When an aggrieved insurer demands a hearing with the commissioner when must the hearing be held?

     §431:14-106  Disapproval of filings.  (a)  If, within the waiting period or any extension of the waiting period as provided in section 431:14-104(j), the commissioner finds that a filing does not meet the requirements of this article, the commissioner shall send to the insurer, rating organization, or advisory organization that made the filing, written notice of disapproval of the filing specifying in what respects the filing fails to meet the requirements of this article, specifying the actuarial, statutory, factual, and legal bases for the disapproval, including an explanation of the application thereof that resulted in disapproval, and stating that the filing shall not become effective.

     (b)  If, within thirty days:

     (1)  After a specific inland marine rate on a risk specially rated by a rating organization or advisory organization subject to section 431:14-104(k) has become effective; or

     (2)  After a special surety or guaranty filing subject to section 431:14-104(k) has become effective;

the commissioner finds that the filing does not meet the requirements of this article, the commissioner shall send to the insurer, rating organization, or advisory organization that made the filing, written notice of disapproval of the filing specifying in what respects the filing fails to meet the requirements of this article and stating when, within a reasonable period thereafter, the filing shall be deemed no longer effective.  The disapproval shall not affect any contract made or issued prior to the expiration of the period set forth in the notice.

     (c)  If, any time subsequent to the applicable review period provided for in subsections (a) or (b), the commissioner finds that a filing does not comply with the requirements of this article, the commissioner shall order a hearing upon the filing.  The hearing shall be held upon not less than ten days' written notice to every insurer, rating organization, or advisory organization that made the filing.  The notice shall specify the matters to be considered at the hearing and specify the actuarial, statutory, factual, and legal bases for the commissioner's finding of noncompliance.  If, after a hearing, the commissioner finds that a filing does not meet the requirements of this article, the commissioner, within thirty days of the hearing, shall issue an order specifying in what respects the filing fails to meet the requirements, and stating when, within a reasonable period thereafter, the filing shall be deemed no longer effective.  Copies of the order shall be sent to every such insurer, rating organization, or advisory organization whose filing is affected by the order.  The order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order.

     (d)  If a filing is disapproved, in whole or in part, a written request for a hearing may be filed pursuant to section 431:14-118.  The insurer shall bear the burden of proving that the filing meets the requirements of this article.

    (e)  Any person or organization aggrieved with respect to any filing that is in effect may make written demand to the commissioner for a hearing thereon; provided that:

     (1)  The insurer, rating organization, or advisory organization that made the filing shall not be authorized to proceed under this subsection;

     (2)  The demand shall specify the grounds to be relied upon by the aggrieved person or organization, and the demand shall show that the person or organization has a specific economic interest affected by the filing;

     (3)  If the commissioner finds that the demand is made in good faith, that the applicant would be so aggrieved if the person's or organization's grounds are established, and that the grounds otherwise justify a hearing, the commissioner, within thirty days after receipt of the demand, shall hold a hearing.  The hearing shall be held upon not less than ten days' written notice to the aggrieved party and to every insurer, rating organization, or advisory organization that made the filing.  The aggrieved party shall bear the burden of proving that the filing fails to meet the standards set forth in section 431:14-103(a)(1); and

     (4)  If, after the hearing, the commissioner finds that the filing does not meet the requirements of this article, the commissioner shall issue an order specifying in what respects the filing fails to meet the requirements of this article, and stating when, within a reasonable period, the filing shall be deemed no longer effective.  Copies of the order shall be sent to the applicant and to every such insurer, rating organization, or advisory organization.  The order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order.

    (f)  No manual of classifications, rules, rating plan, or any modification of any of the foregoing that establishes standards for measuring variations in hazards or expense provisions, or both, and that has been filed pursuant to the requirements of section 431:14-104 shall be disapproved if the rates thereby produced meet the requirements of this article.

     (g)  The notices, hearings, orders, and appeals referred to in this section are in all applicable respects subject to chapter 91, unless expressly provided otherwise. [L 1987, c 347, pt of §2; am L 1990, c 255, §10; am L 2004, c 122, §61; am L 2012, c 258, §5]

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     §431:14-107  Rating organizations.  (a)  A corporation, an unincorporated association, a partnership, or an individual, whether located within or outside this State, may make application to the commissioner for license as a rating organization for such classes of insurance or subdivision or class of risk, or a part or combination thereof, as are specified in its application and shall file the following with the application:

     (1)  A copy of its constitution, charter, its articles of organization, agreement, association, or incorporation, and a copy of its bylaws, plan of operation, and any other rules and regulations governing the conduct of its business;

     (2)  A list of its members and subscribers;

     (3)  The name and address of a resident of this State upon whom notices or orders of the commissioner or process affecting the rating organization may be served;

     (4)  A statement of its qualifications as a rating organization;

     (5)  A biography of the ownership and management of the organization; and

     (6)  Any other relevant information and documents that the commissioner may require.

