REPORT TITLE:



DESCRIPTION:


 
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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



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

 1      SECTION 1.  Purpose.  The purpose of this Act is to place
 
 2 certain provisions adopted as Hawaii Administrative Rules
 
 3 regarding insurance into the Hawaii Revised Statutes.  Currently,
 
 4 provisions governing insurance are found both within the Hawaii
 
 5 Revised Statutes and the Hawaii Administrative Rules.
 
 6      This Act places portions of current insurance administrative
 
 7 rules properly within the Hawaii Revised Statutes. This Act
 
 8 streamlines insurance administration within the State by
 
 9 consolidating certain regulatory provisions into one location.
 
10      The affected administrative rules include: 16 sections of
 
11 chapter 16-1 (Proxies, Consents, and Authorizations of Domestic
 
12 Stock Insurers); 2 sections of chapter 16-5 (Mass Merchandising
 
13 of Motor Vehicle Insurance); 3 sections of chapter 16-14
 
14 (Insurance Holding Company System); and 13 sections of chapter
 
15 16-23 (Motor Vehicle Insurance Law).
 
16      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
17 by adding to article 4 a new part to be appropriately designated
 
18 and to read as follows:
 
19    "PART  .  PROXIES, CONSENTS, AND AUTHORIZATIONS OF DOMESTIC
 

 
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 1                          STOCK INSURERS
 
 2      431:4-A  Applicability.  This part is applicable to all
 
 3 domestic stock insurers having one hundred or more stockholders;
 
 4 provided that this part shall not apply to any insurer if ninety-
 
 5 five per cent or more of its stock is owned or controlled by a
 
 6 parent or an affiliated insurer and the remaining shares are held
 
 7 by less than five hundred stockholders.  A domestic stock insurer
 
 8 that files with the Securities and Exchange Commission forms of
 
 9 proxies, consents, and authorizations complying with the
 
10 requirements of the Securities Exchange Act of 1934 (15 U.S.C.
 
11 section 78a), the Securities and Exchange Acts Amendments of 1964
 
12 (P.L. No. 88-467), and Regulation X-14 of the Securities and
 
13 Exchange Commission adopted thereunder shall be exempt from the
 
14 provisions of this part.
 
15      §431:4-B  Proxies, consents, and authorizations.  No
 
16 domestic stock insurer, or any director, officer, or employee of
 
17 the insurer, or any other person, shall solicit, or permit the
 
18 use of the person's name to solicit, by mail or otherwise, any
 
19 proxy, consent, or authorization with respect to any stock of the
 
20 insurer in contravention of this part or schedule A and schedule
 
21 B.
 
22      §431:4-C  Exhibits.  Schedules A and B and the exhibit
 
23 entitled "stockholders information supplement-financial reporting
 

 
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 1 to stockholder" shall be made on forms or in a format approved by
 
 2 the commissioner.
 
 3      §431:4-D  Disclosure of equivalent information.  Unless
 
 4 proxies, consents, or authorizations with respect to a stock of a
 
 5 domestic insurer, subject to section 431:4-A, are solicited by or
 
 6 on behalf of the management of the insurer from the holders of
 
 7 record of stock of the insurer in accordance with this part and
 
 8 the schedules thereunder prior to any annual or other meeting,
 
 9 the insurer shall file with the insurance commissioner and
 
10 transmit to all stockholders of record information substantially
 
11 equivalent to the information which would be required to be
 
12 transmitted if a solicitation were made.
 
13      §431:4-E  Definitions.  As used in this part:
 
14      "Solicit" and "solicitation" shall include:
 
15      (1)  Any request for a proxy, whether or not accompanied by
 
16           or included in a form of proxy;
 
17      (2)  Any request to execute or not to execute, or to revoke
 
18           a proxy; or
 
19      (3)  The furnishing of a proxy or other communication to
 
20           stockholders under circumstances reasonably calculated
 
21           to result in the procurement, withholding, or
 
22           revocation of a proxy.
 
23      "Solicit" and "solicitation" shall not include:
 

 
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 1      (1)  Any solicitation by a person in respect to stock of
 
 2           which the person is the beneficial owner;
 
 3      (2)  Action by a broker or other person in respect to stock
 
 4           carried in the person's name;
 
 5      (3)  Action in the name of the nominee in forwarding to the
 
 6           beneficial owner of such stock soliciting material
 
 7           received from the company;
 
 8      (4)  Impartially instructing such beneficial owner to
 
 9           forward a proxy to the person, if any, to whom the
 
10           beneficial owner desires to give a proxy;
 
11      (5)  Impartially requesting instructions from the beneficial
 
12           owner with respect to the authority to be conferred by
 
13           the proxy and stating that a proxy will be given if the
 
14           instructions are received by a certain date; or
 
15      (6)  The furnishing of a form of proxy to a stockholder upon
 
16           the unsolicited request of the stockholder, or the
 
17           performance by any person of ministerial acts on behalf
 
18           of a person soliciting a proxy.
 
19      "Participant" and "participant in a solicitation" shall
 
20 include:
 
21      (1)  The insurer;
 
22      (2)  Any director of the insurer and any proxy for a nominee
 
23           for whom an election as a director is solicited; or
 

 
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 1      (3)  Any other person acting alone or with one or more other
 
 2           persons, committees, or groups in organizing,
 
 3           directing, or financing the solicitation.
 
 4      "Participant" and "participant in a solicitation" do not
 
 5 include:
 
 6      (1)  A bank, broker, or dealer who, in the ordinary course
 
 7           of business, lends money or executes orders for the
 
 8           purchase or sale of stock and who is not otherwise a
 
 9           participant;
 
10      (2)  Any person or organization retained or employed by a
 
11           participant to solicit stockholders or any person who
 
12           merely transmits proxy soliciting material or performs
 
13           ministerial or clerical duties;
 
14      (3)  Any person employed in the capacity of attorney,
 
15           accountant, or advertising, public relations, or
 
16           financial advisor, and whose activities are limited to
 
17           the performance of the person's duties in the course of
 
18           the employment of the insurer or any of its
 
19           subsidiaries or affiliates who is not otherwise a
 
20           participant;
 
21      (4)  Any person regularly employed as an officer or employee
 
22           of the insurer or any of its subsidiaries or affiliates
 
23           who is not otherwise a participant; or
 

 
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 1      (5)  Any officer, director, or person regularly employed by
 
 2           any other participant, if the officer, director, or
 
 3           employee is not otherwise a participant.
 
