Report Title:

Insurance Producers; Surplus Lines Brokers; Retaliatory Tax Credit; Limited Lines Adjuster License; Continuing Education Credits; Assigned Claims

 

Description:

Updates references in Insurance Code.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1074

TWENTY-FIFTH LEGISLATURE, 2009

 

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO INSURANCE.

 

 

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

 


     SECTION 1.  Section 26-9, Hawaii Revised Statutes, is amended by amending subsection (o) to read as follows:

     "(o)  Every person licensed under any chapter within the jurisdiction of the department of commerce and consumer affairs and every person licensed subject to chapter 485A or registered under chapter 467B shall pay upon issuance of a license, permit, certificate, or registration a fee and a subsequent annual fee to be determined by the director and adjusted from time to time to ensure that the proceeds, together with all other fines, income, and penalties collected under this section, do not surpass the annual operating costs of conducting compliance resolution activities required under this section.  The fees may be collected biennially or pursuant to rules adopted under chapter 91, and shall be deposited into the special fund established under this subsection.  Every filing pursuant to chapter 514E or section 485A‑202(a)(26) shall be assessed, upon initial filing and at each renewal period in which a renewal is required, a fee that shall be prescribed by rules adopted under chapter 91, and that shall be deposited into the special fund established under this subsection.  Any unpaid fee shall be paid by the licensed person, upon application for renewal, restoration, reactivation, or reinstatement of a license, and by the person responsible for the renewal, restoration, reactivation, or reinstatement of a license, upon the application for renewal, restoration, reactivation, or reinstatement of the license.  If the fees are not paid, the director may deny renewal, restoration, reactivation, or reinstatement of the license.  The director may establish, increase, decrease, or repeal the fees when necessary pursuant to rules adopted under chapter 91.  The director may also increase or decrease the fees pursuant to section 92-28.

     There is created in the state treasury a special fund to be known as the compliance resolution fund to be expended by the director's designated representatives as provided by this subsection.  Notwithstanding any law to the contrary, all revenues, fees, and fines collected by the department shall be deposited into the compliance resolution fund.  Unencumbered balances existing on June 30, 1999, in the cable television fund under chapter 440G, the division of consumer advocacy fund under chapter 269, the financial institution examiners' revolving fund, section 412:2-109, the special handling fund, section 414‑13, and unencumbered balances existing on June 30, 2002, in the insurance regulation fund, section 431:2-215, shall be deposited into the compliance resolution fund.  This provision shall not apply to the drivers education fund underwriters fee, [section] sections 431:10C‑115[,] and 431:10G-107, insurance premium taxes and revenues, revenues of the workers' compensation special compensation fund, section 386-151, the captive insurance administrative fund, section 431:19‑101.8, the insurance commissioner's education and training fund, section 431:2-214, the medical malpractice patients' compensation fund as administered under section 5 of Act 232, Session Laws of Hawaii 1984, and fees collected for deposit in the office of consumer protection restitution fund, section 487‑14, the real estate appraisers fund, section 466K‑1, the real estate recovery fund, section 467‑16, the real estate education fund, section 467‑19, the contractors recovery fund, section 444‑26, the contractors education fund, section 444‑29, the condominium management education fund, section 514A-131, and the condominium education trust fund, section 514B-71.  Any law to the contrary notwithstanding, the director may use the moneys in the fund to employ, without regard to chapter 76, hearings officers and attorneys.  All other employees may be employed in accordance with chapter 76.  Any law to the contrary notwithstanding, the moneys in the fund shall be used to fund the operations of the department.  The moneys in the fund may be used to train personnel as the director deems necessary and for any other activity related to compliance resolution.

     As used in this subsection, unless otherwise required by the context, "compliance resolution" means a determination of whether:

     (1)  Any licensee or applicant under any chapter subject to the jurisdiction of the department of commerce and consumer affairs has complied with that chapter;

     (2)  Any person subject to chapter 485A has complied with that chapter;

     (3)  Any person submitting any filing required by chapter 514E or section 485A‑202(a)(26) has complied with chapter 514E or section 485A-202(a)(26);

     (4)  Any person has complied with the prohibitions against unfair and deceptive acts or practices in trade or commerce; or

     (5)  Any person subject to chapter 467B has complied with that chapter;

and includes work involved in or supporting the above functions, licensing, or registration of individuals or companies regulated by the department, consumer protection, and other activities of the department.