     (b)  If the commissioner finds that the applicant is competent, trustworthy, and otherwise qualified to act as a rating organization and that its constitution, articles of organization, agreement, association, or incorporation, and its bylaws, rules and regulations governing the conduct of its business conform to the requirements of law, the commissioner shall issue a license specifying the classes of insurance or subdivision or class of risk, or part or combination thereof, for which the applicant is authorized to act as a rating organization.  Every such application shall be granted or denied in whole or in part by the commissioner within sixty days of the date of its filing with the commissioner.  Licenses issued pursuant to this section shall remain in effect for three years unless sooner suspended or revoked by the commissioner.  The fee for the license shall be $37.50.  Licenses issued pursuant to this section may be suspended or revoked by the commissioner after hearing upon notice, in the event the rating organization ceases to meet the requirements of subsections (a) and (b).

     (c)  Every rating organization shall notify the commissioner promptly of every material change in the documents or information filed pursuant to subsection (a).

  (d)(1)  Subject to rules that have been approved by the commissioner as reasonable, each rating organization shall permit any insurer, not a member, to be a subscriber to its rating services for any class of insurance or subdivision or class of risk, or a part or combination thereof, for which it is authorized to act as a rating organization.  Notice of proposed changes in the rules shall be given to subscribers.  Each rating organization shall furnish its rating services without discrimination to its members and subscribers.

     (2)  The reasonableness of any rule in its application to subscribers, or the refusal of any rating organization to admit an insurer as a subscriber, shall, at the request of any subscriber or any such insurer, be reviewed by the commissioner at a hearing held upon at least ten days' written notice to such rating organization and to the subscriber or insurer.  If the commissioner finds that the rule is unreasonable in its application to subscribers, the commissioner shall order that the rule shall not be applicable to subscribers.

     (3)  If the rating organization fails to grant or reject an insurer's application for subscribership within thirty days after it was made, the insurer may request a review by the commissioner, in accordance with paragraph (2), as if the application had been rejected.  If the commissioner finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, the commissioner shall order the rating organization to admit the insurer as a subscriber.  If the commissioner finds that the action of the rating organization was justified, the commissioner shall make an order affirming its action.

     (e)  No rating organization shall adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.

     (f)  Cooperation among rating organizations or among rating organizations and insurers in matters within the scope of this article is authorized, provided the filings resulting from the cooperation are subject to all the provisions of this article which are applicable to filings generally.  The commissioner may review the cooperative activities and practices and if, after a hearing, the commissioner finds that any activity or practice is unfair or unreasonable or otherwise inconsistent with this article, the commissioner may issue a written order specifying in what respects the activity or practice is unfair or unreasonable or otherwise inconsistent with this article, and requiring the discontinuance of the activity or practice.

     (g)  Any rating organization may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements, or other evidences of insurance, or the cancellation thereof, and may make reasonable rules governing their submission.  The rules shall contain a provision that in the event any insurer does not within sixty days furnish satisfactory evidence to the rating organization of the correction of any error or omission previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the commissioner thereof.  All information submitted for examination shall be confidential.

     (h)  Any rating organization may subscribe for or purchase actuarial, technical or other services, and such services shall be available to all members and subscribers without discrimination. [L 1987, c 347, pt of §2; am L 1990, c 255, §11; am L 1993, c 205, §33; am L 2004, c 122, §62]

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     §431:14-107.1  Rating and advisory organizations, permitted activity.  In addition to other activities not expressly prohibited by this article, rating organizations and advisory organizations are authorized, on behalf of their members and subscribers, to:

     (1)  Develop statistical plans including territorial and class definitions;

     (2)  Collect statistical data from members, subscribers, or any other source;

     (3)  Prepare and distribute prospective loss costs;

     (4)  Prepare and distribute factors, calculations or formulas pertaining to classification, territory, increased limits, and other variables;

     (5)  Prepare and distribute manuals of rating rules and rating schedules that do not include final rates, expenses provisions, profit provisions, or minimum premiums;

     (6)  Distribute information that is required or directed to be filed with the commissioner;

     (7)  Conduct research and on-site inspections in order to prepare classifications of public fire defenses;

     (8)  Consult with public officials regarding public fire protection as it would affect members, subscribers, and others;

     (9)  Conduct research and collect statistics in order to discover, identify, and classify information relating to causes or prevention of losses;

