Senate File 2364 - Enrolled

PAG LIN



  1  1                                           SENATE FILE 2364
  1  2
  1  3                             AN ACT
  1  4 RELATING TO VARIOUS MATTERS UNDER THE PURVIEW OF THE INSURANCE
  1  5    DIVISION OF THE DEPARTMENT OF COMMERCE INCLUDING THE SECURI=
  1  6    TIES AND REGULATED INDUSTRIES BUREAU, INSURANCE PREMIUM
  1  7    TAXES, THE UNIFORM SECURITIES ACT, INSURANCE DIVISION
  1  8    PROCEDURES INCLUDING FEES AND AN APPROPRIATION, REGULATION
  1  9    OF INSURANCE COMPANIES AND OTHER ENTITIES INCLUDING
  1 10    ADMINISTRATIVE PENALTIES, MOTOR VEHICLE SERVICE CONTRACTS,
  1 11    COUNTY AND STATE MUTUAL INSURANCE ASSOCIATIONS, RECIPROCAL
  1 12    OR INTERINSURANCE INSURERS, CONSOLIDATION, MERGER AND
  1 13    REINSURANCE CONTRACTS, INSURANCE HOLDING COMPANY SYSTEMS,
  1 14    AND CEMETERIES.
  1 15
  1 16 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1 17
  1 18    Section 1.  Section 11.6, subsection 1, paragraph b,
  1 19 subparagraph (6), Code Supplement 2005, is amended to read as
  1 20 follows:
  1 21    (6)  A joint investment trust organized pursuant to chapter
  1 22 28E shall file the audit reports required by this chapter with
  1 23 the administrator of the securities and regulated industries
  1 24 bureau of the insurance division of the department of commerce
  1 25 within ten days of receipt from the auditor.  The auditor of a
  1 26 joint investment trust shall provide written notice to the
  1 27 administrator of the time of delivery of the reports to the
  1 28 joint investment trust.
  1 29    Sec. 2.  Section 22.7, Code Supplement 2005, is amended by
  1 30 adding the following new subsections:
  1 31    NEW SUBSECTION.  52.  Information obtained and prepared by
  1 32 the commissioner of insurance pursuant to section 507.14.
  1 33    NEW SUBSECTION.  53.  Information obtained and prepared by
  1 34 the commissioner of insurance pursuant to section 507E.5.
  1 35    Sec. 3.  Section 432.1, subsection 3, Code Supplement 2005,
  2  1 is amended to read as follows:
  2  2    3.  The applicable percent, as provided in subsection 4, of
  2  3 the gross amount of premiums, assessments, and fees received
  2  4 during the preceding calendar year by every company or
  2  5 association other than life on contracts of insurance other
  2  6 than life for business done in this state, including all
  2  7 insurance upon property situated in this state, after
  2  8 deducting the amounts returned upon canceled policies,
  2  9 certificates and rejected applications but not including the
  2 10 gross premiums written, assessments, and fees in connection
  2 11 with ocean marine insurance authorized in section 515.48.
  2 12    Sec. 4.  Section 432.5, Code 2005, is amended to read as
  2 13 follows:
  2 14    432.5  RISK RETENTION GROUPS.
  2 15    A risk retention group organized and operating pursuant to
  2 16 Pub. L. No. 99=563, also known as the risk retention
  2 17 amendments of 1986, shall pay as taxes to the director of
  2 18 revenue an amount equal to the applicable percent, as provided
  2 19 in section 432.1, subsection 4, of the gross amount of the
  2 20 premiums received written during the previous calendar year
  2 21 for risks placed in this state.  A resident or nonresident
  2 22 producer shall report and pay the taxes on the premiums for
  2 23 risks that the producer has placed in this state with or on
  2 24 behalf of a risk retention group.  The failure of a risk
  2 25 retention group to pay the tax imposed in this section shall
  2 26 result in the risk retention group being considered an
  2 27 unauthorized insurer under chapter 507A.
  2 28    Sec. 5.  Section 502.102, subsection 5, paragraph b,
  2 29 subparagraph (3), Code Supplement 2005, is amended to read as
  2 30 follows:
  2 31    (3)  An industrial loan company that is not an "insured
  2 32 depository institution" as defined in section 3(c)(2) of the
  2 33 Federal Deposit Insurance Act, 12 U.S.C. } 1813(c)(2), or any
  2 34 successor federal statute.
  2 35    Sec. 6.  Section 502.102, subsection 27A, Code Supplement
  3  1 2005, is amended to read as follows:
  3  2    27A.  "Securities and regulated industries bureau" means
  3  3 the securities and regulated industries bureau of the
  3  4 insurance division of the department of commerce.
  3  5    Sec. 7.  Section 502.201, subsection 8A, paragraph b,
  3  6 unnumbered paragraph 1, Code 2005, is amended to read as
  3  7 follows:
  3  8    A mutual or cooperative organization, including a
  3  9 cooperative association organized in good faith under and for
  3 10 any of the purposes enumerated in chapter 497, 498, 499, or
  3 11 501, or 501A, that deals in commodities or supplies goods or
  3 12 services in transactions primarily with and for the benefit of
  3 13 its members, if all of the following apply:
  3 14    Sec. 8.  Section 502.304, subsection 2A, Code 2005, is
  3 15 amended to read as follows:
  3 16    2A.  REPORTS AND EXAMINATIONS.  The administrator may by
  3 17 rule or order require as a condition of registration by
  3 18 qualification, and at the expense of the applicant or
  3 19 registrant, that a report by an accountant, engineer,
  3 20 appraiser, or other professional person be filed.  The
  3 21 administrator may also designate one or more employees of the
  3 22 securities and regulated industries bureau to make an
  3 23 examination of the business and records of an issuer of
  3 24 securities for which a registration statement has been filed
  3 25 by qualification, at the expense of the applicant or
  3 26 registrant.
  3 27    Sec. 9.  Section 502.412, subsection 2, paragraph a, Code
  3 28 Supplement 2005, is amended to read as follows:
  3 29    a.  Institute a revocation or suspension proceeding under
  3 30 this subsection based solely on an order issued under a law of
  3 31 another state that is reported to the administrator or a
  3 32 designee of the administrator more than one year after the
  3 33 date of the order on which it is based.
  3 34    Sec. 10.  Section 502.412, subsection 3, Code Supplement
  3 35 2005, is amended to read as follows:
  4  1    3.  DISCIPLINARY PENALTIES == REGISTRANTS.  If the
  4  2 administrator finds that the order is in the public interest
  4  3 and subsection 4, paragraphs "a" through "f", "h", "i", "j",
  4  4 or "l", and or "m", authorizes the action, an order under this
  4  5 chapter may censure, impose a bar, or impose a civil penalty
  4  6 in an amount not to exceed a maximum of five thousand dollars
  4  7 for a single violation or five hundred thousand dollars for
  4  8 more than one violation, on a registrant, and, if the
  4  9 registrant is a broker=dealer or investment adviser, a
  4 10 partner, officer, director, or person having a similar status
  4 11 or performing similar functions, or a person directly or
  4 12 indirectly in control, of the broker=dealer or investment
  4 13 adviser.
  4 14    Sec. 11.  Section 502.510, subsection 1, paragraph e, Code
  4 15 2005, is amended to read as follows:
  4 16    e.  If the basis for relief under this section may have
  4 17 been a violation of section 502.509, subsection 3 5, an offer
  4 18 to reimburse in cash the consideration paid for the advice and
  4 19 interest at the legal rate from the date of payment.
  4 20    Sec. 12.  Section 502.601, subsection 1, Code Supplement
  4 21 2005, is amended to read as follows:
  4 22    1.  ADMINISTRATION.  This chapter shall be administered by
  4 23 the commissioner of insurance of this state.  The
  4 24 administrator shall appoint a deputy administrator who shall
  4 25 be exempt from the merit system provisions of chapter 8A,
  4 26 subchapter IV.  The deputy administrator is the principal
  4 27 operations officer of the securities and regulated industries
  4 28 bureau of the insurance division of the department of
  4 29 commerce.  The deputy administrator is responsible to the
  4 30 administrator for the routine administration of this chapter
  4 31 and the management of the securities and regulated industries
  4 32 bureau.  In the absence of the administrator, whether because
  4 33 of vacancy in the office, by reason of absence, physical
  4 34 disability, or other cause, the deputy administrator shall be
  4 35 the acting administrator and shall, for that period, have and
  5  1 exercise the authority conferred upon the administrator.  The
  5  2 administrator may by order delegate to the deputy
  5  3 administrator any or all of the functions assigned to the
  5  4 administrator under this chapter.  The administrator shall
  5  5 employ officers, attorneys, accountants, and other employees
  5  6 as needed for the administration of this chapter.
  5  7    Sec. 13.  Section 502A.1, subsection 1, Code 2005, is
  5  8 amended to read as follows:
  5  9    1.  "Administrator" means the administrator of the
  5 10 securities and regulated industries bureau of the insurance
  5 11 division of the department of commerce.
  5 12    Sec. 14.  Section 502A.15, subsection 1, Code 2005, is
  5 13 amended to read as follows:
  5 14    1.  This chapter shall be administered by the administrator
  5 15 of the securities and regulated industries bureau of the
  5 16 insurance division of the department of commerce.
  5 17    Sec. 15.  Section 505.16, subsection 2, Code 2005, is
  5 18 amended to read as follows:
  5 19    2.  The insurance commissioner shall approve rules for
  5 20 carrying out this section including rules relating to the
  5 21 preparation of information to be provided before and after a
  5 22 test and the protection of confidentiality of personal and
  5 23 medical records of insurance applicants and policyholders.
  5 24 The rules shall require a person engaged in the business of
  5 25 insurance who receives results of a positive human
  5 26 immunodeficiency virus test of an insurance applicant or
  5 27 policyholder to report those results to a physician or
  5 28 alternative testing site of the applicant's or policyholder's
  5 29 choice, or if the applicant or policyholder does not choose a
  5 30 physician or alternative testing site to receive the results,
  5 31 to the Iowa department of public health.
  5 32    Sec. 16.  NEW SECTION.  505.27  CONSENT TO JURISDICTION.
  5 33    A person committing any act governed by chapter 502, 502A,
  5 34 505 through 523G, or 523I constitutes consent by that person
  5 35 to the jurisdiction of the commissioner of insurance and the
  6  1 district courts of this state.
  6  2    Sec. 17.  NEW SECTION.  505.28  ADMINISTRATIVE HEARINGS.
  6  3    The commissioner of insurance shall have the authority to
  6  4 appoint as a hearing officer a designee or an independent
  6  5 administrative law judge.  Duties of a hearing officer shall
  6  6 include hearing contested cases arising from conduct governed
  6  7 by chapters 502, 502A, 505 through 523G, and 523I.  Sections
  6  8 10A.801 and 17A.11 do not apply to the appointment of a
  6  9 designee or an administrative law judge pursuant to this
  6 10 section.
  6 11    Sec. 18.  NEW SECTION.  505.29  SERVICE OF PROCESS == FEE.
  6 12    The commissioner of insurance, pursuant to rules adopted
  6 13 pursuant to chapter 17A, may collect a reasonable fee each
  6 14 time process is served on the commissioner as allowed by law.
  6 15 Fees collected by the commissioner under this section shall be
  6 16 used and are appropriated to the insurance division to offset
  6 17 the costs of receiving such service of process.  The party to
  6 18 a proceeding causing service of process is entitled to recover
  6 19 this fee as costs if the party prevails in the proceeding.
  6 20    Sec. 19.  Section 507.10, subsection 5, paragraph b, Code
  6 21 2005, is amended to read as follows:
  6 22    b.  The commissioner is not prevented from disclosing the
  6 23 content of an examination report, preliminary examination
  6 24 report or results, or any matter relating to the report, to an
  6 25 insurance department of any other state or country, to the
  6 26 national association of insurance commissioners, or to law
  6 27 enforcement officials of this or any other state or an agency
  6 28 of the federal government at any time, so long as such agency
  6 29 or office receiving the report, or matters relating to the
  6 30 report, agrees in writing to maintain the confidentiality of
  6 31 the report or such matters in a manner consistent with this
  6 32 chapter.
  6 33    Sec. 20.  Section 507.14, Code 2005, is amended to read as
  6 34 follows:
  6 35    507.14  CONFIDENTIAL DOCUMENTS == EXCEPTIONS.
  7  1    1.  A preliminary report of an examination of a domestic or
  7  2 foreign insurer, and all notes, work papers, or other
  7  3 documents related to an examination of an insurer are not
  7  4 public confidential records under chapter 22 except when
  7  5 sought by the insurer to whom they relate, an insurance
  7  6 regulator of another state, or the national association of
  7  7 insurance commissioners, and shall be privileged and
  7  8 confidential in any judicial or administrative proceeding
  7  9 except any of the following:
  7 10    1.  a.  An action commenced by the commissioner under
  7 11 chapter 507C.
  7 12    2.  b.  An administrative proceeding brought by the
  7 13 insurance division under chapter 17A.
  7 14    3.  c.  A judicial review proceeding under chapter 17A
  7 15 brought by an insurer to whom the records relate.
  7 16    4.  d.  An action or proceeding which arises out of the
  7 17 criminal provisions of the laws of this state or the United
  7 18 States.
  7 19    5.  e.  An action brought in a shareholders' derivative
  7 20 suit against an insurer.
  7 21    6.  f.   An action brought to recover moneys or to recover
  7 22 upon an indemnity bond for embezzlement, misappropriation, or
  7 23 misuse of insurer funds.
  7 24    2.  A report of an examination of a domestic or foreign
  7 25 insurer which is preliminary under the rules of the division
  7 26 is not a public a confidential record under chapter 22 except
  7 27 when sought by the insurer to which the report relates or an
  7 28 insurance regulator of another state, and is privileged and
  7 29 confidential in any judicial or administrative proceeding.
  7 30    3.  All work papers, notes, recorded information,
  7 31 documents, market conduct annual statements, and copies
  7 32 thereof that are produced or obtained by or disclosed to the
  7 33 commissioner or any other person in the course of analysis by
  7 34 the commissioner of the financial condition or market conduct
  7 35 of an insurer are confidential records under chapter 22 and
  8  1 shall be privileged and confidential in any judicial or
  8  2 administrative proceeding except any of the following:
  8  3    a.  An action commenced by the commissioner under chapter
  8  4 507C.
  8  5    b.  An administrative proceeding brought by the insurance
  8  6 division under chapter 17A.
  8  7    c.  A judicial review proceeding under chapter 17A brought
  8  8 by an insurer to whom the records relate.
  8  9    d.  An action or proceeding which arises out of the
  8 10 criminal provisions of the laws of this state or the United
  8 11 States.
  8 12    4.  Confidential documents, materials, information,
  8 13 administrative or judicial orders, or other actions may be
  8 14 disclosed to a regulatory official of any state, federal
  8 15 agency, or foreign country provided that the recipients are
  8 16 required, under their law, to maintain their confidentiality.
  8 17 Confidential records may be disclosed to the national
  8 18 association of insurance commissioners provided that the
  8 19 association certifies by written statement that the
  8 20 confidentiality of the records will be maintained.
  8 21    5.  A financial statement filed by an employer self=
  8 22 insuring workers' compensation liability pursuant to section
  8 23 87.11, or the working papers of an examiner or the division in
  8 24 connection with calculating appropriate security and reserves
  8 25 for the self=insured employer are not public confidential
  8 26 records under chapter 22 except when sought by the employer to
  8 27 which the financial statement or working papers relate or an
  8 28 insurance or workers' compensation self=insurance regulator of
  8 29 another state, and are privileged and confidential in any
  8 30 judicial or administrative proceeding.  The financial
  8 31 information of a nonpublicly traded employer which self=
  8 32 insures for workers' compensation liability pursuant to
  8 33 section 87.11 is protected as proprietary trade secrets to the
  8 34 extent consistent with the commissioner's duties to oversee
  8 35 the security of self=insured workers' compensation liability.
  9  1    6.  Analysis notes, work papers, or other documents related
  9  2 to the analysis of an insurer are not public confidential
  9  3 records under chapter 22.
  9  4    Sec. 21.  Section 507A.4, Code 2005, is amended by adding
  9  5 the following new subsection:
  9  6    NEW SUBSECTION.  10.  a.  A self=funded health benefit plan
  9  7 sponsored by an employer in this state under the federal
  9  8 Employee Retirement Income Security Act of 1974, as codified
  9  9 in 29 U.S.C. } 1169, which provides health benefits to
  9 10 independent contractors of the employer and to spouses and
  9 11 dependents of the independent contractors, if the plan is
  9 12 granted a waiver from the provisions of this chapter by the
  9 13 commissioner and meets all of the following conditions:
  9 14    (1)  There is a written contract between the sponsor of the
  9 15 health benefit plan and the independent contractor which
  9 16 establishes the relationship between the parties to the
  9 17 contract and provides for the personal services to be provided
  9 18 by the independent contractor to the sponsor of the health
  9 19 benefit plan pursuant to the contract.
  9 20    (2)  The personal services to be provided by the
  9 21 independent contractor pursuant to the contract are directly
  9 22 related to the principal business of the sponsor of the health
  9 23 benefit plan.
  9 24    (3)  The contract provides that the independent contractor
  9 25 will provide services to the sponsor of the health benefit
  9 26 plan on an exclusive basis.
  9 27    (4)  The inclusion of the independent contractor in the
  9 28 sponsor's health benefit plan is incidental to the contractual
  9 29 relationship between the sponsor of the health benefit plan
  9 30 and the independent contractor.
  9 31    (5)  Independent contractors and their spouses and
  9 32 dependents included in an employer=sponsored health benefit
  9 33 plan do not in total equal more than forty=nine percent of the
  9 34 total persons covered by the health benefit plan.
  9 35    (6)  The health benefit plan is administered by an
 10  1 authorized insurer or an authorized third=party administrator.
