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Senate File 249

Partial Bill History

Bill Text

PAG LIN
  1  1                                              SENATE FILE 249
  1  2                             AN ACT 
  1  3 RELATING TO THE OPERATION AND REGULATION OF INSURANCE COM-
  1  4    PANIES, INCLUDING THE TREATMENT OF CERTAIN CONFIDENTIAL
  1  5    INFORMATION BY THE COMMISSIONER, THE OPERATION OF CERTAIN
  1  6    TYPES OF INSURANCE COMPANIES, AND THE RIGHTS AND DUTIES
  1  7    OF INSURANCE COMPANIES UNDER CERTAIN POLICIES ISSUED IN 
  1  8    THIS STATE.  
  1  9 
  1 10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1 11 
  1 12    Section 1.  Section 505.17, Code 1999, is amended to read
  1 13 as follows:
  1 14    505.17  CONFIDENTIAL INFORMATION.
  1 15    Information, records, and documents utilized for the
  1 16 purpose of, or in the course of, investigation, regulation, or
  1 17 examination of an insurance company or insurance holding
  1 18 company, received by the division from some other governmental
  1 19 entity which treats such information, records, and documents
  1 20 as confidential, are confidential and shall not be disclosed
  1 21 by the division and are not subject to subpoena.  Such
  1 22 information, records, and documents do not constitute a public
  1 23 record under chapter 22.
  1 24    The disclosure of confidential information, administrative
  1 25 or judicial orders which contain confidential information, or
  1 26 information regarding other action of the division which is
  1 27 not a public record subject to disclosure, to other insurance
  1 28 and financial regulatory officials from this or other states
  1 29 may be permitted by the commissioner provided that those
  1 30 officials are subject to, or agree to comply with, standards
  1 31 of confidentiality comparable to those imposed on the
  1 32 commissioner.
  1 33    Sec. 2.  Section 508B.1, subsection 6, Code 1999, is
  1 34 amended to read as follows:
  1 35    6.  "Reorganized company" means the domestic stock life
  2  1 insurance company into which a mutual company has been
  2  2 converted, converted and merged, or converted and
  2  3 consolidated.
  2  4    Sec. 3.  Section 508B.6, Code 1999, is amended to read as
  2  5 follows:
  2  6    508B.6  APPROVAL OF PLAN BY POLICYHOLDERS – NOTICE OF
  2  7 ELECTION – EFFECTIVE DATE.
  2  8    After the plan has been approved by the commissioner as
  2  9 provided in section 508B.7, the The plan of conversion shall
  2 10 be submitted to and shall not take effect until approved by
  2 11 two thirds of the policyholders of the mutual company voting
  2 12 on the plan.  Notice of a meeting for the purpose of voting on
  2 13 the conversion plan shall be provided by mail to each
  2 14 policyholder entitled to vote in accordance with the articles
  2 15 of incorporation or bylaws of the mutual company.  Each
  2 16 policyholder entitled to vote may cast one vote unless
  2 17 otherwise provided in the articles of incorporation or bylaws
  2 18 of the mutual company.  Voting shall be by ballot, in person
  2 19 or by proxy.  A quorum shall consist of a quorum as defined in
  2 20 the articles of incorporation or bylaws of the mutual company.
  2 21 A copy of the plan of conversion, or a summary of the plan of
  2 22 conversion, shall accompany the notice of meeting and
  2 23 election.  The notice of meeting may contain the notice of any
  2 24 planned public hearing.  An approved plan of conversion shall
  2 25 take effect on the date specified in the plan.
  2 26    Sec. 4.  Section 508B.12, Code 1999, is amended to read as
  2 27 follows:
  2 28    508B.12  AMENDMENTS – WITHDRAWAL.
  2 29    At any time before approval of the plan of the conversion,
  2 30 and if done pursuant to rules issued by the commissioner or as
  2 31 may otherwise be required by the commissioner, the board of
  2 32 directors of a mutual company may amend the conversion plan.
  2 33 An amendment to a conversion plan is subject to the prior
  2 34 approval of the commissioner.  The board of directors of a
  2 35 mutual company may withdraw the plan of conversion at any time
  3  1 prior to the approval of the plan of conversion.
  3  2    Sec. 5.  Section 508B.13, Code 1999, is amended to read as
  3  3 follows:
  3  4    508B.13  PROHIBITIONS ON CERTAIN OFFERS TO ACQUIRE SHARES.
