REPORT TITLE:
Motor Vehicle Insurance


DESCRIPTION:
Establishes a nonprofit company to provide personal injury
coverage in motor vehicle accidents, including those involving
motorcycles or motor scooters, and funded by fees assessed
against gasoline distributors and drivers.  Authorizes the use of
excess premium moneys for venture capital.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2879
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.


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

 1      SECTION 1.  The purpose of this Act is to establish a not-
 
 2 for-profit insurance facility to assume personal injury
 
 3 protection insurance coverage and to serve as a resource for
 
 4 venture capital to encourage the growth of advanced technology of
 
 5 particular interest to the State of Hawaii.  
 
 6      Currently, consumers and businesses in the State pay over
 
 7 $500,000,000 in motor vehicle insurance premiums.  In 1998, over
 
 8 $75,000,000 in premiums were spent by Hawaii consumers on
 
 9 personal injury protection coverages.  Uninsured motorists, who
 
10 constitute twenty per cent or more of the drivers in the State,
 
11 contributed nothing to these premiums.
 
12      Pursuant to Act 251, Session Laws of Hawaii 1997, the motor
 
13 vehicle insurance task force ("task force") completed its study
 
14 of the potential savings created by providing basic personal
 
15 injury benefits directly to consumers, through per gallon
 
16 surcharges and other fees.  The primary goal of the study was to
 
17 force illegally uninsured motorists to contribute to the cost of
 
18 providing motor vehicle insurance coverages within the State.
 
19 The task force reviewed statistical data as well as various
 
20 models through which a pay-at-the-pump system may be structured
 

 
Page 2                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 and administered.
 
 2      This Act will force uninsured motorists to contribute toward
 
 3 paying motor vehicle insurance premiums and distributing the risk
 
 4 of loss on state roads and highways.  Section 2 of the Act
 
 5 establishes a captive insurance facility owned by a not-for-
 
 6 profit private corporation, which is charged with the collection
 
 7 of fees and per gallon surcharges, and with providing direct
 
 8 indemnification for motor vehicle-related injuries equivalent to
 
 9 the minimum personal injury protection coverage currently
 
10 mandated by the insurance code.  
 
11      Savings incurred by lower than expected loss rates will be
 
12 transferred to a fund to support the advancement of technologies
 
13 in fields of particular interest to the State of Hawaii, such as
 
14 education, computer sciences and the Internet, agriculture,
 
15 community-based economic development, and other public purposes.  
 
16      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
17 a new chapter to be appropriately designated and to read as
 
18 follows:  
 
19                            "CHAPTER  
 
20              PERSONAL PROTECTION PUBLIC CORPORATION
 
21                    PART 1.  GENERAL PROVISIONS
 
22      §   -101  Establishment of the corporation.(a)  There
 

 
 
 
Page 3                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 shall be established a not-for-profit corporation pursuant to the
 
 2 laws of the State, to be known as the Hawaii personal protection
 
 3 public corporation. 
 
 4      (b)  The corporation shall be funded by an assessment of
 
 5 fees, which are levied pursuant to this chapter.
 
 6      (c)  The corporation shall provide indemnification to
 
 7 covered individuals consistent with the purposes of this chapter,
 
 8 and shall manage the fund established pursuant to part IV of this
 
 9 chapter.
 
10      §   -102  Establishment of the company.  There shall be a
 
11 captive insurance company formed pursuant to article 19 of
 
12 chapter 431, to be known as the Hawaii personal protection
 
13 insurance company.
 
14      §   -103  Purposes.  The purposes of this chapter are:
 
15      (1)  To provide indemnification equivalent to that required
 
16           by section 431:10C-103.5(b) at the lowest possible
 
17           cost, consistent with reasonable and applicable
 
18           actuarial standards and the sound financial integrity
 
19           of the corporation; and
 
20      (2)  To provide capital, grants, low-interest loans, or
 
21           other prudent financing mechanisms to encourage the
 
22           growth of advanced technology ventures in the State.
 
23      §   -104  Definitions.  For the purposes of this chapter,
 

 
Page 4                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 unless the context requires otherwise: 
 
 2      "Accidental harm" means the same as defined in section
 
 3 431:10C-103.
 
 4      "Advanced technology venture" means those business ventures,
 
 5 either for-profit or not-for-profit, which relate to the fields
 
 6 of computer sciences, aerospace, biotechnology, tropical
 
 7 agriculture, community-based economic development, the Internet,
 
 8 or other field of study of particular interest to the State, and
 
 9 represent recent advancements or innovations in their respective
 
10 field.
 
11      "Board" means the board of directors as established pursuant
 
12 to part II of this chapter.  
 
13      "Commissioner" means the insurance commissioner of the State
 
14 of Hawaii. 
 
15      "Company" means the Hawaii personal protection insurance
 
16 company as established pursuant to this chapter. 
 
17      "Corporation" means the Hawaii personal protection public
 
18 corporation as established pursuant to this chapter.
 
