REPORT TITLE:
Insurance; Service Contracts


DESCRIPTION:
Regulates service contracts and contractual liability insurance
policies.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2352
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO SERVICE CONTRACTS.



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

 1      SECTION 1.  The purpose of this Act is to protect service
 
 2 contract holders in this state by creating a regulatory framework
 
 3 governing the sale, terms, and administration of service
 
 4 contracts sold to consumers.
 
 5      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 6 a new chapter to be appropriately designated and to read as
 
 7 follows:
 
 8                           "CHAPTER   
 
 9                         SERVICE CONTRACTS
 
10      §  -1  Application.(a)  This chapter shall not apply to:
 
11      (1)  Express or implied warranties;
 
12      (2)  Maintenance agreements;
 
13      (3)  Warranties, service contracts and maintenance
 
14           agreements offered by public utilities on their
 
15           transmission devices to the extent they are regulated
 
16           by the public utilities commission or the department of
 
17           commerce and consumer affairs; and
 
18      (4)  Service contracts sold or offered for sale to persons
 
19           other than consumers.
 
20      (b)  The marketing, sale, offering for sale, issuance,
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 making, proposing to make, and administration of service
 
 2 contracts by providers and related service contract sellers,
 
 3 administrators and other persons shall be exempt from regulation
 
 4 under the insurance laws of this state other than laws included
 
 5 in this chapter.
 
 6      §  -2 Definitions.  As used in this chapter:
 
 7      "Administrator" means a person appointed or designated by a
 
 8 provider who administers service contracts and service contract
 
 9 plans on behalf of the provider and subject to the requirements
 
10 of this chapter.
 
11      "Commissioner" means the state insurance commissioner.
 
12      "Consumer" means a natural person who buys, other than for
 
13 purposes of resale, any tangible personal property that is
 
14 distributed in commerce and that is normally used for personal,
 
15 family, or household purposes, and not for business or research
 
16 purposes.
 
17      "Contract holder" means a person who is the purchaser or
 
18 holder of a service contract.
 
19      "Contractual liability insurance policy" means a policy of
 
20 insurance that is issued to a provider, insures the provider's
 
21 service contracts, and may provide:
 
22      (1)  Reimbursement to the provider for sums that the
 
23           provider is legally obligated to pay under the insured
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           service contract; or
 
 2      (2)  The service that the provider is legally obligated to
 
 3           perform under the insured service contract.
 
 4      "Maintenance agreement" means a contract of limited duration
 
 5 that provides scheduled maintenance only.
 
 6      "Non-original manufacturer's parts" means replacement parts
 
 7 not made for or by the original manufacturer of the property,
 
 8 commonly referred to as "after market parts."
 
 9      "Person" means an individual, partnership, corporation,
 
10 incorporated or unincorporated association, joint stock company,
 
11 reciprocal, syndicate, or any similar entity or combination of
 
12 entities acting in concert.
 
13      "Premium" means the consideration paid to an insurer for a
 
14 contractual liability insurance policy.
 
15      "Provider" means a person who is contractually obligated to
 
16 the service contract holder under the terms of the service
 
17 contract.
 
18      "Provider fee" means the consideration paid for a service
 
19 contract.
 
20      "Service contract" means a contract or agreement for a
 
21 separately stated consideration and a specific duration, to
 
22 perform or indemnify the repair, replacement, or maintenance of
 
23 property for operational or structural failure due either to a
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 defect in materials or workmanship, or to normal wear and tear,
 
 2 with or without additional provision for incidental payment or
 
 3 indemnity under limited circumstances, including but not limited
 
 4 to towing, rental, and emergency road service.  Service contracts
 
 5 may provide for the repair, replacement, or maintenance of
 
 6 property damaged by power surges, or accidentally damaged during
 
 7 handling.
 
 8      "Warranty" means a warranty made without consideration,
 
 9 solely by the manufacturer, importer, or seller of property or
 
10 services, that is not negotiated or separated from the sale of
 
11 the product and is incidental to the sale of the product, that
 
12 provides repair or replacement for defective parts, mechanical or
 
13 electrical breakdown, labor, or other remedial measures.
 
