Bill Text: HI SB2812 | 2010 | Regular Session | Introduced
Bill Title: Captive Insurance Companies
Spectrum: Partisan Bill (Democrat 9-0)
Status: (Passed) 2010-03-17 - (S) Act 007, 3/17/2010 (Gov. Msg. No. 365). [SB2812 Detail]
Download: Hawaii-2010-SB2812-Introduced.html
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THE SENATE |
S.B. NO. |
2812 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to captive insurance companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 431:19-108, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The
commissioner or any authorized examiner [authorized by the
commissioner] may conduct an examination of any captive insurance company
as often as the commissioner deems appropriate[; provided that an
examination shall be conducted at least once every three years. The
commissioner, upon application by a captive insurance company, may allow an
examination to be conducted every five years; provided that the commissioner
shall have completed at least one triennial examination of the company.],
and unless the commissioner requires otherwise:
(1) An examination shall be conducted at least once every five years for all captive insurance companies, except as provided in paragraph (2); and
(2) An examination of a class 3 risk retention captive insurance company shall be conducted no later than three years after its formation; thereafter, an examination shall be conducted at least once every five years.
The commissioner or any authorized examiner shall thoroughly inspect and examine the captive insurance company's affairs to ascertain its financial condition, its ability to fulfill its obligations, and whether it has complied with this article."
SECTION 2. Section 431:19-109, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The certificate of authority of a
captive insurance company to do business in this [State] state
may be suspended or revoked by the commissioner for any of the following
reasons:
(1) Insolvency or impairment of capital or surplus;
(2) Failure to meet the requirements of section
431:19-104 [or section 431:19-105];
(3) Refusal or failure to submit an annual report, as required by section 431:19-107 or any other report or statement required by law or by lawful order of the commissioner;
(4) Failure to comply with the provisions of its own articles of incorporation, articles of association, or bylaws;
(5) Failure to submit to examination or any legal obligation relative thereto, as required by section 431:19-108;
(6) Refusal or failure to pay the cost of examination as required by section 431:19-108;
(7) Use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders;
(8) Failure to maintain actuarially appropriate loss reserves as determined by the commissioner; provided that the commissioner shall issue at least one warning to the captive insurance company to correct the problem prior to suspending or revoking the certificate of authority; and
(9) Failure otherwise to comply with the laws of this State."
SECTION 3. Section 431:19-303, Hawaii Revised Statutes, is amended to read as follows:
"[[]§431:19-303[]] Protected
cells. A sponsored captive insurance company formed and licensed under
this article may establish and maintain one or more protected cells to insure
risks of one or more participants, subject to the following:
(1) The shareholders or members of a sponsored captive insurance company shall be limited to its participants and sponsors; provided that a sponsored captive insurance company may issue nonvoting securities to other persons on terms approved by the commissioner;
(2) A protected cell shall be organized and operated in only those forms of business organization authorized by the commissioner, including an association, corporation, limited liability company, partnership, or trust;
[(2)] (3) Each
protected cell shall be accounted for separately on the books and records of
the sponsored captive insurance company to reflect the financial condition and
results of operations of the protected cell, net income or loss, dividends or
other distributions to participants, and other factors as may be provided in
the participant contract or required by the commissioner;
[(3)] (4)
The assets of a protected cell shall not be chargeable with liabilities arising
out of any other insurance business the sponsored captive insurance company may
conduct;
[(4)] (5) No
sale, exchange, or other transfer of assets may be made by a sponsored captive
insurance company between or among any of its protected cells without the
consent of the protected cells;
[(5)] (6) No
sale, exchange, transfer of assets, dividend, or distribution may be made from
a protected cell to a sponsor or participant without the commissioner's
approval, and in no event shall the approval be given if the sale, exchange,
transfer, dividend, or distribution would result in insolvency or impairment
with respect to a protected cell;
[(6)] (7) Each
sponsored captive insurance company shall annually file with the commissioner,
financial reports as the commissioner shall require, that shall include,
without limitation, accounting statements detailing the financial experience of
each protected cell;
[(7)] (8) Each
sponsored captive insurance company shall notify the commissioner in writing
within ten business days of any protected cell that is insolvent or otherwise
unable to meet its claim or expense obligations; and
[(8)] (9) No
participant contract shall take effect without the commissioner's prior written
approval, and the addition of each new protected cell and withdrawal of any
participant or termination of any existing protected cell shall constitute a
change in business plan requiring the commissioner's prior written approval."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
Captive Insurance Companies
Description:
Amends the frequency of statutorily required captive insurance company examinations from once every three years to once every five years, unless otherwise required by the Insurance Commissioner. Requires risk retention captive insurance companies to undergo examination within three years of formation. Eliminates reference to a repealed provision on minimum surplus requirements for captive insurance companies. Requires protected cell accounts established by sponsored captive insurance companies to be operated only under the forms of business organizations authorized by the Insurance Commissioner.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
