Hawaii’s insurance commissioner refuses to accept gifts from outside interests, helping the state earn high marks for its conflict of interest rules in the State Integrity Investigation.

Hawaii received an overall F, or 57 percent, grade in the State Insurance Commissions category. That put us in 37th place, tied with North Dakota. Mississippi came in first. At the bottom was Wyoming.

Despite the failing grade, conflict of interest and gift rules — both in law and in practice — were bright points in the analysis.

Overall, the State Integrity Investigation ranked Hawaii 10th after Civil Beat reporters researched 330 “Corruption Risk Indicators” across 14 categories of government. (Click here to learn more about the methodology used for the project.)

Bottom line: Vigilance on the part of Hawaii’s insurance commissioner have meant that conflict of interest rules appear to be effective at preventing special interests from influencing the office.

Here’s the basis for the 100-percent grade that contributed to the overall 57 percent score in the State Insurance Commissions category. It’s your turn to evaluate whether Civil Beat got it right and to share what you think should be done to improve the situation. Share your comments at the bottom of this story.

Here’s the first question the State Integrity Investigation asked regarding state insurance commissions.

Are the conflicts of interest regulations covering members of the board and senior staff of the state insurance commission effective?

Overall score: 100%

Here are the criteria Civil Beat used to answer that question and what Civil Beat found.

1. In practice, the regulations governing gifts and hospitality offered to the members of the board and senior staff of the state insurance commission are effective.

Notes: There is no state insurance commission, but there is a state insurance commissioner. Employees are prohibited from soliciting, accepting or receiving any gifts meant to influence or reward them. Employees are required to file a disclosure statement with the State Ethics Commission for gift or gifts valued more than $200 from one source. State Insurance Commissioner Gordon Ito said he has not received any gifts. Lloyd Lim, Health Branch administrator with the Hawaii Insurance Division, said the office generally does not accept gifts. Former state Insurance Commissioner J.P. Schmidt said he did not accept any gifts as a commissioner. However, insurance companies, brokers and attorneys have dropped off Christmas fruit baskets to the Insurance Division, Schmidt said.

Sources:

• Gordon Ito, insurance commissioner, Hawaii Insurance Division, 9/28/11, telephone interview.

• Lloyd Lim, Health Branch administrator, Hawaii Insurance Division, 9/30/11, telephone interview.

• J.P. Schmidt, former insurance commissioner, Hawaii Insurance Division, 9/30/11, telephone interview.

Score: 100%

Scoring criteria: These are the scoring criteria for this question.
Very Strong: The regulations governing gifts and hospitality for the members of the board and senior staff of the state insurance commission are regularly enforced. Members of the board and senior staff of the state insurance commission never or rarely accept gifts or hospitality above what is allowed.
Fair: The regulations governing gifts and hospitality to the members of the board and senior staff of the state insurance commission are generally applied though exceptions exist. Some members of the board and senior staff of the state insurance commission are known to accept greater amounts of gifts and hospitality from outside interest groups or private sector actors than is allowed.
Very Weak: The regulations governing gifts and hospitality to the members of the board and senior staff of the state insurance commission are routinely ignored and/or unenforced. Members of the board and senior staff of the state insurance commission routinely accept significant amounts of gifts and hospitality from outside interest groups and actors seeking to influence their decisions.

2. In practice, the regulations restricting post-government private sector employment for the members of the board and senior staff of the state insurance commission are effective.

Notes: There is no state insurance commission, but there is a state insurance commissioner. The post employment restriction also applies to state employees, including members of boards and commissions. For 12 months at the end of their employment, former employees are not allowed to represent any business or person for a fee on issues they participated on. State Insurance Commissioner Gordon Ito said the former commissioners have followed the 12 month rule as far as he knows. Lloyd Lim, Health Branch administrator with the Hawaii Insurance Division, said he is not personally aware of issues with past insurance commissioners. Former state Insurance Commissioner J.P. Schmidt said he has followed the rule. Schmidt serves as a counsel at a Honolulu law firm, where he gives advice. Schmidt spent seven and a half years as a state insurance commissioner, which has an average term of two years.

Sources:

• Gordon Ito, insurance commissioner, Hawaii Insurance Division, 9/28/11, telephone interview.

• Lloyd Lim, Health Branch administrator, Hawaii Insurance Division, 9/30/11, telephone interview.

• J.P. Schmidt, former insurance commissioner, Hawaii Insurance Division, 9/30/11, telephone interview.

Score: 100%

Scoring criteria: These are the scoring criteria for this question.
Very Strong: The regulations restricting post-government private sector employment are uniformly enforced. There are no known cases of those officials taking jobs in the private sector after leaving government where they directly lobby or seek to influence their former government colleagues without an adequate cooling off period.
Fair: The regulations are generally enforced though some exceptions exist. Members of the board and senior staff of the state insurance commission are sometimes known to take jobs in the private sector that entail directly lobbying or seeking to influence their former government colleagues. Cooling off periods are short and sometimes ignored.
Very Weak: The regulations are rarely or never enforced. Members of the board and senior staff of the state insurance commission routinely take jobs in the private sector following government employment that involve direct lobbying or influencing of former government colleagues. Cooling off periods are non-existent or never enforced.

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