19      "Covered individual" means, unless otherwise excluded, a
 
20 person who is injured in an accident involving a motor vehicle,
 
21 and either:
 
22      (1)  Holds a motor vehicle insurance policy issued in the
 
23           State;  
 

 
Page 5                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1      (2)  Is a dependent of a person who holds a motor vehicle
 
 2           insurance policy issued in the State; or 
 
 3      (3)  Is a resident of the State and is injured in an
 
 4           accident involving a motor vehicle within the State. 
 
 5      "Distributor" means: 
 
 6      (1)  Every person who refines, manufactures, produces, or
 
 7           compounds liquid fuel in the State and sells or uses
 
 8           the same in this State; and 
 
 9      (2)  Every person who imports or causes to be imported into
 
10           the State any liquid fuel and sells it in the State,
 
11           whether or not in the original packages or containers
 
12           in which it was imported.
 
13      "Excess premium" means a premium paid by the corporation to
 
14 the company minus operating expenses, reserves for unpaid losses,
 
15 and actual losses paid by the company as determined by
 
16 actuarially sound practices.
 
17      "Fund" means the investment fund established pursuant to
 
18 part IV of this chapter.
 
19      "Injury" means the same as defined in section 431:10C-103.
 
20      "Investment manager" means any fiduciary who has been
 
21 designated by the board to manage, acquire, or dispose of the
 
22 assets of the fund in compliance with federal and state licensing
 
23 and securities laws. 
 

 
Page 6                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1      "Liquid fuel" or "fuel" means the same as defined in section
 
 2 243-1.
 
 3      "Manager" or "captive manager" means the person appointed by
 
 4 the board of directors to carry out the day-to-day administration
 
 5 of the company.
 
 6      "Month" or "calendar month" means the same as defined in
 
 7 section 243-1.
 
 8      "Motor vehicle" means any type of vehicle required to be
 
 9 registered under chapter 286 and a motorcycle or motor scooter as
 
10 defined in section 286-2.
 
11      "Net weight" means the same as defined in section 249-1.
 
12      "Person" means the same as defined in chapter 243.
 
13      §   -105  Construction.(a)  This chapter, and the board,
 
14 fund, corporation, and company established pursuant to this
 
15 chapter shall be exempt from chapters 37, 46, 76, 77, 78, and 92.
 
16      (b)  The corporation established pursuant to this chapter
 
17 shall also be exempt from the requirements of chapter 431;
 
18 provided that the corporation and persons dealing with the
 
19 corporation shall comply with and otherwise be subject to
 
20 sections 431:8-315, 431:10C-304, 431:10C-305, 431:10C-305.5,
 
21 431:10C-306, 431:10C-307, 431:10C-307.7, 431:10C-307.8, and
 
22 431:10C-308.5.
 
23      (c)  The corporation shall prepare reports as required by
 

 
Page 7                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 section 37-47, but shall be otherwise exempt from the
 
 2 requirements of chapter 37.
 
 3      (d)  The employees, officers, and board members of the
 
 4 corporation, the company, and the fund shall be eligible to
 
 5 receive benefits offered pursuant to chapters 41D and 87.
 
 6 Contracts for services from independent third-party providers
 
 7 shall specifically exclude such benefits.
 
 8      (e)  The corporation, the company, and the fund shall be
 
 9 exempt from any requirement of law for competitive bidding for
 
10 agreements or contracts for goods or services, including lease
 
11 and sublease agreements.
 
12      §   -106  Limitation of liability.(a)  Neither the
 
13 corporation, the company, or the fund shall be considered as
 
14 agencies of the State and their respective liabilities shall not
 
15 be deemed to constitute debts or liabilities of the State or
 
16 pledges of full faith and credit of the State. 
 
17      (b)  Before assuming the duties of manager, the captive
 
18 manager shall give a fidelity bond in an amount and with sureties
 
19 approved by the board of directors.  The premium for the bond
 
20 shall be paid by the company.
 
21              PART II.  GOVERNANCE AND ADMINISTRATION
 
22      §   -201  Ownership of stock in corporation.  All shares of
 
23 stock issued by the corporation shall be owned by the State.  Any
 

 
Page 8                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 shares issued by the corporation shall be non-assignable.
 
 2      §   -202  Ownership of stock in company.  All shares of
 
 3 stock issued by the company shall be owned by the corporation.
 
 4      §   -203  Powers and duties.  (a)  The board of directors of
 
 5 the corporation shall:
 
 6      (1)  Establish a captive insurance company pursuant to
 
 7           article 19 of chapter 431, and this chapter to
 
 8           administer and carry out the purposes of this chapter; 
 
 9      (2)  Appoint a manager to administer the day-to-day
 
10           functions of the company;
 
11      (3)  Appoint officers to administer the day-to-day functions
 
12           of the corporation as allowed by this chapter;
 
13      (4)  Appoint an investment manager to administer the day-to-
 
14           day functions of the fund;
 
15      (5)  Supervise the finances of the corporation and the
 
16           company;
 
17      (6)  Supervise the corporation's and the company's
 
18           operations to assure conformity with the insurance and
 
19           reinsurance policies issued through the company and
 
20           with the standards established by this chapter;
 
21      (7)  Procure the audit of accounts and records of the
 
22           exchange, at the corporation's and company's expense; 
 
23      (8)  Adopt rules and procedures that may be necessary for
 

 
Page 9                                                     2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           the purpose of this chapter, including rules providing
 
 2           for the equitable return of fees assessed against or
 
 3           passed onto the owner of a motor vehicle who meets the
 
 4           requirements of section 431:10C-105; and
 
 5      (9)  Approve the selection of the third party service
 
 6           providers to which the duties of the board of directors
 
 7           or the manager may be delegated from time to time.
 
