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State of Hawaii


Insurers council
sues the state

The group wants to block
a transfer of regulation funds


By Debra Barayuga
dbarayuga@starbulletin.com

The Hawaii Insurers Council wants to block the transfer of $2 million into the state's general fund from the insurance regulation fund.

The council filed a lawsuit yesterday in Circuit Court seeking an injunction, alleging that the transfer is illegal.

The suit contends state law prohibits such a transfer and that the money should only be used to regulate the insurance industry. Insurance companies pay into the fund to help regulate the industry.

Named as defendants in the suit were Gov. Ben Cayetano, Budget Director Stanley Shiraki, Commerce and Consumer Affairs Director Kathryn Matayoshi and Insurance Commissioner Wayne Metcalf.

The council alleges that its members will suffer irreparably because the funds will not be available to regulate the industry and that companies will be forced to pay additional assessments to make up for the $2 million transfer.

The council also contends that once the money is transferred into the general fund, there is no way of obtaining a refund of excess money that had been paid into the fund.

The Legislature determined that there was an excess of at least $4 million in the Insurance Regulation Fund.

In April, lawmakers passed a bill that authorized the transfer of $2 million on July 1 and another $2 million on Dec. 1.

Cayetano line-item vetoed the July 1 transfer, but not the Dec. 1 transfer.

Cayetano explained that "while the Legislature determined that there was $4 million in excess of the requirements of the fund and authorized the deposit of that amount to the general fund, I believe that a reduction of that magnitude would adversely affect the fund's ability to carry out its intended purpose."

Cayetano also earlier signed a law that merged the Insurance Regulation Fund into the Compliance Regulation Fund.

The Legislature's purpose was to ensure greater efficiency over the department's funds.

Shiraki said that while he was aware of the transfer, he declined comment because he had not yet seen the lawsuit. The transfer was one of many that the Legislature approved, "I assume to augment the general fund," he said.

Cayetano, Matayoshi and Metcalf were not available for comment.



State of Hawaii


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