    (10)  Prepare policy forms and endorsements and consult with members, subscribers, and others relative to their use and application;

    (11)  Conduct research and on-site inspections for the purpose of providing risk information relating to individual structures;

    (12)  Collect, compile, and distribute past and current prices of individual insurers and publish that information;

    (13)  File final rates, at the direction of the commissioner, for residual market mechanisms; and

    (14)  Furnish any other services, as approved or directed by the commissioner, related to those enumerated in this section. [L 1990, c 255, §3]

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     §431:14-107.2  Insurers and organizations, prohibited activity.  (a)  Except as permitted in this article, no insurer, rating organization, or advisory organization shall:

     (1)  Attempt to monopolize, or combine or conspire with any other person to monopolize an insurance market; or

     (2)  Engage in a boycott, on a concerted basis, of an insurance market.

     (b)  Except as permitted in this article, no insurer shall agree with any other insurer or with a rating organization or with an advisory organization to mandate adherence to or to mandate use of any rate, rating plan, rating schedule, rating rule, policy or bond form, rate classification, rate territory, underwriting rule, survey, inspection, or similar material, except as needed to develop statistical plans permitted by section 431:14-107.1.  The fact that two or more insurers, whether or not members or subscribers of a rating organization or advisory organization, use consistently or intermittently the same rates, rating plans, rating schedules, rating rules, policy or bond forms, rate classifications, rate territories, underwriting rules, surveys or inspections, or similar materials is not sufficient in itself to support a finding that an agreement exists.  Two or more insurers having a common ownership or operating in this State under common management or control may act in concert between or among themselves with respect to any matters pertaining to those activities authorized in this article as if they constituted a single insurer.

     (c)  Except as permitted in this article, no insurer, rating organization, or advisory organization shall make any arrangement with any other insurer, advisory organization, or other person which has the purpose or effect of restraining trade unreasonably or of substantially lessening competition in the business of insurance. [L 1990, c 255, §4; am L 1993, c 205, §34]

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     §431:14-107.3  Rating or advisory organizations, prohibited activity.  Except as specifically permitted under this article or any rule adopted thereunder, no rating or advisory organization shall compile or distribute recommendations relating to rates that include expenses (other than loss adjustment expenses) or profit. [L 1990, c 255, §5]

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     §431:14-108  Deviations.  (a)  Except for those lines of insurance for which the commissioner determines individual rate filings shall be made, every member of or subscriber to a rating organization shall adhere to the filings the organization made on its behalf; provided that any insurer may submit a rate filing to the commissioner to file a deviation from the class rates, schedules, rating plans, or rules respecting any class of insurance, class of risk within a class of insurance, or combination thereof.  The rate filing shall specify the basis for the deviation and shall be accompanied by the data upon which the applicant relies.  The filer shall simultaneously send a copy of the deviation and data to the rating organization.

     (b)  In considering the deviation, the commissioner shall consider the available statistics and the principles for ratemaking in section 431:14-103.  The commissioner shall approve the filing of the deviation if the commissioner finds that it is justified.  The deviation shall become effective upon the commissioner's approval of the proposed effective date of the filing.  The commissioner shall disapprove the rate filing if the commissioner finds the deviation is not justified or the resulting premiums would be excessive, inadequate, or unfairly discriminatory.  Each deviation filed shall be effective for a period of one year from the date of approval, unless terminated sooner with approval by the commissioner. [L 1987, c 347, pt of §2; am L 1993, c 205, §35; am L 2019, c 70, §21]

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     §431:14-109  Appeal by minority.  Any member of or subscriber to a rating organization may appeal to the commissioner from the action or decision of the rating organization in approving or rejecting any proposed change in or addition to the filings of the rating organization.  The commissioner shall, after a hearing held upon not less than ten days' written notice to the appellant and to the rating organization, issue an order approving the action or decision of the rating organization or directing it to give further consideration to the proposal.

     (1)  If the appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, the commissioner may issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, provided the commissioner finds that the action or decision was unreasonable.  The rating organization shall make an addition to its filings within a reasonable time after the issuance of the order and in a manner consistent with the commissioner's findings.

     (2)  The commissioner shall order the rating organization to make the requested filing for use by the appellant if the appeal is:

          (A)  Based upon the failure of the rating organization to make a filing on behalf of the member or subscriber which is based on a system of expense provisions differing from the system of expense provisions included in the rating organization's filing, and

          (B)  Granted by the commissioner.

In deciding the appeal the commissioner shall apply the standards set forth in section 431:14-103. [L 1987, c 347, pt of §2]

Revision Note

  Subsection designation deleted pursuant to §23G-15.

