STAND. COM. REP. NO. 2673

Honolulu, Hawaii

RE: S.B. No. 3081

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 3081 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 and improve various provisions of title 24, Hawaii Revised Statutes relating to the State's Insurance Code. Specifically, this measure:

(1) Defines "dormant captive insurance company" and sets out a procedure to apply for a certificate of dormancy;

(2) Adds the term "doing business as" to "trade name" statutory references;

(3) Clarifies continuing education provider filing requirements;

(4) Clarifies reinsurance intermediary-manager filing requirements;

(5) Amends the surety bond threshold requirement for third party administrators and clarifies the audited financial statements requirements;

(6) Amends the definitions of "controlled unaffiliated business" and "participant" as applied to captive insurance companies; and

(7) Provides an exemption from premium taxes for a captive insurer in its first year after formation.

Your Committee received testimony in support of this measure from the Insurance Division of the Department of Commerce Consumer Affairs and one individual.

Your Committee received comments on this measure from the Hawaii Captive Insurance Council, Brown & Brown, Tax Foundation of Hawaii, and two individuals.

Your Committee finds that periodically updating the State's insurance law is necessary to provide greater protections to consumers, improve the administration and enforcement of regulated entities, and address issues that arise after the implementation of adopted laws and rules. Therefore, this administration measure makes various technical corrections and improvements to the Insurance Code.

Notwithstanding, your Committee has heard the testimony of the Insurance Division of the Department of Commerce and Consumer Affairs, requesting that certain amendments concerning taxation of captive insurance companies be deleted, as they are not necessary at this time. Therefore, amendments to measure are necessary to address this issue.

Accordingly, your Committee has amended this measure by:

(1) Deleting section 9 of this measure, that would have exempted captive insurance companies from payment of premium taxes for the first year after their formation; 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 S.B. No. 3081, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3081, S.D. 1, and be referred to your Committee on Ways and Means.

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

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JARRETT KEOHOKALOLE, Chair