hcic bod meeting - agenda...

P.O. Box 2815 Honolulu, Hawaii 96803

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A G E N D A

Meeting of the Board of Directors Wednesday, August 19, 2015

11:30 am (Hawaii Standard Time) 2:30 pm (Pacific Daylight Time)

Offices of AON Insurance Managers

201 Merchant Street, 24th floor Honolulu, HI 96813

Dial +1 (805) 309-0027

Access Code / Meeting ID: 928-856-213

A. Call to Order/Determination of Quorum

B. Approval of the April 22, 2015 Board meeting minutes

C. Review of the August 5, 2015 Executive Committee Meeting minutes and/or Committee Reports

D. Review and approve Budget

E. Other Business (if not otherwise covered) HID/HCIC Jul 22 meeting follow-up

o Exam Attachment 3 (draft of our feedback is attached) o Session with HID to discuss exam process o Domicile comparison / proposed HRS changes

Scholarships – EC to review & select by Aug 31 Board nominations – for 5 vacancies

o Nomination forms due by September 16 o Membership meeting notices & ballots sent by end of Sept o Voting closes Thurs Oct 29 at 12 noon Hawaii time

Upcoming events: Sept 10 Bay Area trip (flyer attached) Upcoming events at Forum:

o Tues Oct 27 – HCIC Scholars practicum o Wed Oct 28, 8am – BOD Meeting o Thurs Oct 29, 5pm – Annual Membership Meeting

F. Adjournment


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Jun 25 Planning Meeting – Action Items The Board had its strategic planning meeting in June 2015. We are attaching to each Board agenda to continue refreshing our memories and confirming relevance of our targets for 2015-16 Marketing items (see also marketing plan circulated 7/21/15):

Target markets: Hawaii, Japan, US employee benefits, & Hawaii leg / Governor / Federal leg.

Better communicate differentiators: zero premium tax on fronted, annual meeting flexibility, highly experienced infrastructure.

Identify any other ways to differentiate Hawaii -- undertake via HRS update / review? Hawaii Chamber of Commerce – join, organize event for their members HCIC Asia branch Groom Law Group (US employee benefits) Marketing trips – Bay Area (9/10/15), Pacific Northwest or Southern Cal (March 2016) CPCU National Conference, Sept 2016 On-going contact with Congressional delegates Hawaii on the Hill June 2016 Invite governor to events More frequent marketing communications Refresh “Why Hawaii” marketing collateral Identify and retain a “face of captives” spokesperson Perhaps another session for American Gas Assoc (2016)

Regulatory Opportunities:

Re-iterate concerns over Exam Questionnaire Clarify implications of exam findings vs. comments vs. best practices Continue to monitor national developments via CICA & NAIC

Sponsorships & other items:

Board-level “sponsorship drive” for Forum 2015 & 2016. Scholarship program continued; budget for 3 scholars at $2,750 each Other identified budget items:

o Marketing trips o Hawaii on the Hill 2016 (June?) o Retain spokesperson o Refresh brand


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Captive and Risk Management Acronyms “Cheat Sheet”

Related to Captive Regulatory environment:

DCCA – Department of Commerce & Consumer Affairs. Hawaii Insurance Division is within the DCCA.

DBEDT – Department of Business, Economic Development, and Tourism. While the captive industry hasn’t interfaced much with this department, we may be exploring this further going forward.

HAR 16-17 – Hawaii Administrative Rules. Promulgated regulations specific to captive insurance companies.

HID – Hawaii Insurance Division.

HRS – Hawaii Revised Statutes. Article 19 is the captive statute; Article 6 is the investment code for insurers in the State of Hawaii.

IAIS – International Association of Insurance Supervisors. International equivalent of the NAIC.

NAIC – National Association of Insurance Commissioners. U.S. regulatory support organization comprised of the chief insurance regulators from the 50 states, the District of Columbia, and U.S. territories. NAIC establishes insurance accounting and reporting standards, model laws and regulations, and conducts peer and accreditation reviews. Accreditation by the NAIC is desirable so that insurers domiciled in an accredited state can do business in other states and only be subject to regulatory oversight in their home domicile. This is of particular importance for risk retention group captives who generally function as multi-state insurers. All 50 states and D.C. are currently accredited.

Other Captive, Risk Management, and Finance Organizations:

A.M. Best – Rating organization for insurers, including captives and RRGs (risk retention groups) who desire to be rated.

ASHRM – American Society for Healthcare Risk Management.

CFMA – Construction Financial Management Association

CICA - Captive Insurance Companies Association. CICA is a domicile-neutral captive association. Similar to HCIC, their membership is comprised of captive owners and captive service providers. They hold an annual conference, produce a bi-annual fronting/risk-sharing market survey, and have organized a captive domicile leadership group which meets periodically to discuss issues facing the captive industry.

CPCU – Chartered Property & Casualty Underwriters Association. Comprised of professionals holding the CPCU designation. While not captive or risk management specific, many professionals in the insurance brokerage and insurance company community pursue this designation.

ICCIE – International Center for Captive Insurance Education. National captive insurance education program, domicile neutral. Students completing ICCIE’s program may earn the ACI (Associate in Captive Insurance) professional designation.

RIMS – Risk & Insurance Management Society. RIMs is a key target because its membership is comprised of risk managers and service providers in the insurance and risk management industry. RIMs national organizes national and internet-based educational events, issues numerous publications, and RIMs local / regional chapters also organize their own conferences or educational sessions.

SIIA – Self Insurance Institute of America. SIIA’s focus has historically been on self-insured workers’ compensation and health benefits. With the growing interest in funding medical stop loss in captives, we believe there may be greater opportunities for captives through this organization.

VCIA – Vermont Captive Insurance Association. Vermont’s equivalent to HCIC.


HAWAII ON THE HILL 2015 RECAP AND RECOMMENDATIONS TO THE HCIC BOARD OF DIRECTORS Submitted by Matt Takamine, Director, VP & Chair – Government Relations

A. Overview Hawaii on the Hill is a relatively new initiative hosted by the Chamber of Commerce of Hawaii (CoC) to

promote businesses and industries in Hawaii. It was held from June 9‐10, 2015, and was the 2nd year in which the CoC put on the event. This was the first year where the HCIC participated. Ed Haik, Paul Shimomoto, and Matt Takamine attended on behalf of the HCIC.

Hawaii on the Hill consisted of a number of scheduled events, including:

• A small reception with our Hawaii US congressional delegation and local government officials • Hawaii on the Hill Policy Summit – the marquee event which included discussions with U.S.

senators, representatives, administration officials and industry experts. See attached agenda for further details.

• Taste of Hawaii – Hawaii on the Hill culminated with the Taste of Hawaii, which was held in the US Senate building. The HCIC had a booth at the event, which was attended by an estimated 1,500 US senators, representatives, administration officials, and others.

B. Contacts Made/Meetings Held

We had the opportunity to talk about the Hawaii captive insurance industry with a number of individuals and dignitaries including, but not limited to, the following:

1. US Senator Mazie Hirono (D‐HI) 2. US Senator Brian Schatz (D‐HI) 3. US Representative Tulsi Gabbard (D‐HI) 4. US Representative Mark Takai (D‐HI) 5. US Senator Chuck Schumer (D – NY) 6. HI Senator Ronald Kouchi, President of the Senate, State of Hawaii 7. HI Senator J. Kalani English 8. Nani Coloretti, Deputy Secretary, US Dept of HUD (Iolani grad and Paul’s classmate). 2nd in charge at

HUD, responsible for $45 billion and 8500 employees. 9. Governor Neil Abercrombie (former HI governor) 10. Mayor Bernard Carvalho, County of Kauai 11. Betsy Lin, Chief of Staff, Senator Hirono 12. Alan Yamamoto, State Director, Senator Hirono 13. Mika Morse, Legislative Director, Senator Schatz 14. Swarna Vallurupalli, Tax Counsel, Senator Hirono 15. Nick Ikeda, Legislative Staff, Senator Hirono 16. Jonathan Elkin, Legislative Staff, Senator Hirono 17. Emily Latimer, Administrative Staff, Representative Gabbard 18. Alvin Chan, Tax Policy Counsel, Senator Orrin Hatch (R‐Utah) 19. Kara Getz, Senior Tax Counsel, US Senate Finance Committee 20. Jesselyn Chong, Legislative Staff, Senate President Ronald Kouchi 21. Captain Bruce Hay, Commanding Officer, US Navy Pacific Missile Range Kauai 22. Robert (Skip) Myers, Morris Manning and Martin 23. Ryan Work, Senior Director, Government Relations, SIIA 24. Chris Condeluci, Washington Counsel, SIIA

Hawaii on the Hill 2015 Recap to the HCIC Board of Directors Page 2

C. Budget to Actual Results We budgeted $8,000 for the event, including registration fees, air, hotel, shipping costs for our booth and

materials, as well as other costs. Actual costs have not yet been finalized, but the following is a very close representation to what the final results will be:

As illustrated above, actual costs will be significantly lower than budget for 2015 due to 1) Matt not needing a hotel room and 2) lower than expected airfare costs. Participation by the HCIC in future Hawaii on the Hill events will likely be closer to the $8,000 budgeted above.

