The state's largest health insurer has received the green light to raise premiums by an average of 7.8 percent for roughly 11,000 small businesses.

The Hawai'i Insurance Division yesterday approved the increase requested by the Hawaii Medical Service Association.

The rate will go into effect on July 1.

"Our actuaries took a close look at the filing and found it met the statutory requirements," said Gordon Ito, deputy insurance commissioner.

He said that includes determining the request wasn't excessive, inadequate or unfairly discriminatory.

HMSA filed for the rate request on March 1, saying it realized the state's small businesses were still facing tough economic times but that healthcare costs had been rising faster than money brought in by premium revenues.

HMSA has been losing money over the past four years and has been under pressure at the same time to raise what it pays doctors, hospitals and other health care providers.

"We don't like to raise rates anytime, but it was necessary and the þÿinsurance commissioner agreed with the insurer s rate request," said Laura Lott, HMSA spokesman.

The increase covers about 120,000 workers employed by small companies and enrolled in HMSA's preferred provider plan that includes drug, dental and vision coverage.

In filing for the increase the insurer had said it would have a shortfall of $64.4 million this year if it didn't raise rates.