| 1 | 1 | | THE SENATE S.B. NO. 1324 THIRTY-SECOND LEGISLATURE, 2023 S.D. 1 STATE OF HAWAII A BILL FOR AN ACT RELATING TO INSURANCE. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: |
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| 3 | 3 | | THE SENATE S.B. NO. 1324 |
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| 4 | 4 | | THIRTY-SECOND LEGISLATURE, 2023 S.D. 1 |
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| 5 | 5 | | STATE OF HAWAII |
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| 7 | 7 | | THE SENATE |
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| 9 | 9 | | S.B. NO. |
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| 11 | 11 | | 1324 |
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| 13 | 13 | | THIRTY-SECOND LEGISLATURE, 2023 |
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| 15 | 15 | | S.D. 1 |
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| 17 | 17 | | STATE OF HAWAII |
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| 31 | 31 | | A BILL FOR AN ACT |
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| 37 | 37 | | RELATING TO INSURANCE. |
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| 43 | 43 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: |
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| 47 | 47 | | SECTION 1. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to part I of article 19 to be appropriately designated and to read as follows: "§431:19- Dormant captive insurance companies. (a) As used in this section, unless the context requires otherwise, "dormant captive insurance company" means a captive insurance company that as of the filing of its application for a certificate of dormancy under this section: (1) Has never transacted the business of insurance; or (2) Has ceased transacting the business of insurance and has no remaining insurance liabilities associated with any business of insurance transacted by it. (b) A captive insurance company may apply to the commissioner for a certificate of dormancy and the commissioner may grant a certificate of dormancy. The certificate of dormancy shall be subject to renewal every five years and shall expire if not renewed. The application for renewal shall be submitted no less than ninety days prior to the certificate expiration date. The issuance of a certificate of dormancy shall automatically cause the certificate of authority of the captive insurance company to be placed in inactive status. (c) A dormant captive insurance company that has been issued a certificate of dormancy shall: (1) Possess and thereafter maintain unimpaired, paid-in capital and surplus of not less than $25,000; (2) Prior to March 1 of each year, submit to the commissioner a report of its financial condition, verified by oath of two of its executive officers, in a form as may be prescribed by the commissioner; and (3) Pay a certificate of dormancy renewal fee of $300. (d) A dormant captive insurance company that has been issued a certificate of dormancy shall not: (1) Conduct the business of insurance; (2) Be subject to or liable for the payment of any tax under section 431:19-116; (3) Be required to file audited annual financial statements and other reports required under section 431:19-107; and (4) Be subject to examination under section 431:19-108, except for non-compliance with this section. (e) Prior to conducting any insurance business, a dormant captive insurance company shall apply for approval from the commissioner to surrender its certificate of dormancy and to reactivate its certificate of authority. (f) A certificate of dormancy shall be revoked if a dormant captive insurance company violates any provisions of subsections (a) through (d). (g) The commissioner may adopt rules as necessary to carry out this section." SECTION 2. Section 431:2-217, Hawaii Revised Statutes, is amended to read as follows: "[[]§431:2-217[]] Trade name. (a) Prior to the use or change of a trade name to sell, solicit, or negotiate insurance in this State, the licensee shall register the trade name with the department of commerce and consumer affairs pursuant to part II of chapter 482. (b) Upon registration of the trade name with the department of commerce and consumer affairs, the licensee may apply, on a form approved by the commissioner, to add or remove a trade name on a license. The applicant shall provide proof of registration of a trade name to the commissioner. (c) If the commissioner finds the application for use or change of a trade name is substantially identical to another trade name registered with the department of commerce and consumer affairs, or substantially identical to a legal name or trade name of a revoked license, the commissioner shall deny use of the trade name on a license issued pursuant to this chapter. (d) A licensee shall inform the commissioner, by any means acceptable to the commissioner, of any change of status of a trade name registered with the department of commerce and consumer affairs within thirty days of the change. (e) For purposes of this article, "trade name" shall mean the name under which an individual or business entity is conducting business or doing business as if the true legal name of the individual or business entity cannot be used." SECTION 3. Section 431:9A-154, Hawaii Revised Statutes, is amended to read as follows: "§431:9A-154 Self-study courses. (a) In addition to the requirements of courses generally, an approved continuing education course provider shall also require for self-study courses, including computer-based courses, a written or computer-based examination at the conclusion of the self-study course. The examination shall: (1) Be composed of multiple choice questions, essay questions, or both; (2) Have at least three different versions of itself, used on a random or rotating basis; (3) If composed of multiple choice questions for a course approved for up to four credit hours, include at least twenty-five multiple choice questions; (4) If composed of multiple choice questions for a course approved for more than four credit hours, include at least fifty multiple choice questions; (5) Be graded by the continuing education course provider or the continuing education course provider's agent; (6) If the examination is computer-based, not include prompts designed to aid the person taking the examination; and (7) If the course is a computer-based course with a computer-based examination, be designed to prevent the licensee from taking the examination without reviewing the course materials. (b) To pass a multiple-choice self-study course, the licensee shall answer at least seventy per cent of the examination questions correctly. (c) A self-study course examination shall not be administered by a person who: (1) Is related to, or is a business associate of, the licensee taking the examination; or (2) Has a financial interest in the success or failure of a licensee taking the examination. (d) The effective date of a completed examination pursuant to this section shall be the date the continuing education course provider receives the completed examination. Upon receipt of the completed examination, the continuing education course provider or the continuing education course provider's agent shall grade the examination and mail the results to the licensee within fifteen days. (e) The written or computer-based examination and contents shall be made available by the continuing education course provider, upon request, to the commissioner, and shall not be required to be submitted for filing." SECTION 4. Section 431:9B-102, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows: "(c) The commissioner may require a reinsurance intermediary-manager subject to subsection (b) to[: (1) File a bond from an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $500,000 or ten per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the bond amount under this paragraph shall not exceed $10,000,000, for the protection of the reinsurer; (2) Maintain an errors and omissions policy with an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $250,000 or twenty-five per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the policy limits under this paragraph shall not exceed $10,000,000; and (3) Provide] provide any [other] report required by the commissioner. [At the commissioner's request, the reinsurance intermediary‑manager shall provide the commissioner with proof of the bond and policy and appropriate documentation to show that the bond and policy continue to be in effect, or that a new bond and new policy have been secured.]" SECTION 5. Section 431:9B-108, Hawaii Revised Statutes, is amended to read as follows: "[[]§431:9B-108[]] Duties of reinsurers utilizing the services of a reinsurance intermediary-manager. (a) A reinsurer shall not engage the services of any person, firm, association, or corporation to act as a reinsurance intermediary-manager on its behalf unless the person, firm, association, or corporation is licensed as required by section 431:9B-102(b). (b) The reinsurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary-manager which the reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the commissioner. (c) If a reinsurance intermediary-manager establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the reinsurance intermediary-manager. This opinion shall be in addition to any other required loss reserve certification. (d) The reinsurer shall require the reinsurance intermediary-manager to: (1) File a bond for the protection of the reinsurer from an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $500,000 or ten per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the bond amount under this paragraph shall not exceed $10,000,000; and (2) Maintain an errors and omissions policy with an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $250,000 or twenty-five per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the policy limits under this paragraph shall not exceed $10,000,000. At the commissioner's request, the reinsurance intermediary‑manager shall provide the commissioner with proof of the bond and policy required, and appropriate documentation to show that the bond and policy continue to be in effect, or that a new bond and new policy have been secured. [(d)] (e) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the reinsurance intermediary-manager. [(e)] (f) Within thirty days of termination of a contract with a reinsurance intermediary-manager, the reinsurer shall provide written notification of the termination to the commissioner. [(f)] (g) A reinsurer shall not appoint to its board of directors any officer, director, employee, controlling shareholder, or subagent of its reinsurance intermediary-manager; provided that this subsection shall not apply to relationships governed by article 11." SECTION 6. Section 431:9J-103, Hawaii Revised Statutes, is amended to read as follows: "§431:9J-103 Surety bond required. (a) Before the issuance of the administrator license, the administrator shall file with the commissioner, and maintain in force while so licensed, a surety bond of at least $100,000[,] for the first two years, and at least $300,000 from the third year, in the form and penal sum acceptable