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     §431:14-110  Information to be furnished insureds; hearings and appeals of insureds.  (a)  Every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charges as it may make, furnish to any insured affected by a rate made by it or to the authorized representative of the insured, all pertinent information as to the rate.

     (b)  Every rating organization and every insurer which makes its own rates shall provide within this State reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by an authorized representative, on such person's written request to review the manner in which the rating system has been applied in connection with the insurance afforded that person.  If the rating organization or insurer fails to grant or reject the request within thirty days after it is made, the applicant may proceed in the same manner as if the application had been rejected.  Any party affected by the action of the rating organization or the insurer on such request may appeal to the commissioner within thirty days after written notice of such action.  The commissioner, after a hearing held upon not less than ten days' written notice to the appellant and to the rating organization or insurer, may affirm or reverse the action. [L 1987, c 347, pt of §2]

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     [§431:14-110.5]  Disclosure of workers' compensation premium information.  (a)  All policies issued to employers for workers' compensation insurance shall disclose clearly to employers as separate figures the portion of the premium charged for:

     (1)  Medical care, services, and supplies;

     (2)  Wage loss benefits including temporary total, temporary partial, and permanent total disability benefits and their related benefits;

     (3)  Indemnity benefits for permanent partial disability; and

     (4)  Death benefits.

     In addition, a disclosure statement shall indicate to the employer the portion of the premium attributable to loss control and administrative costs, attorney's fees of the insurer, the cost of employer requested medical examinations, and private investigation costs.

     (b)  When a policy is issued to employers for workers' compensation insurance, it shall be accompanied by a statement disclosing the percentages of premiums expended during the previous year by the insurer for claims paid in the categories specified in subsection (a), including loss control and administrative costs, attorney's fees of the insurer, the cost of employer requested medical examinations, and private investigation costs.

     (c)  The information provided to employers by insurers pursuant to this section shall be provided on an annual basis to the director of labor and industrial relations and to the commissioner.

     (d)  Any insurer found in violation of this section shall pay a fine of $5,000 per violation to the insured, plus attorney's fees and costs to the insured for enforcing this section. [L 1995, c 234, pt of §5]

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     [§431:14-110.8]  Publication of homeowners insurance premium information.  (a)  Upon the commissioner's request, all homeowners insurers shall provide homeowners insurance premium information to the commissioner within thirty days of the request.

     (b)  The commissioner shall publish annually, by electronic or online publication on the official website of the insurance division, a list of all homeowners insurers with representative annual premiums for homeowners insurance.

     (c)  As used in this section:

     "Homeowners insurance" means an insurance policy for any residential property in the State that combines:

     (1)  Indemnity from destruction or damage of the insured's property by various designated perils; and

     (2)  Indemnity for legal liability of the insured for death, injury, or disability of any human being or for damage to property.

     "Homeowners insurer" means an insurer holding a valid certificate of authority to engage in the business of making contracts of homeowners insurance in this State. [L 2012, c 258, §1]

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     §431:14-111  Advisory organizations.  (a)  Every group, association or other organization of insurers, whether located within or outside this State, which assists insurers which make their own filings or rating organizations in ratemaking, by the collection and furnishing of loss or expense statistics, or by the submission of recommendations, but which does not make filings under this article, shall be known as an advisory organization.

     (b)  Every advisory organization shall file with the commissioner:

     (1)  A copy of its constitution, its articles of agreement or association, or its certificate of incorporation and of its bylaws, rules and regulations governing its activities;

     (2)  A list of its members;

     (3)  The name and address of a resident of this State upon whom notices or orders of the commissioner or process issued at the commissioner's direction may be served; and

     (4)  An agreement that the commissioner may examine the advisory organization in accordance with section 431:14-113.

     (c)  If, after a hearing, the commissioner finds that the furnishing of such information or assistance by the advisory organization involved any act or practice which is unfair or unreasonable or otherwise inconsistent with this article, the commissioner may issue a written order specifying in what respects the act or practice is unfair or unreasonable or otherwise inconsistent with this article, and requiring the discontinuance of the act or practice.

     (d)  No insurer which makes its own filings, nor any rating organization, shall support its filings by statistics or adopt ratemaking recommendations furnished to it by an advisory organization which has not complied with this section or with an order of the commissioner involving the statistics or recommendations issued under subsection (c).  If the commissioner finds such insurer or rating organization to be in violation of this subsection, the commissioner may issue an order requiring the discontinuance of such violation. [L 1987, c 347, pt of §2]

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     §431:14-112  Joint underwriting or joint reinsurance.  (a)  Every group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance, shall be subject to regulation as provided below, subject:

     (1)  With respect to joint underwriting, to all other provisions of this article, and

     (2)  With respect to joint reinsurance, to section 431:14-113, section 431:14-117 and section 431:14-118.

