THE SENATE

S.C.R. NO.

58

TWENTY-FIRST LEGISLATURE, 2002

  

STATE OF HAWAII

  
   

SENATE CONCURRENT

RESOLUTION

 

REQUESTING THE AUDITOR TO CONDUCT A FEASIBILITY AND IMPLEMENTATION STUDY FOR A CAPTIVE INSURANCE COMPANY TO INSURE POTENTIAL RISKS OF THE STATE OF HAWAII.

 

WHEREAS, the Legislature finds that there is a need to examine the effectiveness and efficiency of how the State finances potential losses arising from its operations; and

WHEREAS, a captive insurance company is a specialized insurance company that is authorized to insure specific risks of its owner and the owner's affiliated entities, and also provides flexibility in efficiently providing coverage for losses arising from property damage, theft, general and professional liability, work related injuries, employment practices liability, and employee benefits; and

WHEREAS, the concept of utilizing a captive insurance company has been, and continues to be, a proven mechanism for private and public sector organizations from Hawaii, and across the United States and abroad; and

WHEREAS, Hawaii has the infrastructure and expertise from the private and public sectors to prudently implement and develop an effective captive insurance facility for state risks; and

WHEREAS, in 2000, the Legislature enacted Act 132, which mandated the Insurance Division of the Department of Commerce and Consumer Affairs to identify and evaluate the feasibility and cost-effectiveness of utilizing a captive insurance company to finance and manage the State's exposure to certain risks; and

WHEREAS, based on the Insurance Division's findings, the State disbursed an estimated $200 million per year for fiscal years 1997, 1998, and 1999 to buy insurance and settle self-insured claims; and

WHEREAS, the Insurance Division's findings also indicated that there is a potential for the State to reap significant financial and operational benefits from the establishment of a captive insurance company, however, the decentralized nature of the fiscal and statutory responsibility of managing the various state risks made it difficult to gather the necessary information to design and implement an effective captive program; and

WHEREAS, the Legislature understands that the price of commercially available insurance has significantly increased, and the availability of some types of insurance coverages has dramatically declined since the events of September 11, 2001; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2002, the House of Representatives concurring, that the Auditor is requested to perform a comprehensive study and evaluation of the effectiveness and efficiency of how the State manages and finances its exposure to the various kinds of risks that can create potentially significant financial or operational losses; and

BE IT FURTHER RESOLVED that the Auditor is requested to perform a study dealing with the issue of how a captive can be implemented by the State for financing and managing its risks; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit findings and recommendations no later than twenty days prior to the convening of the Regular Session of 2003; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Comptroller, Department of Commerce and Consumer Affairs, and the Auditor.

 

 
 

OFFERED BY:

_____________________________

Report Title:

Requesting Auditor to conduct a feasibility and implementation study for a captive insurance company to insure potential risks of the State of Hawaii.