 8      (b)  The captive manager shall:
 
 9      (1)  Solicit, receive, and accept or reject applications for
 
10           insurance or reinsurance to be issued by the company;
 
11      (2)  Investigate and pass upon the desirability of risks
 
12           involved in the applications for insurance or
 
13           reinsurance;
 
14      (3)  Underwrite, classify, rate, and issue policies and
 
15           binders of insurance or reinsurance for the company,
 
16           that are actuarially sound and in accordance with
 
17           prudent insurance practices, and modify or cancel the
 
18           policies in accordance with the terms of those
 
19           policies;
 
20      (4)  Establish and maintain for the company and as the
 
21           company's property, complete and accurate records of
 
22           all policies written by the company;
 
23      (5)  Collect, receive, and account for all surplus
 

 
Page 10                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           contributions and premiums paid for insurance issued or
 
 2           reinsurance assumed, and deposit all of the surplus and
 
 3           premiums in a bank or banks to the account of the
 
 4           company as soon as practicable, and pay therefrom the
 
 5           expenses of the company;
 
 6      (6)  Establish and maintain for the company and as the
 
 7           property of the company, all records required by law
 
 8           and prudent insurance and accounting practices, and
 
 9           prepare all reports required by governmental and non-
 
10           governmental regulatory and supervisory authorities;
 
11      (7)  Obtain reinsurance, or other appropriate risk financing
 
12           products that may be dictated by law, and prudent
 
13           insurance and business practices, and maintain
 
14           necessary records for the company in connection
 
15           therewith;
 
16      (8)  Administer and maintain reserves, for insurance claims
 
17           and losses for the company in accordance with
 
18           reasonable standards approved by the board of directors
 
19           consistent with generally accepted insurance
 
20           principles;
 
21      (9)  Investigate and defend or settle all losses and claims
 
22           under the policies of the company, appoint and engage
 
23           attorneys to defend against claims, and promptly
 

 
Page 11                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           recover all reinsurance due on claims paid; 
 
 2     (10)  Make all delinquent premium and installment payments
 
 3           due from the corporation to the company by deducting
 
 4           the necessary amounts from any of the corporation's
 
 5           accounts or surplus contributions or any other amounts
 
 6           due the corporation from the company;
 
 7     (11)  Collect and maintain statistical data relevant to the
 
 8           purposes of this chapter for the commissioner; 
 
 9     (12)  Arrange for payment from the company's accounts of all
 
10           expenses of the company operation, including, in
 
11           addition to losses, expenses relating to the
 
12           underwriting, claim management, and investment
 
13           activities of the company; and
 
14     (13)  Perform any and all other duties necessary to carry out
 
15           the purposes for which the corporation was formed.
 
16 The manager may delegate any of the above duties to an
 
17 appropriate third-party service provider, subject to the approval
 
18 of the board of directors.  
 
19      §   -204  Board of directors; composition.(a)  The board
 
20 of directors of the corporation shall consist of seven members as
 
21 follows:
 
22      (1)  Three persons appointed by the governor, by and with
 
23           the advice and consent of the senate, to serve for a
 

 
Page 12                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           term of six years each, two of the terms to expire
 
 2           June 30 of each odd-numbered year, and the other on
 
 3           June 30 of even-numbered years; and
 
 4      (2)  Two persons appointed by the governor, by and with the
 
 5           advice of the senate, from a list of nominations
 
 6           submitted by the president of the senate to serve for a
 
 7           term of six years each, one of the terms to expire
 
 8           June 30 of each odd-numbered year, and the other on
 
 9           June 30 of even-numbered years; and
 
10      (3)  Two persons appointed by the governor, by and with the
 
11           advice and consent of the senate, from a list of
 
12           nominations submitted by the speaker of the house of
 
13           representatives to serve for a term of six years each,
 
14           one of the terms to expire June 30 of each odd-numbered
 
15           year, and the other on June 30 of even-numbered years.
 
16      (b)  Each board member shall serve until the member's
 
17 successor is appointed and qualified, and shall serve without
 
18 compensation.  No person shall be appointed consecutively to more
 
19 than two terms as a board member and no person shall serve as a
 
20 board member for more than twelve consecutive years.  Any board
 
21 member whose term has expired, and who is not disqualified from
 
22 acting as a board member as a result of the foregoing term
 
23 limitations, may continue in office as a holdover member until a
 

 
Page 13                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 successor is appointed; provided that a holdover member shall not
 
 2 hold a position on the board beyond the end of the second regular
 
 3 legislative session following the expiration of the respective
 
 4 board member's term.
 
