STAND. COM. REP. NO. 806

Honolulu, Hawaii

, 2001

RE: S.B. No. 1066

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 1066 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

The purpose of this measure is to establish higher minimum net worth requirements for mutual benefit societies and health maintenance organizations.

The Insurance Commissioner testified in support of this measure. Testimony in opposition to the measure was received from Hawaii Management Alliance Association, AlohaCare, Queen's Health Plans, and The Chamber of Commerce of Hawaii.

The recent seizures of several health insurers by the Insurance Division underscore the need for more stringent minimum net worth requirements for mutual benefit societies and health maintenance organizations (HMOs).

This measure establishes stricter standards by requiring mutual benefit societies and HMOs to maintain a minimum net worth equal to three times the average of monthly net claims incurred during the past calendar year if this sum is greater than $1,500,000, or other sums based upon existing minimum net worth formulas.

Your Committee finds that insurers have expressed concerns that the establishment of higher net worth requirements may force the closure of some insurers. Your Committee further finds that these insurers are engaged in discussions with the Insurance Division regarding appropriate net worth formulas, but that the parties require additional time to resolve this issue. Therefore, your Committee has amended this measure by inserting an effective date of July 1, 2050, to maintain the viability of this measure while these discussions continue. Your Committee has also amended this measure to reflect preferred drafting style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1066, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1066, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair