STAND. COM. REP. NO. 1332

Honolulu, Hawaii

RE:    H.B. No. 272

       H.D. 1

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred H.B. No. 272, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CAPTIVE INSURANCE COMPANIES,"

begs leave to report as follows:

     The purpose of this measure is to allow captive insurance companies to be formed as limited liability companies, to clarify the minimum capital and surplus requirements, and increase the investment flexibility for pure captives.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, Willis Management (Hawaii), and one individual.

     Your Committee finds that while Hawaii is the second largest captive insurance domicile in the United States, it is facing increasing competition from other states that have recognized the value of implementing captive insurance enabling regulations. 

     Your Committee further finds that the Hawaii Revised Statutes do not currently allow for the formation of captive insurance companies to form as limited liability companies, while other states do.  This leaves Hawaii unable to compete with other captive domiciles for this type of business.  This measure will help Hawaii to continue to be a leading captive insurance domicile by maintaining captive insurance companies already domiciled in Hawaii and attracting new captive insurance companies in the future. 

     Your Committee has amended this measure by:

    (1)   Clarifying that the captive investment requirements found in section 431:19-110, Hawaii Revised Statutes, do not apply to class 3 risk retention captive insurance companies;

    (2)   Inserting new language to require the captive insurance administrator, who is currently appointed by the Insurance Commissioner and approved by the Director of Commerce and Consumer Affairs, to also be designated as a deputy commissioner; and

    (3)   Making other technical, nonsubstantive changes for purposes of clarity and style.

     Your Committee notes that these amendments were agreed upon by the Department of Commerce and Consumer Affairs and the Hawaii Captive Insurers' Council.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Affordable Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 272, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 272, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Affordable Housing,

____________________________

BRIAN T. TANIGUCHI, Chair