     The director shall prepare and submit an annual report to the governor and the legislature on the use of the compliance resolution fund.  The report shall describe expenditures made from the fund including non-payroll operating expenses."

     SECTION 2.  Section 431:2-215, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  All assessments, fees, fines, penalties, and reimbursements collected by or on behalf of the insurance division under title 24, except for the commissioner's education and training fund (section 431:2-214), the patients' compensation fund (Act 232, Session Laws of Hawaii 1984), the drivers education fund underwriters fee [(section] (sections 431:10C-115[),] and 431:10G-107), and the captive insurance administrative fund (section 431:19-101.8) to the extent provided by section 431:19-101.8(b), shall be deposited into the compliance resolution fund under section 26-9(o).  All sums transferred from the insurance division into the compliance resolution fund may be expended by the commissioner to carry out the commissioner's duties and obligations under title 24. "

     SECTION 3.  Section 431:3-302.5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  The audit required in subsection (a) and the audited, consolidated, or combined financial statements as may be approved under subsection (b) shall be prepared in accordance with either the National Association of Insurance Commissioners' annual statement instructions, following the practices and procedures prescribed by the National Association of Insurance Commissioners' accounting practices and procedure manuals[.], or rules adopted by the commissioner."

     SECTION 4.  Section 431:6-317, Hawaii Revised Statutes, is amended to read as follows:

     "§431:6-317  Common stocks.  (a)  To meet the requirements under section 431:6-201, an [An] insurer may invest any of its funds in common shares of stock that are filed with the SVO or are considered "filing exempt" by the Purposes and Procedures Manual of the SVO, or its successor publication, provided that [In aggregate,] an insurer's amount of investment in common stocks[,] and in non-dividend paying stocks made pursuant to this section and in common trust funds, mutual funds, and exchange traded funds [including investments] made pursuant to section 431:6-322[, and non-dividend paying stocks,] shall not exceed the greater of twenty-five per cent of its admitted assets or one hundred per cent of its surplus as regards to policyholders as defined in section 431:6-101.

     (b)  An insurer may invest any of its funds in common shares of stock in solvent United States corporations after satisfying the requirements under section 431:6-201.

     (c)  An insurer's aggregate amount of investment in non-dividend paying stocks [is] shall be subject to the limitations [of] in section 431:6-104."

     SECTION 5.  Section 431:6-322, Hawaii Revised Statutes, is amended to read as follows:

     "§431:6-322  Common trust funds; mutual funds; and exchange traded funds.  [(a) Subject to the limitations in subsections (b) and (c), an insurer may invest in:

     (1)  A bank's common trust fund as defined in Section 584 of the United States Internal Revenue Code of 1986, as amended;

     (2)  The securities of any open-end management type investment company or investment trust registered with the federal Securities and Exchange Commission under the Investment Company Act of 1940, as amended, if the investment company or trust, other than one of which as a subsidiary of the insurer is investment adviser or principal underwriter, has a new value of not less than $25,000,000 as of the date of investment by the insurer; and

     (3)  An exchange traded fund that is registered with the federal Securities and Exchange Commission under the Investment Company Act of 1940, as amended, and is traded on a public exchange.]

     (a)  For purposes of this section:

     "Common trust funds" means a fund maintained by a bank exclusively for the collective investment and reinvestment of moneys contributed by the bank in its capacity as a trustee, executor, administrator, guardian, or custodian of accounts as defined in Section 584 of the United States Internal Revenue Code of 1986, as amended.

     "Mutual funds" means an investment company that is registered with the federal Securities and Exchange Commission under the Investment Company Act of 1940 (15 United States Code Section 80a-1, et seq.), as amended.

     "Exchange traded fund" means a security that tracks an index, commodity, or basket of assets similar to an index fund, is registered with the federal Securities and Exchange Commission under the Investment Company Act of 1940, as amended, and is traded on a public exchange. 

     (b)  [In aggregate, an insurer's amount of investment] To meet the requirements under section 431:6-201, an insurer may invest in common trust funds, mutual funds, and exchange traded funds, provided that an insurer's amount of investment made pursuant to this section and in common stocks [including investments] made pursuant to section 431:6-317(a)[,] shall not exceed the greater of twenty-five per cent of its admitted assets or one hundred per cent of its surplus as regards to policyholders as defined in section 431:6-101.  This limitation shall not apply to investments approved on the "Mutual Funds List" from the Purposes and Procedures Manual of the SVO, or its successor publication.

