STAND. COM. REP. NO.  1083-08

Honolulu, Hawaii

                , 2008

RE:   S.B. No. 3021

      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 Committee on Health, to which was referred S.B. No. 3021, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO VIATICAL SETTLEMENTS,"

begs leave to report as follows:

     The purpose of this measure is to prohibit any person from operating as a viatical settlement provider or viatical settlement broker without being licensed by the Insurance Commissioner.

     Furthermore, among other things, this measure prohibits any person from using viatical settlement contracts and providing disclosure statements unless the contracts and statements are filed with and approved by the Insurance Commissioner.  Additionally, this measure requires viatical settlement providers and viatical settlement brokers to make certain disclosures to both the life insurance policy owner who wishes to sell the policy as well as the owner's life insurer.

     Your Committee received testimony in support of this measure from the Insurance Division of the Department of Commerce and Consumer Affairs, the National Association of Insurance and Financial Advisors, and the American Council of Life Insurers.  Testimony in support of the intent of the measure, with reservations, was received from the Life Settlements Institute.

     Your Committee finds that a viatical settlement is the sale of a life insurance policy by the policy owner for an immediate cash benefit.  It is a tool that typically can provide the policy owner who sells the policy with more funds that could have been realized if the policy had been surrendered to the insurer.  The transactions usually involve terminally or chronically ill individuals (the viator) who want to sell their insurance policy to a third party (the secondary market) in return for a portion of the death benefit.  This measure is based upon the Viatical Settlements Model Act of the National Association of Insurance Commissioners, and will protect policy owners, particularly seniors or the terminally or chronically ill, who may be interested in selling their life insurance policies.

     Your Committee has amended this measure by changing the effective date to January 1, 2050 in order to promote continued discussion of the matter.

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3021, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3021, S.D. 1, H.D. 1, and be referred to the Committees on Consumer Protection & Commerce and Judiciary.

Respectfully submitted on behalf of the members of the Committee on Health,

____________________________

JOSHUA B. GREEN, M.D., Chair