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2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-102 Persons covered.

§431:15-102 Persons covered.
The proceedings authorized by this article may be applied to:
(1) All insurers and reinsurers who are doing, or have done, an insurance business in this State, and against whom claims arising from that business may exist now or in the future;
(2) All insurers who purport to do an insurance business in this State;
(3) All insurers who have insureds resident in this State;
(4) All other persons organized or in the process of organizing with the intent to do an insurance business in this State;
(5) All nonprofit service plans and all fraternal benefit societies and beneficial societies subject to chapter 432, Benefit Societies; and
(6) All title insurance companies, subject to article 20. [L 1987, c 347, pt of §2]
Case Notes
This section creates an exception to the general rule established by §432:1-101 that mutual benefit societies are typically exempt from provision of the Insurance Code; thus, this article applies to mutual benefit societies. 99 H. 53, 52 P.3d 823 (2002).
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-105 Injunctions and orders.

§431:15-105 Injunctions and orders.
(a) Any receiver appointed in a proceeding under this article may, at any time apply for and the circuit court of the first circuit may grant, under the relevant provisions of the Hawaii Rules of Civil Procedure, any injunctions, any restraining orders, and other orders as may be deemed necessary and proper to prevent:
(1) The transaction of further business;
(2) The transfer of property;
(3) Interference with the receiver or with a proceeding under this article;
(4) Waste of the insurer's assets;
(5) Dissipation and transfer of bank accounts;
(6) The institution or further prosecution of any actions or proceedings;
(7) The obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets or its policyholders;
(8) The levying of execution against the insurer;
(9) The making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer;
(10) The withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or
(11) Any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of any proceeding under this article.
(b) The receiver may apply to any court outside of this State for the relief described in subsection (a). [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-106 Cooperation of officers and employees.

§431:15-106 Cooperation of officers and employees.
(a) Any officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the commissioner or the receiver in any proceeding under this article or any investigation preliminary to the proceeding.
(b) No person shall obstruct or interfere with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental to the proceeding.
(c) This section does not make it illegal to resist by legal proceedings the petition for liquidation or other delinquency proceedings, or other orders.
(d) Any person included within subsection (a) who fails to cooperate with the commissioner, or any person who obstructs or interferes with the commissioner in the conduct of any delinquency proceeding or any investigation preliminary or incidental to the proceeding, or who violates any order the commissioner issued validly under this article may:
(1) Be sentenced to pay a fine not exceeding $10,000 or to be imprisoned for a term of not more than one year, or both; or
(2) After a hearing, be subject to the imposition by the commissioner, of a civil penalty not to exceed $10,000 and shall be subject to the revocation or suspension of any insurance licenses issued by the commissioner.
(e) As used in this section:
"Cooperate" includes but is not limited to the following:
(1) To reply promptly in writing to any inquiry from the commissioner or the receiver requesting a reply; and
(2) To make available and deliver to the commissioner or receiver any books, accounts, documents, or other records, or information or property of or pertaining to the insurer and in its possession, custody, or control.
"Person" includes any person who exercises control directly or indirectly over activities of an insurer through any holding company or other affiliate of the insurer. [L 1987, c 347, pt of §2; am L 2019, c 111, §23]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-107 Commissioner's reports.

§431:15-107 Commissioner's reports.
The commissioner shall make and file annual reports and any other required reports for the companies proceeded against under this article in the manner and form and within the time required by law of insurers authorized to do business in this State. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-108 Continuation of delinquency proceedings.

§431:15-108 Continuation of delinquency proceedings.
This article applies to proceedings commenced after July 1, 1988. [L 1987, c 347, pt of §2]
Revision Note
"July 1, 1988" substituted for "the effective date of the insurance code" pursuant to §23G-15.
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-202 Court's seizure order.

