Senate File 346 - Reprinted SENATE FILE 346 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 1086) (As Amended and Passed by the Senate March 25, 2015 ) A BILL FOR An Act relating to various matters involving insurance and 1 the insurance division of the department of commerce and 2 including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 SF 346 (3) 86 av/nh/jh

S.F. 346 Section 1. Section 22.7, subsection 58, Code 2015, is 1 amended to read as follows: 2 58. Information filed with the commissioner of insurance 3 pursuant to sections 523A.204 and , 523A.205, 523A.206, 4 523A.207, 523A.401, 523A.502A , and 523A.803 . 5 Sec. 2. Section 502.103, Code 2015, is amended to read as 6 follows: 7 502.103 References to federal statutes. 8 “Securities Act of 1933” , 15 U.S.C. §77a et seq.; “Securities 9 Exchange Act of 1934” , 15 U.S.C. §78a et seq.; “Public Utility 10 Holding Company Act of 1935” , 15 U.S.C. §79 et seq.; “Investment 11 Company Act of 1940” , 15 U.S.C. §80a-1 et seq.; “Investment 12 Advisers Act of 1940” , 15 U.S.C. §80b-1 et seq.; “Employee 13 Retirement Income Security Act of 1974” , 29 U.S.C. §1001 et 14 seq.; “National Housing Act” , 12 U.S.C. §1701; “Commodity 15 Exchange Act” , 7 U.S.C. §1 et seq.; “Internal Revenue Code” , 16 26 U.S.C. §1 et seq.; “Securities Investor Protection Act 17 of 1970” , 15 U.S.C. §78aaa et seq.; “Securities Litigation 18 Uniform Standards Act of 1998” , 112 Stat. 3227; “Small Business 19 Investment Act of 1958” , 15 U.S.C. §661 et seq.; and “Electronic 20 Signatures in Global and National Commerce Act” , 15 U.S.C. 21 §7001 et seq. ; and “ Dodd-Frank Wall Street Reform and Consumer 22 Protection Act” , Pub. L. No. 111–203 mean those federal statutes 23 and the rules and regulations adopted under those federal 24 statutes, as in effect on January 1, 2005 2015 . 25 Sec. 3. Section 502.202, Code 2015, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 24. Intrastate crowdfunding. 28 a. Definitions. As used in this subsection, unless the 29 context otherwise requires: 30 (1) “Intermediary” means a broker-dealer that is subject 31 to the registration requirements of section 502.401 and that 32 facilitates the offer and sale of securities by issuers to 33 investors through an internet-based system that is open to 34 and accessible by the general public. “Intermediary” also 35 -1- SF 346 (3) 86 av/nh/jh 1/ 24

S.F. 346 means an entity registered with the administrator as an Iowa 1 crowdfunding portal. 2 (2) “Intrastate crowdfunding” means the offer or sale of a 3 security by an issuer in a transaction that is available for 4 purchase only by Iowa residents and by business organizations 5 located in, and organized and registered under the laws of, 6 this state. 7 (3) “Iowa crowdfunding portal” means an entity incorporated 8 or organized under the laws of this state, authorized to do 9 business in this state, and engaged exclusively in intrastate 10 crowdfunding offers and sales of exempt securities in this 11 state through an internet site and which does not operate or 12 facilitate a secondary market in securities. 13 b. Exemption not available. The exemption in this 14 subsection is not available to any of the following: 15 (1) A foreign issuer. 16 (2) An investment company, as defined in section 3 of the 17 federal Investment Company Act of 1940. 18 (3) A development stage company that either has no specific 19 business plan or purpose or has indicated that the company’s 20 business plan is to engage in a merger or acquisition with an 21 unidentified company or companies, or other entity or person. 22 (4) A company with a class of securities registered under 23 the federal Securities Exchange Act of 1934. 24 (5) Any person who is subject to a disqualifying event as 25 described in the regulations adopted in accordance with section 26 926 of the federal Dodd-Frank Wall Street Reform and Consumer 27 Protection Act, Pub. L. No. 111-203, or in rules adopted by the 28 administrator pursuant to chapter 17A. 29 c. Aggregate sales limit. The aggregate amount of 30 securities sold to all investors by the issuer during the 31 twelve-month period preceding the date of the offer or sale, 32 including any amount sold in reliance upon the exemption in 33 this subsection, shall not exceed one million dollars other 34 than either of the following: 35 -2- SF 346 (3) 86 av/nh/jh 2/ 24

