agent after December 31, 2000.