STAND. COM. REP. NO. 2150

Honolulu, Hawaii

RE: S.B. No. 2493

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2493 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

The purpose and intent of this measure is to delay the implementation of the producer licensing requirements amended by Act 152, Session Laws of Hawaii 2017, until July 1, 2021.

Your Committee received testimony in support of this measure from the Hawaii Insurers Council and National Association of Insurance and Financial Advisors – Hawaii. Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs.

Your Committee finds that, among other things, Act 152, Session Laws of Hawaii 2017 (Act 152), conforms the State's producer licensing requirements to the National Association of Insurance Commissioners' Producer Licensing Model Act by eliminating producer-to-producer appointments. Although Hawaii is the only state in the country with producer-to-producer appointments, the repeal of this appointment process is a major change in the way insurance agents, also known as producers, are and have been contracted, as it means that every producer contract must be re-executed between a producer and an insurance company. According to testimony received by your Committee, for most active producers, this may not present an issue, but for producers who are not active, insurance companies will have to pursue them to execute a new contract. This measure delays the implementation requirements for producer licensing required by Act 152, which will provide insurance companies with ample time to initiate the new producer appointments. However, your Committee notes that during discussions before your Committee, interested industry stakeholders indicated a revised effective date for these requirements was acceptable.

Accordingly, your Committee has amended this measure by:

(1) Delaying the implementation of the producer licensing requirements until January 1, 2020, rather than July 1, 2021; and

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

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2493, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2493, S.D. 1, and be referred to your Committee on Ways and Means.

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

________________________________

ROSALYN H. BAKER, Chair