STAND. COM. REP. NO. 605

Honolulu, Hawaii

, 2005

RE: H.B. No. 160

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 160 entitled:

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

begs leave to report as follows:

The purpose of this bill is to exempt insurers from assessments and fees paid into the Compliance Resolution Fund.

Testimony supporting the bill was submitted by the American Council of Life Insurers and State Farm Insurance Companies. The Department of Commerce and Consumer Affairs opposed the bill. The Hawaii Insurers Council commented.

Your Committee finds that there is some concern about whether insurer assessments and fees are in an amount necessary to allow regulation of the insurance industry, and that there is currently litigation concerning the extent of these assessments and fees.

Your Committee believes that regulated industry should not bear more than its fair share of government's costs, and that Hawaii's businesses will thrive if government ensures that this is, indeed, the regulatory policy of the State.

Accordingly, your Committee has amended this bill by:

(1) Providing a formula for determining how assessments of insurers regulated under Title 24, are to be determined. Total assessments are to be calculated based on the proposed fiscal year budget of the Insurance Division, less funds of the division left over in the Compliance Resolution Fund from the immediately preceding fiscal year, and anticipated revenues. This formula restricts assessments to amounts needed for regulation under Title 24;

(2) Capping the total assessments that may be collected in any fiscal year at $2,000,000, to provide insurers with some assurance of stability in assessment amounts;

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

(4) Requiring the Auditor to conduct an annual audit of the Insurance Regulation sub-account of the Compliance Resolution Fund that is to be submitted to the Legislature prior to each regular session.

Your Committee finds that as amended, this bill will increase the transparency and accountability of the Insurance Division, and establish in statute, a policy that limits the regulatory burdens of insurers to fair and justifiable levels.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 160, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 160, H.D. 1, and be referred to the Committee on Finance.

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

 

____________________________

KENNETH HIRAKI, Chair