HOUSE OF REPRESENTATIVES

H.B. NO.

2163

THIRTY-SECOND LEGISLATURE, 2024

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to insurance.

 

 

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

 

     SECTION 1.  Section 431:14-101.5, Hawaii Revised Statutes, is amended by amending the definition of "prospective loss costs" to read as follows:

     ""Prospective loss costs" means that portion of a rate that does not include provisions for expenses (other than loss adjustment expenses) or profit, and are based on [historical aggregate losses] catastrophe modeling and loss adjustment expenses adjusted through development to their ultimate value and projected through trending to a future point in time."

     SECTION 2.  Section 431:14-103, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Rates shall be made in accordance with the following provisions:

     (1)  Rates shall not be excessive, inadequate, or unfairly discriminatory.

     (2)  Due consideration shall be given to:

          (A)  [Past and prospective] Prospective loss experience within and outside this State; provided that if the claim does not exceed the selected deductible amount pursuant to section 386-100, and the employer reimburses the insurer for the amount, the claims shall not be calculated in the employer's experience rating or risk category;

          (B)  The conflagration and catastrophe hazards, if any;

          (C)  A reasonable margin for underwriting profit and contingencies;

          (D)  Dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers;

          (E)  Past and prospective expenses both country-wide and those specially applicable to this State;

          (F)  Investment income from unearned premium and loss reserve funds; and

          (G)  All other relevant factors within and outside this State.

     (3)  In the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent five-year period for which that experience is available.

     (4)  The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any insurer or group with respect to any class of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

     (5)  Risks may be grouped by classifications for the establishment of rates and minimum premiums.  Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in hazards or expense provisions, or both.  These standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.  No risk classification may be based upon race, creed, national origin, or the religion of the insured.

     (6)  Manual, minimum, class rates, rating schedules, or rating plans shall be made and adopted, except in the case of:

          (A)  Special rates where manual, minimum, class rates, rating schedules, or rating plans are not applicable; and

          (B)  Specifically rated inland marine risks.

     (7)  No insurer authorized to do business in this State shall issue any policy that provides or makes available to any risks preferred rates based upon any grouping of persons, firms, or corporations by way of membership, license, franchise, contract, agreement, or any other means, other than common majority ownership of the risks, or except where:

          (A)  A common stock ownership in and management control of the risks are held by the same person, corporation, or firm;

          (B)  Permitted or authorized by filings in existence as of January 1, 1988, under the casualty rating law and the fire rating law, as these filings may be amended from time to time;

          (C)  Health care providers, as defined in section 671‑1 that could have joined the patients' compensation fund as it existed in chapter 671, part III, prior to May 31, 1984, joined together with one or more groups of related or unrelated health care providers;

          (D)  Permitted under article 12; or

          (E)  Otherwise expressly provided by law.

     (8)  No insurer shall base any rates on past loss experience within or outside this State."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 

 

 

Report Title:

Insurance; Ratemaking; Past Loss Experience; Catastrophe Modeling

 

Description:

Amends the definition of "prospective loss costs" to incorporate catastrophe modeling instead of historical aggregate losses.  Prohibits insurers from basing certain insurance rates on past loss experience within or outside the State.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.