STAND. COM. REP. NO. 10-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 1759

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.B. No. 1759 entitled:

"A BILL FOR AN ACT RELATING TO WORKERS' COMPENSATION INSURANCE,"

begs leave to report as follows:

The purpose of this bill is to allow a workers' compensation insurer to place a surcharge on the cost of a workers' compensation insurance policy offered to an applicant, if the applicant was offered a policy by the Hawaii Employers' Mutual Insurance Company (HEMIC) that was also subject to a surcharge.

The Legislative Information Services of Hawaii, ILWU, Local 142, and the Hawaii Insurers Council testified in support of this measure. The Department of Labor and Industrial Relations, Insurance Division of the Department of Commerce and Consumer Affairs, HEMIC, and the Hawaii Independent Insurance Agents Association opposed this measure.

Your Committee finds that HEMIC was created by the Legislature in 1996 in response to skyrocketing workers' compensation insurance premiums and the lack of available insurers to provide coverage to employers. To allow HEMIC to grow and compete with private workers' compensation insurers, the Legislature provided HEMIC with certain advantages in the insurance marketplace.

Your Committee also finds that workers' compensation rates have since stabilized, and various workers' compensation insurers have called on the Legislature to level the playing field between HEMIC and the rest of the workers' compensation insurers. This bill takes a step toward leveling that playing field.

However, many concerns were raised regarding:

(1) The ability of insurers to sidestep rate regulation under this bill;

(2) The overall impact this bill would have on workers' compensation rates; and

(3) Possible manipulation of the law for financial gain at the expense of the consumer.

Your Committee feels that these issues are within the purview and scope of the Committee on Consumer Protection and Commerce and urges that Committee to carefully review these concerns as this measure continues on in the legislative process.

As affirmed by the record of votes of the members of your Committee on Labor and Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1759 and recommends that it pass Second Reading and be referred to the Committee on Consumer Protection and Commerce.

 

Respectfully submitted on behalf of the members of the Committee on Labor and Public Employment,

 

____________________________

MARCUS R. OSHIRO, Chair