STAND. COM. REP. NO. 1378

Honolulu, Hawaii

, 2023

RE: S.B. No. 434

S.D. 1

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 434, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

The purpose of this measure is to:

(1) Require sponsored captive insurance companies to maintain separate protected cells for separate participant contracts;

(2) Authorize captive insurance companies to apply for a certificate of exemption from examination from the Insurance Commissioner; provided that certain conditions are met;

(3) Require protected cells established by sponsored captive insurance companies to be approved by the Insurance Commissioner;

(4) Authorize sponsored captive insurance companies to establish and maintain protected cells to insure risks of parties unaffiliated with a participant under certain circumstances; and

(5) Require a participant, through a sponsored captive insurance company, to insure only risks approved by the Insurance Commissioner.

Your Committee received testimony in support of this measure from the Hawaii Captive Insurance Council; Brown & Brown; Accuity LLP; Freeman Decorating Co.; Cooperative of American Physicians Insurance Company, Inc.; CPN Insurance Corporation; Paramount Insurance, Inc.; Webcor, L.P.; WTW; Aon Insurance Managers (USA) Inc.; and two individuals. Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs.

Your Committee finds that the State is home to a robust captive insurance market, as the State is the fifth largest captive domicile in the United States and the eighth largest domicile worldwide. This measure provides flexibility to captive insurance companies and allows the regulatory environment to be responsive and efficient.

Your Committee has amended this measure by:

(1) Deleting from the list of conditions for obtaining a certificate of exemption that the applicant demonstrate other good cause for the exemption; and

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

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 434, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 434, S.D. 1, H.D. 1, and be referred to your Committee on Finance.

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

____________________________

MARK M. NAKASHIMA, Chair