CONFERENCE COMMITTEE REPORT NO.79

                            Honolulu, Hawaii
                                            , 2000

                            RE:   S.B. No. 2819
                                  S.D. 1
                                  H.D. 1
                                  C.D. 1




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

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

Sir:

     Your Committee on Conference on the disagreeing vote of the
Senate to the amendments proposed by the House of Representatives
in S.B. No. 2819, S.D. 1, H.D. 1, entitled:  

     "A BILL FOR AN ACT RELATING TO INSURANCE," 

having met, and after full and free discussion, has agreed to
recommend and does recommend to the respective Houses the final
passage of this bill in an amended form.

     The purpose of this measure is to establish standards
governing life insurance policy illustrations and the replacement
of life insurance and annuities.   

     This measure addresses the problems that arise when computer
generated sales illustrations, including computer generated
graphs and comparison charts, are used to induce the purchase of
an insurance product, rather than to help consumers better
understand the product.  By establishing a regulatory framework
for life insurance policy illustrations that defines terminology,
establishes simplified uniform illustrations standards, and
requires disclosure to consumers, this measure will facilitate

 
a                                                     SB2819 CD1
                            CONFERENCE COMMITTEE REPORT NO.79
                            Page 2



the understanding and comparison of different life insurance
products.  The measure also regulates the replacement of life
insurance policies and annuities by establishing the duties of
producers and existing and replacing insurers, and requirements
for the use of direct response solicitations.

     Your Committee on Conference has amended section 3 of the
measure that establishes a new part governing the replacement of
life insurance policies and annuities by:

     (1)  Expanding and retitling the exemptions section to
          include the purposes of the new part and placing it in
          the beginning of the part; 

     (2)  Establishing that the purposes of the part are to
          regulate the replacement of existing life insurance and
          annuities by insurers and producers, and establish
          minimum standards of conduct in replacement or financed
          purchase transactions;

     (3)  Clarifying the type of group meetings held by insurance
          producers that are excluded from the meaning of direct
          solicitation for purposes of establishing exemptions
          from the part;

     (4)  Establishing additional exemptions from the part for
          group life insurance used to fund prearranged funeral
          contracts, immediate annuities purchased with proceeds
          from an existing contract, and structured settlements; 

     (5)  Clarifying the types of transactions that constitute
          prima facie evidence of a policyholder's intent to
          purchase, within the definition of "financed purchase;

     (6)  Deleting the definitions for "in force illustration"
          and "nonguaranteed elements";

     (7)  Clarifying that the notice required of producers
          initiating replacement transactions need not be
          approved by the insurance commissioner if the notice is
          being amended merely to omit inapplicable references;

     (8)  Clarifying the duties of insurers that use producers in
          regards to supervising a producer's compliance with the
          law, having the capacity to monitor a producer,
          recordkeeping, and other duties;

     (9)  Clarifying the duties of replacing insurers that use
          producers as they relate to recordkeeping, refund

a                                                     SB2819 CD1
                            CONFERENCE COMMITTEE REPORT NO.79
                            Page 3



          notices, and verification of sales materials used by a
          producer; and

    (10)  Clarifying the recordkeeping and notification duties of
          an existing insurer in replacement transactions.

     Additionally, your Committee has advanced the measure's
effective date from July 1, 2050, to July 1, 2001, and made
technical, nonsubstantive amendments for clarity, consistency,
and style. 

     As affirmed by the record of votes of the managers of your
Committee on Conference that is attached to this report, your
Committee on Conference is in accord with the intent and purpose
of S.B. No. 2819, S.D. 1, H.D. 1, as amended herein, and
recommends that it pass Final Reading in the form attached hereto
as S.B. No. 2819, S.D. 1, H.D. 1, C.D. 1.

                                   Respectfully submitted on
                                   behalf of the managers:

  ON THE PART OF THE HOUSE           ON THE PART OF THE SENATE




_____________________________     _______________________________
Rep. RON MENOR                    Sen. BRIAN KANNO
Chair                             Co-Chair



                                  _______________________________
                                  Sen. BRIAN T. TANIGUCHI 
                                  Co-Chair                       

 
a                                                     SB2819 CD1