Bill Text: HI HB2325 | 2016 | Regular Session | Introduced

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Bill Title: Hawaii Mandatory Catastrophe Reserve Act; Catastrophe Insurance; Property Insurance; Premium Tax; Electronic Filing; Electronic Payments; Physician Assistant-delivered Services; Child Health Supervision; Accident and Health or Sickness; Claim Filer; Risk Retention; Captives; Mental Illness; Licensed Dietitians; Duty to Respond; Visual or Optometric Services Coverage; Licensed Physicians and Optome

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2016-02-10 - The committee(s) on CPC recommend(s) that the measure be deferred. [HB2325 Detail]

Download: Hawaii-2016-HB2325-Introduced.html

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HOUSE OF REPRESENTATIVES	H.B. NO.	2325
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO INSURANCE.

 

 

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

 

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new article to be appropriately designated and to read as follows:

     "§431-  Short title.  This article shall be known and may be cited as the Hawaii Mandatory Catastrophe Reserve Act.

     §431-  Purpose.  The purpose of this article is to require authorized property insurers to establish reserve funds out of premiums of policies covering risks located or resident in this State.  The reserve fund shall be used to pay for losses resulting from catastrophes occurring in Hawaii.

     §431-  Definitions.  As used in this article, unless the context shall otherwise require:

     "Authorized reinsurance" shall mean reinsurance from a licensed, accredited, certified, or trusteed reinsurer in this State.

     "Catastrophe" means an event declared as a natural disaster by the governor and covering losses related to a natural event, such as a hurricane, an earthquake, or a flood.

     "Hawaii mandatory catastrophe reserve" means a separate contingent liability account.

     "Hawaii subject premiums" means premiums related to property risks located or resident in this State with respect to the kinds of insurance specified in section 431:1-206 that are written on a direct basis.

     "Property insurer" means an insurer licensed to transact property insurance as defined in section 431:1-206.

     "Qualifying losses" means losses and loss adjustment expenses incurred, net of authorized reinsurance, which are directly attributable to a catastrophe in this State.

     §431-  Hawaii mandatory catastrophe reserve.  Every authorized property insurer issuing a policy of insurance or contract of reinsurance covering losses resulting from a catastrophe for property risks located or resident in this State shall establish a Hawaii mandatory catastrophe reserve, which shall be used to fund the payment of claims resulting from qualifying losses.

     §431-  Annual contribution to the Hawaii mandatory catastrophe reserve.  (a)  No later than June 30 of every year, every property insurer that covers losses resulting from a catastrophe shall fund its mandatory catastrophe reserve for the previous calendar year in an amount no less than eighty per cent of the aggregate catastrophe load included in the premium of policies covering property risks located or resident in this State with respect to the kinds of insurance specified in section 431:1-206.  The reserve liability so established shall be net of any authorized reinsurance ceded and federal, state, and local tax incurred on such reserves.

     (b)  Notwithstanding subsection (a), an insurer need not fund its Hawaii mandatory catastrophe reserve with respect to assumed reinsurance premiums in excess of loss reinsurance contracts or treaties.

     §431-  Accumulation of the Hawaii mandatory catastrophe reserve.  The Hawaii mandatory catastrophe reserve may have a rolling term of ten years.  At the end of the tenth year, the first year's contribution, to the extent it is not used to fund catastrophe losses, shall be taken into income, and the following year's contribution shall be added to the reserve.

     §431-  Transfers from the Hawaii mandatory catastrophe reserve.  (a)  A property insurer shall release its Hawaii mandatory catastrophe reserve when it incurs losses resulting from a catastrophe for property risks located or resident in this State.  Within thirty days of releasing the funds from the Hawaii mandatory catastrophe reserve, a property insurer shall provide the commissioner with written notice of such release.  The notice shall be in a form specified by the commissioner and show the amount and calculation of the release and the catastrophe that necessitated the release.

