SB 2042: Insurance; Sponsored Captive Insurance Companies; Minimum Capital and Surplus; Reduction

A BILL FOR AN ACT

RELATING TO INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 431:19-104, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Each captive insurance company licensed pursuant to this article shall possess and thereafter maintain unimpaired capital and surplus in the amount established by the commissioner; provided that:

     (1)  The commissioner shall take into account the nature and volume of business transacted by each captive insurance company, and any other factors deemed appropriate by the commissioner;

     (2)  Class 3 companies shall be subject to other applicable provisions of this chapter that may require capital and surplus in excess of those established by the commissioner; and

     (3)  Minimum capital and surplus established by the commissioner shall be [no] not less than the following amounts:

          (A)  Class 1 company:  $100,000;

          (B)  Class 2 company:  $250,000;

          (C)  Class 3 company:  $500,000;

          (D)  Class 4 company:  [$500,000;] $100,000; and

          (E)  Class 5 company:  An amount as determined by the commissioner on a case by case basis."

     SECTION 2.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on January 1, 3000.

Report Title:

Insurance; Sponsored Captive Insurance Companies; Minimum Capital and Surplus; Reduction

Description:

Reduces the unimpaired minimum capital and surplus that class 4 sponsored captive insurance companies are required to maintain.  Effective 1/1/3000.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 431:19-104, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Each captive insurance company licensed pursuant to this article shall possess and thereafter maintain unimpaired capital and surplus in the amount established by the commissioner; provided that:

     (1)  The commissioner shall take into account the nature and volume of business transacted by each captive insurance company, and any other factors deemed appropriate by the commissioner;

     (2)  Class 3 companies shall be subject to other applicable provisions of this chapter that may require capital and surplus in excess of those established by the commissioner; and

     (3)  Minimum capital and surplus established by the commissioner shall be [no] not less than the following amounts:

          (A)  Class 1 company:  $100,000;

          (B)  Class 2 company:  $250,000;

          (C)  Class 3 company:  $500,000;

          (D)  Class 4 company:  [$500,000;] $100,000; provided that the sponsored captive insurance company does not retain insurance risk; and

          (E)  Class 5 company:  An amount as determined by the commissioner on a case by case basis."

     SECTION 2.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

Insurance; Sponsored Captive Insurance Companies; Minimum Capital and Surplus; Reduction

Description:

Reduces the unimpaired minimum capital and surplus that class 4 sponsored captive insurance companies are required to maintain under certain circumstances.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 2110

Honolulu, Hawaii

RE:     S.B. No. 2042

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 2042 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose and intent of this measure is to reduce the unimpaired minimum capital and surplus required for a Class 4 sponsored captive insurance company from $500,000 to $100,000; provided that the company does not retain insurance risk.

     Your Committee received testimony in support of this measure from the Hawaii Captive Insurance Council, Brown & Brown, Alakai Global Inc., and Aon Insurance Managers (USA) Inc.

     Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs.

     Your Committee finds that the State is an attractive market for the global captive insurance industry due to its balanced approach to regulatory oversight, such as statutory minimum capital and surplus requirements for captive insurance companies.  However, requiring companies that do not retain insurance risk to maintain capital levels designed for risk-retaining insurers imposes costs and can be an obstacle to industry growth in the State.  Your Committee finds that reducing the unimpaired minimum capital and surplus required for certain sponsored captive insurance companies from $500,000 to $100,000 can encourage competition and flexibility without compromising regulatory oversight.

     Your Committee acknowledges the testimony of the Department of Commerce and Consumer Affairs that the measure's qualifying language in relation to the sponsored captive insurance company's retained risk is not necessary because the Insurance Commissioner has the discretionary authority to require a higher minimum amount based on a company's risk profile.

     Accordingly, your Committee has amended this measure by:

     (1)  Deleting language that would have required that a sponsored captive insurance company not retain insurance risk as a condition of the reduced minimum capital and surplus requirement;

     (2)  Inserting an effective date of January 1, 3000, to encourage further discussion; and

     (3)  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. 2042, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2042, S.D. 1, and be referred to your Committee on Ways and Means.

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