HRS §431:4-326
How members share assets when an insurer closes
When a domestic mutual insurer shuts down, after paying its debts and policy claims, the remaining money goes to members who belonged within the 36 months before its license ended. Each member's share is based on the premiums they paid compared to all members' premiums. For life insurers, a fair plan must be approved by the insurance commissioner.
The statute, as written — Members' share of assets
(a) Upon the liquidation of a domestic mutual insurer, its assets remaining after discharge of its indebtedness and policy obligations shall be distributed to its members who were members within the thirty-six months prior to the last termination of its certificate of authority. (b) The distributive share of each member shall be in the proportion that the aggregate premiums earned by the insurer on the policies of the member during the combined periods of the member's membership, bear to the aggregate of all premiums so earned on the policies of all members. If a life insurer, the insurer shall make a reasonable classification of its life insurance policies so held by the members and a formula, based upon such classification, for determining the equitable distributive share of each such member. The classification and formula shall be subject to the commissioner's approval.
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