     (b)  A property insurer shall return to the Hawaii mandatory catastrophe reserve any reserves transferred from the Hawaii mandatory catastrophe reserve that are not expended to pay losses resulting from a catastrophe.

     (c)  A property insurer shall not retain any investment income or interest earned from the Hawaii mandatory catastrophe reserve.  Any investment income or interest earned from the Hawaii mandatory catastrophe reserve shall be used by the property insurer to reduce Hawaii policyholders' premiums.

     (d)  Any transfer of reserves from the Hawaii mandatory catastrophe reserve that is not expended to pay losses resulting from a catastrophe for property risks located or resident in this State requires the property insurer to provide written notice and an explanation of the transfer.  Upon the request of a property insurer, the commissioner may approve funds for transfer from the Hawaii mandatory catastrophe reserve:

     (1)  To mitigate the potential impairment of the property insurer;

     (2)  When the property insurer no longer has exposure for losses resulting from a catastrophe; or

     (3)  Where the release of funds would be in the best interests of the property insurer, its policyholders, or this State.

     §431-  Reporting requirements.  (a)  For a domestic insurer, the Hawaii mandatory catastrophe reserve shall be shown as a write-in liability item on the quarterly and annual statements.

     (b)  For an insurer other than a domestic insurer, the Hawaii mandatory catastrophe reserve shall be shown as a write-in liability item on the Hawaii supplement to the property annual statement.

     §431-  Administration.  The commissioner may adopt rules and procedures to effectuate this article."

     SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended by adding to article 10E a new part to be appropriately designated and to read as follows:

"PART    .  COVERAGES.

     §431:10E-   Notice requirement.  Thirteen months prior to discontinuation of writing property insurance coverage, an insurer shall file an affidavit with the commissioner stating the reasons for the discontinuation.

     §431:10E-   Extended coverage.  Authorization of the commissioner is required for insurers seeking to provide standard extended coverage endorsements for residential property, including coverage of hurricane risks."

     SECTION 3.  Section 431:2D-107, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

     "(g) (1)  Except as provided in subsections (h) and (i), an insurance compliance self-evaluative audit is privileged information and is not discoverable or admissible as evidence in any legal action in any civil, criminal, or administrative proceeding.  The privilege created herein is a matter of substantive law of this State and is not merely a procedural matter governing civil or criminal procedures in the courts of this State;

     (2)  If any company, person, or entity performs or directs the performance of an insurance compliance audit, an officer, employee, or agent involved with the insurance audit, or any consultant who is hired for the purpose of performing the insurance compliance audit may not be examined in any civil, criminal, or administrative proceeding as to the insurance compliance audit or any insurance compliance self-evaluative audit document, as defined in this section.  This subsection does not apply if the privilege set forth in subsection (g)(1) [of this section] is determined under subsection (h) or (i) not to apply;

     (3)  A company may voluntarily submit, in connection with examinations conducted under this article, an insurance compliance self-evaluative audit document to the commissioner or the commissioner's designee, as a confidential document under this section without waiving the privilege set forth in this section to which the company would otherwise be entitled; provided, however, that the provisions in this section permitting the commissioner to make confidential documents public pursuant to this section and access to the National Association of Insurance Commissioners shall not apply to the insurance compliance self-evaluative audit document under other provisions of applicable law, any such report furnished to the commissioner shall not be provided to any other persons or [[]entities[]] and shall be accorded the same confidentiality and other protections as provided above for voluntarily submitted documents.  Any use of an insurance compliance self-evaluative audit document [furnished as a result of the] shall be limited to determining whether or not any disclosed defects in an insurer's policies and procedures or inappropriate treatment of customers has been remedied or that an appropriate [plan for their] remedy is in place.

              A company's insurance compliance self-evaluative audit document submitted to the commissioner shall remain subject to all applicable statutory or common law privileges including, but not limited to, the work product doctrine, attorney-client privilege, or the subsequent remedial measures exclusion.

