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Text: HF00246                           Text: HF00248
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Bills and Amendments: General Index     Bill History: General Index

House File 247

Partial Bill History

Bill Text

PAG LIN
  1  1    Section 1.  Section 87.4, Code 1995, is amended by adding
  1  2 the following new unnumbered paragraph:
  1  3    NEW UNNUMBERED PARAGRAPH.  The workers' compensation
  1  4 premium written on a municipality which is a member of an
  1  5 insurance pool which provides workers' compensation insurance
  1  6 coverage to a statewide group of municipalities, as defined in
  1  7 section 670.1, shall not be considered in the determination of
  1  8 any assessments levied pursuant to an agreement established
  1  9 under section 515A.15.
  1 10    Sec. 2.  Section 144C.4, Code 1995, is amended by adding
  1 11 the following new subsection:
  1 12    NEW SUBSECTION.  1A.  The commissioner or the
  1 13 commissioner's designee shall serve as an ex officio,
  1 14 nonvoting member of the board.
  1 15    Sec. 3.  NEW SECTION.  505.22  CERTAIN RELIGIOUS
  1 16 ORGANIZATION ACTIVITIES EXEMPT FROM REGULATION.
  1 17    A religious organization which, through its publication to
  1 18 subscribers, solicits funds for the payment of medical
  1 19 expenses of other subscribers, shall not be considered to be
  1 20 engaging in the business of insurance for purposes of this
  1 21 chapter or any other provision of Title XIII, and shall not be
  1 22 subject to the jurisdiction of the commissioner of insurance,
  1 23 if all of the following apply:
  1 24    1.  The religious publication is provided by a nonprofit
  1 25 charitable organization described in section 501(c)(3) of the
  1 26 Internal Revenue Code.
  1 27    2.  Participation is limited to subscribers who are members
  1 28 of the same denomination or religion.
  1 29    3.  The publication is registered with the United States
  1 30 postal service and acts as an organizational clearinghouse for
  1 31 information between subscribers who have financial, physical,
  1 32 or medical needs, and subscribers who choose to assist with
  1 33 those needs, matching subscribers with the present ability to
  1 34 pay with subscribers with a present financial or medical need.
  1 35    4.  The organization, through its publication, provides for
  2  1 the payment for subscriber financial or medical needs through
  2  2 direct payments from one subscriber to another.
  2  3    5.  The organization, through its publication, suggests
  2  4 amounts to contribute that are voluntary among the
  2  5 subscribers, with no assumption of risk or promise to pay
  2  6 either among the subscribers or between the subscribers and
  2  7 the publication.
  2  8    Sec. 4.  Section 507.2, subsection 3, Code 1995, is amended
  2  9 to read as follows:
  2 10    3.  In lieu of an examination under this chapter of any
  2 11 foreign or alien insurer licensed in this state, the
  2 12 commissioner may accept an examination report on the company
  2 13 as prepared by the regulatory authority for insurance for the
  2 14 company's state of domicile or port-of-entry state until
  2 15 January 1, 1994.  Thereafter, such reports shall only be
  2 16 accepted if the regulatory authority was at the time of the
  2 17 examination accredited under the national association of
  2 18 insurance commissioners' financial regulation standards and
  2 19 accreditation program or the examination is performed under
  2 20 the supervision of an accredited regulatory authority or with
  2 21 the participation of one or more examiners who are employed by
  2 22 the accredited state and who, after a review of the
  2 23 examination work papers and report, state under oath that the
  2 24 examination was performed in a manner consistent with
  2 25 standards and procedures required by their insurance
  2 26 department.
  2 27    Sec. 5.  Section 507A.10, Code 1995, is amended to read as
  2 28 follows:
  2 29    507A.10  CEASE AND DESIST ORDER &endash; CIVIL PENALTY.
  2 30    The commissioner Upon a determination by the commissioner,
  2 31 after a hearing conducted pursuant to chapter 17A, that a
  2 32 person or insurer has violated a provision of this chapter,
  2 33 the commissioner shall reduce the findings of the hearing to
  2 34 writing and deliver a copy of the findings to the person or
  2 35 insurer, may issue an order requiring the person or insurer to
  3  1 cease and desist from engaging in the conduct resulting in the
  3  2 violation, and may assess a civil penalty of not more than
  3  3 fifty thousand dollars against a the person or insurer who has
  3  4 violated a provision of this chapter.
  3  5    Sec. 6.  Section 507B.4, subsection 7, Code 1995, is
  3  6 amended by adding the following new paragraph:
  3  7    NEW PARAGRAPH.  c.  Making or permitting any discrimination
  3  8 in the sale of insurance solely on the basis of domestic abuse
  3  9 as defined in section 236.2.
  3 10    Sec. 7.  Section 508.5, Code 1995, is amended to read as
  3 11 follows:
  3 12    508.5  CAPITAL AND SURPLUS REQUIRED.
  3 13    A stock life insurance company shall not be authorized to
  3 14 transact business under this chapter with less than two
  3 15 million five hundred thousand dollars capital stock fully paid
  3 16 for in cash and two million five hundred thousand dollars of
  3 17 surplus paid in cash or invested as provided by law.  A stock
  3 18 life insurance company shall not increase its capital stock
  3 19 unless the amount of the increase is fully paid in cash.  The
  3 20 stock shall be divided into shares of not less than one dollar
  3 21 par value each.  A stock life insurance company authorized to
  3 22 do business in Iowa that undergoes a change of control as
  3 23 defined under chapter 521A shall maintain the minimum capital
  3 24 and surplus requirements mandated by this section.
  3 25    Sec. 8.  Section 508.9, Code 1995, is amended to read as
  3 26 follows:
  3 27    508.9  MUTUAL COMPANIES &endash; CONDITIONS.
  3 28    Level premium and natural premium life insurance companies
  3 29 organized under the laws of this state upon the mutual plan
  3 30 shall, before issuing policies, have actual applications on at
  3 31 least two hundred and fifty lives for an average amount of one
  3 32 thousand dollars each.  A list of the applications giving the
  3 33 name, age, residence, amount of insurance, and annual premium
  3 34 of each applicant shall be filed with the commissioner of
  3 35 insurance, and a deposit made with the commissioner of an
  4  1 amount equal to three-fifths of the whole annual premium on
  4  2 the applications, in cash or the securities required by
  4  3 section 508.5.  In addition, a deposit of cash or securities
  4  4 of the character provided by law for the investment of funds
  4  5 for life insurance companies in the sum of five million
  4  6 dollars shall be made with the commissioner, which shall
  4  7 constitute a security fund for the protection of
  4  8 policyholders.  The contribution to the security fund shall
  4  9 not give to contributors to the fund or to other persons any
  4 10 voting or other power in the management of the affairs of the
  4 11 company.  The security fund may be repaid to the contributors
  4 12 to the security fund with interest at six percent from the
  4 13 date of contribution, at any time, in whole or in part, if the
  4 14 repayment does not reduce the surplus of the company below the
  4 15 amount of five million dollars and then only if consent in
  4 16 writing for the repayment is obtained from the commissioner of
  4 17 insurance.  Upon compliance with this section, the
  4 18 commissioner shall issue to the mutual company the certificate
  4 19 prescribed in this chapter.  A mutual insurance company
  4 20 authorized to do business in Iowa that undergoes a change of
  4 21 control as defined in chapter 521A shall maintain the minimum
  4 22 surplus requirement mandated by this section.
  4 23    Sec. 9.  Section 513B.2, subsection 10, paragraph b, Code
  4 24 1995, is amended to read as follows:
  4 25    b.  "Health benefit plan" does not include accident-only,
  4 26 credit, dental, Medicare supplement, long-term care, or
  4 27 disability income insurance, coverage issued as a supplement
  4 28 to liability insurance, workers' compensation or similar
  4 29 insurance, or automobile medical-payment insurance.
  4 30    Sec. 10.  Section 514B.10, Code 1995, is amended to read as
  4 31 follows:
  4 32    514B.10  CHARGES &endash; APPROVAL REQUIRED.
  4 33    No schedule of charges for enrollees coverage for health
  4 34 care services or amendment to the schedule may be used by a
  4 35 health maintenance organization until a copy of the schedule
  5  1 or amendment to the schedule has been filed with and approved
  5  2 by the commissioner.  Charges to enrollees may be established
  5  3 in accordance with actuarial principles for various categories
  5  4 of enrollees, but the charges shall not be determined
  5  5 according to the status of an individual enrollee's health or
  5  6 sex and shall not be excessive, inadequate, or unfairly
  5  7 discriminatory.
  5  8    Sec. 11.  Section 514B.17, Code 1995, is amended to read as
  5  9 follows:
  5 10    514B.17  CANCELLATION OF ENROLLEES.
  5 11    1.  An enrollee enrolled in a prepaid individual plan shall
  5 12 not be canceled except for the failure to pay the charges
  5 13 permitted under section 514B.10 or for other reasons stated in
  5 14 the rules promulgated adopted by the commissioner and subject
  5 15 to review in accordance with chapter 17A.  No Except as
  5 16 provided in subsection 2 concerning prepaid group plans,
  5 17 notice of cancellation to an enrollee shall not be effective
  5 18 unless delivered to the enrollee by the health maintenance
  5 19 organization in a manner prescribed by the commissioner and at
  5 20 least thirty days before the effective date of cancellation
  5 21 and unless accompanied by a statement of reason for
  5 22 cancellation.  At any time before cancellation of the policy
  5 23 for nonpayment, the enrollee may pay to the health maintenance
  5 24 organization the full amount due, including court costs if
  5 25 any, and from the date of payment by the enrollee or the
  5 26 collection of the judgment, coverage shall revive and be in
  5 27 full force and effect.
  5 28    2.  The effect of cancellation of a prepaid group plan
  5 29 providing health care services to enrollees, and the duty to
  5 30 provide notice and liability for benefits, is the same as
  5 31 provided under section 509B.5, subsection 2, for the
  5 32 termination of accident or health insurance for employees or
  5 33 members.
  5 34    Sec. 12.  Section 514C.2, Code 1995, is amended to read as
  5 35 follows:
  6  1    514C.2  SKILLED NURSING CARE COVERED IN HOSPITALS.
  6  2    An insurer, a hospital service corporation, or a medical
  6  3 service corporation, which covers the costs of skilled nursing
  6  4 care under an individual or group policy of accident and
  6  5 health insurance regulated under chapter 509 or 514A, or under
  6  6 a nonprofit hospital or medical and surgical service plan
  6  7 regulated under chapter 514, or a health care service contract
  6  8 regulated under chapter 514B, shall also cover the costs of
  6  9 skilled nursing care in a hospital if the level of care needed
  6 10 by the insured or subscriber has been reclassified from acute
  6 11 care to skilled nursing care and no designated skilled nursing
  6 12 care beds or swing beds are available in the hospital or in
  6 13 another hospital or health care facility within a thirty-mile
  6 14 radius of the hospital.  The insurer or corporation shall
  6 15 reimburse the insured or subscriber based on the skilled
  6 16 nursing care rate.
  6 17    Sec. 13.  NEW SECTION.  514C.8  COORDINATION OF HEALTH CARE
  6 18 BENEFITS WITH STATE MEDICAL ASSISTANCE.
  6 19    1.  An insurer, health maintenance organization, or
  6 20 hospital and medical service plan providing health care
  6 21 coverage to individuals in this state shall not consider the
  6 22 availability of or eligibility for medical assistance under
  6 23 Title XIX of the federal Social Security Act and chapter 249A,
  6 24 when determining eligibility of the individual for coverage or
  6 25 calculating payments to the individual under the health care
  6 26 coverage plan.
  6 27    2.  The state acquires the rights of an individual to
  6 28 payment from an insurer, health maintenance organization, or
  6 29 hospital or medical service plan to the extent payment for
  6 30 covered expenses is made pursuant to chapter 249A for health
  6 31 care items or services provided to the individual.  Upon
  6 32 presentation of proof that payment was made pursuant to
  6 33 chapter 249A for covered expenses, the insurer, health
  6 34 maintenance organization, or hospital or medical service plan
  6 35 shall make payment to the state medical assistance program to
  7  1 the extent of the coverage provided in the policy or contract.
  7  2    3.  An insurer shall not impose requirements on the state
  7  3 with respect to the assignment of rights pursuant to this
  7  4 section that are different from the requirements applicable to
  7  5 an agent or assignee of a covered individual.
  7  6    4.  For purposes of this section, "insurer" means an entity
  7  7 which offers a health benefit plan, including a group health
  7  8 plan under the federal Employee Retirement Income Security Act
  7  9 of 1974.
  7 10    Sec. 14.  NEW SECTION.  514C.9  MEDICAL SUPPORT &endash;
  7 11 INSURANCE REQUIREMENTS.
  7 12    1.  An insurer shall not deny coverage or enrollment of a
  7 13 child under the health plan of the obligor upon any of the
  7 14 following grounds:
  7 15    a.  The child is born out of wedlock.
  7 16    b.  The child is not claimed as a dependent on the
  7 17 obligor's federal income tax return.
  7 18    c.  The child does not reside with the obligor or in the
  7 19 insurer's service area.  This section shall not be construed
  7 20 to require a health maintenance organization regulated under
  7 21 chapter 514B to provide any services or benefits for treatment
  7 22 outside of the geographic area described in its certificate of
  7 23 authority which would not be provided to a member outside of
  7 24 that geographic area pursuant to the terms of the health
  7 25 maintenance organizations contract.
  7 26    2.  An insurer of an obligor providing health care coverage
  7 27 to the child for which the obligor is legally responsible to
  7 28 provide support shall do all of the following:
  7 29    a.  Provide information to the obligee or other legal
  7 30 custodian of the child as necessary for the child to obtain
  7 31 benefits through the coverage of the insurer.
  7 32    b.  Allow the obligee or other legal custodian of the
  7 33 child, or the provider with the approval of the obligee or
  7 34 other legal custodian of the child, to submit claims for
  7 35 covered services without the approval of the obligor.
  8  1    c.  Make payment on a claim submitted in paragraph "b"
  8  2 directly to the obligee or other legal custodian of the child,
  8  3 the provider, or the state medical assistance agency for
  8  4 claims submitted by the obligee or other legal custodian of
  8  5 the child, by the provider with the approval of the obligee or
  8  6 other legal custodian of the child, or by the state medical
  8  7 assistance agency.
  8  8    3.  If an obligor is required by a court order or
  8  9 administrative order to provide health coverage for a child
  8 10 and the obligor is eligible for dependent health coverage, the
  8 11 insurer shall do all of the following:
  8 12    a.  Allow the obligor to enroll under dependent coverage a
  8 13 child who is eligible for coverage pursuant to the applicable
  8 14 terms and conditions of the health benefit plan and the
  8 15 standard enrollment guidelines of the insurer without regard
  8 16 to an enrollment season restriction.
  8 17    b.  Enroll a child who is eligible for coverage under the
  8 18 applicable terms and conditions of the health benefit plan and
  8 19 the standard enrollment guidelines of the insurer, without
  8 20 regard to any time of enrollment restriction, under dependent
  8 21 coverage upon application by the obligee or other legal
  8 22 custodian of the child or by the department of human services
  8 23 in the event an obligor required by a court order or
  8 24 administrative order fails to apply for coverage for the
  8 25 child.
  8 26    c.  Maintain coverage and not cancel the child's enrollment
  8 27 unless the insurer obtains satisfactory written evidence of
  8 28 any of the following:
  8 29    (1)  The court order or administrative order is no longer
  8 30 in effect.
  8 31    (2)  The child is eligible for or will enroll in comparable
  8 32 health coverage through an insurer which shall take effect not
  8 33 later than the effective date of the cancellation of
  8 34 enrollment of the original coverage.
  8 35    (3)  The employer has eliminated dependent health coverage
  9  1 for its employees.
  9  2    (4)  The obligor is no longer paying the required premium
  9  3 because the employer no longer owes the obligor compensation,
  9  4 or because the obligor's employment has terminated and the
  9  5 obligor has not elected to continue coverage.
  9  6    4.  A group health plan shall establish reasonable
  9  7 procedures to determine whether a child is covered under a
  9  8 qualified medical child support order issued pursuant to
  9  9 chapter 252E.  The procedures shall be in writing, provide for
  9 10 prompt notice of each person specified in the medical child
  9 11 support order as eligible to receive benefits under the group
  9 12 health plan upon receipt by the plan of the medical child
  9 13 support order, and allow an obligee or other legal custodian
  9 14 of the child under chapter 252E to designate a representative
  9 15 for receipt of copies of notices in regard to the medical
  9 16 child support order that are sent to the obligee or other
  9 17 legal custodian of the child and the department of human
  9 18 services' child support recovery unit.
  9 19    5.  For purposes of this section, unless the context
  9 20 otherwise requires:
  9 21    a.  "Child" means a person, other than an obligee's spouse
  9 22 or former spouse, who is recognized under a qualified medical
  9 23 child support order as having a right to enrollment under a
  9 24 group health plan as the obligor's dependent.
  9 25    b.  "Court order" or "administrative order" means a ruling
  9 26 by a court or administrative agency in regard to the support
  9 27 an obligor shall provide to the obligor's child.
  9 28    c.  "Insurer" means an entity which offers a health benefit
  9 29 plan.
  9 30    d.  "Obligee" means an obligee as defined in section
  9 31 252E.1.
  9 32    e.  "Obligor" means an obligor as defined in section
  9 33 252E.1.
  9 34    f.  "Qualified medical child support order" means a child
  9 35 support order which creates or recognizes a child's right to
 10  1 receive health benefits for which the child is eligible under
 10  2 a group health benefit plan, describes or determines the type
 10  3 of coverage to be provided, specifies the length of time for
 10  4 which the order applies, and specifies the plan to which the
 10  5 order applies.
 10  6    Sec. 15.  NEW SECTION.  514C.10  COVERAGE FOR ADOPTED
 10  7 CHILD.
 10  8    1.  DEFINITIONS.  For purposes of this section, unless the
 10  9 context otherwise requires:
 10 10    a.  "Child" means, with respect to an adoption or a
 10 11 placement for adoption of a child, an individual who has not
 10 12 attained age eighteen as of the date of the issuance of a
 10 13 final adoption decree, or upon an interlocutory adoption
 10 14 decree becoming a final adoption decree, as provided in
 10 15 chapter 600, or as of the date of the placement for adoption.
 10 16    b.  "Placement for adoption" means the assumption and
 10 17 retention of a legal obligation for the total or partial
 10 18 support of the child in anticipation of the adoption of the
 10 19 child.  The child's placement with a person terminates upon
 10 20 the termination of such legal obligation.
 10 21    2.  COVERAGE REQUIRED.  A policy or contract providing for
 10 22 third-party payment or prepayment of health or medical
 10 23 expenses shall provide coverage benefits to a dependent child
 10 24 adopted by, or placed for adoption with, an insured or
 10 25 enrollee under the same terms and conditions as apply to a
 10 26 biological, dependent child of the insured or enrollee.  The
 10 27 issuer of the policy or contract shall not restrict coverage
 10 28 under the policy or contract for a dependent child adopted by,
 10 29 or placed for adoption with, the insured or enrollee solely on
 10 30 the basis of a preexisting condition of such dependent child
 10 31 at the time that the child would otherwise become eligible for
 10 32 coverage under the plan, if the adoption or placement occurs
 10 33 while the insured or enrollee is eligible for coverage under
 10 34 the policy or contract.  This section applies to the following
 10 35 classes of third-party payment provider contracts or policies
 11  1 delivered, issued for delivery, continued, or renewed in this
 11  2 state on or after July 1, 1995:
 11  3    a.  Individual or group accident and sickness insurance
 11  4 providing coverage on an expense-incurred basis.
 11  5    b.  An individual or group hospital or medical service
 11  6 contract issued pursuant to chapter 509, 514, or 514A.
 11  7    c.  An individual or group health maintenance organization
 11  8 contract regulated under chapter 514B.
 11  9    d.  An individual or group Medicare supplemental policy,
 11 10 unless coverage pursuant to such policy is preempted by
 11 11 federal law.
 11 12    e.  An organized delivery system licensed by the director
 11 13 of public health.
 11 14    Sec. 16.  Section 514G.7, subsection 3, paragraphs a and b,
 11 15 Code 1995, are amended by striking the paragraphs and
 11 16 inserting in lieu thereof the following:
 11 17    a.  A long-term care insurance policy or certificate shall
 11 18 not use a definition of preexisting condition which is more
 11 19 restrictive than the following:  "Preexisting condition" means
 11 20 the existence of symptoms which would cause an ordinarily
 11 21 prudent person to seek diagnosis, care, or treatment, or a
 11 22 condition for which medical advice or treatment was
 11 23 recommended by or received from a provider of health care
 11 24 services within six months preceding the effective date of
 11 25 coverage of an insured person.
 11 26    b.  A long-term care insurance policy shall not exclude
 11 27 coverage for a loss or confinement which is the result of a
 11 28 preexisting condition unless the loss or confinement begins
 11 29 within six months following the effective date of coverage of
 11 30 an insured person.
 11 31    Sec. 17.  Section 514G.7, subsection 3, paragraph c, Code
 11 32 1995, is amended by striking the paragraph.
 11 33    Sec. 18.  Section 514G.7, subsection 6, Code 1995, is
 11 34 amended by striking the subsection and inserting in lieu
 11 35 thereof the following:
 12  1    6.  RIGHT TO RETURN AFTER EXAMINATION.  An individual long-
 12  2 term care insurance policyholder has the right to return the
 12  3 policy within thirty days of its delivery and to have the
 12  4 premium refunded if, after examination, the insured person is
 12  5 not satisfied for any reason.  Long-term care insurance
 12  6 policies must have a notice prominently printed on the first
 12  7 page or attached to the first page stating in substance that
 12  8 the policyholder has the right to return the policy within
 12  9 thirty days of its delivery and to have the premium refunded
 12 10 as provided in this subsection.
 12 11    Sec. 19.  Section 515.8, Code 1995, is amended to read as
 12 12 follows:
 12 13    515.8  PAID-UP CAPITAL REQUIRED.
 12 14    An insurance company other than a life insurance company
 12 15 shall not be incorporated to transact business upon the stock
 12 16 plan with less than two million five hundred thousand dollars
 12 17 capital, the entire amount of which shall be fully paid up in
 12 18 cash and invested as provided by law.  An insurance company
 12 19 other than a life insurance company shall not increase its
 12 20 capital stock unless the amount of the increase is fully paid
 12 21 up in cash.  The stock shall be divided into shares of not
 12 22 less than one dollar each.  An insurance company authorized to
 12 23 do business in Iowa that undergoes a change of control as
 12 24 defined under chapter 521A shall maintain the minimum capital
 12 25 requirements mandated by this section.
 12 26    Sec. 20.  Section 515.10, Code 1995, is amended to read as
 12 27 follows:
 12 28    515.10  SURPLUS REQUIRED.
 12 29    An insurance company other than a life insurance company
 12 30 shall have, in addition to the required paid-up capital, a
 12 31 surplus in cash or invested in securities authorized by law of
 12 32 not less than two million five hundred thousand dollars.  An
 12 33 insurance company authorized to do business in Iowa that
 12 34 undergoes a change of control as defined under chapter 521A
 12 35 shall maintain the minimum surplus requirements mandated by
 13  1 this section.
 13  2    Sec. 21.  Section 515.12, subsection 5, Code 1995, is
 13  3 amended to read as follows:
 13  4    5.  The mutual company shall have in cash or in securities
 13  5 in which insurance companies are authorized to invest, surplus
 13  6 in an amount not less than five million dollars.  The surplus
 13  7 so required may be advanced in accordance with section 515.19.
 13  8 A mutual company authorized to do business in Iowa that
 13  9 undergoes a change of control as defined under chapter 521A
 13 10 shall maintain the minimum surplus requirements mandated by
 13 11 this section.
 13 12    However, the surplus requirements do not apply to a company
 13 13 which establishes and maintains a guaranty fund as provided by
 13 14 section 515.20.
 13 15    Sec. 22.  Section 515.94, Code 1995, is amended to read as
 13 16 follows:
 13 17    515.94  COPY OF APPLICATION &endash; DUTY TO ATTACH.
 13 18    All insurance companies or associations shall, upon the
 13 19 issue or renewal of any policy, attach to such policy, or
 13 20 endorse thereon provide to the insured, a true copy of any
 13 21 application or representation of the assured insured which, by
 13 22 the terms of such policy, is made a part thereof of the
 13 23 policy, or of the contract of insurance, or referred to
 13 24 therein in the contract of insurance, or which may in any
 13 25 manner affect the validity of such policy.
 13 26    Sec. 23.  Section 515.109, Code 1995, is amended to read as
 13 27 follows:
 13 28    515.109  FORMS OF POLICIES AND ENDORSEMENTS &endash; APPROVAL.
 13 29    1.  The form of all policies, and of applications, and of
 13 30 agreements or endorsements modifying the provisions of
 13 31 policies, and of all permits and riders used generally
 13 32 throughout the state, issued or proposed to be issued by any
 13 33 insurance company doing business in this state under the
 13 34 provisions of this chapter, shall first be examined and
 13 35 approved by the commissioner of insurance.