D. Summary and Recommendations

Hawaii on the Hill represents a tremendous opportunity for the HCIC to promote Hawaii’s captive industry – not only to Hawaii’s US congressional delegation, where we previously had little to no connection, but also to the large number of local and state government officials who participate in the event as well. Our HCIC delegation had unprecedented to and significant face time with our congressional leaders. We get the feeling that we’ve gotten in on the ground floor of an event that will grow extensively over time. The cost of the event was far outweighed by the contacts and relationships we were able to make, and we recommend that the HCIC should continue to participate in future Hawaii on the Hill events. We also recommend that HCIC join the Chamber of Commerce of Hawaii to allow us to participate in future Hawaii on the Hills and other events put on by this organization.

2015 Hawaii on the Hill Attendees

Alston Hunt Floyd Ing Blake Oshiro

Ansaldo Honolulu Enrico Fontana, Roberto Passalacqua, Leticia Ojeda

Cyanotech Corporation Jen Johansen

Halm's Enterprise Michael and Natalie Yonemura, Michael and Sandy Irish

Hawaii Captive Insurance Council Edward Haik, Paul Shimomoto, Matt Takamine

Hawaii Crop Improvement Association Bennette Misalucha, Kirby Kester

Hawaii Gas Alicia Moy, Audrey Okaneku

Hawaii Tourism Authority Sean Dee, David Rae

Hawaiian Chip Company Kammy Chan, Carolyn Pacheco, Kacie Miura Chloie Favinger, Matthew Calby

Hawaiian Commercial & Sugar Hilary Bingman

HCATT Stan Osserman


HFMA Byron Goo, Sydney Goo

HMSA Jen Diesman

Innovate Hawaii/HCATT/Cut Collective Wayne Inouye, Sandy Park, Shauna Goya

KaiKini Bikinis Taryn & Tyler Rodighiero

Kaiser Permanente Phyllis Dendle

Kamakura Corporation Martin Zorn, Joanne Iha

Kauai Senator Ron Kouchi, Joy Kouchi, Dan Kouchi, Egan Kouchi, Katie Arita‐Chang, Jesselyn Chong

Kauai Chamber/County of Kauai/KVB/ Aqua Engineers

Randy Francisco, Van Francisco, Nicholas Mongillo, J. Robertson, Bruce Hay

Kauai Cigar Company/ LBD Coffee Les Drent, Victor Calvo, Reynaldo Betanco, Hilario Mendoza

Kauai Coffee Faith Soto, Michael Shimatsu, Wayne Katayama, Brian Kubicki


Kauai County Mayor Bernard Carvalho, Mary Cronin, James Smith

Kauai Kookie Ann Hashisaka, Mabel Hashisaka

King's Hawaiian John and Connie Linehan

Koloa Rum Jeanne Toulon

Maui Chamber of Commerce Pam Tumpap

Navatek Ann Chung, Kacey Suekawa‐Locke

NextEra Energy Lauren Sher

Pacific Allied Products Bernie Coleman, Ted Chen (Deep Ocean Enterprises LLC)

Pae Aina Communications Adrian Kamalii, Leslie Campaniano

PMRF Captain Bruce Hay

Salty Wahine David Andersland, Laura Cristobal Andersland


Surfing Goat Dairy Angela Reichert, Dwayne Reichert

The Boeing Company Jesse Uman

The Orchid Lei Company Sukit Kanaprach, Rebecca/Wing Hei Sinn

Pelatron Q, LLC Kekoa McClellan, Aimoku McClellan

The Queen's Health Systems Paula Yoshioka, Paige Heckathorn, Ann Marie Keala Peters

University of Hawaii David Lassner, Eric Matsunaga, Su Jun Lim, Dan Ishii


Minutes

Hawaii Captive Insurance Council Corporation Meeting of the Board of Directors

Wednesday, April 22, 2015 Honolulu, HI

11:00 am (Hawaii Standard Time) ‐ 1:00pm (Pacific Standard Time)

Offices of AON Insurance Managers 201 Merchant Street, 24th Floor

Honolulu, Hawaii 96813 Attendees: Excused:

Fay Okamoto Paul Wagner ‐ Teleconference Matthew Takamine ‐ Teleconference David Bell ‐ Teleconference Ward Ching – Teleconference Jason Palmer Peter Carlisle ‐ Teleconference Ryan Nobriga – Teleconference Jill Miura ‐ Teleconference Helen Chang Jerelyn Brown Jamie Asato Invited Guests: Danel Licari Ed Haik Paul Shimomoto – Teleconference Christina Kamaka Kari Nettel

Scot Sterenberg Kristinn Olafsson Cynthia Belcher

Agenda Item Comments/Follow Up

A.

Call to order

Meeting was called to order by Fay Okamoto at 10:04 am.

B. Minutes of the March 4, 2015

Approved as presented.

C. Review of the April 8, 2015 Executive Committee Meeting

Fay Okamoto provided a recap of the April 8, 2015 meeting. A draft copy of the minutes was circulated to the Board.

minutes and/or Committee Reports

Additional discussion was held: Legislative Jason added that he saw that there was a going to be a revised preamble later this week. Membership See EC minutes and Membership Committee report. Marketing Paul Shimomoto stated that the State is packaging their sponsorship funding for the Japan seminar with the HCIC Forum. Anticipating $7,000/$8,000, which will cover the room cost plus the presentation equipment costs, leaving little remaining cost, which Paul thinks can be funded by private sponsors. If any service providers are interested in attending the Japan seminar, let Paul know. Education See Education committee report. Forum See EC minutes and Forum Committee report Fay also reported that Scot is working on the schedule for Wednesday of the Forum and plans to have education sessions in the morning. In addition, Fay is thinking of scheduling the BOD meeting late Wednesday morning (10/28/15). Sponsorship deadline is May 1 to make Forum materials. Currently have 12 session submissions for discussion. Industry Liaison Captive Association Leadership Council meeting held on March 9, 2015. See 2 page report from Dennis Harwick. Finance See Finance committee report.

D. Other Business

Fay asked Paul to inquire with HID to see if they will be participating in A.M. Best’s annual captive spot light magazine. Fay received an email solicitation and raised the question whether HCIC should participate if HID does not participate this year. Reminders: RIMS National Conference is in New Orleans at end of April. Matt Takamine is organizing a dinner for those attending RIMS, which include HID, those who assist at the Hawaii

Booth, current & past Board members. Strategic Planning Meeting Date of June 25, 2015 at the KMH office. Lunch will be provided.

E. Adjournment

The meeting was adjourned at 10:31 am.


Minutes

Hawaii Captive Insurance Council Corporation Meeting of the Executive Committee

Wednesday, April 8, 2015 Honolulu, HI

10:00 am (Hawaii Standard Time) ‐ 1:00pm (Pacific Standard Time)



Fay Okamoto Jerelyn Brown Matthew Takamine ‐ Teleconference Ward Ching – Teleconference Paul Wagner ‐ Teleconference Ryan Nobriga Christina Kamaka Jamie Asato Invited Guests: Gerald Yoshida – Teleconference Jill Miura ‐ Teleconference Scot Sterenberg Ed Haik

Jason Palmer


A.

Call to order


B. Minutes of the February 11, 2015 Executive Committee meeting


C. Committee Reports

Legislative Committee: Gerald Yoshida reported. See committee report. Gerald reported that the proposal to amend Internal Revenue Code Section 831(b) was discussed at CICA. Legislative Committee is monitoring progress of the proposal

‐ it is not a bill yet. Membership: Ed Haik reported. See committee report. Ed asked Captive Managers to assist with reaching out to new captive owners to inform them of the first year free membership. Ed will also follow up with service provider members who have not renewed. Finance: As this meeting was close to quarter end, Finance will provide their report at the April Board meeting. Marketing: Paul Shimomoto provided his report. See committee report. Matthew Takamine updated the EC that there is no update to progress with getting HID’s monetary support for the Japan Seminar. The Commissioner has been provided with the information he asked for. Awaiting response, but moving forward regardless. Fay asked Ed, Paul and Matt to reach out to captive owner members to solicit interest in attending Hawaii on the Hill Scot Sterenberg gave a report on how CICA went. Well attended, but slight drop in participation, likely due to the location (east coast). Focus on small captive issues. Website: Nothing to report. Scot requested that the positioning of the Forum link on the website be more prominent. Discussion was held about WRIN TV. Decision to keep the link to WRIN TV on the website, just move the placement. Ward Ching will coordinate with Kari Nettel to make these website changes. Education & Forum: Jill Miura and Scot reported. See committee reports. Jill asked the EC and others if they had any suggestions for Oahu locations for the Forum. Ed suggested that if the Kahala was to be considered, Waialae Country Club could be considered as an additional location to accommodate the lack of meeting rooms. Jill also asked the EC if anyone had contacts at the Sheraton Waikiki as historically they have not been responsive. Ed said that John Takushi could be contacted as a first point of

contact. Scot reported that we have received about 11 session suggestions. Forum committee will be meeting to review and discuss if further recruitment of sessions will be required. Rough schedule set. Golf and Community Service activities will be on Wednesday afternoon of the Forum. Fay inquired about possible time slots for HCIC Board meeting at the Forum – under consideration are Wednesday late morning after ICCIE Wednesday morning webcast. Industry Liaison Update: See committee report. Government Relations Update: Matthew Takamine reported that he is trying to schedule our next quarterly meeting with HID.

D. Other Business

Upcoming Events – RIMS – Matt is coordinating the dinner with HID and for others from industry. Discussion was held regarding who is attending this RIMS dinner. Agreement that invitation is extended to those that volunteered to man the booth, current or past HCIC Board members and HID. Fay notified Board of the confirmed date, location and time of the Strategic Planning Meeting.

