STAND. COM. REP. NO. 298

Honolulu, Hawaii

, 2021

RE: H.B. No. 942

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 942 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

The purpose of this measure is to make various amendments to the State's insurance laws. Specifically, this measure:

(1) Institutes certain consumer protections with regard to public adjusters, by:

(A) Requiring certain contractual terms and disclosures;

(B) Specifying the commissions, fee, or other compensation of public adjusters may charge cannot be unreasonable; and

(C) Specifying that insureds have a right to rescind with certain restrictions;

(2) Imposes the standard of conduct that is applied to other insurers upon limited lines motor vehicle rental company producers, owners of self-service storage facilities, and vendors of portable electronics;

(3) Authorizes the Insurance Commissioner to waive or modify, in whole or part, upon a showing of good cause, any or all fees deposited into the Commissioner's Education and Training Fund and Compliance Resolution Fund;

(4) Mandates the electronic payment of certain taxes and electronic filing of certain reports, and updates the system utilized for electronic filing;

(5) Corrects an inaccuracy by stating that public adjusters and bill reviewers handle funds, not premiums;

(6) Reinstates the right to an administrative hearing and appeal from an order that was inadvertently repealed by Act 279, Session Laws of Hawaii 2019;

(7) Amends the composition and criteria for choosing members of the Hawaii Joint Underwriting Plan Board of Governors;

(8) Clarifies that rewards under wellness programs that meet certain criteria do not constitute a rebate by insurers to insureds;

(9) Deletes the statutory date for extensions of certificates of authority for risk retention groups and authorizes the Insurance Commissioner to establish the dates consistent with the Insurance Commissioner's authority to establish dates for extensions for insurers under the Insurance Code; and

(10) Repeals the $140 penalty imposed on pharmacy benefit managers for failure to renew their registration.

Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, Hawaii Medical Service Association, and one individual.

Your Committee finds that updating the State's insurance laws is necessary for clarity, to provide greater protections to consumers, and to improve the administration and enforcement of regulated entities. This measure will accomplish all of these goals.

Your Committee has amended this measure by:

(1) Amending the composition of the Hawaii Joint Underwriting Plan Board of Governors by:

(A) Reducing the number of members from nationally organized insurers to four; and

(B) Reinstating statutory language requiring two members to be selected by the Insurance Commissioner or nominated by each of the joint underwriting plan classifications;

(2) Changing the effective date to January 1, 2050, to encourage further discussion; and

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

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 942, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 942, H.D. 1, and be referred to your Committee on Finance.

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

____________________________

AARON LING JOHANSON, Chair