SB636

Report Title:

Insurance Coverage

Description:

Extends medical and other insurance benefits to reciprocal beneficiaries. Requires the public employees health fund to establish a reciprocal beneficiary family coverage health benefits plan.

THE SENATE	S.B. NO.	636
TWENTY-FIRST LEGISLATURE, 2001
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 87, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§87- Reciprocal beneficiary family coverage defined; reciprocal beneficiary employees, State and counties, and fund responsibility costs. (a) The board of trustees shall establish a reciprocal beneficiary family coverage health benefits plan for an employee who is a reciprocal beneficiary under chapter 572C and elects to enroll in reciprocal beneficiary family coverage.

(b) As used in this section, "reciprocal beneficiary family coverage" means coverage under a health benefits plan that insures, originally or upon subsequent amendment, an employee who is a reciprocal beneficiary, the other party to the employee's reciprocal beneficiary relationship, and any dependent-beneficiary of the employee, any unmarried child of the non-employee reciprocal beneficiary under age nineteen, or a surviving reciprocal beneficiary of the employee."

SECTION 2. Section 431:10-206, Hawaii Revised Statutes, is amended to read as follows:

"§431:10-206 Application for insurance: consent of insured required. No life or disability insurance contract upon an individual shall be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to contract, applies for or consents to the insurance in writing, except in the following cases:

(1) A spouse or reciprocal beneficiary may effectuate such insurance upon the other spouse[.] or reciprocal beneficiary.

(2) Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and maintenance, may effectuate insurance upon the life of or pertaining to the minor.

This section shall not apply to contracts of group life insurance or of group or blanket disability insurance as defined in this code."

SECTION 3. Section 431:10-232, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) All proceeds payable because of the death of the insured and the aggregate net cash value of any or all life and endowment policies and annuity contracts payable to a spouse or reciprocal beneficiary of the insured, or to a child, parent, or other person dependent upon the insured, whether the power to change the beneficiary is reserved to the insured or not, and whether the insured or the insured's estate is a contingent beneficiary or not, shall be exempt from execution, attachment, garnishment, or other process, for the debts or liabilities of the insured incurred subsequent to May 19, 1939, except as to premiums paid in fraud of creditors within the period limited by law for the recovery of such payments.

(b) When the terms of any life or endowment policy or annuity contract require that the proceeds thereof be retained by the insurer upon the death of the insured, or other maturity of the policy or contract, for payment to any beneficiary other than the insured in accordance with a settlement plan selected by the insured, the beneficiary shall have no right or power, nor shall the beneficiary be permitted by any insurer, to commute, encumber, assign, or otherwise anticipate the beneficiary's interests under the plan if the right or power is expressly denied the beneficiary by the terms of the contract or policy. If the beneficiary under the settlement plan is or was the spouse or reciprocal beneficiary of the insured, or a child, parent, or other person dependent upon the insured, the beneficiary's interests thereunder, in any case, shall be exempt from execution, attachment, garnishment, or other process for the beneficiary's debts or liabilities incurred after December 31, 1955."

SECTION 4. Section 431:10A-103, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-103 Family coverage defined. As used in this part, family coverage means a policy that insures, originally or upon subsequent amendment, an adult member of a family who shall be deemed the policyholder and any two or more eligible members of that family, including spouse, reciprocal beneficiary, dependent children or any children under a specified age which shall not exceed nineteen years, and any other person dependent upon the policyholder."

SECTION 5. Section 431:10A-105, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-105 Required provisions. Except as provided in section 431:10A-107, each policy of accident and sickness insurance delivered or issued for delivery to any person in this State shall contain the provisions set forth below. These provisions shall be in the words in which they appear below, provided that the insurer may substitute corresponding provisions of different wording approved by the commissioner which are in each instance not less favorable in any respect to the insured or the beneficiary. The provisions shall be preceded individually by the specified caption, or by such appropriate individual or group captions or subcaptions as the commissioner may approve. The provisions are as follows:

(1) "Entire Contract; Changes: This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless the approval is endorsed on or attached to this policy. No agent has authority to change this policy or to waive any of its provisions."