     (b)  If, after a hearing, the commissioner finds that any activity or practice of any such group, association or other organization is unfair or unreasonable or otherwise inconsistent with this article, the commissioner may issue a written order specifying in what respects the activity or practice is unfair or unreasonable or otherwise inconsistent with this article, and requiring the discontinuance of such activity or practice. [L 1987, c 347, pt of §2]

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     §431:14-113  Examination.  (a)  The commissioner may, as often as the commissioner may deem it expedient, make or cause to be made an examination of each rating organization referred to in section 431:14-107, each advisory organization referred to in section 431:14-111 and of each group, association or other organization referred to in section 431:14-112.  The reasonable costs of any such examination shall be paid by the rating organization, advisory organization, or group, association, or other organization examined upon presentation to it of a detailed account of such costs.  The officer, manager, agents, and employees of the rating organization, advisory organization, or group, association, or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation.  In lieu of any such examination, the commissioner may accept the report of an examination made by the insurance supervisory official of any state, pursuant to the laws of such state.

     (b)  The commissioner shall furnish the organization examined a copy of the examination report not fewer than sixty days prior to the filing of the report for public inspection in the insurance division.  If the organization so requests in writing during the sixty-day period, the commissioner shall hold a hearing to consider the organization's objections to the report as proposed, and shall not file the report until after the hearing and until after any modifications in the report deemed necessary by the commissioner have been made.  If the organization does not request a hearing on the report, the examination report shall be filed at the end of sixty days.

     (c)  Once filed, the report shall be available for public inspection and shall be admissible as a public record, except that the commissioner or the commissioner's examiners may at any time testify and offer other proper evidence as to information secured during the course of an examination, regardless of whether a written report of the examination has at that time been either made, served, or filed in the insurance division. [L 1987, c 347, pt of §2; am L 1990, c 255, §12; am L 2004, c 122, §63]

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     §431:14-114  Rate administration.  (a)  The commissioner may promulgate reasonable rules and statistical plans, which may be modified from time to time, and which shall be used by each insurer in the recording and reporting of its loss and country-wide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid the commissioner in determining whether rating systems comply with the standards set forth in section 431:14-103.  The rules and plans may also provide for the recording and reporting of expense experience items which are specially applicable to this State and are not susceptible of determination by a prorating of country-wide expense experience.  In promulgating such rules and plans, the commissioner shall give due consideration to:

     (1)  The rating systems on file with the commissioner; and

     (2)  The rules and the form of the plans used for such rating system in other states, in order that the rules and plans may be as uniform as is practicable among the several states and this State.

No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it.  The commissioner may designate one or more rating organizations or other agencies to assist the commissioner in gathering the experience and compiling the information.  The compilations shall be made available, subject to reasonable rules promulgated by the commissioner, to insurers and rating organizations.

     (b)  Reasonable rules and plans may be promulgated by the commissioner for the interchange of data necessary for the application of rating plans.

     (c)  In order to further the uniform administration of rate regulatory laws, the commissioner and every insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers, and rating organizations in any state and may consult with them with respect to ratemaking and the application of rating systems.

     (d)  The commissioner may make reasonable rules and regulations necessary to effect the purposes of the rating laws. [L 1987, c 347, pt of §2]

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     §431:14-115  False or misleading information.  No person or organization shall wilfully withhold information from or knowingly give false or misleading information to the commissioner, any statistical agency designated by the commissioner, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this article.  Violation of this section shall subject the one guilty of such violation to the penalties provided in section 431:14-117. [L 1987, c 347, pt of §2]

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     §431:14-116  Assigned risks.  Agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to, but who are unable to procure, such insurance through ordinary methods and the insurers may agree among themselves on the use of reasonable rate modifications for such insurance, the agreements and rate modifications to be subject to the approval of the commissioner; provided that this section shall not apply to workers' compensation insurance after December 31, 1996, or the date the domestic mutual insurance company established pursuant to [section] 431:14A-103 writes its first policy, whichever is later. [L 1987, c 347, pt of §2; am L 1996, c 261, §3]

Note

  For contingent repeal and reenactment, see L 1996, c 261, §10.

Cross References

  Discontinuation of assigned risks, see §431:14A-119.

