June 25, 2019

June 25, 2019

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June 24, 2019

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Hawaii Legislature Passes New TPA Law

Hawaii is expected to adopt legislation in the coming weeks that will impose licensing and other regulatory requirements on third-party administrators (TPAs). Currently, Hawaii is one of only a handful of states that do not license or regulate TPAs. Hawaii legislators passed Senate Bill 1212 out of a conference committee on April 30, 2019 and it was sent to Hawaii Governor David Ige for his signature on May 6, 2019. It is anticipated that Senate Bill 1212 will become law before the end of June.

Once it becomes law, Senate Bill 1212 will require TPAs doing business in Hawaii to be licensed and regulated. The bill is based on the Registration and Regulation of Third Party Administrators Guideline adopted by the National Association of Insurance Commissioners (NAIC).

Items of interest regarding Senate Bill 1212 include, without limitation, the following: 

  • The terms “Administrator” and  “Third Party Administrator” are defined as “a person who collects charges or premiums from, or who adjusts or settles claims on, residents of this State in connection with self-insurance, stop-loss or life insurance coverage, accident, and health or sickness insurance coverage.”

  • Applicants for TPA licenses will be required to provide annual financial statements for the two most recent years that prove the applicant has a positive net worth. The bill is silent regarding whether the financial statements must be audited by an independent Certified Public Accountant (CPA).

  • If an administrator employs or has contracted individuals to sell, solicit or negotiate insurance business, the employees or contracted individuals must first be licensed as producers. Similarly, an administrator who intends to directly solicit insurance contracts or otherwise act as a producer must first be licensed as an insurance producer.

  • In order to obtain a TPA license, TPA applicants must file a surety bond in the amount of at least $100,000 with the Insurance Division. A surety bond must remain in force to maintain licensure as a TPA.

  • Senate Bill 1212 is expected to take effect January 1, 2020.

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Steven L. Imber, Polsinelli PC, Insurance Regulatory Attorney, Enforcement Actions Lawyer,
Shareholder

Steve Imber chairs Polsinelli's Insurance Business and Regulatory group.  As a former General Counsel at a state insurance department, Steve Imber has the knowledge and experience to provide quality counsel to insurers, third party administrators, insurance agencies, medical discount plans and other insurance regulated entities. His practice includes representing and assisting clients on multi-state and national licensing projects, research projects, enforcement actions, market conduct examinations, audits and compliance programs and various other regulatory and...

913.234.7469
Shareholder

Justin Liby has a talent for organizing and managing large national and multi-state licensure and research projects. This knack provides him with a solid foundation for crafting and implementing sound, efficient strategies that achieve success for his clients. Justin concentrates his efforts on helping the insurance industry navigate the formidable federal and state regulatory maze to achieve the industry’s business needs. He stays current in the insurance industry's evolution, as well as the legislation and regulatory activity impacting the industry.

Justin is a former regulator for the Kansas Insurance Department and in-house counsel for a national third-party administrator.

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Counsel

Jennifer Osborn Nix works diligently for insurance companies, third-party administrators, and other regulated entities to further their goals and help them remain compliant within the 50-state regulatory scheme. She focuses on insurance regulatory and compliance issues, with a primary emphasis on life and health insurance matters.

Jennifer works with many regulated entities, including many in the health care sector, who rely on her for research, advice, strategic counsel, and licensing.

913.234.7472