to the commissioner, and shall provide that the bond may not be canceled or otherwise terminated until two years have elapsed from the last day the applicant was an administrator, unless the commissioner has given prior written consent. The surety bond shall be undertaken and may be enforced in the name of "Commissioner of Insurance, State of Hawaii". (b) [For] At the first renewal, and each subsequent [annual report filing,] year, the surety bond amount shall be at least [$100,000] $300,000 and filed in accordance with §431:9J‑112." SECTION 7. Section 431:9J-112, Hawaii Revised Statutes, is amended to read as follows: "§431:9J-112 Annual report required. (a) An administrator shall file an annual report for the preceding calendar year with the commissioner on or before March 1 of each year, in a form and manner prescribed by the commissioner. (b) The annual report shall include: (1) The names and addresses of all insurers with which the administrator had an agreement during the preceding calendar year; (2) A renewal certificate for the surety bond required in section 431:9J-103 and an updated surety bond form, if needed; and (3) An audited financial statement prepared by an independent certified public accountant. (c) An audited financial statement and annual report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet filed with the report and shall include the following: (1) Worksheet showing the amounts shown on the consolidated audited financial report; (2) Amounts for each entity that shall be stated separately; and (3) Explanations of consolidating and eliminating entries. (d) The annual report shall be in the form, and contain such matters, as the commissioner prescribes and shall be verified by at least two officers of the administrator." SECTION 8. Section 431:13-103, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: "(a) The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance: (1) Misrepresentations and false advertising of insurance policies. Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison that: (A) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy; (B) Misrepresents the dividends or share of the surplus to be received on any insurance policy; (C) Makes any false or misleading statement as to the dividends or share of surplus previously paid on any insurance policy; (D) Is misleading or is a misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates; (E) Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; (F) Is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy; (G) Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; (H) Misrepresents any insurance policy as being shares of stock; (I) Publishes or advertises the assets of any insurer without publishing or advertising with equal conspicuousness the liabilities of the insurer, both as shown by its last annual statement; or (J) Publishes or advertises the capital of any insurer without stating specifically the amount of paid-in and subscribed capital; (2) False information and advertising generally. Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of the person's insurance business, which is untrue, deceptive, or misleading; (3) Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance; (4) Boycott, coercion, and intimidation. (A) Entering into any agreement to commit, or by any action committing, any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance; or (B) Entering into any agreement on the condition, agreement, or understanding that a policy will not be issued or renewed unless the prospective insured contracts for another class or an additional policy of the same class of insurance with the same insurer; (5) False financial statements. (A) Knowingly filing with any supervisory or other public official, or knowingly making, publishing, disseminating, circulating, or delivering to any person, or placing before the public, or knowingly causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of a material fact as to the financial condition of an insurer; or (B) Knowingly making any false entry of a material fact in any book, report, or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom the insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, knowingly omitting to make a true entry of any material fact pertaining to the business of the insurer in any book, report, or statement of the insurer; (6) Stock operations and advisory board contracts. Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance; (7) Unfair discrimination. (A) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any policy of life insurance or annuity contract or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contract; (B) Making or permitting any unfair discrimination in favor of particular individuals or persons, or between insureds or subjects of insurance having substantially like insuring, risk, and exposure factors, or expense elements, in the terms or conditions of any insurance contract, or in the rate or amount of premium charge therefor, or in the benefits payable or in any other rights or privilege accruing thereunder; (C) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk, unless: (i) The refusal, cancellation, or limitation is for a business purpose which is not a mere pretext for unfair discrimination; or (ii) The refusal, cancellation, or limitation is required by law or regulatory mandate; (D) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a residential property risk, or the personal property contained therein, because of the age of the residential property, unless: (i) The refusal, cancellation, or limitation is for a business purpose which is not a mere pretext for unfair discrimination; or (ii) The refusal, cancellation, or limitation is required by law or regulatory mandate; (E) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual because of the sex or marital status of the individual; however, nothing in this subsection shall prohibit an insurer from taking marital status into account for the purpose of defining persons eligible for dependent benefits; (F) Terminating or modifying coverage, or refusing to issue or renew any property or casualty policy or contract of insurance solely because the applicant or insured or any employee of either is mentally or physically impaired; provided that this subparagraph shall not apply to accident and health or sickness insurance sold by a casualty insurer; provided further that this subparagraph shall not be interpreted to modify any other provision of law relating to the termination, modification, issuance, or renewal of any insurance policy or contract; (G) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual based solely upon the individual's having taken a human immunodeficiency virus (HIV) test prior to applying for insurance; or (H) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual because the individual refuses to consent to the release of information which is confidential as provided in section 325‑101; provided that nothing in this subparagraph shall prohibit an insurer from obtaining and using the results of a test satisfying the requirements of the commissioner, which was taken with the consent of an applicant for insurance; provided further that any applicant for insurance who is tested for HIV infection shall be afforded the opportunity to obtain the test results, within a reasonable time after being tested, and that the confidentiality of the test results shall be maintained as provided by section 325‑101; (8) Rebates. Except as otherwise expressly provided by law: (A) Knowingly permitting or offering to make or making any contract of insurance, or agreement as to the contract other than as plainly expressed in the contract, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to the insurance, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits, or any valuable consideration or inducement not specified in the contract; or (B) Giving, selling, or purchasing, or offering to give, sell, or purchase as inducement to the insurance or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value not specified in the contract; (9) Nothing in paragraph (7) or (8) shall be construed as including within the definition of discrimination or rebates any of the following practices: (A) In the case of any life insurance policy or annuity contract, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance; provided that any bonus or abatement of premiums shall be fair and equitable to policyholders and in the best interests of the insurer and its policyholders; (B) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense; (C) Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for the policy year; (D) In the case of any contract of insurance, the distribution of savings, earnings, or surplus equitably among a class of policyholders, all in accordance with this article; and (E) [A reward under a wellness program established under a health care plan that favors an individual if the wellness program meets the following requirements: (i) The wellness program is reasonably designed to promote health or prevent disease; (ii) An individual has an opportunity to qualify for the reward at least once a year; (iii) The reward is available for all similarly situated individuals; (iv) The wellness program has alternative standards for individuals who are unable to obtain the reward because of a health factor; (v) Alternative standards are available for an individual who is unable to participate in a reward program because of a health condition; (vi) The insurer provides information explaining the standard for achieving the reward and discloses the alternative standards; and (vii) The total rewards for all wellness programs under the health care plan do not exceed twenty per cent of the cost of coverage;] The offer or provision by insurers or producers, by or through employees, affiliates, or third-party representatives, of value-added products or services at no or reduced cost when the products or services are not specified in the policy of insurance if the product or service: (i) Relates to the insurance coverage; and (ii) Is primarily designed to satisfy one or more of the following: (I) Provide loss mitigation or loss control; (II) Reduce claim costs or claim settlement costs; (III) Provide education about liability risks or risk of loss to persons or property; (IV) Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk; (V) Enhance health; (VI) Enhance financial wellness through items such as education and financial planning services; (VII) Provide post-loss services; (VIII) Incentivize behavioral changes to improve the health or reduce the risk of death or disability of a customer; or (IX) Assist in the administration of the employee or retiree benefit insurance coverage. (iii) The cost to the insurer or producer offering the product or service to any given customer shall be reasonable in comparison to that customerꞌs premiums or insurance coverage for the policy class. (iv) If the insurer or producer is providing the product or service offered, the insurer or producer shall ensure that the customer is provided with contact information to assist the customer with questions regarding the product or service. (v) The commissioner may adopt rules when implementing the permitted practices set forth in this paragraph to ensure consumer protection. Such rules, consistent with applicable law, may address, among other issues, consumer data protections and privacy, consumer disclosure and unfair discrimination. (vi) The availability of the value-added product or service shall be based on documented objective criteria and offered in a manner that is not unfairly discriminatory. The documented criteria shall be maintained by the insurer or producer and produced upon request by the commissioner. (vii) If an insurer or producer does not have sufficient evidence but has a good-faith belief that the product or service meets the criteria in subparagraph (E)(ii), the insurer or producer may provide the product or service in a manner that is not unfairly discriminatory as part of a pilot or testing program for no more than one year. An insurer or producer shall notify the commissioner of such a pilot or testing program offered to consumers in the State prior to launching and may proceed with the program unless the commissioner objects within twenty-one days of notice. (F) An insurer or a producer may: (i) Offer or give non-cash gifts, items, or services, including meals to or charitable donations on behalf of a customer, to commercial or institutional customers in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost is reasonable in comparison to the premium or proposed premium and the cost of the gift or service is not included in any amounts charged to another person or entity. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service. (ii) Conduct raffles or drawings to the extent permitted by state law, as long as there is no financial cost to entrants to participate, the drawing or raffle does not obligate participants to purchase insurance, the prizes are not valued in excess of a reasonable amount determined by the commissioner and the drawing or raffle is open to the public. The raffle or drawing shall be offered in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service. An insurer, producer or representative of either may not offer or provide insurance as an inducement to the purchase of another policy or otherwise use the words "free", "no cost" or words of similar import, in an advertisement. For purposes of this paragraph, "customer" means a policyholder, potential policyholder, certificate holder, potential certificate holder, insured, potential insured or applicant. (10) Refusing to provide or limiting coverage available to an individual because the individual may have a third-party claim for recovery of damages; provided that: (A) Where damages are recovered by judgment or settlement of a third-party claim, reimbursement of past benefits paid shall be allowed pursuant to section 663-10; (B) This paragraph shall not apply to entities licensed under chapter 386 or 431:10C; and (C) For entities licensed under chapter 432 or 432D: (i) It shall not be a violation of this section to refuse to provide or limit coverage available to an individual because the entity determines that the individual reasonably appears to have coverage available under chapter 386 or 431:10C; and (ii) Payment of claims to an individual who may have a third-party claim for recovery of damages may be conditioned upon the individual first signing and submitting to the entity documents to secure the lien and reimbursement rights of the entity and providing information reasonably related to the entity's investigation of its liability for coverage. Any individual who knows or reasonably should know that the individual may have a third-party claim for recovery of damages and who fails to provide timely notice of the potential claim to the entity, shall be deemed to have waived the prohibition of this paragraph against refusal or limitation of coverage. "Third-party claim" for purposes of this paragraph means any tort claim for monetary recovery or damages that the individual has against any person, entity, or insurer, other than the entity licensed under chapter 432 or 432D; (11) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following: (A) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; (B) With respect to claims arising under its policies, failing to respond with reasonable promptness, in no case more than fifteen working days, to communications received from: (i) The insurer's policyholder; (ii) Any other persons, including the commissioner; or (iii) The insurer of a person involved in an incident in which the insurer's policyholder is also involved. The response shall be more than an acknowledgment that such person's communication has been received and shall adequately address the concerns stated in the communication; (C) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; (D) Refusing to pay claims without conducting a reasonable investigation based upon all available information; (E) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; (F) Failing to offer payment within thirty calendar days of affirmation of liability, if the amount of the claim has been determined and is not in dispute; (G) Failing to provide the insured, or when applicable the insured's beneficiary, with a reasonable written explanation for any delay, on every claim remaining unresolved for thirty calendar days from the date it was reported; (H) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear; (I) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds; (J) Attempting to settle a claim for less than the amount to which a reasonable person would have believed the person was entitled by reference to written or printed advertising material accompanying or made part of an application; (K) Attempting to settle claims on the basis of an application that was altered without notice, knowledge, or consent of the insured; (L) Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made; (M) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; (N) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician or advanced practice registered nurse of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; (O) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage to influence settlements under other portions of the insurance policy coverage; (P) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; and (Q) Indicating to the insured on any payment draft, check, or in any accompanying letter that the payment is "final" or is "a release" of any claim if additional benefits relating to the claim are probable under coverages afforded by the policy; unless the policy limit has been paid or there is a bona fide dispute over either the coverage or the amount payable under the policy; (12) Failure to maintain complaint handling procedures. Failure of any insurer to maintain a complete record of all the complaints that it has received since the date of its last examination under section 431:2-302. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of the complaints, and the time it took to process each complaint. For purposes of this section, "complaint" means any written communication primarily expressing a grievance; (13) Misrepresentation in insurance applications. Making false or fraudulent statements or representations on or relative to an application for an insurance policy, for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, producer, or individual; and (14) Failure to obtain information. Failure of any insurance producer, or an insurer where no producer is involved, to comply with section [431:10D-623(a), (b), or (c) by making reasonable efforts to obtain information about a consumer before making a recommendation to the consumer to purchase or exchange an annuity.] 431:10D-623." SECTION 9. Section 431:19-101, Hawaii Revised Statutes, is amended as follows: 1. By amending the definition of "controlled unaffiliated business" to read: ""Controlled unaffiliated business" means, in the case of a pure captive insurance company, any person[:], or in the case of a sponsored captive insurance company, any participant: (1) That is not in the corporate system of a parent or sponsor and its affiliated entities; (2) That has an existing contractual relationship with a parent or sponsor or one of its affiliated entities; and; (3) Whose risks are managed by the pure captive insurance company[.] or the sponsored captive insurance company." 2. By amending the definition of "participant" to read: ""Participant" means an entity that meets the requirements of section 431:19-305, and any affiliated or controlled unaffiliated business entities thereof that are insured by a sponsored captive insurance company where the losses of the participant may be limited through a participant contract to the participant's pro rata share of the assets of one or more protected cells identified in the participant contract." SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 11. This Act shall take effect on July 1, 2050; provided that the amendments made to section 76-16(b), Hawaii Revised Statutes, by section 3 of this Act shall not be repealed when section 24 of Act 278, Session Laws of Hawaii 2022, takes effect. |
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| 48 | 48 | | |
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| 49 | 49 | | SECTION 1. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to part I of article 19 to be appropriately designated and to read as follows: |
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| 50 | 50 | | |
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| 51 | 51 | | "§431:19- Dormant captive insurance companies. (a) As used in this section, unless the context requires otherwise, "dormant captive insurance company" means a captive insurance company that as of the filing of its application for a certificate of dormancy under this section: |
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| 52 | 52 | | |
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| 53 | 53 | | (1) Has never transacted the business of insurance; or |
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| 54 | 54 | | |
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| 55 | 55 | | (2) Has ceased transacting the business of insurance and has no remaining insurance liabilities associated with any business of insurance transacted by it. |
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| 56 | 56 | | |
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| 57 | 57 | | (b) A captive insurance company may apply to the commissioner for a certificate of dormancy and the commissioner may grant a certificate of dormancy. The certificate of dormancy shall be subject to renewal every five years and shall expire if not renewed. The application for renewal shall be submitted no less than ninety days prior to the certificate expiration date. The issuance of a certificate of dormancy shall automatically cause the certificate of authority of the captive insurance company to be placed in inactive status. |
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| 58 | 58 | | |
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| 59 | 59 | | (c) A dormant captive insurance company that has been issued a certificate of dormancy shall: |
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| 60 | 60 | | |
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| 61 | 61 | | (1) Possess and thereafter maintain unimpaired, paid-in capital and surplus of not less than $25,000; |
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| 62 | 62 | | |
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| 63 | 63 | | (2) Prior to March 1 of each year, submit to the commissioner a report of its financial condition, verified by oath of two of its executive officers, in a form as may be prescribed by the commissioner; and |
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| 64 | 64 | | |
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| 65 | 65 | | (3) Pay a certificate of dormancy renewal fee of $300. |
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| 66 | 66 | | |
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| 67 | 67 | | (d) A dormant captive insurance company that has been issued a certificate of dormancy shall not: |
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| 68 | 68 | | |
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| 69 | 69 | | (1) Conduct the business of insurance; |
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| 70 | 70 | | |
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| 71 | 71 | | (2) Be subject to or liable for the payment of any tax under section 431:19-116; |
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| 72 | 72 | | |
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| 73 | 73 | | (3) Be required to file audited annual financial statements and other reports required under section 431:19-107; and |
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| 74 | 74 | | |
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| 75 | 75 | | (4) Be subject to examination under section 431:19-108, except for non-compliance with this section. |
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| 76 | 76 | | |
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| 77 | 77 | | (e) Prior to conducting any insurance business, a dormant captive insurance company shall apply for approval from the commissioner to surrender its certificate of dormancy and to reactivate its certificate of authority. |
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| 78 | 78 | | |
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| 79 | 79 | | (f) A certificate of dormancy shall be revoked if a dormant captive insurance company violates any provisions of subsections (a) through (d). |
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| 80 | 80 | | |
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| 81 | 81 | | (g) The commissioner may adopt rules as necessary to carry out this section." |
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| 82 | 82 | | |
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| 83 | 83 | | SECTION 2. Section 431:2-217, Hawaii Revised Statutes, is amended to read as follows: |
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| 84 | 84 | | |
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| 85 | 85 | | "[[]§431:2-217[]] Trade name. (a) Prior to the use or change of a trade name to sell, solicit, or negotiate insurance in this State, the licensee shall register the trade name with the department of commerce and consumer affairs pursuant to part II of chapter 482. |
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| 86 | 86 | | |
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| 87 | 87 | | (b) Upon registration of the trade name with the department of commerce and consumer affairs, the licensee may apply, on a form approved by the commissioner, to add or remove a trade name on a license. The applicant shall provide proof of registration of a trade name to the commissioner. |
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| 88 | 88 | | |
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| 89 | 89 | | (c) If the commissioner finds the application for use or change of a trade name is substantially identical to another trade name registered with the department of commerce and consumer affairs, or substantially identical to a legal name or trade name of a revoked license, the commissioner shall deny use of the trade name on a license issued pursuant to this chapter. |
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| 90 | 90 | | |
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| 91 | 91 | | (d) A licensee shall inform the commissioner, by any means acceptable to the commissioner, of any change of status of a trade name registered with the department of commerce and consumer affairs within thirty days of the change. |
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| 92 | 92 | | |
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| 93 | 93 | | (e) For purposes of this article, "trade name" shall mean the name under which an individual or business entity is conducting business or doing business as if the true legal name of the individual or business entity cannot be used." |
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| 94 | 94 | | |
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| 95 | 95 | | SECTION 3. Section 431:9A-154, Hawaii Revised Statutes, is amended to read as follows: |
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| 96 | 96 | | |
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| 97 | 97 | | "§431:9A-154 Self-study courses. (a) In addition to the requirements of courses generally, an approved continuing education course provider shall also require for self-study courses, including computer-based courses, a written or computer-based examination at the conclusion of the self-study course. The examination shall: |
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| 98 | 98 | | |
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| 99 | 99 | | (1) Be composed of multiple choice questions, essay questions, or both; |
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| 100 | 100 | | |
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| 101 | 101 | | (2) Have at least three different versions of itself, used on a random or rotating basis; |
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| 102 | 102 | | |
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| 103 | 103 | | (3) If composed of multiple choice questions for a course approved for up to four credit hours, include at least twenty-five multiple choice questions; |
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| 104 | 104 | | |
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| 105 | 105 | | (4) If composed of multiple choice questions for a course approved for more than four credit hours, include at least fifty multiple choice questions; |
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| 106 | 106 | | |
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| 107 | 107 | | (5) Be graded by the continuing education course provider or the continuing education course provider's agent; |
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| 108 | 108 | | |
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| 109 | 109 | | (6) If the examination is computer-based, not include prompts designed to aid the person taking the examination; and |
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| 110 | 110 | | |
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| 111 | 111 | | (7) If the course is a computer-based course with a computer-based examination, be designed to prevent the licensee from taking the examination without reviewing the course materials. |
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| 112 | 112 | | |
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| 113 | 113 | | (b) To pass a multiple-choice self-study course, the licensee shall answer at least seventy per cent of the examination questions correctly. |
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| 114 | 114 | | |
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| 115 | 115 | | (c) A self-study course examination shall not be administered by a person who: |
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| 116 | 116 | | |
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| 117 | 117 | | (1) Is related to, or is a business associate of, the licensee taking the examination; or |
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| 118 | 118 | | |
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| 119 | 119 | | (2) Has a financial interest in the success or failure of a licensee taking the examination. |
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| 120 | 120 | | |
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| 121 | 121 | | (d) The effective date of a completed examination pursuant to this section shall be the date the continuing education course provider receives the completed examination. Upon receipt of the completed examination, the continuing education course provider or the continuing education course provider's agent shall grade the examination and mail the results to the licensee within fifteen days. |
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| 122 | 122 | | |
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| 123 | 123 | | (e) The written or computer-based examination and contents shall be made available by the continuing education course provider, upon request, to the commissioner, and shall not be required to be submitted for filing." |
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| 124 | 124 | | |
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| 125 | 125 | | SECTION 4. Section 431:9B-102, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows: |
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| 126 | 126 | | |
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| 127 | 127 | | "(c) The commissioner may require a reinsurance intermediary-manager subject to subsection (b) to[: |
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| 128 | 128 | | |
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| 129 | 129 | | (1) File a bond from an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $500,000 or ten per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the bond amount under this paragraph shall not exceed $10,000,000, for the protection of the reinsurer; |
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| 130 | 130 | | |
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| 131 | 131 | | (2) Maintain an errors and omissions policy with an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $250,000 or twenty-five per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the policy limits under this paragraph shall not exceed $10,000,000; and |
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| 132 | 132 | | |
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| 133 | 133 | | (3) Provide] provide any [other] report required by the commissioner. |
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| 134 | 134 | | |
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| 135 | 135 | | [At the commissioner's request, the reinsurance intermediary‑manager shall provide the commissioner with proof of the bond and policy and appropriate documentation to show that the bond and policy continue to be in effect, or that a new bond and new policy have been secured.]" |
