Hawaii’s legislators, who ended their annual session April 30, looked to the insurance industry to help recover from its budget deficit, an approach one trade association says will mean increased costs for that state’s businesses and consumers.
The General Assembly approved three insurance laws, taking effect July 1, that are part of the state’s effort to trim its $1.2 billion budget shortfall by an estimated $253 million through tax and fee increases and other changes. Other efforts, including reinstatement of the state’s estate tax, were used to overcome the remaining deficit in the 2011 budget.
One insurance bill, SB 2159, raises the fee insurers pay to obtain copies of a driver’s record, from $7 to $20. HB 1985 doubles more than 30 other fees that are paid by insurance companies, agents, brokers, adjusters and other insurance entities.
HB 2600 requires insurance companies to put systems in place to pay premium taxes monthly rather than quarterly, which has been the long-standing practice, according to the Property Casualty Insurers Association of America.
“Hawaii is facing difficult state budget problems, and we realize that the legislature had to take action to address the state’s fiscal woes,” said Sam Sorich, PCI’s vice president, in a statement. “Some actions taken by the legislature will drive up the costs for insurance coverages that Hawaii families and businesses need.”
The short-term help to the state’s budget could mean long-term insurance price increases, Sorich said.
“The cumulative impact of the higher costs resulting from these three bills will make it more expensive for insurers to provide insurance protection in Hawaii,” he said. “The higher costs of providing insurance products could ultimately be reflected in premiums paid by consumers and businesses.”
Two other bills pending Gov. Linda Lingle’s approval could further affect insurance costs in Hawaii, the PCI said. HB 1978 would make it easier for a consumer’s insurance company to obtain his or her car from a tow yard, thus lowering insurance costs, the group said.
The other bill, SB2566, which the PCI opposes, would eliminate an employer of his right to contest a workers’ compensation diagnostic service.
Lingle also approved the reinstatement of Hawaii’s state-level estate tax, which hadn’t been in effect since 2005, for estates exceeding $3.5 million in value. That change should net about $8 million in revenues next year, state officials estimated.