STAND. COM. REP. NO. 3517

Honolulu, Hawaii

RE: H.B. No. 2112

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 2112, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CREDIT FOR REINSURANCE,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the provisions in the insurance code relating to bilateral agreements on insurance and reinsurance for consistency with the agreements between the United States and European Union and the United States and United Kingdom.

Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, Hawaii Insurers Council, Hawaii Medical Service Association, American Council of Life Insurers, Hawaii Independent Insurance Agents Association, Reinsurance Association of America, and American Property Casualty Insurance Association.

Your Committee finds that, in 2019, the National Association of Insurance Commissioners adopted amendments to its Credit for Reinsurance Model Law to make its provisions consistent with the requirements of federally negotiated bilateral agreements, or "covered agreements", between the United States and the European Union and the United States and the United Kingdom. Failure by the states to establish a reinsurance modernization framework and collateral reforms, and to implement reinsurance collateral provisions of the covered agreements, will subject states to federal preemption in this area. This measure is necessary to align the State's accounting for reinsurance with the other forty-nine states and maintain the State's accreditation with the National Association of Insurance Commissioners. This measure will further ensure that the State's Insurance Commissioner has the information necessary to regulate the ability and willingness of reinsurers to pay claims as they become due.

Your Committee has amended this measure by:

(1) Making it effective upon its approval; and

(2) 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 H.B. No. 2112, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2112, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

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

________________________________

ROSALYN H. BAKER, Chair