E. Adjournment



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A G E N D A

Meeting of the Executive Committee Wednesday, April 8, 2015 10:00 am (Hawaii Time) 1:00 pm (Pacific Time)

Offices of AON Insurance Managers 201 Merchant Street, 24th floor

Honolulu, HI 96813

Dial +1 (805) 309‐0027 Access Code / Meeting ID: 928‐856‐213


B. Approval of the February 11, 2015 Executive Committee meeting minutes


Legislative

Membership

Finance

Marketing

Website

Education & Forum

Japan Marketing

Industry Liaison Update

Government Relations Update

D. Other Business (if not otherwise covered by committee reports)

HAR Admin Rules update

CICA report

NAIC (F) Committee proposed Accreditation Standards Preamble

Upcoming Events – RIMS April 26‐29

Upcoming Events – Hawaii on the Hill June 9‐10

Next Meeting Strategic Planning Session– June 25, 2015

E. Adjournment


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Prior Year Planning Meeting – Action Items Planning meeting was held in May 2014. The Board conducted a “refresher” review of the items at its November 2014 meeting. We are attaching to each Executive Committee agenda to continue refreshing our memories and confirming relevance of our targets for 2014‐15 Marketing items:

West Coast trip, July 2014 seemed well received

Pacific Northwest, 2015?

Coordinate dates around other known events (e.g. RIMs, CICA, etc.)

Pursue speaking opportunities / session submissions to other organizations: o Local RIMS – Western Region RIMs conference o Local RIMS – others? o CPCU next annual conference in Hawaii – 2016 o CFMA o ASHRM o RIMs national o CICA o World Captive Forum o SIIA (more interest in medical stop loss captives) o University Risk Management programs

More frequent press releases – propose to have VPs oversee / coordinate more frequent communications

Forum Scholarship:

Positive feedback from 2014 recipients. Need to keep in touch with them.

Suggest limiting to 3 recipients for 2015 Forum.

Suggest opening the practicum (why Hawaii, formation process) to all interested participants. Regulatory Opportunities:

New administration may be opportunity for dialogue

Effective & efficient exam procedures (certain procedures annually rather than only every 5 years)

Consistency of exam findings vs. comments vs. best practices

Re‐evaluate applicability of Article 2 (examiners handbook) to pure captives Government Relations:

Established dedicated government relations liaison and outline of 2015 action plan

Evaluated PAC and determined it might not be the optimum vehicle to support lobbying efforts

Designate a portion of HCIC membership dues for “lobbying” activities, and continue grass roots efforts

Contact during administration transition is suggested, particularly at DCCA level. Sponsorships & other items:

Higher level of sponsorship to be made available for 2015 Forum.

ICCIE – drawing for “free” ICCIE session to be considered at 2015 Forum.

Industry liaison – schedule for 2015 events. Increased participation in CICA initiatives?

Purchase of laptops / projectors – under consideration by Education committee

Legislative Committee Report

Date: April 8, 2015

Submitted by: Jerry Yoshida

Committee Members: Jerelyn Brown Danel Licari Paul Shimomoto Ward Ching

Capri Haga Edward Haik Mark Hironaga Christina Kamaka

Chris Mertes Jill Miura Fay Okamoto Jason Palmer

Scot Sterenberg Matt Takamine Colin Teraoka Paul Wagner Jerry Yoshida

A. Subject: Proposed Administrative Rules: Following discussion at the last HCIC Executive Committee and Board meeting, Fay Okamoto transmitted a

notated version of draft #3 of the proposed changes to the captive administrative rules. We are still awaiting feedback and a further meeting with Sanford on this matter.

B. Subject: NAIC F Committee Proposal re Multi-‐State Captive Reinsurers: On February 24, 2015, NAIC staff transmitted a memo and proposed revisions to the Part A Preamble regarding

captive life/health reinsurers. On March 17, 2015 the Chair of the F Committee and Chair of the E Committee issued a memorandum to clarify that the proposed Preamble revisions are intended to apply to only XXX, AXXX, variable annuity and long-‐term care captive reinsurance transactions. The F Committee received numerous comments prior to and at its March meeting in Phoenix, including that the language is still ambiguous. As a result, the F Committee deferred action on the matter and instructed staff to further redraft the Preamble so as to remove any ambiguity. A further revised Preamble is expected to be exposed prior to the next NAIC meeting.

C. Subject: 2015 Hawaii Legislation (changes from last report are noted in red): 1. HB281: Requires the auditor to conduct a study on the feasibility of the State of Hawaii establishing a

captive insurance company to manage the State's property and casualty insurance risks. Appropriates funds for the feasibility study. Passed second reading in the House but did not crossover to the Senate.

2. SB1265 and HB1284: Companion bills to amend various provisions of the Insurance Holding Company

System provisions of the Insurance Code. The Legislature is moving wtith the Senate bill. SB1265 crossed over to the House, heard by House CPC and scheduled for decision-‐making by House Judiciary. No substantive changes.

3. SB1094 and HB925: Companion bills to amend various provisions of the Insurance Code as well as some

other provisions relating to insurers over which the Commissioner has regulatory jurisdiction. The Legislature is moving with the Senate bill. There are some provisions relating to Chapter 431K that would impose fees upon purchasing groups and foreign RRGs, as well as revise certain provisions relating to required filings of foreign RRGs.


Membership Committee Report to Executive Committee

Date: 04/08/15

Submitted by: Danel Licari/Ed Haik (Co-Chairs) A. 2015 Membership Renewals

1) 2015 Membership – total 76 members - 46 captive owners (44 X $325 = $14,300). Count includes two free memberships for formations.

- 30 service providers (30 X $800 = $24,000) - Total revenues from service provider and owner members for 2015 = $38,300.

2) 2014 Membership – total 89 members to date - 55 captive owners (49 X $325 = $15,925) Count includes six free memberships (3 formations, 3 anniversaries). - 34 service providers (34 X $800 = $27,200) - Total revenues from service provider and owner members for 2014 = $43,125.

B. 2015 Hotel Benefit Renewals 1) Hotels renewed (website updated): Pending renewals: - Hilton Hawaiian Village - Sheraton Waikiki - Sheraton Maui - Hawaii Prince - Royal Hawaiian - JW Marriott Ihilani - Mauna Kea Resort - Moana Surfrider - Kapalua Ritz - Hapuna Beach Prince - Halekulani - Trump Hotel Waikiki - Parc Waikiki - Kahala Resort - Aulani

C. 2015 Membership Drive 1) Free “1st” year membership to new captive formations will continue for 2015. Eleven formations for 2014 were

offered “free” memberships in 2015 plus another five formed in 2015. So far only two have accepted and one declined since their first captive is a member. Captive managers please reach out to your new formations to take advantage of the “free” membership.

2) HCIC “Award of Excellence” to continue in 2015. 3) Membership committee will try again this year to recruit new captive owner members through anniversary

acknowledgement and gift. Two of three anniversary captives given free memberships last year renewed in 2015. 4) Six service providers have not renewed from 2014. Membership committee to follow up.

D. Ideas/Works In Progress to Increase Membership

1) Membership Committee is open to all ideas related to increasing membership and prize giveaway ideas for next year’s drawing.

2) Possible mass mailing to “new” group of potential members. Target service providers that participate at other domicile forums. Service provider trend seems to be moving towards multi-states.

3) Revisit having the HCIC member application part of captive application process & or ask for regulator “encouragement” to maintain “member in good standing” could that question “Are you a member of the HCIC in good standing?” be asked in concert with the annual licensing update?


Marketing Committee Report to Executive Committee

08 April 2015

Offices of AON 201 Merchant, Suite 2400

Honolulu, HI 96813

• Japan Marketing Subcommittee o Met on 27 Mar 2015 to discuss outline and concept of 09 Nov 2015 Tokyo Seminar o Attendees: Paul Shimomoto, Asako Shimazu, Tomoko Wong, Jason Palmer, Colin Teraoka, Toni

Kanehira & Yusuke Aonuma o Discussed items relating to anticipated costs, SOH possible participation, format/content of

presentations and attendee invitations o Awaiting response from SOH as to whether or not they will participate/sponsor

• Hawaii on the Hill (in conjunction with Legislative Committee)

o Registration has been submitted o Confirmed attendees (so far): Ed Haik, Paul Shimomoto & Matt Takamine o Have requested meetings with Senator Hirono along with:

§ Jeb Hensarling (TX) who is on the subcommittee for Housing and Insurance. § Orrin Hatch – the Chair of the Finance Committee – represents UT – a burgeoning captive

domicile. § And any other representatives &or staff involved with the Senate Finance Committee where

the proposed 831(b) legislation started. • HCIC Banner

o Working with Kari to purchase a new banner to replace our aging/broken signage o Estimated cost: $250 - $500 for new, three panel, retractable screen system that will be lighter and

easier to transport


o

Education Report to the Executive Committee

Date: April 8, 2015

Submitted by: Jill Miura Education Committee Members: Christina Kamaka, Craig Watanabe, Jamie Asato, Jill Miura, Ryan Nobriga, Kris Olafsson (observer)

A. 2016 Forum RFP RFP to be issued by April 10th; responses requested by May 6th Target dates – October 17 – 19, 2016 Soliciting bids from the following:

Hilton Hawaiian Village Sheraton Waikiki & Resort Possible Four Seasons Ko Olina


Forum Committee Report to Executive Committee

April 8, 2015

Honolulu, HI

Committee Members: Jason Palmer, Christina Kamaka, Jamie Asato, Jill Miura, Ed Haik, Helen Chang, Kari Nettle Scot Sterenberg, Chair

A. Initial planning meeting held in January 23 where we discussed the following ‐ Sessions and Sponsorship form ‐ Sponsorship levels and corresponding values – Added new

“Diamond” level for $12k all other levels stayed consistent with previous off island rates ‐ Set initial schedule of Events per the attached

B. Sessions update C. Sponsor update D. Next Forum Committee meeting planned for April 24 E. Plan to open registration on June 1.