(2) (A) "Time Limit on Certain Defenses:

(i) After three years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for this policy shall be used to void this policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of the three-year period.

(ii) No claim for loss incurred or disability (as defined in the policy) commencing after three years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy."

(B) The policy provision set forth in subparagraph (A)(i) shall not be construed to affect any legal requirement for avoidance of a policy or denial of a claim during the initial three-year period, nor to limit the application of section 431:10A-106(1) through (4) in the event of misstatement with respect to age or occupation or other insurance.

(C) A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium until at least age fifty or, in the case of a policy issued after age forty-four, for at least five years from its date of issue, may contain in lieu of subparagraph (A)(i) the following provision (from which the clause in parentheses may be omitted at the insurer's option): "Incontestable: After this policy has been in force for a period of three years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application."

(3) (A) "Grace period: A grace period of days (insert a number not less than seven for weekly premium policies, ten for monthly premium policies, and thirty-one for all other policies) will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force."

(B) A policy which contains a cancellation provision may add at the end of the above provision: "subject to the right of the insurer to cancel in accordance with the cancellation provision."

(C) A policy in which the insurer reserves the right to refuse any renewal shall have at the beginning of the above provision: "Unless not less than thirty days prior to the premium due date the insurer has delivered to the insured or has mailed to the insured's last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted."

(4) (A) "Reinstatement: If any renewal premium is not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept the premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy; provided[~~, however,~~] that if the insurer or agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy shall be reinstated upon approval of the application by the insurer or, lacking approval, upon the forty-fifth day following the date of conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of the application. The reinstated policy shall cover only loss resulting from accidental injury as may be sustained after the date of reinstatement and loss due to sickness as may begin more than ten days after that date. In all other respects the insured and insurer shall have the same rights as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with the reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than sixty days prior to the date of reinstatement."

(B) The last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums until at least age fifty or, in the case of a policy issued after age forty-four, for at least five years from its date of issue.

(5) (A) "Notice of Claim: Written notice of claim must be given to the insurer within twenty days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at (insert the location of the office as the insurer may designate for the purpose) or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer."

(B) In a policy providing a loss of time benefit which may be payable for at least two years, an insurer may at its option insert the following between the first and second sentences of the above provision: "Subject to the qualification set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two years, the insured shall, at least once in every six months after having given notice of claim, give to the insurer notice of continuance of the disability, except in the event of legal incapacity. The period of six months following any filing of proof by the insured or any payment by the insurer on account of the claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in giving notice shall not impair the insured's right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which notice is actually given."

(6) "Claim Forms: The insurer, upon receipt of a notice of claim, will furnish to the claimant the forms, that are usually furnished by it for filing proofs of loss. If the forms are not furnished within fifteen days after the giving of notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character, and the extent of the loss for which claim is made."

(7) "Proofs of Loss: In case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss, written proof of loss must be furnished to the insurer at its office within ninety days after the termination of the period for which the insurer is liable, and in case of claim for any other loss within ninety days after the date of loss. Failure to furnish proof of loss within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within the time required, provided proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than fifteen months from the time proof is otherwise required."

(8) "Time of Payment of Claims: Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid (insert period for payment which must not be less frequently than monthly) and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof."

(9) (A) "Payment of Claims: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting payment which may be prescribed herein and effective at the time of payment. If no designation or provision is then effective, the indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death [~~may~~], at the option of the insurer, may be paid either to the designated beneficiary or to the estate of the insured. All other indemnities will be payable to the insured."

(B) The following provisions, or either of them, may be included with the above provision at the option of the insurer:

(i) "If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay the indemnity, up to an amount not exceeding $2,000 to any relative by blood or connection by marriage or through reciprocal beneficiary status of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of the payment."

(ii) "Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services [~~may~~], at the insurer's option and unless the insured requests otherwise in writing not later than the time of filing proofs of loss, may be paid directly to the hospital or person rendering the services; but it is not required that the service be rendered by a particular hospital or person."

