HB 2282: Insurance Code; Premium Increase; Adjuster; Independent Bill Reviewer; Producer; Disciplinary Licensing Action; Notice Requirements; Cancellation; Nonrenewal; Purchase Group

A BILL FOR AN ACT

RELATING TO INSURANCE.

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

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10, part II, to be appropriately designated and to read as follows:

     "§431:10-     Explanation of premium increase.  Insurers shall reasonably explain changes in premium upon written request by the policyholder for any premium increase at renewal."

     SECTION 2.  Section 431:9-235, Hawaii Revised Statutes, is amended to read as follows:

     "§431:9-235  [Denial, suspension, revocation of licenses.] Disciplinary licensing actions.  (a)  The commissioner may deny, place on probation, suspend, revoke, or refuse to [extend] issue or renew any license issued under this article and may levy a civil penalty in accordance with section 431:9-238 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 license issued under this article through wilful misrepresentation or fraud, or has failed to pass any examination required by section 431:9-206;

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

     (5)  If the licensee, with intent to deceive, has 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 found to have committed any unfair practice or fraud as defined in article 13;]

     (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 insurance contract;

     (6)  Having been convicted of a felony;

     (7)  Having admitted to or be 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 adjuster or independent bill reviewer 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;

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

    [(7)] (16)  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)] (17)  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.

     (b)  [The license of any partnership or corporation may be suspended, revoked, or refused for any of the causes that relate to any individual designated in the license to exercise its powers.]  The commissioner may act pursuant to subsection (a) by an order; provided that before issuing the order, the commissioner shall notify the applicant or licensee in writing of the commissioner's intent to act under subsection (a).  The applicant or licensee may make written application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice.  The hearing shall be held within thirty days of receipt of the written application and shall be held pursuant to chapter 91.  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering agency.

     (c)  The holder of any license, which has been revoked or suspended, shall surrender the license certificate to the commissioner at the commissioner's request.

     [(d)  The commissioner may suspend, revoke, or refuse to extend any license for any cause specified in this article by an order:

     (1)  Given to the licensee at least fifteen days prior to the order's effective date, subject to the right of the licensee to have a hearing as provided in section 431:2-308.  The license shall be suspended pending the hearing; or

     (2)  Made after a hearing as provided in section 431:2-308.  The effective date of the order shall be ten days after the date the order is given to the licensee.  The order may be appealed to the circuit court of the first judicial circuit of this State as provided in chapter 91.]

     (d)  The commissioner shall retain the authority to enforce the provisions of, and impose any penalty or remedy authorized by, this chapter or chapter 432 or 432D, against any person who is under investigation for or charged with a violation of this chapter or chapter 432 or 432D, even if that person's license or registration has been surrendered or has lapsed by operation of law."

     SECTION 3.  Section 431:9-238, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  In addition to or in lieu of [suspension, revocation, or refusal to extend any license, after a hearing,] an action by the commissioner under section 431:9-235, the commissioner may levy a fine upon the applicant or licensee in an amount [not] of no less than $100 and [not] no more than $10,000."

     SECTION 4.  Section 431:9A-112, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  [If the commissioner takes action] The commissioner may act pursuant to subsection (a)[,] by an order; provided that before issuing the order, the commissioner shall notify the applicant or licensee in writing of the [reason for that action.] commissioner's intent to act under subsection (a).  The applicant or licensee may make written [demand upon] application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice [for a hearing before the commissioner to determine the reasonableness of the commissioner's action].  The hearing shall be held within thirty days of receipt of the written [demand] application and shall be held pursuant to chapter 91[, and following that action,].  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity."

     SECTION 5.  Section 431:10-226.5, Hawaii Revised Statutes, is amended to read as follows:

     "§431:10-226.5  Notice of cancellation or nonrenewal; notice of cancellation or nonrenewal for policies of property insurance.  (a)  Except as provided in subsection (b), in the case of cancellation of a policy, the insurer shall give written notice to the insured [not] no fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the insurer shall give written notice to the insured [not] no fewer than thirty days before the effective date of nonrenewal.  If under this title [24] or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (b)  This subsection shall only apply to policies of insurance on property used for residential purposes, including multi-family residential properties.  In the case of cancellation of a policy, the property insurer shall give written notice to the insured [not] no fewer than twenty days before the effective date of cancellation.  In the case of cancellation of a policy due to nonpayment of premium or material misrepresentation, the property insurer shall give written notice to the insured [not] no fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the property insurer shall give written notice to the insured [not] no fewer than thirty days before the effective date of nonrenewal.  If under this title [24] or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable; provided that the longer period shall be applicable only to the insurer.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (c)  All notices of cancellation or nonrenewal shall clearly state the specific reason or reasons for cancellation or nonrenewal."

