HB 2440: DCCA; Insurance; Ombudsman's Office for Homeowners Insurance; Dispute Intervention; Complaints and Enforcement Officers; Intake Specialists; Special Fund; Appropriation

HOUSE OF REPRESENTATIVES	H.B. NO.	2440
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

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 part to article 10E, be appropriately designated and to read as follows:

"Part     .  OMBUDSman's office for HOMEOWNERs insurance

     §431:10E-A  Definitions.  As used in this part:

     "Complaints and enforcement officer" means the complaints and enforcement officer established pursuant to section 431:10E‑C.

     "Intake specialist" means the intake specialist established pursuant to section 431:10E-C.

     "Ombudsman's office" means the ombudsman's office for homeowners insurance established pursuant to section 431:10E-B.

     §431:10E-B  Ombudsman's office for homeowners insurance established; ombudsman; criteria for ombudsman.  (a)  There is established within the department of commerce and consumer affairs insurance division an ombudsman's office for homeowners insurance.  The ombudsman's office for homeowners insurance shall be headed by the ombudsman, who shall be appointed by the director of commerce and consumer affairs with the approval of the governor.  The ombudsman shall report to the insurance commissioner.

     (b)  The ombudsman shall have been admitted to practice law before the Hawaii supreme court and shall have extensive experience in Hawaii property and casualty insurance, and conflict and alternative dispute resolution.  The ombudsman shall not:

     (1)  Engage or have been engaged within the past two years in any other business or profession that directly or indirectly relates to or conflicts with the work of the ombudsman's office;

     (2)  Serve as the representative, executive, officer, or employee of any political party, executive committee, or other governing body of a political party;

     (3)  Receive remuneration for activities on behalf of any candidate for public office;

     (4)  Engage in soliciting votes or other activities on behalf of a candidate for public office; or

     (5)  Become a candidate for election to public office unless the ombudsman first resigns from the ombudsman's office.

     The ombudsman shall be exempt from chapter 76.

     §431:10E-C  Personnel; salary; benefits.  (a)  The ombudsman shall employ professional and clerical staff as necessary for the efficient operation of the office.  The ombudsman may appoint persons who have been admitted to practice law before the Hawaii supreme court as staff without regard to chapter 76.  All other employees shall be appointed by the ombudsman in accordance with chapter 76.

     (b)  The ombudsman shall appoint complaints and enforcement officers who have been admitted to practice law before the Hawaii supreme court and have extensive experience in Hawaii property and casualty insurance, and conflict and alternative dispute resolution.  The complaints and enforcement officers shall be exempt from chapter 76.

     (c)  The ombudsman's office shall integrate the existing insurance specialist positions in the department of commerce and consumer affairs relating to property and casualty insurance into the ombudsman's office as intake specialists for complaints submitted to the ombudsman's office.

     (d)  The salary of the ombudsman shall be determined by the director of commerce and consumer affairs.  The ombudsman, complaints and enforcement officers, intake specialists, and other personnel shall be included in any benefits program generally applicable to officers and employees of the State.

     §431:10E-D  Ombudsman; powers and duties; immunity from liability.  (a)  The ombudsman shall:

     (1)  Have the power to establish rules and procedures for the operation of the office that shall include receiving and processing complaints and requests for dispute intervention; conducting investigations; enforcement, including fines and penalties; and reporting the findings of the office; provided that the ombudsman shall levy nominal filing fees not to exceed $100 to deter frivolous submissions or investigations of complaints or requests for dispute intervention;

     (2)  In conjunction with the department of commerce and consumer affairs, educate the public and entities required to be registered or certified under this chapter;

     (3)  Have access to and use of all files and records of the department of commerce and consumer affairs;

     (4)  Act as a neutral resource on the rights and responsibilities of insurers, insurance businesses, homeowners insurance policyholders, and any affected parties;

     (5)  Act as a liaison between insurers, insurance businesses, homeowners insurance policyholders, and any affected parties; and encourage and facilitate voluntary meetings with and between these entities when meetings may assist in resolving a dispute prior to any party submitting a formal request for dispute intervention;

     (6)  Respond to general inquiries, make recommendations, or give guidance as necessary to insurers, insurance businesses, homeowners insurance policyholders, and any affected parties;