O c t o b e r 27 - 30, 2015 Grand Hyatt Kauai Resort & Spa www.hawaiicaptives.com

SCHEDULE OF EVENTS

TUESDAY, OCTOBER 27

MORNING INTERNATIONAL CENTER FOR CAP TIVE INSURANCE EDUCATION (ICCIE) WEBINAR & LIVE PANEL

AFTERNOON EDUCATIONAL SESSIONS: BASICS

AFTERNOON EXHIBITOR SET UP

DATE TIME EVENT

WEDNESDAY, OCTOBER 28

MORNING EDUCATIONAL SESSIONS

MORNING EXHIBITOR SET UP

MORNING MEETINGS/NETWORK OPPORTUNITIES

AFTERNOON HCIC SERVICE EVENT

AFTERNOON GOLF TOURNAMENT

EVENING RECEPTION & DINNER

EVENING AFTER HOURS EVENT

THURSDAY, OCTOBER 29

ALL DAY EDUCATIONAL SESSIONS

ALL DAY EXHIBITORS

MID DAY KEYNOTE SPEAKER LUNCHEON

AFTERNOON HCIC ANNUAL MEMBERSHIP MEETING

FRIDAY, OCTOBER 30

MORNING EDUCATIONAL SESSIONS

MORNING EXHIBITORS

Subject To Change

Industry Liaison Report to Executive Committee 08 April 2015

Offices of AON

201 Merchant, Suite 2400 Honolulu, HI 96813

RECAP FROM 2015 CICA CONFERENCE – LEADERSHIP COUNCIL MEETING

• Reputational Challenges Task Force

o CICA is working on a draft of a “best practices” document for 831(b)/ micro captives o Noted that Congressional staff is looking to target abusive practices by amending the IRC o Belief that IRS is overstepping its bounds by trying to regulate the captive industry

• Government Relations Leadership Council

o Need to lobby individual state commissioners to have them speak up in support of captive industry at NAIC meetings

o Noted that state commissioners are generally reluctant to speak out against NAIC initiatives

• Legislative Tracking Software being piloted by Vermont o VT is piloting “FiscalNote” – an online legislative tracking service that will hopefully help VT track all

captive related legislation nationwide. VT reports that service costs approximately $1,000 per month.

o VT will continue to test product and may recommend that CICA invest in the software going forward.


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Synopsis

Captive Association Leadership Council Meeting

Monday, March 9, 2015

A meeting of captive association leaders was convened at 4:25 p.m. Eastern time on Monday, March 9, 2015, during the 2015 CICA International Conference in Orlando. Dennis Harwick, President of CICA, served as the facilitator of the meeting.

Participants included:

Captive Insurance Companies Association (CICA) Dennis Harwick, Scott Beckman, Skip Myers, Joel Chansky

Bermuda Insurance Owners Association Tom McMahon

Connecticut Captive Insurance Association Tom Hodson

Delaware Captive Insurance Association (DCIA) Jeff Simpson

Hawaii Captive Insurance Council (HCIC) Jerry Yoshida and Paul Shimimoto

Kentucky Captive Association (KCA) Michael Shields

Missouri Captive Insurance Association (MOCIA) David Dimit

Montana Captive Insurance Association (MCIA) John Huth

National Risk Retention Association (NRRA) Joe Deems

North Carolina Captive Insurance Association (NCCIA) Martin Eveleigh, Tom Adams

Tennessee Captive Insurance Association Kevin Doherty

Vermont Captive Insurance Association (VCIA) Rich Smith, Bill Riley

The following topics were discussed:

1. Reputational Challenges Task Force – The main topic was micro captives/831(b) captives/enterprise risk captives. The group discussed the draft “Best Practices” document, the proposed legislation of the Senate Finance Committee to increase the allowable premiums and/or restrict the use of the 831(b) election for single parent captives, and the potential influence of the NAIC on this matter. A number of different ideas and strategies were debated, focusing on trying to stay out ahead of this issue, including the possibility of drafting some common language so that each domicile could approach their

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local senators and insurance regulators. After a lengthy discussion, the group agreed that it would be best to wait and see what comes out of the Self Insurance Institute of America (“SIIA”) meeting on this topic, which is supposed to take place the week of March 16, and Jeff Simpson will report back to the group. 2. Government Analytics – Rich Smith from Vermont reported on Fiscal Note, a web‐based tool that Vermont has purchased for $1,000/month. The tool searches for regulations and legislation based on user specified inputs, and also predicts the probability of the legislation passing. Rich described the tool as “pretty cool” and believes that it was useful for tracking captive insurance related regulations and legislation. Some suggested that having CICA leasing such a product might be a good way of centralizing its use on behalf of all US domiciles. Rich/Vermont will continue to use the tool and will report back at the next meeting. 3. NAIC Multi‐State Reinsurer Definition – Skip Myers reported on the latest updates to the definition, and pointed to the new Preamble that appears to restrict the definition for captives to those life captives doing AXXX and XXX business. This issue will be closely monitored. 4. Next Meeting – A call will be scheduled in August. If other matters arise in the interim, additional calls will be scheduled accordingly. The meeting was adjourned at 5:25pm.

Respectfully submitted,


Minutes

Hawaii Captive Insurance Council Corporation Meeting of the Executive Committee Wednesday, August 5, 2015, 2015

Honolulu, HI 10:00 am (Hawaii Standard Time) ‐ 1:00pm (Pacific Standard Time)



Fay Okamoto Paul Wagner ‐ Teleconference Jerelyn Brown Matthew Takamine Jason Palmer Ryan Nobriga Jamie Asato Invited Guests: Gerald Yoshida – Teleconference Jill Miura Scot Sterenberg Danel Licari Ed Haik Kari Nettel

Christina Kamaka Ward Ching


A.

Call to order


B. Minutes of the April 5, 2015 Executive Committee meeting



Legislative Committee: Gerald Yoshida reported. See committee report. Membership: Danel Licari reported. See committee report.

Finance: Jason Palmer reported. See committee report. Discussion was held on proposed 2015/2016 budget. Suggested changes were:

1) Add $6,000 for Marketing Committee to budget for an additional West Coast trip and Hawaii seminar.

2) Add $5,000 more to the Legislative budget to allow for participation in coalitions involved with national captive issues.

3) Legislative briefing budgeted for in both Education and Legislative committees; move the $1,500 budgeted in Education to “Other educational event”.

Discussion also ensued about increasing HCIC presence in the national captive arena, such as extending reciprocal registrations to NRRA (Skip Meyers, since he has indicated interest in attending this year’s Forum), and SIIA. Marketing: No report submitted, as marketing items discussed in conjunction with the budget Website: Nothing to report. Education: Jill Miura reported. See committee report. EC stated that Kari’s contract should be reviewed at least every 2 years. 2016 Forum – Jason to provide contact info for Four Seasons as they stated that the Ko’Olina property will be open for business, competitive, and available for the Forum. Webinars – we may also consider an Employee Benefit webinar, since speakers aren’t able to make it to this year’s Forum. Discussion was held about developing an annual sponsorship plan whereby sponsorships would cover various HCIC events throughout the year, rather than just the Forum like previous years. The Education Committee was tasked with coming up with a plan to present to the EC. Scot reported that the 2015 Forum committee met on 7/8/15. All set. Industry Liaison –None. Government Relations: Matthew Takamine reported. Matt gave a brief report of HCIC’s meeting with HID, held on 7/22/15. Discussed the following:

1) Exam questionnaire 2) HID holding a training session about the exam

process to Industry 3) Commissioner reaffirmed his goal to add net 20

captives Fay also added that a few available members met on 8/3 to discuss the exam questionnaire and our comments. See attached. Scot volunteered to do a domicile analysis, which he will prepare by September to begin HCIC & HID discussions.

D. Other Business

HRS changes – If HCIC wants to propose a bill for 2016 session, bill would need to be drafted by November, and we need to find a sponsor for the bill in December. We will use Scot’s domicile analysis to begin internal HCIC discussions. Upcoming Events –

1) VCIA – Jason and Paul S. to attend 2) Sept 10 Bay Area trip ‐ Ed Haik updated the

committee. Flyer for the event to be distributed shortly. Agreement was made to not have any sponsorships for the event, and to convey the $3,000 event budget to the meeting facility, to manage the open bar tab at the networking event.

3) Forum – committee to confirm the date / time of HCIC BOD meeting once they finalize Forum schedule.

Scholarships – EC to review & select by August 31 – reminder that deadline to submit application is 8/15/15. Kari to circulate a reminder email. EC asked Matt to work with Paul S. to prepare a written report on Hawaii on the Hill and present at the 8/19 Board meeting.

E. Adjournment


DRAFT

Thank you for the opportunity to provide this feedback of industry and captive owners’ perspective on the new pure captive examination process, in particular the queries contained in Attachment 3 entitled "Prospective Risk Considerations" for pure captive examination warrants. This position paper reiterates and summarizes concerns expressed in meetings between the HCIC and State of Hawaii Insurance Division (“HID”) captive branch in 2012, and more recently in July 2015. Our feedback can be summarized into the following salient points: 1) What is the forecasted impact of the completion of Attachment 3 on the cost of pure

captive examinations. Perceived or actual additional cost burden could make Hawaii less competitive when compared to other captive domiciles.

2) The industry continues to be concerned with the regulatory consequences of “wrong” answers, particularly in the context of the new “Summary of Findings” / best practices supplement to the examination report.

3) Has HID considered that requiring Attachment 3 for all pure captives may be perceived as burdensome regulatory process. Such perception may drive existing captives away from Hawaii and may hinder future growth of the domicile.

4) In our review of the Attachment 3 queries, we identified a number of requests which we believe:

• Duplicates other exam requests made of auditors or captive managers • Duplicates information which HID already has ample regulatory authority

over by virtue of review and approval of the initial captive application, review and approval of all business plan changes, and review and approval of all material service providers.

5) As such, we felt the Attachment 3 queries could be eliminated or significantly reduced.

Increased cost of completing Attachment 3 In this extremely competitive environment for captive domiciles, the HCIC is concerned that any additional cost burden to captive owners is not desirable, and may drive existing captives away from Hawaii and hinder future growth. Costs of completing Attachment 3 may not appear significant on the surface, but will require time spent by captive owner and captive manager to provide responses, and by HID examination staff to evaluate responses. If Attachment 3 completion results in reduction of other exam procedures, then an understanding of which queries would positively impact time spent on specific exam procedures would be very helpful for us to convey appropriately to captive owners.

DRAFT

Regulatory consequences of Attachment 3 Although HID has assured industry that responses to Attachment 3 would not result in comments or findings in the examination report unless a situation resulted in lack of compliance with Hawaii laws and regulations, industry is concerned about possible impact on the new “Summary of Findings” / best practices supplement. For example, if a captive does not have a specific strategic planning process (and many pure captives do not), will that appear as a recommendation on the new “Summary of Findings” supplement. This uncertainty surrounding regulatory consequences, particularly in those areas of suggested practices rather than required practices, leads us to question the propriety of providing such information in the context of the examination process. Perception of burdensome process The HCIC and industry are not opposed to regulation, nor are we implying that the queries posed by Attachment 3 are inappropriate. Indeed, similar queries are posed in the captive's business plan, and captive owners have furnished responses as part of their business plan submission therein. Requesting written responses again as part of the exam process for items duplicative of queries in the captive business plan or of information provided elsewhere during the examination process is simply unnecessary. Again, any actual or perceived unnecessary process may adversely impact Hawaii's competitiveness as a captive domicile. We, as the collective industry, must ascertain if the additional requirements achieve the proper balance of attracting sound captive programs versus prudent regulation. In the comments to Attachment 3, we indicated those queries which we felt were duplicative of information requested elsewhere in the examination requests, or of information already supplied in a captive’s business plan. We respectfully request removal of those queries from Attachment 3. Additionally, captive owners have expressed specific concern in providing some of the requested information. Because responses are provided as of a point in time, there is a possibility that responses provided in Attachment 3 may conflict with past or future assertions. In some circumstances, the captive owner may not desire to provide information in written form. Last, certain queries are overly broad. We respectfully request removal of those queries from Attachment 3 which HCIC felt captive owners would find particularly problematic. The HCIC believes that for the majority of pure captives, who are generally only insuring themselves or their affiliated (owned) operations, there is limited reputational or regulatory risk arising from the operation of these captives. We also acknowledge there are or will be situations where posing some of the queries may be prudent from a regulatory perspective.

In light of the foregoing concerns, and recognizing that most pure captives pose limited reputational or regulatory risk, we also request that responses to remaining Attachment 3 queries (if any) not be required across the board from all pure captives under examination. Rather, where certain queries are deemed prudent and justified, which we believe are the exception rather than the norm, we anticipate specific queries may be applied by HID in those situations.

Attachment 3Examination Questionnaire

Updated: 04.2015

Examinee: Captive Name

Completed By: Name: Title Date:

1

2

3

4

5

6

7

8

Company Response:

Company Response:

Company Response:

Company Response:

Company Response:

Holding Company - Describe whether pressures exist to transfer excess funds upstream to the Parent or to affiliates. Also, describe control procedures to minimize the opportunity to execute the transfer of excess funds to the Parent without Commissioner approval.

Please respond with the Company's and/or Captive Management Company procedures to address these areas as completely as possible. If the area does not apply, please include a brief explanation as to the non-applicability.

Strategic Planning - Describe the Company's strategic planning procedures including analyzing strengths, weaknesses, opportunities and threats and Company risks identification and risk mitigating strategies on an on-going basis.

Company Response:

Code of Conduct/Code of Ethics - Describe the Company's policies in terms of code of conduct and ethics. Describe whether there are policies in place to report management circumventing internal controls.

Company Response:

Directors & Officers - Describe which entity, if any, procures a liability insurance policy to cover the Company's directors and officers in conjunction with the performance of their duties as they relate to the Company. Provide a copy of the insurance policy.

Commitments and Contingencies - Describe whether there any commitments and contingencies that need to be accrued or disclosed since the issuance of the Company's audited financial statements.

Fraud - Describe any known instances or suspicion of fraud or irregularities involving management, employees, or service providers who have significant roles in the internal control structure and/or reporting of the financial statements.

Subsequent Events - Describe whether there are any subsequent events of the Company and affiliates that may have a material impact on the Company.

Risks - Describe the most significant risks facing the Company and risk mitigation strategies in place for these risks, who evaluates, monitors and determines the risk mitigation strategies, included but not limited to the following risk areas: - external environmental conditions- underwriting and product pricing- reserving and loss/claims handling- legal- prospective risks

HCIC:Request removal as overly broad, difficult for captive owners to answer, requires speculation and responses may change over time.

HCIC:Confirm this question is limited to the captive.

HCIC:Request removal as policy requested in Attach 2, Admin #10

HCIC:Request removal as liability policy requested in Attach 2, Admin #11

HCIC:Request revision to add "...not previously disclosed."


Updated: 04.2015

9

10

Company Response:

Company Response:

Management - Describe whether the Company has documented its accounting policies and procedures for key accounting cycles (i.e., investments, underwriting, claims and reinsurance), who is responsible for updating and approving these accounting policies and procedures and the frequency of the updates.

Company Response:

Costs of Capital - Describe the Company's plan to access and ability to obtain capital if necessary to meet minimum capital and surplus requirements.

HCIC:Request removal as unsure how response aids in the examination process as regardless of whether pressures exist or not, the transfer of excess funds require HID approval. Also addressed during annual audit

HCIC:Request removal as information requested in Attach 2, Admin #12

HCIC:Request removal as addressed in captive business plan


Updated: 04.2015

11

12

13

14

15

16

17

18

Company Response:

Capital Management - Describe the Company's procedures to manage and maintain sufficient capital to sustain its business plan and solvency position at all times.

Legal and Regulatory Changes - Describe the Company's procedures to identify, monitor and address changes to the legal and regulatory requirements and environment it operates within.

Company Response:

Company Response:

Loss Analysis and Prevention - Describe the Company's strategies or analysis to identify causes of losses to reduce/eliminate future losses based on historical losses and trends.

Company Response:

Reinsurance - If the Company cedes its risks, describe the Company's procedures of monitoring and frequency and/or collateral requirements of its reinsurer(s).

Company Response:

Pricing - Describe the main components of price/rate determination. Also, include whether pricing/rates are dependent upon investment yield of invested assets.

Company Response:

Company Response:

Loss Reserving - Describe whether there were any significant changes in assumptions and methodologies in the reserving calculations and any changes in reserving policies during the examination period.

Service Providers - Describe the Company's due diligence process in the selection of service providers and the Company's procedures to oversee and evaluate service provider performance. (Service providers include but not limited to captive insurance manager, claims administrator, investment manager and/or custodian, insurance broker, information technology.)

Company Response:

Service Providers - Describe the Company's procedures to ensure its service provider agreements to contain adequate safeguards and damage recovery in the event of nonperformance by the service provider. Also, describe whether the Company has contingency plans in the event the service provider is unable to provide the service.

HCIC:Since the HID has ultimate regulatory authority to review and approve material service providers, this question is unnecessary. If the HID is not comfortable with the service team selected by the captive, the HID can express those concerns at the time of licensure or request for approval.

HCIC:Request removal as information requested in Attach 2, Financial #1

HCIC:Request removal as overly broad and concerned about potential for conflicting responses with other public/non-public statements made by captive or parent. Company.

HCIC:Request removal as addressed during annual audit and documented in actuarial analysis and audit workpapers.


Updated: 04.2015

19 Information Technology - Describe the IT procedures in place to ensure that the Company's financial and insured's information is safeguarded in terms of IT security measures to prevent infiltration and theft of data, sufficient back-up and offsite storage data procedures, sound change management procedures when installing and deploying updates or new applications and an adequate business interruption and business continuity plan in the event of a disaster. When using service providers to perform such IT services, describe whether IT service provider contract includes timeframes of remediation for business interruptions and indemnity clauses when occurrence of breach of data.

