STAND. COM. REP. NO. 2733

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 2168

       S.D. 2

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

 

Sir:

 

     Your Committee on Ways and Means, to which was referred S.B. No. 2168, S.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO INSURANCE,"

 

begs leave to report as follows:

 

     The purpose of this measure is to direct the Insurance Commissioner to join the Surplus Lines Insurance Multi-State Compliance Compact and enact the Surplus Lines Insurance Multi-State Compliance Compact.

 

     Your Committee received written comments in support of this measure from Property Casualty Insurers Association of America.

 

     Your Committee finds that Congress, in the federal Nonadmitted and Reinsurance Reform Act of 2010, intended for the states to adopt uniform requirements, forms, and procedures to facilitate the reporting, payment, collection, and allocation of premium taxes for surplus lines insurance.  Your Committee further finds that participation in a multi-state compact is essential for the Insurance Division to continue to collect premium taxes on multistate surplus lines policies.  Your Committee notes that $8,000,000 to $10,000,000 is collected annually on surplus lines policies.

 

Your Committee additionally finds that the preferred multi-state arrangement is the Surplus Lines Insurance Multi-State Compliance Compact, or SLIMPACT, which has the support of all three national state government associations: the National Conference of Insurance Legislators; the Council of State Governments; and the National Conference of State Legislatures.  SLIMPACT has also been endorsed by the surplus and excess lines industry and major national property-casualty and producer organizations.

 

Your Committee notes that when this measure is enacted, Hawaii's membership will put SLIMPACT over its ten state threshold and will allow the compact to become fully operational.

 

Your Committee also notes that the Nonadmitted and Reinsurance Reform Act requirements took effect on July 21, 2011. Your Committee finds that if states are unable to adopt a comprehensive solution as intended by the Act, Congress could take further action.  This could result in a loss of vital premium tax revenue, further federal preemption, and possible federal oversight in the business of insurance.

 

     Your Committee has amended this measure by:

 

     (1)  Changing all references from "promulgated" to "adopted" for purposes of consistency and agreement with the Model State Administrative Procedure Act of 1981 and chapter 91, Hawaii Revised Statutes;

 

     (2)  Defining the term "stamping office" as the Insurance Division of the Department of Commerce and Consumer Affairs;

 

     (3)  Deleting the definition of the term "home state of affiliated group" because the term is not necessary; and

 

     (4)  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 Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2168, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2168, S.D. 2.

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

 

 

 

____________________________

DAVID Y. IGE, Chair