STAND. COM. REP. NO. 177

Honolulu, Hawaii

RE:    S.B. No. 1277

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committees on Commerce and Consumer Protection and Judiciary and Labor, to which was referred S.B. No. 1277 entitled:

"A BILL FOR AN ACT RELATING TO CONSUMER PROTECTION,"

beg leave to report as follows:

     The purpose and intent of this measure is to update the laws regulating legal service plans to enable the insurance commissioner to exert more effective oversight of these plans.

     Your Committees received testimony in support of this measure from the Insurance Commissioner of the Department of Commerce and Consumer Affairs.

     Your Committees find that legal service plans have a low rate of compliance with applicable regulatory laws.  Your Committees further find that there is currently no periodic renewal process for legal services plans.  Therefore, the Insurance Commissioner has no way to track the continued existence and legitimate operations of legal services plans within the State, or to effectively enforce compliance with the applicable laws.  Your Committees also find that the provisions of this measure will allow the Insurance Commissioner to operate with more certainty and efficiency in exerting oversight of legal service plans in this State.

     Your Committees have amended this measure by:

     (1)  Adding a provision to require notice to the Insurance Commissioner of a plan's intention to cease operations and of provisions made for the disposition of accumulated funds; and

     (2)  Making technical, nonsubstantive changes for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Judiciary and Labor that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1277, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1277, S.D. 1, and be referred to the Committee on Ways and Means.

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

____________________________ CLAYTON HEE, Chair

____________________________ ROSALYN H. BAKER, Chair