Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

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

begs leave to report as follows:

The purpose of this measure is to enact a new insurance code article to establish Hawaii as a port of entry for alien insurers.

Testimony in support of this measure was received from the State Insurance Commissioner, Hawaii Insurers Council (HIC), and Reinsurance Association of America.

Your Committee finds that in the growing worldwide market for insurance, many non-U.S. insurers are seeking to do business in the United States. An insurer seeking to come to the United States 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. Your Committee further finds that there is no practical or consumer interest-based reason why this should be the case.

This measure would enable a non-U.S. company to become licensed in Hawaii, and be treated as an insurance company domiciled in Hawaii for purposes of obtaining licenses in other states. This measure incorporates provisions from the State of Entry Model Law of the National Association of Insurance Commissioners.

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

Your Committee has amended this measure on the recommendation of the HIC as agreed to by the Insurance Commissioner, by making certain clarifying amendments to the required amount of trust assets of an alien insurer and the reporting requirements thereto. Your Committee has also made technical, nonsubstantive amendments.

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