REPORT TITLE:
Rent-A-Car Collision Waivers


DESCRIPTION:
Allows for the payment or receipt of indirect commissions from
the sale of collision damage waivers.  Requires lessors to report
information related to employee compensation plans that include
indirect commissions. (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        642
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE MOTOR VEHICLE RENTAL INDUSTRY.



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

 1      SECTION 1.  In 1990, the legislature barred the payment of
 
 2 commissions on the sale of rental vehicle collision damage
 
 3 waivers because of lessee confusion about the nature of collision
 
 4 damage waivers and the potential for abuse relating to their
 
 5 sale.  At the time there were over thirty-five rental companies
 
 6 operating in Hawaii, and related disclosure legislation in
 
 7 section 437D-5, Hawaii Revised Statutes, which required a
 
 8 boldface plain language description of the scope, optional
 
 9 nature, and cost of the collision damage waiver, as well as of
 
10 the possibility that the lessee might already be covered by the
 
11 lessee's personal automobile policy, had only been in existence
 
12 since 1988.
 
13      At present, there are fewer than fifteen rental companies in
 
14 Hawaii and, in part due to the disclosure law, there exists much
 
15 less of a basis to regulate the rental car industry through the
 
16 prohibition of commissions on the sale of collision damage
 
17 waivers.  In addition, the legislature finds that there are many
 
18 segments of the tourism industry that pay commissions and
 
19 evaluate or reward their employees based on their performance in
 

 
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                                                        S.D. 1
                                                        

 
 1 selling the various packages and programs offered by the
 
 2 employer.  Given this, the legislature believes that the motor
 
 3 vehicle rental industry should no longer be singled out by a law
 
 4 barring the payment of commissions calculated in part from the
 
 5 sale of collision damage waivers.
 
 6      The purpose of this Act is to allow the motor vehicle rental
 
 7 industry to receive commissions calculated in part from the sale
 
 8 of collision damage waivers.
 
 9      SECTION 2.  Section 437D-8.5, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "437D-8.5  Commissions.  (a)  No lessor or officer,
 
12 employee, agent, or other representative of the lessor shall pay
 
13 or receive a direct commission for selling collision damage
 
14 waivers.  Any violation of this section shall be an unfair or
 
15 deceptive act or practice as provided in section 480-2.
 
16      (b)  As used in this section, ["commission for selling
 
17 collision damage waivers"] "direct commission for selling
 
18 collision damage waivers" includes any compensation, bonus,
 
19 award, or remuneration, [whether direct, indirect, or otherwise,]
 
20 which is calculated by means of a formula, process, evaluation,
 
21 or other [mechanisms which considers sales of collision damage
 
22 waivers as a factor in any manner.  "Commission for selling
 
23 collision damage waivers" also includes any performance
 

 
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 1 evaluation which could be used in determining promotions, raises,
 
 2 or other personnel decisions, or any other device which serves to
 
 3 encourage the sale of collision damage waivers.] mechanism by
 
 4 which a person is able to calculate the amount of any
 
 5 compensation, bonus, award, or remuneration based directly on the
 
 6 sales of collision damage waivers."
 
 7      SECTION 3.  Section 437D-8.6, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "§437D-8.6  Collision damage waiver statistics.  [Lessors]
 
10 (a)  Each lessor shall submit [data or information] a report to
 
11 the director regarding [their] its sale of collision damage
 
12 waivers in a given year and amounts expended to repair damage to
 
13 rental vehicles caused while the vehicles are subject to the
 
14 collision damage waiver.  
 
15      (b)  Lessors shall maintain all records reflecting these
 
16 statistics.  
 
17      (c)  Neither the director, nor any other employee of the
 
18 department of commerce and consumer affairs, nor any other person
 
19 appointed by the director as provided by law, shall release or
 
20 divulge any of the information or data required by this section,
 
21 except as may be requested by the legislature, or as required or
 
22 allowed by rules adopted pursuant to section 437D-18.
 
23      (d)  By January 1, 2000, each lessor shall submit a report
 

 
Page 4                                                     642
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 1 to the director on its compensation plans for employees who
 
 2 assist or direct the sale of the collision damage waivers as of
 
 3 January 1, 1999, which shall include details on all factors used
 
 4 to calculate employee compensation.
 
 5      (e)  By January 1, 2001, and each year thereafter, each
 
 6 lessor shall submit a report to the director that includes
 
 7 details on the following:
 
 8      (1)  Compensation plans of the lessor that reflect all
 
 9           factors, including indirect commissions for selling
 
10           collision damage waivers, used to calculate employee
 
11           compensation;
 
12      (2)  Performance standards or benchmarks that are used in
 
13           determining promotions, raises, or other personnel
 
14           decisions; and
 
15      (3)  Any other device used by the lessor to encourage the
 
16           sale of collision damage waivers."
 
17      SECTION 4.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 5.  This Act shall take effect upon its approval and
 
20 shall be repealed on June 30, 2001.