S.F. 346 (1) Securities sold to Iowa resident institutional 1 investors. 2 (2) Securities sold to the Iowa resident issuer’s 3 management. 4 d. Individual sales limit. The aggregate amount of 5 securities sold to an investor by the issuer during the 6 twelve-month period preceding the date of the offer or sale, 7 including any amount sold in reliance upon the exemption in 8 this subsection, shall not exceed five thousand dollars unless 9 the investor is an accredited investor who resides in Iowa. 10 For purposes of this individual sales limit, the following 11 investors shall be treated as one investor: 12 (1) A relative, spouse, or relative of the spouse of an 13 investor who has the same principal residence as the investor. 14 (2) A trust or estate in which an investor and any related 15 person collectively have more than fifty percent of the 16 beneficial interest, excluding contingent interests. 17 (3) A corporation or other organization of which an investor 18 and any related person collectively are beneficial owners of 19 more than fifty percent of the equity securities, excluding 20 directors’ qualifying shares, or equity interests. 21 e. Use of an intermediary. All offers and sales of 22 securities made in reliance upon the exemption in this 23 subsection shall be made through an intermediary’s internet 24 site. 25 f. Notice to administrator. Prior to the offer of any 26 security in this state made in reliance upon the exemption 27 in this subsection, the issuer shall file a notice with 28 the administrator in a form and format approved by the 29 administrator, and including the filing fee specified by rule, 30 if any. 31 g. Rulemaking. The administrator shall adopt all rules 32 necessary to implement the exemption in this subsection 33 including but not limited to all of the following: 34 (1) Mandatory disclosures. 35 -3- SF 346 (3) 86 av/nh/jh 3/ 24

S.F. 346 (2) Restrictions on advertising and communications. 1 (3) Target amount, offering period, and escrow 2 requirements. 3 (4) Use and compensation of promoters. 4 (5) Restrictions on the sale of securities purchased under 5 the exemption in this subsection. 6 (6) Sales reports. 7 (7) Limitations on the offering price. 8 (8) Duties of an intermediary which shall include providing 9 the administrator with continuous investor-level access to the 10 intermediary’s internet site. 11 (9) Records maintenance. 12 (10) Duties and registration requirements for internet site 13 operators. 14 Sec. 4. Section 502.302, subsection 1, paragraph a, 15 subparagraph (1), Code 2015, is amended to read as follows: 16 (1) A person who is the issuer of a federal covered 17 security under section 18(b)(2) of the Securities Act of 18 1933 shall initially make a notice filing and annually renew 19 a notice filing in this state for an indefinite amount or a 20 fixed amount . The fixed amount must be for two hundred fifty 21 thousand dollars. 22 Sec. 5. Section 502.302, subsection 1, paragraph a, 23 subparagraph (2), unnumbered paragraph 1, Code 2015, is amended 24 to read as follows: 25 A notice filer shall pay a filing fee in the amount of 26 four hundred dollars when the notice is filed. If the amount 27 covered by the notice is indefinite, the notice filer shall pay 28 a filing fee of one thousand dollars. If the amount covered by 29 the notice is fixed, the notice filer shall pay a filing fee 30 of two hundred fifty dollars, and all of the following shall 31 apply: 32 Sec. 6. Section 502.302, subsection 1, paragraph a, 33 subparagraph (2), subparagraph divisions (a) and (b), Code 34 2015, are amended by striking the subparagraph divisions. 35 -4- SF 346 (3) 86 av/nh/jh 4/ 24

