STAND. COM. REP. NO. 2759

Honolulu, Hawaii

RE: S.B. No. 2277

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 2277, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONTRACTOR PRACTICES,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Prohibit contractors from offering to pay or rebate, or promising to pay or rebate, an insured's property or casualty insurance deductible;

(2) Prohibit contractors from representing or negotiating, or offering or advertising to do so, on behalf of an insured in an insurance claim;

(3) Specify violations are unfair methods of competition and unfair or deceptive acts or practices;

(4) Allow insureds to rescind contracts with the contractors within five business days after the date the contract is executed; and

(5) Require contractors to provide certain forms to an insured, prior to entering into a contract.

Your Committee received testimony in support of this measure from the Hawaii Insurers Council and National Insurance Crime Bureau. Your Committee received testimony in opposition to this measure from the Contractors License Board and Subcontractors Association of Hawaii. Your Committee received comments on this measure from State Farm Mutual Automobile Insurance Company.

Your Committee finds that, after significant weather events, contractors may take advantage of consumers by convincing homeowners to replace their entire roof even in scenarios where the homeowner's roof has sustained minimal or no damage. Your Committee further finds that unscrupulous individuals in these situations may represent themselves to consumers as insurance claims experts who can obtain insurance proceeds to fix a house, even when these individuals are not licensed independent adjusters. If an insured is convinced into signing a contract with the contractor, they could be liable for repairs that are unnecessary or uninsured. This measure seeks to prohibit or remedy these types of actions and prevent consumers from being scammed into entering into deceptive repair contracts.

Your Committee has amended this measure by inserting an effective date of July 30, 2075, to encourage further discussion.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2277, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2277, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Judiciary,

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KARL RHOADS, Chair