Honolulu, Hawaii



RE:    S.B. No. 2655

       S.D. 1




Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii




     Your Committees on Economic Development and Technology and Commerce and Consumer Protection, to which was referred S.B. No. 2655 entitled:




beg leave to report as follows:


     The purpose and intent of this measure is to establish provisions for the sale of portable electronics insurance and to require vendors to hold a limited lines license to sell or offer coverage under a policy.


     Your Committees received testimony in support of this measure from Asurion.  Your Committees received comments on this measure from the State Insurance Commissioner.


     Your Committees find that this measure would present the consumer with an alternative to the service contract provider authorized by chapter 481X, Hawaii Revised Statutes, but would not prevent the continued marketing of the service contract providers' current products.  Presently, service contract providers offer similar types of indemnity protections in conjunction with the service contracts and extended warranties.


     Your Committees have considered a number of recommendations from the State Insurance Commissioner, which will clarify this measure while ensuring adequate consumer protection.


     Your Committees have amended this measure accordingly, by:


     (1)  Replacing references to the "director" with the "commissioner";


     (2)  Replacing the specific provisions related to suspension or revocation of license with sanctions for violations, which clarify that the vendor of portable electronics or its employee or authorized representative is subject to sanctions pursuant to chapter 431, Hawaii Revised Statutes, for the violation of any provision of the new chapter;


     (3)  Clarifying that the termination of portable electronics insurance requires the consent of the policyholder and the customer, and requiring that the policyholder and enrolled customers shall be provided at least thirty days' notice before the agreed change becomes effective;


     (4)  Clarifying that initial portable electronics licenses issued shall be valid for not less than twenty-four months and renewals for twenty-four months, requiring each vendor of portable electronics to pay to the Insurance Commissioner a fee of $2,000 for the issuance of the initial portable electronics limited lines license plus a $1,200 per year license fee for the initial or renewal term, and authorizing a pro-rata portion of the license fee to be applied for a partial year of the initial term;


     (5)  Replacing references to "agent" with "vendor"; and


     (6)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


     As affirmed by the records of votes of the members of your Committees on Economic Development and Technology and Commerce and Consumer Protection that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2655, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2655, S.D. 1, and be referred to the Committee on Ways and Means.


Respectfully submitted on behalf of the members of the Committees on Economic Development and Technology and Commerce and Consumer Protection,