Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.C.R. No. 113 entitled:

begs leave to report as follows:

The purpose of this measure is to request reports regarding the effectiveness of the Hawaii Insurance Bureau's fire rating program.

The Department of Commerce and Consumer Affairs testified in support of this measure. The Hawaii Insurance Bureau, Inc., (Bureau) presented comments.

Your Committee finds that, following fires in major American cities in the early 1990s that resulted in billions of dollars in property losses, insurance companies realized the need for information on the fire-loss characteristics of individual communities. As a result, the Bureau's Public Protection Classification (PPC) Program was created to provide insurers with data that would facilitate the establishment of premium rates that fairly reflected the risk of loss in a particular community.

Your Committee finds that insurers are not required to use the Bureau's fire classifications in establishing premium rates, which raises questions as to the effectiveness of the PPC program and its impact on insurance rates. Therefore, this measure requests the Insurance Commissioner, the Hawaii Insurers Council, and the Bureau to provide information to the Legislature relating to the effectiveness of the PPC Program.

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 concurs with the intent and purpose of H.C.R. No. 113, and recommends its adoption.