14      §  -3 Registration.(a)  Before conducting business in
 
15 this state, a provider shall register with the commissioner on a
 
16 form prescribed by the commissioner, and shall pay to the
 
17 commissioner a fee as provided under section 431:7-101.  Except
 
18 for the registration required of providers under this section,
 
19 service contract sellers, administrators, and other persons
 
20 marketing, selling, or offering to sell service contracts shall
 
21 be exempt from any state licensing requirements.
 
22      §  -4  Financial responsibility.  A provider shall comply
 
23 with requirements under any one of the following paragraphs, and
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 shall not be subject to any other financial security requirements
 
 2 under state law:
 
 3      (1)  The provider shall insure all service contracts under a
 
 4           contractual liability insurance policy issued by an
 
 5           insurer authorized to transact insurance in this state
 
 6           or issued pursuant to part III of article 8 of chapter
 
 7           431;
 
 8      (2)  The provider shall:
 
 9           (A)  Maintain a funded reserve account for all
 
10                obligations under service contracts issued and in
 
11                force in this state.  The reserves shall not be
 
12                less than forty per cent of the gross
 
13                consideration received from the sale of the
 
14                service contract, less claims paid, for all in
 
15                force contracts.  The reserve account shall be
 
16                subject to examination by the commissioner; and
 
17           (B)  Place in trust with the commissioner, for all
 
18                service contracts issued and in force in this
 
19                state, a financial security deposit having a value
 
20                that is not less than $25,000, or five per cent of
 
21                the gross consideration received less claims paid
 
22                for the sale of the service contracts.  The
 
23                financial security deposit shall consist of one of
 

 
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 1                the following:
 
 2                (i)   A surety bond issued by an authorized
 
 3                      surety;
 
 4               (ii)   Securities of the type eligible for deposit
 
 5                      by authorized insurers in this state;
 
 6              (iii)   Cash;
 
 7               (iv)   A letter of credit issued by a qualified
 
 8                      financial institution; or
 
 9                (v)   Another form of security authorized by the
 
10                      commissioner by rule;
 
11           or
 
12      (3)  The provider or its parent company shall:
 
13           (A)  Maintain a net worth or stockholders' equity of at
 
14                least $100,000,000; and
 
15           (B)  Upon request, provide the commissioner with a copy
 
16                of the provider's or the provider's parent
 
17                company's most recent form 10-K or Form 20-F filed
 
18                with the Securities and Exchange Commission within
 
19                the last calendar year, or if the company does not
 
20                file with the Securities and Exchange Commission,
 
21                a copy of the provider's or the provider's parent
 
22                company's audited financial statements.
 
23           If the financial responsibility requirement under this
 

 
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 1           paragraph is to be maintained by the provider's parent
 
 2           company, the parent company shall guarantee the
 
 3           provider's obligations under service contracts sold by
 
 4           the provider in this state.
 
 5      §    -5  Recordkeeping.(a)  The provider or provider's
 
 6 administrator shall keep accurate accounts, books, and records of
 
 7 all transactions regulated under this Act.
 
 8      (b)  Accounts, books, and records maintained as required by
 
 9 this section shall include the following:
 
10      (1)  Copies of each type of service contract sold;
 
11      (2)  The name and address of each contract holder, to the
 
12           extent that the name and address have been furnished by
 
13           the contract holder;
 
14      (3)  A list of the locations where the provider's service
 
15           contracts are marketed, sold, or offered for sale; and
 
16      (4)  Written claims files which shall at a minimum contain
 
17           the date and description of each claim under the
 
18           provider's service contracts.
 
19      (c)  The provider shall for each service contract retain
 
20 records required under this section for at least one year after
 
21 coverage under the contract has expired.  A provider
 
22 discontinuing business in this state shall maintain records
 
23 required under this section until it provides the commissioner
 

 
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 1 with satisfactory proof that the provider has discharged all
 
 2 contractual obligations to contract holders in this state.
 
 3      (d)  The records required under this section may be, but are
 
 4 not required to be, maintained on a computer disk or other
 
 5 recordkeeping technology.  If records are maintained in a form
 
 6 other than hard copy, the records shall be in a form allowing
 
 7 duplication as legible hard copy at the request of the
 
 8 commissioner.
 
