Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 2882, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to enact a new article of the Insurance Code that establishes Hawaii as a port of entry for non-United States (non-U.S.) insurers.

Testimony in support of this bill was received from the Insurance Commissioner of the Department of Commerce and Consumer Affairs. Reinsurance Association of America supported the bill and suggested a technical amendment.

Your Committee finds that in the growing worldwide market for insurance, many non-U.S. insurers are seeking to do business in the U.S. To do so, an insurer must obtain a license in each state in which it intends to do business. In most states it is more difficult for a non-U.S. company to obtain a license than it is for a U.S. company because of the various corporate laws and citizenship requirements, although there is no practical or consumer interest reason why this should be the case.

This bill incorporates provisions from the State of Entry Model Law of the National Association of Insurance Commissioners (NAIC) to facilitate licensing of a non-U.S. insurance company in Hawaii, and enable the company to be treated as one domiciled in Hawaii for purposes of obtaining licenses in other states. The measure also clarifies the required amount of trust assets of an alien insurer and the reporting requirements applicable thereto.

Your Committee finds that this measure would enhance Hawaii's reputation as a center for conducting business within the Pacific Rim, thereby encouraging greater diversification of Hawaii's economy and creating jobs and supporting businesses.

Your Committee has amended this measure to correct a small deviation from the NAIC model law in section 431 -106(a), which concerns reporting requirements for deductions. The amendment clarifies that "recoverables" rather than a single "recoverable," paid on losses from unauthorized "insurers," rather than "reinsurers," must be reported.

Technical, nonsubstantive amendments were also made for clarity, consistency, and style.

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. 2882, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2882, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.