(10) "Physical Examinations and Autopsy: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law."

(11) "Legal Actions: No action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty days after written proof of loss has been furnished in accordance with the requirements of this policy. No action at law or in equity shall be brought after the expiration of three years after the time written proof of loss is required to be furnished."

(12) (A) "Change of Beneficiary: Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy."

(B) The first clause of the above provision, relating to the irrevocable designation of beneficiary, may be omitted at the insurer's option."

SECTION 6. Section 431:10A-202, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-202 Health care groups. A policy of group disability insurance may be issued to a corporation, as policyholder, existing primarily for the purpose of assisting individuals who are its subscribers in securing medical, hospital, dental, and other health care services for themselves and their dependents[,] including reciprocal beneficiaries, covering all and not less than five hundred such subscribers and dependents, with respect only to medical, hospital, dental, and other health care services."

SECTION 7. Section 431:10A-401, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-401 Purpose. It is the purpose of this part to provide a means of more adequately meeting the needs of persons who are sixty-five years of age or older and their spouses or reciprocal beneficiaries for insurance coverage against financial loss from accident or disease through the combined resources and experience of a number of insurers; to make possible the fullest extension of such coverage by encouraging insurers to combine their resources and experience and to exercise their collective efforts in the development and offering of policies of such insurance to all such applicants at costs lower than those generally available through individual insurers; and to regulate the joint activities herein authorized in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945 (Public Law 15, 79th Congress), as amended."

SECTION 8. Section 431:10A-403, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-403 Association of insurers; policyholder; policy. (a) Any insurer may join with one or more other insurers to plan, develop, underwrite, offer, and provide to any person who is sixty-five years of age or older and to the spouse or reciprocal beneficiary of such person, extended health insurance against financial loss from accident or disease, or both. The insurance may be offered, issued, and administered jointly by two or more insurers by a group policy issued to a policyholder through an association formed for the purpose of offering, selling, issuing, and administering such insurance.

(b) The policyholder may be an association, a trustee, or any other person. A master group policy issued to an association or to a trustee or any person appointed by an association for the purpose of providing the insurances described in this part shall be another form of group disability insurance.

Any form of policy approved by the commissioner for an association shall be offered throughout the State to all persons sixty-five and older and their spouses[,] or reciprocal beneficiaries, and the coverage of any person insured under such a form of policy shall not be cancellable except for nonpayment of premiums unless the coverage of all persons insured under such form of policy is also cancelled.

(c) Any such policy may provide, among other things, that the benefits payable under the policy are subject to reduction if the individual insured has any other coverage providing hospital, surgical, or medical benefits whether on an indemnity basis or a provision of service basis resulting in such insured being eligible for more than one hundred per cent of covered expenses which the insured is required to pay. Any insurer issuing individual policies providing extended hospital, surgical, or medical benefits to persons sixty-five years of age and older and their spouses or reciprocal beneficiaries may also use such a policy provision."

SECTION 9. Section 431:10A-601, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:10A-601[]] Reciprocal beneficiary [~~family~~] coverage [~~defined; policyholder and employer responsibility for~~ ~~costs; availability~~]. [~~(a)~~] Any other law to the contrary notwithstanding, for purposes of this article, reciprocal [beneficiary family coverage, as defined in subsection (b), shall be made available to reciprocal beneficiaries, as defined in chapter 572C, but only to the extent that family coverage, as defined in section 431:10A-103, is currently available to individuals who are not reciprocal beneficiaries.

(b) As used in this section, reciprocal beneficiary family coverage means a policy that insures, originally or upon subsequent amendment, a reciprocal beneficiary who shall be deemed the policyholder, the other party to the policyholder's reciprocal beneficiary relationship registered pursuant to ~~chapter 572C, dependent children or any child of any other person dependent upon either reciprocal beneficiary.~~

(c) If a reciprocal beneficiary policyholder incurs additional costs or premiums, if any, by electing reciprocal beneficiary family coverage under this section, the employer may pay additional costs or premiums.] beneficiaries shall be offered the same coverage as is offered to spouses."