 10  2    b.  The sponsor of the health benefit plan shall file an
 10  3 application for waiver from the provisions of this chapter
 10  4 with the commissioner as prescribed by the commissioner and
 10  5 shall file periodic statements and information as required by
 10  6 the commissioner.  The commissioner shall adopt rules pursuant
 10  7 to chapter 17A implementing this subsection.  All statements
 10  8 and information filed with or disclosed to the commissioner
 10  9 pursuant to this subsection are confidential records pursuant
 10 10 to chapter 22.
 10 11    c.  If at any time the commissioner determines that a
 10 12 health benefit plan for which a waiver has been granted does
 10 13 not meet all of the conditions of paragraph "a", and the rules
 10 14 adopted by the commissioner under paragraph "b", the
 10 15 commissioner may terminate the waiver granted to the health
 10 16 benefit plan.
 10 17    d.  A self=funded employer=sponsored health benefit plan
 10 18 which has a valid waiver from the provisions of this chapter
 10 19 shall not be considered any of the following:
 10 20    (1)  An insurance company or association of any kind or
 10 21 character under section 432.1.
 10 22    (2)  A member insurer of the Iowa life and health insurance
 10 23 guaranty association as defined in section 508C.5, subsection
 10 24 8.
 10 25    (3)  A carrier under chapter 513B.
 10 26    (4)  A member of the Iowa individual health benefit
 10 27 reinsurance association under section 513C.10.
 10 28    (5)  An entity subject to chapter 514C.
 10 29    (6)  A multiple employer welfare arrangement as defined in
 10 30 subsection 9.
 10 31    e.  A self=funded employer=sponsored health benefit plan
 10 32 which has received a waiver from the provisions of this
 10 33 chapter shall be considered to be a self=funded employer=
 10 34 sponsored health benefit plan under the federal Employee
 10 35 Retirement Income Security Act of 1974, as codified in 29
 11  1 U.S.C. } 1169, and not subject to this title so long as the
 11  2 waiver is in effect.
 11  3    f.  The provision of health benefits to an independent
 11  4 contractor by a self=funded employer=sponsored health benefit
 11  5 plan which meets all of the conditions of paragraph "a" shall
 11  6 not in and of itself create an employer=employee relationship
 11  7 between the independent contractor and the sponsor of the
 11  8 health benefit plan.
 11  9    Sec. 22.  Section 507A.9, subsection 1, Code 2005, is
 11 10 amended to read as follows:
 11 11    1.  Effective with For all premiums collected during the
 11 12 calendar year 1967, except premiums on lawfully procured
 11 13 surplus lines insurance, every unauthorized insurer shall pay
 11 14 to the commissioner of insurance before March 1, next
 11 15 succeeding the calendar year in which the insurance was so
 11 16 effectuated, continued, or renewed a premium tax of two
 11 17 percent of on gross premiums charged for such insurance on
 11 18 subjects resident, located, or to be performed in this state
 11 19 equal to the applicable percent, as provided in section 432.1.
 11 20 Such insurance whether procured through negotiation or an
 11 21 application, in whole or in part occurring or made within or
 11 22 outside of this state, or for which premiums in whole or in
 11 23 part are remitted directly or indirectly from within or
 11 24 outside of this state, shall be deemed to be insurance
 11 25 procured or continued in this state.  The term "premium"
 11 26 includes all premiums, membership fees, assessments, dues, and
 11 27 any other consideration for insurance.  If the tax prescribed
 11 28 by this section is not paid within the time stated, the tax
 11 29 shall be increased by a penalty of twenty=five percent and by
 11 30 the amount of an additional penalty computed at the rate of
 11 31 one percent per month or any part thereof from the date such
 11 32 payment was due to the date paid.
 11 33    Sec. 23.  Section 507B.4, Code 2005, is amended by adding
 11 34 the following new subsections:
 11 35    NEW SUBSECTION.  9A.  USE OF INQUIRIES.  Considering either
 12  1 of the following events for purposes of surcharging,
 12  2 declining, nonrenewing, or canceling personal lines property
 12  3 and casualty insurance coverage or a binder for personal lines
 12  4 property and casualty insurance coverage:
 12  5    a.  An applicant's or insured's inquiry into the type or
 12  6 level of coverage of a policy, or an inquiry into whether a
 12  7 policy will cover a loss.
 12  8    b.  An insured's inquiry regarding coverage of a policy for
 12  9 a loss if the insured does not file a claim.
 12 10    NEW SUBSECTION.  9B.  HISTORY OF A PROPERTY.  Declining to
 12 11 insure a property not previously owned by an applicant for
 12 12 personal lines property and casualty insurance, based solely
 12 13 on the loss history of a previous owner of the property,
 12 14 unless the insurer can provide evidence that the previous
 12 15 owner did not repair damage to the property.
 12 16    NEW SUBSECTION.  9C.  DISCLOSURE OF USE OF CLAIMS HISTORY.
 12 17 Failing to inform an applicant at the time that an application
 12 18 for personal lines property and casualty insurance is made, in
 12 19 writing or in the same medium as the application is made, that
 12 20 the insurer will consider the applicant's or insured's claims
 12 21 history in determining whether to decline, cancel, nonrenew,
 12 22 or surcharge such a policy, and that a claim made by an
 12 23 insured will be reported to an insurance support organization.
 12 24    NEW SUBSECTION.  15.  INFORMATION.  Failing or refusing to
 12 25 furnish any policyholder or applicant, upon reasonable
 12 26 request, information to which that individual is entitled.
 12 27    Sec. 24.  Section 507B.4, Code 2005, is amended by adding
 12 28 the following new unnumbered paragraph:
 12 29    NEW UNNUMBERED PARAGRAPH.  For purposes of subsections 9A,
 12 30 9B, and 9C, "personal lines property and casualty insurance"
 12 31 means insurance sold to individuals and families primarily for
 12 32 noncommercial purposes as provided in chapter 522B.
 12 33    Sec. 25.  NEW SECTION.  507B.4B  SUITABILITY.
 12 34    1.  A person shall not recommend to any individual the
 12 35 purchase, sale, or exchange of any annuity contract, or any
 13  1 rider, endorsement, or amendment thereto, unless the person
 13  2 has reasonable grounds to believe that the recommendation is
 13  3 suitable for the individual based on a reasonable inquiry into
 13  4 the individual's financial status, investment objectives, and
 13  5 other relevant information.
 13  6    2.  A person engaged in the business of annuities shall
 13  7 establish and maintain a system to monitor recommendations
 13  8 made, that is reasonably designed to achieve compliance with
 13  9 subsection 1.
 13 10    3.  The commissioner shall adopt rules pursuant to chapter
 13 11 17A establishing procedures and standards for implementation
 13 12 of the suitability requirements of subsection 1.
 13 13    Sec. 26.  NEW SECTION.  507B.15  ADMINISTRATIVE HEARINGS.
 13 14    Section 505.28 is applicable to hearings required by
 13 15 sections 507B.6, 507B.6A, and 507B.7.
 13 16    Sec. 27.  Section 507C.2, subsection 13, Code Supplement
 13 17 2005, is amended by adding the following new unnumbered
 13 18 paragraph:
 13 19    NEW UNNUMBERED PARAGRAPH.  "General assets" does not
 13 20 include that portion of the assets of the insurer allocated to
 13 21 and accumulated in a separate account established pursuant to
 13 22 section 508A.1, unless otherwise provided by the applicable
 13 23 policy, annuity, agreement, instrument, or contract.  However,
 13 24 if any assets allocated to and accumulated in a separate
 13 25 account, after the satisfaction of any liabilities with regard
 13 26 to the operation of the separate account, are in excess of an
 13 27 amount equal to the reserves and other liabilities with
 13 28 respect to the separate account, the excess shall be treated
 13 29 as part of the general assets of the insurer.
 13 30    Sec. 28.  Section 507C.42, unnumbered paragraph 1, Code
 13 31 2005, is amended to read as follows:
 13 32    The priority of distribution of claims from the insurer's
 13 33 estate shall be in accordance with the order in which each
 13 34 class of claims is set forth.  Claims in each class shall be
 13 35 paid in full or adequate funds retained for the payment before
 14  1 the members of the next class receive any payment.  Subclasses
 14  2 shall not be established within a class.  As used in this
 14  3 section, "insurer's estate" means the general assets of the
 14  4 insurer.  The order of distribution of claims is:
 14  5    Sec. 29.  Section 507C.42, subsection 2, Code 2005, is
 14  6 amended to read as follows:
 14  7    2.  CLASS 2.  Claims under policies, including claims of
 14  8 the federal or any state or local government, for losses
 14  9 incurred, including third=party claims, claims against the
 14 10 insurer for liability for bodily injury or for injury to or
 14 11 destruction of tangible property which are not under policies,
 14 12 claims of a guaranty association or foreign guaranty
 14 13 association, claims under funding agreements as provided in
 14 14 section 508.31A, subsection 3, claims for an insufficiency in
 14 15 the assets allocated to and accumulated in a separate account
 14 16 as provided in section 508A.1, subsection 8, and claims for
 14 17 unearned premium.  Claims under life insurance and annuity
 14 18 policies, whether for death proceeds, annuity proceeds, or
 14 19 investment values, shall be treated as loss claims.  That
 14 20 portion of a loss, indemnification for which is provided by
 14 21 other benefits or advantages recovered by the claimant, shall
 14 22 not be included in this class, other than benefits or
 14 23 advantages recovered or recoverable in discharge of familial
 14 24 obligations of support or by way of succession at death or as
 14 25 proceeds of life insurance, or as gratuities.  A payment by an
 14 26 employer to an employee is not a gratuity.
 14 27    Sec. 30.  Section 507E.5, Code 2005, is amended by striking
 14 28 the section and inserting in lieu thereof the following:
 14 29    507E.5  CONFIDENTIALITY.
 14 30    1.  All investigation files, investigation reports, and all
 14 31 other investigative information in the possession of the
 14 32 bureau are confidential records under chapter 22 except as
 14 33 specifically provided in this section and are not subject to
 14 34 discovery, subpoena, or other means of legal compulsion for
 14 35 their release until opened for public inspection by the
 15  1 bureau, or upon the consent of the bureau, or until a court of
 15  2 competent jurisdiction determines, after notice to the bureau
 15  3 and hearing, that the bureau will not be unnecessarily
 15  4 hindered in accomplishing the purposes of this chapter by
 15  5 their opening for public inspection.  However, investigative
 15  6 information in the possession of the bureau may be disclosed,
 15  7 in the commissioner's discretion, to appropriate licensing
 15  8 authorities within this state, another state or the District
 15  9 of Columbia, or a territory or country in which a licensee is
 15 10 licensed or has applied for a license.
 15 11    2.  The commissioner may share documents, materials, or
 15 12 other information, including confidential and privileged
 15 13 documents, materials, or other information, with other state,
 15 14 federal, and international regulatory agencies, with the
 15 15 national association of insurance commissioners and its
 15 16 affiliates or subsidiaries, and with state, federal, and
 15 17 international law enforcement authorities, provided that the
 15 18 recipient agrees to maintain the confidential and privileged
 15 19 status of the document, material, or other information,
 15 20 pursuant to Iowa law.
 15 21    3.  The commissioner may receive documents, materials, or
 15 22 other information, including otherwise confidential and
 15 23 privileged documents, materials, or other information, from
 15 24 other local, state, federal, and international regulatory
 15 25 agencies, the national association of insurance commissioners
 15 26 and its affiliates or subsidiaries, and local, state, federal,
 15 27 and international law enforcement authorities, and shall
 15 28 maintain as confidential and privileged any document,
 15 29 material, or other information received with notice or the
 15 30 understanding that it is confidential or privileged under the
 15 31 laws of the jurisdiction that is the source of the document,
 15 32 material, or other information.
 15 33    4.  The commissioner may enter into agreements governing
 15 34 the sharing and use of documents, materials, or other
 15 35 information consistent with this section.
 16  1    5.  An investigator or other staff member of the bureau is
 16  2 not subject to subpoena in a civil action concerning any
 16  3 matter of which the investigator or other staff member has
 16  4 knowledge pursuant to a pending or continuing investigation
 16  5 being conducted by the bureau pursuant to this chapter.
 16  6    Sec. 31.  Section 508.13, Code 2005, is amended to read as
 16  7 follows:
 16  8    508.13  ANNUAL CERTIFICATE OF AUTHORITY.
 16  9    1.  On receipt of an application for a certificate of
 16 10 authority or renewal of a certificate of authority, fees, the
 16 11 deposit provided in section 511.8, subsection 16, and the
 16 12 statement, and the statement and evidence of investment of
 16 13 foreign companies, all of which shall be renewed annually, by
 16 14 the first day of March, the commissioner of insurance shall
 16 15 issue a certificate or a renewal of a certificate setting
 16 16 forth the corporate name of the company, its home office, that
 16 17 it has fully complied with the laws of the state and is
 16 18 authorized to transact the business of life insurance for the
 16 19 ensuing year, which certificate shall expire on the first day
 16 20 of June of the ensuing year, or sooner upon thirty days'
 16 21 notice given by the commissioner, of the next annual valuation
 16 22 of its policies.  Such certificate shall be renewed annually,
 16 23 upon the renewal of the deposit and statement by a domestic
 16 24 company, or of the statement and evidence of investment by a
 16 25 foreign company, and compliance with the conditions above
 16 26 required, and be subject to revocation as the original
 16 27 certificate.
 16 28    2.  A company shall submit annually on or before March 1 a
 16 29 completed application for renewal of its certificate of
 16 30 authority.  A certificate of authority shall expire on the
 16 31 first day of June next succeeding its issue and shall be
 16 32 renewed annually so long as the company transacts business in
 16 33 accordance with all legal requirements of the state.
 16 34    3.  A company that fails to timely file an application for
 16 35 renewal of its certificate of authority shall pay an
 17  1 administrative penalty of five hundred dollars to the
 17  2 treasurer of state for deposit in the general fund of the
 17  3 state as provided in section 505.7.
 17  4    4.  A copy of a certificate of authority, when certified by
 17  5 the commissioner, shall be admissible in evidence for or
 17  6 against a company, with the same effect as the original.
 17  7    Sec. 32.  Section 508A.1, Code 2005, is amended by adding
 17  8 the following new subsection:
 17  9    NEW SUBSECTION.  8.  If the assets of an insurer allocated
 17 10 to and accumulated in a separate account in connection with
 17 11 any policy, annuity, agreement, instrument, or contract, after
 17 12 the satisfaction of any liabilities with regard to the
 17 13 operation of the separate account, are insufficient to fully
 17 14 satisfy the insurer's express obligations under the policy,
 17 15 annuity, agreement, instrument, or contract, then claims for
 17 16 the unsatisfied portions of the insurer's obligations shall be
 17 17 class 2 claims under section 507C.42, subsection 2.
 17 18    Sec. 33.  Section 509.1, subsection 1, paragraph b, Code
 17 19 2005, is amended to read as follows:
 17 20    b.  The premium for the group life policy shall be paid by
 17 21 the policyholder, either wholly from the employer's funds or
 17 22 funds contributed by the employer, or partly from such funds
 17 23 and partly from funds contributed by the insured employees, or
 17 24 from both.  No A policy, except of group accident and health,
 17 25 may be issued on which the entire premium is to be derived
 17 26 from funds contributed by the insured employees.  A policy
 17 27 insurance on which part of the premium is to be derived from
 17 28 funds contributed by the insured employees may be placed in
 17 29 force only if at least seventy=five percent of the then
 17 30 eligible employees, excluding any as to whom evidence of
 17 31 individual insurability is not satisfactory to the insurer,
 17 32 elect to make the required contributions.  A policy on which
 17 33 no part of the premium is to be derived from funds contributed
 17 34 by the insured employees must insure all eligible employees,
 17 35 or all except any as to whom evidence of individual
 18  1 insurability is not satisfactory to the insurer.  As used in
 18  2 this paragraph, "accident and health insurance" does not
 18  3 include disability income insurance.
 18  4    Sec. 34.  Section 509A.15, subsection 1, paragraph d, Code
 18  5 2005, is amended to read as follows:
 18  6    d.  That the governing body has contracted or otherwise
 18  7 arranged with a third=party administrator who holds a current
 18  8 certificate of registration issued by the commissioner
 18  9 pursuant to section 510.21, or with a person not required to
 18 10 obtain the certificate as an a third=party administrator as
 18 11 defined in section 510.11, subsection 1.
 18 12    Sec. 35.  Section 509A.15, subsection 4, Code 2005, is
 18 13 amended to read as follows:
 18 14    4.  One or more political subdivisions of the state or one
 18 15 or more school corporations maintaining self=insured plans
 18 16 with yearly claims that do not exceed one two percent of each
 18 17 entity's general fund budget shall be exempt from the
 18 18 requirements of this section where the plan insures employees
 18 19 for all or part of a deductible, coinsurance payments, drug
 18 20 costs, short=term disability benefits, vision benefits, or
 18 21 dental benefits.
 18 22    The yearly claim amount shall be determined annually on the
 18 23 policy renewal date, or an alternative date established by
 18 24 rule, by a plan administrator or political subdivision or
 18 25 school corporation employee to be designated by the plan
 18 26 administrator.  The exemption shall not apply for the year
 18 27 following a year in which yearly claims are determined to
 18 28 exceed one two percent of the political subdivision's or
 18 29 school corporation's general fund budget.
 18 30    Sec. 36.  Section 509B.1, subsection 4, Code 2005, is
 18 31 amended by striking the subsection.
 18 32    Sec. 37.  Section 509B.5, subsection 1, Code 2005, is
 18 33 amended to read as follows:
 18 34    1.  Employers or group policyholders shall notify all
 18 35 employees or members of their continuation and conversion
 19  1 rights within ten days of termination of employment or
 19  2 membership.  The notice shall be in writing and delivered in
 19  3 person or mailed to the person's last known address.  However,
 19  4 continuation and conversion rights shall not be denied because
 19  5 of failure to provide proper notice.  After receiving proper
 19  6 notice the employee or member may request and shall receive
 19  7 continuation or conversion coverage in accordance with this
 19  8 chapter within ten days of the request, notwithstanding any
 19  9 other time limitation provided by this chapter.  Notification
 19 10 as provided in this section supersedes section 515.80 as that
 19 11 section relates to accident and health insurance.
