STAND. COM. REP. NO. 955

Honolulu, Hawaii

RE:    H.B. No. 262

       H.D. 2

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 262, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE FRAUD,"

begs leave to report as follows:

     The purpose of this measure is to change the name of the Insurance Fraud Investigations Unit to the Insurance Fraud Investigations Branch and to expand its authority to include jurisdiction over all lines of insurance except workers' compensation.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, the American Council of Life Insurance, the National Association of Insurance and Financial Advisors, Hawaii Association of Health Plans, State Farm Insurance, and Hawaii Medical Service Association.  Testimony with comments was received from the Department of the Attorney General and Hawaii Association for Justice.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that under current law, the Insurance Fraud Investigations Unit is empowered to investigate and prosecute only motor vehicle insurance fraud.  Your Committee finds that at the time the Insurance Fraud Investigations Unit was created, it was the intent to expand the Unit's jurisdiction to include all lines of insurance at a later date.  Your Committee notes that the Insurance Commissioner has testified that the Fraud Investigations Unit is not currently seeking additional funding or staff to implement this measure.  Your Committee further finds that insurance fraud is a serious problem that increases costs of insurance premiums for consumers and that this measure is an effective means of combating insurance fraud. 

     Your Committee has amended this measure by:

     (1)  Adding a provision that revises the penal code to clarify that criminal fines and forfeitures for insurance fraud shall be deposited to the Compliance Resolution Fund;

     (2)  Clarifying the mandatory reporting requirements for licensees to facilitate communication with the Insurance Fraud Investigations Branch;

     (3)  Making it effective upon approval; and

     (4)  Making nonsubstantive technical changes for the purposes of clarity and accuracy. 

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 262, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 262, H.D. 2, S.D. 1, and be referred to the Committee on Judiciary and Government Operations.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

____________________________

ROSALYN H. BAKER, Chair