Text: SSB03161                          Text: SSB03163
Text: SSB03100 - SSB03199               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index

Senate Study Bill 3162

Bill Text

PAG LIN
  1  1    Section 1.  Section 87.4, unnumbered paragraph 2, Code
  1  2 1999, is amended to read as follows:
  1  3    A self-insurance association formed under this section and
  1  4 an association comprised of cities or counties, or both, or
  1  5 community colleges as defined in section 260C.2 or school
  1  6 corporations, or both, or other political subdivisions, which
  1  7 have entered into an agreement under chapter 28E for the
  1  8 purpose of establishing a self-insured program for the payment
  1  9 of workers' compensation benefits are exempt from taxation
  1 10 under section 432.1.
  1 11    Sec. 2.  Section 87.4, unnumbered paragraph 4, Code 1999,
  1 12 is amended to read as follows:
  1 13    A self-insured program for the payment of workers'
  1 14 compensation benefits established by an association comprised
  1 15 of cities or counties, or both, or community colleges, as
  1 16 defined in section 260C.2, or other political subdivisions,
  1 17 which have entered into an agreement under chapter 28E, is not
  1 18 insurance, and is not subject to regulation under chapters 505
  1 19 through 523C.  Membership in such an association together with
  1 20 payment of premiums due relieves the member from obtaining
  1 21 insurance as required in section 87.1.  Such an association is
  1 22 not required to submit its plan or program to the commissioner
  1 23 of insurance for review and approval prior to its
  1 24 implementation and is not subject to rules or rates adopted by
  1 25 the commissioner relating to workers' compensation group self-
  1 26 insurance programs.  Such a program is deemed to be in
  1 27 compliance with this chapter.
  1 28    Sec. 3.  Section 505.8, subsection 5, Code Supplement 1999,
  1 29 is amended by striking the subsection.
  1 30    Sec. 4.  Section 505.8, Code Supplement 1999, is amended by
  1 31 adding the following new subsection:
  1 32    NEW SUBSECTION.  7.  The commissioner shall adopt rules
  1 33 protecting the privacy of information held by an insurer or an
  1 34 agent consistent with the federal Gramm-Leach-Bliley Act, Pub.
  1 35 L. No. 106-102.
  2  1    Sec. 5.  NEW SECTION.  505.23  HEARINGS.
  2  2    If an evidentiary hearing is conducted in a proceeding
  2  3 pursuant to sections 508B.7, 515G.7, 521A.3, or 521A.14, or in
  2  4 a proceeding with respect to a merger or consolidation
  2  5 pursuant to chapter 521, the proceeding is a contested case
  2  6 subject to chapter 17A.
  2  7    Sec. 6.  Section 508.4, Code 1999, is amended to read as
  2  8 follows:
  2  9    508.4  APPROVAL OF AMENDMENTS.
  2 10    All amendments to such articles and amendments hereafter
  2 11 made to the articles of incorporation of companies already
  2 12 organized under the laws of this state shall be approved in
  2 13 like manner.
  2 14    A company shall file with the commissioner bylaws and
  2 15 subsequent amendments to such bylaws within thirty days of the
  2 16 adoption of such bylaws and amendments.
  2 17    Sec. 7.  Section 508B.3, unnumbered paragraph 1, Code 1999,
  2 18 is amended to read as follows:
  2 19    A plan of conversion shall not be unfair or inequitable
  2 20 fair and equitable to policyholders.  A plan of conversion is
  2 21 not unfair or inequitable fair and equitable if it satisfies
  2 22 the conditions of subsections 1, 2, or 3.  The commissioner
  2 23 may determine that whether any other plan proposed by a mutual
  2 24 company is not unfair or inequitable fair and equitable to its
  2 25 policyholders.
  2 26    Sec. 8.  Section 508B.4, Code 1999, is amended to read as
  2 27 follows:
  2 28    508B.4  ELIGIBLE POLICYHOLDERS PARTICIPATION.
  2 29    The policyholders who are entitled to notice of and to vote
  2 30 upon approval of a plan of conversion and entitled to notice
  2 31 of a public hearing are the policyholders whose policies or
  2 32 contracts are in force on the date of adoption of the plan of
  2 33 conversion.  Each policyholder whose policy has been in force
  2 34 for at least one year prior to the date is entitled to the
  2 35 consideration, if any, provided for the policyholder in the
  3  1 plan based on the policyholder's membership interest
  3  2 determined pursuant to this chapter, but only to the extent
  3  3 that if the policyholder's membership interest arose from
  3  4 policies or contracts a policy or contract in force on the
  3  5 effective date of the conversion and which were in force such
  3  6 membership interest has been held continuously for at least
  3  7 one year prior to the date of adoption of the plan.  For this
  3  8 purpose, any changes in status of, or premiums in excess of
  3  9 those required on the policies or contracts occurring or made
  3 10 after the date one year prior to the date of adoption of the
  3 11 plan shall be disregarded.
  3 12    Sec. 9.  Section 508B.7, Code 1999, is amended to read as
  3 13 follows:
  3 14    508B.7  REVIEW OF PLAN BY COMMISSIONER – HEARING
  3 15 AUTHORIZED – APPROVAL.
  3 16    The commissioner of insurance shall review the plan.  The
  3 17 commissioner shall approve the plan if the commissioner finds
  3 18 the plan complies with all provisions of law, the plan is not
  3 19 unfair or inequitable fair and equitable to the mutual company
  3 20 and its policyholders, and that the reorganized company will
  3 21 have the amount of capital and surplus deemed by the
  3 22 commissioner to be reasonably necessary for its future
  3 23 solvency.  The commissioner may order a hearing on the
  3 24 fairness and equity of the terms of the plan after giving
  3 25 written notice of the hearing to the mutual company, its
  3 26 policyholders, and other interested persons, all of whom have
  3 27 the right to appear at the hearing.  Costs incurred in
  3 28 connection with the notice shall be paid by the company.