 5      (c)  Any appointment required to be made from a list of
 
 6 nominations submitted by the president of the senate or the
 
 7 speaker of the house of representatives shall be made by the
 
 8 governor within ten days of receipt of the list of nominations.
 
 9      (d)  No person shall be a director who has a direct and
 
10 substantial interest in a motor vehicle insurer as:
 
11      (1)  A stockholder, except as a shareholder in a publicly
 
12           traded company with less than one per cent interest in
 
13           a motor vehicle insurer;
 
14      (2)  An employee;
 
15      (3)  An attorney; or 
 
16      (4)  An independent contractor or business owner who does
 
17           more than twenty-five per cent of its total annual
 
18           volume of business with motor vehicle insurers.
 
19      §   -205  Board of directors; vacancy.  If a vacancy occurs
 
20 on the board of directors of the corporation, the vacancy shall
 
21 be filled for the unexpired term in the same manner as the board
 
22 seat was previously filled.
 
23      §   -206  Board of directors; expenses.  The board of
 

 
Page 14                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 directors shall serve without compensation but shall be
 
 2 reimbursed for all necessary and reasonable expenses.
 
 3      §   -207  Oath of board of directors.  Each member of the
 
 4 board of directors, within ten days after the member's
 
 5 appointment, shall take an oath that, so far as it devolves upon
 
 6 the board member, the board member will diligently and honestly
 
 7 administer the affairs of the fund, and that the board member
 
 8 will not knowingly violate or willingly permit to be violated any
 
 9 law applicable to the corporation.  The oath shall be subscribed
 
10 to by the board member making it and certified by the officer
 
11 before whom it is taken and shall be immediately filed in the
 
12 office of the lieutenant governor.
 
13      §   -208  Board of directors; voting.  Each board member
 
14 shall be entitled to one vote on the board.  Four concurring
 
15 votes shall be necessary for a decision by the member at any
 
16 meeting of the board of directors.
 
17      §   -209  Officers.  The officers of the corporation shall
 
18 consist of a president, a secretary, and such other officers as
 
19 may be determined and elected by the board of directors from time
 
20 to time.  Any individual may hold more than one corporate office
 
21 at any time, except that the president shall not hold any other
 
22 office of the corporation and no member of the board of directors
 
23 shall hold any office.  The compensation of the officers shall be
 

 
Page 15                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 fixed by the board of directors, or by any committee upon which
 
 2 the board of directors has conferred the power to fix
 
 3 compensation.
 
 4                   PART III.  ASSESSMENT OF FEES
 
 5      §   -301  Corporation to assess fees.  The corporation shall
 
 6 assess the following annual fees for the purpose of financing a
 
 7 plan to provide for indemnification equivalent to that required
 
 8 by section 431:10C-103.5(b) to covered individuals:
 
 9      (1)  Upon distributors: a sum against each gallon of liquid
 
10           fuel refined, manufactured, produced, compounded, or
 
11           imported and sold by the distributor in the State;
 
12           provided that the board shall have the discretion to
 
13           determine the sum based upon actuarially sound
 
14           standards; and 
 
15      (2)  Upon covered individuals: a sum equal to a percentage
 
16           of the vehicle weight tax imposed pursuant to chapter
 
17           249; provided that the board shall have the discretion
 
18           to determine the percentage based upon actuarially
 
19           sound standards. 
 
20      §   -302  Collection of fees.(a)  All fees assessed
 
21 pursuant to section    -301(1), shall be paid to the department
 
22 of taxation to be transferred to the corporation.
 
23      (b)  All fees collected pursuant to section    -301(2),
 

 
Page 16                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 shall be paid to the director of finance of the respective county
 
 2 to be transferred to the corporation.
 
 3      (c)  All fees collected pursuant to this section shall be
 
 4 transferred to the corporation by the first day of each month.
 
 5      (d)  The board of directors of the corporation may enter
 
 6 into agreements for fair and equitable compensation for services
 
 7 rendered in the collection of fees pursuant to this chapter;
 
 8 provided that the director of taxation and the directors of
 
 9 finance of the several counties shall not cease providing
 
10 collection services solely upon the basis of a dispute relating
 
11 to the compensation.
 
12       PART IV.  HAWAII PERSONAL PROTECTION INVESTMENT FUND
 
13      §   -401  Investment fund established.  The corporation
 
14 shall establish a separate account to be entitled the "Hawaii
 
15 personal protection investment fund", which shall be owned by the
 
16 corporation and administered by an investment manager.  All
 
17 moneys in the fund shall be appropriated for the purposes of this
 
18 chapter.
 
19      §   -402  Purpose of the fund.  The purpose of the fund is
 
20 to provide capital, grants, low-interest loans, or other prudent
 
21 financing mechanisms to encourage the growth of advanced
 
22 technology ventures within the State.  
 
