REPORT TITLE:
Insurance Agents


DESCRIPTION:
Requires continuing education for insurance agents as a
prerequisite for license renewal, creates insurance
licensing administration special fund 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, on
up to first $25,000,000 each year. (SB1129 HD2)

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


                   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
 

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

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

 
 
 
 
 
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 1      (3)  A licensee granted an exemption by the commissioner
 
 2           from this section pursuant to rules adopted by the
 
 3           commissioner; or
 
 4      (4)  A licensee who is exempt, pursuant to section 431:9-E.
 
 5      431:9-C  Continuing education recordkeeping.(a) Licensees
 
 6 shall maintain their own continuing education records and shall
 
 7 keep the records for four years after completion of an approved
 
 8 continuing education course.
 
 9      (b)  Approved course providers shall maintain attendance
 
10 records for five years for the commissioner to verify the
 
11 attendance and course completion of all licensees enrolled in an
 
12 approved course.  These course providers shall make the records
 
13 available at all times to the commissioner.
 
14      431:9-D  Nondiscrimination.  Continuing education courses
 
15 provided by insurers to their agents shall be subject to the same
 
16 standards, reviews, and credits as other continuing education
 
17 courses.  Nothing in this chapter is intended to preclude the
 
18 provision of continuing education courses by insurers to their
 
19 agents; provided that no credit shall be given for any course
 
20 unless it is an approved continuing education course.
 
21      431:9-E  Exemptions.  Every general agent, subagent,
 
22 solicitor, designated representative, or nonresident agent who is
 
23 licensed as of July 1, 1999, shall be exempt from this part.
 

 
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 1      431:9-F  Penalty.(a)  The commissioner shall suspend,
 
 2 revoke, or refuse to extend the license of any licensee who has
 
 3 submitted an invalid, false, or fraudulent certificate of
 
 4 completion, subject to the right of a licensee to have a hearing
 
 5 as provided in section 431:2-308.
 
 6      (b)  The commissioner shall revoke the approval of an
 
 7 approved course provider who has issued a certificate of
 
 8 completion to a licensee who has not attended the continuing
 
 9 education course or who has not met the course requirements,
 
10 subject to the right of an approved course provider to have a
 
11 hearing as provided in section 431:2-308."
 
12      SECTION 3.  Chapter 431, Hawaii Revised Statutes, is amended
 
13 by adding to article 9 a new section to be appropriately
 
14 designated and to read as follows:
 
15      "431:9-     Insurance licensing administration special
 
16 fund.  (a)  There is established the insurance licensing
 
17 administration special fund to be administered by the
 
18 commissioner.  All fees and penalties collected pursuant to
 
19 section 431:7-101 shall be deposited into the fund to carry out
 
20 the purposes of this article.
 
21      (b)  The commissioner may hire a continuing education
 
22 licensing assistant who is exempt from chapters 76 and 77, for
 

 
 
 
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 1 the purpose of administering the continuing education program,
 
 2 including but not limited to:
 
 3      (1)  Processing and maintaining certificates of completion;
 
 4           and
 
 5      (2)  Monitoring licensing and continuing education
 
 6           compliance.
 
 7      (c)  The commissioner may hire administrative personnel, who
 
 8 shall assist the commissioner in administering this article.
 
 9      (d)  The fund shall be used to compensate and reimburse the
 
10 licensing assistant and administrative personnel hired under this
 
11 article for:
 
12      (1)  Salaries or wages;
 
13      (2)  Actual travel expenses in amounts reasonable and
 
14           customary for such expenses and approved by the
 
15           commissioner; and
 
16      (3)  A living expense at a rate of per diem reasonable and
 
17           customary for such expense and approved by the
 
18           commissioner.
 
19      (e)  The fund may also be used for other expenses related to
 
20 licensing, including but not limited to monitoring and regulating
 
21 licensing activities and continuing education requirements, and
 
22 maintaining a licensing database.
 

 
 
 
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 1      (f)  Moneys in the insurance licensing administration
 
 2 special fund shall not revert to the general fund.
 
 3      (g)  The commissioner shall report annually to the
 
 4 legislature before the convening of each regular session as to
 
 5 the fund's administration and expenditures."
 
