STAND. COM. REP. NO. 2692

Honolulu, Hawaii

RE:    S.B. No. 2821

       S.D. 2

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 2821, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose and intent of this measure is to update various provisions in the Insurance Code that are recommended by the National Association of Insurance Commissioners (NAIC) to ensure the Department of Commerce and Consumer Affairs Insurance Division maintains its NAIC accreditation.

Specifically, the measure adopts revisions to the NAIC's model laws on Credit for Reinsurance Model Act, Standard Valuation Law, Standard Nonforfeiture Law for Life Insurance, and Insurance Holding Company System Regulatory Act.

     Your Committee received written comments in support of this measure from the State Insurance Commissioner of the Department of Commerce and Consumer Affairs and USAA.

     Your Committee finds that the revisions in this measure are part of the NAIC's Solvency Modernization Initiative, which 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 ensuring that the Insurance Division of the Department of Commerce and Consumer Affairs retains its accreditation with the NAIC will allow it to continue to protect consumers in this State.

     Your Committee has amended this measure by:

(1)  Clarifying the formatting of section 431:5-307, Hawaii Revised Statutes, the standard valuation law, regarding the variables used in determining the calendar year statutory valuation interest rates for various types of insurance;

(2)  Changing the effective dates from July 1, 2014, and January 1, 2015 to July 1, 2050, and January 1, 2051, respectively, to facilitate further discussion on the measure; and

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

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2821, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2821, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair