Hawaii Insurance Adjuster License Practice Exam

What determines the financial penalty for a violation of the Hawaii Insurance Code?

1. The severity and duration of the violation

2. The number of complaints received

3. The age of the insurer

4. The history of compliance

The correct answer is: The severity and duration of the violation

The financial penalty for a violation of the Hawaii Insurance Code is primarily determined by the severity and duration of the violation. This means that when assessing penalties, regulators consider how serious the breach is and how long it has been occurring. For instance, a more severe violation that results in significant harm or risk to policyholders would attract a higher penalty than a minor or less impactful violation. Similarly, if a violation has been ongoing for an extended period, this may lead to a cumulative effect that results in a more substantial financial consequence. The other considerations, like the number of complaints received, the age of the insurer, and the history of compliance, can inform the overall evaluation but do not solely dictate the penalty amount. For instance, while a pattern of multiple complaints might indicate a serious issue, it is the nature and extent of the violations themselves that are pivotal in deciding the financial penalties.