  3 29    Sec. 10.  Section 508B.9, unnumbered paragraph 1, Code
  3 30 1999, is amended to read as follows:
  3 31    When the commissioner and the policyholders approve the
  3 32 conversion plan as provided in this chapter, the commissioner
  3 33 shall issue a new certificate of authority to the reorganized
  3 34 company effective on the effective date specified of the
  3 35 conversion as provided in the plan.  The reorganized company
  4  1 is a continuation of the mutual life insurance company and the
  4  2 conversion shall not annul or modify any of the mutual
  4  3 company's existing suits, contracts, or liabilities except as
  4  4 provided in the approved conversion plan.  All rights,
  4  5 franchises, and interests of the mutual company in and to
  4  6 property, assets, and other interests shall be transferred to
  4  7 and shall vest in the reorganized company and the reorganized
  4  8 company shall assume all obligations and liabilities of the
  4  9 mutual company.
  4 10    Sec. 11.  Section 508B.14, unnumbered paragraph 2, Code
  4 11 Supplement 1999, is amended to read as follows:
  4 12    An action challenging the validity of a conversion plan, or
  4 13 any part of a conversion plan, shall not be commenced more
  4 14 than one hundred eighty thirty days following the date of
  4 15 approval by the commissioner, unless an application for
  4 16 rehearing is filed pursuant to section 17A.16, subsection 2.
  4 17 If an application for rehearing is filed, then such action
  4 18 must be filed within thirty days after that application is
  4 19 denied or deemed denied or, if the application is granted,
  4 20 within thirty days after the issuance of the commissioner's
  4 21 final decision on rehearing.
  4 22    Sec. 12.  NEW SECTION.  512A.10  AMENDMENTS TO ARTICLES AND
  4 23 BYLAWS.
  4 24    1.  An organization shall present to the commissioner of
  4 25 insurance for approval its articles of incorporation and any
  4 26 subsequent amendment.  The commissioner shall submit the
  4 27 articles of incorporation and any subsequent amendment to the
  4 28 attorney general for examination, and if found by the attorney
  4 29 general to be in accordance with this chapter, and the
  4 30 constitution and laws of the state, the attorney general shall
  4 31 certify such fact on the articles of incorporation or
  4 32 amendment and return the articles or amendment to the
  4 33 commissioner.  Articles of incorporation or an amendment to
  4 34 the articles shall not be approved by the commissioner or
  4 35 recorded unless certified by the attorney general.
  5  1    2.  The directors of a benevolent association shall have
  5  2 the authority to enact such bylaws and regulations not
  5  3 inconsistent with law as they consider necessary for the
  5  4 regulation and conduct of the business.  A change in the
  5  5 bylaws shall not limit coverage under existing certificates.
  5  6 A benevolent association shall file with the commissioner
  5  7 bylaws and amendments to the bylaws within thirty days of
  5  8 adoption of such bylaws or amendments.
  5  9    Sec. 13.  Section 513B.2, subsections 2, 13, and 15, Code
  5 10 1999, are amended to read as follows:
  5 11    2.  "Base premium rate" means, for each class of business
  5 12 as to a rating period, the lowest premium rate charged or
  5 13 which could have been charged under a rating system for that
  5 14 class of business, by the small employer carrier to small
  5 15 employers with similar case characteristics for health
  5 16 insurance plans with the same or similar coverage.
  5 17    13.  "Index rate" means for each class of business for
  5 18 small employers with similar case characteristics the average
  5 19 of the applicable base premium rate and the corresponding
  5 20 highest premium rate.
  5 21    15.  "New business premium rate" means, for each class of
  5 22 business as to a rating period, the lowest premium rate
  5 23 charged or offered by the small employer carrier to small
  5 24 employers with similar case characteristics for newly issued
  5 25 health insurance coverages with the same or similar coverage.
  5 26    Sec. 14.  Section 513C.10, subsection 6, Code 1999, is
  5 27 amended to read as follows:
  5 28    6.  Rates for basic and standard coverages as provided in
  5 29 this chapter shall be determined by each carrier or organized
  5 30 delivery system as the average of product of a basic and
  5 31 standard factor and the lowest rate available for issuance by
  5 32 that carrier or organized delivery system adjusted for rating
  5 33 characteristics and benefits and the maximum rate allowable by
  5 34 law after adjustments for rate characteristics and benefits.
  5 35 Basic and standard factors shall be established annually by
  6  1 the Iowa individual health benefit reinsurance association
  6  2 board with the approval of the commissioner.  Multiple basic
  6  3 and standard factors for a distinct grouping of basic and
  6  4 standard policies, may be established.  A basic and standard
  6  5 factor is limited to a minimum value defined as the ratio of
  6  6 the average of the lowest rate available for issuance and the
  6  7 maximum rate allowable by law divided by the lowest rate
  6  8 available for issuance.  A basic and standard factor is
  6  9 limited to a maximum value defined as the ratio of the maximum
  6 10 rate allowable by law divided by the lowest rate available for
  6 11 issuance.  The maximum rate allowable by law and the lowest
  6 12 rate available for issuance is determined based on the rate
  6 13 restrictions under this chapter.  However, to maintain
  6 14 assessable loss assessments at or below one percent of total
  6 15 health insurance premiums or payments as determined in
  6 16 accordance with subsection 10, the Iowa individual health
  6 17 benefit reinsurance association board with the approval of the
  6 18 commissioner may increase the value for any basic and standard
  6 19 factor greater than the maximum value and with the approval of
  6 20 the commissioner may increase cost sharing provisions
  6 21 including, but not limited to, basic and standard plan
  6 22 deductibles, coinsurance, or copayments.
  6 23    Sec. 15.  Section 514.3, Code 1999, is amended to read as
  6 24 follows:
  6 25    514.3  APPROVAL BY COMMISSIONER.
  6 26    The articles of incorporation, and any subsequent
  6 27 amendments, of such a corporation shall have endorsed thereon
  6 28 on or annexed thereto to the approval of the commissioner of
  6 29 insurance before the same shall be filed for record.  A
  6 30 corporation shall file with the commissioner bylaws and
  6 31 subsequent amendments to the bylaws within thirty days of the
  6 32 adoption of the bylaws and amendments.