S.F. 346 Sec. 7. Section 502.302, subsections 2 and 3, Code 2015, are 1 amended to read as follows: 2 2. Notice filing effectiveness and renewal. A notice filing 3 under subsection 1 is effective for one year commencing on 4 the later of the notice filing or the effectiveness of the 5 offering filed with the securities and exchange commission. 6 On or before expiration, the issuer may renew a notice filing 7 by filing a copy of those records filed by the issuer with 8 the securities and exchange commission that are required by 9 rule or order under this chapter to be filed and by paying 10 the a renewal fee required by subsection 1 , paragraph “a” of 11 four hundred dollars . A previously filed consent to service 12 of process complying with section 502.611 may be incorporated 13 by reference in a renewal. A renewed notice filing becomes 14 effective upon the expiration of the filing being renewed. 15 3. Notice filings for federal covered securities under 16 section 18(b)(4)(D). With respect to a security that is a 17 federal covered security under section 18(b)(4)(D) of the 18 Securities Act of 1933, 15 U.S.C. §77r(b)(4)(D), a rule under 19 this chapter may require a notice filing by or on behalf of an 20 issuer to include a copy of form D, including the appendix, as 21 promulgated by the securities and exchange commission, and a 22 consent to service of process complying with section 502.611 23 signed by the issuer not later than fifteen days after the 24 first sale of the federal covered security in this state and 25 the payment of a fee of one hundred dollars; and the payment of 26 a fee of two hundred fifty dollars for any late filing. 27 Sec. 8. Section 502.412, subsection 9, Code 2015, is amended 28 to read as follows: 29 9. Limit on investigation or proceeding. The administrator 30 shall not institute a proceeding under subsection 1, 2, 31 or 3 based solely on material facts actually known by the 32 administrator unless an investigation or the proceeding is 33 instituted within one year two years after the administrator 34 actually acquires knowledge of the material facts. 35 -5- SF 346 (3) 86 av/nh/jh 5/ 24

S.F. 346 Sec. 9. Section 505.19, Code 2015, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 4A. Notwithstanding subsection 1, a health 3 insurance carrier licensed to do business in this state that 4 participates in the health benefits exchange used in this state 5 and created pursuant to the federal Patient Protection and 6 Affordable Care Act, Pub. L. No. 111-148, as amended by the 7 federal Health Care and Education Reconciliation Act of 2010, 8 Pub. L. No. 111-152, shall not be subject to the requirements 9 of this section for health plans issued by the health insurance 10 carrier that are filed and purchased within the exchange or the 11 matching health plans issued by the health insurance carrier 12 that are purchased outside of the exchange. However, such 13 a health insurance carrier shall inform policyholders who 14 purchase such health plans of their total premium due and 15 any rate increases to their premium for each upcoming policy 16 year. Such notice shall be provided thirty days prior to 17 the beginning of open enrollment for the health plans and 18 shall provide policyholders with information about how the 19 policyholder can contact the insurance division to submit a 20 comment about a proposed rate increase. A health insurance 21 carrier subject to this subsection shall be subject to all 22 applicable other state and federal laws. 23 Sec. 10. Section 511.8, subsection 5, paragraphs a and b, 24 Code 2015, are amended to read as follows: 25 a. (1) If fixed interest-bearing obligations, the net 26 earnings of the issuing, assuming, or guaranteeing corporation 27 available for its fixed charges for a period of five fiscal 28 years next preceding the date of acquisition of the obligations 29 by such insurance company shall have averaged per year not 30 less than one and one-half times such average annual fixed 31 charges of the issuing, assuming, or guaranteeing corporation 32 applicable to such period, and, during at least one of the last 33 two years of such period, its net earnings shall have been 34 not less than one and one-half times its fixed charges for 35 -6- SF 346 (3) 86 av/nh/jh 6/ 24

