CONFERENCE COMMITTEE REP. NO.171

Honolulu, Hawaii

, 2005

RE: H.B. No. 160

H.D. 2

S.D. 1

C.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the House of Representatives to the amendments proposed by the Senate in H.B. No. 160, H.D. 2, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE COMPLIANCE RESOLUTION FUND,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this bill is to increase transparency, accountability, and fairness in state assessments of insurers and in the use of those funds by:

(1) Establishing a formula for establishing the amount of assessments due from all lines of insurance;

(2) Providing that total assessments are to be calculated based on the Insurance Commissioner's proposed fiscal year budget, less Insurance Division funds left over in the Compliance Resolution Fund (CRF) from the preceding fiscal year, and anticipated revenues;

(3) Specifying that insurers must be provided with at least 60 days notice of when their assessments are due;

(4) Setting a ceiling of $4,000,000 on total assessments of all lines of insurance;

(5) Requiring the Auditor to conduct an annual financial and management audit of the insurance regulation sub-account of the CRF, to be submitted to the Legislature prior to each regular session;

(6) Eliminating the Captive Insurance Administrative Fund (Captive Fund) as a source of transfer funds for the CRF; and

(7) Requiring moneys in the Captive Fund to be used to defray Captive Insurance Branch administrative costs, and specifying the kinds of personnel costs that may be funded.

Your Committee on Conference has amended this bill by:

(1) Increasing the cap on insurer assessments to $5,000,000;

(2) Instead of annual audits, providing for a single financial and management audit of the insurance regulation sub-account of the CRF, to be submitted to the Legislature in 2008;

(3) Appropriating $1,500,000 for each of fiscal years 2005-2006 and 2006-2007 for the operating expenses of the Captive Insurance Branch and for development of the captive insurance industry in Hawaii;

(4) Changing the effective date of the bill from July 1, 2010, to July 1, 2005; and

(5) Making a technical, nonsubstantive amendment for clarity and consistency.

Your Committee on Conference finds that implementation of the insurer assessment formula, in combination with the financial and management audit of the insurance regulation sub-account, will provide information allowing insurer assessments to be evaluated and set at fair and justifiable levels. Your Committee on Conference believes that a similar increase in transparency and accountability will result from making the Captive Fund and the Captive Insurance Branch independent of the CRF.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of H.B. No. 160, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as H.B. No. 160, H.D. 2, S.D. 1, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE SENATE

ON THE PART OF THE HOUSE

____________________________

RON MENOR, Chair

____________________________

KENNETH HIRAKI, Co-Chair

____________________________

BRIAN T. TANIGUCHI, Co-Chair

____________________________

DWIGHT TAKAMINE, Co-Chair