 14  1    2.  The commissioner, upon a determination that the
 14  2 examination required under subsection 1 is unnecessary to
 14  3 achieve the purposes of this section, may exempt either of the
 14  4 following:
 14  5    a.  Any specified person by order, or any class of persons
 14  6 by rule.
 14  7    b.  Any specified risk by order, or any line or kind or
 14  8 insurance or subdivision of insurance or any class of risk or
 14  9 combination of classes of risks by rule.
 14 10    Sec. 24.  Section 515A.15, Code 1995, is amended to read as
 14 11 follows:
 14 12    515A.15  ASSIGNED RISKS.
 14 13    Agreements may shall be made among insurers with respect to
 14 14 the equitable apportionment among them of insurance which may
 14 15 be afforded applicants who are in good faith entitled to but
 14 16 who are unable to procure such insurance through ordinary
 14 17 methods and such insurers may agree among themselves on the
 14 18 use of reasonable rate modifications for such insurance, such
 14 19 the agreements and rate modifications to be subject to the
 14 20 approval of the commissioner.
 14 21    For purposes of this section, "insurer" includes, in
 14 22 addition to insurers defined pursuant to section 515A.2, a
 14 23 self-insurance association formed on or after July 1, 1995,
 14 24 pursuant to section 87.4 except for an association comprised
 14 25 of cities or counties, or both, or an association comprised of
 14 26 community colleges as defined in section 260C.2, which have
 14 27 entered into an agreement pursuant to chapter 28E for the
 14 28 purpose of establishing a self-insured program for the payment
 14 29 of workers' compensation benefits.
 14 30    Sec. 25.  Section 515F.5, subsection 4, Code 1995, is
 14 31 amended to read as follows:
 14 32    4.  Under rules adopted under chapter 17A, the commissioner
 14 33 may, by written order, suspend or modify the requirement of
 14 34 filing as to any kind of insurance, or subdivision or
 14 35 combination of insurance, or as to classes of risks, which are
 15  1 unnecessary to achieve the purposes of this chapter and the
 15  2 rates for which cannot practicably be filed before they are
 15  3 used.  The commissioner may make an examination as the
 15  4 commissioner deems advisable to ascertain whether rates
 15  5 affected by the order meet the standards set forth in section
 15  6 515F.4.
 15  7    Sec. 26.  Section 518.14, Code 1995, is amended by striking
 15  8 the section and inserting in lieu thereof the following:
 15  9    518.14  INVESTMENTS.
 15 10    1.  GENERAL CONSIDERATIONS.  The following considerations
 15 11 apply in the interpretation of this section:
 15 12    a.  This section applies to the investments of county
 15 13 mutual insurance associations.
 15 14    b.  The purpose of this section is to protect and further
 15 15 the interests of policyholders, claimants, creditors, and the
 15 16 public by providing standards for the development and
 15 17 administration of programs for the investment of the assets of
 15 18 associations organized under this chapter.  These standards,
 15 19 and the investment programs developed by associations, shall
 15 20 take into account the safety of the association's principal,
 15 21 investment yield and growth, stability in the value of the
 15 22 investment, and liquidity necessary to meet the association's
 15 23 expected business needs, and investment diversification.
 15 24    All investments made pursuant to this section shall have
 15 25 investment qualities and characteristics such that the
 15 26 speculative elements of the investments are not predominant.
 15 27    c.  Financial terms relating to county mutual insurance
 15 28 associations have the meanings assigned to them under
 15 29 statutory accounting methods.  Financial terms relating to
 15 30 companies or associations other than county mutual insurance
 15 31 associations have the meanings assigned to them under
 15 32 generally accepted accounting principles.
 15 33    d.  Investments shall be valued in accordance with the
 15 34 valuation procedures established by the national association
 15 35 of insurance commissioners, unless the commissioner requires
 16  1 or finds another method of valuation reasonable under the
 16  2 circumstances.
 16  3    e.  If an investment qualifies under more than one
 16  4 subsection, an association may elect to hold the investment
 16  5 under the subsection of its choice.  This section does not
 16  6 prevent an association from electing to hold an investment
 16  7 under a subsection different from the one under which it
 16  8 previously held the investment.
 16  9    2.  DEFINITIONS.  For purposes of this section:
 16 10    a.  "Admitted assets", for purposes of computing percentage
 16 11 limitations on particular types of investments, means the
 16 12 assets which are authorized to be shown on the commissioner's
 16 13 annual statement blank as admitted assets as of the December
 16 14 31 immediately preceding the date the association acquires the
 16 15 investment.
 16 16    b.  "Clearing corporation" means as defined in section
 16 17 554.8102.
 16 18    c.  "Custodian bank" means as defined in section 554.8102.
 16 19    d.  "Issuer" means as defined in section 554.8201.
 16 20    e.  "Member bank" means a national bank, state bank, or
 16 21 trust company which is a member of the United States federal
 16 22 reserve system.
 16 23    f.  "National securities exchange" means an exchange
 16 24 registered under section 6 of the federal Securities Exchange
 16 25 Act of 1934 or an exchange regulated under the laws of Canada.
 16 26    g.  "Obligations" includes bonds, notes, debentures,
 16 27 transportation equipment certificates, domestic repurchase
 16 28 agreements, and obligations for the payment of money not in
 16 29 default as to payments of principal and interest on the date
 16 30 of investment, which constitute general obligations of the
 16 31 issuer or payable only out of certain revenues or certain
 16 32 funds pledged or otherwise dedicated for payment of principal
 16 33 and interest on the obligations.  A lease is an obligation if
 16 34 the lease is assigned to the insurer and is nonterminable by
 16 35 the lessee upon foreclosure of any lien upon the leased
 17  1 property, and if rental payments are sufficient to amortize
 17  2 the investment over the primary lease term.
 17  3    3.  INVESTMENTS IN NAME OF ASSOCIATION OR NOMINEE AND
 17  4 PROHIBITIONS.
 17  5    a.  An association's investments shall be held in its own
 17  6 name or the name of its nominee, except as follows:
 17  7    (1)  Investments may be held in the name of a clearing
 17  8 corporation or of a custodian bank or in the name of the
 17  9 nominee of either on the following conditions:
 17 10    (a)  The clearing corporation, custodian bank, or nominee
 17 11 must be legally authorized to hold the particular investment
 17 12 for the account of others.
 17 13    (b)  When the investment is evidenced by a certificate and
 17 14 held in the name of a custodian bank or the nominee of a
 17 15 custodian bank, a written agreement shall provide that
 17 16 certificates so deposited shall at all times be kept separate
 17 17 and apart from other deposits with the depository, so that at
 17 18 all times they may be identified as belonging solely to the
 17 19 association making the deposit.
 17 20    (c)  If a clearing corporation is to act as depository, the
 17 21 investment may be merged or held in bulk in the name of the
 17 22 clearing corporation or its nominee with other investments
 17 23 deposited with the clearing corporation by any other person,
 17 24 if a written agreement between the clearing corporation and
 17 25 the association provides that adequate evidence of the deposit
 17 26 is to be obtained and retained by the association or a
 17 27 custodian bank.
 17 28    (2)  An association may loan stocks or obligations held by
 17 29 it under this chapter to a broker-dealer registered under the
 17 30 federal Securities Exchange Act of 1934 or to a member bank.
 17 31 The loan must be evidenced by a written agreement which
 17 32 provides all of the following:
 17 33    (a)  That the loan will be fully collateralized by cash or
 17 34 obligations issued or guaranteed by the United States or an
 17 35 agency or an instrumentality of the United States, and that
 18  1 the collateral will be adjusted as necessary each business day
 18  2 during the term of the loan to maintain the required
 18  3 collateralization in the event of market value changes in the
 18  4 loaned securities or collateral.
 18  5    (b)  That the loan may be terminated by the association at
 18  6 any time, and that the borrower will return the loaned stocks
 18  7 or obligations within five business days after termination.
 18  8    (c)  That the association has the right to retain the
 18  9 collateral or use the collateral to purchase investments
 18 10 equivalent to the loaned securities if the borrower defaults
 18 11 under the terms of the agreement, and that the borrower
 18 12 remains liable for any losses and expenses incurred by the
 18 13 association due to default that are not covered by the
 18 14 collateral.
 18 15    (3)  An association may participate through a member bank
 18 16 in the United States federal reserve book entry system, and
 18 17 the records of the member bank shall at all times show that
 18 18 the investments are held for the association or for specific
 18 19 accounts of the association.