SECTION 10. Section 431:10B-105, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Credit life insurance.

(1) The initial amount of credit life insurance shall not exceed the total amount repayable under the contract of indebtedness and, where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater; except that if the sole purpose of the loan is to provide future advances to the debtor to meet education or education related expenses of the debtor, the debtor's spouse, reciprocal beneficiary, children, or other dependents, the amount of insurance may equal, but may not exceed, the total amount of the described expenses forecast at the time of entry into the loan agreement with the creditor, less the amount of all repayments by the debtor. In the case of revolving loan or revolving charge accounts, the insurance shall at no time exceed the unpaid indebtedness.

(2) Notwithstanding [~~the provisions of~~] subsection (a)(1), insurance on agricultural credit transaction commitments not exceeding one year in duration may be written up to the amount of the loan commitment, on a nondecreasing or level term plan."

SECTION 11. Section 431:10C-111, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) No insurer shall refuse to continue a motor vehicle insurance policy based solely upon a person's race, creed, ethnic extraction, age, sex, length of driving experience, marital or reciprocal beneficiary status, residence, physical handicap, or because an insured has elected to obtain any required or optional coverage or deductible required by law. If an insured alleges that the insurer's refusal to continue the motor vehicle insurance policy is based solely upon the insured's race, creed, ethnic extraction, age, sex, length of driving experience, marital or reciprocal beneficiary status, residence, physical handicap, or because the insured has elected to obtain any required or optional coverage or deductible provided by law, the burden of proof shall rest with the insurer to prove that the refusal to continue the policy was not based on noncompliance with this subsection."

SECTION 12. Section 431:10C-207, Hawaii Revised Statutes, is amended to read as follows:

"§431:10C-207 Discriminatory practices prohibited. No insurer shall base any standard or rating plan, in whole or in part, directly or indirectly, upon a person's race, creed, ethnic extraction, age, sex, length of driving experience, credit bureau rating, marital or reciprocal beneficiary status, or physical handicap."

SECTION 13. Section 431:10C-302, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In addition to the motor vehicle insurance coverages described in section 431:10C-301, every insurer issuing a motor vehicle insurance policy shall make available to the insured the following optional insurance under the following conditions. Every insurer issuing a commercial motor vehicle insurance policy shall make available to the insured the following optional insurance, except for those benefits under paragraphs (4), (5), (9), (10), and (11) under the following conditions:

(1) At the option of the insured, provisions covering loss resulting from damage to the insured's motor vehicle with such deductibles, including but not limited to collision and comprehensive deductibles of $50, $100, $250, $500, $1,000, $1,500, and $2,000, at appropriately reduced premium rates, as the commissioner, by rule, shall provide;

(2) At the option of the insured, compensation to the insured, the insured's spouse, the insured's reciprocal beneficiary, any dependents, or any occupants of the insured's vehicle for damages not covered by personal injury protection benefits;

(3) Additional coverages and benefits with respect to any injury or any other loss from motor vehicle accidents or from operation of a motor vehicle for which the insurer may provide for aggregate limits with respect to such additional coverage so long as the basic liability coverages provided are not less than those required by section 431:10C-301(b)(1) and (2);

(4) At the option of the insured, an option in writing for coverage for wage loss benefits for monthly earnings loss for injury arising out of a motor vehicle accident. Any change in the wage loss benefits coverage selected by an insured shall apply only to benefits arising out of motor vehicle accidents occurring after the date the change becomes effective. Coverage shall be offered in multiples of $500 a month/$3,000 per accident per person, from $500 a month/$3,000 per accident to $2,000 a month/$12,000 per accident; however, nothing shall prevent an insurer from making available higher limits of coverage;

(5) An option in writing for minimum coverage for death benefits for death arising out of a motor vehicle accident in an amount of $25,000, to be paid to the surviving spouse[,] or reciprocal beneficiary, for the benefit of the spouse or reciprocal beneficiary and dependent children, or if there are no surviving spouse, reciprocal beneficiary, or dependent children, then to the estate. Coverage shall also be made available for increased death benefits in increments of $25,000 up to $100,000; however, nothing shall prevent an insurer from making available higher limits of coverage. At the option of the insured, coverage for funeral expenses of $2,000 shall be made available;