23      §   -403  Moneys to be paid to the fund.(a)  Excess
 

 
Page 17                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 premiums collected, paid, and returned to the corporation by the
 
 2 company shall be deposited in the fund.  The company shall return
 
 3 excess premiums to the corporation for deposit in the fund within
 
 4 ninety days of the close of the previous fiscal year.
 
 5      (b)  All interest, dividends gains, and any other earnings
 
 6 arising or derived from the investments of the fund shall be
 
 7 returned to the fund for future use pursuant to the purpose of
 
 8 the fund.
 
 9      (c)  The corporation may seek out and accept other sources
 
10 of funding for the fund.
 
11      §   -404  Duties and powers of the investment manager.  The
 
12 investment manager shall:
 
13      (1)  Prepare reports as required by the board for the
 
14           board's review regarding the financial position of the
 
15           fund;
 
16      (2)  Manage and administer the day-to-day operations of the
 
17           fund;
 
18      (3)  Prepare an annual report for public review within
 
19           ninety days of the close of the previous fiscal year,
 
20           which details:
 
21           (A)  Each grant, loan, or investment made by the fund;
 
22           (B)  The fund's income broken down to account for the
 
23                sources listed in section    -403.
 

 
Page 18                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           (C)  Projected income and recommendations for the
 
 2                current fiscal year; and 
 
 3           (D)  Other details on matters as may be required by the
 
 4                board;
 
 5      (4)  Establish and maintain for the fund, all records
 
 6           required by law and prudent investment practices,
 
 7           separate and apart from those of the corporation, and
 
 8           prepare all reports required by governmental regulatory
 
 9           and supervisory authorities; and
 
10      (5)  Execute the investment decisions of the board. 
 
11      §   -405  Disbursement of moneys from the fund.(a)  The
 
12 board may make grants, loans, capital contributions, or
 
13 arrangements for other prudent financing mechanisms to encourage
 
14 the growth of advanced technology ventures within the State to
 
15 persons whose projects or programs represent recent advancements
 
16 or innovations in their respective field and are of particular
 
17 interest to the State.
 
18      (b)  The board shall adopt rules pursuant to chapter 91
 
19 that:
 
20      (1)  Specify qualifications for eligibility of applicants;
 
21      (2)  Establish priorities in determining eligibility if
 
22           insufficient funds are available for otherwise
 
23           qualified applicants; and
 

 
Page 19                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1      (3)  Are necessary for the purpose of this chapter."  
 
 2      SECTION 3.  Section 431:10C-103, Hawaii Revised Statutes, is
 
 3 amended by amending the definition of "motor vehicle" to read as
 
 4 follows:
 
 5      ""Motor vehicle" means any vehicle of a type required to be
 
 6 registered under chapter 286, including a trailer attached to
 
 7 [such a] the vehicle, [but not including motorcycles and motor
 
 8 scooters.] motorcycles, and motor scooters."
 
 9      SECTION 4.  Section 431:10C-103.5, Hawaii Revised Statutes,
 
10 is amended to read as follows:
 
11      "§431:10C-103.5  Personal injury protection benefits;
 
12 defined; limits.(a)  Personal injury protection benefits, with
 
13 respect to any accidental harm, means all appropriate and
 
14 reasonable treatment and expenses necessarily incurred as a
 
15 result of the accidental harm and which are substantially
 
16 comparable to the requirements for prepaid health care plans,
 
17 including medical, hospital, surgical, professional, nursing,
 
18 advanced practice nursing recognized pursuant to chapter 457,
 
19 dental, optometric, chiropractic, ambulance, prosthetic services,
 
20 products and accommodations furnished, x-ray, psychiatric,
 
21 physical therapy pursuant to prescription by a medical doctor,
 
22 occupational therapy, rehabilitation, and therapeutic massage by
 
23 a licensed massage therapist when prescribed by a medical doctor.
 

 
Page 20                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1      [(b)  Personal injury protection benefits, when applied to a
 
 2 motor vehicle insurance policy issued at no cost under section
 
 3 431:10C-410(3)(A), shall not include benefits under subsection
 
 4 (a) for any person receiving public assistance benefits.
 
 5      (c)] (b)  Personal injury protection benefits shall be
 
 6 subject to an aggregate limit of $10,000 per person for services
 
 7 provided under this section.  An insurer may offer additional
 
 8 coverage in excess of the $10,000 aggregate limit for services
 
 9 provided under this section, or as provided by rule of the
 
10 commissioner."
 
11      SECTION 5.  Section 431:10C-103.6, Hawaii Revised Statutes,
 
12 is amended by amending subsection (a) to read as follows:
 
13      "(a)  The benefits provided under section 431:10C-103.5
 
14 shall be substantially comparable to the requirements for prepaid
 
15 health care plans, as provided in chapter 393 and rules of the
 
16 department of labor and industrial relations, pertaining to the
 
17 Prepaid Health Care Act.  The reference to the Prepaid Health
 
18 Care Act is only for purposes of describing the coverages and
 
19 exclusions[, without regard to any specific insurer or plan,] and
 
20 shall not be construed to transfer coverage to the prepaid health
 
21 care plans.  The precise charges and utilization rates shall be
 
22 as contained in the workers' compensation schedules as provided
 
23 under section 431:10C-308.5, unless modified by the commissioner
 

 
Page 21                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 by rule under chapter 91."
 
