STAND. COM. REP. NO.  1261-08

Honolulu, Hawaii

                , 2008

RE:   S.B. No. 2313

      S.D. 1

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Sir:

     Your Committees on Consumer Protection & Commerce and Judiciary, to which was referred S.B. No. 2313, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

beg leave to report as follows:

     The purpose of this bill is to combat insurance fraud by, among other things:

     (1)  Expanding the Insurance Division's ability to investigate and prosecute insurance fraud in all lines of insurance, except workers' compensation insurance;

     (2)  Expanding the scope of the criminal offense of insurance fraud, which currently applies only to the filing of claims, to include the filing of false insurance applications and fraudulent sales of insurance; and

     (3)  Allowing the filing of administrative and civil insurance fraud actions.

     The Department of Commerce and Consumer Affairs, National Association of Insurance and Financial Advisors, Hawaii Association of Health Plans, Property Casualty Insurers Association of America, Hawaii Medical Service Association, and State Farm Insurance Companies testified in support of this bill.  The Department of the Attorney General (AG) and American Council of Life Insurers supported the intent of this measure.  ILWU Local 142 submitted comments.

     Your Committees have amended this bill by:

     (1)  Giving the AG the exclusive discretion to designate special deputy attorneys general representing the State in any criminal, civil, or administrative proceeding on insurance fraud;

     (2)  Changing the definition of the term "knowingly," as used in the provision allowing administrative actions against persons found to have knowingly committed insurance fraud, to have the same meaning as that term is defined in the Penal Code; and

     (3)  Requiring the Insurance Division's Insurance Fraud Investigations Branch to work with insurers and licensees who discover information indicating insurance fraud violations, to determine what information the insurer or licensee must provide to the Branch.

     As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2313, S.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2313, S.D. 1, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Judiciary,

____________________________ TOMMY WATERS, Chair

____________________________ ROBERT N. HERKES, Chair