Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 598 entitled:

begs leave to report as follows:

The purpose of this bill is to preserve the State's ability to provide greater consumer protection in retail sales of insurance products and annuities by depository institutions.

Testimony in support of this measure was received from the Department of Commerce and Consumer Affairs (DCCA). The American Council of Life Insurers submitted comments.

Your Committee finds that Section 305 of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (GLBA) mandates the Board of Governors of the Federal Reserve (FRB), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Office of Thrift Supervision (OTS) to issue rules (federal rules) that relate to consumer protection in retail sales of insurance products or annuities by depository institutions. GLBA also provides that if the FRB, FDIC, and OCC jointly determine that the federal rules protection is greater than comparable state law protection, then the federal rules provision shall preempt the contrary or inconsistent state provision.

The State's interest in vigilantly protecting Hawaii consumers, and avoiding possible preemption of state law, compel changing the law.

Accordingly, your Committee has amended this bill by adopting DCCA's recommendation to clarify that a bank engaged in insurance sales, as allowed by GLBA, will be subject to the State Insurance Code (chapter 431, HRS).

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 598, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 598, H.D. 1, and be placed on the calendar for Third Reading.