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Home My WebLink AboutCOM 0178.006 2020-2022 !1" R C' y' ('�(�l.�v tJ t°� i1 't i. ,COUNTY OF AWa�it 7971 HAY A' 19 A;19: 50 M y' r0.;..9,......,...,9,..„:,;. \.A ty %:\,-,e-c Y `°' N'rr^�, DAVID Y.IGE STATE OF HAWAII CATHERINE P.AWAKUNI COLON GOVERNOR DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS DIRECTOR JOSH GREEN INSURANCE DIVISION JO ANN M.UCHIDATAKEUCHI LIEUTENANT GOVERNOR DEPUTY DIRECTOR 335 MERCHANT STREET,ROOM 213,HONOLULU,HAWAII 96813 P.O.BOX 3614,HONOLULU,HAWAII 96811 COLIN M.HAYASHIDA Phone Number: (808)586-2790 INSURANCE COMMISSIONER Fax Number: (808)587-6714 1 insurance.hawaii.gov May 17, 2021 Maile David, Council Chair Hawai'i County Council 25 Aupuni Street, Suite 1402 Hilo, HI 96720: Dear Chair David: Re:. Resolution 75-21 (Draft 2) Thank-you for the Hawai'i County Council reaching out to the Insurance Division ("INS") for input on this important property insurance issue. Resolution 75-21 invites the INS to: 1. Conduct a study to address the lack of available and affordable property insurance, with such study to include, but not be limited to, all possible mechanisms, including a captive insurance company, that are actuarially feasible for providing affordable property insurance, either exclusively for Lava Zones 1 and 2 or in combination with other areas and-other risks; 2. Advise the Council if it (the INS) will conduct this study as requested, [if there are] any reasons preventing or inhibiting said study, and the anticipated time it would need to perform said study; and 3. Include direct discussions with County officials and Hawai'i Island stakeholders while conducting a potential study, in part to identify any possible benefits to the County from a captive insurance company model, including viable options for investments of conceivable surplus funds. Comm. No. tit Ref. To: Ref. Date MAY 2 1 2021 Maile David, Council Chair May 17, 2021 Page 2 For the reasons stated below, the INS is respectfully informing the County Council that it cannot conduct a study as requested in Resolution 75-21 (Draft 2). The Captive Insurance Branch ("CIB") of the INS is funded through HRS §431:19-101.8, the Captive Insurance Administrative Fund ("Fund"). This section directs that moneys be collected from all captive license-related operations and expended in a manner which regulates and benefits the captive industry as a whole. Resolution 75-21 requests that the INS initiate a study with the primary purpose of determining the feasibility of the creation of a County owned and operated captive. Because of the strict guidelines that the CIB must follow in expending moneys from the Fund and the fact that the Resolution is explicit as to the purpose of why the study is being requested (to help the County make a determination as to whether a government captive should be created and licensed), the CIB will not be able to justify the assembly of expertise or the release of funds for this study. Also, the CIB and INS will not be available to advise the County as to the actuarial feasibility of creating a captive or investment options as this would result in providing preferential treatment to a potential parent company (the County) in a manner which the CIB and INS has not provided before to any licensee or potential licensee. The extension of such preferential treatment to a potential licensee would cast doubt on both CIB's and INS's abilities to maintain impartial positions as regulators for all licensees. Similarly, another concern would be the potential conflict-of-interest issue that would arise if the CIB and INS conducted a study and provided this information to the County. The County's reliance on the provided information would bring into question whether the CIB and INS can be impartial in their regulatory administration of the proposed County captive. In conclusion, the INS respectfully suggests other options for the Council to explore in obtaining the information it seeks. These options include the contacting of the Hawaii Property Insurance Association, approved captive insurance managers active in the Hawai'i (See http://cca.hawaii.gov/ins/captive/), and licensed property and casualty insurers doing business in the County of Hawai'i. Sincerely, fr.rwr_.„4 COLIN M. HAYASHIDA Insurance Commissioner c: Honorable David Y. Ige, Governor Maile David, Council Chair May 17, 2021 Page 3 Catherine P. Awakuni Colon, Director Senator Laura Acasio Senator Rosalyn H. Baker Senator Lorraine Inouye Senator Dru Kanuha Senator Joy San Buenaventura Representative Greggor Ilagen Representative Aaron Ling Johanson Representative Jeanne Kapela Representative Nicole Lowen Representative Mark Nakashima Representative Richard Onishi Representative David Tarnas Representative Chris Todd Honorable Mitchell D. Roth, Mayor Deanna Sako, Director of the Department of Finance.