REPORT TITLE:
Insurance


DESCRIPTION:
Requires continuing education for insurance agents as a
prerequisite for license renewal and increases fees.
Consolidates most of Insurance Division funds into Insurance
Regulation Special Fund to be used to administer Title 24
insurance laws.  Exempts HEMIC from levy of insurers based on
percentage of gross workers compensation insurance premiums,  up
to first $25,000,000 each year. (SB1129 CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1129
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                H.D. 2
STATE OF HAWAII                                            C.D. 1
                                                                      
_________________________________________________________________________
_________________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



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

 1                              PART I
 
 2      SECTION 1.  The purpose of this part is to protect the
 
 3 public, maintain high standards of professional competence in the
 
 4 insurance industry, and improve the insurance skills and
 
 5 knowledge of general agents, subagents, solicitors, designated
 
 6 representatives, and nonresident agents licensed by the
 
 7 department of commerce and consumer affairs, by prescribing
 
 8 minimum continuing education in approved subjects.
 
 9      SECTION 2.  Article 9 of chapter 431, Hawaii Revised
 
10 Statutes, is amended by adding a new part to be appropriately
 
11 designated and to read as follows:
 
12                  "PART   . CONTINUING EDUCATION
 
13      431:9-A  Definitions.  As used in this part, unless the
 
14 context requires otherwise:
 
15      "Approved continuing education course" means a course
 
16 approved by the commissioner following receipt of recommendations
 
17 from various insurance professionals.
 
18      "Approved course provider" means an organization or
 
19 individual that offers a continuing education course and has been
 
20 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)  In
 
 7 addition to payment of fees required in section 431:7-101, to
 
 8 qualify for a license renewal, a licensee shall:
 
 9      (1)  During the twenty-three months preceding a license
 
10           renewal, complete the required number of credit hours
 
11           as set forth in subsection (b) in approved continuing
 
12           education courses; and
 
13      (2)  Pay the fees as required under section 431:7-101.
 
14      (b)  The required number of credit hours shall be as
 
15 follows:
 
16      (1)  For a licensee authorized to sell classes of insurance
 
17           in only one of the following groups:
 
18           (A)  Life or disability; or
 
19           (B)  Property, marine and transportation, vehicle
 
20                general casualty, or surety;
 
21           the requisite number of credit hours shall be twenty
 
22           hours relating to the class of insurance for which the
 
23           license is held, including three credit hours relating
 
24           to the insurance code and insurance administrative
 
25           rules;
 

 
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 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
 
24 "inactive" status.  To reactivate a license, the licensee shall
 
25 submit proof to the insurance division that the requisite number
 

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

 
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 1      (b)  Approved course providers shall maintain attendance
 
 2 records for five years for the commissioner to verify the
 
 3 attendance and course completion of all licensees enrolled in an
 
 4 approved course.  These course providers shall make the records
 
 5 available at all times to the commissioner.
 
 6      431:9-D  Nondiscrimination.  Continuing education courses
 
 7 provided by insurers to their agents shall be subject to the same
 
 8 standards, reviews, and credits as other continuing education
 
 9 courses.  Nothing in this chapter is intended to preclude the
 
10 provision of continuing education courses by insurers to their
 
11 agents; provided that no credit shall be given for any course
 
12 unless it is an approved continuing education course.
 
13      431:9-E  Penalty.(a)  The commissioner shall suspend,
 
14 revoke, or refuse to extend the license of any licensee who has
 
15 submitted an invalid, false, or fraudulent certificate of
 
16 completion, subject to the right of a licensee to have a hearing
 
17 as provided in section 431:2-308.
 
18      (b)  The commissioner shall revoke the approval of an
 
19 approved course provider who has issued a certificate of
 
20 completion to a licensee who has not attended the continuing
 
21 education course or who has not met the course requirements,
 
22 subject to the right of an approved course provider to have a
 
23 hearing as provided in section 431:2-308."
 
24      SECTION 3.  Section 431:7-101, Hawaii Revised Statutes, is
 
25 amended to read as follows:
 

 
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 1      "431:7-101  Fees.(a)  The commissioner shall collect in
 
 2 advance the following fees:
 
 3      (1)  Certificate of authority:  Issuance....[$600] $900
 
 4      (2)  Organization of domestic insurers and affiliated
 
 5           corporations:
 
 6           (A)  Application and all other papers required for
 
 7                issuance of solicitation permit,
 
 8                filing..........................[$1,000] $1,500
 
 9           (B)  Issuance of solicitation permit.....[$100] $150
 
10      (3)  General agent's license:
 
11           (A)  Issuance, regular license............[$50] $75
 
12           (B)  Issuance, temporary license..........[$50] $75
 
13      (4)  Subagent's license:
 
