REPORT TITLE:
Insurance


DESCRIPTION:
Prescribes minimum continuing education in approved subjects for
those in the insurance industry licensed by the DCCA.  Exempts
premiums of HEMIC from special compensation fund levy.  (SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1071
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 2
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.
 

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

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

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

 
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 1      431:9-C  Continuing education record keeping.(a)
 
 2 Licensees shall maintain their own continuing education records
 
 3 and shall keep the records for four years after completion of an
 
 4 approved continuing education course.
 
 5      (b)  Approved course providers shall maintain attendance
 
 6 records for five years for the commissioner to verify the
 
 7 attendance and course completion of all licensees enrolled in an
 
 8 approved course.  These course providers shall make the records
 
 9 available at all times to the commissioner.
 
10      431:9-D  Nondiscrimination.  Continuing education courses
 
11 provided by insurers to their agents shall be subject to the same
 
12 standards, reviews, and credits as other continuing education
 
13 courses.  Nothing in this chapter is intended to preclude the
 
14 provision of continuing education courses by insurers to their
 
15 agents; provided that no credit will be given for any course
 
16 unless it is an approved continuing education course.
 
17      431:9-E  Penalty.(a)  The commissioner shall suspend,
 
18 revoke, or refuse to extend the license of any licensee who has
 
19 submitted an invalid, false, or fraudulent certificate of
 
20 completion, subject to the right of a licensee to have a hearing
 
21 as provided in section 431:2-308.
 
22      (b)  The commissioner shall revoke the approval of an
 
23 approved course provider who has issued a certificate of
 

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

 
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 1 shall assist the commissioner in administering this article.
 
 2      (d)  The fund shall be used to compensate and reimburse the
 
 3 licensing assistant and administrative personnel hired under this
 
 4 article for:
 
 5      (1)  Salaries or wages;
 
 6      (2)  Actual travel expenses in amounts reasonable and
 
 7           customary for these expenses and approved by the
 
 8           commissioner; and
 
 9      (3)  A living expense at a rate of per diem reasonable and
 
10           customary for this expense and approved by the
 
11           commissioner.
 
12      (e)  The fund may also be used for other expenses related to
 
13 licensing, including monitoring and regulating licensing
 
14 activities and continuing education requirements, and maintaining
 
15 a licensing database.
 
16      (f)  Moneys in the insurance licensing administration
 
17 special fund shall not revert to the general fund.
 
18      (g)  The commissioner shall report annually to the
 
19 legislature before the convening of each regular session as to
 
20 the fund administration and expenditures."
 
21      SECTION 4.  Section 386-153, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "386-153  Levy on insurers of employers insured under
 

 


 

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                                     H.B. NO.           H.D. 1
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 1 section 386-121(a)(1).  (a)  For the calendar year 1974 and for
 
 2 each calendar year thereafter insurers of employers, as defined
 
 3 in section 386-1, shall pay a levy determined by the director
 
 4 which shall be based on a percentage on gross premiums, as
 
 5 defined in section 431:7-202(a), derived from workers'
 
 6 compensation insurance issued during the prior year in accordance
 
 7 with chapter 386 and chapter 431, if the levying and collecting
 
 8 of such a levy is required pursuant to section 386-152, which
 
 9 levy shall be collected in the same manner as the tax provided
 
10 for in section 431:7-202 is collected and shall be deposited in
 
11 the special compensation fund established in section 386-151.
 
12 This levy shall be in addition to any tax imposed in chapter 431
 
13 on gross premiums derived from workers' compensation insurance.
 
14      (b)  Notwithstanding subsection (a), from its inception
 
15 through December 31, 2007, the Hawaii Employers' Mutual Insurance
 
16 Company, Inc., shall be exempt from this levy; provided that this
 
17 exemption shall apply to the first $25,000 of written premiums in
 
18 each calendar year; and provided further that annual written
 
19 premiums in excess of $25,000,000 shall be subject to this levy
 
20 at the same rate as other insurers.  Any moneys heretofore paid
 
21 by Hawaii Employers' Mutual Insurance Company, Inc., to the
 
22 special compensation fund shall be retained by the special
 
23 compensation fund to be credited to future levy balances owed by
 

 
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                                     H.B. NO.           H.D. 1
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 1 Hawaii Employers' Mutual Insurance Company, Inc."
 