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     [§431:14-116.5]  Assigned risk pool; experience rating plan.  No employer shall be placed in an assigned risk pool for workers' compensation insurance that does not utilize an experience rating plan that includes:

     (1)  Reasonable eligibility standards;

     (2)  Incentives for loss prevention;

     (3)  Sufficient premium differentials to encourage safety; and

     (4)  Provisions for reasonable and equitable limitations on the ability of policyholders to avoid the impact of past adverse claims experience through change of ownership, control, management, or operation. [L 1995, c 234, pt of §20]

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     §431:14-116.6  Assigned risk pool; residual market plan.  (a)  The commissioner shall establish a residual market plan to provide equitable apportionment of insurance that may be afforded to applicants who are in good faith entitled to, but who are unable to procure, such insurance through ordinary methods.  The residual market plan shall include rules for classification of risks and rates.

     (b)  Any insured placed with the plan shall be notified that insurance coverage is being afforded through the plan and not through the private market.  Written notification shall be given to the insured within ten days of placement with the plan.

     (c)  To ensure that plan rates are made adequate to pay claims and expenses, insurers shall develop a means of obtaining loss and expense experience at least annually.  Each insurer shall submit a report on loss and expense experience, when available, with the department in sufficient detail to make a determination of rate adequacy.

     (d)  The plan shall provide a formula allowing an insurer who voluntarily removes an insured risk from the residual market to be eligible for a take-out credit applicable against that insurer's residual market assessment base levied by the plan.  The terms and conditions of the take-out credit shall be as follows:

     (1)  An insurer shall receive a credit against its assessment base for the amount of the annual premium reflected in the insurer's financial statements for the respective calendar year.  This reported premium shall be stated on the same financial basis as the premiums that are reported for use in determining each insurer's residual market assessment base and shall be subject to subsequent adjustments and audits;

     (2)  The credit applicable to the residual market assessment base shall be as follows:

          (A)  First year:  $2 credit for every $1 of premium removed;

          (B)  Second year:  $1 credit for every $1 of premium removed; and

          (C)  Third year:  $1 credit for every $1 of premium removed;

     (3)  If the insurer keeps the insured risk out of the residual market for three years, that insurer shall receive credit for each of three years.  If the insurer does not write the business for three years, the insurer shall receive credit only for the period of time that the insurer covered the risk in the voluntary market.  Under no circumstances shall an insurer receive credit for risks returned to the residual market within one policy year;

     (4)  An insurer shall not return an insured taken from the residual market to the residual market after one year of coverage to subsequently reissue insurance to the insured to obtain the higher credit established for the first year of residual market removal in paragraph (2)(A);

     (5)  There shall be no maximum limit on credits received; provided that the credits shall not reduce the insurer's assessment base below zero;

     (6)  The kind and amount of coverage to be offered to voluntary risks shall not be less than those afforded by the policy being replaced, unless the kinds and amounts are refused by the insureds;

     (7)  The commissioner may approve loss sensitive rating plans for larger companies that generate more than $150,000 in insurance premiums; and

     (8)  The commissioner may adjust or terminate the credit program depending on market conditions; provided that any adjustment or termination shall not affect any credit earned prior to the adjustment or termination.

     (e)  The commissioner may adopt rules in accordance with chapter 91 to effectuate the purposes of this section.

     (f)  As used in this section, unless the context otherwise requires:

     "Plan" means the residual market plan.

     "Residual market assessment base" means the basis for assessing insurers for losses from the residual market, as provided for in a residual market plan. [L 1995, c 234, pt of §20; am L 1996, c 224, §2; am L 2019, c 111, §22]

Cross References

  Discontinuation of residual market plan, see §431:14A-118.

  Pooled insurance policies, see §431:10-222.5.

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     §431:14-117  Penalties.  (a)  The commissioner, if the commissioner finds any person or organization has violated any provision of this article, may impose a penalty of not more than $500 for each violation, but if the commissioner finds the violation to be wilful the commissioner may impose a penalty of not more than $5,000 for each such violation.  The penalties may be in addition to any other penalty provided by law.  For purposes of this section, any insurer using a rate for which the insurer has failed to file the rate, supplementary rating information, underwriting rules or guides, or supporting information as required by this article, shall have committed a separate violation for each day such failure to file continues.

     (b)  The commissioner may suspend the license of any rating organization or insurer which fails to comply with an order of the commissioner within the time limited by the order, or any extension thereof which the commissioner may grant.  The commissioner shall not suspend the license of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal from the order has expired or, if an appeal has been taken, until the order has been affirmed.  The commissioner may determine when a suspension of license shall become effective and it shall remain in effect for the period fixed by the commissioner unless the commissioner modifies or rescinds such suspension, or until the order upon which the suspension is based is modified, rescinded, or reversed.

