Report Title:

HEMIC; General Liability Insurance

Description:

Requires Hawaii Employers' Mutual Insurance Company to offer general liability insurance for small businesses and nonprofit organizations.

THE SENATE

S.B. NO.

904

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO HAWAII EMPLOYERS' MUTUAL INSURANCE COMPANY.

 

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

SECTION 1. The legislature finds that small businesses and nonprofit organizations are unable to afford the premiums for or cannot procure general liability insurance. Without general liability insurance, these entities cannot continue to operate, which results in potential economic catastrophe for the State since most Hawaii businesses are small business operations and many nonprofit organizations provide much needed social services.

The purpose of this Act is to require the Hawaii Employers' Mutual Insurance Company to offer general liability insurance to small businesses and nonprofit organizations.

SECTION 2. Section 431:14A-102, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""General liability insurance" shall have the same meaning as general casualty insurance under section 431:1-209."

""Nonprofit organization" means any organization that is exempt from taxation under section 501(c) of the Internal Revenue Code of 1986, as amended."

""Small business" means a for-profit enterprise consisting of fewer than one hundred full-time or part-time employees."

SECTION 3. Section 431:14A-101, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:14A-101[]] Purpose. The Hawaii employers' mutual insurance company is established to provide workers' compensation coverage and general liability insurance to employers of the State at the highest level of service with the lowest possible cost, consistent with reasonable and applicable actuarial standards and the sound financial integrity of the company. The purposes of the company are to provide the highest standard of workplace safety and loss prevention, to encourage employer involvement, to afford protection against liability claims, and to be responsive to each policyholder's experience, practice, and operating effectiveness."

SECTION 4. Section 431:14A-103, Hawaii Revised Statutes, is amended as follows:

1. By amending subsections (a) and (b) to read:

"(a) The Hawaii employers' mutual insurance company is established as an independent corporation to provide workers' compensation insurance and related services to Hawaii employers[.], and general liability insurance to Hawaii nonprofit organizations and small businesses. The company may be reorganized as a nonprofit corporation under chapter 414D.

(b) The company shall be organized and operated as a domestic mutual insurance company. The company shall comply with, unless specifically excluded, all requirements of the insurance code regarding a domestic mutual insurance company. The company shall not be an agency of the State. The company or its liabilities shall not be deemed to constitute debts or liabilities of the State of Hawaii or pledges of the full faith and credit of the State. The company shall write workers' compensation insurance policies covering Hawaii employers as required or authorized by law and employers' liability to the same extent as any other private insurer[.] and general liability insurance covering nonprofit organizations and small businesses. The company shall not write other lines of insurance, reinsurance, or excess insurance."

2. By amending subsection (g) to read:

"(g) [On or after January 1, 1997, the] The company shall provide [workers']:

(1) Workers' compensation coverage to Hawaii employers otherwise entitled to coverage but not able to or not electing to purchase coverage in the voluntary insurance market, and are not authorized, either individually or as a part of a group, to self-insure. An authorized self-insured is eligible for coverage upon termination of self-insurance[.]; and

(2) General liability insurance coverage for nonprofit organizations and small businesses that demonstrate an inability to afford or procure general liability insurance from the insurance market."

SECTION 5. Section 431:14A-104, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) For purposes of providing representation on the board, the company shall consist of industry divisions and a high risk division. Assignments to each division shall be made by the administrator with the approval of the board. The [initial] company divisions shall include:

(1) Manufacturing and producers;

(2) Services, entertainment, and amusement;

(3) Professions;

(4) Construction;

(5) Wholesale and retail sales;

(6) Transportation and public utilities;

(7) Finance, insurance, and real estate; [and]

(8) High risk[.];

(9) Nonprofit organizations; and

(10) Small businesses."

SECTION 6. Section 431:14A-105, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) The board of directors of the company shall be responsible for the organization, management, policies, and activities of the company. The board shall consist of [nine] eleven voting members and one nonvoting member. The voting members shall consist of the following:

(1) [Eight] Ten directors who shall be owners, officers, or employees of policyholders of the company and shall represent each of the company divisions; and

(2) One director who shall be a public, at-large member elected by the board of directors.

The administrator shall be the nonvoting member of the board.

(b) The [initial eight] ten division directors shall be appointed by the governor [within sixty days of June 19, 1996,] and shall serve for terms of one year each. The governor shall ensure adequate representation from the major sectors of the economy and workforce in the State.

The public, at-large member initially elected by the board shall serve for a term of one year.

The [initial] board of directors shall determine the staggering and length of future directors' terms; provided that no term shall exceed three years. Upon the expiration of the terms of the initial division directors, the company's policyholders in the division represented by the director shall elect the directors. Each director shall serve for terms as specified by the board unless sooner removed for cause pursuant to rules adopted by the board. Each director shall hold office until a successor is elected as provided in this section. No person shall serve more than two full terms as a director. Any other law to the contrary notwithstanding, the election and composition of the board of directors as provided in this section shall be deemed adequate to qualify the company as a mutual insurer under chapter 431."

SECTION 7. Section 431:14A-107, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Except as otherwise provided by law, the board may:

(1) Transact workers' compensation insurance policies required or authorized by state law to the same extent as any other insurer;

(2) Transact general liability insurance policies for nonprofit organizations and small businesses to the same extent as any other insurer;

[(2)] (3) Provide the terms and conditions of an insurance policy;

[(3)] (4) Provide that any written instrument be executed for the company by the administrator or the administrator's agent;

[(4)] (5) Enter into agreements to reinsure all or part of the company's exposure to loss and to limit the risk to the company; and

[(5)] (6) Employ persons to administer the company, including legal counsel, accountants, insurance consultants, administrators, qualified actuaries, investment managers, adjustors, other experts, and clerical employees and pay compensation and expenses in connection therewith."

SECTION 8. Section 431:14A-115, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:14A-115[]] Denial, cancellation, and termination. The company may deny coverage or renewal of an existing policy or may terminate an existing policy of a policyholder or applicant for:

(1) Nonpayment of an undisputed premium;

(2) Refusal to permit on-site workplace safety examinations;

(3) Failure to comply with workplace safety and health programs required by the company; [or]

(4) Failure to accurately disclose information concerning the applicant's or policyholder's ownership, change of ownership, operations, or payroll, including the allocation of payroll among state and federal compensation programs, and other information necessary for the board to determine premium rates[.]; or

(5) Refusal to permit inspections of property for purposes of assessing risks associated with general liability insurance."

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect on July 1, 2003.

INTRODUCED BY:

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