  6 33    Sec. 16.  Section 514.4, unnumbered paragraph 7, Code 1999,
  6 34 is amended by striking the paragraph.
  6 35    Sec. 17.  NEW SECTION.  514B.3A  APPROVAL BY COMMISSIONER
  7  1 AND ATTORNEY GENERAL.
  7  2    The articles of incorporation, and any subsequent
  7  3 amendment, of a corporation shall have endorsed on or annexed
  7  4 to such articles or amendment the approval of the commissioner
  7  5 of insurance and the attorney general before filing for
  7  6 record.  A corporation shall file with the commissioner bylaws
  7  7 and subsequent amendments to the bylaws within thirty days of
  7  8 the adoption of the bylaws and amendments.
  7  9    Sec. 18.  Section 514B.24, unnumbered paragraph 1, Code
  7 10 1999, is amended to read as follows:
  7 11    The commissioner shall make an examination of the affairs
  7 12 of any a health maintenance organization and its providers as
  7 13 often as the commissioner deems necessary for the protection
  7 14 of the interests of the people of this state, but not less
  7 15 frequently than once every three five years.
  7 16    Sec. 19.  NEW SECTION.  514B.25A  INSOLVENCY PROTECTION –
  7 17 ASSESSMENT.
  7 18    1.  Upon a health maintenance organization or organized
  7 19 delivery system authorized to do business in this state and
  7 20 licensed by the director of public health being declared
  7 21 insolvent by the district court, the commissioner may levy an
  7 22 assessment on each health maintenance organization or
  7 23 organized delivery system doing business in this state and
  7 24 licensed by the director of public health, as applicable, to
  7 25 pay claims for uncovered expenditures for enrollees.  The
  7 26 commissioner shall not assess an amount in any one calendar
  7 27 year which is more than two percent of the aggregate premium
  7 28 written by each health maintenance organization or organized
  7 29 delivery system.
  7 30    2.  The commissioner may use funds obtained through an
  7 31 assessment under subsection 1 to pay claims for uncovered
  7 32 expenditures for enrollees of an insolvent health maintenance
  7 33 organization or organized delivery system and administrative
  7 34 costs.  The commissioner, by rule, may prescribe the time,
  7 35 manner, and form for filing claims under this section.  The
  8  1 commissioner may require claims to be allowed by an ancillary
  8  2 receiver or the domestic receiver or liquidator.
  8  3    3.  a.  A receiver or liquidator of an insolvent health
  8  4 maintenance organization or organized delivery system shall
  8  5 allow a claim in the proceeding in an amount equal to
  8  6 uncovered expenditures and administrative costs paid under
  8  7 this section.
  8  8    b.  A person receiving benefits under this section for
  8  9 uncovered expenditures is deemed to have assigned the rights
  8 10 under the covered health care plan certificates to the
  8 11 commissioner to the extent of the benefits received.  The
  8 12 commissioner may require an assignment of such rights by a
  8 13 payee, enrollee, or beneficiary, to the commissioner as a
  8 14 condition precedent to the receipt of such benefits.  The
  8 15 commissioner is subrogated to these rights against the assets
  8 16 of the insolvent health maintenance organization or organized
  8 17 delivery system that are held by a receiver or liquidator of a
  8 18 foreign jurisdiction.
  8 19    c.  The assigned subrogation rights of the commissioner and
  8 20 allowed claims under this subsection have the same priority
  8 21 against the assets of the insolvent health maintenance
  8 22 organization or organized delivery system as those claims of
  8 23 persons entitled to receive benefits under this section or for
  8 24 similar expenses in the receivership or liquidation.
  8 25    4.  If funds assessed under subsection 1 are unused
  8 26 following the completion of the liquidation of an insolvent
  8 27 health maintenance organization or organized delivery system,
  8 28 the commissioner shall distribute the remaining amounts, if
  8 29 such amounts are not de minimis, to the health maintenance
  8 30 organizations or organized delivery systems that were
  8 31 assessed.
  8 32    5.  The aggregate coverage of uncovered expenditures under
  8 33 this section shall not exceed three hundred thousand dollars
  8 34 with respect to one individual.  Continuation of coverage
  8 35 shall cease after the lesser of one year after the health
  9  1 maintenance organization or organized delivery system is
  9  2 terminated by insolvency or the remaining term of the
  9  3 contract.  The commissioner may provide continuation of
  9  4 coverage on a reasonable basis, including, but not limited to,
  9  5 continuation of the health maintenance organization or
  9  6 organized delivery system contract or substitution of
  9  7 indemnity coverage in a form as determined by the
  9  8 commissioner.
  9  9    6.  The commissioner may waive an assessment of a health
  9 10 maintenance organization or organized delivery system if such
  9 11 organization or system is impaired financially or would be
  9 12 impaired financially as a result of such assessment.  A health
  9 13 maintenance organization or organized delivery system that
  9 14 fails to pay an assessment within thirty days after notice of
  9 15 the assessment is subject to a civil forfeiture of not more
  9 16 than one thousand dollars for each day the failure continues,
  9 17 and suspension or revocation of its certificate of authority.
  9 18 An action taken by the commissioner to enforce an assessment
  9 19 under this section may be appealed by the health maintenance
  9 20 organization or organized delivery system pursuant to chapter
  9 21 17A.
  9 22    Sec. 20.  Section 515.2, Code 1999, is amended to read as
  9 23 follows:
  9 24    515.2  ARTICLES – APPROVAL
  9 25    Each such organization shall present to the commissioner of
  9 26 insurance its articles of incorporation, which shall show its
  9 27 name, objects, location of its principal place of business,
  9 28 and amount of its capital stock, who shall submit it to the
  9 29 attorney general for examination, and if found by the attorney
  9 30 general to be in accordance with the provisions of this title,
  9 31 the laws of the United States, and the Constitution and laws
  9 32 of the state, the attorney general shall certify such fact
  9 33 thereon and return the same to said commissioner, and no
  9 34 articles shall be approved by the commissioner or recorded
  9 35 unless accompanied with such certificate.  A company shall
 10  1 file with the commissioner bylaws and subsequent amendments to
 10  2 the bylaws within thirty days of the adoption of the bylaws
 10  3 and amendments.