 4      §431:4-F  Information to be furnished to stockholders.(a)
 
 5 No solicitation shall be made unless the person solicited is
 
 6 concurrently furnished or has previously been furnished with a
 
 7 written proxy statement containing the information in schedule A.
 
 8      (b)  If the solicitation is made on behalf of the management
 
 9 of the insurer and relates to an annual meeting of stockholders
 
10 at which directors are to be elected, each proxy statement
 
11 furnished pursuant to subsection (a) shall be accompanied or
 
12 preceded by an annual report (in preliminary or final form) to
 
13 the stockholders containing the financial statements for the last
 
14 fiscal year as are included in the insurance division's exhibit
 
15 entitled "stockholders information supplement-financial reporting
 
16 to stockholder".  Subject to these requirements with respect to
 
17 financial statements, the annual report to stockholders may be in
 
18 any form deemed suitable by the management.
 
19      (c)  Two copies of each report sent to the stockholders
 
20 pursuant to this part shall be mailed to the insurance
 
21 commissioner not later than the date on which the report is first
 
22 sent or given to stockholders or the date on which preliminary
 
23 copies of solicitation are filed with the insurance commissioner,
 

 
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 1 pursuant to section 431:4-H(a), whichever date is later.
 
 2      §431:4-G  Requirements as to proxy.  (a)  The form of proxy
 
 3 shall:
 
 4      (1)  Indicate in boldface type whether or not the proxy is
 
 5           solicited on behalf of the management;
 
 6      (2)  Provide a specifically designated blank space for
 
 7           dating the proxy; and
 
 8      (3)  Identify clearly and impartially each matter or group
 
 9           of related matters intended to be acted upon, whether
 
10           proposed by the management, or stockholders.  No
 
11           reference need be made to proposals as to which
 
12           discretionary authority is conferred pursuant to
 
13           subsection (c).
 
14      (b)  Means shall be provided in the proxy for the person
 
15 solicited to specify by ballot a choice between approval or
 
16 disapproval of each matter or group of related matters referred
 
17 to therein, other than elections to office.  A proxy may confer
 
18 discretionary authority with respect to matters as to which a
 
19 choice is not so specified if the form of proxy states in
 
20 boldface type how it is intended to vote the shares or
 
21 authorization represented by the proxy in each case.
 
22      (c)  A proxy may confer discretionary authority with respect
 
23 to other matters which may come before the meeting, provided the
 

 
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 1 persons on whose behalf the solicitation is made are not aware a
 
 2 reasonable time prior to the time the solicitation is made that
 
 3 any other matters are to be presented for action at the meeting
 
 4 and provided that a specific statement to that effect is made in
 
 5 the proxy statement or in the form of proxy.
 
 6      (d)  No proxy shall confer authority to:
 
 7      (1)  Vote for the election of any person to office for which
 
 8           a bona fide nominee is not named in the proxy
 
 9           statement; or
 
10      (2)  Vote at any annual meeting other than the next annual
 
11           meeting (or any adjournment thereof) to be held after
 
12           the date on which the proxy statement and form of proxy
 
13           are first sent or given to stockholders.
 
14      (e)  The proxy statement or form of proxy shall provide,
 
15 subject to reasonable specified conditions, that the proxy will
 
16 be voted and that where the person solicited specifies, by means
 
17 of a ballot provided pursuant to subsection (b), a choice with
 
18 respect to any matter to be acted upon, the vote will be in
 
19 accordance with the specification so made.
 
20      (f)  The information included in the proxy statement shall
 
21 be clearly presented and the statement made shall be divided into
 
22 groups according to subject matter, with appropriate headings.
 
23 All printed proxy statements shall be clearly and legibly
 

 
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 1 presented.
 
 2      §431:4-H  Material required to be filed.  (a)  Two
 
 3 preliminary copies of the proxy statement and form of proxy and
 
 4 any other soliciting material to be furnished to stockholders
 
 5 concurrently therewith shall be filed with the insurance
 
 6 commissioner at least ten days prior to the date definitive
 
 7 copies of the material are first sent or given to stockholders,
 
 8 or a shorter period prior to that date as the insurance
 
 9 commissioner may authorize upon a showing of good cause.
 
10      (b)  Two preliminary copies of any additional soliciting
 
11 material relating to the same meeting or subject matter to be
 
12 furnished to stockholders subsequent to the proxy statements
 
13 shall be filed with the insurance commissioner at least two days
 
14 (exclusive of Saturdays, Sundays, or holidays) prior to the date
 
15 copies of this material are first sent or given to stockholders
 
16 or a shorter period prior to such date as the insurance
 
17 commissioner may authorize upon a showing of good cause.
 
18      (c)  Two definitive copies of the proxy statement, form of
 
19 proxy, and all other soliciting material, in the form in which
 
20 this material is furnished to stockholders, shall be filed with,
 
21 or mailed for filing to, the insurance commissioner not later
 
22 than the date the material is first sent or given to the
 
23 stockholders.
 

 
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 1      (d)  Where any proxy statement, form of proxy, or other
 
 2 material filed pursuant to this chapter is amended or revised,
 
 3 two of the copies shall be marked to clearly show the changes.
 
 4      (e)  Copies of replies to inquiries from stockholders
 
 5 requesting further information and copies of communications which
 
 6 do no more than request that forms of proxy theretofore solicited
 
 7 be signed and returned need not be filed pursuant to this part.
 
 8      (f)  Notwithstanding the provisions of subsections (a) and
 
 9 (b), and section 431:4-M, copies of soliciting material in the
 
10 form of speeches, press releases, and radio or television scripts
 
11 may be filed with the insurance commissioner prior to use or
 
12 publication.  Definitive copies, however, shall be filed with or
 
13 mailed for filing to the insurance commissioner as required by
 
14 subsection (c) not later than the date the material is used or
 
15 published.  The provisions of subsections (a) and (b) and section
 
16 431:4-M shall apply to any reprints or reproductions of all or
 
17 any part of the material.
 
18      §431:4-I  False or misleading statements.  No solicitation
 
19 subject to this part shall be made by means of any proxy
 
20 statement, form of proxy, notice of meeting, or other
 
21 communication, written or oral, containing any statement which at
 
22 the time and in the light of the circumstances under which it is
 
23 made, is false or misleading with respect to any material fact,
 

 
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 1 or which omits to state any material fact necessary in order to
 
 2 make the statements therein not false or misleading or necessary
 
 3 to correct any statement in any earlier communication with
 
 4 respect to the solicitation of a proxy for the same meeting or
 
 5 subject matter which has become false or misleading.
 