 19 12    Sec. 38.  Section 510.11, Code 2005, is amended by striking
 19 13 the section and inserting in lieu thereof the following:
 19 14    510.11  DEFINITIONS.
 19 15    1.  "Life or health insurance" includes but is not limited
 19 16 to the following:
 19 17    a.  Individual or group accident and sickness insurance
 19 18 providing coverage on an expense=incurred basis.
 19 19    b.  An individual or group hospital or medical service
 19 20 contract issued pursuant to chapter 509, 514, or 514A.
 19 21    c.  An individual or group health maintenance organization
 19 22 contract regulated under chapter 514B.
 19 23    d.  An individual or group Medicare supplemental policy.
 19 24    e.  A long=term care policy.
 19 25    f.  An individual or group life insurance policy or annuity
 19 26 issued pursuant to chapter 508, 508A, or 509A.
 19 27    2.  "Third=party administrator" means a person who collects
 19 28 charges or premiums from, or who adjusts or settles claims on,
 19 29 residents of this state in connection with life or health
 19 30 insurance coverage or annuities other than any of the
 19 31 following:
 19 32    a.  A union or association on behalf of its members.
 19 33    b.  An insurance company which is either licensed in this
 19 34 state or acting as an insurer with respect to a policy
 19 35 lawfully issued and delivered by it in and pursuant to the
 20  1 laws of a state in which the insurer was authorized to do
 20  2 insurance business.
 20  3    c.  An entity licensed under chapter 514, including its
 20  4 sales representatives licensed in this state when engaged in
 20  5 the performance of their duties as sales representatives.
 20  6    d.  A life or health agent or broker licensed in this
 20  7 state, whose activities are limited exclusively to the sale of
 20  8 insurance.
 20  9    e.  A creditor on behalf of its debtors with respect to
 20 10 insurance covering a debt between the creditor and its
 20 11 debtors.
 20 12    f.  A trust, its trustees, agents, and employees acting
 20 13 under the trust, established in conformity with 29 U.S.C. }
 20 14 186.
 20 15    g.  A trust exempt from taxation under section 501(a) of
 20 16 the Internal Revenue Code, its trustees, and employees acting
 20 17 under the trust.
 20 18    h.  A custodian, its agents, and employees acting pursuant
 20 19 to a custodial account which meets the requirements of section
 20 20 401(f) of the Internal Revenue Code.
 20 21    i.  A bank, credit union, or other financial institution
 20 22 which is subject to supervision or examination by federal or
 20 23 state banking authorities.
 20 24    j.  A credit card=issuing company which advances for and
 20 25 collects premiums or charges from its credit card holders who
 20 26 have authorized it to do so, if the company does not adjust or
 20 27 settle claims.
 20 28    k.  A person who adjusts or settles claims in the normal
 20 29 course of the person's practice or employment as an attorney,
 20 30 and who does not collect charges or premiums in connection
 20 31 with life or health insurance coverage or annuities.
 20 32    Sec. 39.  Section 510.12, Code 2005, is amended to read as
 20 33 follows:
 20 34    510.12  WRITTEN AGREEMENT NECESSARY.
 20 35    A person shall not act as an a third=party administrator
 21  1 without a written agreement between the third=party
 21  2 administrator and the insurer, and the written agreement shall
 21  3 be retained as part of the official records of both the
 21  4 insurer and the third=party administrator for the duration of
 21  5 the agreement plus five years.  The written agreement shall
 21  6 contain provisions which include the requirements of sections
 21  7 510.11 through 510.16, except insofar as those requirements do
 21  8 not apply to the functions performed by the third=party
 21  9 administrator.
 21 10    When a policy is issued to a trustee, a copy of the trust
 21 11 agreement and any amendments to the trust agreement shall be
 21 12 furnished to the insurer by the third=party administrator and
 21 13 shall be retained as part of the official records of both the
 21 14 insurer and the third=party administrator for the duration of
 21 15 the policy plus five years.
 21 16    Sec. 40.  Section 510.13, Code 2005, is amended to read as
 21 17 follows:
 21 18    510.13  PAYMENT TO THIRD=PARTY ADMINISTRATOR.
 21 19    If an insurer uses the services of an a third=party
 21 20 administrator under the terms of a written contract as
 21 21 required in section 510.12, payment to the third=party
 21 22 administrator of any premiums or charges for insurance by or
 21 23 on behalf of the insured shall be deemed to have been received
 21 24 by the insurer, and the payment of return premiums or claims
 21 25 by the insurer to the third=party administrator shall not be
 21 26 deemed payment to the insured or claimant until the payments
 21 27 are received by the insured or claimant.  This section does
 21 28 not limit any right of the insurer against the third=party
 21 29 administrator resulting from the third=party administrator's
 21 30 failure to make payments to the insurer, insureds, or
 21 31 claimants.
 21 32    Sec. 41.  Section 510.14, Code 2005, is amended to read as
 21 33 follows:
 21 34    510.14  MAINTENANCE OF INFORMATION.
 21 35    An A third=party administrator shall maintain at its
 22  1 principal administrative office for the duration of the
 22  2 written agreement referred to in section 510.12 plus five
 22  3 years, adequate books and records of all transactions between
 22  4 it, insurers, and insured persons.  The third=party
 22  5 administrator's books and records shall be maintained in
 22  6 accordance with prudent standards of insurance recordkeeping.
 22  7 The commissioner shall have access to such books and records
 22  8 for the purpose of examination, audit, and inspection.  Trade
 22  9 secrets contained in an a third=party administrator's books
 22 10 and records, including but not limited to the identity and
 22 11 addresses of policyholders and certificate holders, shall be
 22 12 confidential, except the commissioner may use trade secret
 22 13 information in any proceeding instituted against the third=
 22 14 party administrator.  The insurer retains the right to
 22 15 continuing access to the third=party administrator's books and
 22 16 records sufficient to permit the insurer to fulfill all of its
 22 17 contractual obligations to insured persons, subject to any
 22 18 restrictions in the written agreement between the insurer and
 22 19 third=party administrator on the proprietary rights of the
 22 20 parties in the third=party administrator's books and records.
 22 21    Sec. 42.  Section 510.15, Code 2005, is amended to read as
 22 22 follows:
 22 23    510.15  APPROVAL OF ADVERTISING.
 22 24    An A third=party administrator may use only such
 22 25 advertising pertaining to the business underwritten by an
 22 26 insurer as has been approved by the insurer in advance of its
 22 27 use.
 22 28    Sec. 43.  Section 510.17, Code 2005, is amended to read as
 22 29 follows:
 22 30    510.17  PREMIUM COLLECTION.
 22 31    1.  All insurance charges or premiums collected by an a
 22 32 third=party administrator on behalf of or for an insurer, and
 22 33 return premiums received from the insurer, shall be held by
 22 34 the third=party administrator in a fiduciary capacity.  Such
 22 35 funds shall be immediately remitted to the person or persons
 23  1 entitled to them, or shall be deposited promptly in a
 23  2 fiduciary bank account established and maintained by the
 23  3 third=party administrator.  If charges or premiums so
 23  4 deposited have been collected on behalf of or for more than
 23  5 one insurer, the third=party administrator shall cause the
 23  6 bank in which the fiduciary account is maintained to keep
 23  7 records clearly recording the deposits in and withdrawals from
 23  8 the account on behalf of or for each insurer.  The third=party
 23  9 administrator shall promptly obtain and keep copies of all
 23 10 such records and, upon request of an insurer, shall furnish
 23 11 the insurer with copies of the records pertaining to deposits
 23 12 and withdrawals on behalf of or for that insurer.
 23 13    2.  The third=party administrator shall not pay a claim by
 23 14 withdrawal from the fiduciary account.  Withdrawals from the
 23 15 fiduciary account shall be made, as provided in the written
 23 16 agreement between the third=party administrator and the
 23 17 insurer, for any of the following:
 23 18    a.  Remittance to an insurer entitled thereto.
 23 19    b.  Deposit in an account maintained in the name of the
 23 20 insurer.
 23 21    c.  Transfer to and deposit in a claims=paying account,
 23 22 with claims to be paid as provided in section 510.18.
 23 23    d.  Payment to a group policyholder for remittance to the
 23 24 insurer entitled thereto.
 23 25    e.  Payment to the third=party administrator of its
 23 26 commission, fees, or charges.
 23 27    f.  Remittance of return premiums to the persons entitled
 23 28 thereto.
 23 29    Sec. 44.  Section 510.18, Code 2005, is amended to read as
 23 30 follows:
 23 31    510.18  PAYMENT OF CLAIMS.
 23 32    A claim paid by the third=party administrator from funds
 23 33 collected on behalf of the insurer shall be paid only on a
 23 34 draft, check, or by electronic funds transfer as authorized by
 23 35 the insurer.
 24  1    Sec. 45.  Section 510.19, Code 2005, is amended to read as
 24  2 follows:
 24  3    510.19  CLAIM ADJUSTMENT AND SETTLEMENT.
 24  4    The compensation paid to an a third=party administrator
 24  5 shall not be contingent on claim experience on policies for
 24  6 which the third=party administrator adjusts or settles claims.
 24  7 This section does not prevent the compensation of an a third=
 24  8 party administrator from being based on premiums or charges
 24  9 collected or number of claims paid or processed.
 24 10    Sec. 46.  Section 510.20, Code 2005, is amended to read as
 24 11 follows:
 24 12    510.20  NOTIFICATION REQUIRED.
 24 13    When the services of an a third=party administrator are
 24 14 used, the third=party administrator shall provide a written
 24 15 notice, approved by the insurer, to insured individuals,
 24 16 advising them of the identity of and relationship among the
 24 17 third=party administrator, the policyholder, and the insurer.
 24 18 When an a third=party administrator collects funds, it must
 24 19 shall identify and state separately in writing to the person
 24 20 paying to the third=party administrator any charge or premium
 24 21 for insurance coverage the amount of any such charge or
 24 22 premium specified by the insurer for such insurance coverage.
 24 23    Sec. 47.  Section 510.21, Code 2005, is amended to read as
 24 24 follows:
 24 25    510.21  CERTIFICATE OF REGISTRATION REQUIRED.
 24 26    A person shall not act as or represent oneself to be an a
 24 27 third=party administrator in this state, other than an
 24 28 adjuster licensed in this state for the kinds of business for
 24 29 which the person is acting as an a third=party administrator,
 24 30 unless the person holds a current certificate of registration
 24 31 as an a third=party administrator issued by the commissioner
 24 32 of insurance.  A certificate of registration as an a third=
 24 33 party administrator is renewable every three years.  Failure
 24 34 to hold a certificate subjects the third=party administrator
 24 35 to the sanctions set out in section 507B.7.  The certificate
 25  1 shall be issued by the commissioner to an a third=party
 25  2 administrator unless the commissioner, after due notice and
 25  3 hearing, determines that the third=party administrator is not
 25  4 competent, trustworthy, financially responsible, or of good
 25  5 personal and business reputation, or has had a previous
 25  6 application for an insurance license denied for cause within
 25  7 the preceding five years.
 25  8    An application for registration shall be accompanied by a
 25  9 filing fee of one hundred dollars.  After notice and hearing,
 25 10 the commissioner may impose any or all of the sanctions set
 25 11 out in section 507B.7, upon finding that either the third=
 25 12 party administrator violated any of the requirements of
 25 13 section 515.134 and sections 510.1A through 510.20 and this
 25 14 section, or the third=party administrator is not competent,
 25 15 trustworthy, financially responsible, or of good personal and
 25 16 business reputation.
 25 17    Sec. 48.  Section 510.22, subsections 1 and 3, Code 2005,
 25 18 are amended to read as follows:
 25 19    1.  The person acting as an a third=party administrator is
 25 20 primarily in a business other than that of a third=party
 25 21 administrator.
 25 22    3.  The regular duties being performed as an a third=party
 25 23 administrator are such that the covered persons are not likely
 25 24 to be injured by a waiver of such requirements.
 25 25    Sec. 49.  Section 510.23, Code 2005, is amended to read as
 25 26 follows:
 25 27    510.23  UNFAIR COMPETITION OR UNFAIR AND DECEPTIVE ACTS OR
 25 28 PRACTICES PROHIBITED.
 25 29    An A third=party administrator is subject to chapter 507B
 25 30 relating to unfair insurance trade practices.
 25 31    Sec. 50.  Section 511.8, subsection 1, paragraph b, Code
 25 32 2005, is amended to read as follows:
 25 33    b.  Bonds or other evidences of indebtedness issued,
 25 34 assumed, or guaranteed by the United States of America, or by
 25 35 any agency or instrumentality of the United States of America
 26  1 include investments in an open=end management investment
 26  2 company registered with the federal securities and exchange
 26  3 commission under the federal Investment Company Act of 1940,
 26  4 15 U.S.C. } 80(a) 80a=1 et seq., and operated in accordance
 26  5 with 17 C.F.R. } 270.2a=7, the portfolio of which is limited
 26  6 to the United States government obligations described in
 26  7 paragraph "a", and which are included in the national
 26  8 association of insurance commissioners' securities valuation
 26  9 office's United States direct obligations==full faith and
 26 10 credit exempt list.
 26 11    Sec. 51.  Section 511.8, subsection 18, Code 2005, is
 26 12 amended by adding the following new paragraph:
 26 13    NEW PARAGRAPH.  c.  Common stocks or shares issued by any
 26 14 federal home loan bank under the Federal Home Loan Bank Act,
 26 15 12 U.S.C. } 1421 et seq., and the Acts amendatory thereof, are
 26 16 eligible if the total investment in those stocks or shares
 26 17 does not exceed one=half of one percent of the legal reserve.
 26 18    Sec. 52.  Section 511.8, subsection 22, paragraph b, Code
 26 19 2005, is amended by striking the paragraph and inserting in
 26 20 lieu thereof the following:
 26 21    b.  To be eligible as investments, financial instruments
 26 22 used in hedging transactions shall be either of the following:
 26 23    (1)  Be between an insurer and a counterparty that meets
 26 24 the qualifications established in subsection 5 for an issuer,
 26 25 obligor, or guarantor of bonds or other evidences of
 26 26 indebtedness issued, assumed, or guaranteed by a corporation
 26 27 incorporated under the laws of the United States or of any
 26 28 state, district, or insular or territorial possession thereof,
 26 29 or Canada, or that meets the qualifications established in
 26 30 subsection 19 for an issuer, obligor, or guarantor of bonds or
 26 31 other evidences of indebtedness issued, assumed, or guaranteed
 26 32 by a corporation incorporated under the laws of a foreign
 26 33 government other than Canada.
 26 34    (2)  Be between an insurer and a conduit and be
 26 35 collateralized by cash or obligations which are eligible under
 27  1 subsection 1, 2, 3, 5, 19, or 24, are deposited with a
 27  2 custodian bank as defined in subsection 21, and are held under
 27  3 a written agreement with the custodian bank that complies with
 27  4 subsection 21 and provides for the proceeds of the collateral,
 27  5 subject to the terms and conditions of the applicable
 27  6 collateral or other credit support agreement, to be remitted
 27  7 to the legal reserve deposit of the company or association and
 27  8 to vest in the state in accordance with section 508.18
 27  9 whenever proceedings under that section are instituted.
 27 10 Paragraphs "c", "d", and "e" of this subsection are not
 27 11 applicable to investments in financial instruments used in
 27 12 hedging transactions eligible pursuant to this subparagraph.
 27 13 As used in this subparagraph, "conduit" means a person within
 27 14 an insurer's insurance holding company system, as defined in
 27 15 section 521A.1, subsection 5, which aggregates hedging
 27 16 transactions by other persons within the insurance holding
 27 17 company system and replicates them with counterparties.
 27 18    (a)  Financial instruments used in hedging transactions
 27 19 between an insurer and a conduit which are collateralized by
 27 20 obligations eligible under subsection 5, 19, or 24 are
 27 21 eligible only to the extent that such securities deposited as
 27 22 collateral are not in excess of two percent of the legal
 27 23 reserve in the securities of any one corporation, less any
 27 24 securities of that corporation owned by the insurer or which
 27 25 are the subject of hedging transactions by the insurer, that
 27 26 are included in the insurer's legal reserve.
 27 27    (b)  Financial instruments used in hedging transactions
 27 28 between an insurer and a conduit which are collateralized by
 27 29 obligations eligible under subsection 5 or by cash equivalents
 27 30 eligible under subsection 24, other than a class one money
 27 31 market fund, are eligible only to the extent that such
 27 32 securities deposited as collateral are not in excess of ten
 27 33 percent of the legal reserve, less any obligations eligible
 27 34 under subsection 5 or cash equivalents eligible under
 27 35 subsection 24, other than a class one money market fund, owned
 28  1 by the insurer or which are the subject of hedging
 28  2 transactions by the insurer, that are included in the
 28  3 insurer's legal reserve.
 28  4    (c)  Financial instruments used in hedging transactions
 28  5 between an insurer and a conduit which are collateralized by
 28  6 obligations eligible under subsection 19 are eligible only to
 28  7 the extent that such securities deposited as collateral are
 28  8 not in excess of twenty percent of the legal reserve, less any
 28  9 securities eligible under subsection 19 owned by the insurer
 28 10 or which are the subject of hedging transactions by the
 28 11 insurer, that are included in the insurer's legal reserve.
 28 12    (3)  Financial instruments used in hedging transactions
 28 13 shall be eligible only as provided by this paragraph "b" and
 28 14 rules adopted by the commission pursuant to chapter 17A
 28 15 setting standards for hedging transactions between an insurer
 28 16 and a conduit as authorized under section 521A.5, subsection
 28 17 1, paragraph "b".
