Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 1200 entitled:

begs leave to report as follows:

The purpose of this measure is to authorize additional persons to act as signatories on a captive insurer's letter of financial condition, clarify the applicability of certain insurance code provisions to captives, and make other clarifying amendments, including the replacement of existing language with more appropriate terminology.

The Hawaii Captive Insurance Council and Bank of Hawaii testified in support of this measure. The Department of Commerce and Consumer Affairs presented comments on the measure.

Your Committee finds that this measure will establish greater internal consistency within article 19 of the insurance code and further enhance Hawaii's attractiveness as a captive insurance company domicile.

Your Committee further finds that additional clarification is necessary with respect to the amendment proposed in this measure that would allow any two officers of a captive insurer, rather than only its president and secretary, to act as signatories on the letter of financial condition filed with the Insurance Commissioner. Your Committee notes that captives that are formed as reciprocal insurers are unincorporated associations without officers and utilize an attorney-in-fact to conduct their operations. Therefore your Committee has amended this measure to authorize the attorney-in-fact for a captive insurance company formed as a reciprocal insurer to act as a signatory on the company's financial condition statement. Your Committee also made a technical amendment to correctly cite the Hawaii Revised section references in section 8 of the measure.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1200, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1200, S.D. 1, and be placed on the calendar for Third Reading.