 6      §431:4-J  Prohibition of certain solicitations.  No person
 
 7 making a solicitation shall solicit any undated or postdated
 
 8 proxy or any proxy which provides that it shall be deemed to be
 
 9 dated as of any date subsequent to the date on which it is signed
 
10 by the stockholder.
 
11      §431:4-K  Election contests; applicability.  This part shall
 
12 apply to any solicitation by any person or group for the purpose
 
13 of opposing a solicitation by any person or group with respect to
 
14 the election or removal of directors at any annual or special
 
15 meeting of stockholders.
 
16      §431:4-L  Filing of information required by schedule B.(a)
 
17 No solicitation shall be made by any person, other than the
 
18 management of an insurer unless at least five business days prior
 
19 thereto or a shorter period as the insurance commissioner may
 
20 authorize upon a showing of good cause, there has been filed,
 
21 with the insurance commissioner, by or on behalf of each
 
22 participant in the solicitation, a statement in duplicate
 
23 containing the information specified in schedule B and a copy of
 

 
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 1 any material proposed to be distributed to stockholders in
 
 2 furtherance of the solicitation.  Where preliminary copies of any
 
 3 materials are filed, distribution to stockholders should be
 
 4 deferred until the insurance commissioner's comments have been
 
 5 received and complied with.
 
 6      (b)  Within five business days after a solicitation is made
 
 7 by the management of an insurer, or a longer period as the
 
 8 insurance commissioner may authorize upon a showing of good
 
 9 cause, there shall be filed with the insurance commissioner by or
 
10 on behalf of each participant in the solicitation, other than the
 
11 insurer and by or on behalf of each management nominee or
 
12 director, a statement in duplicate containing the information
 
13 specified by schedule B.
 
14      (c)  If any solicitation on behalf of the management or any
 
15 other person has been made, or if proxy material is ready for
 
16 distribution, prior to a solicitation in opposition thereto, a
 
17 statement in duplicate containing the information specified in
 
18 schedule B shall be filed with the insurance commissioner, by or
 
19 on behalf of each participant in the prior solicitation, other
 
20 than the insurer, as soon as reasonably practicable after the
 
21 commencement of the solicitation in opposition thereto.
 
22      (d)  If, subsequent to the filing of the statements required
 
23 by subsections (a), (b), and (c), additional persons become
 

 
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 1 participants in a solicitation, there shall be filed with the
 
 2 insurance commissioner, by or on behalf of each person, a
 
 3 statement in duplicate containing the information specified in
 
 4 schedule B, within three business days after the person becomes a
 
 5 participant, or longer period as the insurance commissioner may
 
 6 authorize upon a showing of good cause.
 
 7      (e)  If any material change occurs in the facts reported in
 
 8 any statement filed by or on behalf of any participant, an
 
 9 appropriate amendment to the statement shall be filed within
 
10 three business days by or on behalf of each respective
 
11 participant with the insurance commissioner.
 
12      (f)  Each statement and amendment thereto filed pursuant to
 
13 this section shall be part of the public files of the insurance
 
14 commissioner.
 
15      §431:4-M  Solicitations prior to furnishing required written
 
16 proxy statement.  Notwithstanding the provisions of section
 
17 431:4-F(a), a solicitation subject to this part may be made prior
 
18 to furnishing stockholders a written proxy statement containing
 
19 the information specified in schedule A with respect to such
 
20 solicitation, provided that:
 
21      (1)  The statements required by section 431:4-L are filed by
 
22           or on behalf of each participant in the solicitation;
 
23      (2)  No form of proxy is furnished to stockholders prior to
 

 
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 1           the time the proxy statement required by section 431:4-
 
 2           F(a) is furnished to such persons.  This paragraph
 
 3           shall not apply where a proxy statement then meeting
 
 4           the requirements of schedule A has been furnished to
 
 5           stockholders;
 
 6      (3)  At least the information specified in paragraphs (2)
 
 7           and (3) of the statements required by schedule B to be
 
 8           filed by each participant, or an appropriate summary
 
 9           thereof, are included in each communication sent or
 
10           given to stockholders in connection with the
 
11           solicitation; and
 
12      (4)  A written proxy statement containing the information
 
13           specified in schedule A with respect to a solicitation
 
14           is sent or given to stockholders at the earliest
 
15           practicable date.
 
16      §431:4-N  Solicitation prior to furnishing required written
 
17 proxy statement; filing requirements.  Two copies of any
 
18 soliciting material proposed to be sent or given to stockholders
 
19 prior to the furnishing of the written proxy statement required
 
20 by section 431:4-F(a) shall be filed with the insurance
 
21 commissioner in preliminary form at least five business days
 
22 prior to the date definitive copies of the material are first
 
23 sent or given to the stockholders, or a shorter period as the
 

 
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 1 insurance commissioner may authorize upon a showing of good cause
 
 2 therefor.
 
 3      §431:4-O  Application of this part to report.
 
 4 Notwithstanding the provisions of section 431:4-F(b) and (c), two
 
 5 copies of any portion of the report referred to in section 431:4-
 
 6 F(b), which comments upon or refers to any solicitation subject
 
 7 to this section or to any participant in any solicitation, other
 
 8 than the solicitation by the management, shall be filed with the
 
 9 insurance commissioner as proxy material subject to this part.
 
10 The portion of the report shall be filed with the insurance
 
11 commissioner in preliminary form at least five business days
 
12 prior to the date copies of the report are first sent or given to
 
13 stockholders.
 
14      §431:4-P  Schedule A: information required in a proxy
 
15 statement.(a)  When applicable, information in schedule A shall
 
16 include, among other things:
 
17      (1)  Whether or not the person giving the proxy has the
 
18           power to revoke it;
 
19      (2)  A brief outline of the rights of appraisal of
 
20           dissenting stockholders;
 
21      (3)  A statement as to who is making the solicitation;
 
22      (4)  A description of the interest of persons in the matters
 
23           to be acted upon;
 

 
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 1      (5)  A statement as to the class of voting stock to be voted
 
 2           at the meeting, the number of shares outstanding, and
 
 3           the number of votes to which each class is entitled;
 
 4      (6)  Detailed information of nominees for directors;
 
 5      (7)  A statement on remuneration and other transactions with
 
 6           management and others;
 
 7      (8)  Information on the insurer's bonus, profit sharing, and
 
 8           other remuneration plans;
 
 9      (9)  Information on the insurer's pension or retirement
 
10           plan;
 
11     (10)  Information on the options, warrants or rights to
 
12           purchase stock of the insurer;
 
13     (11)  Information of the title, amount, and description of
 
14           stock to be authorized or issued;
 
15     (12)  Detailed information on mergers, consolidations,
 
16           acquisitions, and other similar matters; and
 
17     (13)  Detailed information on any asset, capital, or surplus
 
18           of the insurer.
 