S.F. 346 such year; or if, at the date of acquisition, the obligations 1 are adequately secured and have investment qualities and 2 characteristics wherein the speculative elements are not 3 predominant investment grade as defined by the commissioner by 4 rule . 5 (2) However, with respect to fixed interest-bearing 6 obligations which are issued, assumed, or guaranteed by a 7 financial company, the net earnings by the financial company 8 available for its fixed charges for the period of five fiscal 9 years preceding the date of acquisition of the obligations by 10 the insurance company shall have averaged per year not less 11 than one and one-fourth times such average annual fixed charges 12 of the issuing, assuming, or guaranteeing financial company 13 applicable to such period, and, during at least one of the last 14 two years of the period, its net earnings shall have been not 15 less than one and one-fourth times its fixed charges for such 16 year; or if, at the date of acquisition, the obligations are 17 adequately secured and speculative elements are not predominant 18 in their investment qualities and characteristics investment 19 grade as defined by the commissioner by rule . As used in 20 this subparagraph (2), “financial company” means a corporation 21 which on the average over its last five fiscal years preceding 22 the date of acquisition of its obligations by the insurer, 23 has had at least fifty percent of its net income, including 24 income derived from subsidiaries, derived from the business 25 of wholesale, retail, installment, mortgage, commercial, 26 industrial or consumer financing, or from banking or factoring, 27 or from similar or related lines of business. 28 b. If adjustment, income, or other contingent interest 29 obligations, the net earnings of the issuing, assuming, or 30 guaranteeing corporation available for its fixed charges 31 for a period of five fiscal years next preceding the date 32 of acquisition of the obligations by such insurance company 33 shall have averaged per year not less than one and one-half 34 times such average annual fixed charges of the issuing, 35 -7- SF 346 (3) 86 av/nh/jh 7/ 24

S.F. 346 assuming, or guaranteeing corporation and its average annual 1 maximum contingent interest applicable to such period and, 2 during at least one of the last two years of such period, its 3 net earnings shall have been not less than one and one-half 4 times the sum of its fixed charges and maximum contingent 5 interest for such year, or if, at the date of acquisition, 6 the obligations are adequately secure and have investment 7 qualities and characteristics and speculative elements are not 8 predominant investment grade as defined by the commissioner by 9 rule . 10 Sec. 11. Section 511.8, subsection 6, paragraph a, 11 subparagraph (1), subparagraph division (b), unnumbered 12 paragraph 1, Code 2015, is amended to read as follows: 13 The net earnings available for fixed charges and preferred 14 dividends of the issuing corporation shall have been, for 15 each of the five fiscal years immediately preceding the date 16 of acquisition, not less than one and one-half times the sum 17 of the annual fixed charges and contingent interest, if any, 18 and the annual preferred dividend requirements as of the date 19 of acquisition; or at the date of acquisition the preferred 20 stock has is investment qualities and characteristics wherein 21 speculative elements are not predominant grade as defined by 22 the commissioner by rule . 23 Sec. 12. Section 511.8, subsection 8, unnumbered paragraph 24 1, Code 2015, is amended to read as follows: 25 Securities included under subsections 5, 6, and 7 , and 26 subsection 9, paragraph “h” , shall not be eligible: 27 Sec. 13. Section 511.8, subsection 8, paragraph b, 28 unnumbered paragraph 1, Code 2015, is amended to read as 29 follows: 30 The investments of any company or association in such the 31 securities of a corporation shall not be eligible in excess of 32 exceed the following percentages of the legal reserve of such 33 company or association: 34 Sec. 14. Section 511.8, subsection 8, paragraph b, 35 -8- SF 346 (3) 86 av/nh/jh 8/ 24

S.F. 346 subparagraphs (1) and (2), Code 2015, are amended to read as 1 follows: 2 (1) With the exception of public securities For any one 3 corporation other than a public utility company , two percent 4 of the legal reserve in the securities of any one corporation . 5 Five For any one public utility company, five percent of the 6 legal reserve in the securities of any one public utility 7 corporation . 8 (2) Seventy-five percent of the legal reserve in the 9 securities described in subsection 5 issued by other than 10 public utility corporations. Fifty percent of the legal 11 reserve in the For securities described in subsection 5 issued 12 by public utility corporations companies, fifty percent of the 13 legal reserve . 14 Sec. 15. Section 511.8, subsection 9, Code 2015, is amended 15 by adding the following new paragraph: 16 NEW PARAGRAPH . h. Mezzanine real estate loans subject to 17 the following conditions: 18 (1) The terms of the mezzanine real estate loan agreement 19 shall do all of the following: 20 (a) Require that each pledgor abstain from granting 21 additional security interests in the equity interest pledged. 22 (b) Set forth techniques to minimize the likelihood or 23 impact of a bankruptcy filing on the part of the real estate 24 owner or the mezzanine real estate loan borrower consistent 25 with the national association of insurance commissioners’ 26 accounting practices and procedures manual. 27 (c) Require the real estate owner or mezzanine real estate 28 loan borrower to do all of the following: 29 (i) Hold no assets other than, in the case of the real 30 estate owner, the real property, and in the case of the 31 mezzanine real estate loan borrower, the equity interest of the 32 real estate owner. 33 (ii) Not engage in any business other than, in the case 34 of the real estate owner, the ownership and operation of the 35 -9- SF 346 (3) 86 av/nh/jh 9/ 24