 18 20    (4)  An investment may consist of an individual interest in
 18 21 a pool of obligations or a fractional interest in a single
 18 22 obligation if the certificate of participation or interest or
 18 23 the confirmation of participation or interest in the
 18 24 investment is issued in the name of the association, the name
 18 25 of the custodian bank, or the nominee of either, and, if the
 18 26 interest as evidenced by the certificate or confirmation is,
 18 27 if held by a custodian bank, kept separate and apart from the
 18 28 investments of others so that at all times the participation
 18 29 may be identified as belonging solely to the association
 18 30 making the investment.
 18 31    (5)  Transfers of ownership of investments held as
 18 32 described in paragraph "a", subparagraph (1), subparagraph
 18 33 subdivision (c), and subparagraphs (3) and (4), may be
 18 34 evidenced by bookkeeping entry on the books of the issuer of
 18 35 the investment, its transfer or recording agent, or the
 19  1 clearing corporation without physical delivery of a
 19  2 certificate evidencing the associations's investment.
 19  3    b.  Except as provided in paragraph "a", subparagraph (5),
 19  4 if an investment is not evidenced by a certificate, adequate
 19  5 evidence of the association's investment shall be obtained
 19  6 from the issuer or its transfer or recording agent and
 19  7 retained by the association, a custodian bank, or clearing
 19  8 corporation.  Adequate evidence, for purposes of this
 19  9 paragraph, means a written receipt or other verification
 19 10 issued by the depository or issuer or a custodian bank which
 19 11 shows that the investment is held for the association.
 19 12    4.  INVESTMENTS.  Except as otherwise permitted by this
 19 13 section, an association organized under this chapter shall
 19 14 only invest in the following:
 19 15    a.  UNITED STATES GOVERNMENT OBLIGATIONS.  Obligations
 19 16 issued or guaranteed by the United States or an agency or
 19 17 instrumentality of the United States.
 19 18    b.  CERTAIN DEVELOPMENT BANK OBLIGATIONS.  Obligations
 19 19 issued or guaranteed by the international bank for
 19 20 reconstruction and development, the Asian development bank,
 19 21 the inter-American development bank, the export-import bank,
 19 22 the world bank, or any United States government-sponsored
 19 23 organization of which the United States is a member, if the
 19 24 principal and interest is payable in United States dollars.
 19 25 An association shall not invest more than five percent of its
 19 26 total admitted assets in the obligations of any one of these
 19 27 banks or organizations, and shall not invest more than a total
 19 28 of ten percent of its total admitted assets in the obligations
 19 29 authorized by this paragraph.
 19 30    c.  STATE OBLIGATIONS.  Obligations issued or guaranteed by
 19 31 a state, a political subdivision of a state, or an
 19 32 instrumentality of a state.
 19 33    d.  CANADIAN GOVERNMENT OBLIGATIONS.  Obligations issued or
 19 34 guaranteed by Canada, by an agency or province of Canada, by a
 19 35 political subdivision of such province, or by an
 20  1 instrumentality of any of those provinces or political
 20  2 subdivisions.
 20  3    e.  CORPORATE AND BUSINESS TRUST OBLIGATIONS.  Obligations
 20  4 issued, assumed, or guaranteed by a corporation or business
 20  5 trust organized under the laws of the United States or a
 20  6 state, or the laws of Canada or a province of Canada, provided
 20  7 that an association shall not invest more than five percent of
 20  8 its admitted assets in the obligations of any one corporation
 20  9 or business trust.  Investments shall be made only in
 20 10 investment grade bonds.
 20 11    f.  STOCKS.  Common stocks, common stock equivalents,
 20 12 mutual fund shares, securities convertible into common stocks
 20 13 or common stock equivalents, or preferred stocks issued or
 20 14 guaranteed by a corporation incorporated under the laws of the
 20 15 United States or a state, or the laws of Canada or a province
 20 16 of Canada.  Aggregate investments in nondividend paying stocks
 20 17 shall not exceed five percent of surplus.
 20 18    (1)  Stocks purchased under this lettered paragraph shall
 20 19 not exceed fifty percent of surplus.  With the approval of the
 20 20 commissioner, an association may invest any amount in common
 20 21 stocks, preferred stocks, or other securities of one or more
 20 22 subsidiaries provided that after such investments the
 20 23 association's surplus as regards policyholders will be
 20 24 reasonable in relation to the association's outstanding
 20 25 liabilities and adequate to its financial needs.
 20 26    (2)  An association shall not invest more than ten percent
 20 27 of its surplus in the stocks of any one corporation.
 20 28    g.  HOME OFFICE REAL ESTATE.  Funds may be invested in a
 20 29 home office building, at the direction of the board of
 20 30 directors and with the prior approval of the commissioner of
 20 31 insurance.  An association shall not invest more than twenty-
 20 32 five percent of its total admitted assets in such real estate.
 20 33 With the prior approval of the commissioner, an association
 20 34 may exceed the real estate investment limitation to effectuate
 20 35 a merger with, or the acquisition of, another association.
 21  1    Sec. 27.  Section 518.16, Code 1995, is amended by striking
 21  2 the section and inserting in lieu thereof the following:
 21  3    518.16  QUALIFICATION OF AGENTS.
 21  4    A person shall not solicit any application for insurance
 21  5 for an association in this state without having procured from
 21  6 the commissioner of insurance a license authorizing the person
 21  7 to act as an agent pursuant to chapter 522.
 21  8    Sec. 28.  NEW SECTION.  518.26  LOANS TO OFFICERS
 21  9 PROHIBITED.
 21 10    Assets or other funds shall not be loaned directly or
 21 11 indirectly to an officer, director, or employee of the
 21 12 association, or directly or indirectly to a relative of an
 21 13 officer, director, or an employee of the association.
 21 14    Sec. 29.  NEW SECTION.  518.27  FORM &endash; APPROVAL.
 21 15    The form of all policies, applications, agreements, and
 21 16 endorsements modifying the provisions of policies, and all
 21 17 permits and riders used in this state, issued or proposed to
 21 18 be issued by a county mutual insurance association doing
 21 19 business in this state under the provisions of this chapter,
 21 20 shall first be examined and approved by the commissioner of
 21 21 insurance.
 21 22    Sec. 30.  NEW SECTION.  518.28  FAILURE TO FILE COPY.
 21 23    Upon the failure of a county mutual association to file a
 21 24 copy of its forms of policies or contracts pursuant to section
 21 25 518.27, the commissioner of insurance may suspend its
 21 26 authority to transact business within the state until such
 21 27 forms of policies or contracts have been filed and approved.
 21 28    Sec. 31.  NEW SECTION.  518.29  DISAPPROVAL OF FILINGS.
 21 29    If the commissioner finds that a filing does not meet the
 21 30 requirements of this chapter, written notice of disapproval
 21 31 shall be sent to the county mutual insurance association
 21 32 specifying in what respect the filing fails to meet the
 21 33 requirements of this chapter and stating that the filing is
 21 34 not effective.  If a filing is disapproved by the
 21 35 commissioner, the association may request a hearing on the
 22  1 disapproval within thirty days.  The association bears the
 22  2 burden of proving compliance with the standards established by
 22  3 this chapter.
 22  4    If, at any time after a form has been approved, the
 22  5 commissioner finds that the form no longer meets the
 22  6 requirements of this chapter, the commissioner may order the
 22  7 discontinuance of the use of the form.  The order of
 22  8 discontinuance shall be in writing and may be issued only
 22  9 after a hearing with at least ten days' prior notice to all
 22 10 county mutuals affected by the order.  The order shall state
 22 11 the grounds upon which the order is based and when the order
 22 12 of discontinuance is effective.
 22 13    Sec. 32.  NEW SECTION.  518.30  CERTIFICATE SUSPENSION.
 22 14    The commissioner of insurance may suspend a county mutual
 22 15 insurance association's certificate of authority to do
 22 16 business if the association neglects or fails to comply with
 22 17 this chapter.
 22 18    Sec. 33.  Section 518A.12, Code 1995, is amended by
 22 19 striking the section and inserting in lieu thereof the
 22 20 following:
 22 21    518A.12  INVESTMENTS.
 22 22    1.  GENERAL CONSIDERATIONS.  The following considerations
 22 23 apply in the interpretation of this section:
 22 24    a.  This section applies to the investments of mutual
 22 25 casualty assessment insurance associations.
 22 26    b.  The purpose of this section is to protect and further
 22 27 the interests of policyholders, claimants, creditors, and the
 22 28 public by providing standards for the development and
 22 29 administration of programs for the investment of the assets of
 22 30 associations organized under this chapter.  These standards,
 22 31 and the investment programs developed by companies, shall take
 22 32 into account the safety of the association's principal,
 22 33 investment yield and growth, stability in the value of the
 22 34 investment, and liquidity necessary to meet the association's
 22 35 expected business needs, and investment diversification.
