Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 574, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill, as received by your Committee, is to:

(1) Make an appropriation to fund three insurance examiner

The Director of the Hawaii Captive Insurance Council testified in support of this bill. The Insurance Commissioner testified in support of the bill and suggested an amendment.

Your Committee finds that the State's captive insurance program has been very successful in attracting captive insurers to Hawaii. Accordingly, the number of captive insurers regulated by DCCA has expanded by 100 percent over the past four years, without an increase in insurance examiners in the captive insurance program's staff. The escalating workload has made it necessary for DCCA to outsource examinations to independent contractors, which is typically more expensive than when handled internally by DCCA. This bill would provide funding to allow DCCA to reduce the cost of conducting insurance examinations and thereby reduce the regulatory burden on the State's captive insurance industry which pays for these examinations.

Your Committee has amended this bill by making a technical, nonsubstantive amendment to accurately designate the source of funding for the added positions as the Compliance Resolution Fund, which is the fund into which all Captive Insurance Administration Fund moneys are transferred, and out of which all expenditures for the Branch's personnel and operating costs are made.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 574, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 574, S.D. 1, H.D. 1, and be referred to the Committee on Finance.