S.F. 346 real estate, and in the case of the mezzanine real estate loan 1 borrower, holding an ownership interest in the real estate 2 owner. 3 (iii) Not incur additional debt, other than limited trade 4 payables, a first mortgage loan, or mezzanine real estate 5 loans. 6 (2) At the time of purchase, the sum of the first mortgage 7 and the mezzanine real estate loans shall not exceed ninety 8 percent of the value of the real estate evidenced by a 9 current appraisal and the mezzanine real estate loan shall be 10 classified as CM4 or better in accordance with the national 11 association of insurance commissioners’ rating methodology, or 12 an equivalent or successor rating. 13 (3) The value of a company’s or association’s total 14 investments qualified under this paragraph “h” shall not exceed 15 three percent of the legal reserve subject to the following 16 conditions: 17 (a) The value of a company’s or association’s total 18 investments qualified under this paragraph “h” in mezzanine 19 real estate loans classified as CM3 in accordance with the 20 national association of insurance commissioners’ rating 21 methodology or an equivalent or successor rating at the time of 22 purchase shall not exceed two percent of the legal reserve. 23 (b) The value of a company’s or association’s total 24 investments qualified under this paragraph “h” in mezzanine 25 real estate loans classified as CM4 in accordance with the 26 national association of insurance commissioners’ rating 27 methodology or an equivalent or successor rating at the time of 28 purchase shall not exceed one percent of the legal reserve. 29 (4) For purposes of this paragraph “h” , “mezzanine real 30 estate loan” means a loan secured by a pledge of a direct or 31 indirect equity interest in an entity that owns real estate. 32 Sec. 16. Section 511.8, subsection 13, Code 2015, is amended 33 to read as follows: 34 13. Collateral loans. Loans secured by collateral 35 -10- SF 346 (3) 86 av/nh/jh 10/ 24

S.F. 346 consisting of any securities assets or investments qualified in 1 under this section , provided the amount of the loan is not in 2 excess of ninety percent of the value of the securities assets 3 or investments . Provided further that subsection 8 shall apply 4 to the collateral securities assets or investments pledged 5 to the payment of loans authorized in qualified under this 6 subsection . 7 Sec. 17. Section 511.8, subsection 18, paragraph a, Code 8 2015, is amended to read as follows: 9 a. (1) Common stocks , or shares , or equity interests issued 10 by solvent corporations or institutions are eligible if the 11 total investment in the common stocks , or shares in , or equity 12 interests of the corporations or institutions does not exceed 13 ten percent of legal reserve, provided not more than one-half 14 percent of the legal reserve is invested in common stocks , 15 or shares , or equity interests of any one corporation or 16 institution . However, the not more than four percent of legal 17 reserve shall be invested in common stocks , or shares shall be 18 , or equity interests which do not meet one of the following 19 requirements: 20 (a) Are listed or admitted to trading on an established 21 foreign securities exchange or a securities exchange in the 22 United States or shall be . 23 (b) Are publicly held and traded in the “over-the-counter 24 market” and , provided that market quotations shall be readily 25 available , and further, the investment . 26 (2) An investment in common stocks, shares, or equity 27 interests shall not create a conflict of interest for an 28 officer or director of the company between the insurance 29 company and the corporation whose common stocks , or shares , or 30 equity interests are purchased. 31 Sec. 18. Section 511.8, subsection 20, paragraph b, Code 32 2015, is amended to read as follows: 33 b. For purposes of this subsection , “venture capital 34 fund” means a corporation, partnership, proprietorship, or 35 -11- SF 346 (3) 86 av/nh/jh 11/ 24