19      (b)  If action is to be taken with respect to any matter
 
20 which is not required to be submitted to a vote of stockholders,
 
21 this schedule shall state the nature of the matter, the reason
 
22 for the matter being submitted to a vote of the stockholders, and
 
23 the action intended to be taken by the management in the event of
 

 
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 1 a negative vote on the matter by the stockholders.
 
 2      (c)  If action is to be taken with respect to any amendment
 
 3 of the insurer's charter, by-laws, or other such documents as to
 
 4 which information is not required, the schedule shall briefly
 
 5 state the reasons for and the general effect of the amendment and
 
 6 the vote needed for its approval.
 
 7      §431:4-Q  Schedule B: information to be included in
 
 8 statements filed by or on behalf of a participant other than an
 
 9 insurer in a proxy solicitation in an election contest.
 
10 Information in schedule B shall include, among other things:
 
11      (1)  The name and address of the insurer;
 
12      (2)  Detailed information about the participant;
 
13      (3)  The participant's interest in the stock of the insurer;
 
14      (4)  A description of the time and circumstances in which
 
15           the participant became involved with the solicitation
 
16           and the nature and extant of the activities or proposed
 
17           activities of the participant; and
 
18      (5)  The date and signature of the participant."
 
19      SECTION 3.  Chapter 431, Hawaii Revised Statutes, is amended
 
20 by adding to article 10C eight new sections to article 10C to be
 
21 appropriately designated and to read as follows:
 
22      "§431:10C-A  Agreement.  The applicant shall execute and
 
23 file with the commissioner an agreement in a form prescribed by
 

 
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 1 the commissioner, that if certified as a self-insurer the
 
 2 applicant shall:
 
 3      (1)  In accordance with and to the extent prescribed in this
 
 4           article as amended from time to time:
 
 5           (A)  In case of injury, arising out of a motor vehicle
 
 6                accident, to a person, including, but not limited
 
 7                to an operator, occupant, or user of the self-
 
 8                insured motor vehicle or any pedestrian who
 
 9                sustains an injury as a result of the operation,
 
10                maintenance, or use of the vehicle, pay without
 
11                regard to fault to the health care provider of
 
12                medical-rehabilitative services an amount equal to
 
13                the personal injury protection benefits then
 
14                payable as a result of the injury; and
 
15           (B)  Pay on behalf of the applicant or any operator of
 
16                the insured motor vehicle using the motor vehicle
 
17                with the express or implied permission of the
 
18                named insured, sums which the applicant or the
 
19                operator may legally be obligated to pay for
 
20                injury, death, or damage to property of others
 
21                which arise out of ownership, operation,
 
22                maintenance, use, loading, or unloading of the
 
23                self-insured motor vehicle;
 

 
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 1      (2)  Permit the commissioner or an authorized representative
 
 2           to inspect and copy records and provide them copies of
 
 3           records pertaining to the self-insurer's financial
 
 4           condition, processing and payment of claims, and any
 
 5           other matters pertinent to the administration and
 
 6           enforcement of this article; and
 
 7      (3)  Comply with all requirements of this article, rules,
 
 8           and directives of the commissioner, including, but not
 
 9           limited to, those relating to processing and payment of
 
10           assessments and fees.
 
11      §431:10C-B  Surety bond, deposit of security, or proof of
 
12 financial ability.  An applicant for self-insurance shall either:
 
13      (1)  File with the commissioner and maintain a bond of a
 
14           surety company authorized to do business in the State,
 
15           conditioned for the payment of benefits and amounts as
 
16           would be payable if the applicant were insured under a
 
17           motor vehicle insurance policy as prescribed in this
 
18           article.  The bond shall be in the form and penal sum
 
19           acceptable to the commissioner, but in no event shall
 
20           be less than $300,000, and shall provide that the bond
 
21           may not be canceled or otherwise terminated until two
 
22           years have elapsed from the last day the applicant was
 
23           self-insured, unless the commissioner has given prior
 

 
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 1           written consent.  It shall be undertaken and may be
 
 2           enforced in the name of  "Commissioner of Insurance,
 
 3           State of Hawaii".  The surety company may not cancel
 
 4           the bond for the period of certification; or
 
 5      (2)  Deposit with the commissioner with cash or those
 
 6           securities as may be legally purchased for investment
 
 7           by insurance companies under this chapter and evidence
 
 8           satisfactory to the commissioner that there are no
 
 9           unsatisfied judgments against the applicant.  As used
 
10           herein, "cash" includes an irrevocable letter of credit
 
11           issued by a federally insured financial institution
 
12           whose principal office is located in this State.  Prior
 
13           to the issuance of a certificate of self-insurance the
 
14           securities and cash, if appropriate, shall be
 
15           registered in the name of the "Commissioner of
 
16           Insurance, State of Hawaii".  The deposit shall be held
 
17           to satisfy claims for personal injury protection
 
18           benefits and liability coverage as prescribed in this
 
19           article.  The commissioner shall deposit the cash or
 
20           securities with the director of finance.  The applicant
 
21           shall execute an agreement satisfactory in form to the
 
22           commissioner with respect to the deposit.  The cash or
 
23           market value of the securities deposited shall be in an
 

 
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 1           amount determined by the commissioner to afford
 
 2           security substantially equivalent to that afforded
 
 3           under a motor vehicle insurance policy, but in no event
 
 4           less than $300,000 and shall provide that the cash or
 
 5           securities shall not be withdrawn until two years have
 
 6           elapsed from the last day the applicant was self-
 
 7           insured, unless the commissioner has given prior
 
 8           written consent; and
 
 9      (3)  Furnish the commissioner satisfactory proof of the
 
10           applicant's solvency and financial ability to timely
 
11           pay benefits and amounts as would be payable if the
 
12           applicant were insured under this article.  The
 
13           commissioner shall consider the assets, liabilities,
 
14           profit, loss records, and liquidity of the applicant,
 
15           the number of vehicles involved, the exposure, and
 
16           other factors appropriate to determining whether the
 
17           applicant qualifies as a self-insurer.
 
