HOUSE OF REPRESENTATIVES

H.R. NO.

108

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 
   


HOUSE RESOLUTION

 

REQUESTING THE AUDITOR TO CONDUCT A MANAGEMENT AUDIT OF THE HAWAII EMPLOYERS' MUTUAL INSURANCE COMPANY (hemic).

 

 

WHEREAS, Act 261, Session Laws of Hawaii 1996, established the Hawaii Employers' Mutual Insurance Company (HEMIC) as a nonprofit corporation to replace the existing workers' compensation assigned risk pool and to provide workers' compensation coverage for Hawaii employers, including employers who have in good faith, but without success, sought workers' compensation insurance in the voluntary market; and

WHEREAS, Act 261, codified into the Insurance Code as article 14A, mandates that HEMIC will operate as a domestic mutual insurance company and will not be a state agency, and will be owned and governed by its policyholders, Hawaii employers, and will not receive any state appropriations, and further, that HEMIC or its liabilities will not be deemed to constitute a debt or liability of the State or a pledge of full faith and credit of the State; and

WHEREAS, Act 261 intended that:

(1) HEMIC be a company of last resort that must basically take all comers;

(2) In order to avoid the possibility of an eventual legislative "bail out", the act would not limit the HEMIC board's ability to make prudent business decisions; and

(3) The board would therefore be authorized to exercise a full range of financing options to ensure HEMIC's viability just as would any private sector business;

and

WHEREAS, HEMIC presently enjoys certain exclusions and exemptions from requirements that apply to other domestic insurers such as those relating to surplus requirements, assessments by the Hawaii hurricane relief fund, and participation in guaranty associations; and

WHEREAS, HEMIC competes directly with other insurers for business but also insures businesses that cannot find coverage in the private sector, and

WHEREAS, HEMIC can add surcharges for taking on a larger proportion of additional risks even though other insurers cannot; and

WHEREAS, an oversight council is attached to the Department of Commerce and Consumer Affairs and will submit its findings and recommendations to the Governor; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-second Legislature of the State of Hawaii, Regular Session of 2003, the Auditor is respectfully requested to conduct a management audit of the Hawaii Employers' Mutual Insurance Company (HEMIC) to determine whether HEMIC is carrying out the intent of Act 261, Session Laws of Hawaii, 1996, as amended; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit a report of any findings and recommendations to the Legislature not later than twenty days prior to the convening of the Regular Session of 2004; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to Auditor and the Chairperson of the Board of Directors of the Hawaii Employers' Mutual Insurance Company.

 

 

 

OFFERED BY:

_____________________________

Report Title:

HEMIC