203
HOUSE OF REPRESENTATIVES             H.R. NO.              
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                     HOUSE  RESOLUTION

  REQUESTING THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS TO
    CONVENE A TASK FORCE TO STUDY FORCE PLACED INSURANCE.



 1        WHEREAS, force placed insurance is an insurance policy
 2   protecting a lender's interest in tangible collateral in
 3   possession of a buyer; and
 4   
 5        WHEREAS, the rates charged to the buyer for the force
 6   placed policy of the seller or secured lender is often higher
 7   than the rate formerly paid by the buyer under the buyer's
 8   lapsed policy for coverage on the insurable interest; and
 9   
10        WHEREAS, buyers are often charged for extra coverages not
11   required under the credit agreement, and receive inadequate
12   warning of an impending placement and the cost and nature of
13   force placed insurance; and
14   
15        WHEREAS, it is necessary for lenders to have the power to
16   insure their interests; and
17   
18        WHEREAS, insurers provide monetary payments to lenders to
19   induce lenders to select them as an insurer, but since these
20   payments are paid by the force placed borrower, the lender has
21   an incentive to pick the most expensive insurance; now,
22   therefore,
23   
24        BE IT RESOLVED by the House of Representatives of the
25   Twentieth Legislature of the State of Hawaii, Regular Session
26   of 1999, that the Director of Commerce and Consumer Affairs is
27   requested to form a task force to study the problems of force
28   placed insurance, including possible legislative solutions; and
29   
30        BE IT FURTHER RESOLVED that the task force be comprised of
31   five individuals representing the following entities:
32   
33        (1)  Department of Commerce and Consumer Affairs;
34   
35        (2)  Banking industry;
36   
37        (3)  Insurance industry;
38   

 
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                                  H.R. NO.              
                                                        
                                                        


 1        (4)  The Senate; and
 2   
 3        (5)  The House of Representatives;
 4   
 5   and
 6   
 7        BE IT FURTHER RESOLVED that the Director of Commerce and
 8   Consumer Affairs is requested to submit findings and
 9   recommendations of the task force to the Legislature twenty
10   days prior to the convening of the Regular Session of 2000; and
11   
12        BE IT FURTHER RESOLVED that a certified copy of this
13   Resolution be transmitted to the Director of Commerce and
14   Consumer Affairs.
15   
16 
17 
18 
19                         OFFERED BY:  ____________________________