 2      SECTION 6.  Section 431:10C-301, Hawaii Revised Statutes, is
 
 3 amended by amending subsection (a) to read as follows:
 
 4      "(a) An insurance policy covering a motor vehicle shall
 
 5 provide[:
 
 6      (1)  Coverage specified in section 431:10C-304; and
 
 7      (2)  Insurance] insurance to pay on behalf of the owner or
 
 8 any operator of the insured motor vehicle using the motor vehicle
 
 9 with a reasonable belief that the person is entitled to operate
 
10 the motor vehicle, sums which the owner or operator may legally
 
11 be obligated to pay for injury, death, or damage to property of
 
12 others, except property owned by, being transported by, or in the
 
13 charge of the insured, which arise out of the ownership,
 
14 operation, maintenance, or use of the motor vehicle; provided
 
15 that in the case of a U-drive motor vehicle, insurance to pay on
 
16 behalf of the renter or any operator of the insured motor vehicle
 
17 using the motor vehicle with the express permission of the renter
 
18 or lessee, sums which the renter or operator may be legally
 
19 obligated to pay for damage or destruction of property of others
 
20 (except property owned by, being transported by, or in the charge
 
21 of the renter or operator) arising out of the operation or use of
 
22 the motor vehicle unless the motor vehicle is reported stolen by
 
23 the owner within three days of notification of the incident;
 

 
Page 22                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 provided that the insurer and owner of a U-drive vehicle shall
 
 2 have the right of subrogation against the renter and operator for
 
 3 breach of the rental contract between owner and renter; and
 
 4 provided further that, in the event that any motor vehicle
 
 5 offered for rental or lease is involved in an accident, the
 
 6 lessor shall provide all information it has or obtains relevant
 
 7 to the accident to all other involved parties upon their request,
 
 8 including but not limited to information about the lessee, and
 
 9 the driver of the vehicle if other than the lessee."
 
10      SECTION 7.  Section 431:10C-304, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§431:10C-304  Obligation to pay personal injury protection
 
13 benefits.  For purposes of this section, the term "personal
 
14 injury protection insurer" includes personal injury protection
 
15 self-insurers.  Every personal injury protection insurer shall
 
16 provide personal injury protection benefits for accidental harm
 
17 as follows:
 
18      (1)  Except as otherwise provided in section 431:10C-305(d),
 
19           in the case of injury arising out of a motor vehicle
 
20           accident, the insurer shall pay, without regard to
 
21           fault, to the provider of services on behalf of the
 
22           following persons sustain accidental harm as a result
 
23           of the operation, maintenance, or use of the vehicle,
 

 
Page 23                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           an amount equal to the personal injury protection
 
 2           benefits as defined in section 431:10C-103.5(a) payable
 
 3           for expenses to that person as a result of the injury:
 
 4           (A)  Any person, including the owner, operator,
 
 5                occupant, or user of the insured motor vehicle;
 
 6           (B)  Any pedestrian (including a bicyclist); or
 
 7           (C)  Any user or operator of a moped as defined in
 
 8                section 249-1; [provided that this paragraph shall
 
 9                not apply in the case of injury to or death of any
 
10                operator or passenger of a motorcycle or motor
 
11                scooter as defined in section 286-2 arising out of
 
12                a motor vehicle accident, unless expressly
 
13                provided for in the motor vehicle policy;]
 
14      (2)  Payment of personal injury protection benefits shall be
 
15           made as the benefits accrue, except that in the case of
 
16           death, payment of benefits under section
 
17           431:10C-302(a)(5) may be made immediately in a lump sum
 
18           payment, at the option of the beneficiary;
 
19      (3)  (A)  Payment of personal injury protection benefits
 
20                shall be made within thirty days after the insurer
 
21                has received reasonable proof of the fact and
 
22                amount of benefits accrued, and demand for payment
 
23                thereof.  All providers must produce descriptions
 

 
Page 24                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1                of the service provided in conformity with
 
 2                applicable fee schedule codes;
 
 3           (B)  If the insurer elects to deny a claim for benefits
 
 4                in whole or in part, the insurer shall, within
 
 5                thirty days, notify the claimant in writing of the
 
 6                denial and the reasons for the denial.  The denial
 
 7                notice shall be prepared and mailed by the insurer
 
 8                in triplicate copies and be in a format approved
 
 9                by the commissioner.  In the case of benefits for
 
10                services specified in section 431:10C-103.5(a) the
 
11                insurer shall also mail a copy of the denial to
 
12                the provider; and
 
13           (C)  If the insurer cannot pay or deny the claim for
 
14                benefits because additional information or loss
 
15                documentation is needed, the insurer shall, within
 
16                the thirty days, forward to the claimant an
 
17                itemized list of all the required documents.  In
 
18                the case of benefits for services specified in
 
19                section 431:10C-103.5(a) the insurer shall also
 
20                forward the list to the service provider;
 
