SB726

SECTION 1. The legislature finds that although it is illegal to drive an uninsured motor vehicle on any public street, road, or highway in the State, nearly eleven per cent of Hawaiʻi motorists are uninsured. This failure to carry motor vehicle insurance causes negative outcomes for both insured and uninsured drivers. Insured drivers face higher costs because their premiums must account for the risk of an accident with an uninsured driver, while uninsured drivers are exposed to severe financial risks stemming from potential liability for accidents, as well as the prospect of fines and vehicle impoundment for simply driving without insurance.

The legislature further finds that at least seventeen states have adopted electronic insurance verification systems that enable officials to better monitor the insurance status of motorists in the state, to promptly notify drivers whose coverage has lapsed of their obligation to carry insurance, and to provide information on uninsured motorists to law enforcement. For example, when Arkansas deployed such a system in 2020, it witnessed a nearly fifty per cent decline in uninsured motorists over the next three years.

Accordingly, the purpose of this Act is to require:

(1) Insurers to notify the insurance commissioner whenever the insurer issues, terminates, or does not renew a motor vehicle insurance policy; and

(2) The insurance commissioner to use the motor vehicle insurance policy information provided by insurers to create an electronic database to provide for instant insurance verification.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding two new sections to article 10C to be appropriately designated and to read as follows:

"§431:10C-A Report of cancellation, termination, or issuance of motor vehicle insurance. (a) Every insurer that issues motor vehicle insurance under this article shall electronically report to the insurance commissioner all existing motor vehicle insurance policies issued for vehicles registered in the State or to policyholders with a Hawaii address, including:

(1) The name and mailing address of the insured;

(2) The policy number;

(3) The effective date of coverage, or the date of a coverage lapse due to cancellation, termination, or nonrenewal of a policy;

(4) The vehicle identification number of each vehicle covered by the policy; and

(5) Any other information required by the commissioner.

The insurer shall notify the insurance commissioner of the issuance of a motor vehicle insurance policy within fifteen days of the effective date of the coverage and of the cancellation, termination, or nonrenewal of any policy previously reported within fifteen days of the cancellation, termination, or nonrenewal of the policy.

(b) The commissioner shall receive or accept all notices of policy cancellation, termination, or nonrenewal, and issuance from insurers as required pursuant to subsection (a). Upon receipt of a notice of the cancellation, termination, or nonrenewal of a policy, the commissioner shall review and analyze the information submitted in conjunction with other information that the commissioner may obtain from insurers, vehicle registration records, and any other agency for the purpose of determining whether any registered vehicle owner has failed to continuously maintain insurance coverage in violation of this article.

(c) If the commissioner determines that a registered vehicle owner has failed to continuously maintain insurance coverage, the commissioner shall contact the registered vehicle owner by mail or electronic mail and require that the inquiries be answered in not less than twenty days, in a satisfactory manner containing information and verification of insurance coverage as the commissioner deems necessary.

(d) In the event that a certificate of self-insurance issued pursuant to section 431:10C-604 is revoked or not renewed, the commissioner shall contact the formerly self‑insured register vehicle owner subject to the same requirements of subsection (c).

(e) Within twenty days of receipt of an insurer's report of cancellation, termination, or nonrenewal, or of receipt of the response from a registered vehicle owner, whichever is later, the commissioner shall give notice by mail or electronic mail to any formerly insured registered vehicle owner informing the owner that a report of cancellation, termination, or nonrenewal has been filed with the State, that there is no record that a subsequent policy has been obtained, and of the penalties for driving a motor vehicle in the State without insurance; provided that the notice shall not be required if the commissioner has determined that the registered vehicle owner is not in violation of section 431:10C-104.

(f) Whenever the commissioner issues a notice pursuant to subsection (e), the commissioner shall also give notice to the department of law enforcement and to the county where the motor vehicle was last registered. The notice shall include all the same information required by subsection (a). The commissioner shall authorize the county to take appropriate action upon receipt of the notice, including but not limited to releasing the information to law enforcement.

§431:10C-B Electronic insurance verification system. (a) The insurance commissioner shall establish and maintain an electronic insurance verification system by which law enforcement officers and court personnel may electronically verify that an insurance policy for a motor vehicle has been issued.

(b) The electronic insurance verification system shall be accessible to authorized personnel of the insurance division by direct inquiry, and to the courts, insurers, law enforcement, and offices of the licensing officials charged with motor vehicle registration and titling responsibilities through authorized personnel of those departments. The system shall also be accessible to insurance companies on a limited basis as required to operate the system.

(c) The electronic insurance verification system shall serve as a repository for the information provided to the commissioner under section 431:10C-A, and shall be accessible to authorized users twenty-four hours per day, seven days per week, except as necessary to perform system maintenance."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $100,000 or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to establish and maintain the electronic insurance verification system under section 431:10C-B, Hawaii Revised Statutes.

The sums appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2025.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	726
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII