CONFERENCE COMMITTEE REPORT NO. 31

                            Honolulu, Hawaii
                                            , 2000

                            RE:   H.B. No. 2472
                                  H.D. 2
                                  S.D. 2
                                  C.D. 1




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

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

Sir:

     Your Committee on Conference on the disagreeing vote of the
House of Representatives to the amendments proposed by the Senate
in H.B. No. 2472, H.D. 2, S.D. 2, entitled:

    "A BILL FOR AN ACT RELATING TO INSURANCE,"

having met, and after full and free discussion, has agreed to
recommend and does recommend to the respective Houses the final
passage of this bill in an amended form.

     The purpose of this bill is to make "housekeeping" and other
amendments to the Insurance Code (Code) to strengthen the
insurance laws of this State.  This bill:

     (1) Closes several gaps in the Code by:

         (A) Providing a definition for the term "stock insurer,"
             which is used throughout the Code; and

         (B) Adding to existing provisions governing cancellation
             of motor vehicle policies, the requirement that

 
 
 
                            CONFERENCE COMMITTEE REPORT NO. 31
                            Page 2



             there be notice of cancellation and nonrenewal of a
             motor vehicle policy;

     (2) Dispels ambiguity in the Insurance Code by:

         (A) Specifying when an appointment is necessary to
             engage in the business of insurance;

         (B) Providing that prima facie acceptable premium rates,
             that are acceptable without actuarial support, only
             apply when the required 60 percent ratio of losses
             to premiums earned, occurs during the most recent
             three years; and

         (C) Amending the fraternal benefit society law to
             clearly reflect that the Insurance Commissioner's
             (Commissioner) assessment authority is applicable to
             fraternal benefit societies;

     (3) Provides for consistency with the recommendation of the
         National Association of Insurance Commissioners, and
         greater consumer protection, by increasing the financial
         responsibility requirement for alien insurers;

     (4) Strengthens penalty provisions of the Code by:

         (A) Increasing the maximum civil penalty under the Code
             for conducting business without a license, from
             $1,000 to $5,000, and by establishing a new penalty
             for knowing violations, consisting of a minimum
             $3,000 and maximum $10,000 penalty;

         (B) Adjusting the maximum fines for failure to file
             holding company statements to levels consistent with
             other penalty provisions in the Insurance Code; and

         (C) Closing a loophole in the criminal penalties for
             insurance fraud, that currently do not apply when
             the value of the benefits, recovery, or compensation
             involved is exactly $300;

         and

     (5) Enhances the Commissioner's ability to administer the
         Code by:

         (A) Authorizing the Insurance Division to share
             information with federal agencies and specifying
             when certain records may be discarded;

 
                            CONFERENCE COMMITTEE REPORT NO. 31
                            Page 3




         (B) Clearly stating that in retaining professional,
             technical, and support personnel, the Commissioner
             may do so by contract;

         (C) Providing that a premium tax refund is to be paid
             out of the general fund, which receives premium
             taxes, not the Insurance Regulation Fund; and

         (D) Specifying that unclaimed funds remaining after
             liquidation of the assets of an insolvent insurer
             are to be paid out of the general fund, which
             receives the unclaimed funds.

     In addition, this bill, as received by your Committee on
Conference, makes technical, nonsubstantive amendments to the
Code.

     Your Committee on Conference has amended this measure by:

     (1) Amending the newly established penalty for a knowing
         violation of Code licensing requirements, by reducing
         the minimum penalty from $3,000 to $1,000; and

     (2) Making technical, nonsubstantive amendments for purposes
         of clarity, consistency, and style.

     As affirmed by the record of votes of the managers of your
Committee on Conference that is attached to this report, your
Committee on Conference is in accord with the intent and purpose
of H.B. No. 2472, H.D. 2, S.D. 2, as amended herein, and
recommends that it pass Final Reading in the form attached hereto
as H.B. No. 2472, H.D. 2, S.D. 2, C.D. 1.

                                   Respectfully submitted on
                                   behalf of the managers:

  ON THE PART OF THE SENATE          ON THE PART OF THE HOUSE
                                   
                                   
                                   
                                   
______________________________     ______________________________
BRIAN T. TANIGUCHI, Co-Chair       RON MENOR, Co-Chair
                                   
                                   
                                   
                                   
______________________________     ______________________________
BRIAN KANNO, Co-Chair              BRIAN Y. YAMANE, Co-Chair