§431:15-202 Court's seizure order.
(a) The commissioner may file in the circuit court of the first judicial circuit of this State a petition alleging, with respect to a domestic insurer:
(1) That there exist any grounds that would justify a court order for a formal delinquency proceeding against an insurer under section 431:15-301 or section 431:15-306;
(2) That the interests of policyholders, creditors or the public will be endangered by delay; and
(3) The contents of an order deemed necessary by the commissioner.
(b) Upon a filing under subsection (a), the court may issue forthwith, ex parte and without a hearing, the requested order which shall direct the commissioner to take possession and control of all or a part of the property, books, accounts, documents, and other records of the insurer, and of the premises occupied by it for transaction of its business, and until further order of the court, enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from transaction of its business except with the written consent of the commissioner.
(c) The court shall specify in the order what its duration shall be, which shall be the time as the court deems necessary for the commissioner to ascertain the condition of the insurer. On motion of either party or on its own motion, the court from time to time may hold such hearings as it deems desirable after such notice as it deems appropriate, and may extend, shorten or modify the terms of the seizure order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under section 431:15-301 or section 431:15-306 after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under section 431:15-301 or section 431:15-306 shall vacate the seizure order.
(d) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer.
(e) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of the order for a hearing and review of the order. The court shall hold the hearing and review not more than fifteen days after the request. A hearing under this subsection may be held privately in chambers and it shall be so held if the insurer proceeded against so requests.
(f) If, at any time after the issuance of an order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given shall stay the effect of an order previously issued by the court. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-203 Confidentiality of hearings.

§431:15-203 Confidentiality of hearings.
In all proceedings and judicial reviews thereof under section 431:15-201 and section 431:15-202, all records of the insurer, other documents, and all files, court records, and papers of the insurance division of the department of commerce and consumer affairs, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless the circuit court of the first judicial circuit of this State, after hearing arguments from the parties in chambers, orders otherwise, or unless the insurer requests that the matter be made public. Until the court order, all papers filed with the court shall be confidential. [L 1987, c 347, pt of §2]
Case Notes
Section establishes a duty governing the conduct of the insurance commissioner and court personnel who are involved in investigations conducted by the commissioner and cannot form a basis for the imposition of liability upon third parties who may inadvertently come into possession of material deemed "confidential" pursuant to this section's terms. 89 H. 254, 971 P.2d 1089 (1999).
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-302 Rehabilitation orders.

§431:15-302 Rehabilitation orders.
(a) An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this State, shall appoint the commissioner and the commissioner's successors in office the rehabilitator, and shall direct the rehabilitator forthwith to take possession of the assets of the insurer, and to administer them under the general supervision of the court. The filing or recording of the order with the clerk of the circuit court of the first judicial circuit or at the bureau of conveyances, shall impart the same notice as evidence of title. The order to rehabilitate the insurer shall by operation of law vest title to all assets of the insurer in the rehabilitator.
(b) Any order issued under this section shall require accounting to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in its order.
(c) Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-304 Actions by and against rehabilitator.

§431:15-304 Actions by and against rehabilitator.
(a) Any court in this State before which any action or proceeding in which the insurer is a party or is obligated to defend a party is pending when a rehabilitation order against the insurer is entered, shall stay the action or proceeding for ninety days and such additional time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take such action respecting the pending litigation as the rehabilitator deems necessary in the interests of justice and for the protection of creditors, policyholders and the public. The rehabilitator shall immediately consider all litigation pending outside this State and shall petition the courts having jurisdiction over the litigation for stays whenever necessary to protect the estate of the insurer.
(b) No statute of limitations or defense of laches shall run with respect to any action by or against an insurer between the filing of a petition for appointment of a rehabilitator for that insurer and the order granting or denying that petition. Any action by or against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty days after the order [of] rehabilitation is entered or the petition is denied. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-305 Termination of rehabilitation.

§431:15-305 Termination of rehabilitation.
(a) Whenever the commissioner believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders or the public, or would be futile, the commissioner may petition the circuit court of the first judicial circuit for an order of liquidation. A petition under this subsection shall have the same effect as a petition under section 431:15-306. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition and may order payment from the estate of the insurer of such costs and other expenses of defense as justice may require.
(b) The rehabilitator may at any time petition the court for an order terminating rehabilitation of an insurer. The court shall also permit the directors of the insurer to petition the court for an order terminating rehabilitation of the insurer, and may order payment from the estate of the insurer of such costs and other expenses of such petition as justice may require. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under section 431:15-301 no longer exist, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make that finding and issue that order at any time upon its own motion. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-306 Grounds for liquidation.

