REPORT TITLE:
Admitted Reinsurers


DESCRIPTION:
Establishes a reinsurance enterprise zone.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                            1398        
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO ECONOMIC DEVELOPMENT.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
 1 
 
 2      SECTION 1.  The legislature finds that Hawaii is uniquely
 
 3 situated as the geographic and economic crossroads of the
 
 4 Pacific, and that full advantage should be taken of the array of
 
 5 opportunities available for the development of the State as a
 
 6 business center of the Pacific.  The legislature further finds
 
 7 that if the State is to develop as a center for business, a
 
 8 healthy insurance industry and the ready availability of
 
 9 insurance is essential.  However, the State has found it
 
10 necessary to supplement the coverage provided by private
 
11 insurance carriers by establishing and maintaining the Hawaii
 
12 hurricane relief fund, in part, because reinsurance coverage is
 
13 not sufficiently available within the State.  The legislature
 
14 declares that the economic welfare of the people of this State
 
15 would be enhanced if reinsurance provided by private carriers was
 
16 more readily available to the State's private insurers.  
 
17      The purpose of this Act to create a reinsurance enterprise
 
18 zone within the State that would increase the number of qualified
 
19 reinsurers domiciled in the State through the use of tax and
 
20 regulatory incentives.
 

 
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 1      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
 2 by adding a new article to be appropriately designated and to
 
 3 read as follows:
 
 4                             "ARTICLE
 
 5                        ADMITTED REINSURERS
 
 6      431:  -101  Definitions.  As used in this article:
 
 7      "Admitted reinsurer" means an insurer domiciled and
 
 8 authorized to do business as a reinsurer in this State by the
 
 9 commissioner pursuant to section 431:  -103.
 
10      "Reinsurance" means an insurance transaction where an
 
11 insurer, for consideration, transfers any portion of the risk it
 
12 has assumed to another insurer.
 
13      "Reinsurer" means the insurer assuming the risk, for
 
14 consideration, from a ceding or withdrawing insurer.
 
15      431:  -102  Formation of admitted reinsurers.  An admitted
 
16 reinsurer may be formed as a stock or mutual insurance company
 
17 with a minimum capital, in the case of a stock insurance company,
 
18 or minimum surplus, in the case of mutual insurance company, of
 
19 not less than $30,000,000.
 
20      431:  -103  Admitted reinsurer application.  (a)  An
 
21 applicant seeking to do business in this State as an admitted
 
22 reinsurer pursuant to this article shall file an application with
 
23 the commissioner on forms prescribed by the commissioner
 

 
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 1 describing its plan of operations, general rating plans, and
 
 2 policies, persons who shall be involved in the initial management
 
 3 of the company, and such other factors as the commissioner shall
 
 4 require.
 
 5      (b)  In addition to the requirements in subsection (a), an
 
 6 applicant seeking to redomesticate to this State as an admitted
 
 7 reinsurer shall file with the commissioner audited financial
 
 8 statements for the applicant's fiscal year immediately preceding
 
 9 the year of application and certified copies of the latest report
 
10 of examination, current articles and bylaws, and certificate of
 
11 compliance from the jurisdiction in which the applicant is doing
 
12 business.
 
13      (c)  If the commissioner is satisfied that the documents and
 
14 statements filed by the applicant comply with this chapter, the
 
15 commissioner may grant a license authorizing it to do reinsurance
 
16 business in this state until the following April 1, at which time
 
17 the license may be renewed.
 
18      431:  -104  Permitted lines of coverage.  An admitted
 
19 reinsurer shall be permitted to write only the following lines of
 
20 insurance:
 
21      (1)  Casualty;
 
22      (2)  Property;
 
23      (3)  Life, health, and disability;
 

 
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 1      (4)  Marine and transportation;
 
 2      (5)  Marine protection and indemnity as provided in section
 
 3           431:19-102(h)(3); and
 
 4      (6)  Such other lines as the commissioner may approve.
 
 5      431:  -105  Taxation.(a)  Each admitted reinsurer shall
 
 6 on March 1 of each year, pay to the director of finance through
 
 7 the commissioner a tax of one per cent on the gross premiums
 
 8 received from all risks situated or located within this State,
 
 9 during the year ending on the preceding December 31.
 
10      All premiums written, procured, or received in the State
 
11 shall be presumed to have been from risks resident, situated, or
 
12 located within the State.  Rebuttal of the presumption as to any
 
13 premium, the deductibility of any premium, the deadlines and
 
14 procedures for the payment of taxes, and penalties for delinquent
 
15 taxes shall be as provided in section 431:7-202.
 
16      (b)  Each admitted reinsurer shall file with the
 
17 commissioner an annual tax statement as provided in section
 
18 431:7-201.
 
19      (c)  The taxes imposed under this section shall be in lieu
 
20 of all other taxes levied and collected by this State.
 
21      431:  -106  Admitted reinsurers special fund.  (a)  There
 
22 is created a special fund in the state treasury to be called the
 

 
 
 
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 1 admitted reinsurers special fund, which shall be administered by
 
 2 the director of finance.
 
 3      (b)  All premium taxes collected by the commissioner
 
 4 pursuant to this article shall be deposited in the admitted
 
 5 reinsurers special fund.  At the beginning of each fiscal year,
 
 6 there shall be allocated to the commissioner an amount equivalent
 
 7 to ten per cent of the premium taxes collected pursuant to this
 
 8 article in the immediately preceding year, which shall be
 
 9 utilized by the commissioner for the regulation of admitted
 
10 reinsurers and administration of this article.
 
11      (c)  The balance of the funds remaining in the admitted
 
12 reinsurers special fund after allocation to the commissioner
 
13 pursuant to subsection (b) shall, on January 1 of the following
 
14 year, be transferred to the general fund.
 
15      431:  -107  Annual reports.  Before March 1 of each year,
 
16 every admitted reinsurer shall file with the commissioner an
 
17 audited report, a statement of losses and loss reserves, and loss
 
18 expense reserves certified by an actuary who holds a current
 
19 designation as either an MAAA or FCAS.
 
20      431:  -108  Applicable laws.  No other insurance laws of
 
21 this State shall apply to admitted reinsurers except those
 
22 specifically referenced in this article, and the provisions of
 
23 articles 1, 2, 6, 9A, 11, 13, and 15 of this chapter.
 

 
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 1      431:  -109  Rules.  The commissioner may adopt rules
 
 2 pursuant to chapter 91 necessary to implement this article."
 
 3      SECTION 3.  There shall be appropriated from the general
 
 4 revenues of the State of Hawaii the sum of $250,000 or so much
 
 5 thereof as may be necessary for fiscal year 1999-2000 and the
 
 6 same sum or so much thereof as may be necessary for fiscal year
 
 7 2000-2001 to enable the commissioner to implement this Act.
 
 8      The sums appropriated shall be expended by the insurance
 
 9 commissioner.
 
10      SECTION 4.  This Act shall take effect on July 1, 1999.
 
11 
 
12                           INTRODUCED BY:  _______________________