18      §431:10C-C  Proof of ability to process and pay claims
 
19 promptly.  An applicant for self-insurance shall submit proof
 
20 satisfactory to the commissioner that the applicant has retained
 
21 an adjuster licensed under this chapter to provide a complete
 
22 claims service to process and promptly pay claims in accordance
 
23 with this article and article 13.  During the period that the
 

 
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 1 applicant is self-insured, the applicant shall immediately refer
 
 2 all claims to the adjuster for processing. From time to time, the
 
 3 commissioner may require a self-insurer to show that the self-
 
 4 insurer is continuing to maintain an effective claims service.
 
 5      §431:10C-D  Issuance of certificate of self-insurance.  The
 
 6 commissioner shall issue a certificate of self-insurance if:
 
 7      (1)  The applicant has provided the bond, cash, or
 
 8           securities and proof of qualification as a self-
 
 9           insurer affording security substantially equivalent to
 
10           that afforded under a motor vehicle insurance policy;
 
11           and
 
12      (2)  The commissioner is satisfied that in case of injury or
 
13           death or property damage, any claimant would have the
 
14           same rights against the self-insurer as the claimant
 
15           would have had if a motor vehicle insurance policy was
 
16           applicable.
 
17      §431:10C-E  Duty to notify commissioner.  A self-insurer
 
18 shall notify the commissioner in writing of any change in status
 
19 of any motor vehicle which is self-insured, such as a transfer,
 
20 sale, removal from the State, or any additional motor vehicle
 
21 which the self-insurer desires to self insure within ten working
 
22 days after the change is effected.
 
23      §431:10C-F  Duration of certification.  A certificate of
 

 
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 1 self-insurance is valid for a period of one year from the date of
 
 2 issuance and may be renewed annually.
 
 3      §431:10C-G  Revocation of certificate of self-insurance.
 
 4 The commissioner may revoke a certificate of self-insurance for
 
 5 good cause at any time after providing notice and the opportunity
 
 6 for a hearing in accordance with chapter 91. Failure to comply
 
 7 with this article, rules, orders or directives of the
 
 8 commissioner, or to pay any lawful fee or assessment is cause for
 
 9 revocation.  Upon such revocation, the owner of any self-insured
 
10 motor vehicle shall not operate or permit operation of the
 
11 vehicle in the State until the owner has obtained insurance or
 
12 has received a new certificate of self-insurance from the
 
13 commissioner.
 
14      §431:10C-H  Termination of self-insurer status and
 
15 withdrawal of security deposit.  (a)  A person who terminates the
 
16 person's status as a self-insurer or whose certificate of self-
 
17 insurance has been revoked and who obtains a motor vehicle
 
18 insurance policy for any formerly self-insured motor vehicle or
 
19 shows that the person does not own any motor vehicle, may apply
 
20 to the commissioner for the return of the person's security
 
21 deposit or cancellation of the surety bond.
 
22      (b)  After a lapse of twenty-four months from termination or
 
23 revocation of self-insurer status and proof satisfactory to the
 

 
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 1 commissioner that all claims have been fully adjudicated and
 
 2 paid, that all allotments and assessments have been paid, and
 
 3 that the owner has complied with the applicable provisions of
 
 4 this article, rules, orders, and directives of the commissioner,
 
 5 and provisions of the self-insurer's agreement, the commissioner
 
 6 may release the securities deposited or permit the cancellation
 
 7 of the bond."
 
 8      SECTION 4.  Section 431:10C-103, Hawaii Revised Statutes, is
 
 9 amended by adding seven new definitions to be appropriately
 
10 inserted and to read as follows:
 
11      ""Alternative care provider" means any person providing
 
12 medical or rehabilitative services in section 431:10C-302(a)(10)
 
13 to a claimant covered by a motor vehicle insurance policy.
 
14      "Anesthetist" means a registered nurse-anesthetist who
 
15 performs anesthesia services under the supervision of a licensed
 
16 physician, preferably an anesthesiologist.
 
17      "Claimant" means a person entitled to the benefits described
 
18 in section 431:10C-103.5, under a motor vehicle insurance policy.
 
19      "Eligible injured person" means:
 
20      (1)  The person identified by name as an insured in a motor
 
21           vehicle insurance policy and any relative, as defined
 
22           herein, who sustains accidental harm arising out of the
 
23           operation, maintenance, or use of any motor vehicle;
 

 
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 1      (2)  A pedestrian or other non-occupant, such as a
 
 2           bicyclist, or any user or operator of a moped as
 
 3           defined in section 249-1, but not including any
 
 4           operator or passenger of a motorcycle or motor scooter
 
 5           as defined in section 286-2 who sustains accidental
 
 6           harm arising out of the operation, maintenance, or use
 
 7           of, and caused by, any motor vehicle unless expressly
 
 8           provided for in a motor vehicle policy; or
 
 9      (3)  Any other person who sustains accidental harm arising
 
10           out of the operation, maintenance, or use of the
 
11           insured motor vehicle.
 
12      "Medical fee schedule" refers to the Medicare Resource Based
 
13 Relative Value Scale System applicable to Hawaii, entitled
 
14 "Workers' Compensation Supplemental Medical Fee Schedule".
 
15      "Physician" includes a doctor of medicine, a dentist, a
 
16 chiropractor, an osteopath, a psychologist, an optometrist, or a
 
17 podiatrist.
 
18      "Specialist" means a physician or surgeon who holds a
 
19 certificate as a diplomate issued by a specialty board recognized
 
20 by the American Medical Association, the American Dental
 
21 Association, or the American Osteopathic Association."
 
22      SECTION 5.  Section 431:10C-105, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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 1      "§431:10C-105  Self-insurance.  (a)  The motor vehicle
 
 2 insurance required by section 431:10C-104 may be satisfied by any
 
 3 owner of a motor vehicle if:
 
 4      (1)  Such owner provides a surety bond, proof of
 
 5           qualifications as a self-insurer, or other securities
 
 6           affording security substantially equivalent to that
 
 7           afforded under a [no-fault] motor vehicle insurance
 
 8           policy, providing coverage at all times for the entire
 
 9           motor vehicle registration period, as determined and
 
10           approved by the commissioner under rules; and
 
11      (2)  The commissioner is satisfied that in case of injury,
 
12           death, or property damage, any claimant would have the
 
13           same rights against such owner as the claimant would
 
14           have had if a [no-fault] motor vehicle insurance policy
 
15           had been applicable to such vehicle.
 
16      (b)  A person desiring to qualify as a self-insurer shall
 
17 apply to the commissioner on a form or in a format approved by
 
18 the commissioner pursuant to rules."
 
