Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 2414 entitled:

begs leave to report as follows:

The purpose of this bill is to allow the Insurance Division of the Department of Commerce and Consumer Affairs (DCCA) to continue to protect consumers and providers from insolvent dental insurers by extending the sunset date of Act 123, Session Laws of Hawaii 2001 (Act 132), to July 1, 2005.

Testimony in support of this measure was received from DCCA.

Your Committee finds that regulation of insolvent dental insurers was authorized by Act 132. DCCA requested, then used the authorization to seize the assets of the Hawaii Dental Health Plan (HDHP), that continued to collect premiums from policyholders, but failed to pay dental providers' claims. HDHP was found to be insolvent, having only $1,200 in assets, and $100,000 in claims.

Regulation of dental insurers under Act 132 sunsets on July 1, 2004, but your Committee now feels it is essential to extend this date to July 1, 2005, at the request of the Insurance Commissioner. This extension would enable the Insurance Division to continue to work on the liquidation of HDHP, and to protect the public from the risks associated with the financial failure of dental service organizations and corporations.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2414 and recommends that it pass Second Reading and be referred to the Committee on Finance.