Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2887, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to adopt the National Association of Insurance Commissioners' Interstate Insurance Compact.

Your Committee finds that state insurance regulators across the nation and the National Association of Insurance Commissioners recognize that the financial services industry is changing. Many products sold by life insurers have evolved to become primarily investment products. Consequently, life insurers face increasing direct competition from products offered by depository institutions and securities firms. Depository institutions and securities firms are able to sell products nationally, often without prior regulatory review. Thus, they are able to bring new products to market more quickly without the added expense of meeting different requirements among the states.

This measure allows states that have enacted similar measures to have the flexibility to regulate life insurance, annuities, and disability income insurers, excluding long-term care insurance. This measure is intended to preserve the state-based system of insurance regulation by raising product standards and consumer protections, improving the quality of product review, and giving insurance companies the ability within regulatory confines to compete in an evolving marketplace.

Your Committee finds that this measure conforms to the National Association of Insurance Commissioners' Model Act and would provide high product standards and quicker access to a broader choice of investment products for consumers.

Your Committee has amended this measure by making various technical, nonsubstantive amendments for the purpose of clarity and style.

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. 2887, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2887, S.D. 2.