     (7)  Make available, either separately or through an existing website, or both, information concerning insurance and any additional information the ombudsman may deem appropriate and non-confidential;

     (8)  Coordinate and assist in the preparation and adoption of educational and reference material and endeavor to make known to the largest possible audience the availability of these resources;

     (9)  Receive written requests for dispute intervention;

    (10)  Investigate and assist in resolving disputes brought by insurers, insurance businesses, homeowners insurance policyholders, and any affected parties, pursuant to section 431:10E-E;

    (11)  Investigate acts that may be:

          (A)  Contrary to law;

          (B)  Unreasonable, unfair, or discriminatory as administered or under the circumstances;

          (C)  Based on a mistake of fact;

          (D)  Based on improper or irrelevant grounds;

          (E)  Unaccompanied by an adequate statement of reasons; or

          (F)  Otherwise erroneous;

    (12)  Subject to the privileges that witnesses have in the courts of the State, have the authority to:

          (A)  Compel at a specified time and place, by a subpoena, the appearance and sworn testimony of any person whom the ombudsman reasonably believes may have information relating to a matter under investigation; and

          (B)  Compel any person to produce documents, records, and information the ombudsman reasonably believes may relate to a matter under investigation;

    (13)  Be authorized to bring suit in an appropriate state court to enforce the powers in paragraph (12);

    (14)  Provide advisory opinions upon request from insurers, insurance businesses, homeowners insurance policyholders, and any affected parties;

    (15)  Provide recommendations to the director of commerce and consumer affairs if the ombudsman finds that:

          (A)  The matter should be further considered by the department of commerce and consumer affairs;

          (B)  A statute or rule should be amended or repealed; or

          (C)  Other action should be taken by the department of commerce and consumer affairs;

    (16)  Within a reasonable time after providing recommendations to the director of commerce and consumer affairs pursuant to paragraph (15), the ombudsman may submit a report to the governor or the legislature or publish the report, including any reply by the department of commerce and consumer affairs, and notify the complainant of the actions taken by the ombudsman and the department;

    (17)  Maintain publicly available data on inquiries and complaints received, types of assistance requested, notices of final decisions and actions taken, and disposition of matters;

    (18)  Monitor changes in federal and state laws relating to insurance;

    (19)  Provide to the governor and the public an annual report that includes the number and types of requests for dispute intervention submitted to the ombudsman's office and their disposition, and any suggestions for policy or legislation the ombudsman's office deems necessary to more quickly and efficiently resolve disputes; and

    (20)  Adopt rules pursuant to chapter 91 necessary to carry out the purposes of this part.

     (b)  No proceeding or decision of the ombudsman may be reviewed by any court unless the proceeding or decision contravenes this chapter.  The ombudsman shall have the same immunities from civil and criminal liability as a judge of the State.  The ombudsman and the staff of the ombudsman's office shall not testify in any court concerning matters coming to their attention in the exercise of their official duties except as may be necessary to enforce this part.

     §431:10E-E  Request for dispute intervention.  (a)  Except as otherwise provided in this section, insurers, insurance businesses, homeowners insurance policyholders, and any affected parties, who are party to an insurance-related dispute, may submit to the ombudsman's office a written request for dispute intervention setting forth the facts forming the basis of the dispute. The request shall specify in reasonable detail:

     (1)  The nature of the dispute;

     (2)  Any alleged violations of this article, or any other law or regulation;

     (3)  Any alleged damages that resulted from the dispute; and

     (4)  Any proposed corrective action to resolve the dispute.

     (b)  A dispute intervention request submitted to the ombudsman's office pursuant to this section shall be on a form prescribed by the ombudsman's office and accompanied by evidence that reasonable efforts to resolve the dispute have failed.

     (c)  The ombudsman may impose a minimum fine of $250 against any person who knowingly submits a false or fraudulent dispute intervention request with the ombudsman's office.

     (d)  Legal representation shall not be required for dispute intervention by the ombudsman's office.  A party to a dispute shall not be liable for any legal fees incurred as a result of a dispute intervention request submitted to the ombudsman's office.

     §431:10E-F  Enforcement by complaints and enforcement officers; dispute resolution assistance.  (a)  Upon receipt of a dispute intervention request pursuant to section 431:10E-E, the complaints and enforcement officer shall open an investigation into the dispute.