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| 136 | 136 | | |
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| 137 | 137 | | SECTION 5. Section 431:9B-108, Hawaii Revised Statutes, is amended to read as follows: |
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| 138 | 138 | | |
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| 139 | 139 | | "[[]§431:9B-108[]] Duties of reinsurers utilizing the services of a reinsurance intermediary-manager. (a) A reinsurer shall not engage the services of any person, firm, association, or corporation to act as a reinsurance intermediary-manager on its behalf unless the person, firm, association, or corporation is licensed as required by section 431:9B-102(b). |
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| 140 | 140 | | |
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| 141 | 141 | | (b) The reinsurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary-manager which the reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the commissioner. |
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| 142 | 142 | | |
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| 143 | 143 | | (c) If a reinsurance intermediary-manager establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the reinsurance intermediary-manager. This opinion shall be in addition to any other required loss reserve certification. |
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| 144 | 144 | | |
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| 145 | 145 | | (d) The reinsurer shall require the reinsurance intermediary-manager to: |
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| 146 | 146 | | |
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| 147 | 147 | | (1) File a bond for the protection of the reinsurer from an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $500,000 or ten per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the bond amount under this paragraph shall not exceed $10,000,000; and |
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| 148 | 148 | | |
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| 149 | 149 | | (2) Maintain an errors and omissions policy with an insurance company licensed to do business within the State or with an insurance company approved by the commissioner, in an amount equal to $250,000 or twenty-five per cent of the annual reinsurance premiums managed by the reinsurance intermediary‑manager, whichever is greater, except that the policy limits under this paragraph shall not exceed $10,000,000. |
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| 150 | 150 | | |
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| 151 | 151 | | At the commissioner's request, the reinsurance intermediary‑manager shall provide the commissioner with proof of the bond and policy required, and appropriate documentation to show that the bond and policy continue to be in effect, or that a new bond and new policy have been secured. |
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| 152 | 152 | | |
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| 153 | 153 | | [(d)] (e) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the reinsurance intermediary-manager. |
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| 154 | 154 | | |
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| 155 | 155 | | [(e)] (f) Within thirty days of termination of a contract with a reinsurance intermediary-manager, the reinsurer shall provide written notification of the termination to the commissioner. |
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| 156 | 156 | | |
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| 157 | 157 | | [(f)] (g) A reinsurer shall not appoint to its board of directors any officer, director, employee, controlling shareholder, or subagent of its reinsurance intermediary-manager; provided that this subsection shall not apply to relationships governed by article 11." |
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| 158 | 158 | | |
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| 159 | 159 | | SECTION 6. Section 431:9J-103, Hawaii Revised Statutes, is amended to read as follows: |
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| 160 | 160 | | |
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| 161 | 161 | | "§431:9J-103 Surety bond required. (a) Before the issuance of the administrator license, the administrator shall file with the commissioner, and maintain in force while so licensed, a surety bond of at least $100,000[,] for the first two years, and at least $300,000 from the third year, in the form and penal sum acceptable to the commissioner, and shall provide that the bond may not be canceled or otherwise terminated until two years have elapsed from the last day the applicant was an administrator, unless the commissioner has given prior written consent. The surety bond shall be undertaken and may be enforced in the name of "Commissioner of Insurance, State of Hawaii". |
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| 162 | 162 | | |
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| 163 | 163 | | (b) [For] At the first renewal, and each subsequent [annual report filing,] year, the surety bond amount shall be at least [$100,000] $300,000 and filed in accordance with §431:9J‑112." |
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| 164 | 164 | | |
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| 165 | 165 | | SECTION 7. Section 431:9J-112, Hawaii Revised Statutes, is amended to read as follows: |
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| 166 | 166 | | |
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| 167 | 167 | | "§431:9J-112 Annual report required. (a) An administrator shall file an annual report for the preceding calendar year with the commissioner on or before March 1 of each year, in a form and manner prescribed by the commissioner. |
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| 168 | 168 | | |
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| 169 | 169 | | (b) The annual report shall include: |
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| 170 | 170 | | |
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| 171 | 171 | | (1) The names and addresses of all insurers with which the administrator had an agreement during the preceding calendar year; |
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| 172 | 172 | | |
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| 173 | 173 | | (2) A renewal certificate for the surety bond required in section 431:9J-103 and an updated surety bond form, if needed; and |
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| 174 | 174 | | |
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| 175 | 175 | | (3) An audited financial statement prepared by an independent certified public accountant. |
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| 176 | 176 | | |
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| 177 | 177 | | (c) An audited financial statement and annual report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet filed with the report and shall include the following: |
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| 178 | 178 | | |
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| 179 | 179 | | (1) Worksheet showing the amounts shown on the consolidated audited financial report; |
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| 180 | 180 | | |
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| 181 | 181 | | (2) Amounts for each entity that shall be stated separately; and |
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| 182 | 182 | | |
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| 183 | 183 | | (3) Explanations of consolidating and eliminating entries. |
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| 184 | 184 | | |
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| 185 | 185 | | (d) The annual report shall be in the form, and contain such matters, as the commissioner prescribes and shall be verified by at least two officers of the administrator." |
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| 186 | 186 | | |
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| 187 | 187 | | SECTION 8. Section 431:13-103, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows: |
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| 188 | 188 | | |
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| 189 | 189 | | "(a) The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance: |
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| 190 | 190 | | |
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| 191 | 191 | | (1) Misrepresentations and false advertising of insurance policies. Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison that: |
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| 192 | 192 | | |
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| 193 | 193 | | (A) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy; |
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| 194 | 194 | | |
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| 195 | 195 | | (B) Misrepresents the dividends or share of the surplus to be received on any insurance policy; |
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| 196 | 196 | | |
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| 197 | 197 | | (C) Makes any false or misleading statement as to the dividends or share of surplus previously paid on any insurance policy; |
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| 198 | 198 | | |
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| 199 | 199 | | (D) Is misleading or is a misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates; |
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| 200 | 200 | | |
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| 201 | 201 | | (E) Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; |
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| 202 | 202 | | |
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| 203 | 203 | | (F) Is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy; |
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| 204 | 204 | | |
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| 205 | 205 | | (G) Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; |
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| 206 | 206 | | |
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| 207 | 207 | | (H) Misrepresents any insurance policy as being shares of stock; |
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| 208 | 208 | | |
|---|
| 209 | 209 | | (I) Publishes or advertises the assets of any insurer without publishing or advertising with equal conspicuousness the liabilities of the insurer, both as shown by its last annual statement; or |
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| 210 | 210 | | |
|---|
| 211 | 211 | | (J) Publishes or advertises the capital of any insurer without stating specifically the amount of paid-in and subscribed capital; |
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| 212 | 212 | | |
|---|