(6) Terms, conditions, exclusions, and deductible clauses, coverages, and benefits which:

(A) Are consistent with the required provisions of the policy[,];

(B) Limit the variety of coverage available so as to give buyers of insurance reasonable opportunity to compare the cost of insuring with various insurers; and

(7) At appropriately reduced premium rates, deductibles applicable only to claims of an insured in the amounts of $100, $300, $500, and $1,000 from all personal injury protection benefits otherwise payable; provided that if two or more insureds to whom the deductible is applicable under the contract of insurance are injured in the same accident, the aggregate amount of the deductible applicable to all of them shall not exceed the specified deductible, which amount where necessary shall be allocated equally among them;

(8) Every insurer shall fully disclose the availability of all required and optional coverages and deductibles, including the nature and amounts, at the issuance or delivery of the policy; or, for a policy already issued on January 1, 1998, disclosure shall be made at the first renewal after January 1, 1998. The insurer shall also disclose at issuance or renewal, as applicable, the effect on premium rates and savings of each option and deductible. Further offers or disclosures thereafter shall be required to be included with every other renewal or replacement policy. All elections of coverages, options, and deductibles by a named insured shall be binding upon additional insureds covered under the named insured's policy. The purpose of this paragraph is to inform insureds or prospective insureds of the coverages under this article;

(9) (A) An insurer may make available, and provide at the option of the named insured, the benefits described in section 431:10C-103.5(a) through managed care providers such as a health maintenance organization or a preferred provider organization. The option may include conditions and limitations to coverage, including deductibles and coinsurance requirements, as approved by the commissioner. The commissioner shall approve those conditions and limitations which are substantially comparable to or exceed the coverage provided under section 431:10C-103.6;

(B) An insurer may make available, and provide at the option of the named insured, deductible and coinsurance arrangements whereby the recipient of care, treatment, services, products, expenses, or accommodations shares in the payment obligation;

(C) No deductible or coinsurance under a policy covered under section 431:10C-302(a)(9)(A) or (B) shall be applied with respect to care, treatment, services, products, or accommodation provided or expenses incurred by an insured during the first twenty-four hours in which emergency treatment has been provided or until the insured patient's emergency medical condition is stabilized, whichever is longer;

(D) (i) The optional coverage prescribed in section 431:10C-302(a)(9)(A) and (B) shall apply only to the named insured, resident spouse, or resident relative; and

(ii) "Resident relative" means a person who, at the time of the accident, is related by blood, marriage, or adoption to the named insured [or], resident spouse, or reciprocal beneficiary and who resides in the named insured's household, even if temporarily living elsewhere, and any ward or foster child who usually resides with the named insured, even if living elsewhere;

(E) An agreement made under section 431:10C-302(a)(9) must be a voluntary agreement between the insured and the insurer, and no insurer shall require an insured to agree to those policy provisions as a condition of providing insurance coverage. Requiring an agreement as a precondition to the provision of insurance shall constitute an unfair insurance practice and shall be subject to the provisions, remedies, and penalties provided in article 13; and

(F) An insurer providing the coverages authorized in section 431:10C-302(a)(9)(A) and (B) shall demonstrate in rate filings submitted to the commissioner the savings to the insured to be realized under the plan;

(10) An insurer shall make available optional coverage for naturopathic, acupuncture, nonmedical remedial care, and treatment rendered in accordance with the teachings, faith, or belief of any group which relies upon spiritual means through prayer for healing; and

(11) An insurer may make available optional coverage for chiropractic treatment in addition to chiropractic treatment provided under [§] section 431:10C-103.6 for not more than the lesser of the following:

(A) Thirty additional visits at no more than $75 a visit; or

(B) Treatment as defined by the Hawaii Chiropractic Association guidelines in effect on January 25, 1997.

The commissioner shall adopt rules, including policy limits, terms, and conditions as necessary to implement the requirements of this section."