  3  5    Prior to and for a period of five years following the
  3  6 effective date of the conversion, and in the case of the plans
  3  7 of conversion specified in subsections 1 and 3 of section
  3  8 508B.3, five years following the date of distribution of
  3  9 consideration to the policyholders in exchange for their
  3 10 membership interests, a person, other than the reorganized
  3 11 company, other than an employee benefit plan or employee
  3 12 benefit trust sponsored by the reorganized company, or as
  3 13 otherwise specifically provided for in the plan of conversion,
  3 14 shall not directly or indirectly acquire or offer to acquire
  3 15 the beneficial ownership of more than five percent of any
  3 16 class of voting security of the reorganized company, and a
  3 17 person, other than the reorganized company or other than an
  3 18 employee benefit plan or employee benefit trust sponsored by
  3 19 the reorganized company, who acquires five percent or more of
  3 20 any class of voting security of the reorganized company prior
  3 21 to the conversion or as specifically provided for in the plan
  3 22 of conversion, shall not directly or indirectly acquire or
  3 23 offer to acquire the beneficial ownership of additional voting
  3 24 securities of the reorganized company, unless the acquisition
  3 25 is made pursuant to a plan approved by the commissioner, made
  3 26 pursuant to the plan of conversion, or made after the initial
  3 27 public offering from a broker or dealer of registered
  3 28 securities with the securities and exchange commission at the
  3 29 quoted price on the date of purchase as not being contrary to
  3 30 the interests of the policyholders of the reorganized company
  3 31 or its life insurance company subsidiary and by the board of
  3 32 directors of the reorganized company.  The commissioner and
  3 33 the board of directors may consider the factors set forth in
  3 34 section 490.1108.  The provisions of section 521A.3, except
  3 35 subsection 4, paragraph "a", shall be applicable to a proposed
  4  1 acquisition subject to this section.  An approved plan of
  4  2 conversion may include a stock option plan.  As used in this
  4  3 section, "beneficial ownership" means, with respect to a
  4  4 security, the sole or shared power to vote or direct the
  4  5 voting of the security or the sole power to dispose or direct
  4  6 the disposition of the security.
  4  7    Sec. 6.  Section 508B.14, Code 1999, is amended to read as
  4  8 follows:
  4  9    508B.14  LIMITATION OF ACTIONS – SECURITY FOR ATTORNEY
  4 10 FEES.
  4 11    The commissioner's order approving or disapproving a plan
  4 12 of conversion shall be considered final agency action under
  4 13 chapter 17A.
  4 14    An action challenging the validity of a conversion plan, or
  4 15 any part of a conversion plan, shall not be commenced more
  4 16 than one hundred eighty days following the date of approval by
  4 17 the commissioner.
  4 18    The reorganized company or a defendant may petition the
  4 19 court in such an action to give security for the reasonable
  4 20 attorney fees which may be incurred by any party to the
  4 21 action.  The amount of the security may be increased or
  4 22 decreased in the discretion of the court having jurisdiction
  4 23 if a showing is made that the security provided is or may
  4 24 become inadequate or excessive.
  4 25    Sec. 7.  Section 511.28, Code 1999, is amended to read as
  4 26 follows:
  4 27    511.28  SERVICE OF PROCESS.
  4 28    Any notice or process, with three copies of the notice or
  4 29 process, may be mailed to the commissioner at Des Moines,
  4 30 Iowa, in a certified mail letter addressed to the commissioner
  4 31 by the commissioner's official title.  The commissioner shall
  4 32 acknowledge service on behalf of the defendant foreign
  4 33 insurance company by writing, giving the date of receipt of
  4 34 the notice or process, and shall return the notice or process
  4 35 in a certified mail letter to the clerk of the court in which
  5  1 the suit is pending, addressed to the clerk by the clerk's
  5  2 official title, and shall also mail a copy, with a copy of the
  5  3 commissioner's acknowledgment of service written thereon, in a
  5  4 certified mail letter addressed to the person or corporation
  5  5 named or designated by such company in the written instrument.
  5  6 Notice or process received prior to 12 noon 10 a.m. shall be
  5  7 forwarded the same working day.  Notice or process received
  5  8 after 12 noon 10 a.m. shall be forwarded the next working day.
  5  9 A fee of fifteen dollars must accompany the request for notice
  5 10 or process.
