STAND. COM. REP. NO. 1348_______

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1261
                                     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


     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 1261, S.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to repeal statutorily set
captive insurance licensing and license renewal fees, and allow
the Insurance Commissioner to utilize the rulemaking process to
set these fees, as well as other fees for the issuance of
documents deemed necessary or requested by captive insurance

     Your Committee received testimony in support of this bill
from the Department of Commerce and Consumer Affairs (DCCA), J&H
Marsh & McLennan, and the Hawaii Captive Insurance Council.  DCCA
testified that current law does not allow DCCA to set fees in
proportion to the greater amount of work required to license and
and regulate risk retention captives.  DCCA also requested that
the year 2000 effective date of the bill be extended to 2001,
because in the department's experience, it can take longer than a
year to adopt and implement administrative rules.

     Your Committee recognizes that the captive insurance
industry is a growth industry that confers economic benefits on
Hawaii.  This bill will give DCCA flexibility to properly
administer fees and will support prudent regulation of captive

                                 STAND. COM. REP. NO. 1348_______
                                 Page 2

insurance companies, factors that are integral to maintaining a
reputable and attractive captive domicile.

     Your Committee has amended the effective date of this bill
to 2001 as requested by DCCA.  In addition, to facilitate further
discussion of this measure, your Committee has replaced the
contents of this bill with that of a similar measure that passed
out of the Finance Committee earlier this session, H.B. No. 1624,
H.D. 2.

     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. 1261, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 1261, 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