14           (A)  Issuance, regular license............[$50] $75
 
15           (B)  Issuance, temporary license..........[$50] $75
 
16      (5)  Nonresident agent's or broker's license:
 
17           Issuance...................................[$40] $60
 
18      (6)  Solicitor's license: Issuance..............[$40] $60
 
19      (7)  Independent adjuster's license: Issuance...[$40] $60
 
20      (8)  Public adjuster's license: Issuance........[$40] $60
 
21      (9)  Workers' compensation claims adjuster's limited
 
22           license: Issuance..........................[$40] $60
 
23     (10)  Limited license issued pursuant to section
 
24           431:9-214(c): Issuance.....................[$40] $60
 
25     (11)  Managing general agent's license:
 

 
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 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
 
24           solicitor[.];
 

 
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 1      (6)  [$30] $45 per year for all services (including
 
 2           extension of the license) for a regularly licensed
 
 3           independent adjuster[.];
 
 4      (7)  [$30] $45 per year for all services (including
 
 5           extension of the license) for a regularly licensed
 
 6           public adjuster[.];
 
 7      (8)  [$30] $45 per year for all services (including
 
 8           extension of the license) for a regularly limited
 
 9           licensed workers' compensation claims adjuster[.];
 
10      (9)  [$30] $45 per year for all services (including
 
11           extension of the license) for a limited license issued
 
12           pursuant to section 431:9-214(c)[.];
 
13     (10)  [$50] $75 per year for all services (including
 
14           extension of the license) for a regularly licensed
 
15           managing general agent[.];
 
16     (11)  [$50] $75 per year for all services (including
 
17           extension of the license) for a regularly licensed
 
18           reinsurance intermediary[.];
 
19     (12)  [$30] $45 per year for all services (including
 
20           extension of the license) for a licensed surplus line
 
21           broker[.]; and
 
22     (13)  The services referred to in paragraphs (1) to (12)
 
23           shall not include services in connection with
 
24           examinations, investigations, hearings, appeals, and
 

 
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 1           deposits with a depository other than the department of
 
 2           commerce and consumer affairs.
 
 3      (c)  The commissioner shall notify the holder of the
 
 4 certificate of authority issued under article 3 or the license
 
 5 issued under article 9 by written notice at least thirty days
 
 6 prior to the extension date of such certificate or license. If
 
 7 the fee is not paid before or on the extension date, the fee will
 
 8 be increased by a penalty in the amount of fifty per cent of the
 
 9 fee.  If the fee and the penalty are not paid within the thirty
 
10 days immediately following the extension date, the commissioner
 
11 may revoke, suspend, or inactivate the certificate of authority
 
12 or license and shall not reissue, remove the suspension of, or
 
13 reactivate the certificate of authority or license until the fee
 
14 and penalty have been paid.
 
15      (d)  All fees and penalties shall be [remitted by the
 
16 commissioner to the director of finance not later than the first
 
17 business day following collection, and shall be placed] deposited
 
18 to the credit of the [general fund.] insurance regulation fund."
 
19      SECTION 4.  Section 431:9-232, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "431:9-232  Extension of licenses.(a)  [If the licensee
 
22 is qualified for the license, the license shall be extended.]
 
23 Prior to the extension of a license, each licensee shall annually
 
24 pay the fee required in section 431:7-101 and shall meet the
 
25 requirements of section 431:9-B.
 

 
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 1      (b)  [No license shall contain an expiration date, but all
 
 2 licenses must be extended from time to time in order to continue
 
 3 to be valid.] A license shall be inactivated if a licensee fails
 
 4 to:  
 
 5           (1)  Meet the requirements of section 431:9-B; or
 
 6           (2)  Pay any required fees or penalties.
 
 7      (c) [(1)]  When the commissioner issues or extends a
 
 8 license, the commissioner shall:
 
 9      [(A)]  (1)  Determine the extension date[; the extension
 
10             date], which is that date prior to which the license
 
11             must be extended[,]; and
 
12      [(B)]  (2)  Notify the licensee in writing[.] of the
 
13             extension date.
 
14 [This] The extension date shall be any date not less than one
 
15 year and not more than three years after the date of the issue or
 
16 the last extension[.] of the license."
 
17      SECTION 5.  During fiscal years 1999-2000 and 2000-2001,
 
18 there shall be an assessment of all insurers, general agents,
 
19 subagents, nonresident agents and brokers, solicitors, adjusters,
 
20 limited licensees under 431:9-214(c), managing general agents,
 
21 reinsurance intermediaries, surplus lines brokers, and designated
 
22 representatives.  The assessment shall be fifty per cent of the
 
23 applicable fee amount listed in section 431:7-101(a) prior to the
 
24 effective date of this Act.  The assessment shall be made on
 

 
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 1 August 1, 1999, and August 1, 2000, and shall be due on September
 
 2 1, 1999, and September 1, 2000, respectively.
 
