Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to amendments proposed by the House of Representatives in S.B. No. 1066, S.D. 1, H.D. 1, entitled:

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to enhance consumer protection by increasing the net worth requirements for mutual benefit societies and health maintenance organizations (HMOs).

Presently the law requires that mutual benefit societies and HMOs maintain a minimum net worth equal to the greater of $1,500,000, or sums based upon premium revenues or expenditures. However, the recent seizures of insolvent health insurers by the Insurance Division underscore the need for stricter financial requirements to protect consumers. Therefore, this measure increases the minimum net worth requirement of $1,500,000 to $2,000,000, and establishes a phasing in of this requirement. Additionally, this measure requires mutual benefit societies and HMOs to prepare for the Division's review a quarterly net solvency report and establishes penalties for non-compliance.

Your Committee has amended this measure by making technical, nonsubstantive amendments for purposes of consistency and style.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 1066, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 1066, S.D. 1, H.D. 1, C.D. 1.