STAND. COM. REP. NO. 796

Honolulu, Hawaii

RE: S.B. No. 1575

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. 1575 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

The purpose and intent of this measure is to allow authorized insurers in the State to offer building and hurricane damage insurance for condominium buildings at a lesser rate than the building's prior surplus lines insurance policy for the same coverage.

Your Committee received testimony in support of this measure from one individual.

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

Your Committee finds that there are two main classes of property insurance providers operating in the State. There are admitted insurers, who are regulated by the Insurance Division of the Department of Commerce and Consumer Affairs, and surplus lines insurers, who are not subject to the same regulations and commonly provide coverage to properties that carry high risks. Surplus lines insurers are able to charge higher premiums to condominium associations purchasing surplus lines policies because of the lack of other options available to the association. In addition to paying extra for coverage, surplus lines customers do not enjoy the same protections afforded to customers of admitted insurers that are overseen and held accountable by the state regulatory agency. This measure will address this issue by incentivizing admitted property insurers in the State to provide the same coverage for certain types of risks that were previously only taken on by surplus lines insurers, such as hurricane insurance, at a lower cost to the customer.

Your Committee has amended this measure by inserting an effective date of July 1, 2050, to encourage further discussion.

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. 1575, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1575, 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