STAND. COM. REP. NO.  1196-08

Honolulu, Hawaii

                , 2008

RE:   S.B. No. 3023

      S.D. 2

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Sir:

     Your Committees on Consumer Protection & Commerce and Judiciary, to which was referred S.B. No. 3023, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

beg leave to report as follows:

     The purpose of this bill is to keep Hawaii competitive as a leading captive insurance jurisdiction by authorizing the creation of special purpose financial captive insurance companies to provide securitization of insurance risks.

     The Department of Commerce and Consumer Affairs, Hawaii Captive Insurance Council, Beecher Carlson Insurance Services, LLC, Alliance Captive Insurance Services, LLC, and Artex Risk Solutions, Inc., testified in support of this bill.  The Reinsurance Association of America submitted comments.

     There are concerns that this bill gives the Insurance Commissioner too much discretion in authorizing special purpose financial captives to provide reinsurance to insurers, even though these captives have smaller capital requirements and weaker solvency standards than regular licensed insurers.

     Accordingly, your Committees have amended this bill by changing its effective date to July 1, 2050, to encourage further discussion.  Technical, nonsubstantive amendments were also made for consistency and clarity.

     As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 3023, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 3023, S.D. 2, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Judiciary,

____________________________ TOMMY WATERS, Chair

____________________________ ROBERT N. HERKES, Chair