              Any compliance self-evaluative audit document so submitted and in the possession of the commissioner shall remain the property of the company and shall not be subject to any disclosure or production under chapter [92;] 92F;

     (4)  Disclosure of an insurance compliance self-evaluative audit document to a governmental agency, whether voluntary or pursuant to compulsion of law, shall not constitute a waiver of the privilege set forth in subsection (g)(1) with respect to any other persons or any other governmental agencies."

     SECTION 4.  Section 431:3-306.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Upon written request of the commissioner by certified mail, an insurer writing the peril of residential hurricane coverage in this State shall within thirty days after receipt of the request, make accessible to the commissioner or commissioner's designee information verifying that the insurer has the financial assets and ability to cover its hurricane insurance exposure.  The information to be made accessible shall include:

     (1)  The aggregate amount of hurricane coverage premiums and aggregate limits of coverage by type of coverage, which shall be compiled on a quarterly basis;

     (2)  The probable maximum loss associated with the above aggregate limits, assuming the occurrence of a hurricane of a severity unlikely to occur more frequently than once every one hundred years, as that loss is estimated in a report prepared by a recognized hurricane modeling company;

     (3)  All financial information relating to the insurer's capital base and reinsurance program for hurricane losses, such as:

         (A)  Information describing the reinsurance program in place as of the date notice was received;

         (B)  The names and financial ratings of each reinsurer;

         (C)  Aggregate limits of reinsurance coverage available; [and]

         (D)  Reinstatement provisions; [and] or

         (E)  The insurer's Hawaii mandatory catastrophe reserve; and

     (4)  Any other related information the commissioner may require to evaluate the adequacy of the program."

     SECTION 5.  Section 431:7-201 is amended by amending subsections (a), (b), and (c) to read as follows:

     "(a)  Each authorized insurer shall electronically file with the commissioner annually, on or before March 1 in each year, a statement signed by a duly authorized person on its behalf, setting forth the total business transacted, and the amount of gross premiums reported by the insurer, pursuant to section 431:7-202, during the year ending on the preceding December 31, from all risks or property resident, situated, or located within this State, together with such other information as may be required by the commissioner to determine the taxability of premiums.  The term "gross premiums" as used in this part shall not include consideration paid for annuities.

     (b)  Each authorized insurer shall electronically file with the commissioner monthly, on or before the twentieth day of the calendar month following the month in which the taxes accrue, a statement signed by a duly authorized person on its behalf, setting forth the total business transacted and the amount of gross premiums reported by the insurer, pursuant to section 431:7-202, during the month from all risks or property resident, situated, or located within this State, together with other information as may be required by the commissioner to determine the taxability of premiums.

     (c)  Any insurer failing or refusing to electronically file the annual tax statement on or before March 1, or the monthly statement on or before the twentieth day of the calendar month following the month in which the taxes accrue, shall be liable for a fine in an amount not less than $100 and not more than $500 for each day of delinquency."

     SECTION 6.  Section 431:7-202, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

     "(f)  The taxes imposed by subsections (a), (b), (c), and (d) shall be paid monthly.  The monthly tax shall be due and payable by electronic payment via the Automated Clearing House debit or credit payment system on or before the twentieth day of the calendar month following the month in which it accrues, coinciding with the filing of the statement provided for in section 431:7-201.

     In addition to the monthly tax and monthly tax statement, the annual tax shall be due and payable by electronic payment via the Automated Clearing House debit or credit payment system on or before March 1 coinciding with the filing of the statement provided for in section 431:7-201.

     In this subsection, "Automated Clearing House debit or credit payment system" means the network for the interbank clearing of electronic payments for participating depository financial institutions.

     All amounts paid under this subsection, other than fines, shall be allowed as a credit on the annual tax imposed by subsections (a), (b), (c), and (d).

     If the total amount of installment payments for any calendar year exceeds the amount of annual tax for that year, the excess shall be treated as an overpayment of the annual tax and be allowed as a refund under section 431:7-203.