 28 18    Sec. 53.  Section 511.8, subsection 22, paragraph e, Code
 28 19 2005, is amended to read as follows:
 28 20    e.  Investments in financial instruments of foreign
 28 21 governments or foreign corporate obligations, other than
 28 22 Canada, used in hedging transactions are not eligible in
 28 23 excess of shall be included in the limitation contained in
 28 24 subsection 19 that allows only twenty percent of the legal
 28 25 reserve, less any foreign investment authorized by subsection
 28 26 19 owned by the company or association and in which its legal
 28 27 reserve is invested of the company or association to be
 28 28 invested in such foreign investments, except insofar as the
 28 29 financial instruments are collateralized by cash or United
 28 30 States government obligations as authorized by subsection 1
 28 31 deposited with a custodian bank as defined in subsection 21,
 28 32 and held under a written agreement with the custodian bank
 28 33 that complies with subsection 21 and provides for the proceeds
 28 34 of the collateral, subject to the terms and conditions of the
 28 35 applicable collateral or other credit support agreement, to be
 29  1 remitted to the legal reserve deposit of the company or
 29  2 association and to vest in the state in accordance with
 29  3 section 508.18 whenever proceedings under that section are
 29  4 instituted.
 29  5    This paragraph "e" does not authorize the inclusion of
 29  6 financial instruments used in hedging transactions in an
 29  7 insurer's legal reserve that are in excess of the eligibility
 29  8 limitation provided in paragraph "d" unless the financial
 29  9 instruments are collateralized as provided in this paragraph
 29 10 "e".
 29 11    Sec. 54.  Section 511.8, Code 2005, is amended by adding
 29 12 the following new subsection:
 29 13    NEW SUBSECTION.  24.  CASH EQUIVALENTS.
 29 14    a.  As used in this subsection, unless the context
 29 15 otherwise requires:
 29 16    (1)  "Cash equivalents" means highly liquid investments
 29 17 with an original term to maturity of ninety days or less that
 29 18 are all of the following:
 29 19    (a)  Readily convertible to a known amount of cash without
 29 20 penalty.
 29 21    (b)  So near maturity that the investment presents an
 29 22 insignificant risk of change in value.
 29 23    (c)  Rated any of the following:
 29 24    (i)  "P=1" by Moody's investors services, inc.
 29 25    (ii)  "A=1" by Standard and Poor's division of McGraw=Hill
 29 26 companies, inc., or by the national association of insurance
 29 27 commissioners' securities valuation office.
 29 28    (iii)  Equivalent by a nationally recognized statistical
 29 29 rating organization that is recognized by the national
 29 30 association of insurance commissioners' securities valuation
 29 31 office.
 29 32    (2)  "Class one money market fund" means investments in an
 29 33 open=end management investment company registered with the
 29 34 federal securities and exchange commission under the federal
 29 35 Investment Company Act of 1940, 15 U.S.C. } 80a=1 et seq., and
 30  1 operated in accordance with 17 C.F.R. } 270.2a=7, that
 30  2 qualifies for investment using the bond class one reserve
 30  3 factor under the purposes and procedures of the national
 30  4 association of insurance commissioners' securities valuation
 30  5 office.
 30  6    b.  Cash equivalents include a class one money market fund.
 30  7    c.  Cash equivalents, other than a class one money market
 30  8 fund, are not eligible in excess of two percent of the legal
 30  9 reserve in the obligations of any one corporation, and are not
 30 10 eligible in excess of ten percent of the legal reserve.
 30 11    Sec. 55.  Section 512B.25, Code 2005, is amended to read as
 30 12 follows:
 30 13    512B.25  ANNUAL LICENSE == RENEWAL.
 30 14    A society which is authorized to transact business in this
 30 15 state on January 1, 1991, and a society licensed on or after
 30 16 January 1, 1991, may continue in business until June 1, 1991.
 30 17 The authority of the a society to transact business in this
 30 18 state may thereafter be renewed annually.  A license
 30 19 terminates on the succeeding June 1.  However, a license
 30 20 issued shall continue in full force and effect until a new
 30 21 license is issued or specifically refused.  A society shall
 30 22 submit annually on or before March 1 a completed application
 30 23 for renewal of its license.  For each license or renewal the
 30 24 society shall pay the commissioner a fee of fifty dollars.  A
 30 25 society that fails to timely file an application for renewal
 30 26 shall pay an administrative penalty of five hundred dollars to
 30 27 the treasurer of state for deposit in the general fund of the
 30 28 state as provided in section 505.7.  A duly certified copy or
 30 29 duplicate of the license is prima facie evidence that the
 30 30 licensee is a fraternal benefit society within the meaning of
 30 31 this chapter.
 30 32    Sec. 56.  Section 513C.9, subsection 1, Code 2005, is
 30 33 amended by striking the subsection.
 30 34    Sec. 57.  NEW SECTION.  514.9A  CERTIFICATE OF AUTHORITY ==
 30 35 RENEWAL.
 31  1    A certificate of authority of a corporation formed under
 31  2 this chapter expires on June 1 succeeding its issue and shall
 31  3 be renewed annually so long as the corporation transacts its
 31  4 business in accordance with all legal requirements.  A
 31  5 corporation shall submit annually, on or before March 1, a
 31  6 completed application for renewal of its certificate of
 31  7 authority.  A corporation that fails to timely file an
 31  8 application for renewal shall pay an administrative penalty of
 31  9 five hundred dollars to the treasurer of state for deposit in
 31 10 the general fund of the state as provided in section 505.7.  A
 31 11 duly certified copy or duplicate of the certificate is
 31 12 admissible in evidence for or against the corporation with the
 31 13 same effect as the original.
 31 14    Sec. 58.  NEW SECTION.  514B.3B  CERTIFICATE OF AUTHORITY
 31 15 == RENEWAL.
 31 16    A certificate of authority of a health maintenance
 31 17 organization formed under this chapter expires on June 1
 31 18 succeeding its issue and shall be renewed annually so long as
 31 19 the organization transacts its business in accordance with all
 31 20 legal requirements.  A health maintenance organization shall
 31 21 submit annually, on or before March 1, a completed application
 31 22 for renewal of its certificate of authority.  A health
 31 23 maintenance organization that fails to timely file an
 31 24 application for renewal shall pay an administrative penalty of
 31 25 five hundred dollars to the treasurer of state for deposit in
 31 26 the general fund of the state as provided in section 505.7.  A
 31 27 duly certified copy or duplicate of the certificate is
 31 28 admissible in evidence for or against the organization with
 31 29 the same effect as the original.
 31 30    Sec. 59.  Section 514B.12, Code 2005, is amended to read as
 31 31 follows:
 31 32    514B.12  ANNUAL REPORT.
 31 33    1.  A health maintenance organization shall annually on or
 31 34 before the first day of March file with the commissioner or a
 31 35 depository designated by the commissioner a report verified by
 32  1 at least two of the principal officers of the health
 32  2 maintenance organization and covering the preceding calendar
 32  3 year.  The report shall be on forms prescribed by the
 32  4 commissioner and shall include:
 32  5    1.  a.  Financial statements of the organization including
 32  6 a balance sheet as of the end of the preceding calendar year
 32  7 and statement of profit and loss for the year then ended,
 32  8 certified by a certified public accountant or an independent
 32  9 public accountant.
 32 10    2.  b.  Any material changes in the information submitted
 32 11 pursuant to section 514B.3.
 32 12    3.  c.  The number of persons enrolled during the year, the
 32 13 number of enrollees as of the end of the year and the number
 32 14 of enrollments terminated during the year.
 32 15    4.  d.  Other information relating to the performance of
 32 16 the health maintenance organization as is necessary to enable
 32 17 the commissioner to carry out the commissioner's duties under
 32 18 this chapter.
 32 19    2.  The commissioner shall refuse to renew a certificate of
 32 20 authority of a health maintenance organization that fails to
 32 21 comply with the provisions of this section and the
 32 22 organization's right to transact new business in this state
 32 23 shall immediately cease until the organization has so
 32 24 complied.
 32 25    3.  A health maintenance organization that fails to timely
 32 26 file the report required under subsection 1 is in violation of
 32 27 this section and shall pay an administrative penalty of five
 32 28 hundred dollars to the treasurer of state for deposit in the
 32 29 general fund of the state as provided in section 505.7.
 32 30    4.  The commissioner may give notice to a health
 32 31 maintenance organization that the organization has not timely
 32 32 filed the report required under subsection 1 and is in
 32 33 violation of this section.  If the organization fails to file
 32 34 the required report and comply with this section within ten
 32 35 days of the date of the notice, the organization shall pay an
 33  1 additional administrative penalty of one hundred dollars for
 33  2 each day that the failure continues to the treasurer of state
 33  3 for deposit in the general fund of the state as provided in
 33  4 section 505.7.
 33  5    Sec. 60.  Section 514B.22, Code 2005, is amended by
 33  6 striking the section and inserting in lieu thereof the
 33  7 following:
 33  8    514B.22  FEES.
 33  9    When not otherwise provided, a foreign or domestic health
 33 10 maintenance organization doing business in this state shall
 33 11 pay the commissioner of insurance the fees as required in
 33 12 section 511.24.
 33 13    Sec. 61.  Section 514B.33, Code 2005, is amended by adding
 33 14 the following new subsection:
 33 15    NEW SUBSECTION.  3A.  Sections 514B.3B and 514B.12 apply to
 33 16 all foreign and domestic limited service organizations
 33 17 authorized to do business in this state.
 33 18    Sec. 62.  Section 514C.1, Code 2005, is amended to read as
 33 19 follows:
 33 20    514C.1  SUPPLEMENTAL COVERAGE FOR ADOPTED OR NEWLY BORN
 33 21 CHILDREN.
 33 22    1.  Any policy of individual or group accident and sickness
 33 23 insurance providing coverage on an expense incurred basis, and
 33 24 any individual or group hospital or medical service contracts
 33 25 issued pursuant to chapters 509, 514, and 514A, which provide
 33 26 coverage for a family member of the insured or subscriber
 33 27 shall also provide that the health insurance benefits
 33 28 applicable for children shall, subject to the enrollment
 33 29 requirements of this section, be payable with respect to a
 33 30 newly born child of the insured or subscriber from the moment
 33 31 of birth, or, in the situation of a newly adopted child of a
 33 32 covered person, such child shall be covered from the earlier
 33 33 of any of the following:
 33 34    a.  The date of placement of the child for the purpose of
 33 35 adoption and continuing in the same manner as for other
 34  1 dependents of the covered person, unless the placement is
 34  2 disrupted prior to legal adoption and the child is removed
 34  3 from placement.
 34  4    b.  The date of entry of an order granting the covered
 34  5 person custody of the child for purposes of adoption.
 34  6    c.  The effective date of adoption.
 34  7    2.  The coverage for adopted or newly born children shall
 34  8 consist of coverage for injury or sickness including the
 34  9 necessary care and treatment of medically diagnosed congenital
 34 10 defects and birth abnormalities and is not subject to any
 34 11 preexisting condition exclusion.
 34 12    3.  If payment of a specific premium or subscription fee is
 34 13 required to provide coverage for a newly born child, the
 34 14 policy or contract may require that notification of birth of a
 34 15 newly born child and payment of the required premium or fees
 34 16 must be furnished to the insurer or nonprofit service or
 34 17 indemnity corporation within thirty=one sixty days after the
 34 18 date of birth in order to have coverage continue beyond such
 34 19 thirty=one day period.
 34 20    4.  If payment of a specific premium or subscription fee is
 34 21 not required to provide coverage for a newly born child, the
 34 22 policy or contract may require that notification of birth of a
 34 23 newly born child must be furnished to the insurer or nonprofit
 34 24 service or indemnity corporation within sixty days after the
 34 25 date of birth in order for coverage to be provided for the
 34 26 child from the date of birth.
 34 27    5.  a.  If payment of a specific premium or subscription
 34 28 fee is required to provide coverage for a newly adopted child
 34 29 or child placed for adoption, the policy or contract may
 34 30 require that notification of the adoption or placement for
 34 31 adoption and payment of the required premium or fees must be
 34 32 furnished to the insurer or nonprofit service or indemnity
 34 33 corporation within sixty days after the coverage is required
 34 34 to begin under this section.
 34 35    b.  If payment of a specific premium or subscription fee is
 35  1 not required to provide coverage for a newly adopted child or
 35  2 child placed for adoption, the policy or contract may require
 35  3 that notification of the adoption or placement for adoption
 35  4 must be furnished to the insurer or nonprofit service or
 35  5 indemnity corporation within sixty days after the coverage is
 35  6 required to begin under this section.
 35  7    c.  If a covered person fails to provide the required
 35  8 notice or to make payment of premium or subscription fees
 35  9 within the sixty=day period required in this subsection, the
 35 10 newly adopted child or child placed for adoption shall be
 35 11 treated no less favorably by a health carrier than other
 35 12 dependents of the covered person, other than newly born
 35 13 children, who seek coverage under a policy or contract at a
 35 14 time other than the time when the dependent is first eligible
 35 15 to apply for coverage.
 35 16    Sec. 63.  Section 514C.3, Code 2005, is amended to read as
 35 17 follows:
 35 18    514C.3  DENTIST'S SERVICES UNDER ACCIDENT AND SICKNESS
 35 19 INSURANCE POLICIES.
 35 20    A policy of accident and sickness insurance issued in this
 35 21 state which provides payment or reimbursement for any service
 35 22 which is within the lawful scope of practice of a licensed
 35 23 dentist shall provide benefits for the service whether the
 35 24 service is performed by a licensed physician or a licensed
 35 25 dentist.  As used in this section, "licensed physician"
 35 26 includes persons licensed under chapter 148, 150, or 150A and
 35 27 "policy of accident and sickness insurance" includes
 35 28 individual policies or contracts issued pursuant to chapter
 35 29 514, 514A, or 514B, and group policies as defined in section
 35 30 509B.1, subsections subsection 3 and 4.
 35 31    Sec. 64.  Section 514E.7, Code Supplement 2005, is amended
 35 32 by adding the following new subsection:
 35 33    NEW SUBSECTION.  6.  The association is not required to
 35 34 make plan coverage available to an individual who is covered
 35 35 or is eligible for any continued group coverage under Internal
 36  1 Revenue Code } 4980B, the federal Employee Retirement Income
 36  2 Security Act of 1974, codified at 29 U.S.C. } 1001 et seq.,
 36  3 the federal Public Health Service Act of July 1, 1944,
 36  4 codified at 42 U.S.C. } 201 et seq., or any continued group
 36  5 coverage required by the state.  For purposes of this
 36  6 subsection, an individual who would have been eligible for
 36  7 such continuation of group coverage, but is not eligible
 36  8 solely because the individual or other responsible party
 36  9 failed to make the required election of coverage during the
 36 10 applicable time period, or terminated such coverage prior to
 36 11 the end of such applicable time period, shall be deemed to be
 36 12 eligible for such group coverage until the date on which the
 36 13 individual's continuing group coverage would have expired had
 36 14 an election been made or a termination not occurred.
 36 15    Sec. 65.  Section 514J.7, Code 2005, is amended by adding
 36 16 the following new subsections:
 36 17    NEW SUBSECTION.  9.  If an enrollee dies before the
 36 18 completion of the external review process, the process shall
 36 19 continue to completion if there is potential liability of a
 36 20 carrier or organized delivery system to the estate of the
 36 21 enrollee.
 36 22    NEW SUBSECTION.  10.  a.  If an enrollee who has already
 36 23 received a service or treatment under a plan requests external
 36 24 review of the plan's coverage decision and changes to another
 36 25 plan before the external review process is completed, the
 36 26 carrier or organized delivery system whose coverage was in
 36 27 effect at the time the service or treatment was received is
 36 28 responsible for completing the external review process.
 36 29    b.  If an enrollee who has not yet received service or
 36 30 treatment requests external review of a plan's coverage
 36 31 decision and then changes to another plan prior to receipt of
 36 32 the service or treatment and completion of the external review
 36 33 process, the external review process shall begin anew with the
 36 34 enrollee's current carrier or organized delivery system.  In
 36 35 this instance, the external review process shall be conducted
 37  1 in an expedited manner.
 37  2    Sec. 66.  Section 515.24, Code 2005, is amended to read as
 37  3 follows:
 37  4    515.24  TAX == COMPUTATION.
 37  5    For the purpose of determining the basis of any tax upon
 37  6 the "gross amount of premiums", or "gross receipts from
 37  7 premiums, assessments, fees, and promissory obligations", now
 37  8 or hereafter imposed upon any fire or casualty insurance
 37  9 company under any law of this state, such gross amount or
 37 10 gross receipts shall consist of the gross written premiums or
 37 11 receipts for direct insurance, without including or deducting
 37 12 any amounts received or paid for reinsurance except that any
 37 13 company reinsuring windstorm or hail risks written by county
 37 14 mutual insurance associations shall be required to pay a two
 37 15 percent tax on as a tax, the applicable percent provided in
 37 16 section 432.1, calculated upon the gross amount of reinsurance
 37 17 premiums received upon such risks, but with such other
 37 18 deductions as provided by law, and in addition deducting any
 37 19 so=called dividend or return of savings or gains to
 37 20 policyholders; provided that as to any deposits or deposit
 37 21 premiums received by any such company, the taxable premiums
 37 22 shall be the portion of such deposits or deposit premiums
 37 23 earned during the year with such deductions therefrom as
 37 24 provided by law.
 37 25    Sec. 67.  Section 515.42, Code 2005, is amended to read as
 37 26 follows:
 37 27    515.42  TENURE OF CERTIFICATE == RENEWAL == EVIDENCE.