 9      (e)  Upon request of the commissioner, the provider shall
 
10 make available to the commissioner all accounts, books, and
 
11 records concerning service contracts sold by the provider
 
12 reasonably necessary to enable the commissioner to determine
 
13 compliance or noncompliance with this chapter.
 
14      §    -6  Service contracts; receipt; disclosures.(a)
 
15 Providers shall provide purchasers of a service contract with:
 
16      (1)  A receipt for or other written evidence of the purchase
 
17           of the service contract that shall be provided at the
 
18           time of purchase; and
 
19      (2)  A copy of the service contract that shall be provided
 
20           within a reasonable period of time from the date of
 
21           purchase.
 
22      (b)  Service contracts shall be written in clear,
 
23 understandable language, and shall be printed or typed in a
 

 
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 1 typeface and format that is easy to read.
 
 2      (c)  All service contracts shall:
 
 3      (1)  State the name and address of:
 
 4           (A)   The provider; and
 
 5           (B)   The administrator of the contract, if different
 
 6                 from the provider;
 
 7      (2)  Identify:
 
 8           (A)   The service contract seller; and
 
 9           (B)   The contract holder, to the extent that contract
 
10                 holder has furnished the contract seller,
 
11                 administrator, or provider with that information
 
12      (3)  The terms of the sale, including the purchase price;
 
13      (4)  The procedure the contract holder must follow to obtain
 
14           service;
 
15      (5)  Any deductible amount that applies;
 
16      (6)  The specific merchandise and services to be provided,
 
17           and any limitations, exceptions, or exclusions;
 
18      (7)  Where the contract covers an automobile, whether the
 
19           use of non-original manufacturer's parts is allowed;
 
20      (8)  Any restrictions governing the transferability of the
 
21           service contract that apply;
 
22      (9)  The terms, restrictions, or conditions governing the
 
23           return or cancellation of the service contract by
 

 
Page 10                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           either the provider or contract holder prior to the
 
 2           contract's termination or expiration date;
 
 3     (10)  The obligations and duties of the contract holder, such
 
 4           as the duty to protect against any further damage, or
 
 5           to follow owner's manual instructions; and
 
 6     (11)  Any provision for, or exclusion of consequential
 
 7           damages or pre-existing conditions that applies.
 
 8 The information under paragraphs (1) and (2) shall not be
 
 9 required to be preprinted on the service contract and may be
 
10 added to the service contract at the time of sale.  The purchase
 
11 price under paragraph (3) shall not be required to be preprinted
 
12 on the service contract and may be negotiated with the contract
 
13 holder at the time of sale.
 
14      (d)  Service contracts insured under a contractual liability
 
15 insurance policy shall include the name and address of the
 
16 insurer and contain a statement substantially similar to the
 
17 following:
 
18      Obligations of the provider under this service contract are
 
19      insured under a service contract contractual liability
 
20      insurance policy.
 
21      (e)  Service contracts not insured under a contractual
 
22 liability insurance policy shall contain a statement
 
23 substantially similar to the following:
 

 
Page 11                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      Obligations of the provider under this service contract are
 
 2      backed by the full faith and credit of the provider.
 
 3      §    -7  Service contract returns and refunds.  (a)  Service
 
 4 contracts shall state that the contract holder may return the
 
 5 contract within:
 
 6      (1)  Twenty days of the date that the contract was mailed to
 
 7           the contract holder;
 
 8      (2)  Ten days of the date the contract was delivered to the
 
 9           contract holder, if the contract was delivered at the
 
10           time of sale; or
 
11      (3)  A longer time period specified in the service contract.
 
12      (b)  Upon return of the service contract to the provider
 
13 within the applicable time period, and if no claim has been made
 
14 under the service contract prior to its return to the provider,
 
15 the service contract shall be void and the provider shall refund
 
16 to, or credit the account of, the contract holder with the full
 
17 purchase price of the service contract.  A ten per cent penalty
 
18 per month shall be added to a refund that is not paid or credited
 
19 within forty-five days after the return of the service contract
 
20 to the provider.
 
21      (c)  The right to void a service contract under subsection
 
22 (b) shall not be transferred and shall apply only to the original
 
23 service contract purchaser upon the terms and conditions provided
 
24 in the contract and consistent with this chapter.
 

 
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 1      (d)  Upon cancellation of a service contract by the
 
 2 provider, the provider shall, at least five days prior to
 
 3 cancellation, mail to the contract holder at the contract
 
 4 holder's last known address, a written prior notice of
 
 5 cancellation that states the effective date of the cancellation;
 
 6 provided that prior notice under this subsection shall not be
 
 7 required if cancellation is for:
 
 8      (1)  Nonpayment of the provider's fee for the service
 
 9           provided under the service contract;
 
10      (2)  A material misrepresentation by the contract holder to
 
11           the provider; or
 
12      (3)  A substantial breach of duties of the contract holder
 
13           under the service contract, relating to a covered
 
14           product or its use.
 
15    §    -8  Contractual liability insurance policies.(a)
 
16 Contractual liability insurance policies in this state shall
 
17 provide that in the event covered service is not provided by the
 
18 service contract provider or administrator within sixty days of
 
19 proof of loss by the contract holder, the contract holder is
 
20 entitled to apply directly to the contractual liability insurance
 
21 company for services under the service contract that are covered
 
22 under the policy.
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (b)  A contractual liability insurance policy insurer shall
 
 2 not terminate the policy until it has issued any notice of
 
 3 termination required by the commissioner under the insurance laws
 
 4 of this state.  The termination of a contractual liability
 
 5 insurance policy shall not reduce the insurer's responsibility
 
 6 for service contracts issued by providers prior to the date of
 
 7 termination.
 
 8      (c)  A provider covered by a contractual liability insurance
 
 9 policy shall be considered the agent of the contractual liability
 
10 insurance policy insurer, for purposes of determining duties owed
 
11 by the insurer to contract holders in accordance with the service
 
12 contract and this chapter.
 
13      (d)  Nothing in this chapter shall prevent or limit the
 
14 right of a contractual liability insurance policy insurer to seek
 
15 indemnification or subrogation against a provider for sums that
 
16 the insurer pays or becomes obligated to pay the contract holder
 
17 pursuant to the provisions of the service contract.
 
18      §    -9  Applicability of premium taxes.  Service contract
 
19 provider fees shall not be subject to premium taxes.  Contractual
 
20 liability insurance policies shall be subject to premium taxes.
 
21      §    -10  Prohibited acts.  (a)  No provider shall use in
 
22 its name, the words insurance, casualty, surety, mutual, or any
 
23 other words descriptive of the insurance, casualty, or surety
 

 
Page 14                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 business, or a name deceptively similar to the name or
 
 2 description of any insurance or surety corporation, or to the
 
 3 name of any other provider; provided that the word "guaranty" or
 
 4 similar word may be used by a provider.  This section shall not
 
 5 apply to a provider using any language prohibited by this section
 
 6 in its name prior to [the effective date of this Act].  If such
 
 7 provider continues to use the prohibited language in its name
 
 8 after [the effective date of this Act], the provider shall
 
 9 include in its service contracts a statement substantially
 
10 similar to the following:
 
11      This agreement is not an insurance contract.
 
12      (b)  A provider or its representative shall not in its
 
13 service contracts or literature make, permit, or cause to be
 
14 made, any false or misleading statement, or deliberately omit any
 
15 material statement that would be considered misleading if
 
16 omitted.
 
17      (c)  No person shall condition a loan or the sale of any
 
18 property on the purchase of a service contract.
 
19      §    -11  Rules.  The commissioner may adopt rules pursuant
 
20 to chapter 91 to implement this chapter.
 
21      §    -12  Enforcement.(a)  The commissioner may take any
 
22 action necessary or appropriate to enforce this chapter, and the
 
23 rules adopted and orders issued hereunder.  The commissioner may
 

 
Page 15                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 conduct investigations and examinations of providers,
 
 2 administrators, insurers, or other persons.  If a provider has
 
 3 violated any provision of this chapter or rules or orders under
 
 4 this chapter, the commissioner may issue an order:
 
 5      (1)  Requiring a person to cease and desist from violating
 
 6           any provisions of this chapter or rules or orders under
 
 7           this chapter;
 
 8      (2)  Prohibiting a person from selling or offering for sale
 
 9           service contracts in violation of this chapter; or
 
10      (3)  Imposing a civil penalty on a person or any combination
 
11           of the foregoing, as applicable.
 
