STAND. COM. REP. NO. 719

Honolulu, Hawaii

RE: S.B. No. 19

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 19, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO SURPLUS LINES,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the calculation of the surplus lines insurance premium tax to tax the entirety of the premium using the rate established by Hawaii statute, regardless of location of risk.

Your Committee received written comments in support of this measure from the Wholesale & Specialty Insurance Association and American Property Casualty Insurance Association.

Your Committee received written comments on this measure from the Department of Commerce and Consumer Affairs.

Your Committee finds that this measure repeals language authorizing the Insurance Commissioner to enter into an interstate compact to collect surplus lines premium taxes. Under current law, the interstate compact, among other things, requires the State to use a method in cooperation with other states in allocating risk and computing taxes due on premiums to each state where properties, risks, or exposures are located. Your Committee recognizes that a very small minority of states have signed onto this interstate compact, and it is more beneficial for the State to use a system where surplus lines brokers make direct payments to the Director of Finance.

Your Committee has amended this measure by changing its effective date to July 1, 2050, to facilitate further discussion on the measure.

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. 19, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 19, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair