Report Title:

Hospital and Professional Liability Risk Financing

Description:

Permits Hawaii Health Systems Corporation to create a captive insurance company to provide malpractice coverage to the Department of Health, and University of Hawaii School of Medicine. (SB2957 HD1)

THE SENATE

S.B. NO.

2957

TWENTY-SECOND LEGISLATURE, 2004

S.D. 2

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

RELATING TO HOSPITAL AND PROFESSIONAL LIABILITY RISK FINANCING.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the cost of purchasing medical malpractice and hospital liability coverage continues to rise and that stability in risk financing is needed for the Hawaii health systems corporation, the department of health, and the John A. Burns school of medicine. The escalating costs of premiums, the lack of insurers providing hospital and medical malpractice liability coverage in Hawaii, the decreasing limits of coverage available, and coverage restrictions make it important to establish a captive insurance company to insure and control exposure to these liability risks.

SECTION 2. The purpose of this Act is to provide initial funding of a domestic captive insurance company to be created by the Hawaii health systems corporation, which, when established, may provide, in addition to itself, malpractice coverage to the department of health and the John A. Burns school of medicine.

In organizing the captive insurer, the Hawaii health systems corporation may prepare a formalized business plan and application to be submitted to the insurance division for review and approval, and a formalized financial plan to be submitted to the director of finance for review and approval; provided that the business plan shall include a captive insurer board of directors on which at least one of the members shall represent the department of health, if the agency is insured by the captive insurance company, and one member shall represent the John A. Burns school of medicine, if the agency is insured by the captive insurance company.

SECTION 3. Notwithstanding section 431:19-101, Hawaii Revised Statutes, as it defines "affiliated company," medical malpractice insurance coverage may be provided by the captive insurer, which the Hawaii health systems corporation may create, to the department of health and the John A. Burns school of medicine.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $9,000,000 or so much thereof as may be necessary for fiscal year 2004-2005 to fund the start-up of the captive insurer.

The sum appropriated shall be expended by the Hawaii health systems corporation for the purposes of this Act.

SECTION 5. This Act shall take effect upon its approval except that section 4 shall take effect on July 1, 2004.