 37 28    Such A certificate of authority shall expire on the first
 37 29 day of June next succeeding its issue, and shall be renewed
 37 30 annually so long as such company shall transact business in
 37 31 accordance with the requirements of law; a copy of which
 37 32 certificate, when certified to by the commissioner of
 37 33 insurance, shall be admissible in evidence for or against a
 37 34 company with the same effect as the original.  A company shall
 37 35 submit annually, on or before March 1, a completed application
 38  1 for renewal of its certificate of authority.  A company that
 38  2 fails to timely file an application for renewal shall pay an
 38  3 administrative penalty of five hundred dollars to the
 38  4 treasurer of state for deposit in the general fund of the
 38  5 state as provided in section 505.7.
 38  6    Sec. 68.  NEW SECTION.  515.147A  ADMINISTRATIVE PENALTY.
 38  7    1.  An excess and surplus lines insurance agent that fails
 38  8 to timely file the report required in section 515.147 is in
 38  9 violation of this section and shall pay an administrative
 38 10 penalty of five hundred dollars to the treasurer of state for
 38 11 deposit in the general fund of the state as provided in
 38 12 section 505.7.
 38 13    2.  The commissioner shall refuse to renew the license of
 38 14 an agent that fails to comply with the provisions of section
 38 15 515.147 and this section and the agent's right to transact new
 38 16 business in this state shall immediately cease until the agent
 38 17 has so complied.
 38 18    3.  The commissioner may give notice to an agent that the
 38 19 agent has not timely filed the report required under section
 38 20 515.147 and is in violation of this section.  If the agent
 38 21 fails to file the required report within ten days of the date
 38 22 of the notice, the agent shall pay an additional
 38 23 administrative penalty of one hundred dollars for each day
 38 24 that the failure continues to the treasurer of state for
 38 25 deposit in the general fund of the state as provided in
 38 26 section 505.7.
 38 27    Sec. 69.  Section 515A.6, subsection 1, Code 2005, is
 38 28 amended to read as follows:
 38 29    1.  a.  A corporation, an unincorporated association, a
 38 30 partnership or an individual, whether located within or
 38 31 outside this state, may make application to the commissioner
 38 32 for license as a rating organization for such kinds of
 38 33 insurance, or subdivision or class of risk or a part or
 38 34 combination thereof as are specified in its application and
 38 35 shall file therewith (a) a with the application all of the
 39  1 following:
 39  2    (1)  A copy of its constitution, its articles of agreement
 39  3 or association or its certificate of incorporation, and of its
 39  4 bylaws, rules and regulations governing the conduct of its
 39  5 business, (b) a.
 39  6    (2)  A list of its members and subscribers, (c) the.
 39  7    (3)  The name and address of a resident of this state upon
 39  8 whom notices or orders of the commissioner or process
 39  9 affecting such rating organization may be served and (d) a.
 39 10    (4)  A statement of its qualifications as a rating
 39 11 organization.
 39 12    b.  If the commissioner finds that the applicant is
 39 13 competent, trustworthy, and otherwise qualified to act as a
 39 14 rating organization and that its constitution, articles of
 39 15 agreement or association or certificate of incorporation, and
 39 16 its bylaws, rules and regulations governing the conduct of its
 39 17 business conform to the requirements of law, the commissioner
 39 18 shall issue a license specifying the kinds of insurance, or
 39 19 subdivisions or classes of risks or parts or combinations
 39 20 thereof for which the applicant is authorized to act as a
 39 21 rating organization.  Every such application shall be granted
 39 22 or denied in whole or in part by the commissioner within sixty
 39 23 days of the date of its filing with the commissioner.
 39 24    c.  Licenses issued pursuant to this section shall remain
 39 25 in effect for three years unless sooner suspended or revoked
 39 26 by the commissioner.  The fee for said license shall be
 39 27 twenty=five dollars.
 39 28    d.  Licenses issued pursuant to this section may be
 39 29 suspended or revoked by the commissioner, after hearing upon
 39 30 notice, in the event the rating organization ceases to meet
 39 31 the requirements of this subsection.
 39 32    e.  Every rating organization shall notify the commissioner
 39 33 promptly of every change in (a) its any of the following:
 39 34    (1)  Its constitution, its articles of agreement or
 39 35 association, or its certificate of incorporation, and its
 40  1 bylaws, rules and regulations governing the conduct of its
 40  2 business, (b) its.
 40  3    (2)  Its list of members and subscribers and (c) the.
 40  4    (3)  The name and address of the resident of this state
 40  5 designated by it upon whom notices or orders of the
 40  6 commissioner or process affecting such rating organization may
 40  7 be served.
 40  8    Sec. 70.  Section 515A.9, Code 2005, is amended to read as
 40  9 follows:
 40 10    515A.9  INFORMATION TO BE FURNISHED INSUREDS == HEARINGS
 40 11 AND APPEALS OF INSUREDS.
 40 12    Every rating organization and every insurer which makes its
 40 13 own rate shall, within a reasonable time after receiving
 40 14 written request therefor and upon payment of such reasonable
 40 15 charge as it may make, furnish to any insured affected by a
 40 16 rate made by it, or to the authorized representative of such
 40 17 insured, all pertinent information as to such rate.  Every
 40 18 rating organization and every insurer which makes its own
 40 19 rates shall provide within this state reasonable means whereby
 40 20 any person aggrieved by the application of its rating system
 40 21 may be heard, in person or by the person's authorized
 40 22 representative, on the person's written request to review the
 40 23 manner in which such rating system has been applied in
 40 24 connection with the insurance afforded the person.  Such
 40 25 review of the manner in which a rating system has been applied
 40 26 is not a contested case under chapter 17A.  If the rating
 40 27 organization or insurer fails to grant or reject such request
 40 28 within thirty days after it is made, applicant may proceed in
 40 29 the same manner as if the application had been rejected.  Any
 40 30 party affected by the action of such rating organization or
 40 31 such insurer on such request may, within thirty days after
 40 32 written notice of such action, appeal to the commissioner,
 40 33 who, after a hearing held upon not less than ten days' written
 40 34 notice to the appellant and to such rating organization or
 40 35 insurer, may affirm or reverse such action.  Such appeal to
 41  1 the commissioner of the manner in which a rating system has
 41  2 been applied is not a contested case under chapter 17A.
 41  3    Sec. 71.  Section 515A.10, subsection 2, Code 2005, is
 41  4 amended to read as follows:
 41  5    2.  Every advisory organization shall file with the
 41  6 commissioner (a) a all of the following:
 41  7    a.  A copy of its constitution, its articles of agreement
 41  8 or association or its certificate of incorporation and of its
 41  9 bylaws, rules and regulations governing its activities, (b) a.
 41 10    b.  A list of its members, (c) the.
 41 11    c.  The name and address of a resident of this state upon
 41 12 whom notices or orders of the commissioner or process issued
 41 13 at the commissioner's direction may be served, and (d) an.
 41 14    d.  An agreement that the commissioner may examine such
 41 15 advisory organization in accordance with the provisions of
 41 16 section 515A.12.
 41 17    Sec. 72.  NEW SECTION.  515E.3A  FOREIGN RISK RETENTION
 41 18 GROUP MAY BECOME DOMESTIC.
 41 19    1.  A risk retention group that is organized under the laws
 41 20 of any other state for the purpose of writing insurance, as
 41 21 authorized by this chapter, may redomesticate to this state by
 41 22 doing all of the following:
 41 23    a.  Complying with section 490.902.
 41 24    b.  Complying with all of the requirements of law relative
 41 25 to the organization and licensing of a domestic risk retention
 41 26 group and the capital and surplus requirement set forth in
 41 27 subsection 4.
 41 28    c.  Designating its principal place of business in this
 41 29 state.
 41 30    2.  A risk retention group that meets the requirements of
 41 31 subsection 1 shall be entitled to a certificate of its
 41 32 corporate existence and a license to transact business in this
 41 33 state, and be subject in all respects to the authority and
 41 34 jurisdiction of this state.
 41 35    3.  The certificate of authority, producer appointments and
 42  1 licenses, rates, and other items which are in existence at the
 42  2 time a risk retention group transfers its corporate domicile
 42  3 to this state pursuant to this section shall continue in full
 42  4 force and effect upon such transfer.  For purposes of existing
 42  5 authorizations and all other corporate purposes, the risk
 42  6 retention group is deemed to be the same entity as it was
 42  7 prior to the transfer of its domicile.  All outstanding
 42  8 policies of any transferring risk retention group shall remain
 42  9 in full force and effect.
 42 10    4.  A risk retention group redomesticating to this state
 42 11 pursuant to this chapter shall comply with the minimum capital
 42 12 and surplus requirements of chapter 521E or five million
 42 13 dollars, whichever is greater.  If the risk retention group's
 42 14 prior domestic regulator allowed the use of letters of credit
 42 15 to meet that regulator's surplus requirements, the risk
 42 16 retention group may continue to use the letters of credit to
 42 17 meet this state's minimum surplus requirements for up to five
 42 18 years from the date of redomestication in this state.  The
 42 19 risk retention group shall eliminate a minimum of twenty
 42 20 percent of the letters of credit being used each year based
 42 21 upon the aggregate amount of letters of credit being used to
 42 22 meet surplus requirements at the time of redomestication in
 42 23 this state.
 42 24    5.  Letters of credit used by a risk retention group to
 42 25 meet surplus requirements shall be clean, irrevocable, and
 42 26 unconditionally issued or confirmed by a qualified United
 42 27 States financial institution as defined in section 521B.4,
 42 28 subsection 2.  The beneficiary of each letter of credit being
 42 29 used shall be the commissioner.
 42 30    6.  If a risk retention group redomesticating to this state
 42 31 fails to comply with the provisions of this section, the
 42 32 commissioner shall take action as prescribed in chapter 507C.
 42 33    7.  The commissioner shall adopt rules pursuant to chapter
 42 34 17A to implement this section.
 42 35    Sec. 73.  Section 515F.4, subsection 5, Code 2005, is
 43  1 amended to read as follows:
 43  2    5.  The rates may contain a provision for contingencies and
 43  3 an allowance permitting a reasonable profit.  In determining
 43  4 the reasonableness of the profit, consideration shall be given
 43  5 to investment income attributable to unearned premium and loss
 43  6 reserves.  Income from other sources shall not be considered.
 43  7    Sec. 74.  Section 515G.1, Code 2005, is amended by adding
 43  8 the following new subsections:
 43  9    NEW SUBSECTION.  2A.  "Eligible policyholder" means a
 43 10 policyholder who had a policy in force with a mutual insurer
 43 11 at any time during the three=year period immediately preceding
 43 12 the date of the adoption of a plan of conversion by the mutual
 43 13 insurer's board of directors, including the date of adoption
 43 14 of the plan of conversion, and who, therefore, is eligible to
 43 15 receive an equitable share of the remaining statutory surplus
 43 16 of the mutual insurer, after provision for the base value for
 43 17 voting policyholders, as a result of the conversion.
 43 18    NEW SUBSECTION.  5.  "Voting policyholder" means a
 43 19 policyholder who had a policy in force as provided in section
 43 20 515G.4.
 43 21    Sec. 75.  Section 515G.2, Code 2005, is amended to read as
 43 22 follows:
 43 23    515G.2  MUTUAL INSURER BECOMING STOCK COMPANY ==
 43 24 AUTHORIZATION.
 43 25    1.  A mutual insurer may become a stock insurance company
 43 26 pursuant to a plan of conversion established and approved in
 43 27 the manner provided by this chapter.  The plan of conversion
 43 28 shall be adopted by the board of directors of the insurer to
 43 29 become effective on a future stated date.
 43 30    2.  A plan of conversion may provide that a mutual
 43 31 insurance company may convert into a domestic stock insurance
 43 32 company, convert and merge, or convert and consolidate with a
 43 33 domestic stock insurance company, as provided in chapter 490
 43 34 or chapter 491, whichever is applicable.  However, a mutual
 43 35 insurance company is not required to comply with sections
 44  1 490.1102 and 490.1104 or sections 491.102 through 491.105
 44  2 relating to approval of merger or consolidation plans by
 44  3 boards of directors and shareholders.
 44  4    3.  If conversion from a mutual insurer to a stock company
 44  5 is to be undertaken by a transaction which would be governed
 44  6 by chapter 521 or 521A, but the plan of conversion adopted by
 44  7 the board of directors of the insurer includes approval of an
 44  8 acquisition of control, merger, consolidation, or reinsurance,
 44  9 then chapter 521 or 521A shall not be applicable to the
 44 10 transaction.  However, in that case, the commissioner may
 44 11 require any information from the person or persons acquiring
 44 12 control of the insurer as could be required under chapter 521
 44 13 or 521A, and may disapprove the transaction on any basis on
 44 14 which it could be disapproved under chapter 521 or 521A.
 44 15    Sec. 76.  Section 515G.3, subsection 3, Code 2005, is
 44 16 amended to read as follows:
 44 17    3.  The manner and basis of exchanging the equitable share
 44 18 of each mutual policyholder with a policy in force as provided
 44 19 in section 515G.4 for securities or other consideration, or
 44 20 both, of the stock corporation or an affiliate into which the
 44 21 mutual insurer is to be converted and the disposition of any
 44 22 unclaimed shares.  The plan shall also provide that each
 44 23 person who had a policy of insurance in effect on the date of
 44 24 adoption of the plan is entitled to receive in exchange for an
 44 25 equitable share, without additional payment, consideration
 44 26 payable in voting common shares of the insurer, or other
 44 27 consideration, or both.  The equitable share of the
 44 28 policyholder in the mutual insurer may include a rights of
 44 29 each voting policyholder and each eligible policyholder of the
 44 30 mutual insurer to be converted to a stock company pursuant to
 44 31 this chapter.  Such exchange may include a base value for each
 44 32 voting policyholder in recognition of the voting
 44 33 policyholder's voting rights as a mutual policyholder as well
 44 34 as consideration to be provided to each eligible policyholder
 44 35 in exchange for the eligible policyholder's rights as a mutual
 45  1 policyholder of the mutual insurer to be converted.  After
 45  2 determining the base value for to be provided to each voting
 45  3 policyholder in recognition of the voting rights of the voting
 45  4 policyholder and the balance of such, the equitable share of
 45  5 its each eligible policyholder in the remaining statutory
 45  6 surplus of the mutual insurer, plus any adjustments for
 45  7 nonadmitted assets or additional value permitted by the
 45  8 commissioner, to be provided to each eligible policyholder
 45  9 shall be determined by the ratio which the net earned premiums
 45 10 the eligible policyholder has properly and timely paid to the
 45 11 mutual insurer on insurance policies in effect during the
 45 12 three years three=year period immediately preceding the
 45 13 adoption of the plan of conversion, including the date of the
 45 14 adoption of the plan of conversion, bears to the total net
 45 15 earned premiums received by the mutual insurer from all
 45 16 eligible policyholders during that three=year period.  The
 45 17 base value to be provided to each voting policyholder in
 45 18 recognition of voting rights and the equitable share of each
 45 19 eligible policyholder may be exchanged, without additional
 45 20 payment, for securities or other consideration, or both, of
 45 21 the stock corporation or an affiliate into which the mutual
 45 22 insurer is to be converted.  If the base value for each voting
 45 23 policyholder or the equitable share of the each eligible
 45 24 policyholder entitles the policyholder to the purchase of a
 45 25 fractional share of stock, the policyholder has the option to
 45 26 receive the value of the fractional share in cash or purchase
 45 27 a full share by paying the balance in cash.  However,
 45 28 policyholders due a de minimus amount, as established by the
 45 29 commissioner, need not be offered the value of the fractional
 45 30 share or the option to purchase a full share.  The plan shall
 45 31 also provide for the disposition of any unclaimed shares.
 45 32    Sec. 77.  Section 516E.1, Code Supplement 2005, is amended
 45 33 by adding the following new subsections:
 45 34    NEW SUBSECTION.  2A.  "Financial institution" means an
 45 35 institution that is all of the following:
 46  1    a.  Organized or, in the case of the office of a foreign
 46  2 banking organization located in the United States, licensed,
 46  3 under the laws of the United States or any state, and granted
 46  4 authority to operate with fiduciary powers.
 46  5    b.  Regulated, supervised, and examined by federal or state
 46  6 authorities empowered to regulate banks and trust companies.
 46  7    NEW SUBSECTION.  5A.  "Premium" means the consideration
 46  8 paid to an insurer for a reimbursement insurance policy.
 46  9    NEW SUBSECTION.  9A.  "Service company fee" means the
 46 10 consideration paid for a service contract.
 46 11    Sec. 78.  Section 516E.1, subsection 8, Code Supplement
 46 12 2005, is amended to read as follows:
 46 13    8.  "Reimbursement insurance policy" means a contractual
 46 14 liability insurance policy of insurance issued to a service
 46 15 company and pursuant to which the insurer agrees, for the
 46 16 benefit of the service contract holders, to discharge all of
 46 17 the obligations and liabilities of the service company under
 46 18 the terms of service contracts issued by the service company
 46 19 in the event of nonperformance by the service company.  For
 46 20 the purposes of this definition, "all obligations and
 46 21 liabilities" include, but are not limited to, failure of the
 46 22 service company to perform under the service contract and the
 46 23 return of the unearned service company fee in the event of the
 46 24 service company's unwillingness or inability to reimburse the
 46 25 unearned service company fee in the event of termination of a
 46 26 service contract that either provides reimbursement to a
 46 27 service company under the terms of insured service contracts
 46 28 issued or sold by the service company, or, in the event of
 46 29 nonperformance by the service company, pays, on behalf of the
 46 30 service company, all covered contractual obligations incurred
 46 31 by the service company under the terms of the insured service
 46 32 contracts issued or sold by the service company.
 46 33    Sec. 79.  Section 516E.2, subsection 3, Code Supplement
 46 34 2005, is amended to read as follows:
 46 35    3.  In order to assure the faithful performance of a
 47  1 service company's obligations to its service contract holders,
 47  2 the administrator may by rule require service contracts shall
 47  3 be secured by a reimbursement insurance policy in compliance
 47  4 with the requirements set forth in section 516E.4 or the
 47  5 service company shall comply with the financial responsibility
 47  6 and security standards set forth in section 516E.21.