§431:15-306 Grounds for liquidation.
The commissioner may petition the circuit court of the first judicial circuit for an order directing the commissioner to liquidate a domestic insurer or an alien insurer domiciled in this State on any ground on which the commissioner may apply for an order of rehabilitation under section 431:15-301, whenever the commissioner believes that attempts to rehabilitate the insurer would substantially increase the risk of loss to its creditors, its policyholders or the public, or would be futile, or that rehabilitation would serve no useful purpose, whether or not there has been a prior order directing the rehabilitation of the insurer. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-307 Liquidation orders.

§431:15-307 Liquidation orders.
(a) An order to liquidate the business of a domestic insurer shall appoint the commissioner and the commissioner's successors in office liquidator, and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the general supervision of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the clerk of the circuit court of the first judicial circuit and at the bureau of conveyances shall impart the same notice as evidence of title.
(b) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation, except as provided in section 431:15-308 and section 431:15-327.
(c) An order to liquidate the business of an alien insurer domiciled in this State shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States shall be the only assets and business included therein.
(d) At the time of petitioning for an order of liquidation, or at any time thereafter, the commissioner, after making appropriate findings of an insurer's insolvency, may petition the court for a judicial declaration of such insolvency. After providing such notice and hearing as it deems proper the court may make the declaration.
(e) Any order issued under this section shall require accounting to the court by the liquidator. Accountings shall be at such intervals as the court specifies in its order. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-308 Continuance of coverage.

§431:15-308 Continuance of coverage.
(a) All policies, other than life or accident and health or sickness insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of:
(1) A period of thirty days from the date of entry of the liquidation orders;
(2) The expiration of the policy coverage;
(3) The date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy; or
(4) The liquidator has effected a transfer of the policy obligation pursuant to section 431:15-310(a)(8).
(b) An order of liquidation under section 431:15-307(a) shall terminate coverages at the time specified in subsection (a) for purposes of any other statute.
(c) Policies of life or accident and health or sickness insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty fund or association, or foreign guaranty fund or association. Policies of life or accident and health or sickness insurance or annuities or any period or coverage of such policies not covered by a guaranty fund or association or foreign guaranty fund or association shall terminate under subsections (a) and (b). [L 1987, c 347, pt of §2; am L 2003, c 212, §108]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-309 Dissolution of insurer.

§431:15-309 Dissolution of insurer.
The commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this State at the time the commissioner applies for a liquidation order. The court shall order dissolution of the corporation upon petition by the commissioner, upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent, but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-311 Notice to creditors and others.

§431:15-311 Notice to creditors and others.
(a) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible by:
(1) First class mail and by telegram, telephone, or other electronic communication to the commissioner of each jurisdiction in which the insurer is doing business;
(2) First class mail to any guaranty association or foreign guaranty association who is or may become obligated as a result of the liquidation;
(3) First class mail to all insurance producers of the insurer;
(4) First class mail to all persons known or reasonably expected to have claims against the insurer including all policyholders, at their last known address as indicated by the records of the insurer; and
(5) Publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator deems appropriate.
(b) Notice to potential claimants under subsection (a) shall require claimants to file with the liquidator their claims together with proper proofs thereof under section 431:15-326, on or before a date the liquidator shall specify in the notice. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants shall have a duty to keep the liquidator informed of any changes of address.
(c) If notice is given in accordance with this section, the distribution of assets of the insurer under this article shall be conclusive with respect to all claimants, whether or not they received notice. [L 1987, c 347, pt of §2; am L 2002, c 155, §85; am L 2003, c 212, §109]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-312 Duties of producers.

§431:15-312
Duties of producers.
(a) Every person who receives notice in the form prescribed in section 431:15-311 that an insurer whom the producer represents is the subject of a liquidation order, shall within fifteen days of such notice give notice of the liquidation order. The notice shall be sent by first class mail to the last address contained in the producer's records to each policyholder or other person named in any policy issued through the producer by the insurer, if the producer has a record of the address of the policyholder or other person. A policy shall be deemed issued through a producer if the producer has a property interest in the expiration of the policy, or if the producer has had possession of a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another. The written notice shall include the name and address of the insurer, the name and address of the producer, identification of the policy impaired and the nature of the impairment including termination of coverage, as described in section 431:15-308. Notice by a producer satisfies the notice requirement for any producers under contract to it. Each producer obligated to give notice under this section shall file a report of compliance with the liquidator.
(b) Any producer failing to give notice or file a report of compliance as required in subsection (a) may be subject to payment of a penalty of not more than $1,000 and such producer's license may be suspended, the penalty to be imposed after a hearing held by the commissioner.
(c) The liquidator may waive the duties imposed by this section if the liquidator determines that other notice to the policyholders of the insurer under liquidation is adequate. [L 1987, c 347, pt of §2; am L 2002, c 155, §86]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-314 Collection and list of assets.