  5 11    Sec. 8.  Section 513B.13, Code 1999, is amended by adding
  5 12 the following new subsection:
  5 13    NEW SUBSECTION.  15.  The board of the Iowa small employer
  5 14 health reinsurance program, on an ongoing basis, shall review
  5 15 the program and make recommendations as to the continued cost
  5 16 effectiveness of the program to the commissioner, which
  5 17 recommendations may include proposed modifications or
  5 18 suspension of operation of the program.  In making such a
  5 19 review, the board shall consider such factors as the
  5 20 population reinsured by the program, the premiums and
  5 21 assessments paid to the program, the number and percentage of
  5 22 carriers electing to utilize the program, health care reform
  5 23 measures implemented in the state, as well as other factors
  5 24 deemed relevant by the board.  The commissioner, upon finding
  5 25 that the program is not cost effective, may make modifications
  5 26 to the program or suspend the operation of the program by
  5 27 rule.
  5 28    Sec. 9.  Section 513C.7, subsection 1, paragraph a, Code
  5 29 1999, is amended to read as follows:
  5 30    a.  The individual is covered or is eligible for coverage
  5 31 under a health benefit plan provided by the individual's
  5 32 employer or is covered as the spouse or dependent of another
  5 33 individual covered or eligible for coverage under a health
  5 34 benefit plan provided by that individual's employer.
  5 35    Sec. 10.  Section 513C.7, subsection 4, paragraph b, Code
  6  1 1999, is amended to read as follows:
  6  2    b.  A carrier or an organized delivery system shall waive
  6  3 any time period applicable to a preexisting condition
  6  4 exclusion or limitation period with respect to particular
  6  5 services in an individual health benefit plan for the period
  6  6 of time an individual was previously covered by qualifying
  6  7 previous coverage that provided benefits with respect to such
  6  8 services, provided that the qualifying previous coverage was
  6  9 continuous to a date not more than sixty-three days prior to
  6 10 the effective date of the new coverage.  For purposes of this
  6 11 section, periods of coverage under medical assistance provided
  6 12 pursuant to chapter 249A or Medicare coverage provided
  6 13 pursuant to Title XVIII of the federal Social Security Act
  6 14 shall not be counted with respect to the sixty-three day
  6 15 requirement.
  6 16    Sec. 11.  Section 514B.4, subsection 2, Code 1999, is
  6 17 amended to read as follows:
  6 18    2.  Has arrangements established in accordance with rules
  6 19 adopted by the commissioner for a continuous review of health
  6 20 care processes and outcomes.  If a health maintenance
  6 21 organization is accredited by the national committee on
  6 22 quality assurance, or another accreditation entity approved by
  6 23 the commissioner, an external peer review under rules of the
  6 24 commissioner shall not be applicable.  However, at the
  6 25 discretion of the commissioner, an on-site inspection of the
  6 26 health maintenance organization may be conducted.
  6 27    Sec. 12.  Section 515.26, Code 1999, is amended to read as
  6 28 follows:
  6 29    515.26  DIRECTORS.
  6 30    The affairs of a company organized as provided by this
  6 31 chapter shall be managed by a number of directors, of not less
  6 32 than five nor more than twenty-one, all of whom, in case of a
  6 33 stock company, shall be stockholders, or, in.  In the case of
  6 34 a mutual company, all such directors shall be policyholders,
  6 35 or before the company shall effect insurance, be subscribers
  7  1 for stock or for insurance as the case may be.
  7  2    Sec. 13.  Section 515.35, subsection 3, paragraph a,
  7  3 subparagraph (2), subparagraph subdivision (a), Code 1999, is
  7  4 amended to read as follows:
  7  5    (a)  That the loan will be fully collateralized by cash,
  7  6 cash equivalents, or obligations issued or guaranteed by the
  7  7 United States or an agency or an instrumentality of the United
  7  8 States, and that the collateral will be adjusted as necessary
  7  9 each business day during the term of the loan to maintain the
  7 10 required collateralization in the event of market value
  7 11 changes in the loaned securities or collateral.
  7 12    If the loan is fully collateralized by cash, the
  7 13 reinvestment of the cash may be made in either individual
  7 14 securities or a pooled fund comprised of individual
  7 15 securities.  If such reinvestment is made in individual
  7 16 securities, such securities must mature in less than ninety
  7 17 days.  If such reinvestment is made in a pooled fund, the
  7 18 average maturity of the securities comprising such pooled fund
  7 19 must be less than ninety days.  Individual securities and
  7 20 securities comprising the pooled fund shall be investment
  7 21 grade.