 2      SECTION 5.  Section 431:7-101, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "431:7-101  Fees.(a)  The commissioner shall collect in
 
 5 advance the following fees:
 
 6      (1)  Certificate of authority:  Issuance....[$600] $900
 
 7      (2)  Organization of domestic insurers and affiliated
 
 8           corporations:
 
 9           (A)  Application and all other papers required for
 
10                issuance of solicitation permit,
 
11                filing..........................[$1,000] $1,500
 
12           (B)  Issuance of solicitation permit.....[$100] $150
 
13      (3)  General agent's license:
 
14           (A)  Issuance, regular license............[$50] $75
 
15           (B)  Issuance, temporary license..........[$50] $75
 
16      (4)  Subagent's license:
 
17           (A)  Issuance, regular license............[$50] $75
 
18           (B)  Issuance, temporary license..........[$50] $75
 
19      (5)  Nonresident agent's or broker's license:
 
20           Issuance...................................[$40] $60
 
21      (6)  Solicitor's license: Issuance..............[$40] $60
 
22      (7)  Independent adjuster's license: Issuance...[$40] $60
 
23      (8)  Public adjuster's license: Issuance........[$40] $60
 

 
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 1      (9)  Workers' compensation claims adjuster's limited
 
 2           license: Issuance..........................[$40] $60
 
 3     (10)  Limited license issued pursuant to section
 
 4           431:9-214(c): Issuance.....................[$40] $60
 
 5     (11)  Managing general agent's license:
 
 6           Issuance..................................[$50] $75
 
 7     (12)  Reinsurance intermediary's license:
 
 8           Issuance..................................[$50] $75
 
 9     (13)  Surplus line broker's license: Issuance..[$100] $150
 
10     (14)  Examination for license:  For each examination, a fee
 
11           to be established by the commissioner.
 
12      (b)  The fees for services of the department of commerce and
 
13 consumer affairs subsequent to the issuance of a certificate of
 
14 authority or a license are as follows:
 
15      (1)  [$400] $600 per year for all services (including
 
16           extension of the certificate of authority) for an
 
17           authorized insurer.
 
18      (2)  [$50] $75 per year for all services (including
 
19           extension of the license) for a regularly licensed
 
20           general agent.
 
21      (3)  [$50] $75 per year for all services (including
 
22           extension of the license) for a regularly licensed
 
23           subagent.
 

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

 
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 1           reinsurance intermediary.
 
 2     (12)  [$30] $45 per year for all services (including
 
 3           extension of the license) for a licensed surplus line
 
 4           broker.
 
 5     (13)  The services referred to in paragraphs (1) to (12)
 
 6           shall not include services in connection with
 
 7           examinations, investigations, hearings, appeals, and
 
 8           deposits with a depository other than the department of
 
 9           commerce and consumer affairs.
 
10      (c)  The commissioner shall notify the holder of the
 
11 certificate of authority issued under article 3 or the license
 
12 issued under article 9 by written notice at least thirty days
 
13 prior to the extension date of such certificate or license. If
 
14 the fee is not paid before or on the extension date, the fee will
 
15 be increased by a penalty in the amount of fifty per cent of the
 
16 fee.  If the fee and the penalty are not paid within the thirty
 
17 days immediately following the extension date, the commissioner
 
18 may revoke, suspend, or inactivate the certificate of authority
 
19 or license and shall not reissue, remove the suspension of, or
 
20 reactivate the certificate of authority or license until the fee
 
21 and penalty have been paid.
 
22      (d)  All fees and penalties shall be [remitted by the
 
23 commissioner to the director of finance not later than the first
 

 
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 1 business day following collection, and shall be placed] deposited
 
 2 to the credit of the [general fund.] insurance licensing
 
 3 administration special fund."
 
 4      SECTION 6.  Section 431:9-232, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "431:9-232  Extension of licenses.(a)  [If the licensee
 
 7 is qualified for the license, the license shall be extended.]
 
