STAND. COM. REP. NO. 844

Honolulu, Hawaii

RE: S.B. No. 826

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 826 entitled:

"A BILL FOR AN ACT RELATING TO PRIVACY NOTICE FOR INSURANCE,"

begs leave to report as follows:

The purpose and intent of this measure is to provide insurers with an exemption from the requirement of providing all of its customers with annual privacy notices, under certain circumstances.

Your Committee received testimony in support of this measure from the American Council of Life Insurers, American Property Casualty Insurance Association, Kaiser Permanente Hawaii, and Hawaii Medical Service Association. Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs and State Farm Mutual Automobile Insurance Company.

Your Committee finds that existing law requires an insurer to send annual privacy notice updates to all of its customers in accordance with the federal Gramm-Leach-Bliley Act (GLBA). In 2015, President Obama signed the Fixing America's Surface Transportation Act (FAST Act), which included amendments to the privacy provisions of the GLBA and eliminated the costly and time consuming requirement of redundant annual privacy notices under certain conditions. So far, at least thirty-two states have adopted provisions of the FAST Act to allow insurers relief from the annual privacy notice requirement. This measure would enact provisions of the FAST Act to remove the annual requirement if an insurer meets certain conditions. However, your Committee does acknowledge the testimony received from the Department of Commerce and Consumer Affairs, indicating that there may be certain situations where an insurer, after an initial notice, may never have to send its customers a subsequent privacy notice.

Your Committee has amended this measure by:

(1) Specifying that insurers are allowed to provide a privacy statement to customers at least once every three years rather than annually, under certain circumstances;

(2) Inserting an effective date of July 1, 2050, to encourage further discussion; 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, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 826, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 826, S.D. 1, and be placed on the calendar for Third Reading.

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

________________________________

ROSALYN H. BAKER, Chair