Report Title:

Relating to insurance

Description:

Allows the Insurance Commissioner to monitor relationships and transactions between mutual benefit societies and their affiliates and among affiliates of mutual benefit societies in the same manner as other insurers.  Requires filing of a registration statement describing a mutual benefit society's network of affiliates.

THE SENATE	S.B. NO.	1403
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that mutual benefit societies hold a unique position in the State's economy and business community.  These societies are organized and operated for the primary benefit of their members and beneficiaries and are not for profit.  They also are exempted from many laws that apply to insurance companies and, because of limited application of the insurance code, the insurance commissioner has correspondingly limited supervisory authority over these societies.

     Currently, some mutual benefit societies in Hawaii conduct the business of insurance by extensive use of affiliates.  Affiliate transactions raise special concerns because they are not always independent, market-based transactions.

     The purpose of this Act is to ensure that mutual benefit societies maintain a proper relationship with and among their affiliates by applying the provisions of article 11 of Hawaii's insurance code to mutual benefit societies.  This would benefit the members of mutual benefit societies by authorizing regulatory monitoring of the relations and transactions between mutual benefit societies and their affiliates and among the affiliates of mutual benefit societies, in the same manner as is presently imposed upon other insurers.

     SECTION 2.  Section 431:11-102, Hawaii Revised Statutes, is amended by amending the definition of "insurer" to read as follows:

     ""Insurer" shall have the meaning as set forth in article 1, except that it shall not include:

(1)  Agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state;

(2)  Fraternal benefit societies; or

[(3) Nonprofit medical and hospital service associations; or

(4)] (3)  Unauthorized insurers."

     SECTION 3.  Section 432:1-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Article 2, article 11, and article 13 of chapter 431, and the powers there granted to the commissioner, shall apply to managed care plans, health maintenance organizations, [or] and medical indemnity or hospital service associations, which are owned or controlled by mutual benefit societies, so long as [such] the application in any particular case is in compliance with and is not preempted by applicable federal statutes and regulations."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________
	BY REQUEST