S.F. 346 other entity formed under the laws of the United States, or 1 a state, district, or territory of the United States, whose 2 principal business is or will be the making of investments in, 3 and the provision of significant managerial assistance to, 4 small businesses which meet the small business administration 5 definition of small business. “Equity interests” means limited 6 partnership interests and other equity interests in which 7 liability is limited to the amount of the investment, but does 8 not mean general partnership interests or other interests 9 involving general liability. “Venture capital fund” includes an 10 equity interest in the Iowa fund of funds as defined in section 11 15E.62 and an equity interest in an innovation fund as defined 12 in section 15E.52 . 13 Sec. 19. Section 511.8, subsection 22, paragraphs c and d, 14 Code 2015, are amended to read as follows: 15 c. Investments in financial instruments used in hedging 16 transactions are not eligible in excess of two percent of 17 the legal reserve in the financial instruments of any one 18 corporation, less any securities of that corporation owned 19 by the company or association and in which its legal reserve 20 is invested, except insofar as the financial instruments are 21 collateralized by cash, United States government obligations 22 as authorized by subsection 1 , or obligations of or guaranteed 23 by a United States government-sponsored enterprise which on 24 the date they are pledged as collateral are adequately secured 25 and have investment qualities and characteristics wherein the 26 speculative elements are not predominant investment grade as 27 defined by the commissioner by rule , which are deposited with a 28 custodian bank as defined in subsection 21 , and held under a 29 written agreement with the custodian bank that complies with 30 subsection 21 and provides for the proceeds of the collateral, 31 subject to the terms and conditions of the applicable 32 collateral or other credit support agreement, to be remitted to 33 the legal reserve deposit of the company or association and to 34 vest in the state in accordance with section 508.18 whenever 35 -12- SF 346 (3) 86 av/nh/jh 12/ 24

S.F. 346 proceedings under that section are instituted. 1 d. Investments in financial instruments used in hedging 2 transactions are not eligible in excess of ten percent of the 3 legal reserve, except insofar as the financial instruments are 4 collateralized by cash, United States government obligations 5 as authorized by subsection 1 , or obligations of or guaranteed 6 by a United States government-sponsored enterprise which on 7 the date they are pledged as collateral are adequately secured 8 and have investment qualities and characteristics wherein the 9 speculative elements are not predominant investment grade as 10 defined by the commissioner by rule , which are deposited with a 11 custodian bank as defined in subsection 21 , and held under a 12 written agreement with the custodian bank that complies with 13 subsection 21 and provides for the proceeds of the collateral, 14 subject to the terms and conditions of the applicable 15 collateral or other credit support agreement, to be remitted to 16 the legal reserve deposit of the company or association and to 17 vest in the state in accordance with section 508.18 whenever 18 proceedings under that section are instituted. 19 Sec. 20. Section 511.8, subsection 22, paragraph e, 20 subparagraph (1), Code 2015, is amended to read as follows: 21 (1) Investments in financial instruments of foreign 22 governments or foreign corporate obligations, other than 23 Canada, used in hedging transactions shall be included 24 in the limitation contained in subsection 19 that allows 25 only twenty percent of the legal reserve of the company or 26 association to be invested in such foreign investments, except 27 insofar as the financial instruments are collateralized by 28 cash, United States government obligations as authorized by 29 subsection 1 , or obligations of or guaranteed by a United 30 States government-sponsored enterprise which on the date 31 they are pledged as collateral are adequately secured and 32 have investment qualities and characteristics wherein the 33 speculative elements are not predominant investment grade as 34 defined by the commissioner by rule , which are deposited with a 35 -13- SF 346 (3) 86 av/nh/jh 13/ 24