     Any insurer failing or refusing to pay the required taxes above stated when due and payable shall be liable for a fine of $500 or ten per cent of the tax due, whichever is greater; plus interest at a rate of twelve per cent per annum on the delinquent taxes.  The taxes may be collected by distraint, or the taxes, fine, and interest may be recovered by an action to be instituted by the commissioner in the name of this State, in any court of competent jurisdiction.  The commissioner may suspend the certificate of authority of the delinquent insurer until the taxes, fine, and interest, should any be imposed, are fully paid."

     SECTION 7.  Section 431:10-104, Hawaii Revised Statutes, is amended to read as follows:

     "§431:10-104 General readability requirements.  In addition to any other requirements of law, no contract shall be delivered or issued for delivery in this State unless:

     (1)  The text is in plain language, achieving a minimum score of forty on the Flesch reading ease test or an equivalent score on any other comparable test prescribed by the commissioner under section 431:10-105(a);

     (2)  The contract is printed, except for specification pages, schedules, and tables, in not less than ten point type, one point leaded;

     (3)  The style, arrangement, and general appearance of the contract [gives] give no undue prominence to any endorsements, riders, or other portions of the text; [and]

     (4)  A table of contents or index of principal sections is provided with the contract when the text consists of more than three thousand words printed on three or less pages or when the text has more than three pages regardless of the total number of printed words[.]; and

     (5)  For any short-term health insurance policies that impose preexisting conditions provisions, any policy, application, or sales brochure shall disclose in a conspicuous manner in not less than fourteen point bold face type the following statement:

              "THIS POLICY EXCLUDES COVERAGE FOR CONDITIONS FOR WHICH MEDICAL ADVICE, DIAGNOSIS, CARE, OR TREATMENT WAS RECOMMENDED OR RECEIVED DURING THE [insert exclusion period] IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF COVERAGE.""

     SECTION 8.  Section 431:10A-206.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  All accident and health or sickness insurance policies issued in this State[,] which provide coverage for the children of the insured shall provide coverage for child health supervision services from the moment of birth through age five years.  These services shall be exempt from any deductible provisions, and immunizations shall be exempt from any copayment provisions, which may be in force in these policies or contracts."

     SECTION 9.  Section 431:10A-206.5, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  For the purposes of this section, "child health supervision services" means physician-delivered, physician-supervised, physician assistant-delivered, or nurse-delivered services as defined by section 457-2 ("registered nurse") which shall include as the minimum benefit coverage for services delivered at intervals and scope stated in this section."

     SECTION 10.  Section 431:13-108, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  If a claim is contested or denied or requires more time for review by an entity, the entity shall notify the [health care provider] person filing a claim in writing or electronically not more than fifteen calendar days after receiving a claim filed in writing, or not more than seven calendar days after receiving a claim filed electronically, as appropriate.  The notice shall identify the contested portion of the claim and the specific reason for contesting or denying the claim, and may request additional information; provided that a notice shall not be required if the entity provides a reimbursement report containing the information, at least monthly, to the health care provider."

     SECTION 11.  Section 431:19-304, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§431:19-304[]]  Qualification of sponsors.  A sponsor of a sponsored captive insurance company shall be an insurer licensed under laws of any state, a reinsurer authorized or approved under the laws of any state, a captive insurance company formed or licensed under this article, or any other person, company, or organization approved by the commissioner in the exercise of the commissioner's discretion, after finding that the approval of that person, company, or organization as a sponsor is not inconsistent with the purposes of this article.  A risk retention group shall not be [either] a sponsor [or a participant] of a sponsored captive insurance company."

     SECTION 12.  Section 431:19-305, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Associations, corporations, limited liability companies, partnerships, trusts, risk retention groups, and other business entities may be participants in any sponsored captive insurance company formed or licensed under this chapter."