 6      SECTION 4.  Section 431:7-101, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "431:7-101  Fees.(a)  The commissioner shall collect in
 
 9 advance the following fees:
 
10      (1)  Certificate of authority:  Issuance....[$600] $900
 
11      (2)  Organization of domestic insurers and affiliated
 
12           corporations:
 
13           (A)  Application and all other papers required for
 
14                issuance of solicitation permit,
 
15                filing..........................[$1,000] $1,500
 
16           (B)  Issuance of solicitation permit.....[$100] $150
 
17      (3)  General agent's license:
 
18           (A)  Issuance, regular license............[$50] $75
 
19           (B)  Issuance, temporary license..........[$50] $75
 
20      (4)  Subagent's license:
 
21           (A)  Issuance, regular license............[$50] $75
 
22           (B)  Issuance, temporary license..........[$50] $75
 

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

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

 
 
 
 
 
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 1      (9)  [$30] $45 per year for all services (including
 
 2           extension of the license) for a limited license issued
 
 3           pursuant to section 431:9-214(c)[.];
 
 4     (10)  [$50] $75 per year for all services (including
 
 5           extension of the license) for a regularly licensed
 
 6           managing general agent[.];
 
 7     (11)  [$50] $75 per year for all services (including
 
 8           extension of the license) for a regularly licensed
 
 9           reinsurance intermediary[.];
 
10     (12)  [$30] $45 per year for all services (including
 
11           extension of the license) for a licensed surplus line
 
12           broker[.]; and
 
13     (13)  The services referred to in paragraphs (1) to (12)
 
14           shall not include services in connection with
 
15           examinations, investigations, hearings, appeals, and
 
16           deposits with a depository other than the department of
 
17           commerce and consumer affairs.
 
18      (c)  The commissioner shall notify the holder of the
 
19 certificate of authority issued under article 3 or the license
 
20 issued under article 9 by written notice at least thirty days
 
21 prior to the extension date of such certificate or license. If
 
22 the fee is not paid before or on the extension date, the fee will
 
23 be increased by a penalty in the amount of fifty per cent of the
 

 
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 1 fee.  If the fee and the penalty are not paid within the thirty
 
 2 days immediately following the extension date, the commissioner
 
 3 may revoke, suspend, or inactivate the certificate of authority
 
 4 or license and shall not reissue, remove the suspension of, or
 
 5 reactivate the certificate of authority or license until the fee
 
 6 and penalty have been paid.
 
 7      (d)  All fees and penalties shall be [remitted by the
 
 8 commissioner to the director of finance not later than the first
 
 9 business day following collection, and shall be placed] deposited
 
10 to the credit of the [general fund.] insurance licensing
 
11 administration special fund."
 
12      SECTION 5.  Section 431:9-232, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "431:9-232  Extension of licenses.(a)  [If the licensee
 
15 is qualified for the license, the license shall be extended.]
 
16 Prior to the extension of a license, each licensee shall annually
 
17 pay the fee required in section 431:7-101 and shall meet the
 
18 requirements of section 431:9-B.
 
19      (b)  [No license shall contain an expiration date, but all
 
20 licenses must be extended from time to time in order to continue
 
21 to be valid.] A license shall expire if a licensee fails to pay
 
22 the fee or meet the requirements of section 431:9-B.
 

 
 
 
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 1      (c) [(1)]  When the commissioner issues or extends a
 
 2 license, the commissioner shall:
 
 3      [(A)]  (1)  Determine the extension date[; the extension
 
 4             date], which is that date prior to which the license
 
 5             must be extended[,]; and
 
 6      [(B)]  (2)  Notify the licensee in writing[.] of the
 
 7             extension date.
 
 8 [This] The extension date shall be any date not less than one
 
 9 year and not more than three years after the date of the issue or
 
10 the last extension[.] of the license."
 
11      SECTION 6.  During fiscal years 1999-2000 and 2000-2001,
 
12 there shall be an assessment of all insurers, general agents,
 
13 subagents, nonresident agents and brokers, solicitors, adjusters,
 
14 limited licensees under 431:9-214(c), managing general agents,
 
15 reinsurance intermediaries, surplus lines brokers, and designated
 
16 representatives.  The assessment shall be fifty per cent of the
 
17 applicable fee amount listed in section 431:7-101 (a) prior to
 
18 the effective date of this Act.  The assessment shall be made on
 
19 August 1, 1999, and August 1, 2000, and shall be due on September
 
20 1, 1999, and September 1, 2000, respectively.
 
