REPORT TITLE:
Insurance Continuing Education


DESCRIPTION:
Prescribes minimum continuing education in approved subjects for
those in the insurance industry licensed by the DCCA.  (HB1067
HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1067
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



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

 1      SECTION 1.  The purpose of this Act is to protect the
 
 2 public, maintain high standards of professional competence in the
 
 3 insurance industry, and improve the insurance skills and
 
 4 knowledge of general agents, subagents, solicitors, designated
 
 5 representatives, and nonresident agents licensed by the
 
 6 department of commerce and consumer affairs by prescribing
 
 7 minimum continuing education in approved subjects.
 
 8      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
 9 by adding to article 9 a new part to be appropriately designated
 
10 and to read as follows:
 
11                  "PART   . CONTINUING EDUCATION
 
12      431:9-A  Definitions.  As used in this part, unless the
 
13 context requires otherwise:
 
14      "Approved continuing education course" means a course that
 
15 has been approved by the commissioner or a course approved in at
 
16 least five other states.
 
17      "Approved course provider" means an organization or
 
18 individual that offers a continuing education course and has been
 
19 approved by the commissioner.
 

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

 
 
 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

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

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

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

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

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

 
 
 
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 1      (1)  Processing and maintaining certificates of completion;
 
 2           and
 
 3      (2)  Monitoring licensing and continuing education
 
 4           compliance.
 
 5      (c)  The commissioner may hire administrative personnel, who
 
 6 shall assist the commissioner in administering this article.
 
 7      (d)  The fund shall be used to compensate and reimburse the
 
 8 licensing assistant and administrative personnel hired under this
 
 9 article for:
 
10      (1)  Salaries or wages;
 
11      (2)  Actual travel expenses in amounts reasonable and
 
12           customary for such expenses and approved by the
 
13           commissioner; and
 
14      (3)  A living expense at a rate of per diem reasonable and
 
15           customary for such expense and approved by the
 
16           commissioner.
 
17      (e)  The fund may also be used for other expenses related to
 
18 licensing, including but not limited to monitoring and regulating
 
19 licensing activities and continuing education requirements, and
 
20 maintaining a licensing database.
 
21      (f)  During fiscal years 1999-2000 and 2000-2001, the
 
22 commissioner may expend out of the fund an amount up to
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 $1,000,000 per year; each fiscal year thereafter, the
 
 2 commissioner may expend out of the fund a total of fifty per cent
 
 3 of the total moneys credited to the fund in the prior fiscal
 
 4 year.  Subject to the foregoing expenditure limit, all moneys
 
 5 remaining in the insurance licensing administration special fund
 
 6 shall revert to the general fund.
 
 7      (g)  The commissioner shall report annually to the
 
 8 legislature before the convening of each regular session as to
 
 9 the fund administration and expenditures."
 
10      SECTION 4.  Section 431:7-101, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "431:7-101  Fees.(a)  The commissioner shall collect in
 
13 advance the following fees:
 
14      (1)  Certificate of authority:  Issuance....[$600] $1,200
 
15      (2)  Organization of domestic insurers and affiliated
 
16           corporations:
 
17           (A)  Application and all other papers required for
 
18                issuance of solicitation permit,
 
19                filing..........................[$1,000] $2,000
 
20           (B)  Issuance of solicitation permit.....[$100] $200
 
21      (3)  General agent's license:
 
22           (A)  Issuance, regular license............[$50] $100
 
23           (B)  Issuance, temporary license..........[$50] $100
 

 
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 1      (4)  Subagent's license:
 
 2           (A)  Issuance, regular license............[$50] $100
 
 3           (B)  Issuance, temporary license..........[$50] $100
 
 4      (5)  Nonresident agent's or broker's license:
 
 5           Issuance...................................[$40] $80
 
 6      (6)  Solicitor's license: Issuance..............[$40] $80
 
 7      (7)  Independent adjuster's license: Issuance...[$40] $80
 
 8      (8)  Public adjuster's license: Issuance........[$40] $80
 
 9      (9)  Workers' compensation claims adjuster's limited
 
10           license: Issuance..........................[$40] $80
 
11     (10)  Limited license issued pursuant to section
 
12           431:9-214(c): Issuance.....................[$40] $80
 
13     (11)  Managing general agent's license:
 
14           Issuance..................................[$50] $100
 
15     (12)  Reinsurance intermediary's license:
 
16           Issuance..................................[$50] $100
 
17     (13)  Surplus line broker's license: Issuance..[$100] $200
 
18     (14)  Examination for license:  For each examination, a fee
 
19           to be established by the commissioner.
 
20      (b)  The fees for services of the department of commerce and
 
21 consumer affairs subsequent to the issuance of a certificate of
 
22 authority or a license are as follows:
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (1)  [$400] $800 per year for all services (including
 
 2           extension of the certificate of authority) for an
 
 3           authorized insurer.
 
 4      (2)  [$50] $100 per year for all services (including
 
 5           extension of the license) for a regularly licensed
 
 6           general agent.
 