 10  4    Sec. 21.  Section 515.47, subsection 6, Code 1999, is
 10  5 amended by striking the subsection.
 10  6    Sec. 22.  Section 515B.2, subsection 5, Code 1999, is
 10  7 amended to read as follows:
 10  8    5.  "Insurer" means an insurer licensed to transact
 10  9 insurance business in this state under either chapter 515 or
 10 10 chapter 520, either at the time the policy was issued or when
 10 11 the insured event occurred.  It does not include county or
 10 12 state mutual assessment insurance associations licensed under
 10 13 chapter 518 or chapter 518A, or fraternal beneficiary
 10 14 societies, orders, or associations licensed under chapter
 10 15 512B, or corporations operating nonprofit service plans under
 10 16 chapter 514, or life insurance companies or life, accident, or
 10 17 health associations licensed under chapter 508, or those
 10 18 professions under chapter 519.
 10 19    Sec. 23.  Section 515F.3, subsection 6, Code 1999, is
 10 20 amended to read as follows:
 10 21    6.  Insurance written by a county mutual assessment
 10 22 insurance association as provided in chapter 518A.
 10 23    Sec. 24.  Section 515G.7, Code 1999, is amended to read as
 10 24 follows:
 10 25    515G.7  REVIEW OF PLAN BY COMMISSIONER – HEARING
 10 26 AUTHORIZED – APPROVAL.
 10 27    The commissioner of insurance shall review the plan.  The
 10 28 commissioner shall approve the plan if the commissioner finds
 10 29 the plan complies with all provisions of law, the plan is not
 10 30 unfair or inequitable fair and equitable to the mutual insurer
 10 31 and its policyholders, and that the reorganized company will
 10 32 have the amount of capital and surplus deemed by the
 10 33 commissioner to be reasonably necessary for its future
 10 34 solvency.  The commissioner may order a hearing on the
 10 35 fairness and equity of the terms of the plan after giving
 11  1 written notice of the hearing to the mutual insurer, and its
 11  2 policyholders, all of whom have the right to appear at the
 11  3 hearing.
 11  4    Sec. 25.  Section 515G.14, unnumbered paragraph 1, Code
 11  5 1999, is amended to read as follows:
 11  6    An action challenging the validity of a conversion plan, or
 11  7 any part of a conversion plan, shall not be commenced more
 11  8 than thirty days following the date of approval by the
 11  9 commissioner, unless an application for rehearing is filed
 11 10 pursuant to section 17A.16, subsection 2.  If an application
 11 11 for rehearing is filed, then such action must be filed within
 11 12 thirty days after that application is denied or deemed denied
 11 13 or, if the application is granted, within thirty days after
 11 14 the issuance of the commissioner's final decision on
 11 15 rehearing.
 11 16    Sec. 26.  Section 518.7, Code 1999, is amended to read as
 11 17 follows:
 11 18    518.7  OFFICERS AND DIRECTORS – ELECTION.
 11 19    Officers or directors shall be elected in the manner and
 11 20 for the length of time prescribed in the articles of
 11 21 incorporation.  The same person shall not simultaneously hold
 11 22 the offices of president and secretary.  A director shall be a
 11 23 member of the association.
 11 24    Sec. 27.  Section 518.8, Code 1999, is amended to read as
 11 25 follows:
 11 26    518.8  BYLAWS.
 11 27    The directors of the association shall have the authority
 11 28 to enact such bylaws and regulations not inconsistent with law
 11 29 as they consider necessary for the regulation and conduct of
 11 30 the business.  No change in the bylaws shall have the effect
 11 31 of limiting coverage under existing policies of insurance.  An
 11 32 association shall file with the commissioner bylaws and
 11 33 subsequent amendments to the bylaws within thirty days of the
 11 34 adoption of the bylaws and amendments.
 11 35    Sec. 28.  NEW SECTION.  518.13A  ASSESSMENTS PROHIBITED.
 12  1    An association doing business under this chapter shall not
 12  2 levy an assessment on any member of the association.
 12  3    Sec. 29.  Section 518.17, Code Supplement 1999, is amended
 12  4 to read as follows:
 12  5    518.17  REINSURANCE.
 12  6    A county mutual insurance association may reinsure a part
 12  7 or all of its risks coverages written pursuant to this chapter
 12  8 with any an association operating under the provisions of this
 12  9 chapter, or with any other association or company licensed in
 12 10 this state and authorized to write the kinds of insurance
 12 11 enumerated in section 518.11.
 12 12    Reinsurance sufficient to protect the financial stability
 12 13 of the state mutual association is also required.  Reinsurance
 12 14 coverage obtained by a county mutual insurance association
 12 15 shall not expose the association to a loss losses from
 12 16 coverages written pursuant to this chapter of more than
 12 17 fifteen percent from surplus in any calendar year.  The
 12 18 commissioner of insurance may require additional reinsurance
 12 19 if necessary to protect the policyholders of the association.
 12 20    Sec. 30.  Section 518.23, Code 1999, is amended to read as
 12 21 follows:
 12 22    518.23  CANCELLATION OF POLICIES.
 12 23    1.  CANCELLATION BY INSURED.  Any A policy shall be
 12 24 canceled at any time at the request of the insured upon the
 12 25 return of the policy to the home office of the association,
 12 26 and the payment of all premium charges against such policy; or
 12 27 by the association by giving five days' notice of such
 12 28 cancellation.  Such service
 12 29    2.  CANCELLATION BY ASSOCIATION.
 12 30    a.  Except as provided in paragraph "b", notice of
 12 31 cancellation is not effective unless mailed or delivered by
 12 32 the association to the named insured at least twenty days
 12 33 before the effective date of cancellation.
 12 34    b.  Notice of cancellation resulting from nonpayment of a
 12 35 premium or installment provided for in the policy, or provided
 13  1 for in a note or contract for the payment of such premium or
 13  2 installment, is not effective unless mailed or delivered by
 13  3 the association to the named insured at least ten days prior
 13  4 to the date of cancellation.
