STAND. COM. REP. NO. 497

Honolulu, Hawaii

RE:    S.B. No. 1278

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1278 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose and intent of this measure is to protect insurance consumers, particularly seniors, from abusive practices by adopting model regulations from the National Association of Insurance Commissioners in compliance with the senior investment protection provisions of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

     Your Committee received testimony in support of this measure from the Insurance Commissioner of the Department of Commerce and Consumer Affairs, and the National Association of Insurance and Financial Advisors Hawaii.  Your Committee received testimony in support of the intent of this measure from the American Council of Life Insurers.

     Your Committee finds that adoption of this measure will bring Hawaii's laws into conformity with the requirements of federal law, thereby enabling the Insurance Division of the Department of Commerce and Consumer Affairs to apply for federal grants to fund activities that protect seniors from misleading or fraudulent marketing in the sale of financial products.  Your Committee further finds that there is a real and present need for the protections included in this measure, since the Insurance Division reports the continuing receipt of complaints from consumers, particularly seniors, about abusive or misleading practices in the sale and marketing of annuities.  Finally, your Committee finds that this measure allocates the bulk of the training and compliance responsibilities to insurers, thereby preserving the Insurance Division's current regulatory and oversight functions without requiring new expenditures of State resources.

     Your Committee has amended this measure by:

     (1)  Amending the definition of "annuity" to conform with the language of the National Association of Insurance Commissioners model act;

     (2)  Deferring the implementation date of new requirements for insurers contained in this measure to January 1, 2012, to allow insurers adequate time to comply with this measure; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     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 S.B. No. 1278, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1278, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

ROSALYN H. BAKER, Chair