21      If the assessment is not paid when due, the assessment shall
 
22 be increased by a penalty of fifty per cent of the assessment.
 
23 If the assessment and the penalty are not paid within thirty days
 

 
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 1 following the due date of September 1, the commissioner may
 
 2 revoke, suspend, or inactivate the certificate of authority or
 
 3 license and shall not reissue, remove the suspension of, or
 
 4 reactivate the certificate of authority or license until the
 
 5 assessment and penalty have been paid.
 
 6      SECTION 7.  There is appropriated out of the insurance
 
 7 licensing administration special fund the sum of $1,500,000 or so
 
 8 much thereof as may be necessary for fiscal year 1999-2000 and
 
 9 $1,500,000 or so much thereof as may be necessary for fiscal year
 
10 2000-2001 for the administration of insurance licensing.
 
11      The sums appropriated shall be expended by the department of
 
12 commerce and consumer affairs for the purpose of this Act.
 
13      SECTION 8.  In codifying the new part added to article 9 of
 
14 chapter 431, Hawaii Revised Statutes, by section 2 of this Act,
 
15 the revisor of statutes shall substitute appropriate section
 
16 numbers for the letters used in designating the new sections in
 
17 this part.
 
18                              PART II
 
19      SECTION 9.  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       Insurance regulation fund.  (a)  There is
 
23 established a special fund to be designated as the insurance
 

 
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 1 regulation fund.  All assessments, fees, fines, penalties, and
 
 2 reimbursements collected by or on behalf of the insurance
 
 3 division under title 24, except for the commissioner's education
 
 4 and training fund (section 431:2-214), the drivers education fund
 
 5 underwriters fee (section 431:10C-115), and the captive insurance
 
 6 administrative fund (section 431:19-101.8), to the extent
 
 7 provided by section 431:19-101.8(b), shall be deposited into the
 
 8 insurance regulation fund.
 
 9      (b)  The insurance regulation fund shall be used to defray
 
10 administrative costs, including personnel costs, associated with
 
11 the programs of the division, and costs incurred by supporting
 
12 offices and divisions.  Any law to the contrary notwithstanding,
 
13 the commissioner may use the moneys in the fund to employ,
 
14 without regard to chapters 76 and 77, hearings officers,
 
15 attorneys, investigators, accountants, examiners, and other
 
16 necessary professional, technical, and support personnel to
 
17 implement and carry out the purposes of title 24; provided that
 
18 any person or position that is subject to chapters 76 and 77
 
19 prior to the effective date of this part shall remain subject to
 
20 chapters 76 and 77.
 
21      (c)  Moneys in the special fund shall not revert to the
 
22 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; provided that the amounts
 
 4 assessed and expended shall be for the purpose of meeting the
 
 5 administrative costs of operating the insurance division.
 
 6      (e)  The commissioner shall prepare an annual report to the
 
 7 director, governor, and the legislature of the use of the fund.
 
 8 The report shall describe assessments by line or type of
 
 9 insurance, and expenditures made from the fund including non-
 
10 payroll operating expenses.  The report shall be submitted to the
 
11 legislature no later than twenty days prior to the convening of
 
12 each regular legislative session."
 
13      SECTION 10.  Section 431:2-105.5, Hawaii Revised Statutes,
 
14 is amended to read as follows:
 
15      "[[]431:2-105.5[]]  Staff.  There are established within
 
16 the insurance division of the department of commerce and consumer
 
17 affairs six positions for technical staff, and three positions
 
18 for clerical staff, necessary to enable the State to meet and
 
19 maintain National Association of Insurance Commissioners
 
20 accreditation standards.  These positions shall not be subject to
 
21 chapters 76 and 77.  [The salaries for these positions shall be
 
22 funded out of the insurance examiners revolving fund, as provided
 
23 in section 431:2-307.]"
 