 3      If the assessment is not paid when due, the assessment shall
 
 4 be increased by a penalty of fifty per cent of the assessment.
 
 5 If the assessment and the penalty are not paid within thirty days
 
 6 following the due date of September 1, the commissioner may
 
 7 revoke, suspend, or inactivate the certificate of authority or
 
 8 license and shall not reissue, remove the suspension of, or
 
 9 reactivate the certificate of authority or license until the
 
10 assessment and penalty have been paid.
 
11      SECTION 6.  There is appropriated out of the insurance
 
12 regulation fund the sum of $1,500,000 or so much thereof as may
 
13 be necessary for fiscal year 1999-2000 and $1,500,000 or so much
 
14 thereof as may be necessary for fiscal year 2000-2001 for the
 
15 administration of insurance licensing.
 
16      The sums appropriated shall be expended by the department of
 
17 commerce and consumer affairs for the purpose of this Act.
 
18                              PART II
 
19      SECTION 7.  Chapter 431, Hawaii Revised Statutes, is amended
 
20 by adding to article 2 a new section to be appropriately
 
21 designated and to read as follows:
 
22      "431:2-A  Insurance regulation fund.  (a)  There is
 
23 established a special fund to be designated as the insurance
 
24 regulation fund.  All assessments, fees, fines, penalties, and
 
25 reimbursements collected by or on behalf of the insurance
 

 
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 1 division under title 24, except for the commissioner's education
 
 2 and training fund (section 431:2-214), the patients' compensation
 
 3 fund (Act 232, Session Laws of Hawaii 1984), the drivers
 
 4 education fund underwriters fee (section 431:10C-115), and the
 
 5 captive insurance administrative fund (section 431:19-101.8), to
 
 6 the extent provided by section 431:19-101.8(b), shall be
 
 7 deposited into the insurance regulation fund.  All sums
 
 8 transferred into the insurance regulation fund may be expended by
 
 9 the commissioner to carry out the commissioner's duties and
 
10 obligations under title 24.
 
11      (b)  The insurance regulation fund shall be used to defray
 
12 any administrative costs, including personnel costs, associated
 
13 with the programs of the division, and costs incurred by
 
14 supporting offices and divisions.  Any law to the contrary
 
15 notwithstanding, the commissioner may use the moneys in the fund
 
16 to employ, without regard to chapters 76 and 77, hearings
 
17 officers, attorneys, investigators, accountants, examiners, and
 
18 other necessary professional, technical, and support personnel to
 
19 implement and carry out the purposes of title 24; provided that
 
20 any position, except any attorney position, that is subject to
 
21 chapters 76 and 77 prior to the effective date of this part shall
 
22 remain subject to chapters 76 and 77.
 
23      (c)  Moneys in the special fund shall not revert to the
 
24 general fund.
 

 
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 1      (d)  The commissioner shall determine the amount or amounts
 
 2 to be assessed and the time any moneys from assessments are due
 
 3 for each line or type of insurance or entity regulated under
 
 4 title 24; provided that:
 
 5      (1)  The criteria for making the assessment shall be
 
 6           established by rule; provided further that the
 
 7           commissioner shall have provisional authority to make
 
 8           assessments prior to adoption of the rule but this
 
 9           provisional authority shall not extend beyond two years
 
10           from the effective date of this Act;
 
11      (2)  The insurers or entities under title 24 shall be
 
12           provided reasonable notice of when their respective
 
13           assessments are due;
 
14      (3)  The assessments by line or type shall bear a reasonable
 
15           relationship to the costs of regulating the line or
 
16           type of insurance, including any administrative costs
 
17           of the division; and
 
18      (4)  The sum total of all assessments made and collected
 
19           shall not exceed the special fund ceiling or ceilings
 
20           related to the fund that are established by the
 
21           legislature.
 
22 As used in this subsection, "reasonable notice" means a period of
 
23 at least sixty days.
 
24      (e)  The commissioner may suspend an assessment of any
 
25 insurer if the commissioner determines that an insurer or entity
 

 
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 1 may reach insolvency or other financial difficulty if the
 
 2 assessment is made against that insurer or entity.
 
 3      (f) The commissioner shall prepare an annual report to the
 
 4 director, governor, and the legislature of the use of the fund.
 
 5 The report shall describe assessments by line or type of
 
 6 insurance, and expenditures made from the fund including non-
 
 7 payroll operating expenses.  The report shall be submitted to the
 
 8 legislature no later than twenty days prior to the convening of
 
 9 each regular legislative session."
 
