STAND. COM. REP. NO. 2592

Honolulu, Hawaii

RE:    S.B. No. 3016

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred S.B. No. 3016 entitled:

"A BILL FOR AN ACT RELATING TO MUTUAL BENEFIT SOCIETIES,"

begs leave to report as follows:

     The purpose of this measure is to create a more competitive market for mutual benefit societies by establishing a cap on the deposit required to operate a mutual benefit society at not more than $20,000,000, and deleting the benefit fund requirement under section 432:1-401, Hawaii Revised Statutes.

     Testimony in support of this measure was submitted by the Department of Commerce and Consumer Affairs, and the Hawaii Medical Service Association.

     Your Committee finds that small mutual benefit societies are having difficulty complying with the "one-half of twenty times the maximum benefit payable in thirty days" deposit requirement under section 432:1-306, Hawaii Revised Statutes.  Deposits by mutual benefit societies protect the public in the event of insolvency; however, tying up unnecessarily large sums in deposits deprives the insurer of funds that could be used to defer premium increases.  This measure will remove a barrier to entry for new mutual benefit societies, and allow for a more competitive market, which fulfills the intent of this measure.

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

     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 S.B. No. 3016, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3016, S.D. 1.

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

____________________________

RUSSELL S. KOKUBUN, Chair