STAND. COM. REP. NO.994

Honolulu, Hawaii

, 2001

RE: S.B. No. 1068

S.D. 1

H.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred S.B. No. 1068, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PRODUCER LICENSING,"

beg leave to report as follows:

The purpose of this measure is to conform Hawaii's licensing laws to the requirements of the federal Financial Services Modernization Act of 1999, P.L. 106-102, more commonly known as the Gramm-Leach-Bliley Act.

The federal law establishes November 12, 2002, as the date when a majority of the states must have "producer licensing" laws in place that are either uniform or reciprocal to each other. Failure of the states to accomplish this would trigger the formation of the National Association of Registered Agents and Brokers' Licensing Authority to replace state regulatory authority in this area.

This bill adopts the National Association of Insurance Commissioners' Producer Licensing Model Act that was created and approved by that organization in response to the federal mandate.

Your Committees received favorable testimony from the Department of Commerce and Consumer Affairs, First Hawaiian Bank, First Hawaiian Insurance Company, American Council of Life Insurers, Hawaii Independent Insurance Agents Association, and National Association of Insurance and Financial Advisors. State Farm supported the bill with an amendment. The National Association of Independent Insurers commented. Opposition to the bill was submitted by the Hawaii Insurers Council and the Office of Information Practices, which opposed a portion of the bill.

Your Committees find that this bill will provide licensing uniformity that will benefit:

(1) Insurance consumers, by increasing the number of insurance companies available to serve consumers;

(2) Insurance agents or "producers," by allowing them to service clients anywhere in the country;

(3) The State, by allowing Hawaii to retain authority over and centralize licensing regulation; and

(4) The Insurance industry, by replacing the complex and confusing general agent-subagent/solicitor system.

Your Committees have amended the bill by:

(1) Exempting insurance company employees performing ministerial duties from insurance producer licensing requirements;

(2) Amending the definitions of "approved continuing education courses," and "approved course provider";

(3) Deleting an erroneous reference to chapter 432, Hawaii Revised Statutes, with respect to business entity fees;

(4) Repealing several insurance licensing sections in the Insurance Code that are superceded by the provisions of the Producer Licensing Model Act;

(5) Making other conforming amendments to the Insurance Code, by replacing references to the terms "general agent," "agent," "broker," "nonresident broker," "nonresident agent," "subagent," and "solicitor," with the term "producer."

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1068, S.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1068, S.D. 1, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs,

____________________________

ERIC G. HAMAKAWA, Chair

____________________________

KENNETH T. HIRAKI, Chair