Hawaii lands first foreign insurer
Dongbu is the first to take advantage of a two-year-old state law
When Dongbu Insurance Co. celebrated its grand opening in Hawaii yesterday at the Royal Hawaiian Hotel, the event was more than just a public-relations show to kick off a company's local marketing campaign. The festivities also marked the arrival of a new type of insurer in Hawaii.
Dongbu is the first company to use a two-year-old law that allows foreign insurance companies to set up shop in Hawaii. Known as a "port-of-entry" or "state-of-entry" law, it was passed in part to foster the Aloha State's rapidly growing professional and business services sector.
According to the U.S. Department of Labor's Bureau of Labor Statistics, the number of professional and business services jobs in Honolulu grew by 35 percent over the past 10 years, from 46,800 in August 1997 to 63,300 in August 2006.
J.P. Schmidt, Hawaii's insurance commissioner, believes Hawaii's state-of-entry law will further boost the business-services segment, in part because Hawaii is one of just 10 states with such a law.
"Most states, when they get a request or inquiry from a foreign insurer, they refer them to New York," Schmidt said.
While Michigan's state-of-entry law has made it a center for Canadian insurers wanting to set up in the United States, Schmidt said Hawaii's location makes it a natural for Pacific Rim firms.
Such a vision is more than a pipe dream. A law allowing so-called captive insurance companies to be set up in Hawaii has fostered a community of 161 such companies. Captive insurers are small insurance companies that big corporations set up to ensure themselves. Among those running captive insurers here are companies like Sanyo, Nike, Intel and eBay, Schmidt said.
Hawaii captives have total assets of $6.5 billion and write $1.5 billion in annual premiums, Schmidt said. And although the captives typically don't have big staffs here, they do hire local lawyers and accountants. Plus they rely on local banks for investment services, Schmidt said.
Dongbu's entry into Hawaii does more than plant seeds for a new industry. It also has the obvious benefit of providing more competition in the local insurance market. Dongbu, which is part of a giant Seoul-based conglomerate, received its state operating license months ago and has been writing policies since May, Schmidt said.
That was around the time that the parent of Hawaiian Insurance & Guaranty Co. Ltd. began running into financial problems that caused policyholders to defect from the company. Dongbu gave home and auto owners another option at a critical time, Schmidt said.
"They've already helped us a lot," he said.