Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Health and Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 131 entitled:

beg leave to report as follows:

The purpose of this measure is to authorize and fund the creation of a captive insurance company by the Hawaii Health Systems Corporation to provide medical malpractice and hospital professional and general liability coverage to the Hawaii Health Systems Corporation, the Department of Health, the University of Hawaii's John A. Burns School of Medicine, and their physicians.

The Department of Health, the Department of Commerce and Consumer Affairs; Hawaii Health Systems Corporation; medical staff members of Leahi Hospital, Maui Memorial Medical Center, Kona Community Hospital, Hilo Medical Center, and Hawaii Health Systems Corporation; Healthcare Association of Hawaii; and the University of Hawaii's John A. Burns School of Medicine submitted testimony in support of this measure.

Your Committees find that the cost of medical malpractice and hospital professional and general liability coverage continues to rise and that stability in risk financing is needed for the Hawaii Health Systems Corporation, and the physicians serving this entity. The escalating costs of premiums, lack of insurers providing coverage in Hawaii, decreased limits of available coverage, and coverage restrictions, make it important to establish a captive insurance company to insure and control exposure to the liability risks of the aforementioned entity.

Upon further consideration, your Committees have amended this measure by specifying the Hawaii Health Systems Corporation only and as a five-year pilot project, and by making technical, non-substantive amendments for clarity and style.

As affirmed by the records of votes of the members of your Committees on Health and Commerce, Consumer Protection, and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 131, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 131, S.D. 1, and be referred to the Committee on Ways and Means.