12      (b)  A person aggrieved by an order under this section may
 
13 request a hearing before the commissioner, conducted subject to
 
14 chapter 91.  The hearing request shall be filed with the
 
15 commissioner within twenty days of the effective date of the
 
16 commissioner's order.  Upon filing of a hearing request, the
 
17 order shall be suspended from its effective date, until
 
18 completion of the hearing and final decision of the commissioner.
 
19 At the hearing, the commissioner shall have the burden of proof
 
20 to show that the order is justified.
 
21      (c)  The commissioner may bring an action in any court of
 
22 competent jurisdiction, for an injunction or other appropriate
 
23 relief to remedy threatened or existing violations of this
 

 
Page 16                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 chapter or of the commissioner's orders or rules.  An action
 
 2 filed under this section may also seek restitution on behalf of
 
 3 persons aggrieved by a violation of this chapter or orders or
 
 4 rules of the commissioner.
 
 5      (e)  Violations of this chapter or orders or rules of the
 
 6 commissioner shall be considered unfair or deceptive acts or
 
 7 practices in the conduct of trade or commerce under section 480-
 
 8 2."  SECTION 3.  Section 431:1-209, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "§431:1-209  General casualty insurance defined.  General
 
11 casualty insurance includes vehicle insurance as defined in
 
12 section 431:1-208, disability insurance defined in section
 
13 431:1-205 and in addition is insurance:
 
14      (1)  Against legal liability for the death, injury or
 
15           disability of any human being, or from damage to
 
16           property.
 
17      (2)  Of medical, hospital, surgical, and funeral benefits to
 
18           persons injured, irrespective of legal liability of the
 
19           insured, when issued with or supplemental to insurance
 
20           against legal liability for the death, injury or
 
21           disability of human beings.
 
22      (3)  Of the obligation accepted by, imposed upon, or assumed
 
23           by employers under law for death, disablement or injury
 
24           to employees.
 

 
Page 17                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (4)  Against loss or damage by burglary, theft, larceny,
 
 2           robbery, forgery, fraud, vandalism, malicious mischief,
 
 3           confiscation, or wrongful conversion, disposal or
 
 4           concealment, or from any attempt of any of the
 
 5           foregoing; also insurance against loss or damage to
 
 6           moneys, coins, bullion, securities, notes, drafts,
 
 7           acceptances, or any other valuable papers or documents,
 
 8           resulting from any cause, except while in the mail.
 
 9      (5)  Upon personal effects of individuals, by an all-risk
 
10           type of policy commonly known as the personal property
 
11           floater.
 
12      (6)  Against loss or damage to glass and its appurtenances
 
13           resulting from any cause.
 
14      (7)  Against any liability and loss or damage to property
 
15           resulting from accidents to or explosions of boilers,
 
16           pipes, pressure containers, machinery, or apparatus.
 
17      (8)  Against loss of or damage to any property of the
 
18           insured resulting from the ownership, maintenance or
 
19           use of elevators, except loss or damage by fire.
 
20      (9)  Against loss or damage to any property caused by the
 
21           breakage or leakage of sprinklers, water pipes or
 
22           containers, or by water entering through leaks or
 
23           openings in buildings.
 

 
Page 18                                                    2352
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 1     (10)  Against loss or damage resulting from failure of
 
 2           debtors to pay their obligations to the insured (credit
 
 3           insurance).
 
 4     (11)  Against loss of or damage to any domesticated or wild
 
 5           animal resulting from any cause (livestock insurance).
 
 6     (12)  Against loss of or damage to any property of the
 
 7           insured resulting from collision of any other object
 
 8           with such property, but not including collision to or
 
 9           by vessels, craft, piers, or other instrumentalities of
 
10           ocean or inland navigation (collision insurance).
 