 
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 1      SECTION 11.  Section 431:2-306, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (b) to read as follows:
 
 3      "(b)  The insurer, person, or guaranty fund examined and
 
 4 liable therefor shall pay to the commissioner's examiners upon
 
 5 presentation of an itemized statement, their actual travel
 
 6 expenses, their reasonable living expense allowance, and their
 
 7 per diem compensation at a reasonable rate approved by the
 
 8 commissioner, incurred on account of the examination.  All
 
 9 payments collected by the commissioner shall be remitted to:
 
10      (1)  The [general fund of the State;] insurance regulation
 
11           fund; or
 
12      [(2) The insurance examiner's revolving fund if independent
 
13           contractor examiners were employed for the examination;
 
14           or
 
15      (3)] (2) The captive insurance administrative fund if
 
16           independent contractor examiners or captive staff
 
17           examiners were employed for a captive insurer's
 
18           examination.
 
19 The commissioner or the commissioner's examiners shall not
 
20 receive or accept any additional emolument on account of any
 
21 examination."
 
22      SECTION 12.  Section 431:19-101.8, Hawaii Revised Statutes,
 
23 is amended to read as follows:
 

 
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 1      "[[]431:19-101.8[]]  Captive insurance administrative fund.
 
 2 (a)  The commissioner may establish a separate fund designated as
 
 3 the captive insurance administrative fund.
 
 4      [(b)  The commissioner may appoint staff examiners exempt
 
 5 from chapters 76 and 77, to examine the affairs, transactions,
 
 6 accounts, records, documents, and assets of each authorized
 
 7 captive insurer licensed under this article.  The commissioner
 
 8 may also appoint administrative support personnel exempt from
 
 9 chapters 76 and 77, to assist and support the examiners.
 
10      (c)  The commissioner may pay the salaries of the captive
 
11 insurance administrator, the staff examiners, and the
 
12 administrative support personnel from the captive insurance
 
13 administrative fund.  The commissioner may also appoint
 
14 independent contractor examiners to examine captive insurance
 
15 companies.  The funds may also be used for other expenses
 
16 relating to the monitoring, regulation, and examination of
 
17 captive insurance companies, the development of the captive
 
18 insurance industry under this article, and the education and
 
19 training of the captive insurance administrator and examiners.
 
20      (d)]  (b)  All premium taxes collected from captive
 
21 insurance companies licensed in this State under this article,
 
22 all captive insurance company application fees, annual license
 
23 fees, and examination fees collected pursuant to this article
 

 
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 1 shall be credited to the captive insurance [[]administrative[]]
 
 2 fund.  Each fiscal year, the commissioner [may expend out of the
 
 3 fund] shall transfer out of the fund and deposit into the
 
 4 insurance regulation fund a total of forty per cent of the total
 
 5 moneys credited to the fund in the prior fiscal year or $250,000,
 
 6 whichever is greater, to pay for the expenditures contemplated by
 
 7 this section.  Subject to the foregoing expenditure limit, all
 
 8 moneys remaining in the fund shall revert to the general fund.
 
 9      [(e)  The commissioner shall prepare and submit an annual
 
10 report to the legislature on the use of the captive insurance
 
11 [[]administrative[]] fund.]"
 
12      SECTION 13.  Section 431:19-108, Hawaii Revised Statutes, is
 
13 amended by amending subsection (b) to read as follows:
 
14      "(b)  The powers, authorities, and duties relating to
 
15 examinations vested in and imposed upon the commissioner under
 
16 section 431:2-301 through section [431:2-307] 431:2-307.5 of the
 
17 code are extended to and imposed upon the commissioner in respect
 
18 to examinations of captive insurance companies."
 
19      SECTION 14.  Section 431:19-115.5, Hawaii Revised Statutes,
 
20 is amended to read as follows:
 
21      "431:19-115.5  Applicability of other laws to captive
 
22 insurance companies writing motor vehicle insurance policies in
 
23 this State.  Captive insurance companies writing motor vehicle
 

 
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 1 insurance policies in this State shall be subject to sections
 
 2 431:10C-102, 431:10C-103, 431:10C-107, 431:10C-108, 431:10C-109,
 
 3 431:10C-112, 431:10C-115, [431:10C-115.5,] 431:10C-119,
 
 4 431:10C-120, 431:10C-207, 431:10C-211, 431:10C-212, 431:10C-213,
 
 5 431:10C-215, 431:10C-301, and 431:10C-303 through 431:10C-315.
 
 6 Captive insurance companies shall also be subject to the rules
 
 7 adopted by the commissioner to implement these sections."
 
