146
THE SENATE                           S.C.R. NO.            
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  CONCURRENT
                        RESOLUTION

  REQUESTING THE AUDITOR TO ASSESS THE INEQUITIES OR UNEVENNESS
    OF THE TAX LAWS AND ANY OTHER LAWS IN RELATION TO MUTUAL
    BENEFIT SOCIETIES AND ALL OF INSURANCE.


 1        WHEREAS, insurers are required to pay a tax on premiums
 2   received for risks underwritten pursuant to section 431:7-202,
 3   Hawaii Revised Statutes (HRS); and
 4   
 5        WHEREAS, insurers paid approximately $59.5 million in
 6   premium taxes in fiscal year 1998; and
 7   
 8        WHEREAS, mutual benefit societies are not subject to
 9   taxation under section 431:7-202, HRS; and 
10   
11        WHEREAS, mutual benefit societies are also exempt from
12   participating in the Hawaii Insurance Guaranty Association
13   (HIGA) which pays the covered claims of an insolvent insurer
14   and assesses its member insurers in order to pay HIGA's
15   obligations; and
16   
17        WHEREAS, a mutual benefit society operating in this State
18   has proposed to offer its members long-term care insurance,
19   thereby, raising concerns about the potentially inequitable
20   treatment of insurers and mutual benefit societies with respect
21   to taxes and other requirements; and
22   
23        WHEREAS, under current law, a mutual benefit society
24   selling long-term care insurance would enjoy a financial
25   advantage over insurers selling long-term care insurance since
26   the mutual benefit society would not be required to pay premium
27   taxes or HIGA assessments; and 
28   
29        WHEREAS, legislation has been proposed to address this
30   potentially inequitable situation by requiring that mutual
31   benefit societies that offer long-term care insurance belong to
32   HIGA and pay premium taxes, or by exempting all premiums
33   received from the sale of long-term care insurance policies
34   from the premium tax; and 
35   
36        WHEREAS, the affordability and availability of long-term

 
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 1   care insurance for mutual benefit society members may be
 2   adversely affected if mutual benefit societies are required to
 3   pay premium taxes and assessments; and 
 4   
 5        WHEREAS, the imminent entry of a mutual benefit society
 6   into the State's long-term care insurance market requires an
 7   assessment of the implications of allowing the sale of
 8   insurance by mutual benefit societies without requiring their
 9   compliance with laws applicable to insurers; now, therefore, 
10   
11        BE IT RESOLVED by the Senate of the Twentieth Legislature
12   of the State of Hawaii, Regular Session of 1999, the House of
13   Representatives concurring, that the Auditor is requested to
14   assess the inequities or unevenness of the tax laws and any
15   other laws in relation to mutual benefit societies and all of
16   insurance; and
17   
18        BE IT FURTHER RESOLVED that the Auditor's findings and
19   recommendations shall be reported to the Legislature twenty
20   days before the convening of the 2000 Regular Session; and
21   
22        BE IT FURTHER RESOLVED that certified copies of this
23   Concurrent Resolution be transmitted to the Auditor and the
24   Insurance Commissioner.
25 
26 
27 
28                         OFFERED BY:  ____________________________