 47  7    Sec. 80.  Section 516E.2, subsection 4, paragraph f, Code
 47  8 Supplement 2005, is amended by striking the paragraph.
 47  9    Sec. 81.  Section 516E.3, subsection 1, paragraph a, Code
 47 10 Supplement 2005, is amended to read as follows:
 47 11    a.  A service contract shall not be issued, sold, or
 47 12 offered for sale in this state unless a true and correct copy
 47 13 of the service contract, and the service company's
 47 14 reimbursement insurance policy, if applicable, have been filed
 47 15 with the commissioner by the service company.
 47 16    Sec. 82.  Section 516E.3, subsection 2, paragraph b, Code
 47 17 Supplement 2005, is amended to read as follows:
 47 18    b.  A provider shall file a consent to service of process
 47 19 on the commissioner, a notice with the name and ownership of
 47 20 the provider, and such other information as the commissioner
 47 21 requires, annually with the commissioner no later than August
 47 22 1.  If August 1 falls on a weekend or a holiday, the date for
 47 23 filing shall be the next business day.  In addition to the
 47 24 annual filing, the provider shall promptly file copies of any
 47 25 amended documents if material amendments have been made in the
 47 26 materials on file with the commissioner.  If an annual filing
 47 27 is made after August 1 and sales have occurred during the
 47 28 period when the provider was in noncompliance with this
 47 29 section, the commissioner shall assess an additional filing
 47 30 fee that is two times the amount normally required for an
 47 31 annual filing.  A fee shall not be charged for interim filings
 47 32 made to keep the materials filed with the division current and
 47 33 accurate.  The annual filing shall be accompanied by a filing
 47 34 fee in the amount of one hundred dollars.
 47 35    Sec. 83.  Section 516E.4, subsection 1, Code Supplement
 48  1 2005, is amended by striking the subsection and inserting in
 48  2 lieu thereof the following:
 48  3    1.  REQUIREMENTS.  A reimbursement insurance policy
 48  4 insuring a service contract issued, sold, or offered for sale
 48  5 in this state shall provide for all of the following:
 48  6    a.  The reimbursement insurance policy shall, in the event
 48  7 of the service company's failure to perform under the service
 48  8 contract or otherwise, either reimburse or pay on behalf of
 48  9 the service company any covered amounts that the service
 48 10 company is legally obligated to pay under the service
 48 11 contract, including the return of any unearned service company
 48 12 fee owed by the service company to the service contract
 48 13 holder.
 48 14    b.  An insurer that issues a reimbursement insurance policy
 48 15 shall assume full responsibility for the administration of
 48 16 claims made pursuant to a service contract in the event that
 48 17 the service company is unable to do so.
 48 18    c.  If a service covered under a service contract is not
 48 19 provided by the service company within sixty days of proof of
 48 20 loss by the service contract holder, the service contract
 48 21 holder is entitled to apply directly against the reimbursement
 48 22 insurance policy of the service company.
 48 23    Sec. 84.  Section 516E.4, Code Supplement 2005, is amended
 48 24 by adding the following new subsections:
 48 25    NEW SUBSECTION.  4.  OBLIGATIONS INSURED.  If a service
 48 26 company secures its service contracts with a reimbursement
 48 27 insurance policy, the reimbursement insurance policy shall
 48 28 insure one hundred percent of the obligations of all service
 48 29 contracts sold by the service company.
 48 30    NEW SUBSECTION.  5.  QUALIFICATIONS OF INSURER.  An insurer
 48 31 issuing a reimbursement insurance policy under this chapter
 48 32 shall be authorized, registered, or otherwise permitted to
 48 33 transact business in this state, or shall be an excess and
 48 34 surplus lines insurer authorized, registered, or otherwise
 48 35 permitted to transact business in this state, and shall meet
 49  1 one of the following requirements:
 49  2    a.  At the time the policy is filed with the commissioner,
 49  3 and continuously thereafter, the insurer maintains surplus as
 49  4 to policyholders and paid=in capital of at least fifteen
 49  5 million dollars and annually files copies of the insurer's
 49  6 financial statements, national association of insurance
 49  7 commissioners annual statement, and actuarial certification,
 49  8 if required and filed in the insurer's state of domicile.
 49  9    b.  At the time the policy is filed with the commissioner
 49 10 and continuously thereafter, the insurer does all of the
 49 11 following:
 49 12    (1)  Maintains surplus as to policyholders and paid=in
 49 13 capital of less than fifteen million dollars but at least ten
 49 14 million dollars.
 49 15    (2)  Demonstrates to the satisfaction of the commissioner
 49 16 that the insurer maintains a ratio of net written premiums,
 49 17 wherever written, to surplus as to policyholders and paid=in
 49 18 capital of not greater than three to one.
 49 19    (3)  Files copies annually of the insurer's financial
 49 20 statements, national association of insurance commissioners
 49 21 annual statement, and actuarial certification, if required and
 49 22 filed in the insurer's state of domicile.
 49 23    Sec. 85.  Section 516E.5, subsection 1, Code Supplement
 49 24 2005, is amended to read as follows:
 49 25    1.  a.  A service contract insured by a reimbursement
 49 26 insurance policy shall not be issued, sold, or offered for
 49 27 sale in this state unless the contract conspicuously states
 49 28 that the obligations of the service company to the service
 49 29 contract holder are guaranteed under a reimbursement insurance
 49 30 policy, including a statement in substantially the following
 49 31 form:
 49 32    "Obligations of the service company under this service
 49 33 contract are guaranteed under a reimbursement insurance
 49 34 policy.  If the service company fails to pay or provide
 49 35 service on a claim within sixty days after proof of loss has
 50  1 been filed with the service company, the service contract
 50  2 holder is entitled to make a claim directly against the
 50  3 reimbursement insurance policy."
 50  4    b.  A claim against a reimbursement insurance policy shall
 50  5 also include a claim for return of the unearned consideration
 50  6 service company fee paid for the service contract in excess of
 50  7 the premium paid.  A service contract shall conspicuously
 50  8 state the name and address of the issuer of the reimbursement
 50  9 insurance policy for that service contract.
 50 10    c.  A service contract issued, sold, or offered for sale in
 50 11 this state that is not insured under a reimbursement insurance
 50 12 policy shall contain a statement in substantially the
 50 13 following form:
 50 14    "Obligations of the service company under this service
 50 15 contract are backed by the full faith and credit of the
 50 16 service company."
 50 17    Sec. 86.  Section 516E.5, subsection 2, paragraphs a and b,
 50 18 Code Supplement 2005, are amended to read as follows:
 50 19    a.  Clearly and conspicuously states the name and address
 50 20 of the service company, and describes the service company's
 50 21 obligations to perform services or to arrange for the
 50 22 performance of services under the service contract, and states
 50 23 that the obligations of the service company to the service
 50 24 contract holder are guaranteed under a reimbursement insurance
 50 25 policy.
 50 26    b.  Clearly and conspicuously states the name and address
 50 27 of the issuer of the reimbursement insurance policy, if
 50 28 applicable.
 50 29    Sec. 87.  Section 516E.9, Code Supplement 2005, is amended
 50 30 to read as follows:
 50 31    516E.9  MISREPRESENTATIONS OF STATE APPROVAL.
 50 32    A service company shall not represent or imply in any
 50 33 manner that the service company has been sponsored,
 50 34 recommended, or approved or that the service company's
 50 35 abilities or qualifications have in any respect been passed
 51  1 upon by the state of Iowa, including the commissioner, the
 51  2 insurance division, or the division's securities and regulated
 51  3 industries bureau.
 51  4    Sec. 88.  Section 516E.15, subsection 1, paragraph b, Code
 51  5 Supplement 2005, is amended to read as follows:
 51  6    b.  A provider, or service company, or third=party
 51  7 administrator that fails to file documents and information
 51  8 with the commissioner as required pursuant to section 516E.3
 51  9 may be subject to a civil penalty.  The amount of the civil
 51 10 penalty shall not be more than four hundred dollars plus two
 51 11 dollars for each service contract that the person executed
 51 12 prior to satisfying the filing requirement.  However, a person
 51 13 who fails to file information regarding a change in the name
 51 14 or the termination of the business of a provider, or service
 51 15 company, or third=party administrator as required pursuant to
 51 16 section 516E.3 is subject to a civil penalty of not more than
 51 17 five hundred dollars.
 51 18    Sec. 89.  NEW SECTION.  516E.20  APPLICATION OF INSURANCE
 51 19 LAWS.
 51 20    The sale of a service contract under this chapter shall not
 51 21 be deemed to include the sale of insurance.  Unless a service
 51 22 company, third=party administrator, or provider is otherwise
 51 23 engaged in the sale of insurance, the insurance laws of this
 51 24 state are not applicable to the service company, third=party
 51 25 administrator, or provider of such a service contract.
 51 26    Sec. 90.  NEW SECTION.  516E.21  FINANCIAL RESPONSIBILITY
 51 27 AND SECURITY REQUIREMENTS IN LIEU OF REIMBURSEMENT INSURANCE
 51 28 POLICY.
 51 29    1.  In lieu of obtaining a reimbursement insurance policy
 51 30 as provided in section 516E.2, subsection 3, a service company
 51 31 may secure its service contracts by maintaining a funded
 51 32 reserve account which complies with all of the following:
 51 33    a.  The reserve account shall be in a custodial account at
 51 34 a financial institution that is dedicated to the service
 51 35 company's outstanding obligations under service contracts
 52  1 issued and outstanding in this state.
 52  2    b.  The reserve account shall comply with rules adopted by
 52  3 the commissioner pursuant to chapter 17A establishing
 52  4 requirements for reserve accounts, reserve account agreements,
 52  5 or the method of valuing marketable securities as necessary to
 52  6 protect holders of service contracts issued and outstanding in
 52  7 this state.  The commissioner may require amendments to
 52  8 reserve account agreements that are not in compliance with the
 52  9 provisions of this section.
 52 10    c.  The reserve account shall not be an amount that is less
 52 11 than forty percent of the gross consideration received, less
 52 12 claims paid, on the sale of service contracts issued and
 52 13 outstanding by the service company in this state.
 52 14    d.  The reserve account shall be subject to examination and
 52 15 review by the commissioner or a designee on the premises of
 52 16 the financial institution where the account is located and the
 52 17 financial institution shall, upon request, produce documents
 52 18 or records as necessary to allow the commissioner or a
 52 19 designee to verify the value and safety of the assets of the
 52 20 reserve account.
 52 21    2.  The service company shall annually provide the
 52 22 commissioner with one of the following:
 52 23    a.  A copy of the service company's financial statements.
 52 24    b.  If the service company's financial statements are
 52 25 consolidated with those of its parent company, a copy of the
 52 26 parent company's most recent form 10=K or form 20=F filed with
 52 27 the federal securities and exchange commission within the last
 52 28 calendar year, or if the parent company does not file with the
 52 29 federal securities and exchange commission, a copy of the
 52 30 parent company's audited financial statements showing a net
 52 31 worth of at least one hundred million dollars.  If the service
 52 32 company's financial statements are consolidated with those of
 52 33 its parent company, the service company shall also provide a
 52 34 copy of a written agreement by the parent company guaranteeing
 52 35 the obligations of the service company under service contracts
 53  1 issued and outstanding by the service company in this state.
 53  2    3.  If a service contract company secures its contracts by
 53  3 maintaining a funded reserve account as provided in subsection
 53  4 1 but does not have or maintain a minimum net worth or
 53  5 stockholders equity of one hundred million dollars or more,
 53  6 the service company shall also meet one of the following
 53  7 requirements:
 53  8    a.  Maintain a security deposit trust fund which complies
 53  9 with all of the following:
 53 10    (1)  The security deposit trust fund shall be in an account
 53 11 at a financial institution.
 53 12    (2)  The security deposit trust fund shall be held,
 53 13 invested, and administered for the benefit and protection of
 53 14 service contract holders in this state in the event of
 53 15 nonperformance of the service contract by the service company.
 53 16    (3)  The security deposit trust fund shall comply with
 53 17 rules adopted by the commissioner pursuant to chapter 17A,
 53 18 establishing the form, terms, and conditions of security
 53 19 deposit trust fund agreements established pursuant to this
 53 20 paragraph "a".
 53 21    (4)  The security deposit trust fund shall be subject to
 53 22 recovery by any service contract holder sustaining actionable
 53 23 injury due to the failure of the service company to perform
 53 24 its obligations under the service contract.  A holder of a
 53 25 service contract issued in this state may, in the event of
 53 26 nonperformance by the service company, maintain an action and
 53 27 file a claim against the security deposit trust fund
 53 28 maintained by the service company.
 53 29    (5)  The security deposit trust fund shall not be
 53 30 commingled with other funds of the service company.
 53 31    (6)  The security deposit trust fund shall have a value of
 53 32 not less than five percent of the gross consideration received
 53 33 by the service company, less claims paid, for the sale of all
 53 34 service contracts issued and in force in this state, but not
 53 35 less than twenty=five thousand dollars, and consists of one or
 54  1 more of the following:
 54  2    (a)  Cash.
 54  3    (b)  Securities of the type eligible for deposit by
 54  4 insurers authorized to transact business in this state.
 54  5    (c)  Certificates of deposit.
 54  6    (d)  Another form of security as prescribed by the
 54  7 commissioner by rule.
 54  8    b.  File a surety bond with the commissioner that is issued
 54  9 by a surety company authorized to do business in this state,
 54 10 and that complies with all of the following:
 54 11    (1)  The surety bond is conditioned upon the service
 54 12 company's faithful performance of service contracts subject to
 54 13 this chapter.
 54 14    (2)  The surety bond is for the benefit of and subject to
 54 15 recovery by any service contract holder sustaining actionable
 54 16 injury due to the failure of the service company to perform
 54 17 its obligations under a service contract.  The surety's
 54 18 liability shall extend to all service contracts issued by the
 54 19 service company and outstanding in this state.  A holder of a
 54 20 service contract issued in this state may, in the event of
 54 21 nonperformance of the contract by the service company,
 54 22 maintain an action and file a claim against the surety bond
 54 23 filed by the service company.
 54 24    (3)  The surety bond is for an amount that is not less than
 54 25 five percent of the gross consideration received by the
 54 26 service company, less claims paid, for the sale of all service
 54 27 contracts issued and in force in this state, but not less than
 54 28 twenty=five thousand dollars.
 54 29    (4)  The surety bond cannot be canceled by the surety
 54 30 except upon written notice of cancellation by the surety to
 54 31 the commissioner by restricted certified mail, and not prior
 54 32 to the expiration of sixty days after receipt of the notice by
 54 33 the commissioner.
 54 34    Sec. 91.  Section 518.15, Code 2005, is amended to read as
 54 35 follows:
 55  1    518.15  REPORTS, AND EXAMINATIONS, AND RENEWALS.
 55  2    1.  The president or the vice president and secretary of
 55  3 each association authorized to do business under this chapter
 55  4 shall annually before the first day of March prepare under
 55  5 oath and file with the commissioner of insurance a full, true
 55  6 and complete statement of the condition of such association on
 55  7 the last day of the preceding year.  The commissioner of
 55  8 insurance shall prescribe the report forms and shall determine
 55  9 the information and data to be reported.
 55 10    2.  Such associations shall pay the same expenses of any
 55 11 examination made or ordered to be made by the commissioner of
 55 12 insurance and the same fees for the annual reports and annual
 55 13 certificates of authority as are required to be paid by
 55 14 domestic companies organized and doing business under chapter
 55 15 515, which certificates shall expire June 1 of the year
 55 16 following the date of issue.
 55 17    3.  A certificate of authority of an association formed
 55 18 under this chapter expires on June 1 succeeding its issue and
 55 19 shall be renewed annually so long as the association transacts
 55 20 its business in accordance with all legal requirements.  An
 55 21 association shall submit annually, on or before March 1, a
 55 22 completed application for renewal of its certificate of
 55 23 authority.
 55 24    4.  The commissioner shall refuse to renew the certificate
 55 25 of authority of an association that fails to comply with the
 55 26 provisions of this chapter.
 55 27    5.  An association formed under this chapter that fails to
 55 28 timely file the statement required under subsection 1 or the
 55 29 application for renewal required under subsection 3 is in
 55 30 violation of this section and shall pay an administrative
 55 31 penalty of five hundred dollars to the treasurer of state for
 55 32 deposit in the general fund of the state as provided in
 55 33 section 505.7.  The association's right to transact new
 55 34 business in this state shall immediately cease until the
 55 35 association has fully complied with this chapter.
 56  1    6.  The commissioner may give notice to an association that
 56  2 the association has not timely filed the statement required
 56  3 under subsection 1 or an application for renewal under
 56  4 subsection 3 and is in violation of this section.  If the
 56  5 association fails to file the required statement or
 56  6 application and comply with this section within ten days of
 56  7 the date of the notice, the association shall pay an
 56  8 additional administrative penalty of one hundred dollars for
 56  9 each day that the failure continues to the treasurer of state
 56 10 for deposit in the general fund of the state as provided in
 56 11 section 505.7.
 56 12    Sec. 92.  Section 518A.18, Code 2005, is amended to read as
 56 13 follows:
 56 14    518A.18  ANNUAL REPORT == PENALTIES.
 56 15    1.  An association doing business under this chapter, on or
 56 16 before March 1 of each year, shall prepare under oath and file
 56 17 with the commissioner of insurance an accurate and complete
 56 18 statement of the condition of the association as of the last
 56 19 day of the preceding calendar year.  The statement shall
 56 20 conform to the annual statement blank prepared pursuant to
 56 21 instructions prescribed by the commissioner.  All financial
 56 22 information reflected in the annual report shall be kept and
 56 23 prepared pursuant to accounting practices and procedures
 56 24 prescribed by the commissioner.  Statements filed with the
 56 25 commissioner pursuant to this section shall be tabulated and
 56 26 published by the commissioner of insurance in the annual
 56 27 report of insurance.