19      SECTION 6.  Section 431:10C-107, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "431:10C-107  Verification of insurance: motor vehicles.
 
22 (a)  Every insurer shall issue to its insureds a motor vehicle
 
23 insurance identification card for each motor vehicle for which
 

 
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 1 the basic motor vehicle insurance coverage is written.  The
 
 2 identification card shall contain the following:
 
 3      (1)  Name of make and factory or serial number of the motor
 
 4           vehicle; provided that insurers of five or more motor
 
 5           vehicles which are under common registered ownership
 
 6           and used in the regular course of business shall not be
 
 7           required to indicate the name of make and the factory
 
 8           or serial number of each motor vehicle;
 
 9      (2)  Policy number;
 
10      (3)  Names of the insured and the insurer; and
 
11      (4)  Effective dates of coverage including the expiration
 
12           date.
 
13      (b)  The identification card shall be in the insured motor
 
14 vehicle at all times and shall be exhibited to a law enforcement
 
15 officer upon demand.
 
16      (c)  The identification card shall be resistant to forgery
 
17 by whatever means appropriate.  The commissioner shall approve
 
18 the construction, form, and design of the identification card to
 
19 ensure that the card is forgery resistant.
 
20      (d)  The commissioner shall issue a certificate of self-
 
21 insurance periodically, as necessary, for use in each motor
 
22 vehicle insured under section 431:10C-105.
 
23      (e)  The identification card issued by an insurer shall not
 

 
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 1 be issued for a period exceeding the period for which premiums
 
 2 have been paid or earned.  This subsection shall apply only to
 
 3 the first application of a person for a motor vehicle insurance
 
 4 policy and shall not apply to applications for commercial and
 
 5 fleet vehicles."
 
 6      SECTION 7.  Section 431:10C-115, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "§431:10C-115  Drivers education fund underwriters fee.
 
 9      (a)  The commissioner shall assess and levy upon each
 
10 insurer, and self-insurer, a drivers education fund underwriters
 
11 fee of $2 a year on each motor vehicle insured by each insurer or
 
12 self-insurer.  This fee is due and payable on an annual basis by
 
13 means and at a time to be determined by the commissioner.
 
14      (b)  The commissioner shall deposit the fees into a special
 
15 drivers education fund account.
 
16      (c)  The commissioner shall allocate the fees deposited for
 
17 each fiscal year in the following manner:
 
18      (1)  Fifty per cent to the commissioner to be expended for
 
19           the operation of the drivers education program provided
 
20           in section [[]286-128(d)[]]; and
 
21      (2)  Fifty per cent to the director of commerce and consumer
 
22           affairs for:
 
23           (A)  The drivers education program administered by the
 

 
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 1                department of education for high school students;
 
 2                and
 
 3           (B)  The traffic safety education program established
 
 4                and administered by the department of education
 
 5                pursuant to section 302A-417.
 
 6      (d)  Motor vehicles insured under the joint underwriting
 
 7 plan shall be excluded from the drivers' education fund
 
 8 assessment.
 
 9      [(d)] (e)  The commissioner shall adopt rules in accordance
 
10 with chapter 91 for the execution of this section and the
 
11 distribution of this fund."
 
12      SECTION 8.  Section 431:11-102, Hawaii Revised Statutes, is
 
13 amended by adding three new definitions to be appropriately
 
14 inserted and to read as follows:
 
15      ""Executive officer" means chief executive officer, chief
 
16 operating officer, chief financial officer, treasurer, secretary,
 
17 controller, or any other individual performing functions
 
18 corresponding to those performed by the foregoing officers under
 
19 whatever title.
 
20      "Statement" means information required to be filed with the
 
21 commissioner pursuant to sections 431:11-104, 431:11-105, and
 
22 431:11-106, and guidelines set forth on a form or in a format
 
23 approved by the commissioner.
 

 
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 1      "Ultimate controlling person" means a person who is not
 
 2 controlled by any other person."
 
 3      SECTION 9.  Section 431:11-103, Hawaii Revised Statutes, is
 
 4 amended by amending subsection (b) to read as follows:
 
 5      "(b)  In addition to investments in common stock, preferred
 
 6 stock, debt obligations, and other securities permitted [under
 
 7 article 6,] in this chapter, a domestic insurer may also:
 
 8      (1)  Invest in common stock, preferred stock, debt
 
 9           obligations, and other securities of one or more
 
10           subsidiaries, amounts which do not exceed the lesser of
 
11           ten per cent of the insurer's assets or fifty per cent
 
12           of the insurer's surplus as regards policyholders;
 
13           provided that after the investments, the insurer's
 
14           surplus as regards policyholders will be reasonable in
 
15           relation to the insurer's outstanding liabilities and
 
16           adequate to its financial needs.  In calculating the
 
17           amount of the investments, investments in domestic or
 
18           foreign insurance subsidiaries shall be excluded, and
 
19           there shall be included:
 
20           (A)  Total net moneys or other consideration expended
 
21                and obligations assumed in the acquisition or
 
22                formation of a subsidiary, including all
 
23                organizational expenses and contributions to
 

 
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 1                capital and surplus of the subsidiary whether or
 
 2                not represented by the purchase of capital stock
 
 3                or issuance of other securities, and
 
 4           (B)  All amounts expended in acquiring additional
 
 5                common stock, preferred stock, debt obligations,
 
 6                and other securities and all contributions to the
 
 7                capital or surplus of a subsidiary subsequent to
 
 8                its acquisition or formation;
 
 9      (2)  Invest any amount in common stock, preferred stock,
 
10           debt obligations, and other securities of one or more
 
11           subsidiaries engaged or organized to engage exclusively
 
12           in the ownership and management of assets authorized as
 
13           investments for the insurer; provided that each
 
14           subsidiary agrees to limit its investments in any asset
 
15           so that the investments will not cause the amount of
 
16           the total investment of the insurer to exceed any of
 
17           the investment limitations specified in [item]
 
18           paragraph (1) or in [article 6.] this chapter.  For the
 
19           purpose of this subsection, the total investment of the
 
20           insurer shall include:
 
21           (A)  Any direct investment by the insurer in an asset,
 
22                and
 
23           (B)  The insurer's proportionate share of any
 

 
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 1                investment in an asset by any subsidiary of the
 
 2                insurer, which shall be calculated by multiplying
 
 3                the amount of the subsidiary's investment by the
 
 4                percentage of the ownership of the subsidiary; and
 
 5      (3)  With the approval of the commissioner, invest any
 
 6           greater amount in common stock, preferred stock, debt
 
 7           obligations, or other securities of one or more
 
 8           subsidiaries; provided that after the investment the
 
 9           insurer's surplus as regards policyholders will be
 
10           reasonable in relation to the insurer's outstanding
 
11           liabilities and adequate to its financial needs."
 
