STAND. COM. REP. NO. 1320-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 3190
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 3190, S.D. 1, entitled: 

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

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Authorize the licensing of "branch" captives; and

     (2)  Authorize captive insurance companies to insure
          personal homeowner's and motor vehicle risks outside
          the State.

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

     Your Committee finds that this measure would enhance the
State's attractiveness as a captive insurance domicile.  

     Your Committee further finds that the provision allowing
captive insurance companies to provide automobile and homeowner's
coverage solely for out-of-state risks reflects poorly upon the
state's regulatory stature and the financial responsibility of
captive insurance companies domiciled in Hawaii.  By allowing the
coverage of personal risks located only outside of Hawaii, the

 
 
 
                                 STAND. COM. REP. NO. 1320-00
                                 Page 2

 
Legislature would essentially cast a vote of "no confidence" upon
the effectiveness of the captive insurance industry.

     Your Committee has amended this bill by:

     (1)  Removing the provision that restricts captive insurers
          to providing coverage for personal homeowner's and
          motor vehicle risks located outside the state of
          Hawaii; 

     (2)  Incorporating the amendments suggested by the DCCA to
          clarify that captive insurance companies may insure
          personal homeowner's and motor vehicle coverage to the
          extent allowed by article 19, chapter 431, Hawaii
          Revised Statutes; and

     (3)  Designating a branch captive insurance company as
          "class 5."

     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. 3190, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 3190, S.D. 1, H.D. 1, and be placed on the
calendar for Third Reading.

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



                                   ______________________________
                                   RON MENOR, Chair