 56 28    2.  An association that fails to timely file the statement
 56 29 required under subsection 1 is in violation of this section
 56 30 and shall pay an administrative penalty of five hundred
 56 31 dollars for each violation to the treasurer of state for
 56 32 deposit in the general fund of the state as provided in
 56 33 section 505.7.
 56 34    3.  The commissioner may give notice to an association that
 56 35 the association has not timely filed the statement required
 57  1 under subsection 1 and is in violation of this section.  If
 57  2 the association fails to file the required statement and
 57  3 comply with this section within ten days of the date of the
 57  4 notice, the association shall pay an additional administrative
 57  5 penalty of one hundred dollars for each day that each failure
 57  6 continues to the treasurer of state for deposit in the general
 57  7 fund of the state as provided in section 505.7.
 57  8    4.  The association's right to transact new business in
 57  9 this state shall immediately cease until the association has
 57 10 fully complied with this chapter.
 57 11    Sec. 93.  Section 518A.35, subsection 1, Code 2005, is
 57 12 amended to read as follows:
 57 13    1.  A state mutual insurance association doing business
 57 14 under this chapter shall on or before the first day of March,
 57 15 each year, pay to the director of revenue, or a depository
 57 16 designated by the director, a sum equivalent to the applicable
 57 17 percent of the gross receipts from premiums and fees for
 57 18 business done within the state, including all insurance upon
 57 19 property situated in the state without including or deducting
 57 20 any amounts received or paid for reinsurance.  However, a
 57 21 company reinsuring windstorm or hail risks written by county
 57 22 mutual insurance associations is required to pay the
 57 23 applicable percent tax on the gross amount of reinsurance
 57 24 premiums received written upon such risks, but after deducting
 57 25 the amount returned upon canceled policies and rejected
 57 26 applications covering property situated within the state, and
 57 27 dividends returned to policyholders on property situated
 57 28 within the state.  For purposes of this section, "applicable
 57 29 percent" means the same as specified in section 432.1,
 57 30 subsection 4.
 57 31    Sec. 94.  Section 518A.40, Code 2005, is amended to read as
 57 32 follows:
 57 33    518A.40  ANNUAL FEES == RENEWALS == PENALTIES.
 57 34    1.  Such associations shall pay the same fees for annual
 57 35 reports and annual certificates of authority as are required
 58  1 to be paid by domestic companies organized and doing business
 58  2 under chapter 515, which certificates shall expire May 1 of
 58  3 the year following the date of issue.
 58  4    2.  A certificate of authority of an association formed
 58  5 under this chapter shall be renewed annually so long as the
 58  6 organization transacts its business in accordance with all
 58  7 legal requirements.  Such an association shall submit
 58  8 annually, on or before March 1, a completed application for
 58  9 renewal of its certificate of authority.
 58 10    3.  The commissioner shall refuse to renew the certificate
 58 11 of authority of a state mutual insurance association that
 58 12 fails to comply with the provisions of this chapter and the
 58 13 association's right to transact new business in this state
 58 14 shall immediately cease until the association has so complied.
 58 15    4.  An association that fails to timely file the
 58 16 application for renewal required under subsection 2 is in
 58 17 violation of this section and shall pay an administrative
 58 18 penalty of five hundred dollars to the treasurer of state for
 58 19 deposit in the general fund of the state as provided in
 58 20 section 505.7.
 58 21    Sec. 95.  Section 518C.17, Code 2005, is amended to read as
 58 22 follows:
 58 23    518C.17  ACTIONS AGAINST THE ASSOCIATION.
 58 24    An action against the association shall be brought against
 58 25 it in the association's own name and only in the Polk county
 58 26 district court.  Service of original notice in an action
 58 27 against the association may shall be made on any officer of
 58 28 the association or upon the commissioner of insurance on its
 58 29 behalf.  The commissioner shall promptly transmit any notice
 58 30 served upon the commissioner to the association.
 58 31    Sec. 96.  Section 520.10, Code 2005, is amended to read as
 58 32 follows:
 58 33    520.10  ANNUAL REPORT == EXAMINATION == PENALTIES.
 58 34    1.  Such attorney shall, within the time limited for filing
 58 35 the annual statement by insurance companies transacting the
 59  1 same kind of business, make a report, under oath, to the
 59  2 commissioner of insurance for each calendar year, showing the
 59  3 financial condition of affairs at the office where such
 59  4 contracts are issued and shall, at any and all times, furnish
 59  5 such additional information and reports as may be required;
 59  6 provided, however, that the attorney shall not be required to
 59  7 furnish the names and addresses of any subscribers except in
 59  8 case of an unpaid final judgment.  The business affairs,
 59  9 records, and assets of any such organization shall be subject
 59 10 to examination by the commissioner of insurance at any
 59 11 reasonable time, and such examination shall be at the expense
 59 12 of the organization examined.
 59 13    2.  A certificate of authority of a reciprocal or
 59 14 interinsurance insurer authorized under this chapter shall be
 59 15 renewed annually in accordance with section 520.12 so long as
 59 16 the insurer transacts its business in accordance with all
 59 17 legal requirements.
 59 18    3.  The commissioner shall refuse to renew the certificate
 59 19 of authority of a reciprocal or interinsurance insurer that
 59 20 fails to comply with the provisions of this chapter and the
 59 21 insurer's right to transact new business in this state shall
 59 22 immediately cease until the insurer has so complied.
 59 23    4.  A reciprocal or interinsurance insurer that fails to
 59 24 timely file the report required under subsection 1 is in
 59 25 violation of this section and shall pay an administrative
 59 26 penalty of five hundred dollars to the treasurer of state for
 59 27 deposit in the general fund of the state as provided in
 59 28 section 505.7.
 59 29    5.  The commissioner may give notice to a reciprocal or
 59 30 interinsurance insurer that the insurer has not timely filed
 59 31 the report required under subsection 1 and is in violation of
 59 32 this section.  If the insurer fails to file the required
 59 33 report and comply with this section within ten days of the
 59 34 date of the notice, the insurer shall pay an additional
 59 35 administrative penalty of one hundred dollars for each day
 60  1 that the failure continues to the treasurer of state for
 60  2 deposit in the general fund of the state as provided in
 60  3 section 505.7.
 60  4    Sec. 97.  Section 520.12, Code 2005, is amended to read as
 60  5 follows:
 60  6    520.12  CERTIFICATE OF AUTHORITY == RENEWAL == PENALTIES.
 60  7    1.  Upon compliance with the requirements of this chapter,
 60  8 the commissioner of insurance shall issue a certificate of
 60  9 authority or a license to the attorney, authorizing the
 60 10 attorney to make such contracts of insurance, which license
 60 11 shall specify the kind or kinds of insurance and shall contain
 60 12 the name of the attorney, the location of the principal office
 60 13 and the name or designation under which such contracts of
 60 14 insurance are issued.  The certificate of authority shall
 60 15 expire on the first day of June next succeeding its issue, and
 60 16 shall be renewed annually as long as the company transacts
 60 17 business in accordance with the requirements of law.  A copy
 60 18 of the certificate, when certified by the commissioner of
 60 19 insurance, shall be admissible in evidence for or against a
 60 20 company with the same effect as the original.
 60 21    2.  A reciprocal or interinsurance insurer shall submit
 60 22 annually, on or before March 1, a completed application for
 60 23 renewal of the insurer's certificate of authority.  An insurer
 60 24 that fails to timely file an application for renewal shall pay
 60 25 an administrative fee of five hundred dollars to the treasurer
 60 26 of state for deposit in the general fund of the state as
 60 27 provided in section 505.7.
 60 28    Sec. 98.  Section 521.1, Code 2005, is amended to read as
 60 29 follows:
 60 30    521.1  DEFINITIONS.
 60 31    For the purposes of this chapter:
 60 32    1.  "Affected company" or "affected mutual company" means
 60 33 the company being merged with and into the surviving company.
 60 34    2.  "Commission" means the commission created in section
 60 35 521.5.
 61  1    3.  "Commissioner" means the commissioner of insurance.
 61  2    4.  "Company" or "companies" when used in this chapter
 61  3 means a company or association organized under chapter 508,
 61  4 511, 515, 518, 518A, or 520, and includes a mutual insurance
 61  5 holding company organized pursuant to section 521A.14.
 61  6    Sec. 99.  Section 521.2, Code 2005, is amended to read as
 61  7 follows:
 61  8    521.2  LIFE COMPANIES == CONSOLIDATION, MERGER, AND
 61  9 REINSURANCE.
 61 10    1.  One or more domestic mutual insurance companies
 61 11 organized under chapter 491 may merge or consolidate with a
 61 12 domestic or foreign mutual insurance company as provided in
 61 13 this chapter.  Sections 491.101 through 491.105 shall not be
 61 14 applicable to a merger or consolidation of a domestic mutual
 61 15 insurance company pursuant to this chapter.
 61 16    2.  One or more domestic insurance companies organized
 61 17 under chapter 490 may merge with a domestic or foreign
 61 18 insurance company as provided in chapter 490 with the approval
 61 19 of the commission pursuant to this chapter.
 61 20    3.  The provisions of this chapter shall not be applicable
 61 21 to the merger or consolidation of a domestic mutual company
 61 22 with a stock company pursuant to chapter 508B or chapter 515G.
 61 23    4.  A domestic mutual insurance company organized under the
 61 24 laws of this state to do the business of life insurance,
 61 25 either on the stock, mutual, stipulated premium, or assessment
 61 26 plan, shall not consolidate with any other company or reinsure
 61 27 its risks, or any part of such risks, with any other company,
 61 28 or assume or reinsure the whole or any part of the risks of
 61 29 any other company, except as provided in this chapter.
 61 30 However, this chapter shall not be construed to prevent any
 61 31 company, as defined in section 521.1, from reinsuring a
 61 32 fractional part of any single risk.
 61 33    Sec. 100.  Section 521.3, Code 2005, is amended by striking
 61 34 the section and inserting in lieu thereof the following:
 61 35    521.3  SUBMISSION OF PLAN AND APPLICATION TO COMMISSIONER
 62  1 OF INSURANCE.
 62  2    Any company proposing to consolidate, merge, or enter into
 62  3 any reinsurance contract with another company shall file a
 62  4 plan and an application in support of the plan with the
 62  5 commissioner.  The plan shall set forth the terms of the
 62  6 proposed contract of consolidation, merger, or reinsurance,
 62  7 along with any other information requested by the
 62  8 commissioner.
 62  9    Sec. 101.  Section 521.4, Code 2005, is amended by striking
 62 10 the section and inserting in lieu thereof the following:
 62 11    521.4  PROCEDURE == NOTICE.
 62 12    The commission may hear and determine an application, and
 62 13 approve, disapprove, or require modification of a plan
 62 14 submitted under section 521.3 without notice and without
 62 15 public hearing.  The commission may require a public hearing
 62 16 when necessary to conserve the interests of the members,
 62 17 policyholders, or shareholders of the affected company.  In
 62 18 such cases the commission shall require the affected company
 62 19 to mail to all of its members, policyholders, or shareholders
 62 20 written notice of the public hearing stating that an
 62 21 application and plan have been filed with the commission, the
 62 22 nature of the plan, and the date, time, and place of the
 62 23 public hearing on the application and plan.  The commission
 62 24 shall determine the number of days prior to the public hearing
 62 25 that notice is required to be given to the members or
 62 26 shareholders, which shall be no fewer than ten nor more than
 62 27 sixty days.
 62 28    Sec. 102.  Section 521.5, Code 2005, is amended to read as
 62 29 follows:
 62 30    521.5  COMMISSION TO HEAR PETITION CREATED.
 62 31    For the purpose of hearing and determining such petition, a
 62 32 A commission consisting of the commissioner of insurance and
 62 33 the attorney general is hereby created to hear and determine
 62 34 the application and to approve, disapprove, or require
 62 35 modification of the plan prior to approval.
 63  1    Sec. 103.  Section 521.6, Code 2005, is amended to read as
 63  2 follows:
 63  3    521.6  EXAMINATION.
 63  4    The commission may make such examination into examine the
 63  5 affairs and condition of any company or companies as it may
 63  6 deem deems proper, and shall have the power to summon and
 63  7 compel the attendance and testimony of witnesses, and the
 63  8 production of books and papers before said the commission and
 63  9 may administer oaths.
 63 10    Sec. 104.  Section 521.7, Code 2005, is amended to read as
 63 11 follows:
 63 12    521.7  APPEARANCE BY MEMBERS, POLICYHOLDERS, OR
 63 13 SHAREHOLDERS.
 63 14    When notice shall have been is given as above provided in
 63 15 section 521.4, any member, policyholder, or stockholder
 63 16 shareholder of said the affected company or companies shall
 63 17 have the right to appear before said the commission and be
 63 18 heard with reference to said petition regarding the
 63 19 application and plan.
 63 20    Sec. 105.  Section 521.8, Code 2005, is amended to read as
 63 21 follows:
 63 22    521.8  AUTHORIZATION.
 63 23    Said The commission, if satisfied that the interests of the
 63 24 members, policyholders, or shareholders of said the affected
 63 25 company or companies are properly protected and no reasonable
 63 26 objection to said petition the application and plan exists,
 63 27 may authorize approve, disapprove, or require modification of
 63 28 the proposed plan of consolidation, merger, or reinsurance or
 63 29 may direct such modification thereof as may seem to it best
 63 30 for the interests of the policyholders; and said prior to
 63 31 approval.  The commission may make such order and disposition
 63 32 of the assets of any such company thereafter remaining as
 63 33 shall be just and equitable.
 63 34    Sec. 106.  Section 521.10, Code 2005, is amended by
 63 35 striking the section and inserting in lieu thereof the
 64  1 following:
 64  2    521.10  ELECTION CALLED.
 64  3    1.  The commission may require an affected company to
 64  4 submit the plan of consolidation, merger, or reinsurance to a
 64  5 vote by its members.  The plan shall be submitted at a meeting
 64  6 called for that purpose, upon not less than thirty days'
 64  7 notice.  Member approval of the plan requires the affirmative
 64  8 vote of two=thirds of all members voting in person, by ballot,
 64  9 or by proxy.
 64 10    2.  Approval by the members of a mutual company of a plan
 64 11 of merger or reinsurance is not required if all of the
 64 12 following conditions are satisfied:
 64 13    a.  The company will survive the merger or is the
 64 14 reinsurer.
 64 15    b.  At the time of the merger or reinsurance, the number of
 64 16 members of the surviving company is greater than the number of
 64 17 members of the affected company.
 64 18    c.  At the time of the merger or reinsurance, the surplus
 64 19 of the surviving company is greater than the surplus of the
 64 20 affected company.
 64 21    Sec. 107.  Section 521.13, Code 2005, is amended by
 64 22 striking the section and inserting in lieu thereof the
 64 23 following:
 64 24    521.13  REINSURANCE TRANSACTIONS == EXEMPTION.
 64 25    Reinsurance as provided in sections 515.49, 518.17,
 64 26 518A.44, and 520.21 is exempt from the requirements of this
 64 27 chapter.
 64 28    Sec. 108.  Section 521.14, Code 2005, is amended to read as
 64 29 follows:
 64 30    521.14  EXPENSES AND COSTS == HOW PAID.
 64 31    All expenses and costs incident to proceedings under the
 64 32 provisions of this chapter, shall be paid by the company or
 64 33 companies bringing filing the petition application and plan.
 64 34    Sec. 109.  Section 521.16, Code 2005, is amended to read as
 64 35 follows:
 65  1    521.16  APPLICABILITY OF CHAPTER SECTION 521A.3.
 65  2    Chapter 521A is The provisions of section 521A.3 shall also
 65  3 be applicable to a merger or consolidation made pursuant
 65  4 subject to this chapter, and the provisions of chapter 521A
 65  5 and this chapter shall apply exclusively with respect to such
 65  6 merger or consolidation.
 65  7    Sec. 110.  NEW SECTION.  521.17  ADDITIONAL FILING
 65  8 REQUIREMENTS == PLANS AND ARTICLES OF MERGER OR CONSOLIDATION.
 65  9    A company filing a plan to merge or consolidate shall, in
 65 10 addition to and after meeting the requirements of this
 65 11 chapter, make all appropriate filings with and pay appropriate
 65 12 fees to the secretary of state required under chapter 490 or
 65 13 491.
 65 14    Sec. 111.  NEW SECTION.  521.18  ARTICLES OF MERGER OR
 65 15 CONSOLIDATION == FILING FEES AND APPROVAL.
 65 16    A company filing a plan to merge or consolidate under the
 65 17 provisions of this chapter shall file its articles of merger
 65 18 or consolidation with the commission for its approval.  The
 65 19 fee for filing articles of merger or consolidation with the
 65 20 commission is fifty dollars.
 65 21    Sec. 112.  Section 521A.1, subsection 6, Code 2005, is
 65 22 amended to read as follows:
 65 23    6.  "Insurer" means a company qualified and licensed by the
 65 24 insurance division to transact the business of insurance in
 65 25 this state by certificate issued pursuant to chapters 508,
 65 26 512B, 514, 514B, 515, 515E, and 520, except that it shall not
 65 27 include:
 65 28    a.  Agencies agencies, authorities, or instrumentalities of
 65 29 the United States, its possessions and territories, the
 65 30 commonwealth of Puerto Rico, the District of Columbia, or a
 65 31 state or political subdivision of a state.
 65 32    b.  Fraternal benefit societies.
 65 33    c.  Nonprofit medical, hospital or dental service
 65 34 associations.
 65 35    Sec. 113.  Section 521A.2, subsection 1, paragraph c, Code
 66  1 2005, is amended to read as follows:
 66  2    c.  Investing, reinvesting, or trading in securities and
 66  3 financial instruments as defined in section 511.8, subsection
 66  4 22, for its own account, that of its parent, any subsidiary of
 66  5 its parent, or any affiliate or subsidiary.