     SECTION 6.  Section 431K-7.1, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  If the service fee is not paid on or before [August 16 of the year in which payment is due,] the extension date, a penalty shall be imposed in the amount of fifty per cent of the service fee.  The commissioner shall provide written notice of the delinquency of payment and the imposition of the authorized penalty.  If the service fee and the penalty are not paid within thirty days immediately following the date of the notice of delinquency, the commissioner may revoke the registration of the purchasing group and [may] shall not reinstate the registration until the service fee and the penalty have been paid."

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect upon its approval; provided that sections 1, 2, 3, 4, and 5 shall take effect on January 1, 2027.

Report Title:

Insurance Code; Premium Increase; Adjuster; Independent Bill Reviewer; Producer; Disciplinary Licensing Action; Notice Requirements; Cancellation; Nonrenewal; Purchase Group

Description:

Beginning 1/1/2027, requires insurers to provide explanation of premium increases upon request; clarifies grounds for denial, suspension, and revocation of an adjuster or independent bill reviewer license; clarifies procedures for denying, suspending, and revoking an insurance producer license; and amends the notice requirements for cancellation or nonrenewal of a property insurance policy.  Clarifies the date on which purchase groups are required to pay an annual service fee.  (CD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO INSURANCE.

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

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10, part II, to be appropriately designated and to read as follows:

     "§431:10-     Explanation of premium increase.  Insurers shall reasonably explain changes in premium upon written request by the policyholder for any premium increase at renewal."

     SECTION 2.  Section 431:9-235, Hawaii Revised Statutes, is amended to read as follows:

     "§431:9-235  [Denial, suspension, revocation of licenses.] Disciplinary licensing actions.  (a)  The commissioner may deny, place on probation, suspend, revoke, or refuse to [extend] issue or renew any license issued under this article and may levy a civil penalty in accordance with section 431:9-238 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 license issued under this article through wilful misrepresentation or fraud, or has failed to pass any examination required by section 431:9-206;

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

     (5)  If the licensee, with intent to deceive, has 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 found to have committed any unfair practice or fraud as defined in article 13;]

     (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 insurance contract;

     (6)  Having been convicted of a felony;

     (7)  Having admitted to or be 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 adjuster or independent bill reviewer 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 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;

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

    [(7)] (16)  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)] (17)  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.

     (b)  [The license of any partnership or corporation may be suspended, revoked, or refused for any of the causes that relate to any individual designated in the license to exercise its powers.]  The commissioner may act pursuant to subsection (a) by an order; provided that before issuing the order, the commissioner shall notify the applicant or licensee in writing of the commissioner's intent to act under subsection (a).  The applicant or licensee may make written application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice.  The hearing shall be held within thirty days of receipt of the written application and shall be held pursuant to chapter 91.  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering agency.

     (c)  The holder of any license, which has been revoked or suspended, shall surrender the license certificate to the commissioner at the commissioner's request.

     [(d)  The commissioner may suspend, revoke, or refuse to extend any license for any cause specified in this article by an order:

     (1)  Given to the licensee at least fifteen days prior to the order's effective date, subject to the right of the licensee to have a hearing as provided in section 431:2-308.  The license shall be suspended pending the hearing; or

     (2)  Made after a hearing as provided in section 431:2-308.  The effective date of the order shall be ten days after the date the order is given to the licensee.  The order may be appealed to the circuit court of the first judicial circuit of this State as provided in chapter 91.]

     (d)  The commissioner shall retain the authority to enforce the provisions of, and impose any penalty or remedy authorized by, this chapter or chapter 432 or 432D, against any person who is under investigation for or charged with a violation of this chapter or chapter 432 or 432D, even if that person's license or registration has been surrendered or has lapsed by operation of law."

