STAND. COM. REP. NO. 472

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 1279

       S.D. 1

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

 

Sir:

 

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1279 entitled:

 

"A BILL FOR AN ACT RELATING TO INSURANCE,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to amend the Insurance Code in order to comply with the requirements of federal law and to authorize the Insurance Commissioner to enter into a multistate compact to recoup taxes and fees from surplus lines insurers.

 

     Your Committee received testimony in support of this measure from the Insurance Commissioner of the Department of Commerce and Consumer Affairs.  Your Committee received comments on this measure from National Association of Professional Surplus Lines Offices, Ltd.

 

     Your Committee finds that this measure will enable the Insurance Commissioner to comply with the federal Nonadmitted and Reinsurance Reform Act of 2010 and participate on behalf of the Insurance Division, in the Surplus Lines Insurance Multistate Compliance Compact in order to regulate issuers of surplus lines insurance policies that cover risks in multiple states.  Your Committee further finds that participation in the Multistate Compliance Compact is essential for the Insurance Division to be able to continue to collect premium taxes on multistate surplus lines policies which are deposited into the General Fund and presently represent $10,000,000 annually.  Your Committee notes that the Multistate Compliance Compact created pursuant to the federal Nonadmitted and Reinsurance Reform Act of 2010 is currently in the process of creation by the participating states.  Therefore, your Committee anticipates that further legislation will be necessary in the future to enable the Insurance Commissioner to fully participate in the Multistate Compliance Compact once it is implemented in its final form.

 

     Your Committee has amended this measure by:

 

     (1)  Amending the definitions of "state" and "United States" in the Insurance Code to include the Northern Mariana Islands, to conform with federal law;

 

     (2)  Substituting the term "insured" for "subject resident", "surplus lines insurance" for "unauthorized insurance", and "unauthorized insurer" for "nonadmitted insurer" to conform with the language used throughout the Insurance Code;

 

     (3)  Specifying a quarterly reporting schedule for surplus lines brokers to report verified statements of all surplus lines insurance transacted;

 

     (4)  Specifying a payment schedule for tax on surplus lines paid to the Director of Finance from a surplus lines broker during the transition period to the Multistate Compliance Compact and once the Insurance Commissioner's participation in the Multistate Compliance Compact is fully effectuated;

 

     (5)  Instructing the Insurance Commissioner to submit recommendations for further legislation to enable the Insurance Commissioner to participate fully in the Multistate Compliance Compact created pursuant to the Nonadmitted and Reinsurance Reform Act of 2010; and

 

     (6)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1279, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1279, S.D. 1, and be placed on the calendar for Third Reading.

 

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

 

 

 

____________________________

ROSALYN H. BAKER, Chair