 13  5    c.  If a notice of cancellation under paragraph "a" or "b"
 13  6 fails to include the reason for such cancellation, the
 13  7 association, upon receipt of a timely request by the named
 13  8 insured, shall provide in writing the reason for the
 13  9 cancellation.
 13 10    3.  NONRENEWAL BY ASSOCIATION.  A notice of intention not
 13 11 to renew is not effective unless mailed or delivered by the
 13 12 insurer to the named insured at least thirty days prior to the
 13 13 expiration date of the policy.  If the reason does not
 13 14 accompany the notice of nonrenewal, the association, upon
 13 15 receipt of a timely request by the named insured, shall
 13 16 provide the reason for the nonrenewal in writing.
 13 17    4.  NOTICE.  Service of notice under subsection 2 or 3 may
 13 18 be made in person, or by mailing such notice by certified mail
 13 19 deposited in the post office and directed to the insured at
 13 20 the insured's post office address as given in or upon the
 13 21 policy, or to such other address as the insured shall have
 13 22 given to the association in writing.  A post office department
 13 23 receipt of certified or registered mail shall be deemed proof
 13 24 of receipt of such notice.  If in either case the cash
 13 25 payments shall exceed the amount properly chargeable, the
 13 26 excess will shall be refunded to the insured upon the
 13 27 surrender of the policy to the association at its home office.
 13 28    Sec. 31.  Section 518A.6, Code 1999, is amended to read as
 13 29 follows:
 13 30    518A.6  OFFICERS – ELECTION.
 13 31    Officers or directors shall be elected in the manner and
 13 32 for the length of time prescribed in the articles of
 13 33 incorporation or bylaws.  The same person shall not
 13 34 simultaneously hold the offices of president and secretary.  A
 13 35 director shall be a member of the association.
 14  1    Sec. 32.  NEW SECTION.  518A.6A  BYLAWS.
 14  2    The directors of the association may enact the bylaws and
 14  3 regulations not inconsistent with law as they consider
 14  4 necessary for the regulation and conduct of the business.  A
 14  5 change in the bylaws shall not limit coverage under existing
 14  6 policies of insurance.  An association shall file with the
 14  7 commissioner bylaws and amendments to bylaws within thirty
 14  8 days of adoption.
 14  9    Sec. 33.  Section 518A.7, Code 1999, is amended to read as
 14 10 follows:
 14 11    518A.7  POLICIES – ISSUANCE – CONDITIONS.
 14 12    No A state mutual assessment insurance association shall
 14 13 not issue policies until at least one hundred twenty-five
 14 14 applications have been received in any class as shown by
 14 15 section 518A.1, representing the following amount of
 14 16 insurance:  Classes one, two, three, and five, two hundred
 14 17 fifty thousand dollars each; class four, one hundred thousand
 14 18 dollars, and no county mutual assessment association shall
 14 19 issue policies until applications for insurance to the amount
 14 20 of fifty thousand dollars representing at least fifty
 14 21 applicants have been received, and no an application for
 14 22 insurance during the period of organization shall not exceed
 14 23 two percent of the amount required for organization, or after
 14 24 one year of organization, one percent of the total insurance
 14 25 in force, any reinsurance taking effect simultaneously with
 14 26 the policy being deducted in determining such maximum single
 14 27 risk.
 14 28    Sec. 34.  Section 518A.9, Code 1999, is amended by striking
 14 29 and inserting in lieu thereof the following:
 14 30    518A.9  PREMIUM CHARGES.
 14 31    An association, by action of its board of directors, may
 14 32 establish premium charges for the purpose of payment of losses
 14 33 and expenses and for the establishment or maintenance of a
 14 34 reserve fund.
 14 35    A policy shall stand suspended if any default is made in
 15  1 the payment of any premium on or before the date specified in
 15  2 a written notice requiring the payment of such premium and
 15  3 mailed to the insured and directed to the insured's last known
 15  4 address not less than thirty days prior to such suspension
 15  5 date.  The notice shall specify the amount and due date of the
 15  6 premium.  The association is not liable for any loss occurring
 15  7 during such period of suspension.
 15  8    Sec. 35.  NEW SECTION.  518A.9A  ASSESSMENTS PROHIBITED.
 15  9    An association doing business under this chapter shall not
 15 10 levy an assessment on any member of the association.
 15 11    Sec. 36.  Section 518A.12, subsection 1, paragraphs a and
 15 12 c, Code 1999, is amended to read as follows:
 15 13    a.  This section applies to the investments of state mutual
 15 14 casualty assessment insurance associations.
 15 15    c.  Financial terms relating to state mutual casualty
 15 16 assessment insurance associations have the meanings assigned
 15 17 to them under statutory accounting methods.  Financial terms
 15 18 relating to companies other than state mutual casualty
 15 19 assessment insurance associations have the meanings assigned
 15 20 to them under generally accepted accounting principles.
 15 21    Sec. 37.  Section 518A.18, Code 1999, is amended to read as
 15 22 follows:
 15 23    518A.18  ANNUAL REPORT.
 15 24    An association doing business under this chapter shall, on
 15 25 or before March 1 of each year, report to the commissioner of
 15 26 insurance the facts required of domestic insurance companies
 15 27 organizing under chapter 515, which are applicable to this
 15 28 chapter.  These reports shall prepare under oath and file with
 15 29 the commissioner of insurance an accurate and complete
 15 30 statement of the condition of the association as of the last
 15 31 day of the preceding calendar year.  The statement shall
 15 32 conform to the annual statement blank prepared pursuant to
 15 33 instructions prescribed by the commissioner.  All financial
 15 34 information reflected in the annual report shall be kept and
 15 35 prepared pursuant to accounting practices and procedures
 16  1 prescribed by the commissioner.  Statements filed with the
 16  2 commissioner pursuant to this section shall be tabulated and
 16  3 published by the commissioner of insurance in the annual
 16  4 report of insurance.
 16  5    Sec. 38.  Section 518A.29, Code 1999, is amended by
 16  6 striking the section and inserting in lieu thereof the
 16  7 following:
 16  8    518A.29  CANCELLATION BY ASSOCIATION – NOTICE.