     SECTION 13.  Section 431M-4, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Mental illness benefits.

     (1)  Covered benefits for mental health services set forth in this subsection shall be limited to coverage for diagnosis and treatment of mental disorders.  All mental health services shall be provided under an individualized treatment plan approved by a physician, psychologist, licensed clinical social worker, marriage and family therapist, licensed mental health counselor, [or] advanced practice registered nurse, or licensed dietitian, and must be reasonably expected to improve the patient's condition.  An individualized treatment plan approved by a licensed clinical social worker, marriage and family therapist, licensed mental health counselor, [or] an advanced practice registered nurse, or a licensed dietitian for a patient already under the care or treatment of a physician or psychologist shall be done in consultation with the physician or psychologist;

     (2)  In-hospital and nonhospital residential mental health services as a covered benefit under this chapter shall be provided in a hospital or a nonhospital residential facility.  The services to be covered shall include those services required for licensure and accreditation;

     (3)  Mental health partial hospitalization as a covered benefit under this chapter shall be provided by a hospital or a mental health outpatient facility.  The services to be covered under this paragraph shall include those services required for licensure and accreditation; and

     (4)  Mental health outpatient services shall be a covered benefit under this chapter."

     SECTION 14.  Section 431P-10, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  [Upon the authorization] Authorization of the commissioner[,] is required for insurers [may] seeking to provide standard extended coverage endorsements for residential property, including coverage of hurricane risks, subject to the fund's program for incentives and credits; provided that in the absence of such authorization, no other policy of residential property insurance or endorsement to a policy of residential property insurance on eligible residential property located in this State shall be issued to provide insurance for damages or losses caused by a covered event if such coverage is less than that offered by the fund.  If standard extended coverage endorsements on commercial property are no longer being offered by the fund, any standard extended coverage endorsements on commercial property offered by an insurer shall qualify as a comparable coverage under section 431P-5(b)(8)(A).  Standard extended coverage endorsements on residential property which include coverage for hurricane losses offered by an insurer shall qualify as a comparable coverage under section 431P-5(b)(8)(A)."

     SECTION 15.  Section 431R-5, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§431R-5[]]  Violations; penalties.  (a)  The insurance commissioner may assess a fine of up to $10,000 for each violation by a pharmacy benefit manager or prescription drug benefit plan provider who is in violation of section 431R-2 or 431R-3.  In addition, the insurance commissioner may order the pharmacy benefit manager to take specific affirmative corrective action or make restitution.

     (b)  Failure of a pharmacy benefit manager to comply with a previously agreed upon contractual retail pharmacy network agreement pursuant to section 431R-2 or 431R-3 shall be an unfair or deceptive act or practice as provided in section 431:13-102.

     (c)  A pharmacy benefit manager or prescription drug benefit plan provider may appeal any decision made by the insurance commissioner in accordance with chapter 91.

     (d)  Every person and its officers, employees, and representatives subject to investigation or examination by the commissioner under this chapter shall produce and make freely accessible to the commissioner the accounts, records, documents, and files in the person's possession or control relating to the subject of the investigation or examination, and shall otherwise facilitate the investigation or examination.

     (e)  Every person and its officers, employees, and representatives subject to investigation or examination by the commissioner under this chapter shall issue a written response no later than fifteen working days after receiving a written inquiry from the commissioner regarding a claim or complaint.  The response shall be more than an acknowledgment that the commissioner's communication has been received, and shall adequately address the concerns stated in the communication."

     SECTION 16.  Section 432:1-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Article 2, article 2D, parts II and IV of article 3, article 6, part III of article 7, article 9A, article 13, article 14G, and article 15 of chapter 431, sections 431:3-301, 431:3-302, 431:3-303, 431:3-304, 431:3-305, [and] 431:10-102, 431:10-225, 431:10-226.5, and 431:10A-116(1) and (2), and the powers granted by those provisions to the commissioner, shall apply to managed care plans, health maintenance organizations, or medical indemnity or hospital service associations that are owned or controlled by mutual benefit societies so long as the application in any particular case is in compliance with and is not preempted by applicable federal statutes and regulations."

