STAND. COM. REP. NO. 2743

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2563
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 2563 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to require insurers to
provide coverage under a policy notwithstanding the insured's
potential claim for damages against a third party.

     The Insurance Commissioner, Consumer Lawyers of Hawaii,
Hawaii Medical Service Association, State Farm Insurance
Companies, and an individual submitted testimony on the measure.

     This measure prohibits an insurer from refusing to provide
past or future coverage, or otherwise limiting coverage to an
insured on the basis of an insured's potential claim for damages
against a third party, but entitles the insurer to reimbursement
for benefits paid when the insured recovers damages on the third
party claim.  This measure will help to clarify an insurer's
rights and duties and protect consumers' rights to coverage in
cases involving third party claims.

     Upon careful consideration, your Committee has amended this
measure by:

     (1)  Removing from the prohibition an insurer's refusal to
          provide past or future coverage to avoid mandating
          continued future renewals, as opposed to future

 
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                                   STAND. COM. REP. NO. 2743
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          coverage under an existing policy that continues to
          provide coverage until a future expiration date;

     (2)  Exempting workers' compensation insurers, motor vehicle
          insurers, benefit societies, and health maintenance
          organizations from the prohibition since they are
          regulated under other sections of the law;

     (3)  Including an amendment to the tort law that clarifies
          health care entities' subrogation and lien rights where
          an insured has recovered damages from a third party;
          and

     (4)  Making technical, nonsubstantive changes.

     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. 2563, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as
S.B. No. 2563, 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,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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