REPORT TITLE:
Liability Insurance


DESCRIPTION:
Requires insurance commissioner to study feasibility of requiring
real estate professionals to maintain liability insurance in
exchange for exclusion from joint and several liability.
Requires insurance commissioner to collect tort claim data.
Allows insurance commissioner to adjust rates. [SD1]

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE. 


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The insurance commissioner shall study the
 
 2 feasibility of setting mandatory minimum levels of liability
 
 3 insurance to be carried by all licensed real estate agents and
 
 4 brokers, and at the same time abrogating joint and several
 
 5 liability for all licensed real estate agents and brokers who
 
 6 carry the mandatory minimum level of liability insurance.  The
 
 7 commissioner shall consult with the Real Estate Commission, the
 
 8 Board of Realtors, the Hawaii Association of Realtors, licensed
 
 9 real estate agents and brokers, attorneys, insurers, and other
 
10 parties the commissioner deems appropriate.
 
11      In studying the feasibility of setting minimum insurance
 
12 levels in conjunction with the abrogation of joint and several
 
13 liability for those who carry the required insurance, the
 
14 commissioner shall consider:
 
15      (1)  Appropriate minimum levels of liability insurance to
 
16           provide adequate protection to potential claimants;
 
17      (2)  The cost of insurance required for compliance;
 
18      (3)  The anticipated level of compliance;
 
19      (4)  The level of interest among real estate brokers and
 

 
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 1           agents in adopting and implementing a mandatory minimum
 
 2           level of liability insurance in conjunction with the
 
 3           abrogation of joint and several liability for those who
 
 4           carry the required insurance;
 
 5      (5)  Enforcement procedures and the cost of enforcement;
 
 6      (6)  Whether and how to fund client losses due to awards
 
 7           against agents or brokers who do not maintain the
 
 8           required liability insurance or awards that are greater
 
 9           than the policy limits of liability insurance;
 
10      (7)  Whether the benefit of protection from potential joint
 
11           and several liability justifies the cost of mandatory
 
12           minimum liability insurance;
 
13      (8)  The administrative costs of developing, implementing,
 
14           and regulating a mandatory insurance program;
 
15      (9)  The economic impact of a mandatory insurance program on
 
16           real estate agents and brokers and on the industry as a
 
17           whole;
 
18     (10)  Other factors the commissioner deems relevant.
 
19      The commissioner shall submit to the legislature a report of
 
20 its findings and recommendations no later than twenty days prior
 
21 to the convening of the regular session of 2000.
 
22      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
23 by adding a new section to be appropriately designated and to
 

 
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 1 read as follows:
 
 2      "431-    Reporting of claims data.  (a)  The commissioner
 
 3 shall collect from insurers, data relating to the nature,
 
 4 frequency, and payment of tort claims, including claims relating
 
 5 to personal injuries, death, professional errors and omissions,
 
 6 property damage, and negligence.  The information collected shall
 
 7 include data as to potential tort claims whether or not a
 
 8 complaint was actually filed.  The information collected may
 
 9 include the legal and factual bases for claims and defenses, the
 
10 procedural history of cases or alternative dispute resolution
 
11 proceedings, the ultimate disposition of cases, factors
 
12 influencing a decision to settle a claim, the perceived fairness
 
13 of the claim's outcome, and the perceived impact of the claim on
 
14 the insured.  The commissioner shall submit an annual report of
 
15 the data collected to the legislature twenty days prior to the
 
16 convening of each regular session.
 
17      (b)  Each insurer shall annually report data relating to the
 
18 nature, frequency, and payment of tort claims as requested by the
 
19 commissioner under this section.  Data provided under this
 
20 section shall not include identifying information regarding
 
21 persons or parties involved in claims, such as names, ages,
 
22 addresses, phone numbers, social security numbers, insurance
 
23 policy or membership numbers, and similar personal information.
 

 
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 1      (c)  Except as provided in subsection (d), data provided by
 
 2 insurers under this section may include privileged information,
 
 3 including attorney-client communications and claims handling
 
 4 information.  Information for which a claim of privilege may be
 
 5 or has been asserted shall be confidential and shall not be
 
 6 revealed in any public release, report, or publication.
 
 7      (d)  An insurer may require, as part of a policy, that its
 
 8 insureds provide it with information relating to a tort claim as
 
 9 to which a claim has been made under the policy, as needed to
 
10 comply with this section; provided that an insurer shall not
 
11 collect from any insured information for which a claim of
 
12 privilege may be or has been asserted if the information relates
 
13 to a tort claim for which there is a potential or actual dispute
 
14 as to coverage between the insurer and the insured.  For the
 
15 purpose of this subsection, there is a potential dispute as to
 
16 coverage of a claim which an insurer is defending subject to a
 
17 reservation of rights."
 
18      SECTION 3.  Section 431:14-103.3, Hawaii Revised Statutes,
 
19 is amended to read as follows:
 
20      "[[]431:14-103.3  Rate adjustment mandates.[]](a)  Except
 
21 as otherwise provided by law, the commissioner may mandate
 
22 insurers to submit new filings for any type of insurance under
 
23 section 431:14-102 when the commissioner has actuarially sound
 

 
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 1 information that current rates may be excessive, inadequate, or
 
 2 unfairly discriminatory.
 
 3      (b)  Insurers shall submit the new rate filings within one
 
 4 hundred twenty days of the commissioner's mandate.
 
 5      (c)  The new rate filings shall be subject to the rate
 
 6 filing requirements under section 431:14-104.
 
 7      (d)  The commissioner, on an annual basis, may reduce rates
 
 8 and adjust rates prospectively for any class or type of insurance
 
 9 for any insurer or group of insurers, if rates are excessive,
 
10 inadequate, or unfairly discriminatory.
 
11      (e)  An affected party that objects to a rate adjustment
 
12 pursuant to subsection (d) shall be entitled to a public hearing
 
13 under chapter 91, at which all affected and interested parties
 
14 shall have an opportunity to examine, comment, and present
 
15 testimony on the impact and application of the proposed or
 
16 revised rates."
 
17      SECTION 4.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 5.  This Act shall take effect upon its approval.