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 as a 5-year pilot project. (SD2)

THE SENATE

S.B. NO.

131

TWENTY-THIRD LEGISLATURE, 2005

S.D. 2

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 and the physicians serving this entity. 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 entity.

The purpose of this Act is to authorize and provide initial funding for the establishment of a domestic captive insurance company five year pilot project by the Hawaii health systems corporation to provide medical malpractice and hospital professional and general liability coverage for the corporation and the physicians serving the entity.

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 pilot project 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) 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."

SECTION 3. Section 431:19-102, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(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 captive insurance company established by 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."

2. By amending subsection (h) to read:

"(h) A captive insurance company may engage in the business of any of the following types of insurance:

(1) All casualty insurance;

(2) Marine and transportation insurance;

(3) Marine protection and indemnity insurance, which includes insurance against, or against legal liability of the insured for loss, damage, or expense arising out of or incident to, the ownership, operation, chartering, maintenance, use, repair, or construction of a vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, death, or for loss of or damage to the property of another person;

(4) Wet marine and transportation insurance, which is that part of marine and transportation insurance that includes only:

(A) Insurance upon vessels, crafts, hulls, and of interests therein or with relation thereto;

(B) Insurance of marine builder's risks, marine war risks and contracts, or marine protection and indemnity insurance;

(C) Insurance of freights and disbursements pertaining to a subject of insurance; and

(D) Insurance of personal property and interests therein, in the course of exportation from or importation into any country, and in the course of transportation coastwise or on inland waters, including transportation by land, water, or air from point of origin to final destination, with respect to, appertaining to, or in connection with any and all risks or perils of navigation, transit, or transportation, and while being prepared for and while awaiting shipment, and during delays, storage, transshipment, or reshipment incident thereto;

(5) Property insurance;

(6) Surety insurance;

(7) Title insurance;

(8) Credit life insurance and credit disability insurance offered as part of, or relating directly to the business or operations of its parent or affiliated companies; and

(9) Other lines of insurance that the commissioner may allow. The commissioner shall allow the captive insurance company established by the Hawaii health systems corporation to provide medical malpractice and hospital professional and general liability coverage pursuant to section 323F-  ."

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. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2050; provided that:

(1) Sections 4 and 5 shall take effect on July 1, 2005; and

(2) This Act shall be repealed on June 30, 2010, and section 431:19-102(a) and (h), Hawaii Revised Statutes, is reenacted in the form in which it read on the day before the approval of this Act.