Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 1068 entitled:

begs leave to report as follows:

The purpose of this measure is to maintain the State's oversight of insurance agent and broker licensing.

The following parties submitted testimony in support of the measure, but also proposing amendments to or expressing concerns about the measure: Insurance Commissioner, State Farm Insurance Companies, American Council of Life Insurers, National Association of Insurance and Financial Advisors, Hawaii Independent Insurance Agents Association, and National Association of Independent Insurers. An individual testified in opposition to the measure. The Office of Information Practices submitted comments on the measure.

The Financial Services Modernization Act of 1999, more commonly known as the Gramm-Leach-Bliley Act (GLBA), requires the majority of the states to adopt uniform or reciprocal licensing laws for insurance producers by November 12, 2002. A failure by the states to adopt uniform laws triggers the establishment of the National Association of Registered Agents and Brokers', a federal licensing authority that would assume licensing oversight from the states until the entity's dissolution by Congress.

Your Committee find that it is in the best interests of consumers that the State retain licensing oversight of insurance agents and brokers. Therefore, in response to the GLBA mandate, this measure adopts the National Association of Insurance Commissioners' Producer Licensing Model Act. Adoption of the model legislation will improve the efficiency and reduce the costs of issuing and renewing insurance producer licenses.

Your Committee finds that although there is general support for the adoption of the model Act, concerns have been raised about this measure, including those regarding the scope of the licensure requirement and the commissioner's authority to develop uniform procedures consistent with a national centralized licensing system.

Your Committee further finds that there may be some latitude to address these concerns within the framework of this measure without affecting the State's substantial compliance with the GLBA. Therefore, in order to facilitate further discussion on these issues, your Committee has amended this measure by inserting an effective date of July 1, 2050.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1068, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1068, S.D. 1, and be referred to the Committee on Ways and Means.