SECTION 14. Section 431:10C-305, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) (1) Except as provided in paragraph (2), personal injury protection benefits shall be paid primarily from the following sources in the following conditions:

(A) The insurance on the vehicle occupied by the injured person at the time of the accident; or

(B) The insurance on the vehicle which caused accidental harm if the injured person is a pedestrian (including a bicyclist).

If there is no insurance on the vehicle, any other motor vehicle insurance applicable to the injured person shall apply.

No person shall recover personal injury protection benefits from more than one insurer for accidental harm as a result of the same accident;

(2) All personal injury protection benefits shall be paid secondarily and net of any benefits a person is entitled to receive because of the accidental harm from workers' compensation laws; provided that:

(A) The total amount a person is entitled to receive for monthly earnings loss under this article shall be limited to the amount of any applicable coverage under section 431:10C-302, without any deduction of any amount received as compensation for lost earnings under any workers' compensation law;

(B) The aggregate of the payments from both sources shall not exceed eighty per cent of the person's monthly earnings as provided in section 431:10C-302(a)(4). However, if the person's employer provides both workers' compensation and personal injury protection payments, the aggregate shall not exceed the person's net monthly earnings (computed by subtracting the total of federal and state income taxes and employee social security contributions from the gross monthly earnings), provided that the workers' compensation payments shall not be less than required by chapter 386; and

(C) This section shall not apply to benefits payable to a surviving spouse or reciprocal beneficiary and any surviving dependent as provided under section 431:10C-304.

If the person does not collect such benefits under the workers' compensation laws by reason of the contest of this right to so collect by the person or organization responsible for payment thereof, the injured person, if otherwise eligible, shall, nevertheless, be entitled to receive personal injury protection benefits and, upon payment thereof, the personal injury protection insurer shall be subrogated to the injured person's rights to collect such benefits."

SECTION 15. Section 431:10C-409, Hawaii Revised Statutes, is amended to read as follows:

"§431:10C-409 Establishment and criteria. The commissioner shall, after consultation with the board, establish and promulgate the rating rules, classification standards and rules, rates, rating plans, territories, and policy forms for use in the provision of all motor vehicle insurance issued under the joint underwriting plan, in accordance with the following provisions:

(1) Rates shall not be excessive, inadequate, or unfairly discriminatory.

(2) Consideration shall be given to the following:

(A) The plan's past and prospective loss experience within the State;

(B) Contingencies in the administration of motor vehicle insurance sold;

(D) Income from investments of premiums and other proceeds received on account of joint underwriting plan motor vehicle insurance sold; and

(E) All other factors demonstrated to be relevant by a current actuarially sound study of the definable risks involved.

(3) The commissioner may:

(A) Establish rating territories and group risks by classifications for the establishing of rates and minimum premiums;

(B) Provide for, by regulation, a uniform classification of risks and rating territories for the various coverages;

(C) Modify classification rates to produce rates in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks including vehicles, occupations, past traffic convictions, and involvement in past accidents, provided they are established to have a demonstrable effect upon losses or expense; and

(D) Ensure that no standard or rating plan shall be based, in whole or in part, directly or indirectly, upon a person's race, creed, ethnic extraction, age, sex, length of driving experience, credit bureau rating, marital or reciprocal beneficiary status, or physical handicap."

SECTION 16. Section 431:10D-104, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Cash surrender value - life:

(1) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by subsection (b), shall be an amount not less than the excess, if any, of the present value, on the anniversary, of the future guaranteed benefits which would have been provided for by the policy including any existing paid-up additions, if there had been no default, over the sum of:

(A) The then present value of the adjusted premiums as defined in subsection (e) corresponding to premiums which would have fallen due on and after the anniversary[,]; and

(B) The amount of any indebtedness to the insurer on account of or secured by the policy. Provided that for any policy issued on or after the operative date of subsection (e)(8) as defined therein, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in [~~item~~] paragraph (1) shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.