     SECTION 3.  Section 431:9-238, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  In addition to or in lieu of [suspension, revocation, or refusal to extend any license, after a hearing,] an action by the commissioner under section 431:9-235, the commissioner may levy a fine upon the applicant or licensee in an amount [not] of no less than $100 and [not] no more than $10,000."

     SECTION 4.  Section 431:9A-112, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  [If the commissioner takes action] The commissioner may act pursuant to subsection (a)[,] by an order; provided that before issuing the order, the commissioner shall notify the applicant or licensee in writing of the [reason for that action.] commissioner's intent to act under subsection (a).  The applicant or licensee may make written [demand upon] application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice [for a hearing before the commissioner to determine the reasonableness of the commissioner's action].  The hearing shall be held within thirty days of receipt of the written [demand] application and shall be held pursuant to chapter 91[, and following that action,].  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity."

     SECTION 5.  Section 431:10-226.5, Hawaii Revised Statutes, is amended to read as follows:

     "§431:10-226.5  Notice of cancellation or nonrenewal; notice of cancellation or nonrenewal for policies of property insurance.  (a)  Except as provided in subsection (b), in the case of cancellation of a policy, the insurer shall give written notice to the insured [not] no fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the insurer shall give written notice to the insured [not] no fewer than thirty days before the effective date of nonrenewal.  If under this title [24] or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (b)  This subsection shall only apply to policies of insurance on property used for residential purposes, including multi-family residential properties.  In the case of cancellation of a policy, the property insurer shall give written notice to the insured [not] no fewer than twenty days before the effective date of cancellation.  In the case of cancellation of a policy due to nonpayment of premium or material misrepresentation, the property insurer shall give written notice to the insured [not] no fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the property insurer shall give written notice to the insured [not] no fewer than thirty days before the effective date of nonrenewal.  If under this title [24] or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable; provided that the longer period shall be applicable only to the insurer.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (c)  All notices of cancellation or nonrenewal shall clearly state the specific reason or reasons for cancellation or nonrenewal."

     SECTION 6.  Section 431K-7.1, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  If the service fee is not paid on or before [August 16 of the year in which payment is due,] the extension date, a penalty shall be imposed in the amount of fifty per cent of the service fee.  The commissioner shall provide written notice of the delinquency of payment and the imposition of the authorized penalty.  If the service fee and the penalty are not paid within thirty days immediately following the date of the notice of delinquency, the commissioner may revoke the registration of the purchasing group and may not reinstate the registration until the service fee and the penalty have been paid."

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 2050; provided that sections 1, 2, 3, 4, and 5 shall take effect on January 1, 2027.

Report Title:

Insurance Code; Premium Increase; Adjuster; Bill Reviewer; Producer; Disciplinary Licensing Action; Notice Requirements; Cancellation; Nonrenewal; Purchase Group

Description:

Beginning 1/1/2027, requires insurers to provide explanation of premium increases upon request; clarifies grounds for denial, suspension, and revocation of an adjuster and bill reviewer license; clarifies procedures for denying, suspending, and revoking an insurance producer license; and amends the notice requirements for cancellation or nonrenewal of a property insurance policy.  Clarifies the date on which purchase groups are required to pay an annual service fee.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO INSURANCE.

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

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10, part II, to be appropriately designated and to read as follows:

     "§431:10-     Explanation of premium increase.  Insurers shall reasonably explain changes in premium upon written request by the policyholder, for any premium increase at renewal."

     SECTION 2.  Section 431:9-235, Hawaii Revised Statutes, is amended to read as follows:

     "§431:9-235  [Denial, suspension, revocation of licenses.] Disciplinary licensing actions.  (a)  The commissioner may deny, place on probation, suspend, revoke, or refuse to [extend] issue or renew any license issued under this article and may levy a civil penalty in accordance with section 431:9-238, 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 license issued under this article through wilful misrepresentation or fraud, or has failed to pass any examination required by section 431:9-206;

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

     (5)  If the licensee, with intent to deceive, has 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 found to have committed any unfair practice or fraud as defined in article 13;]

     (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 insurance contract;

     (6)  Having been convicted of a felony;

     (7)  Having admitted to or be 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 adjuster or independent bill reviewer 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 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;

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

    [(7)] (16)  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)] (17)  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.

