Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 160, H.D. 2, entitled:

begs leave to report as follows:

The purpose of this measure is to revise the method of assessing insurers for the compliance resolution fund.

This bill repeals the Insurance Commissioner's authority to formulate the amount of assessments that insurers owe to the compliance resolution fund and instead legislatively establishes a formula for the total amount of assessments due in all lines of insurance.

Specifically, this measure requires that total assessments for the compliance resolution fund be equal to the commissioner's proposed budget, less the insurance regulation sub-account funds, and less the commissioner's anticipated revenues.

Furthermore, this measure sets a ceiling of $2,000,000 on total assessments in all lines of insurance and requires annual audits of the insurance regulation sub-account of the compliance resolution fund.

Your Committee finds that this measure will promote transparency and fairness in the assessment process. Your Committee also finds that the considerable size of the cash reserves accumulated by the Insurance Commissioner over the years indicates that the present law, in granting discretion to the Insurance Commissioner to determine the amount of assessments, has the legislatively unintended potential to be used as a revenue generator.

Your Committee has amended this measure by increasing the ceiling for total assessments in all lines of insurance from $2,000,000 to $4,000,000. Furthermore, your Committee has amended this measure by eliminating the captive insurance administrative fund as a source of transfer funds for the compliance resolution fund. Lastly, your Committee has made technical nonsubstantive amendments for the purposes 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 H.B. No. 160, H.D. 2, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 160, H.D. 2, S.D. 1.