| 213 | 213 | | (2) False information and advertising generally. Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of the person's insurance business, which is untrue, deceptive, or misleading; |
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| 214 | 214 | | |
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| 215 | 215 | | (3) Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance; |
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| 216 | 216 | | |
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| 217 | 217 | | (4) Boycott, coercion, and intimidation. |
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| 218 | 218 | | |
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| 219 | 219 | | (A) Entering into any agreement to commit, or by any action committing, any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance; or |
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| 220 | 220 | | |
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| 221 | 221 | | (B) Entering into any agreement on the condition, agreement, or understanding that a policy will not be issued or renewed unless the prospective insured contracts for another class or an additional policy of the same class of insurance with the same insurer; |
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| 222 | 222 | | |
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| 223 | 223 | | (5) False financial statements. |
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| 224 | 224 | | |
|---|
| 225 | 225 | | (A) Knowingly filing with any supervisory or other public official, or knowingly making, publishing, disseminating, circulating, or delivering to any person, or placing before the public, or knowingly causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of a material fact as to the financial condition of an insurer; or |
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| 226 | 226 | | |
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| 227 | 227 | | (B) Knowingly making any false entry of a material fact in any book, report, or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom the insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, knowingly omitting to make a true entry of any material fact pertaining to the business of the insurer in any book, report, or statement of the insurer; |
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| 228 | 228 | | |
|---|
| 229 | 229 | | (6) Stock operations and advisory board contracts. Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance; |
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| 230 | 230 | | |
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| 231 | 231 | | (7) Unfair discrimination. |
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| 232 | 232 | | |
|---|
| 233 | 233 | | (A) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any policy of life insurance or annuity contract or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contract; |
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| 234 | 234 | | |
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| 235 | 235 | | (B) Making or permitting any unfair discrimination in favor of particular individuals or persons, or between insureds or subjects of insurance having substantially like insuring, risk, and exposure factors, or expense elements, in the terms or conditions of any insurance contract, or in the rate or amount of premium charge therefor, or in the benefits payable or in any other rights or privilege accruing thereunder; |
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| 236 | 236 | | |
|---|
| 237 | 237 | | (C) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk, unless: |
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| 238 | 238 | | |
|---|
| 239 | 239 | | (i) The refusal, cancellation, or limitation is for a business purpose which is not a mere pretext for unfair discrimination; or |
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| 240 | 240 | | |
|---|
| 241 | 241 | | (ii) The refusal, cancellation, or limitation is required by law or regulatory mandate; |
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| 242 | 242 | | |
|---|
| 243 | 243 | | (D) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a residential property risk, or the personal property contained therein, because of the age of the residential property, unless: |
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| 244 | 244 | | |
|---|
| 245 | 245 | | (i) The refusal, cancellation, or limitation is for a business purpose which is not a mere pretext for unfair discrimination; or |
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| 246 | 246 | | |
|---|
| 247 | 247 | | (ii) The refusal, cancellation, or limitation is required by law or regulatory mandate; |
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| 248 | 248 | | |
|---|
| 249 | 249 | | (E) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual because of the sex or marital status of the individual; however, nothing in this subsection shall prohibit an insurer from taking marital status into account for the purpose of defining persons eligible for dependent benefits; |
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| 250 | 250 | | |
|---|
| 251 | 251 | | (F) Terminating or modifying coverage, or refusing to issue or renew any property or casualty policy or contract of insurance solely because the applicant or insured or any employee of either is mentally or physically impaired; provided that this subparagraph shall not apply to accident and health or sickness insurance sold by a casualty insurer; provided further that this subparagraph shall not be interpreted to modify any other provision of law relating to the termination, modification, issuance, or renewal of any insurance policy or contract; |
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| 252 | 252 | | |
|---|
| 253 | 253 | | (G) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual based solely upon the individual's having taken a human immunodeficiency virus (HIV) test prior to applying for insurance; or |
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| 254 | 254 | | |
|---|
| 255 | 255 | | (H) Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual because the individual refuses to consent to the release of information which is confidential as provided in section 325‑101; provided that nothing in this subparagraph shall prohibit an insurer from obtaining and using the results of a test satisfying the requirements of the commissioner, which was taken with the consent of an applicant for insurance; provided further that any applicant for insurance who is tested for HIV infection shall be afforded the opportunity to obtain the test results, within a reasonable time after being tested, and that the confidentiality of the test results shall be maintained as provided by section 325‑101; |
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| 256 | 256 | | |
|---|
| 257 | 257 | | (8) Rebates. Except as otherwise expressly provided by law: |
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| 258 | 258 | | |
|---|
| 259 | 259 | | (A) Knowingly permitting or offering to make or making any contract of insurance, or agreement as to the contract other than as plainly expressed in the contract, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to the insurance, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits, or any valuable consideration or inducement not specified in the contract; or |
|---|
| 260 | 260 | | |
|---|
| 261 | 261 | | (B) Giving, selling, or purchasing, or offering to give, sell, or purchase as inducement to the insurance or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value not specified in the contract; |
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| 262 | 262 | | |
|---|
| 263 | 263 | | (9) Nothing in paragraph (7) or (8) shall be construed as including within the definition of discrimination or rebates any of the following practices: |
|---|
| 264 | 264 | | |
|---|
| 265 | 265 | | (A) In the case of any life insurance policy or annuity contract, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance; provided that any bonus or abatement of premiums shall be fair and equitable to policyholders and in the best interests of the insurer and its policyholders; |
|---|
| 266 | 266 | | |
|---|
| 267 | 267 | | (B) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense; |
|---|
| 268 | 268 | | |
|---|
| 269 | 269 | | (C) Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for the policy year; |
|---|
| 270 | 270 | | |
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| 271 | 271 | | (D) In the case of any contract of insurance, the distribution of savings, earnings, or surplus equitably among a class of policyholders, all in accordance with this article; and |
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| 272 | 272 | | |
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| 273 | 273 | | (E) [A reward under a wellness program established under a health care plan that favors an individual if the wellness program meets the following requirements: |
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| 274 | 274 | | |
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| 275 | 275 | | (i) The wellness program is reasonably designed to promote health or prevent disease; |
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| 276 | 276 | | |
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| 277 | 277 | | (ii) An individual has an opportunity to qualify for the reward at least once a year; |
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| 278 | 278 | | |
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| 279 | 279 | | (iii) The reward is available for all similarly situated individuals; |
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| 280 | 280 | | |
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| 281 | 281 | | (iv) The wellness program has alternative standards for individuals who are unable to obtain the reward because of a health factor; |
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| 282 | 282 | | |
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| 283 | 283 | | (v) Alternative standards are available for an individual who is unable to participate in a reward program because of a health condition; |
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| 284 | 284 | | |
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| 285 | 285 | | (vi) The insurer provides information explaining the standard for achieving the reward and discloses the alternative standards; and |
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| 286 | 286 | | |
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| 287 | 287 | | (vii) The total rewards for all wellness programs under the health care plan do not exceed twenty per cent of the cost of coverage;] |
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| 288 | 288 | | |
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| 289 | 289 | | The offer or provision by insurers or producers, by or through employees, affiliates, or third-party representatives, of value-added products or services at no or reduced cost when the products or services are not specified in the policy of insurance if the product or service: |