S.F. 346 custodian bank as defined in subsection 21 , and held under a 1 written agreement with the custodian bank that complies with 2 subsection 21 and provides for the proceeds of the collateral, 3 subject to the terms and conditions of the applicable 4 collateral or other credit support agreement, to be remitted to 5 the legal reserve deposit of the company or association and to 6 vest in the state in accordance with section 508.18 whenever 7 proceedings under that section are instituted. 8 Sec. 21. Section 514G.102, Code 2015, is amended to read as 9 follows: 10 514G.102 Scope. 11 The requirements of this chapter apply to policies delivered 12 or issued for delivery in this state on or after July 1, 2008. 13 The requirements of this chapter related to independent review 14 of benefit trigger determinations apply to all claims made on 15 or after January 1, 2009. The requirements of this chapter 16 related to prompt payment of claims and the payment of interest 17 apply to all long-term care insurance policies. This chapter 18 is not intended to supersede the obligations of entities 19 subject to this chapter to comply with the substance of other 20 applicable insurance laws not in conflict with this chapter , 21 except that laws and regulations designed and intended to apply 22 to Medicare supplement insurance policies shall not be applied 23 to long-term care insurance. 24 Sec. 22. Section 515.35, subsection 4, paragraph m, Code 25 2015, is amended to read as follows: 26 m. Venture capital funds. Shares or equity interests in 27 venture capital funds which agree to invest an amount equal to 28 at least fifty percent of the investments by a company in small 29 businesses having their principal offices within this state and 30 having either more than one-half of their assets within this 31 state or more than one-half of their employees employed within 32 this state. A company shall not invest more than five percent 33 of its capital and surplus under this paragraph. For purposes 34 of this paragraph, “venture capital fund” means a corporation, 35 -14- SF 346 (3) 86 av/nh/jh 14/ 24

S.F. 346 partnership, proprietorship, or other entity formed under the 1 laws of the United States, or a state, district, or territory 2 of the United States, whose principal business is or will be 3 the making of investments in, and the provision of significant 4 managerial assistance to, small businesses which meet the small 5 business administration definition of small business. “Equity 6 interests” means limited partnership interests and other equity 7 interests in which liability is limited to the amount of the 8 investment, but does not mean general partnership interests or 9 other interests involving general liability. “Venture capital 10 fund” includes an equity interest in the Iowa fund of funds 11 as defined in section 15E.62 and an equity interest in an 12 innovation fund as defined in section 15E.52 . 13 Sec. 23. Section 521A.5, subsection 4, paragraph d, Code 14 2015, is amended to read as follows: 15 d. The board of directors of a domestic insurer shall 16 establish one or more committees comprised solely of directors 17 who or other persons appointed by the board, the majority of 18 whom are not officers or employees of the insurer or of any 19 entity controlling, controlled by, or under common control with 20 the insurer and who are not beneficial owners of a controlling 21 interest in the voting stock of the insurer or any such entity. 22 The committee or committees shall have responsibility for 23 recommending or nominating candidates for director for election 24 by shareholders or policyholders, evaluating the performance 25 of officers deemed to be principal officers of the insurer, 26 and recommending to the board of directors the selection and 27 compensation of the principal officers. 28 Sec. 24. Section 523A.102, subsection 8, Code 2015, is 29 amended by striking the subsection. 30 Sec. 25. Section 523A.204, subsection 3, Code 2015, is 31 amended to read as follows: 32 3. All records maintained by the commissioner under this 33 section shall be confidential pursuant to section 22.7, 34 subsection 58 , and shall not be made available for inspection 35 -15- SF 346 (3) 86 av/nh/jh 15/ 24

S.F. 346 or copying except upon the approval of the commissioner or the 1 attorney general , or except when sought by the preneed seller 2 to whom the records relate . Such records shall be privileged 3 and confidential in any judicial or administrative proceeding 4 except any of the following: 5 a. An action commenced by the commissioner. 6 b. An administrative proceeding brought by the insurance 7 division. 8 c. An action or proceeding which arises out of the criminal 9 provisions of the laws of this state or of the United States. 10 d. An action brought by the insurance division or 11 the attorney general to recover moneys for embezzlement, 12 misappropriation, or misuse of trust funds. 13 Sec. 26. Section 523A.204, subsections 4 and 5, Code 2015, 14 are amended by striking the subsections. 15 Sec. 27. Section 523A.205, subsection 2, Code 2015, is 16 amended by striking the subsection. 17 Sec. 28. Section 523A.205, subsection 3, Code 2015, is 18 amended to read as follows: 19 3. Notwithstanding chapter 22 , all All records maintained 20 by the commissioner under this section shall be confidential 21 pursuant to section 22.7, subsection 58, and shall not be made 22 available for inspection or copying except upon approval of the 23 commissioner or the attorney general , or except when sought by 24 the financial institution to whom the records relate . Such 25 records shall be privileged and confidential in any judicial or 26 administrative proceeding except any of the following: 27 a. An action commenced by the commissioner. 28 b. An administrative proceeding brought by the insurance 29 division. 30 c. An action or proceeding which arises out of the criminal 31 provisions of the laws of this state or of the United States. 32 d. An action brought by the insurance division or 33 the attorney general to recover moneys for embezzlement, 34 misappropriation, or misuse of trust funds. 35 -16- SF 346 (3) 86 av/nh/jh 16/ 24