12      SECTION 10.  Section 431:11-106, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "431:11-106  Standards and management of an insurer within a
 
15 holding company system.
 
16      (a)  (1)  Transactions within a holding company system to
 
17                which an insurer subject to registration is a
 
18                party shall be subject to the following standards:
 
19           (A)  The terms shall be fair and reasonable;
 
20           (B)  Charges or fees for services performed shall be
 
21                reasonable;
 
22           (C)  Expenses incurred and payment received shall be
 
23                allocated to the insurer in conformity with
 

 
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 1                customary insurance accounting practices
 
 2                consistently applied;
 
 3           (D)  The books, accounts, and records of each party to
 
 4                all transactions shall be so maintained as to
 
 5                clearly and accurately disclose the nature and
 
 6                details of the transactions including the
 
 7                accounting information as is necessary to support
 
 8                the reasonableness of the charges or fees to the
 
 9                respective parties; and
 
10           (E)  The insurer's surplus as regards policyholders
 
11                following any dividends or distributions to
 
12                shareholder affiliates shall be reasonable in
 
13                relation to the insurer's outstanding liabilities
 
14                and adequate to its financial needs.
 
15      (2)  The following transactions involving a domestic insurer
 
16           and any person in its holding company system may not be
 
17           entered into unless the insurer has notified the
 
18           commissioner in writing of its intention to enter into
 
19           the transaction at least thirty days prior thereto, or
 
20           a shorter period as the commissioner may permit, and
 
21           the commissioner has not disapproved it within that
 
22           period:
 
23           (A)  Sales, purchases, exchanges, loans, or extensions
 

 
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 1                of credit, guarantees, or investments; provided
 
 2                that the transactions are equal to or exceed:
 
 3                (i)  With respect to nonlife insurers, the lesser
 
 4                     of three per cent of the insurer's admitted
 
 5                     assets or twenty-five per cent of surplus as
 
 6                     regards policyholders each as of the thirty-
 
 7                     first day of December next preceding; or
 
 8               (ii)  With respect to life insurers, three per cent
 
 9                     of the insurer's admitted assets as of the
 
10                     thirty-first day of December next preceding;
 
11           (B)  Loans or extensions of credit to any person who is
 
12                not an affiliate, where the insurer makes the
 
13                loans or extensions of credit with the agreement
 
14                or understanding that the proceeds of the
 
15                transactions, in whole or in substantial part, are
 
16                to be used to make loans or extensions of credit
 
17                to, to purchase assets of, or to make investments
 
18                in, any affiliate of the insurer making the loans
 
19                or extensions of credit provided the transactions
 
20                are equal to or exceed:
 
21                (i)  With respect to nonlife insurers, the lesser
 
22                     of three per cent of the insurer's admitted
 
23                     assets or twenty-five per cent of surplus as
 

 
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 1                     regards policyholders each as of the thirty-
 
 2                     first day of December next preceding; or
 
 3               (ii)  With respect to life insurers, three per cent
 
 4                     of the insurer's admitted assets as of the
 
 5                     thirty-first day of December next preceding;
 
 6           (C)  Reinsurance agreements or modifications thereto in
 
 7                which the reinsurance premium or a change in the
 
 8                insurer's liabilities equals or exceeds five per
 
 9                cent of the insurer's surplus as regards
 
10                policyholders, as of the 31st day of December next
 
11                preceding, including those agreements which may
 
12                require as consideration the transfer of assets
 
13                from an insurer to a nonaffiliate, if an agreement
 
14                or understanding exists between the insurer and
 
15                nonaffiliate that any portion of the assets will
 
16                be transferred to one or more affiliates of the
 
17                insurer;
 
18           (D)  All management agreements, service contracts, and
 
19                all cost-sharing arrangements; and
 
20           (E)  Any material transactions, specified by
 
21                regulation, which the commissioner determines may
 
22                adversely affect the interests of the insurer's
 
23                policyholders.
 

 
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 1 Nothing in this section shall be deemed to authorize or permit
 
 2 any transactions which, in the case of an insurer not a member of
 
 3 the same holding company system, would be otherwise contrary to
 
 4 law.
 
 5      (3)  A domestic insurer may not enter into transactions,
 
 6           which are part of a plan or series of like transactions
 
 7           with persons within the holding company system, if the
 
 8           purpose of those separate transactions is to avoid the
 
 9           statutory threshold amount and thus avoid the review
 
10           that would otherwise occur.  If the commissioner
 
11           determines that the separate transactions were entered
 
12           into over any twelve month period for that purpose, the
 
13           commissioner may exercise the commissioner's authority
 
14           under section 431:11-111.
 
15      (4)  The commissioner, in reviewing transactions pursuant to
 
16           subsection (a)(2), shall consider whether the
 
17           transactions comply with the standards set forth in
 
18           subsection (a)(1) and whether they may adversely affect
 
19           the interests of policyholders.
 
20      (5)  The commissioner shall be notified within thirty days
 
21           of any investment of the domestic insurer in any one
 
22           corporation if the total investment in the corporation
 
23           by the insurance holding company system exceeds ten per
 

 
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 1           cent of the corporation's voting securities.
 
 2      (b)  (1) No domestic insurer shall pay any extraordinary
 
 3           dividend or make any other extraordinary distribution
 
 4           to its shareholders until:
 
 5           (A)  Thirty days after the commissioner has received
 
 6                notice of the declaration thereof and has not
 
 7                within the period disapproved the payment; or
 
 8           (B)  The commissioner shall have approved the payment
 
 9                within the thirty-day period.
 
10      (2)  For purposes of this section, an extraordinary dividend
 
11           or distribution includes any dividend or distribution
 
12           of cash or other property, whose fair market value
 
13           together with that of other dividends or distributions
 
14           made within the preceding twelve months exceeds the
 
15           [[]lesser[]] of:
 
16           (A)  Ten per cent of such insurer's surplus as regards
 
17                policyholders as of the thirty-first day of
 
18                December next preceding; or
 
19           (B)  The net gain from operations of a life insurer, or
 
20                the net income, if the insurer is not a life
 
21                insurer, not including realized capital gains, for
 
22                the twelve-month period ending the thirty-first
 
23                day of December next preceding.
 

 
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 1           Extraordinary dividend or distribution shall not
 
 2           include pro rata distributions of any class of the
 
 3           insurer's own securities.
 
 4                In determining whether a dividend or distribution
 
 5           is extraordinary, an insurer other than a life insurer
 
 6           may carry forward income from the previous two calendar
 
 7           years that has not already been paid out as dividends.
 
 8           This carry-forward shall be computed by taking the net
 
 9           income from the second and third preceding calendar
 
10           years, not including realized capital gains, less
 
11           dividends paid in the second and immediate preceding
 
12           calendar years.
 
13                Notwithstanding any other provisions of law, an
 
14           insurer may declare an extraordinary dividend or
 
15           distribution that is conditional upon the
 
16           commissioner's approval thereof, and the declaration
 
17           shall confer no rights upon shareholders until the
 
18           commissioner has either approved the payment of the
 
19           dividend or distribution or has not disapproved the
 
20           payment within the thirty-day period referred to above.
 
21      (c)  (1) Notwithstanding the control of a domestic insurer
 
22           by any person, the officers and directors of the
 
23           insurer shall not thereby be relieved of any obligation
 

 
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 1           or liability which they would otherwise be subject to
 
 2           by law.  The insurer shall be managed so as to assure
 
 3           its separate operating identity consistent with this
 
 4           article.
 
 5      (2)  Nothing herein shall preclude a domestic insurer from
 
 6           having or sharing a common management or cooperative or
 
 7           joint use of personnel, property, or services with one
 
 8           or more other persons under arrangements meeting the
 
 9           standards of subsection (a)(1).
 
10      (d)  For purposes of this article, in determining whether an
 
11 insurer's surplus as regards policyholders is reasonable in
 
12 relation to the insurer's outstanding liabilities and adequate to
 
13 its financial needs, the following factors, among others, shall
 
14 be considered:
 
15      (1)  The size of the insurer as measured by its assets,
 
16           capital and surplus, reserves, premium writings,
 
17           insurance in force, and other appropriate criteria;
 
18      (2)  The extent to which the insurer's business is
 
19           diversified among the several lines of insurance;
 
20      (3)  The number and size of risks insured in each line of
 
21           business;
 
22      (4)  The extent of the geographical dispersion of the
 
23           insurer's insured risks;
 

 
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 1      (5)  The nature and extent of the insurer's reinsurance
 
 2           program;
 
 3      (6)  The quality, diversification, and liquidity of the
 
 4           insurer's investment portfolio;
 
 5      (7)  The recent past and projected future trend in the size
 
 6           of the insurer's investment portfolio;
 
 7      (8)  The surplus as regards policyholders maintained by
 
 8           other comparable insurers;
 
 9      (9)  The adequacy of the insurer's reserves; and
 
10     (10)  The quality and liquidity of investments in affiliates.
 
11           The commissioner may treat any investment as a
 
12           disallowed asset for purposes of determining the
 
13           adequacy of surplus as regards policyholders whenever
 
14           in the commissioner's judgment the investment so
 
15           warrants.
 
16      (e)  The factors set forth in subsection (d) are not
 
17 intended to be an exhaustive list.  In determining the adequacy
 
18 and reasonableness of an insurer's surplus, no single factor is
 
19 necessarily controlling.
 
20      (1)  The commissioner shall consider the net effect of all
 
21           of the factors, along with other factors bearing on the
 
22           financial condition of the insurer.
 
23      (2)  In comparing the surplus maintained by other insurers,
 

 
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 1           the commissioner shall consider the extent to which
 
 2           each of these factors varies among insurers.
 
 3      (3)  In determining the quality and liquidity of investments
 
 4           in subsidiaries, the commissioner shall consider the
 
 5           individual subsidiary and may discount or disallow its
 
 6           valuation to the extent warranted by individual
 
 7           investments."
 
 8      SECTION 11.  Section 431:12-105, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "§431:12-105  Mass merchandising requirements.  Mass
 
11 merchandising of insurance and every mass merchandising plan
 
12 shall be subject to the following conditions:
 
13      (1)  The insurance offered shall be open to participation by
 
14           or be available to every employee of the employer who
 
15           meets the underwriting requirements of the insurer.
 
16      (2)  The insurance shall be offered without discrimination
 
17           against any employee as to rates, forms, or coverages.
 
18           Nothing herein shall preclude the establishment of
 
19           different classes of risks.
 
20      (3)  Upon the termination of employment or upon the
 
21           termination of the mass merchandising agreement, an
 
22           insured employee shall have the option of continuing
 
23           the employee's participation in a group policy or the
 

 
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 1           employee's individual policy then in force for a period
 
 2           of one year upon payment of the applicable premium;
 
 3           provided that the employee shall exercise the
 
 4           employee's option within thirty days following the date
 
 5           of such termination.  The terms, conditions, and
 
 6           coverages for the one-year period are those that were
 
 7           effective on the date of termination and shall not be
 
 8           more restrictive than those contained in the mass
 
 9           merchandising agreement, the group policy, or the
 
10           individual policy in force immediately prior to the
 
11           date of termination.
 
12      (4)  The insurer shall issue a certificate or other evidence
 
13           of participation to every member covered under a group
 
14           policy and a policy of insurance to every member
 
15           insured under an individual policy.
 
16      (5)  The insurance offered shall not be contingent upon the
 
17           purchase of any other insurance, product, or service;
 
18           nor shall the purchase of any other insurance, product,
 
19           or service be contingent upon the purchase of the motor
 
20           vehicle, property, and casualty insurance offered."
 
21      SECTION 12.  Section 431:12-115, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "§431:12-115  Establishment and maintenance of office.  (a)
 

 
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 1 Every insurer selling insurance on a mass merchandising basis
 
 2 shall establish and maintain at all times an office in the State
 
 3 to conduct the administration of its business and handle claims.
 
 4      (b)  Establishment and maintenance of an office by any
 
 5 licensed general agent of an insurer shall meet the requirements
 
 6 of this section."
 
 7      SECTION 13.  In codifying the new sections added to chapter
 
 8 431, Hawaii Revised Statutes, by sections 2, 3, and 4 of this
 
 9 Act, the revisor of statutes shall substitute appropriate section
 
10 numbers for the letters used in the designations of these new
 
11 sections in this Act.
 
12      SECTION 14.  Statutory material to be repealed is bracketed.
 
13 New statutory material is underscored.
 
14      SECTION 15.  This Act shall take effect upon its approval. 
 
15 
 
16                           INTRODUCED BY:  _______________________
 

 
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