STAND. COM. REP. NO. 509-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2219
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 2219 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Clearly provide for the continuing confidentiality of
          nonpublic information submitted to the Insurance
          Commissioner (Commissioner) by a captive insurance
          company or its parent or member organizations;

     (2)  Authorize the Commissioner to disclose this nonpublic
          information only under appropriate circumstances; and

     (3)  Give the Commissioner flexibility in determining the
          type of accounting methods required, and auditors that
          may be employed, by captive insurance companies other
          than class 3 captives in writing their statements of
          financial condition.

     Your Committee received testimony in support of the measure
from Becher+Carlson Risk Management, Inc., Marsh Management
Services, Inc., and Aon Insurance Managers.  The Department of
Commerce and Consumer Affairs (DCCA) also testified in support of
the bill, but suggested amendments.  An attorney in private
practice testified as an individual and as chairman of the Hawaii
Captive Insurance Council Corporation, and supported the measure

 
 
                                 STAND. COM. REP. NO. 509-00
                                 Page 2

 
as well as the amendments requested by DCCA.  A private
individual testified in opposition to the bill.

     DCCA requested amendments to section two of the bill that
would:

     (1)  Make financial reporting requirements under that
          section applicable to all captive insurers other than
          class 3 insurers, thereby establishing a basic standard
          for financial reports; and

     (2)  Remove the reference to class 4 captives from the
          paragraph exempting class 3 captives from any required
          filing of risk-based capital reports with the National
          Association of Insurance Commissioners.

     Your Committee finds that this measure, which protects the
confidentiality of captive insurance company nonpublic financial
information while allowing for the public interest, and which
gives the Insurance Commission some discretion with regard to
financial reporting by captive insurance companies, will give
existing and potential captive owners increased confidence in the
Hawaii captive infrastructure, attract new captives, and support
Hawaii's position as an industry leader.

     Your Committee has amended this bill consistent with DCCA's
request, and has also made technical, nonsubstantive amendments
for purposes of clarity, consistency, and style.

     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. 2219, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
2219, H.D. 1, and be placed on the calendar for Third Reading.

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



                                   ______________________________
                                   RON MENOR, Chair