 7      (3)  [$50] $100 per year for all services (including
 
 8           extension of the license) for a regularly licensed
 
 9           subagent.
 
10      (4)  [$30] $60 per year for all services (including
 
11           extension of the license) for a regularly licensed
 
12           nonresident agent or broker.
 
13      (5)  [$20] $40 per year for all services (including
 
14           extension of the license) for a regularly licensed
 
15           solicitor.
 
16      (6)  [$30] $60 per year for all services (including
 
17           extension of the license) for a regularly licensed
 
18           independent adjuster.
 
19      (7)  [$30] $60 per year for all services (including
 
20           extension of the license) for a regularly licensed
 
21           public adjuster.
 

 
 
 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (8)  [$30] $60 per year for all services (including
 
 2           extension of the license) for a regularly limited
 
 3           licensed workers' compensation claims adjuster.
 
 4      (9)  [$30] $60 per year for all services (including
 
 5           extension of the license) for a limited license issued
 
 6           pursuant to section 431:9-214(c).
 
 7     (10)  [$50] $100 per year for all services (including
 
 8           extension of the license) for a regularly licensed
 
 9           managing general agent.
 
10     (11)  [$50] $100 per year for all services (including
 
11           extension of the license) for a regularly licensed
 
12           reinsurance intermediary.
 
13     (12)  [$30] $60 per year for all services (including
 
14           extension of the license) for a licensed surplus line
 
15           broker.
 
16     (13)  The services referred to in paragraphs (1) to (12)
 
17           shall not include services in connection with
 
18           examinations, investigations, hearings, appeals, and
 
19           deposits with a depository other than the department of
 
20           commerce and consumer affairs.
 
21      (c)  The commissioner shall notify the holder of the
 
22 certificate of authority issued under article 3 or the license
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 issued under article 9 by written notice at least thirty days
 
 2 prior to the extension date of such certificate or license. If
 
 3 the fee is not paid before or on the extension date, the fee will
 
 4 be increased by a penalty in the amount of fifty per cent of the
 
 5 fee.  If the fee and the penalty are not paid within the thirty
 
 6 days immediately following the extension date, the commissioner
 
 7 may revoke, suspend, or inactivate the certificate of authority
 
 8 or license and shall not reissue, remove the suspension of, or
 
 9 reactivate the certificate of authority or license until the fee
 
10 and penalty have been paid.
 
11      (d)  All fees and penalties shall be [remitted by the
 
12 commissioner to the director of finance not later than the first
 
13 business day following collection, and shall be placed] deposited
 
14 to the credit of the [general fund.] insurance licensing
 
15 administration special fund."
 
16      SECTION 5.  Section 431:9-232, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "431:9-232  Extension of licenses.(a)  [If the licensee
 
19 is qualified for the license, the license shall be extended.]
 
20 Prior to the extension of a license, each licensee shall annually
 
21 pay the fee required in section 431:7-101 and shall meet the
 
22 requirement 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 expire if a licensee fails to pay
 
 4 the fee or meet the requirements of section 431:9-B.
 
 5      (c) (1)  When the commissioner issues or extends a license,
 
 6 the commissioner shall:
 
 7           (A)  Determine the extension date; the extension date
 
 8                is that date prior to which the license must be
 
 9                extended[,]; and
 
10           (B)  Notify the licensee in writing.
 
11 This date shall be any date not less than one year and not more
 
12 than three years after the date of issue or extension[.] of
 
13 license."
 
14      SECTION 6.  During fiscal years 1999-2000 and 2000-2001,
 
15 there is appropriated out of the insurance licensing
 
16 administration special fund the sum of $1,000,000 per fiscal
 
17 year; each fiscal year thereafter, there is appropriated fifty
 
18 per cent of the total moneys credited to the fund in the prior
 
19 fiscal year, to carry out the purposes of this Act.
 
20      SECTION 7.  In codifying the new part added to article 9 of
 
21 chapter 431, Hawaii Revised Statutes, by section 2 of this Act,
 
22 and in subsequent references to such sections in this Act, the
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 revisor of statutes shall substitute appropriate section numbers
 
 2 for the letters used in designating the new sections in this Act.
 
 3      SECTION 8.  If any provision of this Act, or the application
 
 4 thereof to any person or circumstance is held invalid, the
 
 5 invalidity does not affect other provisions or applications of
 
 6 the Act which can be given effect without the invalid provision
 
 7 or application, and to this end the provisions of this Act are
 
 8 severable.
 
 9      SECTION 9.  Statutory material to be repealed is bracketed.
 
10 New statutory material is underscored.
 
11      SECTION 10.  This Act shall take effect on July 1, 1999,
 
12 except that:
 
13      (1)  Sections 431:9-B and 431:9-C contained in section 2 of
 
14           this Act shall become effective on January 1, 2001; and
 
15      (2)  The twenty-three-month period to meet the continuing
 
16           education requirements shall commence upon the first
 
17           license renewal of a general agent, subagent,
 
18           solicitor, designated representative, or non-resident
 
19           agent after December 31, 2000.