10      SECTION 8.  Section 36-27, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "36-27  Transfers from special funds for central service
 
13 expenses.  Except as provided in this section, and
 
14 notwithstanding any other law to the contrary, from time to time
 
15 the director of finance, for the purpose of defraying the
 
16 prorated estimate of central service expenses of government in
 
17 relation to all special funds, except the:
 
18      (1)  Special summer school and intersession fund under
 
19           section 302A-1310;
 
20      (2)  School cafeteria special funds of the department of
 
21           education;
 
22      (3)  Special funds of the University of Hawaii;
 
23      (4)  State educational facilities improvement special fund;
 

 
 
 
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 1      (5)  Convention center capital special fund under section
 
 2           206X-10.5 and the convention center operations special
 
 3           fund under section 206X-10.6;
 
 4      (6)  Special funds established by section 206E-6;
 
 5      (7)  Housing loan program revenue bond special fund;
 
 6      (8)  Housing project bond special fund;
 
 7      (9)  Aloha Tower fund created by section 206J-17;
 
 8     (10)  [Repeal and reenactment on June 30, 2000.  L 1997, c
 
 9           216, 13.]  Domestic violence prevention special fund
 
10           under section 321-1.3;
 
11     (11)  Spouse and child abuse special account under section
 
12           346-7.5;
 
13     (12)  Spouse and child abuse special account under section
 
14           601-3.6;
 
15     (13)  Funds of the employees' retirement system created by
 
16           section 88-109;
 
17     (14)  Unemployment compensation fund established under
 
18           section 383-121;
 
19     (15)  Hawaii hurricane relief fund established under chapter
 
20           431P;
 
21     (16)  Hawaii health systems corporation special funds;
 
22     (17)  Boiler and elevator safety revolving fund established
 
23           under section 397-5.5;
 
24     (18)  Tourism special fund established under section
 
25           [[]201B-11[]]; [and]
 

 
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 1     (19)  Department of commerce and consumer affairs' special
 
 2           funds; and
 
 3     (20)  Insurance regulation fund under section 431:2-A;
 
 4 shall deduct five per cent of all receipts of all other special
 
 5 funds, which deduction shall be transferred to the general fund
 
 6 of the State and become general realizations of the State.  All
 
 7 officers of the State and other persons having power to allocate
 
 8 or disburse any special funds shall cooperate with the director
 
 9 in effecting these transfers.  To determine the proper revenue
 
10 base upon which the central service assessment is to be
 
11 calculated, the director shall adopt rules pursuant to chapter 91
 
12 for the purpose of suspending or limiting the application of the
 
13 central service assessment of any fund.  No later than twenty
 
14 days prior to the convening of each regular session of the
 
15 legislature, the director shall report all central service
 
16 assessments made during the preceding fiscal year.
 
17      SECTION 9.  Section 36-30, Hawaii Revised Statutes, is
 
18 amended by amending subsection (a) to read as follows:
 
19      "(a)  Each special fund, except the:
 
20      (1)  Transportation use special fund established by section
 
21           261D-1;
 
22      (2)  Special summer school and intersession fund under
 
23           section 302A-1310;
 
24      (3)  School cafeteria special funds of the department of
 
25           education;
 

 
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 1      (4)  Special funds of the University of Hawaii;
 
 2      (5)  State educational facilities improvement special fund;
 
 3      (6)  Special funds established by section 206E-6;
 
 4      (7)  Aloha Tower fund created by section 206J-17;
 
 5      (8)  Domestic violence prevention special fund under section
 
 6           321-1.3;
 
 7      (9)  Spouse and child abuse special account under section
 
 8           346-7.5;
 
 9     (10)  Spouse and child abuse special account under section
 
10           601-3.6;
 
11     (11)  Funds of the employees' retirement system created by
 
12           section 88-109;
 
13     (12)  Unemployment compensation fund established under
 
14           section 383-121;
 
15     (13)  Hawaii hurricane relief fund established under chapter
 
16           431P;
 
17     (14)  Convention center capital special fund established
 
18           under section 206X-10.5 and the convention center
 
19           operations special fund established under section 206X-
 
20           10.6;
 
21     (15)  Hawaii health systems corporation special funds; and
 
22     (16)  Tourism special fund established under section
 
23           [201B-11];
 
24     (17)  Insurance regulation fund under section 431:2-A;
 

 
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 1 shall be responsible for its pro rata share of the administrative
 
 2 expenses incurred by the department responsible for the
 
 3 operations supported by the special fund concerned."
 
