STAND. COM. REP. NO. 2508

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2819
                                        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. 2819 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

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

     The Insurance Commissioner, State Farm Insurance Companies,
Hawaii State Association of Insurance and Financial Advisors, and
American Council of Life Insurers submitted testimony on the
measure.

     Your Committee finds that life insurers and their agents are
increasingly using computer generated sales illustrations,
including computer generated graphs and comparison charts, to
sell their products.  Problems with these practices arise when
the illustrations are used to induce buying, rather than to help
consumers better understand the insurance product being marketed.
This measure will facilitate understanding and comparison of
different life insurance products by establishing a regulatory
framework for life insurance policy illustrations that defines
terminology, establishes simplified uniform illustrations
standards, and requires disclosure to consumers.  

     Your Committee further finds that the replacement of life
insurance policies does not generally benefit consumers and that

 
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                                   STAND. COM. REP. NO. 2508
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the complicated nature of replacement transactions increase the
risks of unfair trade practices.  Therefore, this 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.

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

     (1)  Expressly requiring that consumer notices and
          disclosures mandated by this Act be made in writing,
          and that the written notice or disclosure not be
          electronically transmitted to the consumer;

     (2)  Changing the effective date of this Act from "upon its
          approval" to July 1, 2005; and

     (3)  Making technical, nonsubstantive changes for purposes
          of clarity, consistency, and style.

     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. 2819, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 2819, 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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