STAND. COM. REP. NO. 1347_______

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1131
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 1131, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this bill is to:

     (1)  Increase the amounts assessed insurers and paid into
          the Insurance Examiners Revolving Fund (IERF), which
          moneys are used by the Department of Commerce and
          Consumer Affairs (DCCA) to examine the activities,
          operations, and financial condition of insurers in
          Hawaii; and

     (2)  Preserve the State's National Association of Insurance
          Commissioners (NAIC) accreditation status by repealing
          sunset and related provisions to make the IERF, as well
          as certain insurer reporting, filing, and reserve
          requirements set by the NAIC, a permanent part of the
          Insurance Code.

     Your Committee received testimony strongly supporting this
measure from the Insurance Commissioner of the DCCA.  DCCA
explained the amendments as follows:


 
 
 
 
                                 STAND. COM. REP. NO. 1347_______
                                 Page 2

 
     (1)  The increase in IERF insurer assessments is
          necessitated by Act 116, Session Laws of Hawaii 1998,
          which increased personnel costs by transferring four
          examination branch general fund positions to the IERF
          without increasing funding;

     (2)  Repeal of IERF sunset provisions is necessary to allow
          continued DCCA oversight of the State's insurance
          industry and to preserve State NAIC accreditation
          status because, without the IERF, the State would be
          unable to show financial ability to conduct
          examinations of the insurance industry as required by
          the NAIC; and

     (3)  To qualify for NAIC accreditation, the State must have
          in place the insurer risk-based capital requirements,
          and the insurer reporting and filing requirements made
          permanent by this bill.

     It is your Committee's intention to encourage further
discussion of this measure.  Your Committee notes that H.B. No.
1069, which is similar to this bill, was passed out of your
Committee earlier this session.  Your Committee has amended this
bill by reflecting the substance of H.B. No. 1069 as follows:

     (1)  Changed the effective date to take effect upon
          approval; and

     (2)  Made technical, nonsubstantive amendments for style and
          clarity.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 1131, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 1131, S.D. 1, H.D. 1, and be referred to the
Committee on Finance.

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



                                   ______________________________
                                   RON MENOR, Chair