Company Response:HCIC:Request removal as IT controls are addressed during annual audit.

HAWAII DOMICILE SYMPOSIUM

AGENDA 2:30pm - 3:00pm Opening Remarks ~ 3:00pm - 3:50pm Session I State of Domicile Briefing: What’s new, tried & true. ~ 3:50pm - 4:10pm Break ~ 4:10pm - 5:00pm Session II Earthquake CAT Bonds & Managing Other Cata-strophic Risks ~ 5:00pm - 6:30pm Networking Reception

PANELISTS Session II David Bell, Kaiser Permanente

Gerald Yoshida, Char Hamilton

Rich Foster, Guy Carpenter

The Hawaii Captive Insurance Council invites you to attend a Hawaii Domicile Symposium

WHEN

September 10th, Thursday

2:30pm—6:30pm

WHERE

The University Club of San Francisco

800 Powell Street, San Francisco, CA

RSVP

[email protected]

Please reply promptly. Seating is limited.

PANELISTS Session I Sanford Saito, State of Hawaii

Loren Nickel, Google, Inc.

Ward Ching, Aon Insurance Managers

HAWAII CAPTIVE INSURANCE COUNCIL . P.O. BOX 2815 . HONOLULU, HAWAII 96803 . WWW.HAWAIICAPTIVES.COM


1

A G E N D A

Meeting of the Executive Committee Wednesday, August 5, 2015 10:00 am (Hawaii Time) 1:00 pm (Pacific Time)

Offices of AON Insurance Managers 201 Merchant Street, 24th floor

Honolulu, HI 96813

Dial +1 (805) 309‐0027 Access Code / Meeting ID: 928‐856‐213


B. Approval of the April 8, 2015 Executive Committee meeting minutes


Legislative

Membership

Finance

Marketing

Website

Education & Forum

Japan Marketing

Industry Liaison Update

Government Relations Update

D. Other Business (if not otherwise covered by committee reports)

HID/HCIC Jul 22 meeting follow‐up

HRS changes – assign a group to evaluate?

Upcoming Events – VCIA, Sept 10 Bay Area trip, Forum

Scholarships – EC to review & select by Aug 31

E. Adjournment

Legislative Committee Report

Date: April 8, 2015

Submitted by: Jerry Yoshida

Committee Members: Jerelyn Brown Danel Licari Paul Shimomoto Ward Ching

Capri Haga Edward Haik Mark Hironaga Christina Kamaka

Chris Mertes Jill Miura Fay Okamoto Jason Palmer

Scot Sterenberg Matt Takamine Colin Teraoka Paul Wagner Jerry Yoshida

A. Subject: Proposed Administrative Rules: Following discussion at the last HCIC Executive Committee and Board meeting, Fay Okamoto transmitted a

notated version of draft #3 of the proposed changes to the captive administrative rules. We are still awaiting feedback and a further meeting with Sanford on this matter.

B. Subject: NAIC F Committee Proposal re Multi-‐State Captive Reinsurers: On February 24, 2015, NAIC staff transmitted a memo and proposed revisions to the Part A Preamble regarding

captive life/health reinsurers. On March 17, 2015 the Chair of the F Committee and Chair of the E Committee issued a memorandum to clarify that the proposed Preamble revisions are intended to apply to only XXX, AXXX, variable annuity and long-‐term care captive reinsurance transactions. The F Committee received numerous comments prior to and at its March meeting in Phoenix, including that the language is still ambiguous. As a result, the F Committee deferred action on the matter and instructed staff to further redraft the Preamble so as to remove any ambiguity. A further revised Preamble is expected to be exposed prior to the next NAIC meeting.

C. Subject: 2015 Hawaii Legislation (changes from last report are noted in red): 1. HB281: Requires the auditor to conduct a study on the feasibility of the State of Hawaii establishing a

captive insurance company to manage the State's property and casualty insurance risks. Appropriates funds for the feasibility study. Passed second reading in the House but did not crossover to the Senate.

2. SB1265 and HB1284: Companion bills to amend various provisions of the Insurance Holding Company

System provisions of the Insurance Code. The Legislature is moving wtith the Senate bill. SB1265 crossed over to the House, heard by House CPC and scheduled for decision-‐making by House Judiciary. No substantive changes.

3. SB1094 and HB925: Companion bills to amend various provisions of the Insurance Code as well as some

other provisions relating to insurers over which the Commissioner has regulatory jurisdiction. The Legislature is moving with the Senate bill. There are some provisions relating to Chapter 431K that would impose fees upon purchasing groups and foreign RRGs, as well as revise certain provisions relating to required filings of foreign RRGs.


Membership Committee Report to Executive Committee

Date: 08/05/15

Submitted by: Danel Licari/Ed Haik (Co-Chairs) A. 2015 Membership Renewals

1) 2015 Membership – total 80 members - 49 captive owners (45 X $325 = $14,625). Count includes four free memberships for formations.

- 31 service providers (31 X $800 = $24,800) - Total revenues from service provider and owner members for 2015 = $39,425.

2) 2014 Membership – total 89 members to date - 55 captive owners (49 X $325 = $15,925) Count includes six free memberships (3 formations, 3 anniversaries). - 34 service providers (34 X $800 = $27,200) - Total revenues from service provider and owner members for 2014 = $43,125.

B. 2015 Hotel Benefit Renewals 1) Hotels renewed (website updated): Pending renewals: - Hilton Hawaiian Village - Sheraton Waikiki - Sheraton Maui - Hawaii Prince - Royal Hawaiian - JW Marriott Ihilani - Mauna Kea Resort - Moana Surfrider - Hapuna Beach Prince - Halekulani - Parc Waikiki - Kahala Resort - Ritz Carlton Kapalua

C. 2015 Membership Drive 1) Free “1st” year membership to new captive formations will continue for 2015. Eleven formations for 2014 were

offered “free” memberships in 2015 plus another eight formed in 2015. So far only four have accepted and one declined since their first captive is a member. Captive managers please reach out to your new formations to take advantage of the “free” membership.

2) HCIC “Award of Excellence” to continue in 2015. 3) Membership committee will try again this year to recruit new captive owner members through anniversary

acknowledgement and gift. Out of twelve anniversaries this year eight are not members. 4) Five service providers have not renewed from 2014. Membership committee to follow up.

D. Ideas/Works In Progress to Increase Membership

1) Membership Committee is open to all ideas related to increasing membership and prize giveaway ideas for next year’s drawing.

2) Possible mass mailing to “new” group of potential members. Target service providers that participate at other domicile forums. Service provider trend seems to be moving towards multi-states.

3) Revisit having the HCIC member application part of captive application process & or ask for regulator “encouragement” to maintain “member in good standing” could that question “Are you a member of the HCIC in good standing?” be asked in concert with the annual licensing update?


o

Date: August 5, 2015

Submitted by: Jason Palmer, Treasurer Finance Committee Members: Jason Palmer, Treasurer ◊ Ryan Nobriga, Assistant Treasurer ◊ Christina Kamaka ◊ Jamie Asato

Information submitted below are based upon financial statements prepared as of

June 30, 2015 Review of Cash Portfolio – As of June 30, 2015 the Company had approximately $565,000 in cash and cash equivalents invested as follows:

Type of Cash & Cash Equivalents Institution Amount as of 6/30/2015

Checking Account, with no return Bank of Hawaii $115,002

Money Market Account, yielding .07% Bank of Hawaii $100,176

Certificate of Deposit, yielding .10%, and set to mature on July 27, 2015

Bank of Hawaii $125,000

Certificate of Deposit, yielding .15%, and set to mature on July 30, 2015

Bank of Hawaii $125,000

Certificate of Deposit, yielding .20%, and set to mature on September 19, 2015

First Hawaiian Bank

$100,000

The Finance Committee has been tasked with seeking investment recommendations from our HCIC member banks/investment firms based on a $500,000 portfolio to start ASAP. The targeted partners for this process will be the Bank and Investment Manager members of the organization. At each certificate of deposit renewal the proceeds are being deposited into the savings account. Financial Statements as of June 30, 2015 – Total assets and total liabilities and equity have increased approximately $104,000 since June 30, 2014 due to the net income for the fiscal year of $32,308 and 2015 Forum Sponsorship and Registration Fees committed to in advance. For the fiscal year ending June 30, 2015 the organization has net income of approximately $32,000, this is largely driven by the net income of approximately $76,000 on the 2014 educational forum. Actual fiscal year results in comparison to budget indicate the Company is $6,000 over budget (positive) in revenue, and $74,000 (positive) under budget from an expense perspective. The large reason for expenses being under budget is due to the forum being under budget by $23,000, minimal utilization of the marketing or legislative budgets totaling $29,000 and the scholarship program being under budget by $11,000.


Finance Committee Report to the Board of Directors

Fiscal Year 2015/2016 Budget – Each Committee has submitted their respective proposed budgets which have been combined into the overall proposed budget attached to this report. The proposed budget, which includes the input from the strategic planning meeting, shows a net income for the fiscal year in the amount of $3,983. Significant changes from prior year are as follows:

The 2015 Forum Committee is estimating revenue of $241,500 and expenses of $141,500 resulting in anticipated income from the conference of $100,000. For comparative purposes the 2014 and 2013 Forums resulted in net income of $76,000 and $124,000, respectively.

