STAND. COM. REP. NO.770-02

Honolulu, Hawaii

, 2002

RE: S.B. No. 2582

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 2582 entitled:

"A BILL FOR AN ACT RELATING TO CAPTIVE INSURANCE,"

begs leave to report as follows:

The purpose of this bill is to make Hawaii's premium tax structure for single-owner and multi-owner captive insurance licensees more equitable and attractive, while maintaining an adequate funding base for the monitoring, regulation, and development activities undertaken by the Captive Insurance Branch (Branch) of the Insurance Division.

Testimony in support of this measure was received from the Insurance Division of the Department of Commerce and Consumer Affairs (DCCA).

Your Committee finds that under the present tax structure single-owner captive insurers pay a premium of .25 percent on gross premiums, while multi-owner captive insurers pay a tax of one percent. This bill proposes to make both single-owner and multi-owner captive insurance licensee premiums subject to a tax of .25 per cent on the first $25,000,000, .15 per cent on the next $25,000,000, and .05 per cent on premiums over $50,000,000.

The proposed tax structure is expected to attract captive insurance companies with large premium bases to Hawaii, thus, its impact on Hawaii's captive insurance market and DCCA regulatory responsibilities also require a change in funding for the Captive Insurance Administration Fund (Fund). Accordingly, this measure increases the minimum funding level of the Fund from $250,000 to $1,500,000 to account for anticipated Branch needs for the next two years.

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. 2582 and recommends that it pass Second Reading and be referred to the Committee on Finance.

 

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

 

____________________________

KENNETH T. HIRAKI, Chair