 23  1    All investments made pursuant to this section shall have
 23  2 investment qualities and characteristics such that the
 23  3 speculative elements of the investments are not predominant.
 23  4    c.  Financial terms relating to mutual casualty assessment
 23  5 insurance associations have the meanings assigned to them
 23  6 under statutory accounting methods.  Financial terms relating
 23  7 to companies other than mutual casualty assessment insurance
 23  8 associations have the meanings assigned to them under
 23  9 generally accepted accounting principles.
 23 10    d.  Investments shall be valued in accordance with the
 23 11 valuation procedures established by the national association
 23 12 of insurance commissioners, unless the commissioner requires
 23 13 or finds another method of valuation reasonable under the
 23 14 circumstances.
 23 15    e.  If an investment qualifies under more than one
 23 16 subsection, an association may elect to hold the investment
 23 17 under the subsection of its choice.  This section does not
 23 18 prevent an association from electing to hold an investment
 23 19 under a subsection different from the one under which it
 23 20 previously held the investment.
 23 21    2.  DEFINITIONS.  For purposes of this section:
 23 22    a.  "Admitted assets", for purposes of computing percentage
 23 23 limitations on particular types of investments, means the
 23 24 assets which are authorized to be shown on the national
 23 25 association of insurance commissioner's annual statement blank
 23 26 as admitted assets as of the December 31 immediately preceding
 23 27 the date the association acquires the investment.
 23 28    b.  "Clearing corporation" means as defined in section
 23 29 554.8102.
 23 30    c.  "Custodian bank" means as defined in section 554.8102.
 23 31    d.  "Issuer" means as defined in section 554.8201.
 23 32    e.  "Member bank" means a national bank, state bank, or
 23 33 trust company which is a member of the United States federal
 23 34 reserve system.
 23 35    f.  "National securities exchange" means an exchange
 24  1 registered under section 6 of the federal Securities Exchange
 24  2 Act of 1934 or an exchange regulated under the laws of Canada.
 24  3    g.  "Obligations" includes bonds, notes, debentures,
 24  4 transportation equipment certificates, domestic repurchase
 24  5 agreements, and obligations for the payment of money not in
 24  6 default as to payments of principal and interest on the date
 24  7 of investment, which constitute general obligations of the
 24  8 issuer or payable only out of certain revenues or certain
 24  9 funds pledged or otherwise dedicated for payment of principal
 24 10 and interest on the obligations.  A lease is an obligation if
 24 11 the lease is assigned to the insurer and is nonterminable by
 24 12 the lessee upon foreclosure of any lien upon the leased
 24 13 property, and if rental payments are sufficient to amortize
 24 14 the investment over the primary lease term.
 24 15    3.  INVESTMENTS IN NAME OF ASSOCIATION OR NOMINEE AND
 24 16 PROHIBITIONS.
 24 17    a.  An association's investments shall be held in its own
 24 18 name or the name of its nominee, except as follows:
 24 19    (1)  Investments may be held in the name of a clearing
 24 20 corporation or of a custodian bank or in the name of the
 24 21 nominee of either on the following conditions:
 24 22    (a)  The clearing corporation, custodian bank, or nominee
 24 23 must be legally authorized to hold the particular investment
 24 24 for the account of others.
 24 25    (b)  When the investment is evidenced by a certificate and
 24 26 held in the name of a custodian bank or the nominee of a
 24 27 custodian bank, a written agreement shall provide that
 24 28 certificates so deposited shall at all times be kept separate
 24 29 and apart from other deposits with the depository, so that at
 24 30 all times they may be identified as belonging solely to the
 24 31 association making the deposit.
 24 32    (c)  If a clearing corporation is to act as depository, the
 24 33 investment may be merged or held in bulk in the name of the
 24 34 clearing corporation or its nominee with other investments
 24 35 deposited with the clearing corporation by any other person,
 25  1 if a written agreement between the clearing corporation and
 25  2 the association provides that adequate evidence of the deposit
 25  3 is to be obtained and retained by the association or a
 25  4 custodian bank.
 25  5    (2)  An association may loan stocks or obligations held by
 25  6 it under this chapter to a broker-dealer registered under the
 25  7 federal Securities Exchange Act of 1934 or to a member bank.
 25  8 The loan must be evidenced by a written agreement which
 25  9 provides all of the following:
 25 10    (a)  That the loan will be fully collateralized by cash or
 25 11 obligations issued or guaranteed by the United States or an
 25 12 agency or an instrumentality of the United States, and that
 25 13 the collateral will be adjusted as necessary each business day
 25 14 during the term of the loan to maintain the required
 25 15 collateralization in the event of market value changes in the
 25 16 loaned securities or collateral.
 25 17    (b)  That the loan may be terminated by the association at
 25 18 any time, and that the borrower will return the loaned stocks
 25 19 or obligations within five business days after termination.
 25 20    (c)  That the association has the right to retain the
 25 21 collateral or use the collateral to purchase investments
 25 22 equivalent to the loaned securities if the borrower defaults
 25 23 under the terms of the agreement, and that the borrower
 25 24 remains liable for any losses and expenses incurred by the
 25 25 association due to default that are not covered by the
 25 26 collateral.
 25 27    (3)  An association may participate through a member bank
 25 28 in the United States federal reserve book entry system, and
 25 29 the records of the member bank shall at all times show that
 25 30 the investments are held for the association or for specific
 25 31 accounts of the association.
 25 32    (4)  An investment may consist of an individual interest in
 25 33 a pool of obligations or a fractional interest in a single
 25 34 obligation if the certificate of participation or interest or
 25 35 the confirmation of participation or interest in the
 26  1 investment is issued in the name of the association, the name
 26  2 of the custodian bank, or the nominee of either, and, if the
 26  3 interest as evidenced by the certificate or confirmation is,
 26  4 if held by a custodian bank, kept separate and apart from the
 26  5 investments of others so that at all times the participation
 26  6 may be identified as belonging solely to the association
 26  7 making the investment.
 26  8    (5)  Transfers of ownership of investments held as
 26  9 described in paragraph "a", subparagraph (1), subparagraph
 26 10 subdivision (c), and subparagraphs (3) and (4), may be
 26 11 evidenced by bookkeeping entry on the books of the issuer of
 26 12 the investment, its transfer or recording agent, or the
 26 13 clearing corporation without physical delivery of a
 26 14 certificate evidencing the associations's investment.
 26 15    b.  Except as provided in paragraph "a", subparagraph (5),
 26 16 if an investment is not evidenced by a certificate, adequate
 26 17 evidence of the association's investment shall be obtained
 26 18 from the issuer or its transfer or recording agent and
 26 19 retained by the association, a custodian bank, or clearing
 26 20 corporation.  Adequate evidence, for purposes of this
 26 21 paragraph, means a written receipt or other verification
 26 22 issued by the depository or issuer or a custodian bank which
 26 23 shows that the investment is held for the association.
 26 24    4.  INVESTMENTS.  Except as otherwise permitted by this
 26 25 section, an association organized under this chapter shall
 26 26 only invest in the following:
 26 27    a.  UNITED STATES GOVERNMENT OBLIGATIONS.  Obligations
 26 28 issued or guaranteed by the United States or an agency or
 26 29 instrumentality of the United States.
 26 30    b.  CERTAIN DEVELOPMENT BANK OBLIGATIONS.  Obligations
 26 31 issued or guaranteed by the international bank for
 26 32 reconstruction and development, the Asian development bank,
 26 33 the inter-American development bank, the export-import bank,
 26 34 the world bank, or any United States government-sponsored
 26 35 organization of which the United States is a member, if the
 27  1 principal and interest is payable in United States dollars.
 27  2 An association shall not invest more than five percent of its
 27  3 total admitted assets in the obligations of any one of these
 27  4 banks or organizations, and shall not invest more than a total
 27  5 of ten percent of its total admitted assets in the obligations
 27  6 authorized by this paragraph.
 27  7    c.  STATE OBLIGATIONS.  Obligations issued or guaranteed by
 27  8 a state, a political subdivision of a state, or an
 27  9 instrumentality of a state.
 27 10    d.  CANADIAN GOVERNMENT OBLIGATIONS.  Obligations issued or
 27 11 guaranteed by Canada, by an agency or province of Canada, by a
 27 12 political subdivision of such province, or by an
 27 13 instrumentality of any of those provinces or political
 27 14 subdivisions.