The Marketing Committee is re‐implementing the Tokyo, Japan education seminar in November 2015. Sponsorships have been obtained and it is estimated that a $6,000 profit will be made on this event. The profit is budgeted to be utilized to support another educational seminar in Osaka/Nagoya. The budget contains revenue of $23,000 and expenses of the same amount.

Due to the success of Hawaii on the Hill in 2015, the budget contains $10,000 for this event in 2016.

At the strategic planning meeting it was determined that a graphic designer should be contracted to help with a refresh of our logo, website, and printed materials. A budget line item of $15,000 has been earmarked for this purpose.

The Legislative Committee has reduced their budget request by $10,000 due to under‐utilization in years past.

The Education Committee has earmarked $3,200 to purchase two laptops and two LCD projectors to save equipment rental fees at future educational events.

The Scholarship Program budget has been reduced to $8,250 representing a smaller number of participants than originally budgeted in 2014.

Hawaii Captive Insurance CouncilBalance Sheet

As of June 30, 2015 and June 30, 2014

June 30, 2015 June 30, 2014

ASSETSBOH Checking 115,002 137,552 BOH Money Market 100,176 100,106 FHB Certificate of Deposit 100,000 - Time Certificate of Deposit 250,000 250,000

565,178 487,658

Accounts Receivable 54,873 9,272 Deposits - Forum 1,000 5,000 Prepaid expense - Forum 1,085 17,729 Prepaid expense - Other 2,945 1,069

TOTAL ASSETS 625,081 520,728

LIABILITIES & EQUITYAccounts Payable 2,516 - Accrued Expenses 6,486 2,857 Dues Recd in Adv - Owners 7,475 7,475 Dues Recd in Adv - Service Prov 12,000 10,400 Forum Sponsorhips Received in Advance 58,500 31,000 Forum Registrations Received in Advance 33,800 - Japan Sponsorhips Received in Advance 3,000 -

Total Liabilities 123,777 51,732

EquityOpening Bal Equity 7,519 7,519 Retained Earnings 461,477 373,337 Net Income 32,308 88,140

Total Equity 501,304 468,996

TOTAL LIABILITIES & EQUITY 625,081 520,728

Hawaii Captive Insurance CouncilIncome Statement

For the Periods Ended June 30, 2015 and 2014

Period Ended Over/ Period EndedJune 30, Budget (Under) June 30,

2015 FY 2015 Budget 2014Income Forum Sponsors 55,000 56,500 (1,500) 82,000 Registration 111,125 117,000 (5,875) 162,990 Dues 45,525 37,675 7,850 40,787 Membership Awards Sponsorship 5,000 - 5,000 - Japan Seminar Sponsorships - - - - Interest 419 200 219 393

Total Income 217,069 211,375 5,694 286,170

Expenses Forum 90,080 113,700 (23,620) 115,606 HCIC Coordinator Services 60,636 60,637 (1) 60,395 Japan Seminar - 1,500 (1,500) - Accounting Services 3,628 4,000 (372) 3,914 Industry Liason 1,820 5,000 (3,180) 1,766 Tax Services - - - - Charitible Contribution - - - - Insurance 2,153 2,150 3 2,106 Conference Line for EC & BOD Me 1,241 1,500 (259) 1,241 Trade Shows & Advertising 3,446 6,489 (3,043) 4,546 RIMS Dinner 531 2,100 (1,569) 1,396 Social Functions 577 700 (123) 680 Miscellaneous 18 50 (32) 29 Storage Fees 641 650 (9) 641 PO Box 192 400 (208) 399 Membership 1,712 1,770 (58) 1,246 Utilities 402 600 (198) 572 Promotions (newsletter & pubs) 850 4,000 (3,150) - Scholarships 1,844 12,500 (10,656) - Marketing 2,044 20,000 (17,956) - Economic Impact Study - - - 500 Website 260 1,500 (1,240) 368 Meetings 748 1,500 (752) 1,012 Banking Fees 122 100 22 77 Credit Card Fees 50 - 50 6 Postage - - - - Legislative Expenses 4,551 16,000 (11,449) 1,530 Lobbying Expenses - - - - Seminars/Webinar 1,065 2,250 (1,185) - Bad Debt Expense 6,150 - 6,150 -

Total Expenses 184,761 259,096 (74,335) 198,030

Net Income (Loss) 32,308 (47,721) 80,029 88,140

-

Hawaii Captive Insurance Council2015 - 2016 Budgeted Income Statement

Approved Over/ ProposedActual Actual Actual Budget (Under) Budget

YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016Income Forum Sponsorship 42,000$ 82,000$ 55,000$ 56,500$ (1,500)$ 82,000$ Registration 116,450 157,290 111,125 117,000 (5,875) 159,500 Membership Dues 43,763 40,787 45,525 37,675 7,850 44,400 Membership Awards Sponsorship 5,000 - 5,000 Japan Seminar Sponsorships 23,000 Interest 132 393 419 200 219 500

Total Income 202,345 280,470 217,069 211,375 5,694 309,400

ExpensesEducation: Forum 81,750 115,607 90,080 113,700 (23,620) 141,500 Seminars/Webinar 1,332 1,530 1,065 2,250 (1,185) 2,210 Scholarship Program - - 1,844 12,500 (10,656) 8,250 Equipment 3,200 Bad Debt Expense - - 6,150 - 6,150 - Marketing: Japan Seminar 445 - - 1,500 (1,500) 23,000 Hawaii on the Hill 4,336 8,000 (3,664) 10,000 Promotions (newsletter & pubs) 563 - 850 4,000 (3,150) 15,000 Trade Shows & Advertising 5,792 3,312 3,446 6,489 (3,043) 8,000 Marketing 15,000 - 2,044 16,000 (13,956) 5,000 RIMS Dinner 10,030 1,396 531 2,100 (1,569) 2,000 Economic Impact Study - 500 - - - - Industry Liaison - 3,000 1,820 5,000 (3,180) 5,000 Membership 1,487 1,246 1,712 1,770 (58) 2,170 Website 4,677 368 260 1,500 (1,240) 5,500 Legislative expenses 467 - 214 12,000 (11,786) 2,200 Operating: HCIC Coordinator Services 57,750 60,395 60,636 60,637 (1) 60,637 Accounting Services 3,695 3,914 3,628 4,000 (372) 4,000 Insurance 2,017 2,106 2,153 2,150 3 2,200 Conference line for EC & BOD mtgs 922 1,241 1,241 1,500 (259) 1,500 Social Functions - 680 577 700 (123) 1,000 Miscellaneous 201 29 18 50 (32) 50 Storage fees 641 641 641 650 (9) 650 PO Box 180 399 192 400 (208) 200 Utilities 404 572 402 600 (198) 500 Meetings 331 1,012 748 1,500 (752) 1,500 Banking Fees 33 77 122 100 22 150 Credit Card Fees 87 6 50 - 50 - Postage 9 - - - - -

Total Expenses 187,813 198,031 184,760 259,096 (74,336) 305,417

Net Income (Loss) 14,532$ 82,439$ 32,309$ (47,721)$ 80,030$ 3,983$

8/4/2015 HCIC Budget - 2015_20162015-16 Budget

HCIC ForumProposed Budget2015-2016

HHV HapunaOct 12 Nov-13 Approved Over/ Proposed

Budget Actual Actual Actual Budget (Under) BudgetRevenue YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016

Registration total 116,450 157,290 111,125 117,000 (5,875) 159,500 Sponsorship Total 42,000 82,000 55,000 56,500 (1,500) 82,000

ExpensesTotal expenses 81,750 115,607 90,080 113,700 (23,620) 141,500

8/4/2015 HCIC Budget - 2015_2016Forum

HCIC - EducationProposed Budget2015-2016


YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016

ExpensesScholorships -$ -$ 1,844$ 12,500$ (10,656) 8,250$ Legislative educational event 1,332 1,530 1,065 2,000 (935) 1,500 Webinars - - - - - HCIC/ICCIE webinar - - - - - Forum site visit - - - 50 (50) 510 Equipment 3,200 Other - - - 200 (200) 200

- 1,332$ 1,530$ 2,909$ 14,750$ (11,841)$ 13,660$

Comments1) Scholarships - increased cost due to higher room rates at Forum 2015:

PY Actual Proposed

Airfare & other costs 1,844$ 2,750$

# of scholarships 1 3

1,844$ 8,250$

2) Legislative educational event - hosting an informational event with legislators:

PY Actual Proposed

Food 849$ 1,200$

Printing, other 216 300 1,065$ 1,500$

3) Webinars - webinar hosting costs are included in monthly Go To Meeting cost

4) HCIC/ICCIE webinar - estimated equipment fees for Forum session included in Forum budget

# Cost Total

Airfare 2 $ 200 $ 400

Car rental 1 80 80

Parking 2 15 30 $ 510

# Cost Total

Laptop 2 700$ 1,400$

LCD projector 2 900 1,800

3,200$

Note that the cost outlay will be offset by savings on rental costs. In 2014, rental costs were $2,275

7) Other - estimated miscellaneous costs (pastries, copies, etc …)

5) Forum site visit costs - includes airfare, car, parking for neighbor island site visit:

6) Equipment for annual Forum:

8/4/2015HCIC Budget - 2015_2016

Education

HCIC - MarketingProposed Budget2015-2016


YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016IncomeJapan Seminar -$ -$ -$ -$ - 23,000$ RIMS - - - - - Sponsorships - - - - - CICA - - - - -

-$ -$ -$ -$ -$ 23,000$

ExpensesNewsletter 563$ -$ -$ 1,000$ (1,000) Promotions expense (electronic or printed programs) - 850 3,000 (2,150) 15,000 Marketing 15,000 - 2,044 16,000 (13,956) 5,000 Economic Impact Study - 500 - - - Seminars - Booth and Incidentals -

CICA 4,292 3,312 3,446 5,150 (1,704) 5,000 RIMS 10,030 1,396 531 2,100 (1,569) 2,000 West Coast Mini Seminar - - - 3,000 VCIA - - - Japan 445 - - 1,500 (1,500) 23,000 Hawaii on the Hill - 4,000 (4,000) 5,000 NRRA 1,500 - - 1,339 (1,339) Booth (one time expense) - - - -

31,830$ 5,208$ 6,871$ 34,089$ (27,218)$ 58,000$

(31,830)$ (5,208)$ (6,871)$ (34,089)$ 27,218$ (35,000)$

Comments:

1. Japan educational event scheduled for Tokyo in November 2015 will likely have a surplus (estimated at $6,000), therefore the budget includes a $6,000 expense for a Spring 2016 event in Osaka.Nagoya.