11     (13)  Against legal liability of the insured, and against
 
12           loss, damage or expense incident to a claim of such
 
13           liability, and including any obligation of the insured
 
14           to pay medical, hospital, surgical, and funeral
 
15           benefits to injured persons, irrespective of legal
 
16           liability of the insured, arising out of the death or
 
17           injury of any person, or arising out of injury to the
 
18           economic interest of any person as the result of
 
19           negligence in rendering expert, fiduciary or
 
20           professional service (malpractice insurance).
 
21     (14)  Against any contract of warranty or guaranty which
 
22           promises service maintenance, parts replacement,
 
23           repair, money, or any other indemnity in the event of
 

 
Page 19                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           loss of or damage to a motor vehicle or any part
 
 2           thereof from any cause, including loss of or damage to
 
 3           or loss of use of the motor vehicle by reason of
 
 4           depreciation, deterioration, wear and tear, use,
 
 5           obsolescence, or breakage if made by a warrantor or
 
 6           guarantor who or which as such is doing an insurance
 
 7           business[.
 
 8                The making of a contract covering only defects in
 
 9           material and work in exchange for a separately stated
 
10           charge where it is incidental to the business of
 
11           selling or leasing motor vehicles, shall not be deemed
 
12           insurance; provided the maker of the contract has an
 
13           insurance policy, with an insurer as defined in section
 
14           431:1-202, providing coverage for the making of those
 
15           contracts.  The policy shall assume the legal liability
 
16           created by each contract or, alternatively, the
 
17           ultimate legal liability of all contracts made by the
 
18           issuer.  If the maker of the contract is unable to
 
19           perform the duties imposed by the contract, the
 
20           purchaser of the contract then shall be considered a
 
21           policyholder of the insurer.  The policy shall include
 
22           a loss payee endorsement that provides coverage to any
 
23           lending institution as its interest may appear.  In
 

 
Page 20                                                    2352
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 1           addition, the contract conspicuously shall state the
 
 2           name and address of the licensed underwriting insurer
 
 3           and contain a statement that the policyholder shall be
 
 4           entitled to make a direct claim against the insurer
 
 5           upon the failure of the issuer to pay any claim within
 
 6           sixty days after proof of loss has been filed with the
 
 7           issuer.  The requirement that the maker of the contract
 
 8           have an insurance policy with an insurer shall not
 
 9           apply if the maker is a manufacturer, distributor or
 
10           importer of automobiles.]; provided that service
 
11           contracts as defined in chapter     and which meet the
 
12           requirements of chapter    , shall not be subject to
 
13           chapter 431.
 
14                The doing or proposing to do any business in
 
15           substance equivalent to the business described in this
 
16           section in a manner designed to evade the provisions of
 
17           this section is the doing of an insurance business.
 
18     (15)] (14)  Against any other kind of loss, damage or
 
19           liability properly the subject of insurance and not
 
20           within any other class or classes of insurance as
 
21           defined in section 431:1-204 to section 431:1-211, if
 
22           such insurance is not contrary to law or public
 
23           policy."
 

 
Page 21                                                    2352
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 4.  Section 431:7-101, Hawaii Revised Statutes, is
 
 2 amended by amending subsections (a) and (b) to read as follows:
 
 3      "(a)  The commissioner shall collect in advance the
 
 4 following fees:
 
 5      (1)  Certificate of authority:  Issuance................$900
 
 6      (2)  Organization of domestic insurers and affiliated
 
 7           corporations:
 
 8           (A)  Application and all other papers required for
 
 9                issuance of solicitation permit, filing.....$1,500
 
10           (B)  Issuance of solicitation permit...............$150
 
11      (3)  General agent's license:
 
12           (A)  Issuance, regular license......................$75
 
13           (B)  Issuance, temporary license....................$75
 
14      (4)  Subagent's license:
 
15           (A)  Issuance, regular license......................$75
 
16           (B)  Issuance, temporary license....................$75
 
17      (5)  Nonresident agent's or broker's license:
 
18           Issuance............................................$60
 
19      (6)  Solicitor's license: Issuance.......................$60
 
20      (7)  Independent adjuster's license: Issuance............$60
 
21      (8)  Public adjuster's license: Issuance.................$60
 
22      (9)  Workers' compensation claims adjuster's limited
 
23           license: Issuance...................................$60
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1     (10)  Limited license issued pursuant to section
 
 2           431:9-214(c): Issuance..............................$60
 
 3     (11)  Managing general agent's license:
 
 4           Issuance............................................$75
 
 5     (12)  Reinsurance intermediary's license:
 
 6           Issuance............................................$75
 
 7     (13)  Surplus line broker's license: Issuance............$150
 
 8     (14)  Service contract provider's registration:
 
 9           Issuance...........................................$   
 
10    [(14)] (15) Examination for license:  For each examination, a
 
11           fee to be established by the commissioner.
 