21      (4)  Amounts of benefits which are unpaid thirty days after
 
22           the insurer has received reasonable proof of the fact
 
23           and the amount of benefits accrued, and demand for
 

 
Page 25                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           payment thereof, after the expiration of the thirty
 
 2           days, shall bear interest at the rate of one and one-
 
 3           half per cent per month;
 
 4      (5)  No part of personal injury protection benefits paid
 
 5           shall be applied in any manner as attorney's fees in
 
 6           the case of injury or death for which the benefits are
 
 7           paid.  The insurer shall pay, subject to section
 
 8           431:10C-211, in addition to the personal injury
 
 9           protection benefits due, all attorney's fees and costs
 
10           of settlement or suit necessary to effect the payment
 
11           of any or all personal injury protection benefits found
 
12           due under the contract.  Any contract in violation of
 
13           this provision shall be illegal and unenforceable.  It
 
14           shall constitute an unlawful and unethical act for any
 
15           attorney to solicit, enter into, or knowingly accept
 
16           benefits under any contract; and
 
17      (6)  Any insurer who violates this section shall be subject
 
18           to section 431:10C-117(b) and (c)."
 
19      SECTION 8.  Section 431:10C-407, Hawaii Revised Statutes, is
 
20 amended by amending subsection (b) to read as follows:
 
21      "(b)  The plan shall provide [all personal injury protection
 
22 benefits and services and] bodily injury and property damage
 
23 liability coverages to the limits and coverages specified in this
 

 
Page 26                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 article for all classes of persons, motor vehicles, and motor
 
 2 vehicle uses specified in this part upon the payment of premiums
 
 3 as provided in subpart C, as follows:
 
 4      (1)  The plan shall provide [personal injury protection
 
 5           benefits and] policies for each of the following
 
 6           classes, and each class shall be able to secure a
 
 7           [personal injury protection and] bodily injury and
 
 8           property damage liability policy through the plan:
 
 9           (A)  All motor vehicles owned by licensed assigned risk
 
10                drivers as the commissioner, by rules, shall
 
11                define.  The commissioner shall regulate the class
 
12                in accordance with the general practice of the
 
13                industry, the applicable results, if any, of the
 
14                commissioner's examination of the motor vehicle
 
15                insurers' business records and experience, and any
 
16                applicable and scientifically credible
 
17                governmental or academic studies of the
 
18                multi-accident or high-risk motor vehicle driver;
 
19           (B)  All motor vehicles owned by licensed drivers
 
20                convicted within the thirty-six months immediately
 
21                preceding the date of application, in any
 
22                jurisdiction of any one or more of the offenses
 
23                of, or of the offenses cognate to:
 

 
Page 27                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1                (i)  Heedless and careless driving;
 
 2               (ii)  Driving while license suspended or revoked;
 
 3              (iii)  Leaving the scene of an accident;
 
 4               (iv)  Manslaughter, if resulting from the operation
 
 5                     of a motor vehicle; or
 
 6                (v)  Driving under the influence of an
 
 7                     intoxicating liquor as provided in section
 
 8                     291-4 or any drug as provided in section
 
 9                     291-7;
 
10           (C)  All commercial uses, first class, defined as any
 
11                commercial use engaged in the transport of
 
12                passengers for hire or gratuity;
 
13           (D)  All commercial uses, second class, defined as any
 
14                commercial, business, or institutional use other
 
15                than the transport of passengers as described in
 
16                subparagraph (C) or the exclusive use of a vehicle
 
17                for domestic-household-familial purposes; and
 
18           (E)  All other motor vehicles, not classified under
 
19                subparagraph (A), (B), (C), or (D), owned by
 
20                licensed drivers who are unable to obtain motor
 
21                vehicle insurance policies and optional additional
 
22                insurance through ordinary methods;
 
23      (2)  The plan shall provide [personal injury protection
 

 
Page 28                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           benefits and] bodily injury and property damage
 
 2           policies for all classes of persons, motor vehicles,
 
 3           and motor vehicle uses, at the premiums specified under
 
 4           subpart C, at the option of the owners, for the
 
 5           following classes, which the commissioner, by rules,
 
 6           shall further define and regulate:
 
 7           (A)  All licensed drivers, or unlicensed permanently
 
 8                disabled individuals unable to operate their motor
 
 9                vehicles, who are receiving public assistance
 
10                benefits consisting of direct cash payments, or
 
11                who received public assistance benefits in the
 
12                form of medical services prior to July 1, 1994,
 
13                and are still receiving the benefits, through the
 
14                department of human services, or benefits from the
 
15                Supplemental Security Income program under the
 
16                Social Security Administration; provided that the
 
17                licensed drivers, or unlicensed permanently
 
18                disabled individuals unable to operate their motor
 
19                vehicles, are the sole registered owners of the
 
20                motor vehicles to be insured; provided further
 
21                that not more than one vehicle per public
 
22                assistance unit shall be insured under this part,
 
23                unless extra vehicles are approved by the
 

 
Page 29                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1                department of human services as being necessary
 
 2                for medical or employment purposes; provided
 
 3                further that the motor vehicle to be insured shall
 
 4                be used strictly for personal purposes, and not
 
 5                for commercial purposes; and
 
 6           (B)  Any licensed physically handicapped driver,
 
 7                including drivers with any auditory limitation.
 