Provided further that for any family policy issued on or after the operative date of subsection (e)(8) as defined therein, which defines a primary insured and provides term insurance on the life of the spouse or reciprocal beneficiary of the primary insured expiring before the spouse's or reciprocal beneficiary's age seventy-one, the cash surrender value referred to in [~~item~~] paragraph (1) shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse or reciprocal beneficiary and the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in such paragraph [[]for[]] a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse[.] or reciprocal beneficiary.

(2) Any cash surrender value available within thirty days after any policy anniversary, of the future guaranteed benefits provided for by the policy including any existing paid-up additions, decreased by any indebtedness to the insurer on account of or secured by the policy."

SECTION 17. Section 431:10D-114, Hawaii Revised Statutes, is amended to read as follows:

"§431:10D-114 Miscellaneous proceeds. Upon the death of the insured and except as is otherwise expressly provided by the policy or premium deposit agreement, a life insurer may pay to the surviving spouse[,] or reciprocal beneficiary, children, beneficiary, or person other than the insured's estate, appearing to the insurer to be equitably entitled to such payment, sums then held by it and comprising:

(1) Premiums paid in advance, if such premiums did not fall due prior to the death, or funds held on deposit for the payment of future premiums.

(2) Dividends theretofore declared on the policy and held by the insurer under the insured's option.

(3) Dividends becoming payable on or after the death of the insured."

SECTION 18. Section 431:10D-201, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Subsection (a) shall not apply to contracts of life insurance insuring only individuals:

(1) Related by marriage, by a reciprocal beneficiary relationship, by blood, or by legal adoption; or

(2) Having a common interest through ownership of a business enterprise, or of a substantial legal interest or equity in the business enterprise, and who are actively engaged in its management; or

(3) Otherwise having an insurable interest in each other's lives."

SECTION 19. Section 431:10D-203, Hawaii Revised Statutes, is amended to read as follows:

"§431:10D-203 Debtor groups. The lives of a group of individuals may be insured under a policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two or more creditors, which creditor, holding company, affiliate, trustee, trustees, or agent shall be deemed the policyholder, to insure debtors of the creditor or creditors, subject to the following requirements:

(1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors or all of any class or classes thereof. The policy may provide that the term debtors shall include:

(A) Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

(B) The debtors of one or more subsidiary corporations; and

(C) The debtors of one or more affiliated corporations, proprietorships, or partnerships, if the business of the policyholder and the affiliate is under common control.

(2) The premiums for the policy shall be paid either from the creditor's funds, or from charges collected from the insured debtors, or from both. A policy on which part or all of the premiums is to be derived from the collection from the insured debtors of identifiable charges not required of uninsured debtors shall not include, in the class or classes of debtors eligible from insurance, debtors under obligations outstanding at its date of issue without evidence of individual insurability unless at least seventy-five per cent of the then eligible debtors elect to pay the required charges. Except as provided in [~~item~~] paragraph (3), a policy on which no part of the premium is to be derived from the collection of such identifiable charges must insure all eligible debtors.

(3) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer.

(4) The policy may be issued only if the group of eligible debtors is then receiving new entrants at the rate of at least one hundred persons yearly, or may reasonably be expected to receive at least one hundred new entrants during the first policy year, and only if the policy reserves to the insurer the right to require evidence of individual insurability if less than seventy-five per cent of the new entrants become insured.

(5) The amount of the insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor, except that if the sole purpose of the loan is to provide future advances to the debtor to meet education or education-related expenses of the debtor, the debtor's spouse, reciprocal beneficiary, children, or other dependents, the amount of insurance may equal, but may not exceed, the total amount of the described expenses forecast at the time of entry into the loan agreement with the creditor, less the amount of all repayments by the debtor. In the case of revolving loan or revolving charge accounts, the insurance shall at no time exceed the unpaid indebtedness.

(6) The insurance shall be payable to the creditor or any successor to the right, title, and interest of the creditor. The payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment and, whenever the amount of insurance exceeds the unpaid indebtedness, any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to the debtor's estate.