     SECTION 17.  Section 432:1-602.5, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  For the purposes of this section, "child health supervision services" means physician-delivered, physician-supervised, physician assistant-delivered, or nurse-delivered services as defined by section 457-2 ("registered nurse") which shall include as the minimum benefit coverage for services delivered at intervals and scope stated in this section."

     SECTION 18.  Section 432:1-604.5, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  For purposes of this section:

     "Contraceptive services" means physician-delivered, physician-supervised, physician assistant-delivered, nurse practitioner-delivered, certified nurse midwife-delivered, [or] nurse-delivered [medical services], or pharmacist-delivered medical services intended to promote the effective use of contraceptive supplies or devices to prevent unwanted pregnancy.

     "Contraceptive supplies" means all Food and Drug Administration-approved contraceptive drugs or devices used to prevent unwanted pregnancy."

     SECTION 19.  Section 432D-14, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  In addition to, or in lieu of, suspension or revocation of a certificate of authority pursuant to this section, the commissioner[, after hearing,] may levy an administrative fine upon the health maintenance organization in an amount not less than $500 and not more than $50,000 pursuant to section 431:3-221."

     SECTION 20.  Section 432D-19, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  Article 2, article 2D, part IV of article 3, article 6, part III of article 7, article 9A, article 13, article 14G, and article 15 of chapter 431, and sections 431:3-301, 431:3-302, 431:3-303, 431:3-304, [and] 431:3-305, 431:10-225, and 431:10-226.5, and the powers granted by those provisions to the commissioner shall apply to health maintenance organizations, so long as the application in any particular case is in compliance with and is not preempted by applicable federal statutes and regulations."

     SECTION 21.  Section 431P-17, Hawaii Revised Statutes, is repealed.

     ["[§431P-17]  Additional notice requirement.  Thirteen months prior to discontinuation of writing property insurance coverage, an insurer shall file an affidavit with the commissioner stating the reasons for the discontinuation."]

     SECTION 22.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 23.  This Act, upon its approval, shall take effect on July 1, 2016.

 

INTRODUCED BY:	____________________________
	BY REQUEST

 

 

Report Title:

Hawaii Mandatory Catastrophe Reserve Act; Catastrophe Insurance; Property Insurance; Premium Tax; Electronic Filing; Electronic Payments; Physician Assistant-delivered Services; Child Health Supervision; Accident and Health or Sickness; Claim Filer; Risk Retention; Captives; Mental Illness; Licensed Dietitians; Duty to Respond; Visual or Optometric Services Coverage; Licensed Physicians and Optometrists; Surgical or Emergency Services Coverage; Dentists; Mutual Benefit Societies; Contraceptive Services; Insurance

 

Description:

Makes various updates to title 24, Hawaii Revised Statutes, including: requiring property insurers to establish catastrophe reserve funds; requiring an insurer seeking to discontinue writing property coverage to file an affidavit; requiring the Insurance Commissioner's authorization for insurers providing residential property coverage; requiring insurers to file their premium tax statements electronically and to pay electronically; applying consumer protections to short-term health policies with preexisting conditions provisions; including physician assistant-delivered services under coverage for child health supervision for accident and health or sickness policies and for mutual benefit societies; requiring an entity to notify a claim filer under certain conditions; prohibiting a risk retention group from being a sponsor of and allowing it to be a participant in a sponsored captive insurance company; providing mental illness benefits coverage to licensed dietitians; requiring an entity's duty to respond to the Insurance Commissioner during an investigation or examination; providing visual or optometric services coverage for licensed physicians and optometrists and surgical or emergency services coverage for dentists under health plans of mutual benefit societies; providing coverage for pharmacist-delivered contraceptive services; and making other housekeeping and conforming amendments.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.