The Hawaii Medical Service Association said it continues to ail financially, recording a $13.9 million loss for the first three months of this year.

The state's largest health insurer blamed the problem on a persistent increase in benefit costs, or what it pays out on claims filed by healthcare providers.

"We are currently in a situation where double-digit increases in healthcare costs are outpacing increases in member dues," Steve Van Ribbink, HMSA executive vice president, said in a prepared statement released to the media.

"We're working hard to keep our administrative expenses low, increase our operational efficiencies, and generate the greatest value for our members."

It was the eighth loss reported by HMSA in the past nine quarters and comes as the state Insurance Division mulls the insurer's request to raise rates for 10,800 small businesses by 12.7 percent.

Hawai'i companies have been complaining about HMSA's premium increases and searching for ways to lower health insurance benefits provided to employees, including looking at lower-cost plans with less coverage. Some frustration has included questioning the salaries being drawn by HMSA's top executives.

At the same time, doctors and hospitals have called for higher reimbursements from HMSA to help stem what they say is a loss of physicians moving elsewhere. The insurer said it has tried to control its administrative expenses to improve its bottom line.

During the most recent quarter, it maintained a number of cost-cutting programs, including a hiring freeze, travel restrictions and budget reductions.

Even with the lower administration expenses, HMSA reported its loss grew from a year earlier, when it had red ink of $10 million.

Numbers released by HMSA show:

• First-quarter member premiums rose by $32.5 million from a year earlier. But that was less than the $36.7 million increase in benefit expense.

• A little more than 95 cents of every dollar of dues revenue was paid out to providers such as hospitals, doctors, pharmacies and other healthcare providers.

• Administrative costs were cut by 5 percent to $38.9 million.

• Volatility in investment markets translated into $1.8 million less in earnings off HMSA's investments compared with a year earlier.

• HMSA's reserve fund shrank to $380.6 million from $540.7 million a year earlier.

• During the quarter, HMSA had 703,477 members, or almost 2,000 members more than a year earlier.

Last month, HMSA filed for approval of a 12.7 percent rate hike for small businesses, in what would be its largest premium hike for the group in two decades.

The state Insurance Division is to render a decision on the rate application by early June.