HAR §16-7-3. Members’ participation

(a) For the purposes of determining the extent of participation by members, insurers under common management or ownership shall constitute a single member. (b) All insurers which are members of the plan shall participate in its writings, expenses, servicing allowance, management fees, and losses in proportion that the net direct premiums as defined in section 435C-2(3), HRS, of each member (excluding that portion of premiums attributable to the operation of the plan) written during the preceding calendar year bears to the aggregate net direct premiums written in this State by all members of the plan; provided that any profit realized shall either be considered within the rating structure of the plan or returned to the policyholders as a dividend. When the plan stops writing insurance any ultimate net profit, after deducting contributions, including initial expenses, shall be returned to the policyholders as a dividend. Each insurer’s participation in the plan shall be determined annually on the basis of net direct premiums written during the preceding calendar year, as reported in the annual statement and other reports filed by the insurer with the insurance commissioner. (c) No member shall be obligated in any one year to reimburse the plan on account of its proportionate share in any deficit from operations of the plan in that year an amount in excess of one percent of such member’s surplus to policyholders. The aggregate amount not so reimbursed by reason of the application of this provision shall be reallocated among the remaining members in accordance with the method of determining participation described in this section, after excluding from such computation the total net direct premiums of all members not sharing in such excess deficit. In the event the deficit from operations allocated to all members of the plan in any calendar year shall exceed one percent of their respective surplus to policyholders, the amount of the deficit ìshall be allocated to each member in accordance with the method of determining participation prescribed in this section. (d) Any deficit sustained by the plan shall be recouped by either or both of the following methods: (1) An assessment upon the policyholders; (2) A rate increase applicable prospectively. [Eff 6/22/81] (Auth: HRS §435C-2) (Imp: HRS §§435C-3, 434C-4, 435C-5)