 16  9    1.  CANCELLATION BY INSURED.  A policy shall be canceled at
 16 10 any time at the request of the insured upon the return of the
 16 11 policy to the home office of the association and the payment
 16 12 of all premium charges against such policy.
 16 13    2.  CANCELLATION BY ASSOCIATION.
 16 14    a.  Except as provided in paragraph "b", notice of
 16 15 cancellation is not effective unless mailed or delivered by
 16 16 the association to the named insured at least twenty days
 16 17 before the effective date of cancellation.
 16 18    b.  Notice of cancellation resulting from nonpayment of a
 16 19 premium or installment provided for in the policy, or provided
 16 20 for in a note or contract for the payment of such premium or
 16 21 installment, is not effective unless mailed or delivered by
 16 22 the association to the named insured at least ten days prior
 16 23 to the date of cancellation.
 16 24    c.  If a notice of cancellation under paragraph "a" or "b"
 16 25 fails to include the reason for such cancellation, the
 16 26 association, upon receipt of a timely request by the named
 16 27 insured, shall provide the reason for the cancellation in
 16 28 writing.
 16 29    3.  NONRENEWAL BY ASSOCIATION.  A notice of intention not
 16 30 to renew is not effective unless mailed or delivered by the
 16 31 insurer to the named insured at least thirty days prior to the
 16 32 expiration date of the policy.  If the reason does not
 16 33 accompany the notice of nonrenewal, the association, upon
 16 34 receipt of a timely request by the named insured, shall
 16 35 provide in writing the reason for the nonrenewal.
 17  1    4.  NOTICE.  Service of notice under subsection 2 or 3 may
 17  2 be made in person, or by mailing such notice by certified mail
 17  3 deposited in the post office and directed to the insured at
 17  4 the insured's post office address as given in or upon the
 17  5 policy, or to such other address as the insured shall have
 17  6 given to the association in writing.  A post office department
 17  7 receipt of certified or registered mail shall be deemed proof
 17  8 of receipt of such notice.  If in either case the cash
 17  9 payments exceed the amount properly chargeable, the excess
 17 10 shall be refunded upon the surrender of the policy to the
 17 11 association at its home office.
 17 12    Sec. 39.  Section 518A.35, Code 1999, is amended to read as
 17 13 follows:
 17 14    518A.35  ANNUAL TAX.
 17 15    Every A state mutual insurance association doing business
 17 16 under this chapter shall on or before the first day of March,
 17 17 each year, pay to the director of the department of revenue
 17 18 and finance, or a depository designated by the director, a sum
 17 19 equivalent to two percent of the gross receipts from premiums,
 17 20 assessments, and fees, and promissory obligations for business
 17 21 done within the state, including all insurance upon property
 17 22 situated in the state without including or deducting any
 17 23 amounts received or paid for reinsurance except that any.
 17 24 However, a company reinsuring windstorm or hail risks written
 17 25 by county mutual associations shall be is required to pay a
 17 26 two percent tax on the gross amount of reinsurance premiums
 17 27 received upon such risks, but after deducting the amount
 17 28 returned upon canceled policies and rejected applications
 17 29 covering property situated within the state, and dividends
 17 30 returned to policyholders on property situated within the
 17 31 state.
 17 32    Sec. 40.  Section 518A.44, Code Supplement 1999, is amended
 17 33 to read as follows:
 17 34    518A.44  REINSURANCE.
 17 35    A state mutual insurance association may reinsure a part or
 18  1 all of its risks coverages written pursuant to this chapter
 18  2 with any an association operating under the provisions of this
 18  3 chapter, or with any other association or company licensed in
 18  4 this state and authorized to write the kinds of insurance
 18  5 enumerated in section 518A.1.
 18  6    Reinsurance sufficient to protect the financial stability
 18  7 of the state mutual insurance association is required.
 18  8 Reinsurance coverage obtained by an association shall not
 18  9 expose the association to a loss losses from coverages written
 18 10 pursuant to this chapter of more than fifteen percent from
 18 11 surplus in any calendar year.  The commissioner of insurance
 18 12 may require additional reinsurance if necessary to protect the
 18 13 policyholders of the association.
 18 14    Sec. 41.  Section 518A.52, Code 1999, is amended to read as
 18 15 follows:
 18 16    518A.52  FORM – APPROVAL.
 18 17    The form of all policies, applications, agreements, and
 18 18 endorsements modifying the provisions of policies, and all
 18 19 permits and riders used in this state, issued or proposed to
 18 20 be issued by a state mutual casualty assessment insurance
 18 21 association doing business in this state under the provisions
 18 22 of this chapter, shall first be examined and approved by the
 18 23 commissioner of insurance.
 18 24    Sec. 42.  Section 518A.53, Code 1999, is amended to read as
 18 25 follows:
 18 26    518A.53  FAILURE TO FILE COPY.
 18 27    Upon the failure of a state mutual casualty assessment
 18 28 insurance association to file a copy of its forms of policies
 18 29 or contracts pursuant to section 518A.52, the commissioner of
 18 30 insurance may suspend its authority to transact business
 18 31 within the state until such forms of policies or contracts
 18 32 have been filed and approved.
 18 33    Sec. 43.  Section 518A.54, Code 1999, is amended to read as
 18 34 follows:
 18 35    518A.54  DISAPPROVAL OF FILINGS.
 19  1    If the commissioner finds that a filing does not meet the
 19  2 requirements of this chapter, written notice of disapproval
 19  3 shall be sent to the state mutual casualty assessment
 19  4 insurance association specifying in what respect the filing
 19  5 fails to meet the requirements of this chapter and stating
 19  6 that the filing is not effective.  If a filing is disapproved
 19  7 by the commissioner, the association may request a hearing on
 19  8 the disapproval within thirty days.  The association bears the
 19  9 burden of proving compliance with the standards established by
 19 10 this chapter.