§431:15-314 Collection and list of assets.
(a) As soon as practicable after the liquidation order, but not later than one hundred twenty days thereafter, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented from time to time as the liquidator may determine. One copy shall be filed in the office of the clerk of the circuit court of the first judicial circuit and one copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed.
(b) The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation.
(c) A submission to the court for disbursement of assets in accordance with section 431:15-324 fulfills the requirements of subsection (a). [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-315 Fraudulent transfers prior to petition.

§431:15-315 Fraudulent transfers prior to petition.
(a) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this article is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this article, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor or obligee for a present fair equivalent value, and except that any purchaser, lienor or obligee, who in good faith has given a consideration less than fair for such transfer, lien or obligation, may retain the property, lien or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor or obligee.
(b)(1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under section 431:15-317(c).
(2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
(4) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.
(c) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection (a) if:
(1) The transaction consists of the termination, adjustment or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transaction, unless the reinsurer gives a present fair equivalent value for the release; and
(2) Any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-316 Fraudulent transfer after petition.

§431:15-316 Fraudulent transfer after petition.
(a) After a petition for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the bureau of conveyances. The exercise by a court of the United States or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.
(b) After a petition for rehabilitation or liquidation has been filed, and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:
(1) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.
(2) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon the receiver's order, with the same effect as if the petition were not pending.
(3) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith.
(4) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator.
(c) Nothing in this article shall impair the negotiability of currency or negotiable instruments. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-318 Claims of holders of void or voidable rights.

§431:15-318 Claims of holders of void or voidable rights.
(a) No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance, voidable under this article, shall be allowed unless the creditor surrenders the preference, lien, conveyance, transfer, assignment or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within thirty days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.
(b) A claim allowable under subsection (a) by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment, or encumbrance, may be filed as an excused late filing under section 431:15-325 if filed within thirty days from the date of the avoidance, or within the further time allowed by the court under subsection (a). [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-319 Setoffs and counterclaims.

§431:15-319 Setoffs and counterclaims.
(a) Mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this article shall be set off and the balance only shall be allowed or paid, except as provided in subsection (b) and section 431:15-323.
(b) No setoff or counterclaim shall be allowed in favor of any person where:
(1) The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer;
(2) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff;
(3) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or
(4) The obligation of the person is to pay premiums whether earned or unearned, to the insurer. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-320 Assessments.

§431:15-320 Assessments.
(a) As soon as practicable but not more than two years from the date of an order of liquidation under section 431:15-307 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth:
(1) The reasonable value of the assets of the insurer;
(2) The insurer's probable total liabilities;
(3) The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment; and
(4) A recommendation as to whether or not an assessment should be made and in what amount.
(b)(1) Upon the basis of the report provided in subsection (a), including any supplements and amendments thereto, the circuit court of the first judicial circuit may levy one or more assessments against all members of the insurer who are subject to assessment.
(2) Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount that the sum of the probable liabilities, the expenses of administration, and the estimated cost of collection of the assessment, exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically.
(c) After levy of assessment under subsection (b) the liquidator shall issue an order directing each member who has not paid the assessment pursuant to the order, to show cause why the liquidator should not pursue a judgment therefor.
(d) The liquidator shall give notice of the order to show cause by publication and by first class mail to each member liable thereunder, mailed to each member's last known address as it appears on the insurer's records, at least twenty days before the return day of the order to show cause.
(e)(1) If a member does not appear and serve duly verified objections upon the liquidator on or before the return day of the order to show cause under subsection (c), the court shall make an order adjudging the member liable for the amount of the assessment against the member, pursuant to subsection (c), together with costs, and the liquidator shall have a judgment against the member therefor.
(2) If on or before such return day, the member appears and serves duly verified objections upon the liquidator, the commissioner may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. In the event that the commissioner determines that such objections do not warrant relief from assessment, the member may request the court to review the matter and vacate the order to show cause.
(f) The liquidator may enforce any order or collect any judgment under subsection (e) by any lawful means. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-321 Reinsurer's liability.

