Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1163, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to extend for an additional year, from July 1, 2003 to July 1, 2004, the Insurance Commissioner's limited jurisdiction over dental service corporations and dental service organizations.

Furthermore, this measure specifies that the Insurance Commissioner's duty to examine these dental service corporations and dental service organizations is discretionary rather than mandatory.

Your Committee finds that Act 132, Session Laws of Hawaii 2001, temporarily subjects dental service corporations and dental service organizations to the Insurance Code provisions relating to investigations, examinations, hearings and appeals and to provisions relating to insurers supervision, rehabilitation, and liquidation. Furthermore, Act 219, Session Laws of Hawaii 2002, extends the repeal date of Act 132 from July 1, 2002 to July 1, 2003. Together these acts give the Commissioner authority to protect the interests of consumers by shutting down insolvent dental insurance plans that fail to pay their claims and by pursuing dental plan organizers, operators, and agents to recover assets on behalf of policyholders and providers.

Your Committee also finds that the Insurance Code currently requires the Insurance Commissioner to conduct examinations of domestic insurers, including dental service corporations and dental service organizations, at least once every three years. Given the relative infrequency of problems with dental service plans and the costs associated with triennial examinations, policyholder interests may be better served if examinations are conducted at the Commissioner's discretion as warranted, rather than on a triennial basis.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1163, S.D. 1, and recommends that it pass Third Reading.