STAND. COM. REP. NO. 3314

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2471
                                        H.D. 1
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred H.B. No. 2471, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO THE HAWAII INSURANCE GUARANTY
     ASSOCIATION,"

begs leave to report as follows:

     The purpose of this measure is to enhance the ability of the
Hawaii Insurance Guaranty Association (HIGA) to assist the
policyholders and claimants of insolvent insurers.

     The Insurance Commissioner and Executive Director of HIGA
submitted testimony on the measure.

     HIGA was created by the Legislature in 1971 to provide a
mechanism for the payment of the covered claims of an insolvent
insurer's policyholders or claimants.  The intent of the law was
to provide a "safety net" for the average consumer with
homeowners' and motor vehicle insurance policies.  The
association is funded with assessments levied against licensed
property and liability insurers in the State based on their
proportionate shares of net direct written premiums, and member
insurers are authorized to recoup their assessments from their
policyholders through premium surcharges. 

     Since the enactment of the law, HIGA has been involved in
nineteen insolvencies and has paid in excess of $250,000,000 to
policyholders and claimants.  The possibility of future and more

 
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                                   STAND. COM. REP. NO. 3314
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costly insolvencies requires that HIGA take steps to protect its
resources and to limit its obligations consistent with the
original purpose of the law.  Therefore, this measure excludes as
covered claims under the law the first party claims of insureds
with a net worth over $25,000,000, and establishes limits on the
association's obligations to claimants of an insolvent insurer.
Additionally, the measure makes housekeeping amendments and
clarifies the powers of the association.

     Your Committee has amended this measure by making technical,
nonsubstantive amendments for purposes of clarity, consistency,
and style.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 2471, H.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 2471, H.D. 1, S.D. 1, and be placed on the
calendar for Third Reading.

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



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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