     (c)  No penalty shall be imposed and no license shall be suspended or revoked except upon a written order of the commissioner, stating the commissioner's findings, made after a hearing held upon not less than ten days' written notice to the person or organization specifying the alleged violation. [L 1987, c 347, pt of §2; am L 1990, c 255, §13]

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     §431:14-118  Hearing procedure and judicial review.  (a)  Any insurer or rating organization aggrieved by any order or decision of the commissioner made without a hearing, may, within thirty days after notice of the order to the insurer or organization, make written request to the commissioner for a hearing.  The commissioner shall hold a hearing within twenty days after receipt of the request, and shall give not less than ten days' written notice of the time and place of the hearing.  Within fifteen days after the hearing, the commissioner shall affirm, reverse, or modify the commissioner's previous action, specifying the reasons for the commissioner's decision.  Pending the hearing and decision, the commissioner may suspend or postpone the effective date of the commissioner's previous action.

     (b)  Any final order or decision of the commissioner may be reviewed in the circuit court of the first circuit, and an appeal from the decision of the court shall lie to the intermediate appellate court, subject to chapter 602.  The review shall be taken and had in the manner provided in chapter 91. [L 1987, c 347, pt of §2; am L 2004, c 202, §49; am L 2006, c 94, §1; am L 2010, c 109, §1]

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     §431:14-119  REPEALED.  L 1997, c 81, §3.

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     §431:14-120  Additional powers for workers' compensation rate filing and ratemaking.  (a)  The commissioner shall review filings as soon as reasonably possible after they have been made to determine whether they meet the requirements of this article.

     (b)  Except as provided herein, each filing shall be on file for a waiting period of ninety days before the filing becomes effective.  The period may be extended by the commissioner for an additional period not to exceed fifteen days if the commissioner gives written notice within the waiting period to the insurer, rating organization, or advisory organization that made the filing that the commissioner needs the additional time for the consideration of the filing.  Upon the written application by the insurer, rating organization, or advisory organization, the commissioner may authorize a filing which the commissioner has reviewed to become effective before the expiration of the waiting period or any extension thereof.  A filing shall be deemed to meet the requirements of this article unless disapproved by the commissioner within the waiting period or any extension thereof.

     (c)  The commissioner may institute proceedings for appropriate relief including but not limited to proceedings to roll back current rates whenever it appears to the commissioner that an insurer or other interested persons regulated by this article affecting workers' compensation insurance rates has:

     (1)  Violated or failed to comply with any provisions of this part or of any state or federal law;

     (2)  Failed to comply with any rule, regulation, or other requirement of any other state or federal agency which affects workers' compensation insurance rates;

     (3)  Failed to comply with any provision of its charter or franchise;

     (4)  Set or applied any rates, classification, charges, or rules affecting workers' compensation insurance that are unreasonable or are unreasonably discriminatory;

     (5)  Failed to give appropriate consideration to investment income earned or realized by insurers, including investment income earned from unearned premium and loss reserve funds in making rates; or

     (6)  Failed to recognize good safety performance records of employers in setting premium rates and levels. [L 1987, c 347, pt of §2; am L 1997, c 81, §2; am L 1998, c 71, §3; am L 2000, c 264, §2]

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ARTICLE 14A

HAWAII EMPLOYERS' MUTUAL INSURANCE COMPANY

     §431:14A-101  Purpose.  The Hawaii employers' mutual insurance company is established to provide workers' compensation coverage to employers of the State at the highest level of service with the lowest possible cost, consistent with reasonable and applicable actuarial standards and the sound financial integrity of the company.  The purposes of the company are to provide the highest standard of workplace safety and loss prevention, to encourage employer involvement, and to be responsive to each policyholder's experience, practice, and operating effectiveness.  Nothing in this article shall create any implied third-party duty or impose additional legal liability for the company toward its members or beneficiaries beyond that explicitly created by this chapter, chapter 386, or common law, and generally applicable to all issuers of workers' compensation insurance in this State. [L 1996, c 261, pt of §2; am L 2010, c 52, §1]

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     §431:14A-102  Definitions.  As used in this article:

     "Administrator" means the chief executive officer of the Hawaii employers' mutual insurance company.

     "Board" means the board of directors of the Hawaii employers' mutual insurance company.

     "Company" means the Hawaii employers' mutual insurance company established by this article.

     "Council" means the Hawaii employers' mutual insurance company oversight council.

     "Investment manager" means any fiduciary, who has been designated by the board to manage, acquire, or dispose of the company's assets, a bank as defined by law, or an insurance company qualified to perform services under the laws of more than one state.

     "Qualified actuary" means a member of the American Academy of Actuaries who is either a fellow of the Casualty Actuarial Society or an Associate of the Casualty Actuarial Society who has five or more years of experience. [L 1996, c 261, pt of §2; am L 1998, c 252, §3; am L 2010, c 52, §2]

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     §431:14A-103  Hawaii employers' mutual insurance company, established.  (a)  The Hawaii employers' mutual insurance company is established as an independent corporation to provide workers' compensation insurance and related services to Hawaii employers.  The company may be reorganized as a nonprofit corporation under chapter 414D.

