STAND. COM. REP. NO. 386

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 1069
                                     




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 1069 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this bill is to increase assessment amounts
paid by insurers, that are credited to the insurance examiners
revolving fund (IERF), and to make permanent the IERF.  Section 1
of the bill increases the assessment amount from $550 a year to
$800 a year.  Sections 2 through 4 eliminate the sunset and
repeal provisions of the laws affecting the IERF, and eliminate
related conditional provisions for transfer of moneys from the
IERF to the general fund.    

     The Department of Commerce and Consumer Affairs (DCCA)
strongly supported the bill, explaining the need for the
increased assessments to cover increased personnel costs incurred
as a result of four examination fund positions being transferred
to the IERF under Act 116, Session Laws of Hawaii 1998. DCCA also
testified that the elimination of the sunset provisions are
necessary to sustain certain accreditation requirements set by
the National Association of Insurance Commissioners (NAIC),
including requirements for risk-based capital that protect
against insolvencies.  DCCA emphasized that the permanence of the
IERF is necessary to enable the Insurance Division to meet its
NAIC accreditation requirement of proof of financial ability to
conduct examinations, and to enable the Division to perform

 
 
 
                                 STAND. COM. REP. NO. 386
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examinations and conduct financial surveillance to assure the
solvency of all insurance companies doing business in our state. 

     Your Committee recognizes the importance of the IERF and the
need for its permanence, but has concerns regarding the amount of
the increased assessment and would recommend that the Committee
on Finance to take a closer look at this issue.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 1069 and recommends that it pass Second
Reading and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair