(a) Subject to the limitation contained in this section and in addition to the powers that the commissioner has under article 2 relating to the examination of insurers, the commissioner may examine any insurer registered under § 431:11-105 as reasonably necessary to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis.

Terms Used In Hawaii Revised Statutes 431:11-107

  • Enterprise risk: means any activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including but not limited to anything that would cause the insurer's risk-based capital to fall into company action level as set forth in § 431:3-403 or would cause the insurer to be in hazardous financial condition as pursuant to section 431:15-103. See Hawaii Revised Statutes 431:11-102
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Insurance holding company system: consists of two or more affiliated persons, one or more of which is an insurer. See Hawaii Revised Statutes 431:11-102
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Person: means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, and any similar entity or any combination of the foregoing acting in concert, but shall not include any joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property, or a securities broker performing only the usual and customary broker's function. See Hawaii Revised Statutes 431:11-102
  • Subpoena: A command to a witness to appear and give testimony.
  • Testify: Answer questions in court.
  • Testimony: Evidence presented orally by witnesses during trials or before grand juries.
  • Ultimate controlling person: means a person who is not controlled by any other person. See Hawaii Revised Statutes 431:11-102
(b) To evaluate whether the operations of an ultimate controlling person, affiliate, or any combination of entities within the insurance holding company system may adversely and materially affect the operations, management, or financial condition of an insurer, the commissioner may order any insurer registered under § 431:11-105 to:

(1) Produce the records, books, or other information in the possession of the insurer or its affiliates that are reasonably necessary to determine compliance with this article; and
(2) Determine compliance with this article, produce information not in the possession of the insurer if the insurer can obtain access to that information pursuant to contractual relationships, statutory obligations, or other methods. In the event the insurer cannot obtain the information requested by the commissioner, the insurer shall provide the commissioner a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information. Whenever it appears to the commissioner that the detailed explanation is without merit, the commissioner may require, after notice and hearing, the insurer to pay a penalty of not less than $100 and not more than $500 for each day’s delay, or may suspend or revoke the insurer’s license.
(c) The commissioner may retain at the registered insurer’s expense attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner’s staff as shall be reasonably necessary to assist in the conduct of the examination under subsections (a) and (e). Any persons so retained shall be under the direction and control of the commissioner and shall act in a purely advisory capacity.
(d) Each registered insurer producing for examination records, books, and papers pursuant to subsections (a) and (e) shall be liable for and shall pay the expense of the examination in accordance with article 2.
(e) In the event that:

(1) An insurer fails to comply with an order pursuant to subsection (b); or
(2) The commissioner, upon evaluating whether the operations of an ultimate controlling person, affiliate, or any combination of entities within the insurance holding company system pursuant to subsection (b), has reasonable cause to believe that:

(A) The operations of the ultimate controlling person, affiliate, or any combination of entities within the insurance holding company system may adversely and materially affect the operations, management, or financial condition of an insurer; or
(B) The commissioner is unable to obtain relevant information from the controlled insurer, the commissioner may examine the ultimate controlling person, affiliate, or any combination of entities within the insurance holding company system.

The commissioner may also issue subpoenas, administer oaths, and examine under oath any person for purposes of determining compliance with this section. Upon the failure or refusal of any person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court. Every person shall be obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the State. Every person shall be entitled to the same fees and mileage, if claimed, as a witness in a court of record, which fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses, and their testimony, shall be itemized and charged against, and be paid by, the company being examined.

(f) An examination of affiliates by the commissioner under subsection (e) shall specify the grounds for the examination and shall be confined to those specified grounds.

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