 19 11    If, at any time after a form has been approved, the
 19 12 commissioner finds that the form no longer meets the
 19 13 requirements of this chapter, the commissioner may order the
 19 14 discontinuance of the use of the form.  The order of
 19 15 discontinuance shall be in writing and may be issued only
 19 16 after a hearing with at least ten days' prior notice to all
 19 17 state mutual casualty assessment insurance associations
 19 18 affected by the order.  The order shall state the grounds upon
 19 19 which the order is based and when the order of discontinuance
 19 20 is effective.
 19 21    Sec. 44.  Section 518A.55, Code 1999, is amended to read as
 19 22 follows:
 19 23    518A.55  CERTIFICATE SUSPENSION.
 19 24    The commissioner of insurance may suspend a state mutual
 19 25 casualty assessment insurance association's certificate of
 19 26 authority to do business if the association neglects or fails
 19 27 to comply with this chapter.
 19 28    Sec. 45.  Section 519.10, Code 1999, is amended to read as
 19 29 follows:
 19 30    519.10  POWERS OF COMMISSIONER.
 19 31    The commissioner of insurance shall have and exercise the
 19 32 same control over such corporations as the commissioner now
 19 33 has over state mutual assessment insurance associations
 19 34 organized and doing business under chapter 518A.
 19 35    Sec. 46.  Section 519.11, Code Supplement 1999, is amended
 20  1 to read as follows:
 20  2    519.11  LIABILITY TO ASSESSMENTS.
 20  3    The provisions as to maximum liability of members to
 20  4 assessments when assets are insufficient and to assessments
 20  5 when the corporation is insolvent, found in sections section
 20  6 518A.9 and 518A.14, shall apply to all mutual insurance
 20  7 corporations organized under this chapter.
 20  8    Sec. 47.  Section 521E.1, subsection 4, paragraph e, Code
 20  9 1999, is amended to read as follows:
 20 10    e.  A state mutual casualty assessment insurance
 20 11 association organized under chapter 518A.
 20 12    Sec. 48.  Section 522.3, unnumbered paragraph 3, Code 1999,
 20 13 is amended by striking the unnumbered paragraph.
 20 14    Sec. 49.  Section 573.3, Code 1999, is amended by adding
 20 15 the following new unnumbered paragraph:
 20 16    NEW UNNUMBERED PARAGRAPH.  A public corporation, with
 20 17 respect to a public improvement which is or has been
 20 18 competitively bid or negotiated, shall not require a
 20 19 contractor to procure a bond, as required under section 573.2,
 20 20 from a particular insurance or surety company, agent, or
 20 21 broker.
 20 22    Sec. 50.  Sections 518A.11, 518A.14, 518A.15, 518A.30,
 20 23 518A.31, and 518A.32, Code 1999, are repealed.  
 20 24                           EXPLANATION 
 20 25    This bill amends provisions relating to the regulation of
 20 26 insurance entities in this state.
 20 27    Code section 87.4 is amended to exempt cities, counties,
 20 28 community colleges, and political subdivisions that establish
 20 29 a program of self-insurance for workers' compensation
 20 30 insurance from regulation by the insurance division.
 20 31    Code section 505.8 is amended by striking the requirement
 20 32 that the commissioner annually prepare a report identifying
 20 33 the premium volume of nonqualified insurance annuities issued
 20 34 by domestic insurance companies doing a volume of at least
 20 35 $5,000,000 per annum.
 21  1    Code section 505.8 is amended to require the commissioner
 21  2 to adopt rules protecting the privacy of information held by
 21  3 an insurer or an agent consistent with federal legislation.
 21  4    New Code section 505.23 is created and provides that if an
 21  5 evidentiary hearing is conducted in certain proceedings, the
 21  6 proceeding is a contested case subject to Code chapter 17A.
 21  7    Code section 508.4 is amended to require that a life
 21  8 insurance company incorporated under Iowa law must file its
 21  9 bylaws and any amendments to such bylaws within 30 days of the
 21 10 adoption of such bylaws and amendments.
 21 11    The bill amends provisions of Code chapter 508B relating to
 21 12 the conversion of a mutual life insurance company to a stock
 21 13 life insurance company.  The bill provides that such plan of
 21 14 conversion must be fair and equitable to policyholders.
 21 15 Currently, such plan is not to be unfair or inequitable to
 21 16 policyholders.  The bill provides that the commissioner is to
 21 17 review the plan and make a finding that the plan is fair and
 21 18 equitable to the mutual company and its policyholders, rather
 21 19 than a finding that the plan is not unfair or inequitable.
 21 20 The bill provides that a new certificate of authority to a
 21 21 reorganized company is effective on the effective date of the
 21 22 conversion as provided in the plan of conversion.  Currently,
 21 23 such certificate is effective on the date specified in the
 21 24 plan of conversion.  The bill also reduces the time within
 21 25 which a person may commence an action challenging a conversion
 21 26 under Code chapter 508B from 180 days to 30 days, unless an
 21 27 application for rehearing is filed.  The bill provides that if
 21 28 an application for rehearing is filed, then such action
 21 29 challenging the conversion must be filed within 30 days after
 21 30 that application is denied or deemed denied or, if the
 21 31 application is granted, within 30 days after the issuance of
 21 32 the commissioner's final decision on rehearing.
 21 33    New Code section 512A.10 is created and requires a
 21 34 benevolent association to file its articles of incorporation
 21 35 and amendments to the articles with the commissioner for
 22  1 approval.  The Code section also requires a benevolent
 22  2 association to file its bylaws and amendments to the bylaws
 22  3 with the commissioner within 30 days of adoption.
 22  4    Code section 513B.2 is amended by striking, for purposes of
 22  5 determining premium rates for a class of business, the use
 22  6 small employers with similar case characteristics.
 22  7    Code section 513C.10 is amended to provide that rates for
 22  8 basic and standard health care coverages are to be determined
 22  9 as a product of a basic and standard factor and the lowest
 22 10 rate available for issuance by an insurance carrier or
 22 11 organized delivery system.  The section is also amended to
 22 12 provide for the manner in which basic and standard factors are
 22 13 to be determined.
 22 14    Code section 514.3 is amended and provides that a nonprofit
 22 15 health service corporation must file its bylaws and any
 22 16 amendments to such bylaws within 30 days of the adoption of
 22 17 such bylaws and amendments.
