NAMIC has submitted written testimony opposing SB 3230 to the Senate Committee on Commerce and Consumer Protection and the Senate Committee on Public Safety and Intergovernmental Military Affairs. The bill is scheduled for hearing on Feb. 7. This overly broad underwriting and unworkable coverage bill has a double committee hearing assignment.

In its testimony, NAMIC asserted that “SB 3230 may sound like a pro-consumer protection bill, but in practical reality it is an unnecessary, overly broad and complex bill that is more likely to confuse consumers, lead to unnecessary insurance rate costs for consumers, deny policyholders of important consumer choice as to what they need and want in their insurance products, and adversely impact insurers in their ability to match rate to risk of loss exposure.”

As part of its testimony, the association raised the following points:

  • How does creating unnecessary insurance rate cost-drivers benefit consumers who are struggling, in today’s inflationary world to pay for the necessities of their lives?
  • Why should insurance consumers be denied the right to make personal decisions about how best to use their finances to protect their home and assets?
  • The legislation would require insurers to engage in anti-competitive, possibly even antitrust protection-related, disclosure behavior to the detriment of consumers.
  • The legislation is inconsistent with the very concept of risk-based pricing of property insurance.
  • The legislation would impose costly, impractical, and unworkable underwriting and consumer-disclosure requirements that are far more likely to confuse consumers than educate them.

The basic provisions of SB 3230 are:

  • Establishes ratemaking regulations for insurers who base their rates on a policyholder or applicant’s wildfire risk;
  • Any risk model described in subsection (a) and additional documentation requested by the insurance commissioner during the review of applicable rate applications must be made available for public inspection, regardless of the information’s source or whether the insurer or the developer of the rating plan or wildfire risk model claims that the plan or model is confidential, proprietary, or a trade secret. (Emphasis added.);
  • Amends the definition of “prospective loss costs” to incorporate catastrophe modeling instead of historical aggregate losses;
  • Prohibits insurers from basing certain insurance rates on past loss experience within or outside the state;
  • Requires insurers to provide a list of items that may be covered under a homeowners insurance policy issued or renewed on or after Jan. 1, 2025, as additional living expenses when a claim for such is made;
  • Requires coverage for additional living expenses for a period of not less than 24 months from the loss, if the loss relates to a state of emergency, subject to other policy provisions;
  • Requires that coverage for additional living expenses not limit a policyholder’s right to recovery if the insured home is made uninhabitable by a covered peril;
  • Requires additional living expenses coverage for at least two weeks for certain losses incurred if a state of emergency is accompanied by an order of civil authority restricting access to the home;
  • Requires each newly issued or renewed homeowners insurance policy to provide for the replacement cost value of the insured property, beginning Jan. 1, 2025; and
  • Amends the determination of over‑insurance.
Post Details

Publish Date

February 7, 2024

News Type

  • State of the States

Topics

  • Hawaii

Points of Contact
Christian Rataj
Christian Rataj
Senior Regional Vice President, Western Region