STAND. COM. REP. NO. 469

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 124

       S.D. 1

 

 

 

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

 

Sir:

 

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 124 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 an insurer to cancel or refuse to renew a policy of motor vehicle insurance if the policy is transferred to a subsidiary or affiliate of the insurer and the premium rate is reduced.

 

     Your Committee received testimony in support of this measure from State Farm Insurance Companies.  Your Committee received testimony in opposition to this measure from the Insurance Commissioner of the Department of Commerce and Consumer Affairs.

 

     Your Committee finds that this measure will exempt insurers from general prohibitions on cancelling or not renewing policies of motor vehicle insurance when the purpose of the cancellation or nonrenewal is to replace the existing policy with a new policy with terms and conditions that are more favorable to the insured.  Your Committee further finds that this exemption preserves the consumer-protection intent of the current law's general prohibition on cancellation or nonrenewal of motor vehicle insurance by allowing cancelations or nonrenewals of motor vehicle policies for the purpose of providing policies with more favorable terms and lower costs.  Finally, your Committee notes that the language of this measure represents consensus between representatives of the motor vehicle insurance industry and the State's regulatory agency.

 

     Your Committee has amended this measure by deleting its contents and replacing them with a new provision to be added to article 10C of chapter 431, Hawaii Revised Statutes, specifying that the exemption to the general prohibition on cancellation or nonrenewal of motor vehicle insurance applies narrowly to cases where a policy is cancelled or not renewed so that it may be replaced by a policy with terms, including cost, that are more favorable to the consumer.

 

     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. 124, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 124, 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,

 

 

 

____________________________

ROSALYN H. BAKER, Chair