 8      SECTION 15.  Sections 431:2-203, 431:2-307.5, 431:3-221,
 
 9 431:7-203, 431:9-238, 431:11-111, 431:15-334, and 431:15-335,
 
10 Hawaii Revised Statutes, are amended by:
 
11      (1)  Substituting the term "insurance regulation fund", or
 
12           like term, wherever the term "general fund", or like
 
13           term, appears, as the context requires; and
 
14      (2)  Substituting the term "insurance regulation fund", or
 
15           like term, wherever the term "state treasurer", or like
 
16           term, appears, as the context requires."
 
17      SECTION 16.  Act 234, Session Laws of Hawaii 1995, is
 
18 amended by amending section 21 to read as follows:
 
19      "SECTION 21.  There is established a special fund for the
 
20 administration of workers' compensation insurance by the
 
21 insurance commissioner to be called the workers' compensation
 
22 insurance administration special fund.
 

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

 
 
 
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 1           compensation insurance in this State and each self-
 
 2           insurer.
 
 3      As of July 1, [2001,] 1999, all unexpended and unencumbered
 
 4 balances remaining in the special fund shall [transfer to the
 
 5 credit of the state general fund.] be transferred to the
 
 6 insurance regulation fund.  After funds are transferred to the
 
 7 insurance regulation fund, the workers' compensation special fund
 
 8 shall be abolished.
 
 9      [The insurance commissioner shall submit a complete and
 
10 detailed report on the status of the fund's administration and
 
11 expenditures to the legislature no later than twenty days before
 
12 the convening of each regular legislative session.]
 
13      The insurance commissioner may adopt rules effectuating the
 
14 purposes of this section."
 
15      SECTION 17.  The director of finance shall transfer and
 
16 deposit all funds in the following funds unencumbered as of the
 
17 effective date of this Act into the insurance revolving fund:
 
18      (1)  The insurance examiners revolving fund (section 431:2-
 
19           307);
 
20      (2)  The motor vehicle insurance administration revolving
 
21           fund (section 431:10C-115.5); or
 
22      (3)  The workers' compensation insurance administration
 
23           special fund (Act 234, Session Laws of Hawaii 1995).
 

 
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 1 Any funds remaining in any of the aforementioned funds on June
 
 2 30, 1999, shall be transferred into the insurance regulation
 
 3 fund.
 
 4      SECTION 18.  Section 431:2-307, Hawaii Revised Statutes, is
 
 5 repealed.
 
 6      ["431:2-307  Insurance examiners revolving fund and
 
 7 appointment of examiners. (a)  The commissioner may establish a
 
 8 separate fund designated as the insurance examiners revolving
 
 9 fund.
 
10      (b)  The commissioner may appoint staff examiners, not
 
11 subject to chapters 76 and 77, and contract with independent
 
12 contractor examiners, who shall examine the affairs,
 
13 transactions, accounts, records, documents, and assets of each
 
14 authorized insurer, general agent, subagent, solicitor, adjuster,
 
15 and agency.  The commissioner may also appoint administrative
 
16 support personnel, not subject to chapters 76 and 77, who shall
 
17 assist and support the examiners.  The commissioner may pay the
 
18 salaries of the staff examiners and administrative support
 
19 personnel from the insurance examiners revolving fund.
 
20      (c)  The funds shall be used to compensate or reimburse
 
21 independent contractor examiners for:
 
22      (1)  Actual travel expenses in amounts customary for such
 
23           expenses and approved by the commissioner;
 

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

 
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 1 accept any additional emolument on account of an examination.  In
 
 2 the case of an examination, any reimbursement or compensation
 
 3 made by the fund and approved by the commissioner shall be
 
 4 charged to the person being examined by the commissioner and all
 
 5 receipts shall be credited to the fund.
 
 6      (g)  Moneys in the insurance examiners revolving fund shall
 
 7 not revert to the general fund.
 
 8      (h)  Each authorized insurer shall pay, on or before
 
 9 August 15, 1993, and each year thereafter, on or before July 1, a
 
10 sum of $550 to the commissioner to be credited to the insurance
 
11 examiners revolving fund.
 
12      (i)  The commissioner shall prepare and submit a quarterly
 
13 report to the legislature on the use of the insurance examiners
 
14 revolving fund.  The report shall describe expenditures made from
 
15 the fund including non-payroll operating expenses."]
 
16      SECTION 19.  Section 431:10C-115.5, Hawaii Revised Statutes,
 
17 is repealed.
 
