Report Title:

Insurance Licensees; Mortgage Brokering and Soliciting


Authorizes sanctions against insurance licensees who negotiate mortgage loans without complying with laws regulating mortgage brokers and solicitors.


S.B. NO.












SECTION 1. Section 431:9-235, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The commissioner may suspend, revoke, or refuse to extend any license issued under this article for any cause specified in any other provision of this article, or for any of the following causes:

(1) For any cause for which issuance of the license could have been refused had it then existed and been known to the commissioner;

(2) If the licensee wilfully violates or knowingly participates in the violation of any provision of this code;

(3) If the licensee has obtained or attempted to obtain any such license through wilful misrepresentation or fraud, or has failed to pass any examination required by section 431:9-206;

(4) If the licensee has misappropriated, or converted to the licensee's own use, or has illegally withheld moneys required to be held in a fiduciary capacity;

(5) If the licensee has, with intent to deceive, materially misrepresented the terms or effect of any insurance contract; or has engaged or is about to engage in any fraudulent transaction;

(6) If the licensee has been guilty of any unfair practice or fraud as defined in article 13;

(7) If in the conduct of the licensee's affairs under the license, the licensee has shown oneself to be a source of injury and loss to the public; [or]

(8) If the licensee has dealt with, or attempted to deal with, insurance or to exercise powers relative to insurance outside the scope of the licensee's licenses[.]; or

(9) If the licensee makes, negotiates, acquires, or offers to make, negotiate, or acquire a mortgage loan on behalf of a borrower seeking a mortgage loan and:

(A) Fails to comply with section 454-3.1; or

(B) Commits any of the acts prohibited under section 454-4(a)."

SECTION 2. Section 431:9A-112, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The commissioner may deny, place on probation, suspend, revoke, or refuse to issue or renew an insurance producer's license and may levy a civil penalty in accordance with articles 2 and 3, or any combination of these actions, for any of the following causes:

(1) Providing incorrect, misleading, incomplete, or materially untrue information in the license application;

(2) Violating any law, or violating any rule, subpoena, or order of the commissioner or of another state's commissioner;

(3) Obtaining or attempting to obtain a license through misrepresentation or fraud;

(4) Improperly withholding, misappropriating, or converting any moneys or properties received in the course of doing business;

(5) Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;

(6) Having been convicted of a felony;

(7) Having admitted to or been found to have committed any insurance unfair trade practice or fraud;

(8) Using fraudulent, coercive, or dishonest practice or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this State or elsewhere;

(9) Having an insurance producer license or its equivalent denied, placed on probation, suspended, or revoked in any other state, province, district, or territory;

(10) Forging another's name on an application or on any document related to a transaction;

(11) Improperly using notes or any other reference material while taking an examination for an insurance license;

(12) Accepting insurance business from a person who is not licensed;

(13) Failing to comply with an administrative or court order imposing a child support obligation;

(14) Failing to pay federal or state income taxes or failing to comply with any administrative or court order directing payment of federal or state income taxes; [or]

(15) Receiving certification from an administering entity pursuant to chapter 436C that the licensee or applicant is in default or breach of any obligation under any student loan, student loan repayment contract, or scholarship contract that financed the licensee's or applicant's education, or has failed to comply with a repayment plan[.]; or

(16) As an exclusive agent under section 454-2, making, negotiating, or acquiring, or offering to make, negotiate, or acquire a mortgage loan on behalf of a borrower seeking a mortgage loan and:

(A) Failing to meet the requirements of section 454-3.1; or

(B) Committing any of the acts prohibited under section 454-4(a)."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.