 4      SECTION 10.  Section 431:2-105.5, Hawaii Revised Statutes,
 
 5 is amended to read as follows:
 
 6      "[[]431:2-105.5[]]  Staff.  There are established within
 
 7 the insurance division of the department of commerce and consumer
 
 8 affairs six positions for technical staff, and three positions
 
 9 for clerical staff, necessary to enable the State to meet and
 
10 maintain National Association of Insurance Commissioners
 
11 accreditation standards.  These positions shall not be subject to
 
12 chapters 76 and 77.  [The salaries for these positions shall be
 
13 funded out of the insurance examiners revolving fund, as provided
 
14 in section 431:2-307.]"
 
15      SECTION 11.  Section 431:2-306, Hawaii Revised Statutes, is
 
16 amended by amending subsection (b) to read as follows:
 
17      "(b)  The insurer, person, or guaranty fund examined and
 
18 liable therefor shall pay to the commissioner's examiners upon
 
19 presentation of an itemized statement, their actual travel
 
20 expenses, their reasonable living expense allowance, and their
 
21 per diem compensation at a reasonable rate approved by the
 
22 commissioner, incurred on account of the examination.  All
 
23 payments collected by the commissioner shall be remitted to:
 
24      (1)  The [general fund of the State;] insurance regulation
 
25           fund; or
 

 
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 1      [(2) The insurance examiner's revolving fund if independent
 
 2           contractor examiners were employed for the examination;
 
 3           or
 
 4      (3)] (2) The captive insurance administrative fund if
 
 5           independent contractor examiners or captive staff
 
 6           examiners were employed for a captive insurer's
 
 7           examination.
 
 8 The commissioner or the commissioner's examiners shall not
 
 9 receive or accept any additional emolument on account of any
 
10 examination."
 
11      SECTION 12.  Section 431:19-101.8, Hawaii Revised Statutes,
 
12 is amended to read as follows:
 
13      "[[]431:19-101.8[]]  Captive insurance administrative fund.
 
14 (a)  The commissioner may establish a separate fund designated as
 
15 the captive insurance administrative fund.
 
16      [(b)  The commissioner may appoint staff examiners exempt
 
17 from chapters 76 and 77, to examine the affairs, transactions,
 
18 accounts, records, documents, and assets of each authorized
 
19 captive insurer licensed under this article.  The commissioner
 
20 may also appoint administrative support personnel exempt from
 
21 chapters 76 and 77, to assist and support the examiners.
 
22      (c)  The commissioner may pay the salaries of the captive
 
23 insurance administrator, the staff examiners, and the
 
24 administrative support personnel from the captive insurance
 
25 administrative fund.  The commissioner may also appoint
 

 
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 1 independent contractor examiners to examine captive insurance
 
 2 companies.  The funds may also be used for other expenses
 
 3 relating to the monitoring, regulation, and examination of
 
 4 captive insurance companies, the development of the captive
 
 5 insurance industry under this article, and the education and
 
 6 training of the captive insurance administrator and examiners.
 
 7      (d)]  (b)  All premium taxes collected from captive
 
 8 insurance companies licensed in this State under this article,
 
 9 all captive insurance company application fees, annual license
 
10 fees, and examination fees collected pursuant to this article
 
11 shall be credited to the captive insurance [[]administrative[]]
 
12 fund.  Each fiscal year, the commissioner [may expend out of the
 
13 fund] shall transfer out of the fund and deposit into the
 
14 insurance regulation fund a total of forty per cent of the total
 
15 moneys credited to the fund in the prior fiscal year or $250,000,
 
16 whichever is greater, to pay for the expenditures contemplated by
 
17 this section.  Subject to the foregoing expenditure limit, all
 
18 moneys remaining in the fund shall revert to the general fund.
 
19      [(e)  The commissioner shall prepare and submit an annual
 
20 report to the legislature on the use of the captive insurance
 
21 [administrative] fund.]"
 
22      SECTION 13.  Section 431:19-108, Hawaii Revised Statutes, is
 
23 amended by amending subsection (b) to read as follows:
 
24      "(b)  The powers, authorities, and duties relating to
 
25 examinations vested in and imposed upon the commissioner under
 

 
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 1 section 431:2-301 through section [431:2-307] 431:2-307.5 of the
 
 2 code are extended to and imposed upon the commissioner in respect
 
 3 to examinations of captive insurance companies."
 