     (b)  [The license of any partnership or corporation may be suspended, revoked, or refused for any of the causes that relate to any individual designated in the license to exercise its powers.]  The commissioner may act pursuant to subsection (a) by an order; provided that before issuing the order, the commissioner shall notify the applicant or licensee in writing of the commissioner's intent to act under subsection (a).  The applicant or licensee may make written application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice.  The hearing shall be held within thirty days of receipt of the written application and shall be held pursuant to chapter 91.  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering agency.

     (c)  The holder of any license, which has been revoked or suspended, shall surrender the license certificate to the commissioner at the commissioner's request.

     [(d)  The commissioner may suspend, revoke, or refuse to extend any license for any cause specified in this article by an order:

     (1)  Given to the licensee at least fifteen days prior to the order's effective date, subject to the right of the licensee to have a hearing as provided in section 431:2-308.  The license shall be suspended pending the hearing; or

     (2)  Made after a hearing as provided in section 431:2-308.  The effective date of the order shall be ten days after the date the order is given to the licensee.  The order may be appealed to the circuit court of the first judicial circuit of this State as provided in chapter 91.]

     (d)  The commissioner shall retain the authority to enforce the provisions of, and impose any penalty or remedy authorized by, this chapter or chapter 432 or 432D, against any person who is under investigation for or charged with a violation of this chapter or chapter 432 or 432D, even if that person's license or registration has been surrendered or has lapsed by operation of law."

     SECTION 3.  Section 431:9-238, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  In addition to or in lieu of [suspension, revocation, or refusal to extend any license, after a hearing,] an action by the commissioner under section 431:9-235, the commissioner may levy a fine upon the applicant or licensee in an amount [not] of no less than $100 and [not] no more than $10,000."

     SECTION 4.  Section 431:9A-112, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  [If the commissioner takes action] The commissioner may act pursuant to subsection (a)[,] by an order; provided that before issuing the order, the commissioner shall notify the applicant or licensee in writing of the [reason for that action.] commissioner's intent to act under subsection (a).  The applicant or licensee may make written [demand upon] application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice [for a hearing before the commissioner to determine the reasonableness of the commissioner's action].  The hearing shall be held within thirty days of receipt of the written [demand] application and shall be held pursuant to chapter 91[, and following that action,].  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity."

     SECTION 5.  Section 431:10-226.5, Hawaii Revised Statutes, is amended to read as follows:

     "§431:10-226.5  Notice of cancellation or nonrenewal; notice of cancellation or nonrenewal for policies of property insurance.  (a)  Except as provided in subsection (b), in the case of cancellation of a policy, the insurer shall give written notice to the insured [not] no fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the insurer shall give written notice to the insured [not] no fewer than thirty days before the effective date of nonrenewal.  If under this title [24] or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (b)  This subsection shall only apply to policies of insurance on property used for residential purposes, including multi-family residential properties.  In the case of cancellation of a policy, the property insurer shall give written notice to the insured [not] no fewer than twenty days before the effective date of cancellation.  In the case of cancellation of a policy due to nonpayment of premium or material misrepresentation, the property insurer shall give written notice to the insured [not] no fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the property insurer shall give written notice to the insured [not] no fewer than thirty days before the effective date of nonrenewal.  If under this title [24] or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable; provided that the longer period shall be applicable only to the insurer.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (c)  All notices of cancellation or nonrenewal shall clearly state the specific reason or reasons for cancellation or nonrenewal."

     SECTION 6.  Section 431K-7.1, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  If the service fee is not paid on or before [August 16 of the year in which payment is due,] the extension date, a penalty shall be imposed in the amount of fifty per cent of the service fee.  The commissioner shall provide written notice of the delinquency of payment and the imposition of the authorized penalty.  If the service fee and the penalty are not paid within thirty days immediately following the date of the notice of delinquency, the commissioner may revoke the registration of the purchasing group and may not reinstate the registration until the service fee and the penalty have been paid."

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 3000; provided that sections 1, 2, 3, 4, and 5 shall take effect on January 1, 2027.