S.F. 346 Sec. 29. Section 523A.206, subsection 6, Code 2015, is 1 amended by striking the subsection and inserting in lieu 2 thereof the following: 3 6. All records maintained by the commissioner under this 4 section, including work papers, notes, recorded information, 5 documents, and copies thereof that are produced or obtained 6 by or disclosed to the commissioner or another person in the 7 course of a compliance examination, shall be confidential 8 pursuant to section 22.7, subsection 58, and shall not be 9 made available for inspection and copying except upon the 10 approval of the commissioner or the attorney general. Such 11 records shall be privileged and confidential in any judicial or 12 administrative proceeding except any of the following: 13 a. An action commenced by the commissioner. 14 b. An administrative proceeding brought by the insurance 15 division. 16 c. An action or proceeding which arises out of the criminal 17 provisions of the laws of this state or of the United States. 18 d. An action brought by the insurance division or 19 the attorney general to recover moneys for embezzlement, 20 misappropriation, or misuse of trust funds. 21 Sec. 30. Section 523A.207, Code 2015, is amended to read as 22 follows: 23 523A.207 Audits by certified public accountants —— penalty. 24 1. A purchase agreement shall not be sold or transferred, 25 as part of the sale of a business or the assets of a business, 26 until an audit has been performed by a certified public 27 accountant and filed with the commissioner that expresses the 28 auditor’s opinion of the adequacy of funding related to the 29 purchase agreements to be sold or transferred. If the buyer 30 of a purchase agreement sold or transferred as part of the 31 sale of a business or the assets of a business, fails to file 32 such an audit, the commissioner shall suspend the preneed 33 seller’s license of the buyer and the preneed sales license of 34 any sales agent in the employ of the buyer until the audit is 35 -17- SF 346 (3) 86 av/nh/jh 17/ 24

S.F. 346 filed. In addition, the commissioner shall assess a penalty 1 against the buyer in an amount up to one hundred dollars for 2 each day that the audit remains unfiled. The commissioner 3 shall allow a thirty-day grace period after the date that a 4 purchase agreement is sold or transferred before suspension of 5 a license or assessment of a penalty for failure to file an 6 audit pursuant to this section . 7 2. All records maintained by the commissioner under this 8 section shall be confidential pursuant to section 22.7, 9 subsection 58, and shall not be made available for inspection 10 or copying except upon approval of the commissioner or the 11 attorney general, or except when sought by the preneed seller 12 to whom the records relate. Such records shall be privileged 13 and confidential in any judicial or administrative proceeding 14 except any of the following: 15 a. An action commenced by the commissioner. 16 b. An administrative proceeding brought by the insurance 17 division. 18 c. An action or proceeding which arises out of the criminal 19 provisions of the laws of this state or of the United States. 20 d. An action brought by the insurance division or 21 the attorney general to recover moneys for embezzlement, 22 misappropriation, or misuse of trust funds. 23 Sec. 31. Section 523A.401, subsection 8, Code 2015, is 24 amended to read as follows: 25 8. An insurance company issuing policies funding purchase 26 agreements subject to this chapter shall file an annual report 27 with the commissioner on a form prescribed by the commissioner. 28 The report shall list the applicable insurance policies 29 outstanding for each seller. Computer printouts may be 30 submitted so long as each legibly provides the same information 31 required in the prescribed form. 32 Sec. 32. Section 523A.401, Code 2015, is amended by adding 33 the following new subsection: 34 NEW SUBSECTION . 10. All records maintained by the 35 -18- SF 346 (3) 86 av/nh/jh 18/ 24