18      ["431:10C-115.5  Motor vehicle insurance administration
 
19 revolving fund.(a)  There is established a separate revolving
 
20 fund to be administered by the commissioner and to be designated
 
21 as the motor vehicle insurance administration revolving fund.
 
22      (b)  This fund shall be used to pay the costs of
 
23 administering the commissioner's obligations under this article.
 

 
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 1 The costs shall include but not be limited to costs related to
 
 2 public education and information, costs related to closed claims
 
 3 studies and other studies and evaluations relating to motor
 
 4 vehicle insurance, costs related to the administration of the
 
 5 motor vehicle insurance benefits task force, and costs related to
 
 6 administrative contracts with personnel necessary to carry out
 
 7 the purposes of this article.  The commissioner may hire
 
 8 attorneys for the insurance fraud investigations unit, insurance
 
 9 fraud investigators, insurance fraud investigator assistants, and
 
10 other support staff without regard to chapters 76 and 77.
 
11      (c)  Each insurer authorized to transact motor vehicle
 
12 insurance in this State and each self-insurer shall deposit with
 
13 the commissioner a fair and equitable amount to be determined by
 
14 the commissioner on April 1 of each year, to be credited to the
 
15 motor vehicle insurance administration revolving fund.  In
 
16 addition, each insurer authorized to transact motor vehicle
 
17 insurance in this State and each self-insurer in this State,
 
18 shall pay to the commissioner at a time determined by the
 
19 commissioner, a one-time deposit in an amount to be determined by
 
20 the commissioner, to be credited to the motor vehicle insurance
 
21 administration revolving fund.
 
22      (d)  Moneys in the motor vehicle insurance administration
 
23 revolving fund shall not revert to the general fund.
 

 
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 1      (e)  The commissioner shall report annually to the
 
 2 legislature before the convening of each regular session as to
 
 3 fund administration and expenditures."]
 
 4                             PART III
 
 5      SECTION 20.  Section 386-153, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "386-153  Levy on insurers of employers insured under
 
 8 section 386-121(a)(1).  (a) For the calendar year 1974 and for
 
 9 each calendar year thereafter, insurers of employers, as defined
 
10 in section 386-1, shall pay a levy determined by the director
 
11 which shall be based on a percentage on gross premiums, as
 
12 defined in section 431:7-202(a), derived from workers'
 
13 compensation insurance issued during the prior year in accordance
 
14 with chapter 386 and chapter 431, if the levying and collecting
 
15 of such a levy is required pursuant to section 386-152, which
 
16 levy shall be collected in the same manner as the tax provided
 
17 for in section 431:7-202 is collected and shall be deposited in
 
18 the special compensation fund established in section 386-151.
 
19 This levy shall be in addition to any tax imposed in chapter 431
 
20 on gross premiums derived from workers' compensation insurance.  
 
21      (b) Notwithstanding subsection (a), from its inception
 
22 through December 31, 2007, the Hawaii employers' mutual insurance
 
23 company, inc., shall be exempt from this levy; provided that this
 

 
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 1 exemption shall apply to the first $25,000,000 of written
 
 2 premiums in each calendar year; and provided further that annual
 
 3 written premiums in excess of $25,000,000 shall be subject to
 
 4 this levy at the same rate as other insurers.  Any moneys
 
 5 heretofore paid by Hawaii employers' mutual insurance company,
 
 6 inc., to the special compensation fund shall be retained by the
 
 7 special compensation fund to be credited to future levy balances
 
 8 owed by Hawaii employers' mutual insurance company, inc."
 
 9                              PART IV
 
10      SECTION 21.  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 
 
16 severable.
 
17      SECTION 22.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 23.  This Act shall take effect on              ,
 
20 provided that:
 
21      (1)  Sections 431:9-B and 431:9-C contained in section 2 of
 
22           Part I shall become effective on July 1, 1999; and
 
23           provided further that the twenty-three month period to
 

 
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 1           meet the continuing education requirements shall
 
 2           commence upon the first license renewal of a general
 
 3           agent, subagent, solicitor, designated representative,
 
 4           or nonresident agent after July 1, 1999; and
 
 5      (2)  Part II shall take effect on July 1, 1999; provided
 
 6           further that sections 18 and 19 shall be effective on
 
 7           July 1, 1999, after all funds are transferred into the
 
 8           insurance revolving fund.