Report Title:

Residential Insurance and Loans; Hazard Zone Identification

Description:

Prohibits consideration of "hazard zone" identifications of the United States Department of the Interior in setting rates for residential property insurance or deciding whether to approve a residential loan application.

HOUSE OF REPRESENTATIVES

H.B. NO.

210

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO HAZARD ZONE IDENTIFICATIONS.

 

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

SECTION 1. Chapter 412, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§412- Residential loan application; unfair trade practice. It shall constitute an unfair or deceptive act or practice in the conduct of any trade or commerce under section 480-2 for any financial institution to consider "hazard zone" identifications made by the United States Department of the Interior in reaching a decision on any residential loan application."

SECTION 2. Section 431:14-103, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Rates shall be made in accordance with the following provisions:

(1) Rates shall not be excessive, inadequate, or unfairly discriminatory[.];

(2) Due consideration shall be given to:

(A) Past and prospective loss experience within and outside this [State;] state; provided that if the claim does not exceed the selected deductible amount pursuant to section 386-100, and the employer reimburses the insurer for the amount, the claims shall not be calculated in the employer's experience rating or risk category;

(B) The conflagration and catastrophe hazards, if any;

(C) A reasonable margin for underwriting profit and contingencies;

(D) Dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers;

(E) Past and prospective expenses both country-wide and those specially applicable to this [State;] state;

(F) Investment income from unearned premium and loss reserve funds; and

(G) All other relevant factors within and outside this [State.] state;

(3) In the case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent five-year period for which that experience is available[.];

(4) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any insurer or group with respect to any class of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable[.];

(5) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in hazards or expense provisions, or both. These standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses. No risk classification may be based upon race, creed, national origin, or the religion of the insured[.];

(6) Manual, minimum, class rates, rating schedules, or rating plans shall be made and adopted, except in the case of:

(A) Special rates where manual, minimum, class rates, rating schedules, or rating plans are not applicable; and

(B) Specifically rated inland marine risks[.];

(7) No insurer authorized to do business in this [State] state shall issue any policy that provides or makes available to any risks preferred rates based upon any grouping of persons, firms, or corporations by way of membership, license, franchise, contract, agreement, or any other means, other than common majority ownership of the risks, or except where:

(A) A common stock ownership in and management control of the risks are held by the same person, corporation, or firm;

(B) Permitted or authorized by filings in existence as of January 1, 1988, under the casualty rating law and the fire rating law, as these filings may be amended from time to time;

(C) Health care providers, as defined in section

671-1 that could have joined the patients' compensation fund as it existed in chapter 671, part III, prior to May 31, 1984, joined together with one or more groups of related or unrelated health care providers;

(D) Permitted under article 12; or

(E) Otherwise expressly provided by law[.];

and

(8) In the case of residential property insurance, no consideration shall be given to "hazard zone" identifications made by the United States Department of the Interior."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

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