REPORT TITLE:
Captive Insurance Co.


DESCRIPTION:
Gives the state comptroller the authority to establish a captive
insurance company to insure the general liabilities of the State.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2986 
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1        
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            


                   A  BILL  FOR  AN  ACT

RELATING TO THE STATE RISK MANAGEMENT AND INSURANCE
   ADMINISTRATION.



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

 1      SECTION 1.  The purpose of this Act is to grant the state
 
 2 comptroller sufficient authority to establish a captive insurance
 
 3 company, which will be owned by the State in order to insure the
 
 4 general liabilities of state agencies pursuant to chapter 41D,
 
 5 Hawaii Revised Statutes.
 
 6      The State currently self-insures a substantial portion of
 
 7 its assets, and current insurance policies already maintain
 
 8 deductibles between $50,000 and $3,000,000 per occurrence.  In
 
 9 return the State pays nearly $5,000,000 in premiums per year.
 
10 The State will save money under the proposed scheme since the
 
11 state-owned captive insurance company will allow the State direct
 
12 access to the discounted premium rates available in the
 
13 reinsurance market.
 
14      SECTION 2.  Section 41D-1, Hawaii Revised Statutes, is
 
15 amended by adding a new definition to be appropriately inserted
 
16 and to read as follows:
 
17      ""Captive insurance company" shall have the same meaning as
 
18 captive insurance company has in section 431:19-101."
 
19      SECTION 3.  Section 41D-2, Hawaii Revised Statutes, is
 

 
Page 2                                                     2986
                                     H.B. NO.           H.D. 1        
                                                        
                                                        


 1 amended by adding a new subsection to be appropriately designated
 
 2 and to read as follows:
 
 3      "( ) The State comptroller, through the risk manager, may
 
 4 establish a captive insurance company pursuant to article 19 of
 
 5 chapter 431, in order to effectuate the purposes of this
 
 6 chapter."
 
 7      SECTION 4.  Section 41D-6, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "[[]§41D-6[]]  Fund advancement[; dissolution].  If the
 
10 state risk management revolving fund should become financially
 
11 incapable of meeting its obligations under this chapter, the
 
12 comptroller, in the comptroller's discretion, [may:
 
13      (1)  Request] shall request that the governor authorize the
 
14           transfer of sufficient sums to meet the fund's
 
15           obligations from whatever such savings as may be
 
16           available from other current appropriation for any
 
17           other state program.  Money so advanced shall be repaid
 
18           from the state risk management revolving fund in annual
 
19           installments, without interest.  The amount of
 
20           installments shall be fixed by the director of finance
 
21           at whatever amount as can reasonably be expected to
 
22           liquidate indebtedness of the fund in not more than ten
 
23           years[; or
 

 
Page 3                                                     2986
                                     H.B. NO.           H.D. 1        
                                                        
                                                        


 1      (2)  Dissolve the fund, prorating remaining assets of the
 
 2           fund among the claimants, giving priority to those
 
 3           claims as, in the comptroller's discretion, is
 
 4           appropriate]."
 
 5      SECTION 5.  Section 41D-8.5, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "[[]§41D-8.5[]]  Insurance for indemnification.  The
 
 8 comptroller may [obtain]:
 
 9      (1)  Obtain sufficient loss insurance to cover the liability
 
10           of the State that may arise from indemnity provisions
 
11           agreed to pursuant to section 29-15.5[.]; and
 
12      (2)  Obtain appropriate and sufficient reinsurance to cover
 
13           the liability of a captive insurance company
 
14           established pursuant to section 41D-2."
 
15      SECTION 6.  Statutory material to be repealed is bracketed.
 
16 New statutory material is underscored.
 
17      SECTION 7.  This Act shall take effect upon its approval.