 4      SECTION 14.  Section 431:19-115.5, Hawaii Revised Statutes,
 
 5 is amended to read as follows:
 
 6      "431:19-115.5  Applicability of other laws to captive
 
 7 insurance companies writing motor vehicle insurance policies in
 
 8 this State.  Captive insurance companies writing motor vehicle
 
 9 insurance policies in this State shall be subject to sections
 
10 431:10C-102, 431:10C-103, 431:10C-107, 431:10C-108, 431:10C-109,
 
11 431:10C-112, 431:10C-115, [431:10C-115.5,] 431:10C-119,
 
12 431:10C-120, 431:10C-207, 431:10C-211, 431:10C-212, 431:10C-213,
 
13 431:10C-215, 431:10C-301, and 431:10C-303 through 431:10C-315.
 
14 Captive insurance companies shall also be subject to the rules
 
15 adopted by the commissioner to implement these sections."
 
16      SECTION 15.  Sections 431:2-203, 431:2-307.5, 431:3-221,
 
17 431:7-203, 431:9-238, 431:11-111, 431:15-334, and 431:15-335,
 
18 Hawaii Revised Statutes, are amended by:
 
19      (1)  Substituting the term "insurance regulation fund", or
 
20           like term, wherever the term "general fund", or like
 
21           term, appears, as the context requires; and
 
22      (2)  Substituting the term "insurance regulation fund", or
 
23           like term, wherever the term "state treasurer", or like
 
24           term, appears, as the context requires."
 

 
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 1      SECTION 16.  Act 234, Session Laws of Hawaii 1995, is
 
 2 amended by amending section 21 to read as follows:
 
 3      "SECTION 21.  There is established a special fund for the
 
 4 administration of workers' compensation insurance by the
 
 5 insurance commissioner to be called the workers' compensation
 
 6 insurance administration special fund.
 
 7      This fund shall be used to pay the costs incurred in
 
 8 administering workers' compensation insurance.  Costs shall
 
 9 include but not be limited to:
 
10      (1)  Costs related to public education and information;
 
11      (2)  Costs relating to closed claims studies;
 
12      (3)  Other studies and evaluations relating to workers'
 
13           compensation insurance, which may include an analysis
 
14           of the classifications of jobs and the assigned risk
 
15           pool affecting the rates charged by insurers; and
 
16      (4)  Costs related to administrative contracts with
 
17           personnel necessary to carry out the purposes of this
 
18           Act.
 
19      For each fiscal year beginning 1995-1996 until fiscal year
 
20 [2000-2001] 1998-1999, up to $150,000 shall be deposited into
 
21 this special fund from the following sources:
 
22      (1)  Fair and equitable assessments to be made by the
 
23           insurance commissioner on April of each year, on each
 
24           insurer authorized to transact workers' compensation
 
25           insurance in this State and each self-insurer;
 

 
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 1      (2)  Fair and equitable assessments to be made by the
 
 2           insurance commissioner for a one-time deposit into the
 
 3           fund, on each insurer authorized to transact workers'
 
 4           compensation insurance in this State and each self-
 
 5           insurer.
 
 6      As of July 1, [2001,] 1999, all unexpended and unencumbered
 
 7 balances remaining in the special fund shall [transfer to the
 
 8 credit of the state general fund.] be transferred to the
 
 9 insurance regulation fund.  After funds are transferred to the
 
10 insurance regulation fund, the workers' compensation special fund
 
11 shall be abolished.
 
12      [The insurance commissioner shall submit a complete and
 
13 detailed report on the status of the fund's administration and
 
14 expenditures to the legislature no later than twenty days before
 
15 the convening of each regular legislative session.
 
16      The insurance commissioner may adopt rules effectuating the
 
17 purposes of this section.]"
 
18      SECTION 17.  Act 216, Session Laws of Hawaii 1997, is
 
19 amended by amending section 13 to read as follows:
 
20      "SECTION 13.  This Act shall take effect on July 1, 1997,
 
21 and shall be repealed on June 30, 2000; provided that any
 
22 statutory or session law material in this Act in existence on
 
23 June 30, 1997, shall be reenacted on July 1, 2000, in the same
 
24 form in which it existed on June 30, 1997[.]; and provided
 
25 further that the amendments made to section 36-27 and 36-30,
 

 
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 1 Hawaii Revised Statutes, by sections 8 and 9 of Act    , Session
 
 2 Laws of Hawaii 1999, shall be retained."
 
 3      SECTION 18.  Act 142, Session Laws of Hawaii 1998, is
 
 4 amended by amending section 9 to read as follows:
 
 5      "SECTION 9.  This Act shall take effect upon its approval
 
 6 and shall be repealed on July 31, 2003, except that section 3 of
 
 7 this Act shall not be repealed; provided that section 36-27 and
 
 8 397-5(b), Hawaii Revised Statutes, shall be reenacted in the form
 
 9 in which they read on the day before the approval of this Act[.];
 
10 and provided further that the amendments made to section 36-27,
 
11 Hawaii Revised Statutes, by section 8 of Act    , Session Laws of
 
12 Hawaii 1999, shall be retained.
 
13      SECTION 19.  The director of finance shall transfer and
 
14 deposit all funds in the following funds unencumbered as of the
 
15 effective date of this Act into the insurance revolving fund:
 
16      (1)  The insurance examiners revolving fund (section 431:2-
 
17           307);
 
18      (2)  The motor vehicle insurance administration revolving
 
19           fund (section 431:10C-115.5); or
 
20      (3)  The workers' compensation insurance administration
 
21           special fund (Act 234, Session Laws of Hawaii 1995).
 
