STAND. COM. REP. NO. 2257

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2321
                                        




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 S.B. No. 2321 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this bill is provide the Insurance
Commissioner (Commissioner) with the authority to regulate
medical insurance rates.  

     The business of insurance is primarily regulated by the
State.  The Commissioner is charged with the duty of overseeing
the solvency of health insurers and related market practices.
Across the nation, health insurers have seen their share of
failures and market problems, and it is the intent of your
Committee to provide the Commissioner with regulatory tools to
prevent insolvencies and to promote competition in the health
insurance market.

     Insurance regulatory activities can be divided into two
broad categories, solvency regulation and market regulation.
Solvency regulation seeks to protect consumers against the risk
that an insurer will not be able to meet its financial
obligations.  Market regulation attempts to ensure fair and
reasonable premiums and products.  Although separate, the two
forms of regulation are inextricably related.  Although rate
regulation seems to fall within the category of market
regulation, rate regulation will ultimately affect an insurer's
financial performance and thus, impact solvency.  Your Committee

 
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                                   STAND. COM. REP. NO. 2257
                                   Page 2


agrees with the Commissioner, rate regulation is related to
solvency regulation. 

     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 S.B. No. 2321 and recommends that it pass Second
Reading and be referred to the Committee on Ways and Means.

                                   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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