Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2582 entitled:

begs leave to report as follows:

The purpose of this measure is to replace the separate flat rate premium tax structures for single-owner captive insurers and multi-owner captive insurers with a single declining rate structure for both.

Furthermore, this measure raises the amount of funds that the Insurance Commissioner may transfer from the captive insurance administrative fund to the insurance regulation fund for administrative expenses. It is the intent of your Committee that the additional funds transferred shall be used to provide the captive insurance branch with resources to strengthen that branch's capabilities to attract and regulate captive insurers in Hawaii.

Your Committee finds that under the present law single-owner captive insurers pay a premium tax of .25 per cent on gross premiums while multi-owner captive insurers pay a tax of one per cent. Your Committee further finds that under this measure both types of insurers will pay a premium tax that declines from .25 per cent on the first $25,000,000 of gross premiums to .05 per cent on gross premiums after the first $50,000,000.

Your Committee finds that the new premium tax structure will attract captive insurers with large premium bases to domicile their companies in the State.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2582 and recommends that it pass Third Reading.