     (b)  The company shall be organized and operated as a domestic mutual insurance company.  The company shall comply with, unless specifically excluded, all requirements of the insurance code regarding a domestic mutual insurance company.  The company shall not be an agency of the State.  The company or its liabilities shall not be deemed to constitute debts or liabilities of the State of Hawaii or pledges of the full faith and credit of the State.  The company shall write workers' compensation insurance policies covering Hawaii employers as required or authorized by law and employers' liability to the same extent as any other private insurer.  The company shall not write other lines of insurance, reinsurance, or excess insurance.

     (c)  The company may insure Hawaii employers against their liability for compensation or damages for injury or death under the United States Longshoremen's and Harbor Workers' Compensation Act or federal or maritime laws like any other private insurer.

     (d)  The company's assets shall consist of real and personal property and shall include all premiums and other moneys paid to the company, all property, and other income acquired, earned, or otherwise gained by the use of premiums and other moneys paid to the company by deposits, investments, exchanges, and other transactions.  The company's assets shall be the sole property of the company and shall be used exclusively by the company for the operation and obligations of the company.

     (e)  Notwithstanding any other law to the contrary, the company shall be excluded from the surplus requirements of domestic mutual insurers from January 1, 1997, through December 31, 2007.  The company is also excluded during this time period from any assessments by the Hawaii hurricane relief fund otherwise required by section 431P-5(b)(8); provided that the exclusion shall apply to the first $25,000,000 of written premiums in each calendar year; and provided further that annual written premiums in excess of $25,000,000 shall be assessed in accordance with section 431P-5(b)(8).

     (f)  The company is exempt from participation, and shall not join, contribute financially to, nor be entitled to the protection of, any plan, association, guaranty, insolvency fund, or education and training fund authorized or required by this chapter.  Notwithstanding the foregoing exemptions, beginning January 1, 2008, the company shall participate in the property and liability insurance guaranty association, pursuant to sections 431:16-101 to 431:16-117; provided that the company shall meet the surplus requirements applicable to all other domestic insurers under chapter 431 effective January 1, 2008.

     (g)  On or after January 1, 1997, the company shall provide workers' compensation coverage to Hawaii employers otherwise entitled to coverage but not able to or not electing to purchase coverage in the voluntary insurance market, and not authorized, either individually or as a part of a group, to self-insure.  An authorized self-insured is eligible for coverage upon termination of self-insurance. [L 1996, c 261, pt of §2; am L 1997, c 300, §§3, 4; am L 1998, c 252, §4; am L 1999, c 18, §13; am L 2002, c 40, §70; am L 2004, c 122, §64]

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     §431:14A-104  Company divisions.  (a)  For purposes of providing representation on the board, the company shall consist of industry divisions and a high risk division.  Assignments to each division shall be made by the administrator with the approval of the board.  The initial company divisions shall include:

     (1)  Manufacturing and producers;

     (2)  Services, entertainment, and amusement;

     (3)  Professions;

     (4)  Construction;

     (5)  Wholesale and retail sales;

     (6)  Transportation and public utilities;

     (7)  Finance, insurance, and real estate; and

     (8)  High risk.

     (b)  An employer with two or more lost-time claims greater than $10,000, and a loss ratio greater than 1.0, over the immediately preceding three years shall be placed in the high risk division.

     (c)  The administrator, with the approval of the board, shall modify the requirements for placing employers in the high risk division if the qualifications result in the high risk division being limited to only those employers with measurable adverse loss ratios, demonstrated accident frequency records, or a demonstrated attitude of noncompliance with workplace safety and health programs or claims management requirements.

     (d)  The company shall give notice to each employer in the high risk division not less than thirty days prior to the policy renewal date requesting a report on the employer's lost-time claims for the policy year.  The report shall be used to determine the employer's qualification for placement in the high risk division.

     (e)  The company may apply a rating differential and charge a surcharge to any employer placed in the high risk division.  The company may make multiple rate filings, consistent with sound actuarial judgment for each classification.  These rate filings may be applied to risks in any division.

     (f)  The contingent liabilities of members provided in section 431:4-317 may be separated so that members assigned to the high risk division have a further contingent liability for deficits in the high risk division; provided that no contingent liability shall be in the aggregate for more than five times the annual premium rate of the member's policy nor for a term of more than one year. [L 1996, c 261, pt of §2; am L 1997, c 300, §5]