(a) In
order to qualify for the credit in section 431:7- , HRS, an insurer must meet
each of the following criteria at all times during the taxable year for which
the credit is claimed.
(1) The insurer is
authorized to do business in Hawaii by the insurance commissioner;
(2) The insurer maintains in Hawaii:
(A) All documentation in support of the
information shown on the insurer's annual statement filed with the insurance
commissioner, including general ledger accounts, and all information pertaining
to Hawaii operations, underwriting, premiums, and claims (including reserving
calculations);
(B) All information
compiled on Hawaii policyholders;
(C) All organizational documents such as
articles of incorporation, by-laws, and certificate of authority;
(D) Minutes of meetings of the board of
directors and the board's committees for the past three years;
(E) All agreements materially affecting
Hawaii business, including reinsurance bordereau;
(F) All information filed with the insurance
commissioner pertaining to rates currently in use or pending;
(G) A list of consumer complaints for the
past three years, including the date of complaint, the nature of the complaint,
the resolution of the complaint, and the date of resolution;
(H) A list of all lawsuits currently pending
against the insurer in the United States and the status of each suit;
(I) Written procedures and policies for
investments, underwriting, complaints, and marketing;
(J) Audit reports for the past three years,
including annual reports (with management letter) compiled by a certified
public accountant, annual actuarial reports with supporting data, and internal
audit reports; and
(K) A list of
the insurer's authorized agents in Hawaii together with their current
addresses, and for the preceding three years the gross amount of business the
agents wrote and the amount of commissions the agents were paid;
(3) The insurer employs in Hawaii
a person designated in writing by the insurer to represent the insurer in
examination matters. The insurer's designated representative, at minimum, must
be able to explain the insurer's annual statement, including the ledger
accounts, general ledger, and calculation of the trial balance on which the
statement is based, all changes in operations that affect liabilities, and all
agreements affecting Hawaii policyholders, including management agreements,
intercompany agreements, and reinsurance treaties. Additionally, the
representative must be able to access the insurer's computer systems and must
know what data is stored on the system and how to retrieve it; and
(4) The insurer maintains in Hawaii a
customer service center where the insurer's customers can meet in person with a
representative of the insurer who has the authority to promptly answer
questions and resolve problems concerning premium payments, the sales and
marketing of the insurance policy, the processing of a customer's application
for insurance, insurance policy coverage, including any endorsements,
underwriting decisions, including criteria for approval, and modification,
reinstatement, and cancellation of insurance policies.
(b) An insurer may meet the requirements of
subsection (a) (2) by either:
(1) Maintaining
in Hawaii originals or copies of the required books and records; or
(2) Providing a computer terminal by which
the required books and records can be accessed from Hawaii.
The information required by subsection (a) (2) (A) only may be
met by providing monthly computer listings and reports.
(c) The tax credit shall not be
applied against any penalties or interest assessed.
(d) The tax credit shall be claimed before
the end of the twelfth month following the close of the taxable year for which
the credit is claimed. The credit may be claimed on the insurer's interim
return or annual return. If the credit is claimed on the insurer's interim
return, the amount of the credit shall not exceed one per cent of the gross
premiums reported on the interim return. Credits which cannot be claimed on an
interim return must be claimed on the annual return.