  7 22    Sec. 14.  Section 515.74, Code 1999, is amended to read as
  7 23 follows:
  7 24    515.74  SERVICE OF PROCESS.
  7 25    Any notice or process, with three copies of the notice or
  7 26 process, may be mailed to the commissioner at Des Moines,
  7 27 Iowa, in a certified mail letter addressed to the commissioner
  7 28 by the commissioner's official title.  The commissioner shall
  7 29 acknowledge service on behalf of the defendant foreign
  7 30 insurance company by writing, giving the date of receipt of
  7 31 the notice or process, and shall return the notice or process
  7 32 in a certified mail letter to the clerk of the court in which
  7 33 the suit is pending, addressed to the clerk by the clerk's
  7 34 official title, and shall also mail a copy, with a copy of the
  7 35 commissioner's acknowledgment of service written thereon, in a
  8  1 certified mail letter addressed to the person or corporation
  8  2 named or designated by such company in the written instrument.
  8  3 Notice or process received prior to 12 noon 10 a.m. shall be
  8  4 forwarded the same working day.  Notice or process received
  8  5 after 12 noon 10 a.m. shall be forwarded the next working day.
  8  6 A fee of fifteen dollars must accompany the request for notice
  8  7 or process.
  8  8    Sec. 15.  Section 518.2, Code 1999, is amended to read as
  8  9 follows:
  8 10    518.2  ARTICLES – APPROVAL.
  8 11    Each such An organization shall present to the commissioner
  8 12 of insurance for approval its articles of incorporation, which
  8 13 shall show its name, objects and purposes, the time and place
  8 14 of the annual meeting of the members, and the location of its
  8 15 principal place of business, and any subsequent amendments to
  8 16 its articles.  The commissioner of insurance shall then submit
  8 17 the articles of incorporation and any subsequent amendments to
  8 18 the articles to the attorney general for examination, and if
  8 19 found by the attorney general to be in accordance with the
  8 20 provisions of this chapter and the Constitution and the laws
  8 21 of the state, the attorney general shall certify such fact
  8 22 thereon on the articles of incorporation and on any amendments
  8 23 to the articles and return the same to said them to the
  8 24 commissioner, and no articles.  Articles of incorporation and
  8 25 amendments to the articles shall not be approved by the
  8 26 commissioner or recorded unless accompanied by such
  8 27 certificate certified by the attorney general.
  8 28    Sec. 16.  Section 518.17, Code 1999, is amended to read as
  8 29 follows:
  8 30    518.17  REINSURANCE.
  8 31    Any A county mutual insurance association may reinsure a
  8 32 part or all of its risks with any association operating under
  8 33 the provisions of this chapter, or with any other association
  8 34 or company licensed in this state and authorized to write the
  8 35 kinds of insurance enumerated in section 518.11.
  9  1    The commissioner of insurance may require any county mutual
  9  2 insurance association to obtain reinsurance coverage as
  9  3 provided for in this section if it appears to the commissioner
  9  4 of insurance that the perils insured against and the classes
  9  5 of properties insured may seriously endanger the financial
  9  6 position of the association and the security of its members.
  9  7    Reinsurance sufficient to protect the financial stability
  9  8 of the state mutual association is also required.  Reinsurance
  9  9 coverage obtained by a county mutual insurance association
  9 10 shall not expose the association to a loss of more than
  9 11 fifteen percent from surplus in any calendar year.  The
  9 12 commissioner of insurance may require additional reinsurance
  9 13 if necessary to protect the policyholders of the association.
  9 14    Sec. 17.  Section 518.25, Code 1999, is amended to read as
  9 15 follows:
  9 16    518.25  SURPLUS.
  9 17    An association organized under this chapter shall at all
  9 18 times maintain a surplus of not less than fifty thousand
  9 19 dollars or one-tenth of one percent of the gross property risk
  9 20 in force, whichever is greater.  Reinsurance sufficient to
  9 21 protect the financial stability of the company is also
  9 22 required.  The insurance commissioner may require additional
  9 23 reinsurance if necessary to protect the policyholders of the
  9 24 company.  An association authorized to transact business in
  9 25 this state before July 1, 1990, shall meet this requirement
  9 26 not later than July 1, 1993.