§431:15-321 Reinsurer's liability.
The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made directly to an insured or other creditor shall not diminish the reinsurer's obligation to the insurer's estate except when the reinsurance contract provided for direct coverage of a named insured and the payment was made in discharge of that obligation. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-322 Applicability of claims settlement provisions to loss claims.

§431:15-322 Applicability of claims settlement provisions to loss claims.
Section 431:15-310(a)(18), section 431:15-325 through section 431:15-328, section 431:15-333, section 431:15-403(c), section 431:15-406, and section 431:15-407 do not apply to loss claims to the extent that they are subject to article 16 or to corresponding laws of other states. [L 1987, c 347, pt of §2]
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-323 Recovery of premiums owed.

§431:15-323 Recovery of premiums owed.
(a) A producer, premium finance company, or any other person, other than the insured, responsible for the payment of a premium shall be obligated to pay upon written demand by the liquidator any unpaid collected premium held by the person, whether earned or unearned, as shown on the records of the insurer. A producer, premium finance company, or any other person shall have no obligation to pay an uncollected, unpaid, unearned premium to the liquidator. The liquidator shall also have the right to recover from the person any part of an unearned premium that represents commission actually paid or credited to the person. Credits or setoffs or both shall not be allowed to a producer or premium finance company for any amounts advanced to the insurer by the producer or premium finance company on behalf of, but in the absence of a payment by, the insured. An insured shall be obligated to pay, upon written demand by the liquidator, any unpaid, earned premium due the insurer as shown on the records of the insurer.
(b) The circuit court of the first judicial circuit shall have original but not exclusive jurisdiction of all civil proceedings to hear and determine the rights of any producer, premium finance company, insured, liquidator, or any other person under this section. The circuit court of the first judicial circuit may provide that any and all proceedings arising under this section shall be referred to the judge presiding over the delinquency proceeding of the insurer. In lieu of a separate action for the collection of unpaid premiums, a producer, premium finance company, insured, or any other person who contests their liability for unpaid premiums may voluntarily submit their claim and dispute to the judge presiding over the delinquency proceeding of the insurer for summary disposition.
(c) The commissioner may take administrative action in accordance with applicable law against a producer, premium finance company, or any other person the commissioner believes is in violation of subsection (a) by suspending, revoking, or refusing to renew an insurance license, or by levying a civil penalty in an amount not to exceed $1,000 for each violation.
(d) Any appeal of the commissioner's decision pursuant to subsection (c) shall be made pursuant to chapter 91 to the circuit court of the first judicial circuit. [L 1987, c 347, pt of §2; am L 1993, c 165, §1; am L 2002, c 155, §87; am L 2005, c 132, §6]
Case Notes
As proceedings under this section are not in the nature of assumpsit, trial court did not err in denying insurance commissioner attorneys' fees under §607-14 in suit against customer of liquidated mutual benefit society. 99 H. 53, 52 P.3d 823 (2002).
Nothing in the language of §478-3 or this section precluded an award of post-judgment interest to insurance commissioner upon final judgment awarding commissioner the unpaid premiums from customer of liquidated mutual benefit society. 99 H. 53, 52 P.3d 823 (2002).
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-325 Filing of claims.

