Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 574 entitled:

begs leave to report as follows:

The purpose of this measure is to make an appropriation to fund three insurance examiner positions in the Captive Insurance Administrative Branch of the Insurance Division of the Department of Commerce and Consumer Affairs.

The measure also provides that the Captive Insurance Administrator shall report directly to the Insurance Commissioner.

Your Committee finds that the number of captive insurers regulated by the Department of Commerce and Consumer Affairs has increased by one hundred percent over the past four years. During that time, no examiners have been added to the captive insurance program staff. As a result, the Department has had to outsource examination services to independent contractors. Typically, outsourced examinations are more expensive and time consuming for captive insurance licensees.

This bill provides the necessary funds to hire needed personnel in the Captive Insurance Administrative Branch to eliminate outsourcing of examination services to ultimately reduce costs and provide better and more efficient services.

Your Committee finds that the Captive Insurance Administrator should report directly to the Insurance Commissioner, who is responsible for establishing and implementing important insurance policies for the State. This structure is consistent with the purpose for establishing a captive insurance branch that is solely responsible to the commissioner.

Your Committee has amended this measure by making technical nonsubstantive changes.

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. 574, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 574, S.D. 1.