S.B. 1212 Summary

• Creates a new regulatory framework requiring third party administrators (TPAs) to obtain licenses from the Hawaii Insurance Commissioner, with specific definitions excluding employers, unions, insurers, and certain licensed professionals.

• Establishes licensing requirements including submission of organizational documents, financial statements showing positive net worth, surety bond of at least $100,000, and biennial license renewal with fees of $150 for issuance and $150 annually for renewal.

• Mandates TPAs maintain fiduciary accounts for premium and claims payments, keep detailed records accessible to the commissioner, provide written agreements with insurers, and deliver policies and communications promptly to insureds.

• Prohibits compensation for claim adjusting from being contingent on claim experience and requires TPAs to disclose all fees and commissions received from insurers.

• Authorizes the commissioner to deny, suspend, or revoke TPA licenses for violations including unsound financial condition, hazardous business practices, failure to pay judgments, and other regulatory breaches; allows immediate suspension without notice for insolvency or imminent threats to public welfare.