§431:15-325 Filing of claims.
(a) Proof of all claims shall be filed with the liquidator in the form required by section 431:15-326 on or before the last day for filing specified in the notice required under section 431:15-311, except that proof of claims for cash surrender values or other investment value in life insurance and annuities need not be filed unless the liquidator expressly so requires.
(b) The liquidator may permit a claimant making a late filing to share in distributions, whether past or future, as if the claimant were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation, under the following circumstances:
(1) The existence of the claim was not known to the claimant and that the claimant filed such claim as promptly as reasonably possible after learning of it;
(2) A transfer to a creditor was avoided under section 431:15-315 through section 431:15-317, or was voluntarily surrendered under section 431:15-318, and that the filing satisfies the conditions of section 431:15-318; and
(3) The valuation under section 431:15-331, of security held by a secured creditor shows a deficiency, which is filed within thirty days after the valuation.
(c) The liquidator shall permit late filing claims to share in distributions, whether past or future, as if they were not late, if such claims are claims of a guaranty fund or association, or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, subsequent to the last day for filing where such payments were made and expenses incurred as provided by law.
(d) The liquidator may consider any claim filed late which is not covered by subsection (b), and permit it to receive distributions which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late filing claimant shall receive, at each distribution, the same percentage of the amount allowed on the claimant's claim as is then being paid to claimants of any lower priority. This shall continue until the claimant's claim has been paid in full.
(e) Claims by guaranty funds or associations, or foreign guaranty funds or associations shall be filed periodically by the funds or associations pursuant to rules adopted by the commissioner. These claims shall share in all subsequently declared distributions as if they were not late. [L 1987, c 347, pt of §2]
Case Notes
In a claim filed by former parent company of liquidated life insurer that the company remained the sole shareholder of the insurer following liquidator's alleged failure to validly forfeit the company's surrendered shares, liquidation court did not abuse its discretion in concluding that the claim was time barred because the company waited more than eleven years before notifying liquidator of the company's claim against the insurer's estate. 135 H. 49, 346 P.3d 118 (2015).
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-326 Proof of claim.

§431:15-326 Proof of claim.
(a) Proof of claim shall consist of a statement signed by the claimant that includes all of the following that are applicable:
(1) The particulars of the claim including the consideration given for it;
(2) The identity and amount of the security on the claim;
(3) The payments made on the debt, if any;
(4) That the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to the claim;
(5) Any right of priority of payment or other specific right asserted by the claimant;
(6) A copy of the written instrument which is the foundation of the claim; and
(7) The name and address of the claimant and the attorney who represents the claimant, if any.
(b) No claim need be considered or allowed if it does not contain all the information in subsection (a) which may be applicable. The liquidator may require that a prescribed form be used, and may require that other information and documents be included.
(c) At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subsection (a) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.
(d) No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four months before the filing of the petition need be considered as evidence of liability or of the quantum of damages.
(e) All claims of a guaranty fund or association or foreign guaranty fund or association shall be in such form and contain such substantiation as may be agreed to by the fund or association and the liquidator. [L 1987, c 347, pt of §2]
Case Notes
Although letter written to liquidator by former parent company of liquidated life insurer did not fully comply with the proof of claim elements of this section, the omissions, although not insignificant, were not of a nature to deprive liquidator of an understanding of the critical elements of the company's claim against the insurer's estate, as liquidator was able to identify who submitted the claim, the amount of the claim, and the grounds of the claim. Therefore, the letter sufficiently complied with the proof of claim requirements to permit liquidator to adjudicate the claim. 135 H. 49, 346 P.3d 118 (2015).
The purpose and language of the Insurers Supervision, Rehabilitation and Liquidation Act support a broad interpretation of this section, such that the liquidator's discretionary powers include the acceptance of claims that are in substantial compliance with the proof of claim elements of this section. 135 H. 49, 346 P.3d 118 (2015).
2023 Hawaii Revised Statutes › Title 24. Insurance › 431. Insurance Code › 431:15-327 Special claims.

§431:15-327 Special claims.
(a) The claim of a third party which is contingent only on first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.
(b) Any claim that would have become absolute if there had been no termination of coverage under section 431:15-308, and that was not covered by insurance acquired to replace the terminated coverage, shall be allowed as if the coverage had remained in effect, unless at least ten days before the insured event occurred either the claimant had actual notice of the termination or notice was mailed to the claimant as prescribed by section 431:15-311. If allowed, the claim shall share in distributions under section 431:15-332(7).
(c) A claim may be allowed even if it is contingent, if it is filed in accordance with section 431:15-326(b). It may be allowed and may participate in all distributions declared after it is filed, to the extent that it does not prejudice the orderly administration of the liquidation.
(d) Claims that are due except for the passage of time are treated as absolute claims, except that where justice requires the liquidator may discount them at the rate of interest available on United States treasury securities of approximately the same maturity.
(e) A guaranty fund or association, or foreign guaranty association may file a claim with the liquidator for all claims to which the fund or association has been subrogated.
(f) Claims made under employment contracts by directors, principal officers, or persons who, in fact, perform similar functions or have similar powers, are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under section 431:15-302 or section 431:15-307. [L 1987, c 347, pt of §2; am L 2004, c 122, §70]