Report Title:

Insurance Code; Premium Increase; Adjuster; Bill Reviewer; Producer; Disciplinary Licensing Action; Notice Requirements; Cancellation; Nonrenewal; Purchase Group

Description:

Beginning 1/1/2027, requires insurers to provide explanation of premium increases upon request; clarifies grounds for denial, suspension, and revocation of an adjuster and bill reviewer license; clarifies procedures for denying, suspending, and revoking an insurance producer license; and amends the notice requirements for cancellation or nonrenewal of a property insurance policy.  Clarifies the date on which purchase groups are required to pay an annual service fee.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO INSURANCE.

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

     SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended by adding to part II of article 10 a new section to be appropriately designated and to read as follows:

     "§431:10-     Explanation of premium increase.  Insurers shall reasonably explain changes in premium upon written request by the policyholder, for any premium increase at renewal."

     SECTION 2.  Section 431:9-235, Hawaii Revised Statutes, is amended to read as follows:

     "§431:9-235  Denial, suspension, revocation of licenses.  (a)  The commissioner may deny, place on probation, suspend, revoke, or refuse to [extend] issue or renew any license issued under this article and may levy a civil penalty in accordance with section 431:9-238, 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 license issued under this article through wilful misrepresentation or fraud, or has failed to pass any examination required by section 431:9-206;

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

     (5)  If the licensee, with intent to deceive, has 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 found to have committed any unfair practice or fraud as defined in article 13;]

     (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 be 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 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;

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

    [(7)] (16)  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)] (17)  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.

     (b)  [The license of any partnership or corporation may be suspended, revoked, or refused for any of the causes that relate to any individual designated in the license to exercise its powers.]  The commissioner may act pursuant to subsection (a) by an order, provided that, prior to issuing the order, the commissioner shall notify the applicant or licensee in writing of the commissioner's intent to act under subsection (a).  The applicant or licensee may make written application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice.  The hearing shall be held within thirty days of receipt of the written application and shall be held pursuant to chapter 91.  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order; and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering agency.

     (c)  The license of a business entity may be sanctioned pursuant to subsection (a) if the commissioner finds, after hearing, that any licensee working under the business entity has engaged in misconduct under subsection (a) that was known or should have been known by one or more of the entity's partners, officers, or managers acting on behalf of the entity and the violation was neither reported to the commissioner by the entity nor corrective action taken by the entity.

     [(c)] (d)  The holder of any license, which has been revoked or suspended, shall surrender the license certificate to the commissioner at the commissioner's request.

     [(d)  The commissioner may suspend, revoke, or refuse to extend any license for any cause specified in this article by an order:

     (1)  Given to the licensee at least fifteen days prior to the order's effective date, subject to the right of the licensee to have a hearing as provided in section 431:2-308.  The license shall be suspended pending the hearing; or

     (2)  Made after a hearing as provided in section 431:2-308.  The effective date of the order shall be ten days after the date the order is given to the licensee.  The order may be appealed to the circuit court of the first judicial circuit of this State as provided in chapter 91.]

     (e)  The commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by chapter 431, 432, or 432D, against any person who is under investigation for or charged with a violation of chapter 431, 432, or 432D, even if that person's license or registration has been surrendered or has lapsed by operation of law."

     SECTION 3.  Section 431:9-238, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  In addition to or in lieu of [suspension, revocation, or refusal to extend any license, after a hearing,] an action by the commissioner under section 431:9-235, the commissioner may levy a fine upon the applicant or licensee in an amount not less than $100 and not more than $10,000."

     SECTION 4.  Section 431:9A-112, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     (b)  [If the commissioner takes action] The commissioner may act pursuant to subsection (a) by an order, provided that prior to issuing the order, the commissioner shall notify the applicant or licensee in writing of the [reason for that action.] commissioner's intent to act under subsection (a).  The applicant or licensee may make written [demand upon] application to the commissioner for a hearing before the commissioner to determine the reasonableness of the commissioner's action within ten days of the date of receipt of the notice [for a hearing before the commissioner to determine the reasonableness of the commissioner's action].  The hearing shall be held within thirty days of receipt of the written [demand] application and shall be held pursuant to chapter 91[, and following that action,].  If no written application for a hearing is made to the commissioner within ten days of receipt of the notice, the commissioner may proceed with issuing the order; and, unless otherwise provided by law, the commissioner shall without further review or hearing renew, reinstate, or grant the license only upon receipt of an authorization from the administering entity."