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| 290 | 290 | | |
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| 291 | 291 | | (i) Relates to the insurance coverage; and |
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| 292 | 292 | | |
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| 293 | 293 | | (ii) Is primarily designed to satisfy one or more of the following: |
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| 294 | 294 | | |
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| 295 | 295 | | (I) Provide loss mitigation or loss control; |
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| 296 | 296 | | |
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| 297 | 297 | | (II) Reduce claim costs or claim settlement costs; |
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| 298 | 298 | | |
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| 299 | 299 | | (III) Provide education about liability risks or risk of loss to persons or property; |
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| 300 | 300 | | |
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| 301 | 301 | | (IV) Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk; |
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| 302 | 302 | | |
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| 303 | 303 | | (V) Enhance health; |
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| 304 | 304 | | |
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| 305 | 305 | | (VI) Enhance financial wellness through items such as education and financial planning services; |
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| 306 | 306 | | |
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| 307 | 307 | | (VII) Provide post-loss services; |
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| 308 | 308 | | |
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| 309 | 309 | | (VIII) Incentivize behavioral changes to improve the health or reduce the risk of death or disability of a customer; or |
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| 310 | 310 | | |
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| 311 | 311 | | (IX) Assist in the administration of the employee or retiree benefit insurance coverage. |
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| 312 | 312 | | |
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| 313 | 313 | | (iii) The cost to the insurer or producer offering the product or service to any given customer shall be reasonable in comparison to that customerꞌs premiums or insurance coverage for the policy class. |
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| 314 | 314 | | |
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| 315 | 315 | | (iv) If the insurer or producer is providing the product or service offered, the insurer or producer shall ensure that the customer is provided with contact information to assist the customer with questions regarding the product or service. |
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| 316 | 316 | | |
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| 317 | 317 | | (v) The commissioner may adopt rules when implementing the permitted practices set forth in this paragraph to ensure consumer protection. Such rules, consistent with applicable law, may address, among other issues, consumer data protections and privacy, consumer disclosure and unfair discrimination. |
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| 318 | 318 | | |
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| 319 | 319 | | (vi) The availability of the value-added product or service shall be based on documented objective criteria and offered in a manner that is not unfairly discriminatory. The documented criteria shall be maintained by the insurer or producer and produced upon request by the commissioner. |
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| 320 | 320 | | |
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| 321 | 321 | | (vii) If an insurer or producer does not have sufficient evidence but has a good-faith belief that the product or service meets the criteria in subparagraph (E)(ii), the insurer or producer may provide the product or service in a manner that is not unfairly discriminatory as part of a pilot or testing program for no more than one year. An insurer or producer shall notify the commissioner of such a pilot or testing program offered to consumers in the State prior to launching and may proceed with the program unless the commissioner objects within twenty-one days of notice. |
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| 322 | 322 | | |
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| 323 | 323 | | (F) An insurer or a producer may: |
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| 324 | 324 | | |
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| 325 | 325 | | (i) Offer or give non-cash gifts, items, or services, including meals to or charitable donations on behalf of a customer, to commercial or institutional customers in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost is reasonable in comparison to the premium or proposed premium and the cost of the gift or service is not included in any amounts charged to another person or entity. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service. |
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| 326 | 326 | | |
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| 327 | 327 | | (ii) Conduct raffles or drawings to the extent permitted by state law, as long as there is no financial cost to entrants to participate, the drawing or raffle does not obligate participants to purchase insurance, the prizes are not valued in excess of a reasonable amount determined by the commissioner and the drawing or raffle is open to the public. The raffle or drawing shall be offered in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service. |
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| 328 | 328 | | |
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| 329 | 329 | | An insurer, producer or representative of either may not offer or provide insurance as an inducement to the purchase of another policy or otherwise use the words "free", "no cost" or words of similar import, in an advertisement. |
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| 330 | 330 | | |
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| 331 | 331 | | For purposes of this paragraph, "customer" means a policyholder, potential policyholder, certificate holder, potential certificate holder, insured, potential insured or applicant. |
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| 332 | 332 | | |
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| 333 | 333 | | (10) Refusing to provide or limiting coverage available to an individual because the individual may have a third-party claim for recovery of damages; provided that: |
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| 334 | 334 | | |
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| 335 | 335 | | (A) Where damages are recovered by judgment or settlement of a third-party claim, reimbursement of past benefits paid shall be allowed pursuant to section 663-10; |
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| 336 | 336 | | |
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| 337 | 337 | | (B) This paragraph shall not apply to entities licensed under chapter 386 or 431:10C; and |
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| 338 | 338 | | |
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| 339 | 339 | | (C) For entities licensed under chapter 432 or 432D: |
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| 340 | 340 | | |
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| 341 | 341 | | (i) It shall not be a violation of this section to refuse to provide or limit coverage available to an individual because the entity determines that the individual reasonably appears to have coverage available under chapter 386 or 431:10C; and |
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| 342 | 342 | | |
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| 343 | 343 | | (ii) Payment of claims to an individual who may have a third-party claim for recovery of damages may be conditioned upon the individual first signing and submitting to the entity documents to secure the lien and reimbursement rights of the entity and providing information reasonably related to the entity's investigation of its liability for coverage. |
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| 344 | 344 | | |
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| 345 | 345 | | Any individual who knows or reasonably should know that the individual may have a third-party claim for recovery of damages and who fails to provide timely notice of the potential claim to the entity, shall be deemed to have waived the prohibition of this paragraph against refusal or limitation of coverage. "Third-party claim" for purposes of this paragraph means any tort claim for monetary recovery or damages that the individual has against any person, entity, or insurer, other than the entity licensed under chapter 432 or 432D; |
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| 346 | 346 | | |
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| 347 | 347 | | (11) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following: |
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| 348 | 348 | | |
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| 349 | 349 | | (A) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; |
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| 350 | 350 | | |
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| 351 | 351 | | (B) With respect to claims arising under its policies, failing to respond with reasonable promptness, in no case more than fifteen working days, to communications received from: |
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| 352 | 352 | | |
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| 353 | 353 | | (i) The insurer's policyholder; |
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| 354 | 354 | | |
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| 355 | 355 | | (ii) Any other persons, including the commissioner; or |
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| 356 | 356 | | |
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| 357 | 357 | | (iii) The insurer of a person involved in an incident in which the insurer's policyholder is also involved. |
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| 358 | 358 | | |
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| 359 | 359 | | The response shall be more than an acknowledgment that such person's communication has been received and shall adequately address the concerns stated in the communication; |
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| 360 | 360 | | |
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| 361 | 361 | | (C) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; |
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| 362 | 362 | | |