 27 15    e.  CORPORATE AND BUSINESS TRUST OBLIGATIONS.  Obligations
 27 16 issued, assumed, or guaranteed by a corporation or business
 27 17 trust organized under the laws of the United States or a
 27 18 state, or the laws of Canada or a province of Canada, provided
 27 19 that an association shall not invest more than five percent of
 27 20 its admitted assets in the obligations of any one corporation
 27 21 or business trust.  Investments shall be made only in
 27 22 investment grade bonds.
 27 23    f.  STOCKS.  Common stocks, common stock equivalents,
 27 24 mutual fund shares, securities convertible into common stocks
 27 25 or common stock equivalents, or preferred stocks issued or
 27 26 guaranteed by a corporation incorporated under the laws of the
 27 27 United States or a state, or the laws of Canada or a province
 27 28 of Canada.  Aggregate investments in nondividend paying stocks
 27 29 shall not exceed five percent of surplus.
 27 30    (1)  Stocks purchased under this lettered paragraph shall
 27 31 not exceed fifty percent of surplus.  With the approval of the
 27 32 commissioner, an association may invest any amount in common
 27 33 stocks, preferred stocks, or other securities of one or more
 27 34 subsidiaries provided that after such investments the
 27 35 association's surplus as regards policyholders will be
 28  1 reasonable in relation to the association's outstanding
 28  2 liabilities and adequate to its financial needs.
 28  3    (2)  An association shall not invest more than ten percent
 28  4 of its surplus in the stocks of any one corporation.
 28  5    g.  HOME OFFICE REAL ESTATE.  Funds may be invested in a
 28  6 home office building, at the direction of the board of
 28  7 directors and with the prior approval of the commissioner of
 28  8 insurance.  An association shall not invest more than twenty-
 28  9 five percent of its total admitted assets in such real estate.
 28 10 With the prior approval of the commissioner, an association
 28 11 may exceed the real estate investment limitation to effectuate
 28 12 a merger with, or the acquisition of, another association.
 28 13    Sec. 34.  Section 518A.17, unnumbered paragraph 3, Code
 28 14 1995, is amended to read as follows:
 28 15    Not less than fifty percent of such aggregate amount of
 28 16 assessments, and other sums paid by the members shall be
 28 17 returned to the members, either through the payment of losses
 28 18 or through discounts, credits, or dividends, to be credited on
 28 19 the assessments required for the current or succeeding year,
 28 20 or, at the discretion of the board of directors, may be set
 28 21 aside in the emergency fund as defined in section 518A.12 as
 28 22 surplus to policyholders, but no sum less than forty percent
 28 23 of such aggregate assessments, and other sums paid by the
 28 24 members, shall be returned to the members through payment of
 28 25 such losses or through discounts, credits, or dividends during
 28 26 the current or succeeding year.
 28 27    Sec. 35.  NEW SECTION.  518A.44  LIMITATION ON RISKS.
 28 28    An association shall not expose itself to loss on any one
 28 29 risk or hazard to an amount exceeding ten percent of its
 28 30 surplus to policyholders unless one of the following applies:
 28 31    1.  The excess is reinsured in some other good and reliable
 28 32 company licensed to sell insurance in this state.
 28 33    2.  The excess is reinsured by a group of incorporated or
 28 34 individual unincorporated insurers who are authorized to sell
 28 35 insurance in at least one state of the United States and who
 29  1 possess assets which are held in trust for the benefit of the
 29  2 American policyholders in the sum of not less than fifty
 29  3 million dollars, and a certificate of such reinsurance shall
 29  4 be furnished to the insured.
 29  5    3.  The excess is reinsured with a company which has, with
 29  6 respect to the ceding insurer, created a trust fund, made a
 29  7 deposit, or obtained letters of credit, on terms satisfactory
 29  8 to the commissioner.
 29  9    Sec. 36.  NEW SECTION.  518A.51  LOANS TO OFFICERS
 29 10 PROHIBITED.
 29 11    Assets or other funds shall not be loaned directly or
 29 12 indirectly to an officer, director, or employee of the
 29 13 association, or directly or indirectly to a relative of an
 29 14 officer, director, or employee of the association.
 29 15    Sec. 37.  NEW SECTION.  518A.52  FORM &endash; APPROVAL.
 29 16    The form of all policies, applications, agreements, and
 29 17 endorsements modifying the provisions of policies, and all
 29 18 permits and riders used in this state, issued or proposed to
 29 19 be issued by a mutual casualty assessment insurance
 29 20 association doing business in this state under the provisions
 29 21 of this chapter, shall first be examined and approved by the
 29 22 commissioner of insurance.
 29 23    Sec. 38.  NEW SECTION.  518A.53  FAILURE TO FILE COPY.
 29 24    Upon the failure of a mutual casualty assessment insurance
 29 25 association to file a copy of its forms of policies or
 29 26 contracts pursuant to section 518A.52, the commissioner of
 29 27 insurance may suspend its authority to transact business
 29 28 within the state until such forms of policies or contracts
 29 29 have been filed and approved.
 29 30    Sec. 39.  NEW SECTION.  518A.54  DISAPPROVAL OF FILINGS.
 29 31    If the commissioner finds that a filing does not meet the
 29 32 requirements of this chapter, written notice of disapproval
 29 33 shall be sent to the mutual casualty assessment insurance
 29 34 association specifying in what respect the filing fails to
 29 35 meet the requirements of this chapter and stating that the
 30  1 filing is not effective.  If a filing is disapproved by the
 30  2 commissioner, the association may request a hearing on the
 30  3 disapproval within thirty days.  The association bears the
 30  4 burden of proving compliance with the standards established by
 30  5 this chapter.
 30  6    If, at any time after a form has been approved, the
 30  7 commissioner finds that the form no longer meets the
 30  8 requirements of this chapter, the commissioner may order the
 30  9 discontinuance of the use of the form.  The order of
 30 10 discontinuance shall be in writing and may be issued only
 30 11 after a hearing with at least ten days' prior notice to all
 30 12 mutual casualty assessment insurance associations affected by
 30 13 the order.  The order shall state the grounds upon which the
 30 14 order is based and when the order of discontinuance is
 30 15 effective.
 30 16    Sec. 40.  NEW SECTION.  518A.55  CERTIFICATE SUSPENSION.
 30 17    The commissioner of insurance may suspend a mutual casualty
 30 18 assessment insurance association's certificate of authority to
 30 19 do business if the association neglects or fails to comply
 30 20 with this chapter.
 30 21    Sec. 41.  Section 521.1, Code 1995, is amended to read as
 30 22 follows:
 30 23    521.1  DEFINITIONS.
 30 24    "Company" or "companies" when used in this chapter means a
 30 25 company or association organized under chapter 508, 511, 515,
 30 26 518, 518A, or 520, except county mutuals and includes a mutual
 30 27 insurance holding company organized pursuant to section
 30 28 521A.14.
 30 29    Sec. 42.  Section 521.2, Code 1995, is amended to read as
 30 30 follows:
 30 31    521.2  LIFE COMPANIES &endash; CONSOLIDATION AND REINSURANCE.
 30 32    No A company organized under the laws of this state to do
 30 33 the business of life insurance, either on the stock, mutual,
 30 34 stipulated premium, or assessment plan, shall not consolidate
 30 35 with any other company or reinsure its risks, or any part
 31  1 thereof of such risks, with any other company, or assume or
 31  2 reinsure the whole or any part of the risks of any other
 31  3 company, except as hereinafter provided; provided that nothing
 31  4 contained in this chapter.  However, this chapter shall not be
 31  5 construed to prevent any company, as defined in section 521.1,
 31  6 from reinsuring a fractional part of any single risk.
 31  7    Sec. 43.  NEW SECTION.  521.16  APPLICABILITY OF CHAPTER.
 31  8    Chapter 521A is applicable to a merger or consolidation
 31  9 made pursuant to this chapter, and the provisions of chapter
 31 10 521A and this chapter shall apply exclusively with respect to
 31 11 such merger or consolidation.
 31 12    Sec. 44.  NEW SECTION.  521A.14  MUTUAL INSURANCE HOLDING
 31 13 COMPANIES.