     SECTION 5.  Section 431:10-226.5, Hawaii Revised Statutes, is amended to read as follows:

     "§431:10-226.5  Notice of cancellation or nonrenewal; notice of cancellation or nonrenewal for policies of property insurance.  (a)  Except as provided in subsection (b), in the case of cancellation of a policy, the insurer shall give written notice to the insured not fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the insurer shall give written notice to the insured not fewer than thirty days before the effective date of nonrenewal.  If under title 24 or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (b)  This subsection shall only apply to policies of insurance on property used for residential purposes, including multi-family residential properties.  In the case of cancellation of a policy, the property insurer shall give written notice to the insured not fewer than twenty days before the effective date of cancellation.  In the case of cancellation of a policy due to nonpayment of premium or material misrepresentation, the property insurer shall give written notice to the insured not fewer than ten days before the effective date of cancellation.  For nonrenewal of a policy, the property insurer shall give written notice to the insured not fewer than thirty days before the effective date of nonrenewal.  If under title 24 or a policy, a longer time period is required for a notice of cancellation or nonrenewal for the policy, the longer period shall be applicable; provided that the longer period shall be applicable only to the insurer.  Cancellation or nonrenewal shall not be deemed valid unless evidence of mailing the written notice is provided.

     (c)  All notices of cancellation or nonrenewal shall clearly state the specific reason or reasons for cancellation or nonrenewal."

     SECTION 6.  Section 431K-7.1, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  If the service fee is not paid on or before [August 16 of the year in which payment is due,] the extension date, a penalty shall be imposed in the amount of fifty per cent of the service fee.  The commissioner shall provide written notice of the delinquency of payment and the imposition of the authorized penalty.  If the service fee and the penalty are not paid within thirty days immediately following the date of the notice of delinquency, the commissioner may revoke the registration of the purchasing group and may not reinstate the registration until the service fee and the penalty have been paid."

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act, upon its approval, shall take effect on January 1, 2027; provided that section 7 shall take effect upon approval.

Report Title:

Insurance Code; Insurance; Adjuster; Bill Reviewer; Licensing; National Association of Insurance Commissioners; Notice Requirements; Cancellation; Nonrenewal; Premium Change Notice; Unfair Methods of Competition; Unfair and Deceptive Acts and Practices; Purchasing Groups.

Description:

Amends various provisions of the Insurance Code to update and improve existing provisions.  Clarifies grounds for denial, suspension, and revocation of an adjuster and bill reviewer license.  Clarifies procedures for denying, suspending, and revoking an insurance producer license.  Amends the notice requirements for cancellation or nonrenewal of an insurance policy.  Requires insurers to provide explanation of premium increases upon request.  Amends the definition of unfair methods of competition and unfair or deceptive acts or practices.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  899-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 2282

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 2282 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to make various amendments to the provisions of title 24, Hawaii Revised Statutes, including:

     (1)  Requiring insurers to provide a written explanation of premium increases, upon request by the policyholder;

     (2)  Aligning the grounds and procedures for denial, suspension, and revocation of licenses to ensure consistency amongst adjusters, independent bill reviewers, and producers;

     (3)  Requiring insurers to state the specific reason for cancellation or nonrenewal of a policy of property insurance; and

     (4)  Resolving inconsistencies regarding purchasing group service fee payment dates.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs; Work Injury Medical Association of Hawaii; and one individual.

     Your Committee finds that this measure makes targeted, technical, and consumer-focused improvements to increase transparency, update the Insurance Commissioner's licensing enforcement authority, and clarify existing statutory requirements without imposing new fiscal impacts.  Your Committee further finds that this measure is a technical modernization measure that will enhance consumer protection, promote regulatory clarity, and maintain consistency with national standards.

     Your Committee has amended this measure by:

     (1)  Clarifying the actions for which an adjuster and independent bill reviewer may be subject to disciplinary licensing actions;

     (2)  Deleting language relating to the sanctioning of a business entity as it is inapplicable to adjusters and independent bill reviewers;

     (3)  Specifying that the effective date for all provisions except for the provision relating to purchasing groups is January 1, 2027;

     (4)  Changing the effective date to July 1, 3000, to encourage further discussion; and

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

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2282, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2282, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,