 22 18    Code section 514.4 is amended to strike language
 22 19 prohibiting a corporation from reimbursing or compensating a
 22 20 director of a nonprofit health service corporation who is a
 22 21 provider or a subscriber more than per diem plus necessary and
 22 22 actual expenses for attendance at a meeting of the board of
 22 23 directors.
 22 24    New Code section 514B.3A is created and provides that the
 22 25 articles of incorporation of a health maintenance organization
 22 26 be approved by both the commissioner and the attorney general.
 22 27 The new Code section also requires a health maintenance
 22 28 organization to file its bylaws and any amendments to such
 22 29 bylaws within 30 days of the adoption of such bylaws and
 22 30 amendments.
 22 31    Code section 514B.24 is amended to increase the maximum
 22 32 time which a health maintenance organization may go without
 22 33 examination by the commissioner from three to five years.
 22 34    New Code section 514B.25A is created and establishes an
 22 35 assessment mechanism in the event that a health maintenance
 23  1 organization or an organized delivery system is found to be
 23  2 insolvent.
 23  3    Code section 515.2 is amended and provides that an
 23  4 insurance company, other than a life insurance company, must
 23  5 file its bylaws and any amendments to such bylaws within 30
 23  6 days of the adoption of such bylaws and amendments.
 23  7    Code section 515.47 is amended by striking a provision
 23  8 which requires mutual companies or associations organized or
 23  9 doing business under Code chapter 515 to hold as a reserve for
 23 10 unearned premiums an amount equal to at least 40 percent of
 23 11 the aggregate gross premiums written in all policies in force
 23 12 less deductions for reinsurance.
 23 13    The bill amends provision of Code sections 515G.7 and
 23 14 515G.14 relating to the conversion of a mutual property and
 23 15 casualty insurance company to a stock property and casualty
 23 16 insurance company.  The bill provides that the commissioner is
 23 17 to review the plan and make a finding that the plan is fair
 23 18 and equitable to the mutual insurer and its policyholders,
 23 19 rather than a finding that the plan is not unfair or
 23 20 inequitable.  The bill also provides that if an application
 23 21 for rehearing is filed after the commissioner approves the
 23 22 conversion, then an action challenging the conversion must be
 23 23 filed within 30 days after that application is denied or
 23 24 deemed denied or, if the application is granted, within 30
 23 25 days after the issuance of the commissioner's final decision
 23 26 on rehearing.
 23 27    Code section 518.7 is amended and requires that a director
 23 28 of a county mutual insurance association also be a member of
 23 29 such association.
 23 30    Code section 518.8 is amended and provides that a county
 23 31 mutual insurance association must file its bylaws and any
 23 32 amendments to such bylaws within 30 days of the adoption of
 23 33 such bylaws and amendments.
 23 34    New Code section 518.13A is created and prohibits a county
 23 35 mutual insurance association from levying an assessment on
 24  1 members of the association.
 24  2    Code section 518.17 is amended to provide that reinsurance
 24  3 obtained by a county mutual insurance association will cover
 24  4 losses incurred only from coverages written under Code chapter
 24  5 518.
 24  6    Code section 518.23 is amended and provides the manner for
 24  7 cancellation and nonrenewal of a policy issued by a county
 24  8 mutual insurance association.
 24  9    Code section 518A.6 is amended and requires that a director
 24 10 of a state mutual insurance association also be a member of
 24 11 such association.
 24 12    New Code section 518A.6A is created and authorizes the
 24 13 directors of a state mutual insurance association to adopt
 24 14 bylaws and regulations necessary for the regulation and
 24 15 conduct of business, and requires that the bylaws and
 24 16 amendments to the bylaws be filed with the commissioner within
 24 17 30 days of adoption.
 24 18    Code sections 515B.2, 515F.3, 518A.7, 518A.12, 518A.35,
 24 19 518A.52, 518A.53, 518A.54, 518A.55, 519.10, and 521E.1 are
 24 20 amended to conform to the change in the name of the
 24 21 association from mutual casualty assessment insurance
 24 22 association to the state mutual insurance association.
 24 23    Code section 518A.9 is rewritten and strikes the authority
 24 24 of a state mutual insurance association to assess members of
 24 25 the association and authorizes the association to establish
 24 26 premium charges for the purpose of payment of losses and
 24 27 expenses and the establishment or maintenance of a reserve
 24 28 fund.  The Code section also provides for the suspension of a
 24 29 policy for nonpayment of premium.
 24 30    New Code section 518A.9A is created and prohibits a state
 24 31 mutual insurance association from levying an assessment on
 24 32 members of the association.
 24 33    Code section 518A.18 is amended and provides that a state
 24 34 mutual association is required to annually prepare a statement
 24 35 of the condition of the association for the preceding calendar
 25  1 year.  The statement is to conform to the statement blank
 25  2 prescribed by the commissioner.
 25  3    Code section 518A.29 is amended and provides the manner for
 25  4 cancellation and nonrenewal of a policy issued by a state
 25  5 mutual insurance association.
 25  6    Code section 518A.44 is amended to provide that reinsurance
 25  7 obtained by a state mutual insurance association will cover
 25  8 losses incurred only from coverages written under Code chapter
 25  9 518A.
 25 10    Code section 522.3 is amended by striking language
 25 11 requiring that a first-time applicant for a license as an
 25 12 insurance agent pay to the commissioner an application fee of
 25 13 $10 for each line of insurance.
 25 14    Code section 573.3 is amended to provide that a public
 25 15 corporation, with respect to a public improvement which is or
 25 16 has been competitively bid or negotiated, shall not require a
 25 17 contractor to procure a bond from a particular insurance or
 25 18 surety company, agent, or broker.
 25 19    The bill repeals sections relating to the state mutual
 25 20 insurance association concerning the borrowing of money,
 25 21 liability of members, reserves for unearned premium,
 25 22 cancellation of policies by insureds, unearned assessments,
 25 23 and pro rata assessments of association members.  
 25 24 LSB 5253DP 78
 25 25 mj/as/5.1

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