12      (b)  The fees for services of the department of commerce and
 
13 consumer affairs subsequent to the issuance of a certificate of
 
14 authority or a license are as follows:
 
15      (1)  $600 per year for all services (including extension of
 
16           the certificate of authority) for an authorized
 
17           insurer;
 
18      (2)  $75 per year for all services (including extension of
 
19           the license) for a regularly licensed general agent;
 
20      (3)  $75 per year for all services (including extension of
 
21           the license) for a regularly licensed subagent;
 
22      (4)  $45 per year for all services (including extension of
 
23           the license) for a regularly licensed nonresident agent
 
24           or broker;
 

 
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 1      (5)  $30 per year for all services (including extension of
 
 2           the license) for a regularly licensed solicitor;
 
 3      (6)  $45 per year for all services (including extension of
 
 4           the license) for a regularly licensed independent
 
 5           adjuster;
 
 6      (7)  $45 per year for all services (including extension of
 
 7           the license) for a regularly licensed public adjuster;
 
 8      (8)  $45 per year for all services (including extension of
 
 9           the license) for a regularly limited licensed workers'
 
10           compensation claims adjuster;
 
11      (9)  $45 per year for all services (including extension of
 
12           the license) for a limited license issued pursuant to
 
13           section 431:9-214(c);
 
14     (10)  $75 per year for all services (including extension of
 
15           the license) for a regularly licensed managing general
 
16           agent;
 
17     (11)  $75 per year for all services (including extension of
 
18           the license) for a regularly licensed reinsurance
 
19           intermediary;
 
20     (12)  $45 per year for all services (including extension of
 
21           the license) for a licensed surplus line broker; [and]
 
22     (13)  $   per year for all services (including renewal of
 
23           registration) for a service contract provider; and
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1    [(13)] (14) The services referred to in paragraphs (1) to
 
 2           [(12)] (13) shall not include services in connection
 
 3           with examinations, investigations, hearings, appeals,
 
 4           and deposits with a depository other than the
 
 5           department of commerce and consumer affairs."
 
 6      SECTION 5.  If any provision of this Act, or the application
 
 7 of the provision to any person or circumstances, shall be held
 
 8 invalid, the remainder of the Act, and the application of the
 
 9 provision to person or circumstances other than those as to which
 
10 it is held invalid, shall not be affected.
 
11      SECTION 6.  In codifying this Act, the revisor of statutes
 
12 shall replace the text within brackets in section 2 of this Act,
 
13 with the effective date of this Act, and shall remove the
 
14 brackets.
 
15      SECTION 7.  This Act shall not apply to service contracts or
 
16 contractual liability insurance policies effective prior to
 
17 January 1, 2001, or to the activities of service contract
 
18 providers, administrators, sellers, or contractual liability
 
19 insurance policy insurers prior to January 1, 2001.  The failure
 
20 of a provider or other person to comply with this Act or
 
21 otherwise to administer a service contract plan, in the manner
 
22 required by this Act prior to January 1, 2001, shall not be
 
23 admissible in any court, arbitration, or alternative dispute
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 resolution proceeding, or otherwise used to prove that the action
 
 2 of any person or the service contract was unlawful or otherwise
 
 3 improper.
 
 4      SECTION 8.  Statutory material to be repealed is bracketed.
 
 5 New statutory material is underscored.
 
 6      SECTION 9.  The revisor of the Hawaii Revised Statutes shall
 
 7 insert the appropriate number designating the service contract
 
 8 act in place of the blank space in section three of this act
 
 9 amending section 431:1-209, Hawaii Revised Statutes.
 
10      SECTION 10.  This Act shall take effect on                .