22 Any funds remaining in any of the aforementioned funds on June
 
23 30, 1999, shall be transferred into the insurance regulation
 
24 fund.
 

 
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 1      SECTION 20.  Section 431:2-307, Hawaii Revised Statutes, is
 
 2 repealed.
 
 3      ["431:2-307  Insurance examiners revolving fund and
 
 4 appointment of examiners. (a)  The commissioner may establish a
 
 5 separate fund designated as the insurance examiners revolving
 
 6 fund.
 
 7      (b)  The commissioner may appoint staff examiners, not
 
 8 subject to chapters 76 and 77, and contract with independent
 
 9 contractor examiners, who shall examine the affairs,
 
10 transactions, accounts, records, documents, and assets of each
 
11 authorized insurer, general agent, subagent, solicitor, adjuster,
 
12 and agency.  The commissioner may also appoint administrative
 
13 support personnel, not subject to chapters 76 and 77, who shall
 
14 assist and support the examiners.  The commissioner may pay the
 
15 salaries of the staff examiners and administrative support
 
16 personnel from the insurance examiners revolving fund.
 
17      (c)  The funds shall be used to compensate or reimburse
 
18 independent contractor examiners for:
 
19      (1)  Actual travel expenses in amounts customary for such
 
20           expenses and approved by the commissioner;
 
21      (2)  A reasonable living expense at a rate of per diem
 
22           customary for such expenses and approved by the
 
23           commissioner; and
 
24      (3)  Compensation at a rate customary for such compensation
 
25           as approved by the commissioner.
 

 
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 1      (d)  The funds may also be used to reimburse insurance
 
 2 division staff examiners and administrative support personnel for
 
 3 the following expenses necessarily incurred on account of an
 
 4 examination and the examiners' education and training:
 
 5      (1)  Actual travel expenses in amounts customary for such
 
 6           expenses and approved by the commissioner;
 
 7      (2)  A reasonable living expense allowance at a rate
 
 8           customary for such expenses and approved by the
 
 9           commissioner; and
 
10      (3)  Any fee or tuition necessary to attend educational and
 
11           training conferences, workshops, seminars, and any
 
12           similar events of this nature.
 
13      (e)  The funds may also be used for other expenses relating
 
14 to examinations of insurance companies.
 
15      (f)  All persons receiving any reimbursement or compensation
 
16 from the insurance examiners revolving fund shall submit to the
 
17 commissioner for approval a detailed account of all expenses and
 
18 compensation necessarily incurred.  Persons shall not receive or
 
19 accept any additional emolument on account of an examination.  In
 
20 the case of an examination, any reimbursement or compensation
 
21 made by the fund and approved by the commissioner shall be
 
22 charged to the person being examined by the commissioner and all
 
23 receipts shall be credited to the fund.
 
24      (g)  Moneys in the insurance examiners revolving fund shall
 
25 not revert to the general fund.
 

 
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 1      (h)  Each authorized insurer shall pay, on or before
 
 2 August 15, 1993, and each year thereafter, on or before July 1, a
 
 3 sum of $550 to the commissioner to be credited to the insurance
 
 4 examiners revolving fund.
 
 5      (i)  The commissioner shall prepare and submit a quarterly
 
 6 report to the legislature on the use of the insurance examiners
 
 7 revolving fund.  The report shall describe expenditures made from
 
 8 the fund including non-payroll operating expenses."]
 
 9      SECTION 21.  Section 431:10C-115.5, Hawaii Revised Statutes,
 
10 is repealed.
 
11      ["431:10C-115.5  Motor vehicle insurance administration
 
12 revolving fund.(a)  There is established a separate revolving
 
13 fund to be administered by the commissioner and to be designated
 
14 as the motor vehicle insurance administration revolving fund.
 
15      (b)  This fund shall be used to pay the costs of
 
16 administering the commissioner's obligations under this article.
 
