Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 753 entitled:

begs leave to report as follows:

The purpose of this measure is to repeal the law that limits pooled insurance to construction projects estimated to cost $50,000,000 or more for the total construction project.

Testimony in support of this measure was submitted by the Department of Commerce and Consumer Affairs, the Hawaii Independent Insurance Agents Association, and King & Neel, Inc. Testimony in opposition to this measure was submitted by the Subcontractors Association of Hawaii. Comments on this measure were also submitted by the Hawaii Medical Service Association.

Your Committee finds that under the current law, an insurer may offer pooled insurance only for construction projects that are estimated to cost $50,000,000 or more for the total construction project. Pooled insurance allows a group of companies, including a general contractor and its subcontractors, to approach insurance companies and ask that the entire group or pool of companies be insured as a unit for the construction of a particular project. This group approach allows companies to take advantage of lower premiums since their risks are spread across all the companies involved in the project. It also aids smaller construction firms who might otherwise have difficulty obtaining insurance on their own and helps to lower the cost of construction by allowing pooled insurance arrangements for housing and other building projects.

Your Committee further finds that the current limitation prevents many contractors and subcontractors performing work on multi-million dollar projects from benefiting from the utilization of pooled insurance. Therefore, your Committee determines that the $50,000,000 limitation should be removed in order to allow the construction industry, and ultimately the public, to benefit by another option for insurance coverage being made available under pooled insurance.

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. 753 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.