RELATING TO INSURANCE.

HB2440

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:

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SECTION 1.
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Chapter 431,
Hawaii Revised Statutes, is amended by adding a new part to article 10E, be
appropriately designated and to read as follows:

"
Part
.
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OMBUDSman's
office for HOMEOWNERs insurance

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

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

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

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

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431:10E-B
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Ombudsman's office for homeowners insurance
established; ombudsman; criteria for ombudsman.
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(a)
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There
is established within the department of commerce and consumer affairs insurance
division an ombudsman's office for homeowners insurance.
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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.
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The ombudsman shall report to the insurance
commissioner.

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(b)
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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.
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The
ombudsman shall not:

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(1)
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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;

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

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

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

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

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The
ombudsman shall be exempt from chapter 76.

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

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(b)
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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.
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The complaints and enforcement officers shall
be exempt from chapter 76.

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(c)
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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.

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(d)
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The salary of the ombudsman shall be
determined by the director of commerce and consumer affairs.
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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.

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

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(1)
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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;

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

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

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

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(5)
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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;

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

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(7)
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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;

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(8)
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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;

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(9)
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Receive written requests for dispute
intervention;

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

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(11)
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Investigate acts that may be:

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(A)
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Contrary to law;

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

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(C)
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Based on a mistake of fact;

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(D)
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Based on improper or irrelevant
grounds;

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

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(F)
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Otherwise erroneous;

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

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(A)
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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

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

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

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

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

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

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

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

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(16)
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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;

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

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

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(19)
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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

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

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(b)
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No proceeding or decision of the ombudsman
may be reviewed by any court unless the proceeding or decision contravenes this
chapter.
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The ombudsman shall have the
same immunities from civil and criminal liability as a judge of the State.
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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.

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431:10E-E
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Request for dispute intervention.
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(a)
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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:

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(1)
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The nature of the dispute;

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

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

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

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(b)
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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.

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(c)
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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.

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(d)
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Legal representation shall not be required
for dispute intervention by the ombudsman's office.
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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.

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431:10E-F
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Enforcement by complaints and enforcement
officers; dispute resolution assistance.
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(a)
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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.

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(b)
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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.
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Participation by all parties to the dispute shall be mandatory.
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A party who refuses to participate shall be
subject to penalties and fines to be predetermined and published by the
ombudsman.

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(c)
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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.

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(d)
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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.

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(e)
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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.
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Participation in a contested
case hearing by all parties to the dispute shall be mandatory.

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(f)
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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.

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431:10E-G
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Contested case hearing.
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(a)
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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.

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(b)
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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.
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The standard of proof
required shall be a preponderance of the evidence.

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

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

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(e)
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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.
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Any party adversely affected by the decision
may submit written exceptions to the ombudsman's office within fifteen days
after receipt of the decision.

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(f)
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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.
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Any final decision made by the ombudsman shall be binding on all
parties.

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

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431:10E-I
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Ombudsman's office for homeowners insurance

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

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

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(b)
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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.

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

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SECTION 2.
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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.

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

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SECTION
3
.
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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.

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SECTION
4
.
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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.

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

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SECTION 5.
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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.

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SECTION 6.
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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.
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Establishes the Ombudsman's Office for
Homeowners Insurance Special Fund.
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Appropriates funds.

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