STAND. COM. REP. NO. 720

Honolulu, Hawaii

RE: S.B. No. 1137

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 1137 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

The purpose and intent of this measure is to require insurers to notify policyholders of rate changes within thirty days of approval by the Insurance Commissioner of a rate change and not less than thirty days before the effective date of the rate change.

Your Committee received testimony in support of this measure from four individuals.

Your Committee received testimony in opposition to this measure from the National Association of Mutual Insurance Companies.

Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs.

Your Committee finds that there is a lack of consistency among insurers providing direct notice to individual policyholders regarding rate changes, leaving many consumers uninformed about adjustments to their insurance coverage that could affect their financial future. Your Committee finds that several states, such as New Jersey and Washington, have implemented regulations requiring insurers to directly notify policyholders of any rate changes within specified time frames of the changes becoming effective. This measure establishes a baseline standard for required information to be disclosed to increase transparency and enhance consumer protection.

Your Committee acknowledges the testimony of the Department of Commerce and Consumer Affairs expressing concerns that this measure may create significant operational challenges for insurers without providing meaningful benefits to policyholders. Insurers typically need time to operationalize the changes once a rate filing is approved by the Insurance Commissioner, which includes updating internal rating systems, testing for accuracy, and ensuring compliance with regulatory requirements. Your Committee also acknowledges the concern that issuing notices before insurers have fully validated rate changes could result in inaccurate or unclear information being communicated to policyholders. Amendments to this measure are therefore necessary to address these concerns.

Accordingly, your Committee has amended this measure by:

(1) Deleting language that would have required the notification to be sent no later than thirty days after the rate filing is approved by the Insurance Commissioner and clarifying that the notification shall be sent at least thirty days before the effective date of the rate change;

(2) Updating section 1 to reflect its amended purpose;

(3) Inserting an effective date of July 1, 2050, to encourage further discussion; and

(4) 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. 1137, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1137, 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,

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JARRETT KEOHOKALOLE, Chair