 8 Prior to the extension of a license, each licensee shall annually
 
 9 pay the fee required in section 431:7-101 and shall meet the
 
10 requirement of section 431:9-B.
 
11      (b)  [No license shall contain an expiration date, but all
 
12 licenses must be extended from time to time in order to continue
 
13 to be valid.]  A license shall expire if a licensee fails to pay
 
14 the fee or meet the requirements of section 431:9-B.
 
15      (c) (1)  When the commissioner issues or extends a license,      
 
16           the commissioner shall:
 
17           (A)  Determine the extension date; the extension date
 
18                is that date prior to which the license must be
 
19                extended[,]; and
 
20           (B)  Notify the licensee in writing.
 
21 This date shall be any date not less than one year and not more
 
22 than three years after the date of issue or extension[.] of
 
23 license."
 

 
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                                     H.B. NO.           H.D. 1
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 1      SECTION 7.  During fiscal years 1999-2000 and 2000-2001,
 
 2 there shall be an assessment of all insurers, general agents,
 
 3 subagents, nonresident agents and brokers, solicitors, adjusters,
 
 4 limited licensees under section 431:9-214(c), Hawaii Revised
 
 5 Statutes, managing general agents, reinsurance intermediaries,
 
 6 surplus lines brokers and designated representatives.  The
 
 7 assessment shall be fifty per cent of the fees amount listed in
 
 8 section 431:7-101, Hawaii Revised Statutes, prior to the
 
 9 enactment of this Act.  The assessment shall be made on August 1,
 
10 1999, and August 1, 2000, and shall be due on September 1, 1999,
 
11 and September 1, 2000, respectfully.
 
12      If the assessment is not paid when due, the assessment will
 
13 be increased by a penalty of fifty per cent of the assessment.
 
14 If the assessment and the penalty are not paid within thirty days
 
15 following the due date of September 1, the commissioner may
 
16 revoke, suspend, or inactivate the certificate of authority or
 
17 license and shall not reissue, remove the suspension of, or
 
18 reactivate the certificate of authority or license until the
 
19 assessment and penalty have been paid.
 
20      SECTION 8.  There is appropriated out of the insurance
 
21 licensing administration special fund the sum of $1,500,000 or so
 
22 much thereof as may be necessary for fiscal year 1999-2000 and
 
23 the sum of $1,500,000 or so much thereof as may be necessary for
 

 
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                                     H.B. NO.           H.D. 1
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 1 fiscal year 2000-2001 to carry out the purposes of this Act.
 
 2      SECTION 9.  The sums appropriated shall be expended by the
 
 3 department of commerce and consumer affairs for the purposes of
 
 4 this Act.
 
 5      SECTION 10.  In codifying the new part added to article 9 of
 
 6 chapter 431, Hawaii Revised Statutes, by section 2 of this Act,
 
 7 and in subsequent references to such sections in this Act, the
 
 8 revisor of statutes shall substitute appropriate section numbers
 
 9 for the letters used in designating the new sections in this Act.
 
10      SECTION 11.  If any provision of this Act, or the
 
11 application thereof to any person or circumstance is held
 
12 invalid, the invalidity does not affect other provisions or
 
13 applications of the Act which can be given effect without the
 
14 invalid provision or application, and to this end the provisions
 
15 of this Act are severable.
 
16      SECTION 12.  Statutory material to be repealed is bracketed.
 
17 New statutory material is underscored.
 
18      SECTION 13.  This Act shall take effect on July 1, 1999,
 
19 except that:
 
20      (1)  Sections 431:9-B and 431:9-C contained in section 2 of
 
21           this Act shall become effective on January 1, 2001; and
 
22      (2)  The twenty-three-month period to meet the continuing
 
23           education requirements shall commence upon the first
 

 
Page 16                                                    1071
                                     H.B. NO.           H.D. 1
                                                        S.D. 2
                                                        

 
 1           license renewal of a general agent, subagent,
 
 2           solicitor, designated representative, or non-resident
 
 3           agent after December 31, 2000.