HI Rev Stat § 386-194 (2021)
2021 Hawaii Revised Statutes|Title 21. Labor and Industrial Relations|386. Workers' Compensation Law|386-194 Qualifications for initial approval and continued authority to act as a workers' compensation self-insurance group.

  §386-194 Qualifications for initial approval and continued authority to act as a workers' compensation self-insurance group. (a) A proposed workers' compensation self-insurance group shall file with the insurance commissioner its application for a certificate of approval accompanied by a nonrefundable filing fee in the amount of $300. The application shall include the group's name, location of its principal office, date of organization, name and address of each member, and such other information as the insurance commissioner may reasonably require, together with the following:  (1) Proof of compliance with subsection (b);  (2) A copy of its articles of association, if any;  (3) A copy of agreements with the administrator and any service company;  (4) A copy of the bylaws of the proposed group;  (5) A copy of the agreement between the group and each member securing the payment of workers' compensation benefits, which shall include provision for payment of special compensation fund assessments as provided for under chapter 386, part IV, subpart C;  (6) Designation of the initial board of trustees and administrator;  (7) The address in this State where the books and records of the group will be maintained at all times;  (8) A pro forma financial statement on a form acceptable to the insurance commissioner showing the financial ability of the group to pay the workers' compensation obligations of its members; and  (9) Proof of payment to the group by each member of not less than twenty-five per cent of that member's first year estimated annual net premium on a date prescribed by the insurance commissioner. Each payment shall be considered part of the first year premium payment of each member if the proposed group is granted a certificate of approval.  (b) To obtain and maintain its certificate of approval, a workers' compensation self-insurance group shall comply with the following requirements as well as any other requirements established by law or rule:  (1) A combined net worth of all members of at least $1,000,000;  (2) Security in the form and amount prescribed by the insurance commissioner which shall be provided by either a surety bond, security deposit, financial security endorsement, or any combination thereof. If a surety bond is used to meet the security requirement, it shall be issued by a corporate surety company authorized to transact business in this State. If a security deposit is used to meet the security requirement, securities shall be limited to bonds or other evidences of indebtedness issued, assumed, or guaranteed by the United States or any agency or instrumentality thereof; certificates of deposits in a federally insured bank; shares or savings deposits in a federally insured savings and loan association or credit union; or any bond or security issued by any state and backed by the full faith and credit of that state. Any such securities shall be deposited with the director of finance and assigned to and made negotiable by the director of labor and industrial relations pursuant to a trust document acceptable to the insurance commissioner. Interest accruing on a negotiable security so deposited shall be collected and transmitted to the depositor, provided the depositor is not in default. A financial security endorsement, issued as part of an acceptable excess insurance contract, may be used to meet all or part of the security requirement. The bond, security deposit, or financial security endorsement shall be for the benefit of the State solely to pay claims and associated expenses and payable upon the failure of the group to pay workers' compensation benefits it is legally obligated to pay. The insurance commissioner may establish and adjust from time to time requirements for the amount of security based on differences among groups in their size, types of employment, years in existence, and other relevant factors;  (3) Specific and aggregate excess insurance in a form, in an amount, and by an insurance company acceptable to the insurance commissioner. The insurance commissioner may establish minimum requirements for the amount of specific and aggregate excess insurance based on differences among groups in their size, types of employment, years in existence, and other relevant factors, and may permit a group to meet this requirement by placing in a designated depository securities of the type referred to under paragraph (2);  (4) An estimated annual standard premium of at least $250,000;  (5) An indemnity agreement jointly and severally binding the group and each member thereof to meet the workers' compensation obligations of each member. The indemnity agreement shall be in a form prescribed by the insurance commissioner and shall include minimum uniform substantive provisions prescribed by the insurance commissioner. Subject to the insurance commissioner's approval, a group may add other provisions needed because of its particular circumstances;  (6) A fidelity bond for the administrator in a form and amount prescribed by the insurance commissioner; and  (7) A fidelity bond for the service company in a form and amount prescribed by the insurance commissioner. The insurance commissioner may also require the service company providing claim services to furnish a performance bond in a form and amount prescribed by the insurance commissioner.  (c) A group shall notify the insurance commissioner of any change in the information required to be filed under subsection (a) or in the manner of the group's compliance with subsection (b) no later than thirty days after such change.  (d) The insurance commissioner shall evaluate the information provided by the application required to be filed under subsection (a) to assure that no gaps in funding exist and that funds necessary to pay workers' compensation benefits will be available on a timely basis.  (e) The insurance commissioner shall act upon a completed application for a certificate of approval within sixty days. If, because of the number of applications, the insurance commissioner is unable to act upon an application within this period, the insurance commissioner shall have an additional sixty days to act under this subsection.  (f) The insurance commissioner shall issue to the group a certificate of approval upon finding that the proposed group has met all requirements or the insurance commissioner shall issue an order refusing such certificate setting forth reasons for such refusal upon finding that the proposed group does not meet all requirements.  (g) Each workers' compensation self-insurance group shall be deemed to have appointed the insurance commissioner as its attorney to receive service of legal process issued against it in this State. The appointment shall be irrevocable, shall bind any successor in interest, and shall remain in effect as long as there is in this State any obligation or liability of the group for workers' compensation benefits.  (h) Each group shall establish and maintain a safety and accident prevention program for which the insurance commissioner shall prescribe minimum requirements. [L 1986, c 304, pt of §1]