 66  6    Sec. 114.  Section 521A.2, subsection 3, Code 2005, is
 66  7 amended by adding the following new paragraph:
 66  8    NEW PARAGRAPH.  d.  Invest, reinvest, and trade in
 66  9 financial instruments as defined in section 511.8, subsection
 66 10 22, for its own account, that of its parent, any subsidiary of
 66 11 its parent, or any affiliate or subsidiary.
 66 12    Sec. 115.  NEW SECTION.  522B.16B  WRITTEN CONSENT TO
 66 13 ENGAGE OR PARTICIPATE IN BUSINESS OF INSURANCE.
 66 14    1.  A person who is prohibited by 18 U.S.C. } 1033 from
 66 15 engaging or participating in the business of insurance because
 66 16 that person has been convicted of a crime under that statute
 66 17 or of a felony involving dishonesty or breach of trust may
 66 18 apply to the commissioner for written consent to engage or
 66 19 participate in the business of insurance in this state.
 66 20    2.  The commissioner, by rule, shall establish a procedure
 66 21 and standards for issuing such a written consent.
 66 22    3.  The commissioner shall not issue an insurance producer
 66 23 license to an applicant who has been convicted of a crime as
 66 24 set forth in subsection 1 unless the applicant has first
 66 25 obtained a written consent from the commissioner to engage or
 66 26 participate in the business of insurance in this state.
 66 27    4.  The commissioner shall not renew or issue an insurance
 66 28 producer license to an insurance producer licensee who has
 66 29 been convicted of a crime as set forth in subsection 1, unless
 66 30 that licensee has first obtained a written consent from the
 66 31 commissioner to engage or participate in the business of
 66 32 insurance in this state.
 66 33    Sec. 116.  Section 523A.601, subsection 1, paragraph i,
 66 34 Code 2005, is amended to read as follows:
 66 35    i.  Include an explanation of regulatory oversight by the
 67  1 insurance division in twelve point boldface type, in
 67  2 substantially the following language:
 67  3    THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY THE IOWA
 67  4 INSURANCE DIVISION.  YOU MAY CALL THE INSURANCE DIVISION AT
 67  5 (..) ..... (515)281=4441.  WRITTEN INQUIRIES OR COMPLAINTS
 67  6 SHOULD BE MAILED TO THE IOWA SECURITIES AND REGULATED
 67  7 INDUSTRIES BUREAU, (STREET ADDRESS), (CITY) 330 MAPLE STREET,
 67  8 DES MOINES, IOWA (ZIP CODE) 50319.
 67  9    Sec. 117.  Section 523A.602, subsection 2, paragraph b,
 67 10 Code 2005, is amended by adding the following new
 67 11 subparagraph:
 67 12    NEW SUBPARAGRAPH.  (1A)  If a purchase agreement is
 67 13 canceled before the purchase price is paid in full, a
 67 14 purchaser requests a transfer of the trust assets upon
 67 15 cancellation of a purchase agreement before the purchase price
 67 16 is paid in full, or another establishment provides cemetery
 67 17 merchandise, funeral merchandise, funeral services, or a
 67 18 combination thereof, designated in a purchase agreement before
 67 19 the purchase price is paid in full, the seller shall refund or
 67 20 transfer within thirty days of receiving a written demand no
 67 21 less than the amount paid by the purchaser, less any actual
 67 22 expenses incurred by the seller pursuant to the purchase
 67 23 agreement as set forth in the purchase agreement under section
 67 24 523A.601, subsection 1, paragraph "f".  The amount of the
 67 25 actual expenses deducted by the seller shall not exceed ten
 67 26 percent of the total original purchase price of the applicable
 67 27 cemetery merchandise, funeral merchandise, funeral services,
 67 28 or a combination thereof.  The seller may also deduct the
 67 29 value of the cemetery merchandise, funeral merchandise, and
 67 30 funeral services already received by, delivered to, or
 67 31 warehoused for the purchaser.
 67 32    Sec. 118.  Section 523I.102, Code Supplement 2005, is
 67 33 amended by adding the following new subsection:
 67 34    NEW SUBSECTION.  49.  "Veterans cemetery" means a cemetery
 67 35 that is owned or operated by the state of Iowa or by the
 68  1 United States for the burial of veterans.
 68  2    Sec. 119.  Section 523I.103, subsection 1, paragraph a,
 68  3 Code Supplement 2005, is amended to read as follows:
 68  4    a.  All cemeteries, except religious cemeteries that
 68  5 commenced business prior to July 1, 2005, and veterans
 68  6 cemeteries.
 68  7    Sec. 120.  Section 523I.201, subsection 1, Code Supplement
 68  8 2005, is amended to read as follows:
 68  9    1.  This chapter shall be administered by the commissioner.
 68 10 The deputy administrator appointed pursuant to section
 68 11 523A.801 502.601 shall be the principal operations officer
 68 12 responsible to the commissioner for the routine administration
 68 13 of this chapter and management of the administrative staff.
 68 14 In the absence of the commissioner, whether because of vacancy
 68 15 in the office due to absence, physical disability, or other
 68 16 cause, the deputy administrator shall, for the time being,
 68 17 have and exercise the authority conferred upon the
 68 18 commissioner.  The commissioner may by order from time to time
 68 19 delegate to the deputy administrator any or all of the
 68 20 functions assigned to the commissioner in this chapter.  The
 68 21 deputy administrator shall employ officers, attorneys,
 68 22 accountants, and other employees as needed for administering
 68 23 this chapter.
 68 24    Sec. 121.  Section 523I.309, subsection 1, Code Supplement
 68 25 2005, is amended to read as follows:
 68 26    1.  Any available member of the following classes of
 68 27 persons, in the priority listed, shall have the right to
 68 28 control the interment, relocation, or disinterment of a
 68 29 decedent's remains within or from a cemetery:
 68 30    a.  The attorney in fact of the decedent pursuant to a
 68 31 durable power of attorney for health care.
 68 32    b.  a.  The surviving spouse of the decedent, if not
 68 33 legally separated from the decedent.
 68 34    c.  b.  The decedent's surviving adult children.  If there
 68 35 is more than one surviving adult child, any adult child who
 69  1 can confirm, in writing, that all other adult children have
 69  2 been notified of the proposed interment, relocation, or
 69  3 disinterment may authorize the interment, relocation, or
 69  4 disinterment, unless the cemetery receives an objection to
 69  5 such action from another adult child of the decedent.
 69  6 Alternatively, a majority of the surviving adult children of
 69  7 the decedent whose whereabouts are reasonably ascertainable
 69  8 shall have such right to control.
 69  9    d.  c.  A The surviving parent parents of the decedent
 69 10 whose whereabouts are reasonably ascertainable.
 69 11    d.  A surviving adult grandchild of the decedent.  If there
 69 12 is more than one surviving adult grandchild, any adult
 69 13 grandchild who can confirm, in writing, that all other adult
 69 14 grandchildren have been notified of the proposed interment,
 69 15 relocation, or disinterment may authorize the interment,
 69 16 relocation, or disinterment, unless the cemetery receives an
 69 17 objection to such action from another adult grandchild of the
 69 18 decedent.  Alternatively, a majority of the surviving adult
 69 19 grandchildren of the decedent whose whereabouts are reasonably
 69 20 ascertainable shall have such right to control.
 69 21    e.  A surviving adult sibling of the decedent.  If there is
 69 22 more than one surviving adult sibling, any adult sibling who
 69 23 can confirm, in writing, that all other adult siblings have
 69 24 been notified of the proposed interment, relocation, or
 69 25 disinterment may authorize the interment, relocation, or
 69 26 disinterment, unless the cemetery receives an objection to
 69 27 such action from another adult sibling of the decedent.
 69 28 Alternatively, a majority of the surviving adult siblings of
 69 29 the decedent whose whereabouts are reasonably ascertainable
 69 30 shall have such right to control.
 69 31    f.  A surviving grandparent of the decedent.  If there is
 69 32 more than one surviving grandparent, any grandparent who can
 69 33 confirm, in writing, that all other grandparents have been
 69 34 notified of the proposed interment, relocation, or
 69 35 disinterment may authorize the interment, relocation, or
 70  1 disinterment, unless the cemetery receives an objection to
 70  2 such action from another grandparent of the decedent.
 70  3 Alternatively, a majority of the surviving grandparents of the
 70  4 decedent whose whereabouts are reasonably ascertainable shall
 70  5 have such right to control.
 70  6    g.  The legal guardian of the decedent at the time of the
 70  7 decedent's death.  An adult person in the next degree of
 70  8 kinship to the decedent in the order named by law to inherit
 70  9 the estate of the decedent under the rules of inheritance for
 70 10 intestate succession.
 70 11    h.  The county medical examiner, if responsible for the
 70 12 decedent's remains.
 70 13    A cemetery may await a court order before proceeding with
 70 14 the interment, relocation, or disinterment of a decedent's
 70 15 remains within or from a cemetery if the cemetery is aware of
 70 16 a dispute between an authorized person under this section and
 70 17 the executor named in the decedent's will or a personal
 70 18 representative appointed by a court, or is aware of a dispute
 70 19 among authorized persons with the same priority under this
 70 20 subsection.
 70 21    Sec. 122.  Section 523I.312, subsection 2, paragraph n,
 70 22 Code Supplement 2005, is amended by striking the paragraph and
 70 23 inserting in lieu thereof the following:
 70 24    n.  Include an explanation of regulatory oversight by the
 70 25 insurance division in twelve point boldface type, in
 70 26 substantially the following language:
 70 27    THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY THE IOWA
 70 28 INSURANCE DIVISION.  YOU MAY CALL THE INSURANCE DIVISION WITH
 70 29 INQUIRIES OR COMPLAINTS AT (515)281=4441.  WRITTEN INQUIRIES
 70 30 OR COMPLAINTS SHOULD BE MAILED TO:  IOWA SECURITIES AND
 70 31 REGULATED INDUSTRIES BUREAU, 330 MAPLE STREET, DES MOINES,
 70 32 IOWA 50319.
 70 33    Sec. 123.  Section 523I.316, subsection 3, Code Supplement
 70 34 2005, is amended to read as follows:
 70 35    3.  DUTY TO PRESERVE AND PROTECT.
 71  1    a.  A governmental subdivision having a cemetery, or a
 71  2 burial site that is not located within a dedicated cemetery,
 71  3 within its jurisdiction, for which preservation is not
 71  4 otherwise provided, shall preserve and protect the cemetery or
 71  5 burial site as necessary to restore or maintain its physical
 71  6 integrity as a cemetery or burial site.  The governmental
 71  7 subdivision may enter into an a written agreement to delegate
 71  8 the responsibility for the preservation and protection of the
 71  9 cemetery or burial site to a the owner of the property on
 71 10 which the cemetery or burial site is located or to a public or
 71 11 private organization interested in historical preservation.
 71 12 The governmental subdivision shall not enter into an agreement
 71 13 with a public or private organization to preserve and protect
 71 14 the cemetery or burial site unless the property owner has been
 71 15 offered the opportunity to enter into such an agreement and
 71 16 has declined to do so.
 71 17    b.  A governmental subdivision is authorized to expend
 71 18 public funds, in any manner authorized by law, in connection
 71 19 with such a cemetery or burial site.
 71 20    c.  If a governmental subdivision proposes to enter into an
 71 21 agreement with a public or private organization pursuant to
 71 22 this subsection to preserve and protect a cemetery or burial
 71 23 site that is located on property owned by another person
 71 24 within the jurisdiction of the governmental subdivision, the
 71 25 proposed agreement shall be written, and the governmental
 71 26 subdivision shall provide written notice by ordinary mail of
 71 27 the proposed agreement to the property owner at least fourteen
 71 28 days prior to the date of the meeting at which such proposed
 71 29 agreement will be authorized.  The notice shall include the
 71 30 location of the cemetery or burial site and a copy of the
 71 31 proposed agreement, and explain that the property owner is
 71 32 required to permit members of the public or private
 71 33 organization reasonable ingress and egress for the purposes of
 71 34 preserving and protecting the cemetery or burial site pursuant
 71 35 to the proposed agreement.  The notice shall also include the
 72  1 date, time, and place of the meeting and a statement that the
 72  2 property owner has a right to attend the meeting and to
 72  3 comment regarding the proposed agreement.
 72  4    d.  Subject to chapter 670, a governmental subdivision that
 72  5 enters into an agreement with a public or private organization
 72  6 pursuant to this subsection is liable for any personal injury
 72  7 or property damage that occurs in connection with the
 72  8 preservation or protection of the cemetery or burial site or
 72  9 access to the cemetery or burial site by the governmental
 72 10 subdivision or the public or private organization.
 72 11    For the purposes of this paragraph, "liable" means
 72 12 liability for every civil wrong which results in wrongful
 72 13 death or injury to a person or injury to property or injury to
 72 14 personal or property rights and includes but is not restricted
 72 15 to actions based upon negligence; error or omission; nuisance;
 72 16 breach of duty, whether statutory or other duty; or denial or
 72 17 impairment of any right under any constitutional provision,
 72 18 statute, or rule of law.
 72 19    e.  A property owner who is required to permit members of a
 72 20 public or private organization reasonable ingress and egress
 72 21 for the purpose or preserving or protecting a cemetery or
 72 22 burial site on that owner's property and who acts in good
 72 23 faith and in a reasonable manner pursuant to this subsection
 72 24 is not liable for any personal injury or property damage that
 72 25 occurs in connection with the preservation or protection of
 72 26 the cemetery or burial site or access to the cemetery or
 72 27 burial site.
 72 28    f.  For the purposes of this subsection, reasonable ingress
 72 29 and egress to a cemetery or burial site shall include the
 72 30 following:
 72 31    (1)  A member of a public or private organization that has
 72 32 entered into a written agreement with the governmental
 72 33 subdivision who desires to visit such a cemetery or burial
 72 34 site shall give the property owner at least ten days' written
 72 35 notice of the intended visit.
 73  1    (2)  If the property owner cannot provide reasonable access
 73  2 to the cemetery or burial site on the desired date, the
 73  3 property owner shall provide reasonable alternative dates when
 73  4 the property owner can provide access to the member.
 73  5    (3)  A property owner is not required to make any
 73  6 improvements to that person's property to satisfy the
 73  7 requirement to provide reasonable access to a cemetery or
 73  8 burial site pursuant to this subsection.
 73  9    Sec. 124.  NEW SECTION.  523I.317  DUTY TO PROVIDE PUBLIC
 73 10 ACCESS.
 73 11    A cemetery shall provide or permit public access to the
 73 12 cemetery, at reasonable times and subject to reasonable
 73 13 regulations, so that owners of interment rights and other
 73 14 members of the public have reasonable ingress and egress to
 73 15 the cemetery.
 73 16    Sec. 125.  Section 523I.508, subsection 4, Code Supplement
 73 17 2005, is amended to read as follows:
 73 18    4.  DELEGATES TO CONVENTIONS.  A township having one or
 73 19 more cemeteries under its control may designate, not up to
 73 20 exceed two, officials from each cemetery as delegates to
 73 21 attend meetings of cemetery officials, and certain expenses,
 73 22 including association dues, of the delegates not to exceed
 73 23 exceeding twenty=five dollars for each delegate, of the
 73 24 delegates including association dues, may be paid out of the
 73 25 cemetery fund of the township.
 73 26    Sec. 126.  Section 616.15, Code 2005, is amended to read as
 73 27 follows:
 73 28    616.15  SURETY COMPANIES.
 73 29    1.  Suit may be brought against any company or corporation
 73 30 furnishing or pretending to furnish surety, fidelity, or other
 73 31 bonds in this state, in any county in which the principal
 73 32 place of business of such company or corporation is maintained
 73 33 in this state, or in any county wherein is maintained its
 73 34 general office for the transaction of its Iowa business, or in
 73 35 the county where the principal resides at the time of bringing
 74  1 suit, or in the county where the principal did reside at the
 74  2 time the bond or other undertaking was executed; and in the
 74  3 case of bonds furnished by any such company or corporation for
 74  4 any building or improvement, either public or private, action
 74  5 may be brought in the county wherein said building or
 74  6 improvement, or any part thereof is located.
 74  7    2.  The secretary of state shall serve as the agent for
 74  8 service of process for the purposes of 31 U.S.C. } 9306, of
 74  9 any surety company or corporation for a surety bond written by
 74 10 that surety company or corporation for the federal government
 74 11 and issued in this state as required or permitted under
 74 12 federal law, if the surety company or corporation is licensed
 74 13 in this state and cannot be otherwise served with process.
 74 14 Notwithstanding section 507.14, upon request of the secretary
 74 15 of state, the commissioner of insurance shall provide the
 74 16 secretary of state with the name and address of the person
 74 17 designated for consent to service of process by the surety
 74 18 company or corporation which is on file with the commissioner.
 74 19    Sec. 127.  Sections 509B.4, 521.9, 521.11, and 521.12, Code
 74 20 2005, are repealed.
 74 21    Sec. 128.  Section 516E.17, Code Supplement 2005, is
 74 22 repealed.
 74 23
 74 24
 74 25                                                             
 74 26                               JEFFREY M. LAMBERTI
 74 27                               President of the Senate
 74 28
 74 29
 74 30                                                             
 74 31                               CHRISTOPHER C. RANTS
 74 32                               Speaker of the House
 74 33
 74 34    I hereby certify that this bill originated in the Senate and
 74 35 is known as Senate File 2364, Eighty=first General Assembly.
 75  1
 75  2
 75  3                                                             
 75  4                               MICHAEL E. MARSHALL
 75  5                               Secretary of the Senate
 75  6 Approved                , 2006
 75  7
 75  8
 75  9                                
 75 10 THOMAS J. VILSACK
 75 11 Governor