STAND. COM. REP. NO. 2198

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2561
                                        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 S.B. No. 2561 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to authorize the Insurance
Commissioner (Commissioner) to use a percentage of moneys in the
captive insurance administrative fund to promote Hawaii as a
captive insurance domicile.

     Testimony in support of the measure was submitted by the
Department of Commerce and Consumer Affairs, Marsh Management
Services, Inc., Hawaii Captive Insurance Council, Becher and
Carlson Risk Management, Inc., and Hawaii Captive Insurance
Management, Inc. 

     Since the enactment of Hawaii's captive insurance law in
1986, the State and the private sector have worked together to
develop a regulatory framework and supporting infrastructure for
the establishment of a captive insurance industry.  

     Captive insurance companies are risk-financing facilities
that insure the risks of a parent or affiliated company, or other
specialized risks.  They are valued for their flexibility and
ability to insure risks at cost-effective rates as well as for
their ability to insure risks not normally covered by traditional
insurance companies.  Hawaii is a leading captive insurance

 
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domicile in the Asian-Pacific region and is poised to become a
major domicile in the global captive insurance industry.

     Your Committee finds that the State may take advantage of
these opportunities by promoting its status as a captive
insurance domicile and the flexibility and effectiveness of its
regulatory scheme.  The State will be able to enhance its profile
as a captive insurance domicile by dedicating a portion of funds
in the captive insurance administration fund for promotional
purposes.  This serves to further diversify the State's economic
base while strengthening its financial services industries. 

     Your Committee has amended this measure to:

     (1)  Require, rather than authorize the Commissioner to make
          an expenditure of funds for promotional purposes; and

     (2)  Provide that moneys in the captive insurance
          administrative fund be transferred to the insurance
          regulation fund for disbursement, to be consistent with
          current procedures governing the administration of the
          funds.

     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. 2561, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 2561, S.D. 1, 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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