THE SENATE

S.B. NO.

2938

TWENTY-NINTH LEGISLATURE, 2018

S.D. 1

STATE OF HAWAII

H.D. 1

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO INSURANCE REGULATORY VARIANCE.

 

 

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

 


     SECTION 1.  The legislature finds that technology and consumer expectations are rapidly transforming the regulated health insurance industry.  Substantial investments are being made in innovative health insurance products, services, and technologies, which have great potential to improve efficiencies, reduce costs of insurance transactions, improve health outcomes, and improve overall customer understanding of health and wellness.

     The legislature further finds that some innovations may disrupt current insurance business models and introduce new and more efficient ways of doing business.  By actively engaging with, and encouraging, the piloting and testing of new and innovative ways of delivering insurance to businesses and consumers, the State can expand insurance markets, particularly by making insurance transactions more accessible for first-time insurance buyers.

     However, the legislature additionally finds that the strict application of uniformly applicable requirements can lead to unintended results when new and innovative technologies, products, and services are first tested in a closely regulated marketplace like insurance.  In these circumstances, it may be appropriate to adopt a procedure for insurance regulators to provide targeted relief to persons or entities subject to regulation, thus promoting expanded competition and innovation for the benefit of businesses and consumers.

     The legislature also finds that approving applications for targeted or limited variances, waivers, or no action letters with respect to the enforcement or application of certain requirements of the State's health insurance laws should be permissible, to the extent that:

     (1)  An applicant for such relief is able to demonstrate that the public policy purpose of the underlying law or rule may be achieved by alternative means; and

     (2)  The application of the current law or rule would inhibit or discourage the introduction of new, innovative, or more efficient insurance products, services, or technologies to the State's consumers.

     The purpose of this Act is to promote innovative health insurance technologies, products, and services by permitting the insurance commissioner to approve applications for health insurer no action letters, waivers, or variances.

     SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to part II of article 2 to be appropriately designated and to read as follows:

     "§431:2-    Application for a health insurer no action letter, waiver, or variance; regulatory sandbox.  (a)  This section shall apply to health insurers subject to article 10A of chapter 431, or chapters 432 and 432D, and are participants in the regulatory sandbox.

     (b)  Applications for a health insurer no action letter, waiver, or variance must demonstrate that health insurer applicants have the following:

     (1)  A certificate of authority to sell health insurance in this State; and

     (2)  A location, whether physical or virtual, that is adequately accessible to the commissioner, from which testing will be developed and performed, and where all required records, documents, and data will be maintained.

     (c)  Subject to the limitations specified in subsection (b):

     (1)  Under the regulatory sandbox, the commissioner may approve an application for a health insurer no action letter, waiver, or variance relating to a requirement of this state's health insurance laws or rules if a person or entity subject to this state's health insurance laws demonstrates that the public policy goals of the law or rule may be achieved by other means and that the requirement may inhibit or discourage the introduction of new, innovative, or more efficient insurance products, services, or technologies;

     (2)  An approval issued pursuant to this section shall be of a duration deemed appropriate by the commissioner; and

     (3)  The commissioner may issue approvals of differing or limited durations and scope.

     (d)  The commissioner shall not issue an approval under this section related to any provision of this chapter governing:

     (1)  Assets, deposits, investments, capital, surplus, or other solvency requirements applicable to insurance companies;

     (2)  Licensing and certificate of authority requirements applicable to any person or entity required to hold a license under this chapter;

     (3)  Required participation in any assigned risk plan, residual market, or guaranty fund;

     (4)  Requirements that the insurance division maintain its accreditation by the National Association of Insurance Commissioners, unless an approval under this section is permitted;

     (5)  The applicability of any tax or fee; and

     (6)  Any other requirement that the commissioner deems ineligible for the issuance of an approval under this section.

     (e)  When an application under this section is approved, the commissioner shall provide public notice of the application.  The notice shall include:

     (1)  The specific law or rule to which the application applies;

     (2)  The name of the applicant; and

     (3)  The duration of the application.

     The requirements of this subsection may be satisfied by the publication of a notice on the insurance division's website.

     (f)  The commissioner shall adopt rules pursuant to chapter 91 that establish a procedure for the submission, granting, or denying of an application under this section; provided that the rules shall:

     (1)  Include procedures for the granting or denial of an application within sixty days of the receipt of the application;

     (2)  Prescribe conditions under which the commissioner may revoke an approval issued pursuant to this section; and

     (3)  Authorize the commissioner to require reasonable terms, conditions, or limitations on the conduct or activity permitted; provided that the terms, conditions, or limitations may include a requirement that the applicant shall take reasonable steps to protect consumers, mitigate risks, or submit data or analysis to the commissioner on the market impact of the application's approval.

     (g)  Notwithstanding the provisions of subsection (e), the following shall be considered a trade secret and confidential information and shall not be subject to public disclosure:

     (1)  An application;

     (2)  Information contained in an application;

     (3)  All information provided to the commissioner by an applicant; and

     (4)  Any communication between the insurance division and the recipient that is required pursuant to the terms of the approval.

     (h)  The commissioner's authority to grant an approval under this section shall not be construed to limit or otherwise affect the authority of the commissioner to exercise discretion to waive or enforce requirements as permitted under any other law.

     (i)  No later than twenty days prior to the convening of each regular session, the commissioner shall submit an annual report to the legislature, related to the disposition of applications granted under this section, that includes the following information for the previous year:

     (1)  The total number of applications granted or denied by the commissioner;

     (2)  For each approval by the commissioner, the information required under subsection (e);

     (3)  For each provision in this chapter to which an approval applies, the commissioner's recommendation as to whether the provision should be continued, eliminated, or amended in order to promote innovation and establish a uniform regulatory system for all regulated entities; and

     (4)  A list of approvals that have lapsed or been revoked and, if revoked, a description of other regulatory or disciplinary actions, if any, that resulted in, accompanied, or resulted from the revocation."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2050.


 


 

Report Title:

Insurance Regulatory Variance; Insurance Commissioner; Applications; No Action Letters, Waivers, or Variances; Health Insurers

 

Description:

Permits the insurance commissioner to approve applications for health insurer no action letters, waivers, or variances with respect to specific requirements of the health insurance laws or its rules when certain conditions are met.  (SB2938 HD1)

 

 

 

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