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| 363 | 363 | | (D) Refusing to pay claims without conducting a reasonable investigation based upon all available information; |
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| 364 | 364 | | |
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| 365 | 365 | | (E) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; |
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| 366 | 366 | | |
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| 367 | 367 | | (F) Failing to offer payment within thirty calendar days of affirmation of liability, if the amount of the claim has been determined and is not in dispute; |
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| 368 | 368 | | |
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| 369 | 369 | | (G) Failing to provide the insured, or when applicable the insured's beneficiary, with a reasonable written explanation for any delay, on every claim remaining unresolved for thirty calendar days from the date it was reported; |
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| 370 | 370 | | |
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| 371 | 371 | | (H) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear; |
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| 372 | 372 | | |
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| 373 | 373 | | (I) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds; |
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| 374 | 374 | | |
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| 375 | 375 | | (J) Attempting to settle a claim for less than the amount to which a reasonable person would have believed the person was entitled by reference to written or printed advertising material accompanying or made part of an application; |
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| 376 | 376 | | |
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| 377 | 377 | | (K) Attempting to settle claims on the basis of an application that was altered without notice, knowledge, or consent of the insured; |
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| 378 | 378 | | |
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| 379 | 379 | | (L) Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made; |
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| 380 | 380 | | |
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| 381 | 381 | | (M) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; |
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| 382 | 382 | | |
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| 383 | 383 | | (N) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician or advanced practice registered nurse of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; |
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| 384 | 384 | | |
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| 385 | 385 | | (O) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage to influence settlements under other portions of the insurance policy coverage; |
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| 386 | 386 | | |
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| 387 | 387 | | (P) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; and |
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| 388 | 388 | | |
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| 389 | 389 | | (Q) Indicating to the insured on any payment draft, check, or in any accompanying letter that the payment is "final" or is "a release" of any claim if additional benefits relating to the claim are probable under coverages afforded by the policy; unless the policy limit has been paid or there is a bona fide dispute over either the coverage or the amount payable under the policy; |
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| 390 | 390 | | |
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| 391 | 391 | | (12) Failure to maintain complaint handling procedures. Failure of any insurer to maintain a complete record of all the complaints that it has received since the date of its last examination under section 431:2-302. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of the complaints, and the time it took to process each complaint. For purposes of this section, "complaint" means any written communication primarily expressing a grievance; |
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| 392 | 392 | | |
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| 393 | 393 | | (13) Misrepresentation in insurance applications. Making false or fraudulent statements or representations on or relative to an application for an insurance policy, for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, producer, or individual; and |
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| 394 | 394 | | |
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| 395 | 395 | | (14) Failure to obtain information. Failure of any insurance producer, or an insurer where no producer is involved, to comply with section [431:10D-623(a), (b), or (c) by making reasonable efforts to obtain information about a consumer before making a recommendation to the consumer to purchase or exchange an annuity.] 431:10D-623." |
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| 396 | 396 | | |
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| 397 | 397 | | SECTION 9. Section 431:19-101, Hawaii Revised Statutes, is amended as follows: |
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| 398 | 398 | | |
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| 399 | 399 | | 1. By amending the definition of "controlled unaffiliated business" to read: |
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| 400 | 400 | | |
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| 401 | 401 | | ""Controlled unaffiliated business" means, in the case of a pure captive insurance company, any person[:], or in the case of a sponsored captive insurance company, any participant: |
|---|
| 402 | 402 | | |
|---|
| 403 | 403 | | (1) That is not in the corporate system of a parent or sponsor and its affiliated entities; |
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| 404 | 404 | | |
|---|
| 405 | 405 | | (2) That has an existing contractual relationship with a parent or sponsor or one of its affiliated entities; and; |
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| 406 | 406 | | |
|---|
| 407 | 407 | | (3) Whose risks are managed by the pure captive insurance company[.] or the sponsored captive insurance company." |
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| 408 | 408 | | |
|---|
| 409 | 409 | | 2. By amending the definition of "participant" to read: |
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| 410 | 410 | | |
|---|
| 411 | 411 | | ""Participant" means an entity that meets the requirements of section 431:19-305, and any affiliated or controlled unaffiliated business entities thereof that are insured by a sponsored captive insurance company where the losses of the participant may be limited through a participant contract to the participant's pro rata share of the assets of one or more protected cells identified in the participant contract." |
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| 412 | 412 | | |
|---|
| 413 | 413 | | SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. |
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| 414 | 414 | | |
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| 415 | 415 | | SECTION 11. This Act shall take effect on July 1, 2050; provided that the amendments made to section 76-16(b), Hawaii Revised Statutes, by section 3 of this Act shall not be repealed when section 24 of Act 278, Session Laws of Hawaii 2022, takes effect. |
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| 416 | 416 | | |
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| 417 | 417 | | Report Title: Insurance Code; Captive Insurers; Producers; Trade Name; Third Party Administrators; Surety Bond; Reinsurance Intermediary-Managers; Unfair Methods of Competition; Unfair and Deceptive Acts and Practices; Reinsurers; Non-Insurance Benefits Description: Amends various provisions of title 24 of the Hawaii Revised Statutes (HRS) to update and improve existing provisions. Adds the term "doing business as" to "trade name" statutory references. Clarifies continuing education provider filing requirements. Clarifies reinsurance intermediary-manager filing requirements. Amends the surety bond threshold requirement for third party administrators and clarifies the audited financial statements requirements. Adopts revised National Association of Insurance Commissioners Model #880 Unfair Trade Practices Act regarding expansion of value-added products beyond health products. Aligns section 431:13-103, HRS, with changes made to article 9 of chapter 431 by Act 110, Session Laws of Hawaii 2021. Amends the definitions of "controlled unaffiliated business" and "participant" as applied to captive insurance companies. Effective 7/1/2050. (SD1) The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent. |
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| 418 | 418 | | |
|---|
| 419 | 419 | | |
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| 420 | 420 | | |
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| 421 | 421 | | |
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| 422 | 422 | | |
|---|
| 423 | 423 | | Report Title: |
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| 424 | 424 | | |
|---|
| 425 | 425 | | Insurance Code; Captive Insurers; Producers; Trade Name; Third Party Administrators; Surety Bond; Reinsurance Intermediary-Managers; Unfair Methods of Competition; Unfair and Deceptive Acts and Practices; Reinsurers; Non-Insurance Benefits |
|---|
| 426 | 426 | | |
|---|
| 427 | 427 | | |
|---|
| 428 | 428 | | |
|---|
| 429 | 429 | | Description: |
|---|
| 430 | 430 | | |
|---|
| 431 | 431 | | Amends various provisions of title 24 of the Hawaii Revised Statutes (HRS) to update and improve existing provisions. Adds the term "doing business as" to "trade name" statutory references. Clarifies continuing education provider filing requirements. Clarifies reinsurance intermediary-manager filing requirements. Amends the surety bond threshold requirement for third party administrators and clarifies the audited financial statements requirements. Adopts revised National Association of Insurance Commissioners Model #880 Unfair Trade Practices Act regarding expansion of value-added products beyond health products. Aligns section 431:13-103, HRS, with changes made to article 9 of chapter 431 by Act 110, Session Laws of Hawaii 2021. Amends the definitions of "controlled unaffiliated business" and "participant" as applied to captive insurance companies. Effective 7/1/2050. (SD1) |
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| 432 | 432 | | |
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| 433 | 433 | | |
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| 434 | 434 | | |
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| 435 | 435 | | |
|---|
| 436 | 436 | | |
|---|
| 437 | 437 | | |
|---|
| 438 | 438 | | |
|---|
| 439 | 439 | | The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent. |
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