(7) Payment by the debtor insured under any such group life insurance contract of an amount not in excess of the premium charged the creditor by the insurer for such insurance pertaining to the debtor, shall not be deemed to constitute a charge upon a loan in violation of any banking or usury law or any law regulating installment sales."

SECTION 20. Section 431:10D-212, Hawaii Revised Statutes, is amended to read as follows:

"§431:10D-212 Spouses, reciprocal beneficiaries, and dependents of insured individuals. Except for a policy issued under [~~section~~] sections 431:10D-203 and [~~section~~] 431:10D-211, insurance under any group life insurance policy issued pursuant to this article may be extended to insure the employees or members of such groups against loss due to the death of their spouses, reciprocal beneficiaries, and dependent children subject to the following:

(1) The spouse, reciprocal beneficiary, and dependent of the individual insured may be covered in amounts of insurance equivalent to the amount of coverage of the insured individual, provided that in the case of a dependent other than a spouse or reciprocal beneficiary of the insured individual the amount of insurance for the dependent shall not be in excess of fifty per cent of the coverage of the insured individual or $5,000 whichever is less, and provided further that in the case of a dependent whose age at death is under six months, the amount shall not be in excess of $2,000.

(2) The premiums for the insurance of the spouse, reciprocal beneficiary, or dependent shall be paid either from funds contributed by the employer, union, association, or other person to whom the policy has been issued, or from funds contributed by the individual insured, or from both.

(3) An insurer may exclude or limit the coverage on any spouse, reciprocal beneficiary, or dependent child as to whom evidence of individual insurability is not satisfactory to the insurer.

(4) For purposes of this section:

(A) A dependent shall be a child of the insured individual:

(i) Under eighteen years of age; or

(ii) Under twenty-three years of age who is attending an educational institution and relying upon the insured individual for financial support; or

(iii) Regardless of age who is incapable of self-sustaining employment by reason of mental retardation or physical handicap and is chiefly dependent upon the insured individual for support and maintenance.

(B) The term individual shall be deemed to include a person or a member of any group provided in section 431:10D-202 and [~~section~~] sections 431:10D-204 [~~through section~~] to 431:10D-210."

SECTION 21. Section 431:10D-308, Hawaii Revised Statutes, is amended to read as follows:

"§431:10D-308 Facility of payment. Such a policy may also provide that if the beneficiary designated in the policy does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than thirty days after the death of the insured, or if the beneficiary is the estate of the insured or is a minor, or dies before the insured or is not legally competent to give a valid release, then the insurer may make payment under the policy to the personal representative of the insured, or to any of the insured's relatives by blood, legal adoption, or connection by marriage[,] or by reciprocal beneficiary relationship, or to any person appearing to the insurer to be equitably entitled to such payment by reason of having been named beneficiary, or by reason of having incurred expense for the maintenance, medical attention, or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy."

SECTION 22. Chapter 432, Hawaii Revised Statutes, is amended by adding to part VI of article I a new section to be appropriately designated and to read as follows:

"§432:1- Reciprocal beneficiary coverage. Any other law to the contrary notwithstanding, all individual and group hospital or medical service plan contracts which offer coverage for a subscriber's or member's spouse shall offer the same coverage for a subscriber's or member's reciprocal beneficiary."

SECTION 23. Section 432D-23, Hawaii Revised Statutes, is amended to read as follows:

"§432D-23 Required provisions and benefits. (a) Notwithstanding any provision of law to the contrary, each policy, contract, plan, or agreement issued in the State after January 1, 1995, by health maintenance organizations pursuant to this chapter, shall include benefits provided in sections 431:10-212, 431:10A-115, 431:10A-115.5, 431:10A-116, 431:10A-116.5, 431:10A-116.6, 431:10A-119, 431:10A-120, 431:10A-121, and chapter 431M.

(b) Notwithstanding any provision of law to the contrary, each policy, contract, plan, or agreement issued in the State after July 1, 2001, by health maintenance organizations pursuant to this chapter, shall offer the same coverage to reciprocal beneficiaries as is offered to spouses."

SECTION 24. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provision of this Act are severable.

SECTION 25. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 26. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________