2. Hawaii on the Hill budgeted expenses of $10,000 split between Marketing and Legislative Committees.

3. Promotions Expense includes estimated charges for graphic design.

8/4/2015 HCIC Budget - 2015_2016Marketing

HCIC - MembershipProposed Budget2015-2016


YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016Income

Membership DuesAssociate -$ -$ -$ -$ - Captive owner 15,763 14,787 15,925 15,275 650 15,600$ Service provider 28,000 26,000 29,600 22,400 7,200 28,800

43,763$ 40,787$ 45,525$ 37,675$ 7,850$ 44,400$

ExpensesCredit card fees 628$ 544$ 895$ 600$ 295 1,000$ Application flyers - - - - Reg Online 2) 94 270 207 270 (63) 270 Promotional expense 656 329 479 750 (271) 750 Miscellaneous 109 103 131 150 (19) 150

1,487$ 1,246$ 1,712$ 1,770$ (58)$ 2,170$

42,276$ 39,541$ 43,813$ 35,905$ 7,908$ 42,230$

Membership Statistics 1)Associate - - - - Captive owner 43 46 49 47 48 Service provider 31 26 37 28 36

74 72 86 75 84

RatesAssociate 250$ 250$ 250$ Captive owner 325$ 325$ 325$ 325$ 325$ Service provider 800$ 800$ 800$ 800$ 800$

Comments1) Projected membership revenue and count based on reg-on-line count to July 2015. Slightly off from actual 06/30/15 amounts.

Increase in membership due to additional service providers joining.

2) Reg Online fee estimated using prior year budgeted amount.

3) Credit card fees increased to accommodate actual usage to 06/30/15 which seems to indicate that more members are

charging. In the past 1/3 of members paid by credit card; this year increased to 1/2 (1/2 of 84 = 42, Say 1/2 of 42 = 21

owners x cc fee of $12.84 =$269.64 and 21 service providers x cc fee of $31.60 = $663.60)

4) Keeping rates the same. Discontinued Associate category.

8/4/2015 HCIC Budget - 2015_2016Membership

HCIC - WebsiteProposed Budget2015-2016


YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016Expenses

Redesign 4,104$ -$ -$ -$ -$ Enhancements - - 1,000 (1,000) 5,000$ Maintenance 573 368 260 500 (240) 500$ Processing fee - Retro RegOnline membership fee -

4,677$ 368$ 260$ 1,500$ (1,240)$ 5,500$

CommentsRegOnline Fees related to membership & specific events are NOT budgeted for here. These costs are budgetedfor by the specific event or other committees, but the general cost parameters are notated below for informational purposes (last 2 sections of the notes below).

Enhancements - website updates due to brand refresh.

Web design consultant 5,000$ TBD depending on need.

Rounding ‐$

5,000$

Maintenance - covering RegOnline & website hosting costs:

RegOnline annual fees None

RegOnline emailing fees ‐$

Odenex Hosting charges

Fixed charge 300$ Actual 2013 hosting charges were $230.

includes upgraded disk space

includes upgraded bandwidth 100$ Actual 2013 elections online was $82.

On‐line Election ballots

Rounding 100$ e.g. Hawaii vendor compliance annual charges, etc.

500$

Processing Fees: fixed annual fees (budgeted for within HCIC general budget)Credit Card fixed charges ‐$

Processing Fees: varies by each specific "event"; budgeted for by other HCIC committees by each event:Updated 7/2015, verified RegOnline charges to RegOnline account

Reg On‐line Event (reg form) set‐up fee: -$ Activation flat rate per event

Reg On‐line per registration fee 3.55$ per registrant

Reg On‐line per credit card trx fee Varies 3.95% MC/VISA, 3.95% all Others plus 0.95% for Payflow Pro

Verisign fees None None; paid via fixed annual fee above

Processing Fees: for membership management system; budgeted by HCIC membership committee:Outlined below are the charges which could be expected to be incurred to maintain membership database:

Reg On‐line Event per member per year 3.60$ per member per year

maintenance fee

Reg On‐line member Event set‐up fee -$ Activation flat rate

Reg On‐line per credit card trx fee Varies 3.95% MC/VISA, 3.95% all Others plus 0.95% for Payflow Pro

However, majority of members renew with check, so zero fees from RegOnline

8/4/2015 HCIC Budget - 2015_2016Website

HCIC - LegislativeProposed Budget2015-2016


YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016ExpensesLobbying -$ -$ 214$ 11,500$ (11,286)$ 2,000$ CFCI Donation - - - - Multi-party conference calls - - 500 (500) 200 Copying & printing 467 - - - Hawaii on the Hill 4,336 4,000 5,000

467$ -$ 4,550$ 16,000$ (11,786)$ 7,200$

Comments

1. Hawaii on the Hill budgeted expenses of $10,000 split between Marketing and Legislative Committees.

8/4/2015 HCIC Budget - 2015_2016Legislative

HCIC - General OverheadProposed Budget2015-2016


YTD 6/30/13 YTD 6/30/14 YTD 6/30/15 2014 - 2015 Budget 2015-2016Income

Interest income 132 393 419 200 219 500

ExpensesHCIC Coordinator 57,750 60,395 60,636 60,637 (1) 60,637 Bookkeeping fees 3,695 3,914 3,628 4,000 (372) 4,000 Industry Liaison 3,000 1,820 5,000 (3,180) 5,000 Insurance 2,017 2,106 2,153 2,150 3 2,200

Miscellaneous - Storage fee 641 641 641 650 (9) 650 PO Box 180 399 192 400 (208) 200 Licenses/fees/Other 201 29 18 50 (32) 50

Tax compliance fees - - - Meetings (Includes Semi Annual Planning Meetings) 331 1,012 748 1,500 (752) 1,500 Conference calls 922 1,241 1,241 1,500 (259) 1,500 RIMS Dinner 380 - Social Functions (Holiday Luncheon) 680 577 700 (123) 1,000 Banking fees 33 77 122 100 22 150 Utilities 404 572 402 600 (198) 500 Postage 9 - - - - Long Range Planning - - - - - CARFM - - - - - Legal fees - - - - - Credit card - other 87 6 50 - 50 Charitible Contribution - - - - Total expenses 66,650$ 74,072$ 72,228$ 77,287$ (5,059)$ 77,387$

8/4/2015 HCIC Budget - 2015_2016General Overhead

o

Education Committee Report to the Executive Committee

Date: August 5, 2015

Submitted by: Jill Miura Education Committee Members: Christina Kamaka, Craig Watanabe, Jamie Asato, Ryan Nobriga, Jill Miura

A. Project Coordinator Contract Review Recommendations:

Compensation Minor wording changes to Article III Services to be Performed by Consultant

o Section 3.01 I. Work with Treasurer to build and monitor HCIC’s budget and coordinate with other committee heads on expenses, as needed.

o Section 3.01 K. Work with the appropriate committees in tracking legislation of interest to HCIC members, assisting in the coordination of efforts to support legislation favored by HCIC and keeping members apprised of legislative developments, as needed.

o Section 3.01 L. Coordinate HCIC website, retrieving emails and all other correspondence directed to HCIC on a daily basis and to timely respond thereto and preparing and maintaining mailing lists and HCIC statistical databases – considering revision as project coordinator duties have expanded regarding website. Gathering more information.

Recommend reviewing contract terms every 3 years unless there is a significant change in duties of the project coordinator. The 3 year period would commence next year (2016).

B. Forum 2016

Selection of venue Solicited proposals from Hilton Hawaiian Village, Sheraton, Kahala Hotel Received responses from the Hilton and Kahala; Sheraton not available during period requested Also inquired with Four Seasons Ko Olina – not available

Recommend Hilton as Kahala Hotel does not have adequate meeting space Dates available:

o October 10 – 12 (M – W) o October 12 – 14 (W – F) o November 2 – 4 (W – F)

Committee’s preference is the October dates, request feedback and approval of EC to proceed.

C. Forum 2017 RFP process to start Chair

D. Webinars

Reviewing Strategic Asset Alliance – investment consulting firm – approached HCIC Forum 2015 submissions that were not selected – Willis, Aon sessions


hcic bod meeting - agenda...

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