 8           Each category of driver/owner under subparagraphs (A)
 
 9           and (B) may secure motor vehicle insurance coverage
 
10           through the plan at the individual's option; provided
 
11           any previous motor vehicle insurance policy has expired
 
12           or has been canceled.  Any person becoming eligible for
 
13           plan coverage under subparagraph (A) shall first
 
14           exhaust all paid coverage under any motor vehicle
 
15           insurance policy then in force before becoming eligible
 
16           for plan coverage.
 
17                Any person eligible or becoming eligible under
 
18           rules adopted by the commissioner under subparagraph
 
19           (B), may at any time elect coverage under the plan and
 
20           terminate any prior private insurer's coverage.
 
21                A certificate shall be issued by the department of
 
22           human services indicating that the person is a bona
 
23           fide public assistance recipient as defined in
 

 
Page 30                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1           subparagraph (A).  The certificate shall be deemed a
 
 2           policy for the purposes of this chapter upon the
 
 3           issuance of a valid motor vehicle insurance
 
 4           identification card pursuant to section 431:10C-107;
 
 5           and
 
 6      (3)  Under the joint underwriting plan, the required motor
 
 7           vehicle policy coverages as provided in section
 
 8           431:10C-301 shall be offered by every insurer to each
 
 9           eligible applicant assigned by the bureau.  In
 
10           addition, uninsured motorist and underinsured motorist
 
11           coverages shall be offered in conformance with section
 
12           431:10C-301, and optional additional coverages shall be
 
13           offered in conformance with section 431:10C-302, for
 
14           each class except the class defined in paragraph
 
15           (2)(A), as the commissioner, by rules, shall provide."
 
16      SECTION 9.  Section 431:10G-301, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "§431:10G-301  Required motorcycle and motor scooter policy
 
19 coverage.(a)  An insurance policy covering a motorcycle or
 
20 motor scooter shall provide insurance in the following amounts to
 
21 pay, on behalf of the owner or any operator of the insured
 
22 motorcycle or motor scooter, sums that the owner or any operator
 
23 may legally be obligated to pay for injury, death, or damage to
 

 
Page 31                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1 the property of others, except property owned by, being
 
 2 transported by, or in charge of the insured that arise out of the
 
 3 ownership, operation, maintenance, or use of the motorcycle or
 
 4 motor scooter:
 
 5      (1)  Liability coverage of not less than $20,000 per person,
 
 6           with an aggregate limit of $40,000 per accident, for
 
 7           all damages arising out of accidental harm sustained as
 
 8           a result of any one accident; and
 
 9      (2)  Liability coverage of not less than $10,000 for all
 
10           damages arising out of injury to or destruction of
 
11           property, including motorcycles or motor scooters and
 
12           including the loss of use thereof, but not including
 
13           property owned by, being transported by, or in the
 
14           charge of the insured, as a result of any one accident.
 
15      (b)  At the option of the owner, each insurer shall:
 
16      (1)  Offer medical payment coverage up to $10,000 to pay all
 
17           reasonable expenses incurred within one year from the
 
18           date of accident for necessary medical, surgical,
 
19           dental, ambulance, hospital, professional, and nursing
 
20           services;
 
21      (2)  Offer an income disability plan; and
 
22      (3)  Offer liability coverage in excess of the minimum
 
23           coverages required by this section. 
 

 
Page 32                                                    2879
                                     H.B. NO.           
                                                        
                                                        

 
 1     [(c)  Any operator or passenger of a motorcycle or motor
 
 2 scooter as defined in section 286-2 who receives injuries or dies
 
 3 in a motor vehicle accident may not claim personal injury
 
 4 protection benefits under a motor vehicle insurance policy,
 
 5 unless expressly provided for in the motor vehicle policy.]"
 
 6      SECTION 10.  This Act does not affect rights and duties that
 
 7 matured, penalties that were incurred, accidents which occurred,
 
 8 and proceedings that were begun, before July 1, 2001.
 
 9      SECTION 11.  If any provision of this Act, or the
 
10 application thereof to any person or circumstances is held
 
11 invalid, the invalidity does not affect other provisions or
 
12 applications of the Act which can be given effect without the
 
13 invalid provision or application, and to this end the provisions
 
14 of this Act are severable. 
 
15      SECTION 12.  Statutory material to be repealed is bracketed.
 
16 New statutory material is underscored.
 
17      SECTION 13.  This Act shall take effect on July 1, 2001;
 
18 provided that the corporation secures a private letter ruling
 
19 from the internal revenue service confirming the corporation's
 
20 tax-exempt status under the Internal Revenue Code of 1986 as
 
21 amended.
 
22 
 
23                       INTRODUCED BY:  ___________________________