     (c)  An insurer may invest any of its funds in common trust funds, mutual funds, and exchange traded funds after satisfying the requirements of section 431:6-201."

     SECTION 6.  Section 431:7-206, Hawaii Revised Statutes, is amended to read as follows:

     "§431:7-206  Domestic company credit for retaliatory taxes paid other states.  If by the laws of any state other than this State, or by the action of any public official of another state, any insurer or company, as defined in section 431:1-202, organized or domiciled in this State, shall be required to pay taxes for the privilege of doing business in the other state, and the amounts are imposed or assessed so that the taxes which are or would be imposed against Hawaii domestic insurance companies are greater than those taxes required of insurers organized or domiciled in the other state, to the extent the amounts are legally due to the other states, an insurer or company organized or domiciled in this State may claim a credit against the tax payable pursuant to this article of a sum not to exceed one hundred per cent of the amount.  The credit shall not be greater than the tax payable pursuant to this article during the taxable year.  All claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit."

     SECTION 7.  Section 431:8-310, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The commissioner shall issue a surplus lines broker license to any producer licensed under article 9A, except producers licensed under section 431:9A-107(a)(1), (2), or (5), when the producer has:

     (1)  Remitted the annual license fee to the commissioner as provided in article 7; and

     (2)  Submitted a completed license application on a form furnished by the commissioner."

     SECTION 8.  Section 431:9-222.5, Hawaii Revised Statutes, is amended to read as follows:

     "§431:9-222.5  [Workers' compensation claims] Claims adjusters; limited license.  (a)  The commissioner may issue a limited license to an adjuster who only adjusts either workers' compensation or crop insurance claims; provided that the adjuster:

     (1)  Is domiciled in the State of Hawaii, or in a state that permits residents of the State of Hawaii to act as adjusters in that other state;

     (2)  Has had experience, special education, or training in handling loss claims under workers' compensation or crop insurance contracts of sufficiently reasonable duration and extent to enable an individual to fulfill the responsibilities of an adjuster;

     (3)  Has a passing grade on the workers' compensation or crop insurance examination pursuant to section 431:9-206; and

     (4)  Pays the applicable fees.

     (b)  An adjuster with a limited license in workers' compensation issued under this section may extend the license biennially upon successfully passing a reexamination on workers' compensation."

     SECTION 9.  Section 431:9A-124, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The required number of credit hours shall be as follows:

     (1)  For a licensee authorized to sell lines of insurance in only one of the following groups:

          (A)  Life or accident and health or sickness; or

          (B)  Property, marine and transportation, vehicle, general casualty, or surety;

          the requisite number of credit hours shall be [twenty] twenty-four credit hours, consisting of eighteen credit hours relating to the line of authority for which the license is held, [including] three credit hours relating to ethics training, and three credit hours relating to the insurance laws and the insurance rules;

     (2)  For a licensee with a license to sell lines of insurance in both groups in paragraph (1), the total requisite number of credit hours shall be [thirty] twenty-four credit hours, [of which:] consisting of:

          (A)  [Twelve] Ten credit hours [shall relate] relating to paragraph (1)(A), of which two credit hours shall relate to the insurance laws and [the] rules relating to the line of authority for which the license is held; [and]

          (B)  [Eighteen] Eleven credit hours [shall relate] relating to paragraph (1)(B), of which two credit hours shall relate to the insurance laws and [the] rules relating to the line of authority for which the license is held[.]; and

          (C)  Three credit hours relating to ethics training.

For purposes of this section, ethics training shall include, but shall not be limited to, the study of fiduciary responsibility, commingling of funds, payment and acceptance of commissions, unfair claims practices, policy replacement considerations, and conflicts of interest."

     SECTION 10.  Section 431:10C-408, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Each person sustaining accidental harm, or such person's legal representative, may, except as provided in subsection (b), obtain the motor vehicle insurance benefits through the plan whenever:

     (1)  No [liability or uninsured motorist] insurance benefits under motor vehicle insurance policies are applicable to the accidental harm;

     (2)  No such insurance benefits applicable to the accidental harm can be identified; or

     (3)  The only identifiable insurance benefits under motor vehicle insurance policies applicable to the accidental harm will not be paid in full because of financial inability of one or more self-insurers or insurers to fulfill their obligations. "

     SECTION 11.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 12.  This Act shall take effect on July 1, 2009, provided that section 3 shall take effect on January 1, 2010.

 

INTRODUCED BY:

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By Request