(a) The commissioner shall gather information from data currently available to the insurance division, as well as surveys and required reporting requirements, information collected by the National Association of Insurance Commissioners and a variety of other sources in both the public and private sectors, information from within and outside the insurance industry from objective sources, information from websites for insurers, agents, and other organizations, and information from other sources; provided that prior to use, the sources are published at least annually in a bulletin or circular.

The information shall be analyzed to develop a baseline understanding of the marketplace and to identify for further review insurers or practices that deviate significantly from the norm or that may pose a potential risk to the insurance consumer. The commissioner shall use procedures that are substantially similar to the National Association of Insurance Commissioners’ guidelines on market analysis as one resource in performing this analysis.

The commissioner shall use the following policies and procedures in performing the analysis required under this section:

Terms Used In Hawaii Revised Statutes 431:2D-104

  • Baseline: Projection of the receipts, outlays, and other budget amounts that would ensue in the future without any change in existing policy. Baseline projections are used to gauge the extent to which proposed legislation, if enacted into law, would alter current spending and revenue levels.
  • Commissioner: means the insurance commissioner of the State of Hawaii. See Hawaii Revised Statutes 431:2D-102
  • Interrogatories: Written questions asked by one party of an opposing party, who must answer them in writing under oath; a discovery device in a lawsuit.
  • Market analysis: means a process whereby market conduct surveillance personnel collect and analyze information from filed schedules, surveys, required reports, and other sources to develop a baseline and to identify patterns or practices of insurers licensed to do business in this State that deviate significantly from the norm or that may pose a potential risk to the insurance consumer. See Hawaii Revised Statutes 431:2D-102
  • Market conduct action: means any of the full range of activities that the commissioner may initiate to assess the market and practices of individual insurers, beginning with market analyses and extending to targeted examinations. See Hawaii Revised Statutes 431:2D-102
  • Market conduct examination: means the examination of the insurance operations of an insurer licensed to do business in this State to evaluate compliance with the applicable laws and rules of this State. See Hawaii Revised Statutes 431:2D-102
  • National Association of Insurance Commissioners: means the organization of insurance regulators from the fifty states, the District of Columbia, and the four United States territories. See Hawaii Revised Statutes 431:2D-102
(1) Identify key lines of business for systematic review; and
(2) Identify companies for further analysis based on available information.
(b) If the analysis compels the commissioner to inquire further into a particular insurer or practice, the following continuum of market conduct actions may be considered prior to conducting a targeted, on-site market conduct examination. The action selected shall be made known to the insurer in writing. These actions may include but are not limited to:

(1) Correspondence with the insurer;
(2) Insurer interviews;
(3) Information gathering;
(4) Policy and procedure reviews;
(5) Interrogatories; and
(6) Review of insurer self-evaluation and compliance programs, including membership in an organization such as a best-practice organization that has as its central mission the promotion of high ethical standards in the marketplace.
(c) The commissioner shall select a market conduct action that is cost-effective for the insurance division and the insurer, while still protecting the insurance consumer.
(d) The commissioner shall take those steps reasonably necessary to:

(1) Eliminate requests for information that duplicate:

(A) Information provided as part of an insurer’s annual financial statement, the annual market conduct statement of the National Association of Insurance Commissioners, or other required schedules, surveys, or reports that are regularly submitted to the commissioner; or
(B) Data requests made by other states if that information is available to the commissioner, unless the information is state-specific; and
(2) Coordinate market conduct actions and findings with other states.
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