Report Title:

Hawaii Health Systems Corporation; Captive Insurer

Description:

Authorizes and funds creation of captive insurance company by HHSC to provide medical malpractice and hospital professional and general liability coverage to HHSC, DOH, UH medical school, and their physicians.

HOUSE OF REPRESENTATIVES

H.B. NO.

1059

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RElating to the hawaii health systems corporation.

 

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

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

The purpose of this Act is to authorize and provide initial funding for the establishment of a domestic captive insurance company by the Hawaii health systems corporation to provide medical malpractice and hospital professional and general liability coverage for the corporation, the department of health, the John A. Burns school of medicine, and the physicians serving these entities.

SECTION 2. Chapter 323F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§323F-   Captive insurance company; authorized. (a) The corporation may establish a captive insurance company in accordance with article 19, chapter 431, to provide medical malpractice and hospital professional and general liability coverage for Hawaii health systems facilities and their physicians.

(b) Notwithstanding section 431:19-102(a)(1), a captive insurance company established pursuant to this section may provide medical malpractice and hospital professional and general liability coverage for the department of health and the John A. Burns school of medicine.

(c) In organizing a captive insurance company:

(1) The corporation shall submit a formalized financial plan to the director of finance for review and approval; and

(2) Upon receiving the approval required by paragraph (1), and in addition to the documents required by article 19, chapter 431, the corporation shall submit to the insurance commissioner a formalized business plan that includes the establishment of a captive insurer board of directors. At least one of the board members shall represent the department of health if the department is insured by the captive insurance company, and at least one of the members shall represent the John A. Burns school of medicine if the school is insured by the captive insurance company."

SECTION 3. Section 431:19-102, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any captive insurance company, when permitted by its articles of association or articles of incorporation, may apply to the commissioner for a certificate of authority to do any and all insurance set forth in subsection (h); provided that:

(1) No pure captive insurance company may insure any risks other than those of its parent and affiliated companies; provided that the Hawaii health systems corporation may insure risks authorized under section 323F-  ;

(2) No association captive insurance company may insure any risks other than those of the member organizations of its association and their affiliated companies;

(3) No captive insurance company may provide personal motor vehicle or homeowner's insurance coverage or any component thereof, other than as employee benefits for the employees of a parent, association, or its members, and their respective affiliated companies; or as reinsurance as may be allowed under this article; and

(4) No captive insurance company may accept or cede insurance except as provided in section 431:19-111."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2005-2006, to the health systems special fund.

SECTION 5. There is appropriated out of the health systems special fund the sum of $          , or so much thereof as may be necessary for fiscal year 2005-2006, for the Hawaii health systems corporation to establish the captive insurance company authorized by this Act.

The sum appropriated shall be expended by the department of health for the purposes of this Act.

SECTION 6. This Act shall take effect upon its approval; provided that sections 4 and 5 shall take effect on July 1, 2005.

INTRODUCED BY:

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