STAND. COM. REP. NO. 2155

Honolulu, Hawaii

RE:    S.B. No. 2821

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 2821 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Adopt revisions to the National Association of Insurance Commissioners model laws on Credit for Reinsurance Model Act, Standard Valuation Law, Standard Nonforfeiture Law for Life Insurance, and Insurance Holding Company System Regulatory Act; and

     (2)  Ensure the Insurance Division of the Department of Commerce and Consumer Affairs maintains its accreditation with the National Association of Insurance Commissioners.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, USAA, Lloyd's of London, Reinsurance Association of America, American Council of Life Insurers, and one individual.  Your Committee received comments on this measure from the Office of Information Practices and National Association of Mutual Insurance Companies.

     Your Committee finds that the revisions to the State's Insurance Code in this measure are part of the National Association of Insurance Commissioners' Solvency Modernization Initiative, a critical self-examination to update the nation's insurance solvency regulation framework and review international developments regarding insurance supervision, banking supervision, and international accounting standards and their use in the country's insurance regulation.  The Solvency Modernization Initiative focuses on key issues, including capital requirements, governance and risk management, group supervision, statutory accounting and financial reporting, and reinsurance.

     Your Committee further finds that the National Association of Insurance Commissioners' financial regulation standards and accreditation program ensure that each state has adequate solvency laws and regulations to protect consumers and guarantee reserve funds.  This measure will therefore help protect consumers in Hawaii and ensure that the Insurance Division of the Department of Commerce and Consumer Affairs retains its accreditation with the National Association of Insurance Commissioners.

     Your Committee has amended this measure by:

     (1)  Clarifying that documents, materials, or other information that are already confidential by law and privileged shall not be disclosable under chapter 92F, Hawaii Revised Statutes, rather than not subject to the requirements of chapter 92F, Hawaii Revised Statutes;

     (2)  Clarifying that disciplinary action by the Insurance Commissioner against an appointed actuary, rather than against a qualified actuary, shall be defined in regulations, to conform to the National Association of Insurance Commissioners Standard Valuation Law;

     (3)  Specifying that the nonforfeiture interest rate for life insurance policies issued prior to the operative date of the valuation manual shall not be less than four percent, to conform to the National Association of Insurance Commissioners Standard Nonforfeiture Law for Life Insurance;

     (4)  Clarifying corporate confidentiality language pertaining to insurance holding company systems, to conform to the National Association of Insurance Commissioners Insurance Holding Company System Regulatory Act; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2821, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2821, S.D. 1, and be referred to the Committee on Ways and Means.

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

____________________________

ROSALYN H. BAKER, Chair