The recently adjourned, 2011 session of the Hawaii Legislature passed several insurance-related bills to send to the Governor's desk. The bills are summarized below.
HB 519- Workers' Compensation
This measure excludes services performed by an individual who is a member of a limited liability company, a partner of a limited liability partnership who has a distributional interest in the company or partnership of at least fifty per cent, a partner of a partnership, and a sole proprietor from the definition of "employment" under the workers' compensation law, Haw. Rev. Stat. sec. 386-1.
HB 924 - Interpreting Commercial Liability Policies
This legislation attempts to address Group Builders, Inc. v. Admiral Ins. Co., 123 Haw. 142, 231 P.3d 67 (Haw. Ct. App. 2010), which determined construction defects do not arise from an occurrence. In order to pass, the bill was watered down from its initial language which stated that Group Builders had no impact on the interpretation of existing policies. The final bill states the terms of a liability insurance policy issued to a construction professional shall be construed according to the reasonable expectations of the parties at the time that the insurance policy was issued. The language of bill can be reviewed here.
HB 1045 - Risk-Based Capital
This legislation will update the Insurance Code to adopt the revisions to the National Association of Insurance Commissioners' model laws and regulations for a risk-based capital trend test for property and casualty insurers required for accreditation. Effective July 1, 2011.
HB 1049 - Relating to Insurance Code
The measure updates various portions of the Insurance Code and related provisions. Effective July 1, 2011.
HB 1052 - Surplus Lines Insurance
This provision amends the insurance code to comply with the federal Nonadmitted and Reinsurance Reform Act of 2010 relating to surplus lines insurance and to participate in a multi-state cooperative to collect surplus lines premium taxes and fees. The bill also distributes to the individual states the taxes and fees assessed. Effective June 1, 2011.
HB 1134 - Health Insurance
The measure repeals part V of the Hawaii Prepaid Health Care Act and Act 99, Session Laws of Hawaii 1994, relating to the future termination of the prepaid health care law.
SB 27 - Long-Term Care Insurance
This bill removes long-term care insurance from the definition of "accident and health or sickness insurance" and related terms within the insurance code. The bill also removes reference to the insurance fraud statute. The bill was signed by the Governor on April 25, 2011.
SB 123- Insurance Procedures, Record Requirements
Motor vehicle and homeowners insurance is exempted from general record keeping requirements if records are maintained electronically, accessible by the producer, and available within one business day.
SB 124 - Motor Vehicle Insurance, Cancellation
An insurer is exempted from prohibitions on cancellation or nonrenewal of a motor vehicle insurance policy if the insurer offers a replacement policy that has the same or better coverage, terms, or conditions at a lower price through an affiliate or subsidiary.
SB 1273 - Health Insurance, Compliance with Federal Law
The legislation authorizes the Insurance Commissioner to enforce consumer protections and market reforms relating to insurance of the federal Patient Protection and Affordable Care Act. The bill was signed by the Governor on April 25, 2011.
SB 1274 - Health Insurance, External Review Procedure
This bill adds a new section to Haw. Rev. Stat. Chap. 432E, the Patients' Bill of Rights and Responsibilities Act. When external review of an insurer's denial of coverage is requested, the commissioner will assign the review to an independent review organization from a list of qualified organizations. The measure purports to provide uniform standards for external review procedures based on the National Association of Insurance Commissioners Uniform Health Carrier External Review Model Act, to comply with the requirements of the federal Patient Protection and Affordable Care Act of 2010. The bill also requires reports to the legislature.
SB 1278 - Insurance Conformity with Federal Standards
This legislation adopts model regulations of National Association of Insurance Commissioners in conformity with senior investor protections in Section 989A of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
SB 1348 - Hawaii Health Insurance Exchange
In compliance with the new federal health care law, this bill establishes the Hawaii health connector to create a health insurance exchange pursuant to the federal Patient Protection and Affordable Care Act of 2010; creates the Hawaii Health Insurance Exchange under a board of directors; creates a board of directors; creates an interim board to recommend policies and procedures to implement the governance of the health insurance exchange; and appropriates federal funds to support the operations of the interim board of the Hawaii health connector.
SB 1484 - Fraternal Benefit Societies
This measure exempts from insurance code associations: (1) organized before 1880; (2) whose members are active, retired, or honorably discharged members of the U.S. armed forces or sea services; and (3) whose principal purpose is to provide insurance and other benefits to their members. The bill was signed by the Governor on April 27, 2011.
Unless otherwise indicated, these measures await the Governor's signature or veto. The status of bills not yet signed can be tracked at www.capitol.hawaii.gov/session2011.