  9 27    Sec. 18.  NEW SECTION.  518A.1A  PLAN OF ORGANIZATION.
  9 28    An entity seeking to organize as or convert to a state
  9 29 mutual insurance association shall submit a plan of
  9 30 organization to the commissioner for approval.
  9 31    Sec. 19.  Section 518A.8, Code 1999, is amended by striking
  9 32 the section and inserting in lieu thereof the following:
  9 33    518A.8  ARTICLES – APPROVAL.
  9 34    An organization shall present to the commissioner of
  9 35 insurance for approval its articles of incorporation, which
 10  1 shall show its name, objects, and purposes, the time and place
 10  2 of the annual meeting of the members, and the location of its
 10  3 principal place of business, and any subsequent amendments.
 10  4 The commissioner shall submit the articles of incorporation
 10  5 and any subsequent amendments to the articles to the attorney
 10  6 general for examination, and if found by the attorney general
 10  7 to be in accordance with the provisions of this chapter and
 10  8 the Constitution and the laws of this state, the attorney
 10  9 general shall certify such fact on the articles of
 10 10 incorporation and on any amendments to the articles and return
 10 11 them to the commissioner.  Articles of incorporation and
 10 12 amendments to the articles shall not be approved by the
 10 13 commissioner or recorded unless certified by the attorney
 10 14 general.
 10 15    Sec. 20.  Section 518A.37, Code 1999, is amended to read as
 10 16 follows:
 10 17    518A.37  SURPLUS.
 10 18    An association organized under this chapter shall at all
 10 19 times maintain a surplus of not less than one hundred thousand
 10 20 dollars, or one-tenth of one percent of the gross property
 10 21 risk in force, whichever is greater.  Reinsurance sufficient
 10 22 to protect the financial stability of the company is also
 10 23 required.  The insurance commissioner may require additional
 10 24 reinsurance if necessary to protect the policyholders of the
 10 25 company.  An association authorized to transact business in
 10 26 this state before July 1, 1990, shall meet this requirement
 10 27 not later than July 1, 1992.
 10 28    Sec. 21.  Section 518A.44, Code 1999, is amended by
 10 29 striking the section and inserting in lieu thereof the
 10 30 following:
 10 31    518A.44  REINSURANCE.
 10 32    A state mutual insurance association may reinsure a part or
 10 33 all of its risks with any association operating under the
 10 34 provisions of this chapter, or with any other association or
 10 35 company licensed in this state and authorized to write the
 11  1 kinds of insurance enumerated in section 518A.1.
 11  2    Reinsurance sufficient to protect the financial stability
 11  3 of the state mutual association is required.  Reinsurance
 11  4 coverage obtained by an association shall not expose the
 11  5 association to a loss of more than fifteen percent from
 11  6 surplus in any calendar year.  The commissioner of insurance
 11  7 may require additional reinsurance if necessary to protect the
 11  8 policyholders of the association.
 11  9    Sec. 22.  Section 519.11, Code 1999, is amended to read as
 11 10 follows:
 11 11    519.11  LIABILITY TO ASSESSMENTS.
 11 12    The provisions as to maximum liability of members to
 11 13 assessments when assets are insufficient and to assessments
 11 14 when the corporation is insolvent, found in sections 518A.9,
 11 15 518A.10, and 518A.14, and 518A.28, shall apply to all mutual
 11 16 insurance corporations organized under the provisions of this
 11 17 chapter.
 11 18    Sec. 23.  Sections 518A.10, 518A.13, 518A.17, and 518A.28,
 11 19 Code 1999, are repealed.  
 11 20 
 11 21 
 11 22                                                             
 11 23                               MARY E. KRAMER
 11 24                               President of the Senate
 11 25 
 11 26 
 11 27                                                             
 11 28                               RON J. CORBETT
 11 29                               Speaker of the House
 11 30 
 11 31    I hereby certify that this bill originated in the Senate and
 11 32 is known as Senate File 249, Seventy-eighth General Assembly.
 11 33 
 11 34 
 11 35                                                             
 12  1                               MICHAEL E. MARSHALL
 12  2                               Secretary of the Senate
 12  3 Approved                , 1999
 12  4 
 12  5 
 12  6                               
 12  7 THOMAS J. VILSACK
 12  8 Governor
     
Text: SF00248                           Text: SF00250
Text: SF00200 - SF00299                 Text: SF Index
Bills and Amendments: General Index     Bill History: General Index

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