17 The costs shall include but not be limited to costs related to
 
18 public education and information, costs related to closed claims
 
19 studies and other studies and evaluations relating to motor
 
20 vehicle insurance, costs related to the administration of the
 
21 motor vehicle insurance benefits task force, and costs related to
 
22 administrative contracts with personnel necessary to carry out
 
23 the purposes of this article.  The commissioner may hire
 
24 attorneys for the insurance fraud investigations unit, insurance
 

 
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 1 fraud investigators, insurance fraud investigator assistants, and
 
 2 other support staff without regard to chapters 76 and 77.
 
 3      (c)  Each insurer authorized to transact motor vehicle
 
 4 insurance in this State and each self-insurer shall deposit with
 
 5 the commissioner a fair and equitable amount to be determined by
 
 6 the commissioner on April 1 of each year, to be credited to the
 
 7 motor vehicle insurance administration revolving fund.  In
 
 8 addition, each insurer authorized to transact motor vehicle
 
 9 insurance in this State and each self-insurer in this State,
 
10 shall pay to the commissioner at a time determined by the
 
11 commissioner, a one-time deposit in an amount to be determined by
 
12 the commissioner, to be credited to the motor vehicle insurance
 
13 administration revolving fund.
 
14      (d)  Moneys in the motor vehicle insurance administration
 
15 revolving fund shall not revert to the general fund.
 
16      (e)  The commissioner shall report annually to the
 
17 legislature before the convening of each regular session as to
 
18 fund administration and expenditures."]
 
19                             PART III
 
20      SECTION 22.  Section 386-153, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "386-153  Levy on insurers of employers insured under
 
23 section 386-121(a)(1).  (a) For the calendar year 1974 and for
 
24 each calendar year thereafter, insurers of employers, as defined
 
25 in section 386-1, shall pay a levy determined by the director
 

 
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 1 which shall be based on a percentage on gross premiums, as
 
 2 defined in section 431:7-202(a), derived from workers'
 
 3 compensation insurance issued during the prior year in accordance
 
 4 with chapter 386 and chapter 431, if the levying and collecting
 
 5 of such a levy is required pursuant to section 386-152, which
 
 6 levy shall be collected in the same manner as the tax provided
 
 7 for in section 431:7-202 is collected and shall be deposited in
 
 8 the special compensation fund established in section 386-151.
 
 9 This levy shall be in addition to any tax imposed in chapter 431
 
10 on gross premiums derived from workers' compensation insurance.  
 
11      (b) Notwithstanding subsection (a), from its inception
 
12 through December 31, 2007, the Hawaii Employers' Mutual Insurance
 
13 Company, Inc., shall be exempt from this levy; provided that this
 
14 exemption shall apply to the first $25,000,000 of written
 
15 premiums in each calendar year; and provided further that annual
 
16 written premiums in excess of $25,000,000 shall be subject to
 
17 this levy at the same rate as other insurers.  Any moneys
 
18 heretofore paid by Hawaii Employers' Mutual Insurance Company,
 
19 Inc., to the special compensation fund shall be retained by the
 
20 special compensation fund to be credited to future levy balances
 
21 owed by Hawaii Employers' Mutual Insurance Company, Inc."
 
22                              PART IV
 
23      SECTION 23.  If any provision of this Act, or the
 
24 application thereof to any person or circumstance is held
 
25 invalid, the invalidity does not affect other provisions or
 

 
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 1 applications of the Act which can be given effect without the
 
 2 invalid provision or application, and to this end the provisions
 
 3 of this Act are severable.
 
 4      SECTION 24.  Statutory material to be repealed is bracketed.
 
 5 New statutory material is underscored.
 
 6      SECTION 25.  In codifying the new part added to articles 2
 
 7 and 9 of chapter 431, Hawaii Revised Statutes, by sections 2 and
 
 8 7 of this Act, the revisor of statutes shall substitute
 
 9 appropriate section numbers for the letters used in designating
 
10 the new sections in this part.  In printing this Act, the revisor
 
11 of statutes shall insert the appropriate number of this Act in
 
12 sections 17 and 18 of this Act.
 
13      SECTION 26.  This Act shall take effect on approval,
 
14 provided that:
 
15      (1)  Sections 431:9-B and 431:9-C contained in section 2 of
 
16           Part I shall become effective on January 1, 2001; and
 
17           provided further that the twenty-three month period to
 
18           meet the continuing education requirements shall
 
19           commence upon the first license renewal of a general
 
20           agent, subagent, solicitor, designated representative,
 
21           or nonresident agent after December 31, 2000; and
 
22      (2)  Part II shall take effect on July 1, 1999; provided
 
23           further that sections 21 and 22 shall take effect after
 
24           all funds that are supposed to be credited to the motor
 
25           vehicle insurance administration revolving fund and the
 

 
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 1           insurance examiners revolving fund are transferred into
 
 2           the insurance regulation special fund.