STAND. COM. REP. NO. 2508

Honolulu, Hawaii

RE:    S.B. No. 3017

       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 Health, to which was referred S.B. No. 3017 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to by authorize the Insurance Commissioner to monitor the relationships and transactions between mutual benefit societies and their affiliates.

     Testimony in support of the measure was submitted by the Department of Commerce and Consumer Protection and the Hawaii Coalition for Health.  Testimony in opposition to the measure was submitted by the Hawaii Medical Service Association.

     Your Committee finds that mutual benefit societies are treated differently than other insurers under the Insurance Code, which includes being subjected to limited regulation by the Insurance Commissioner.  In Hawaii, several mutual benefit societies provide insurance through the extensive use of their affiliates, which raises special concerns due to the nature of such transactions.  This measure increases the regulatory supervision of the Insurance Commissioner over mutual benefit societies and their relationships and transactions with affiliates.  Your Committee determines that increased regulations will improve the Insurance Commissioner's ability to protect consumers from improper transactions between mutual benefit societies and their affiliates.

     Your Committee has amended this measure by changing its effective date to July 1, 2050 to facilitate further discussion on the matter in light of concerns raised regarding the specificity and clarity of the increased regulation to be imposed.

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3017, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3017, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection, and Affordable Housing.

Respectfully submitted on behalf of the members of the Committee on Health,

____________________________

DAVID Y. IGE, Chair