     (b)  The complaints and enforcement officer may interview parties and witnesses involved in the dispute and request the production of documents, records, or other evidence that would be reasonably helpful in resolving the dispute.  Participation by all parties to the dispute shall be mandatory.  A party who refuses to participate shall be subject to penalties and fines to be predetermined and published by the ombudsman.

     (c)  The complaints and enforcement officer shall make recommendations, give guidance, or issue an advisory opinion or decision as the complaints and enforcement officer deems necessary.

     (d)  The complaints and enforcement officer may impose a fine in the amount of not less than $250 against any person who knowingly submits false or fraudulent information to the ombudsman's office, willingly hinders the lawful actions of the ombudsman or the staff of the ombudsman's office, or willingly refuses to comply with the lawful demands of the ombudsman or the staff of the ombudsman's office.

     (e)  If the parties are unable to reach an agreement under this section or if a party does not agree with the decision of the complaints and enforcement officer, a party may request a contested case hearing with the ombudsman's office that shall be presided over by the ombudsman.  Participation in a contested case hearing by all parties to the dispute shall be mandatory.

     (f)  Any party who wishes to request a contested case hearing shall submit a written request with the ombudsman's office within thirty days after receipt of a copy of the complaints and enforcement officer's decision.

     §431:10E-G  Contested case hearing.  (a)  A contested case hearing shall be conducted by the ombudsman pursuant to chapter 91 and any rules adopted by the ombudsman's office; provided that if there is no dispute as to the facts involved in a particular matter, the ombudsman may permit the parties to proceed by memoranda of law in lieu of a hearing, unless the procedure would unduly burden any party or would otherwise not serve the ends of justice.

     (b)  The ombudsman shall not be bound by the rules of evidence when conducting a hearing to determine whether a violation of this part has occurred.  The standard of proof required shall be a preponderance of the evidence.

     (c)  A record shall be made of the proceeding.

     (d)  All parties shall be afforded a full opportunity to engage in discovery and present evidence and argument on the issues involved.

     (e)  If a hearing is held or a review by memoranda of law is conducted, a decision shall be rendered by the ombudsman's office and promptly delivered to each party by certified mail.  Any party adversely affected by the decision may submit written exceptions to the ombudsman's office within fifteen days after receipt of the decision.

     (f)  As expeditiously as possible after the close of the hearing but not before any party adversely affected has had the opportunity to submit a written exception, the ombudsman shall issue a decision together with separate findings of fact and conclusions of law regarding whether a violation of this part has occurred.  Any final decision made by the ombudsman shall be binding on all parties.

     §431:10E-H  Fines; fees.  Any fine or fee collected pursuant to this part shall be deposited into the ombudsman's office for homeowners insurance special fund.

     §431:10E-I  Ombudsman's office for homeowners insurance special fund.  (a)  There is established in the state treasury an ombudsman's office for homeowners insurance special fund into which shall be deposited the following moneys:

     (1)  Administrative penalties, fines, and other charges collected under this part or any rule adopted pursuant to this part; and

     (b)  All interest earned or accrued on moneys deposited into the ombudsman's office for homeowners insurance special fund shall become a part of the fund.

     (c)  The ombudsman's office shall adopt rules in accordance with chapter 91 for the purposes of this section."

     SECTION 2.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for the administrative costs associated with the establishment of the ombudsman's office for homeowners insurance within the department of commerce and consumer affairs, including the hiring of necessary staff.

     The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 to be deposited into the ombudsman's office for homeowners insurance special fund.

     SECTION 4.  There is appropriated out of the ombudsman's office for homeowners insurance special fund the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for purposes consistent with the special fund.

     The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

     SECTION 5.  In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 6.  This Act shall take effect on July 1, 2026.

 

INTRODUCED BY:	_____________________________

 

 

 

Report Title:

DCCA; Insurance; Ombudsman's Office for Homeowners Insurance; Dispute Intervention; Complaints and Enforcement Officers; Intake Specialists; Special Fund; Appropriation

 

Description:

Establishes the Ombudsman's Office for Homeowners Insurance within the Department of Commerce and Consumer Affairs.  Establishes the Ombudsman's Office for Homeowners Insurance Special Fund.  Appropriates funds.

 

 

 

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