Report Title:

Rental Car Collision Waivers

 

Description:

Allows the payment or receipt of indirect commissions from the sale of collision damage waivers for rental vehicles; requires lessor to report to the director on its compensation plan for employees who assist or direct the sale of collision damage waivers.

 

THE SENATE

S.B. NO.

593

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to motor vehicle rental industry.

 

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

SECTION 1. In 1990, the legislature barred the payment of commissions on the sale of rental vehicle collision damage waivers because of lessee confusion about the nature of collision damage waivers and the potential for abuse relating to their sale. At the time there were over thirty-five rental companies operating in Hawaii, and related disclosure legislation in section 437D-5, Hawaii Revised Statutes, which required a boldface plain language description of the scope, optional nature, and cost of the collision damage waiver, as well as of the possibility that the lessee might already be covered by the lessee's personal automobile policy, had only been in existence since 1988.

At present, there are fewer than fifteen rental companies in Hawaii and, in part due to the disclosure law, there exists much less of a basis to regulate the rental car industry through the prohibition of commissions on the sale of collision damage waivers. In addition, the legislature finds that there are many segments of the tourism industry that pay commissions and evaluate or reward their employees based on their performance in selling the various packages and programs offered by the employer. Given this, the legislature believes that the motor vehicle rental industry should no longer be singled out by a law barring the payment of commissions calculated in part from the sale of collision damage waivers.

The purpose of this Act is to allow the motor vehicle rental industry to receive commissions calculated in part from the sale of collision damage waivers.

SECTION 2. Section 437D-8.5, Hawaii Revised Statutes, is amended to read as follows:

"§437D-8.5 Commissions. (a) No lessor or officer, employee, agent, or other representative of the lessor shall pay or receive a direct commission for selling collision damage waivers. Any violation of this section shall be an unfair or deceptive act or practice as provided in section 480-2.

(b) As used in this section, ["commission for selling collision damage waivers"] "direct commission for selling collision damage waivers" includes any compensation, bonus, award, or remuneration, [whether direct, indirect, or otherwise,] which is calculated by means of a formula, process, evaluation, or other [mechanisms which considers sales of collision damage waivers as a factor in any manner. "Commission for selling collision damage waivers" also includes any performance evaluation which could be used in determining promotions, raises, or other personnel decisions, or any other device which serves to encourage the sale of collision damage waivers.] mechanism by which a person is able to calculate the amount of any compensation, bonus, award, or remuneration based directly on the sales of collision damage waivers."

SECTION 3. Section 437D-8.6, Hawaii Revised Statutes, is amended to read as follows:

"§437D-8.6 Collision damage waiver statistics. [Lessors] (a) Each lessor shall submit [data or information] a report to the director regarding [their] its sale of collision damage waivers in a given year and amounts expended to repair damage to rental vehicles caused while the vehicles are subject to the collision damage waiver.

(b) Lessors shall maintain all records reflecting these statistics.

(c) Neither the director, nor any other employee of the department of commerce and consumer affairs, nor any other person appointed by the director as provided by law, shall release or divulge any of the information or data required by this section, except as may be requested by the legislature, or as required or allowed by rules adopted pursuant to section 437D-18.

(d) By January 1, 2001, each lessor shall submit a report to the director on its compensation plans for employees who assist or direct the sale of the collision damage waivers as of January 1, 2000, that shall include details on all factors used to calculate employee compensation.

(e) By January 1, 2002, and each year thereafter, each lessor shall submit a report to the director that includes details on the following:

(1) Compensation plans of the lessor that reflect all factors, including indirect commissions for selling collision damage waivers, used to calculate employee compensation;

(2) Performance standards or benchmarks that are used in determining promotions, raises, or other personnel decisions; and

(3) Any other device used by the lessor to encourage the sale of collision damage waivers."

SECTION 4. Statutory material to be repealed is bracketed. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval and shall be repealed on June 30, 2003; provided that sections 437D-8.5 and 437D-8.6, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day before the approval of this Act.

INTRODUCED BY:

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