 31 14    1.  a.  A domestic mutual insurance company upon approval
 31 15 of the commissioner, may reorganize by forming an insurance
 31 16 holding company based upon a mutual plan and continuing the
 31 17 corporate existence of the reorganizing insurance company as a
 31 18 stock insurance company.  The commissioner, after a public
 31 19 hearing as provided in section 521A.3, subsection 4, paragraph
 31 20 "b", if satisfied that the interests of the policyholders are
 31 21 properly protected and that the plan of reorganization is fair
 31 22 and equitable to the policyholders, may approve the proposed
 31 23 plan of reorganization and may require as a condition of
 31 24 approval such modifications of the proposed plan of
 31 25 reorganization as the commissioner finds necessary for the
 31 26 protection of the policyholder's interests.  The commissioner
 31 27 may retain consultants as provided in section 521A.3,
 31 28 subsection 4, paragraph "c".  A reorganization pursuant to
 31 29 this section is subject to section 521A.3, subsections 1, 2,
 31 30 and 3.  The commissioner shall retain jurisdiction over a
 31 31 mutual insurance holding company organized pursuant to this
 31 32 section to assure that policyholder interests are protected.
 31 33    b.  All of the initial shares of the capital stock of the
 31 34 reorganized insurance company shall be issued to the mutual
 31 35 insurance holding company.  The membership interests of the
 32  1 policyholders of the reorganized insurance company shall
 32  2 become membership interests in the mutual insurance holding
 32  3 company.  Policyholders of the reorganized insurance company
 32  4 shall be members of the mutual insurance holding company in
 32  5 accordance with the articles of incorporation and bylaws of
 32  6 the mutual insurance holding company.  The mutual insurance
 32  7 holding company shall at all times own a majority of the
 32  8 voting shares of the capital stock of the reorganized
 32  9 insurance company.
 32 10    2.  a.  A domestic mutual insurance company, upon the
 32 11 approval of the commissioner, may reorganize by merging its
 32 12 policyholders membership interests into a mutual insurance
 32 13 holding company formed pursuant to subsection 1 and continuing
 32 14 the corporate existence of the reorganizing insurance company
 32 15 as a stock insurance company subsidiary of the mutual
 32 16 insurance holding company.  The commissioner, after a public
 32 17 hearing as provided in section 521A.3, subsection 4, paragraph
 32 18 "b", if satisfied that the interest of the policyholders are
 32 19 properly protected and that the merger is fair and equitable
 32 20 to the policyholders, may approve the proposed merger and may
 32 21 require as a condition of approval such modifications of the
 32 22 proposed merger as the commissioner finds necessary for the
 32 23 protection of the policyholder's interests.  The commissioner
 32 24 may retain consultants as provided in section 521A.3,
 32 25 subsection 4, paragraph "c".  A merger pursuant to this
 32 26 section is subject to section 521A.3, subsections 1, 2, and 3.
 32 27 The commissioner shall retain jurisdiction over the mutual
 32 28 insurance holding company organized pursuant to this section
 32 29 to assure that policyholder interests are protected.
 32 30    b.  All of the initial shares of the capital stock of the
 32 31 reorganized insurance company shall be issued to the mutual
 32 32 insurance holding company.  The membership interests of the
 32 33 policyholders of the reorganized insurance company shall
 32 34 become membership interests in the mutual insurance holding
 32 35 company.  Policyholders of the reorganized insurance company
 33  1 shall be members of the mutual insurance holding company in
 33  2 accordance with the articles of incorporation and bylaws of
 33  3 the mutual insurance holding company.  The mutual insurance
 33  4 holding company shall at all times own a majority of the
 33  5 voting shares of the capital stock of the reorganized
 33  6 insurance company.  A merger of policyholder's membership
 33  7 interests in a mutual insurance company into a mutual
 33  8 insurance holding company shall be deemed to be a merger of
 33  9 insurance companies pursuant to chapter 521 and chapter 521 is
 33 10 also applicable.
 33 11    3.  A mutual insurance holding company resulting from the
 33 12 reorganization of a domestic mutual insurance company
 33 13 organized under chapter 491 shall be incorporated pursuant to
 33 14 chapter 491.  This requirement shall supersede any conflicting
 33 15 provisions of section 491.1.  The articles of incorporation
 33 16 and any amendments to such articles of the mutual insurance
 33 17 holding company shall be subject to approval of the
 33 18 commissioner and the attorney general in the same manner as
 33 19 those of an insurance company.
 33 20    4.  A mutual insurance holding company is deemed to be an
 33 21 insurer subject to chapter 507C and shall automatically be a
 33 22 party to any proceeding under chapter 507C involving an
 33 23 insurance company which as a result of a reorganization
 33 24 pursuant to subsection 1 or 2 is a subsidiary of the mutual
 33 25 insurance holding company.  In any proceeding under chapter
 33 26 507C involving the reorganized insurance company, the assets
 33 27 of the mutual insurance holding company are deemed to be
 33 28 assets of the estate of the reorganized insurance company for
 33 29 purposes of satisfying the claims of the reorganized insurance
 33 30 company's policyholders.  A mutual insurance holding company
 33 31 shall not dissolve or liquidate without the approval of the
 33 32 commissioner or as ordered by the district court pursuant to
 33 33 chapter 507C.
 33 34    5.  a.  Chapters 508B and 515G are not applicable to a
 33 35 reorganization or merger pursuant to this section.
 34  1    b.  Chapter 508B is applicable to demutualization of a
 34  2 mutual insurance holding company which resulted from the
 34  3 reorganization of a domestic mutual life insurance company
 34  4 organized under chapter 508 as if it were a mutual life
 34  5 insurance company.
 34  6    c.  Chapter 515G is applicable to demutualization of a
 34  7 mutual insurance holding company which resulted from the
 34  8 reorganization of a domestic mutual property and casualty
 34  9 insurance company organized under chapter 515 as if it were a
 34 10 mutual property and casualty insurance company.
 34 11    6.  A membership interest in a domestic mutual insurance
 34 12 holding company shall not constitute a security as defined in
 34 13 section 502.102.
 34 14    Sec. 45.  Section 521B.2, subsection 4, paragraph a, Code
 34 15 1995, is amended to read as follows:
 34 16    a.  Credit is allowed if the reinsurance is ceded to an
 34 17 assuming insurer which maintains a trust fund in a qualified
 34 18 United States financial institution, as defined in section
 34 19 521B.4, subsection 2, for the payment of the valid claims of
 34 20 its United States policyholders and ceding insurers, their
 34 21 assigns, and successors in interest.  The assuming insurer
 34 22 shall report annually to the commissioner information
 34 23 substantially the same as that required to be reported on the
 34 24 national association of insurance commissioners' annual
 34 25 statement form by licensed insurers to enable the commissioner
 34 26 to determine the sufficiency of the trust fund.  In the case
 34 27 of a single assuming insurer, the trust shall consist of a
 34 28 trusted account representing the liabilities of the assuming
 34 29 insurer attributable to business written in the United States
 34 30 and, in addition, the assuming insurer shall maintain a
 34 31 trusted surplus of not less than twenty million dollars.  In
 34 32 the case of a group of including individual unincorporated and
 34 33 incorporated underwriters, the trust shall consist of a
 34 34 trusted account representing the liabilities of the group
 34 35 attributable to business written in the United States and, in
 35  1 addition, the group shall maintain a trusted surplus of which
 35  2 one hundred million dollars shall be held jointly for the
 35  3 benefit of United States ceding insurers of any member of the
 35  4 group.  The incorporated members of the group shall not engage
 35  5 in any business other than underwriting as a member of the
 35  6 group and shall be subject to the same level of solvency
 35  7 regulation and control by the group's domiciliary regulator as
 35  8 are the unincorporated members.  The group shall make
 35  9 available to the commissioner an annual certification of the
 35 10 solvency of each underwriter by the group's domiciliary
 35 11 regulator and its independent public accountants.
 35 12    Sec. 46.  1994 Iowa Acts, chapter 1072, section 9, is
 35 13 amended to read as follows:
 35 14    SEC. 9.  CREATION OF INSURANCE FRAUD BUREAU CONTINGENT UPON
 35 15 FUNDING.  The creation of an insurance fraud bureau within the
 35 16 insurance division shall only be implemented, and sections
 35 17 507E.2, 507E.4, 507E.5, 507E.6, and 507E.8 of this Act shall
 35 18 only be effective, if the state receives a federal grant for
 35 19 its implementation and the general assembly appropriates
 35 20 matching funds from the general fund of the state for its
 35 21 implementation.
 35 22    Sec. 47.  Sections 518A.33, 518A.34, and 518A.42, Code
 35 23 1995, are repealed.
 35 24    Sec. 48.  The Code editor is directed to codify new section
 35 25 521A.14, as enacted in this Act, as a separate division of
 35 26 chapter 521A.  
 35 27 HF 247
 35 28 mj/pk/25
     
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