House File 2489
HOUSE FILE
BY COMMITTEE ON COMMERCE,
REGULATION AND LABOR
(SUCCESSOR TO HSB 658)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the regulation of various industries by the
2 insurance division, including modifications related to the
3 interstate insurance product regulation compact;
4 investigations and penalties; procedures and contempt orders;
5 insurance company investments; insurance producer licensing;
6 individual health insurance programs; coverage obligations of
7 the Iowa comprehensive health insurance association; coverage
8 of federal Trade Adjustment Act recipients; penalties and
9 discipline applicable to holders of establishment and sales
10 permits for cemetery and funeral merchandise and services; and
11 providing and applying penalties.
12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
13 TLSB 5319HV 80
14 av/gg/14
PAG LIN
1 1 Section 1. Section 272C.1, subsection 6, paragraph z, Code
1 2 2003, is amended by striking the paragraph.
1 3 Sec. 2. Section 272C.3, subsection 2, paragraph a, Code
1 4 Supplement 2003, is amended to read as follows:
1 5 a. Revoke a license, or suspend a license either until
1 6 further order of the board or for a specified period, upon any
1 7 of the grounds specified in section 147.55, 148.6, 148B.7,
1 8 152.10, 153.34, 154A.24, 169.13, 455B.219, 542.10, 542B.21,
1 9 543B.29, 544A.13, 544B.15, or 602.3203 or chapter 151, or 155,
1 10 507B, or 522B, as applicable, or upon any other grounds
1 11 specifically provided for in this chapter for revocation of
1 12 the license of a licensee subject to the jurisdiction of that
1 13 board, or upon failure of the licensee to comply with a
1 14 decision of the board imposing licensee discipline;
1 15 Sec. 3. Section 272C.4, subsection 6, Code 2003, is
1 16 amended to read as follows:
1 17 6. Define by rule acts or omissions which that are grounds
1 18 for revocation or suspension of a license under section
1 19 147.55, 148.6, 148B.7, 152.10, 153.34, 154A.24, 169.13,
1 20 455B.219, 542.10, 542B.21, 543B.29, 544A.13, 544B.15, or
1 21 602.3203 or chapter 151, or 155, 507B or 522B, as applicable,
1 22 and to define by rule acts or omissions which that constitute
1 23 negligence, careless acts, or omissions within the meaning of
1 24 section 272C.3, subsection 2, paragraph "b", which licensees
1 25 are required to report to the board pursuant to section
1 26 272C.9, subsection 2;
1 27 Sec. 4. Section 432.5, Code Supplement 2003, is amended to
1 28 read as follows:
1 29 432.5 RISK RETENTION GROUPS.
1 30 A risk retention group organized and operating pursuant to
1 31 Pub. L. No. 99=563, also known as the risk retention
1 32 amendments of 1986, shall pay as taxes to the director of
1 33 revenue an amount equal to two percent the applicable percent,
1 34 as provided in section 432.1, subsection 4, of the gross
1 35 amount of the premiums received during the previous calendar
2 1 year for risks placed in this state. A resident or
2 2 nonresident agent producer shall report and pay the taxes on
2 3 the premiums for risks that the agent producer has placed in
2 4 this state with or on behalf of a risk retention group. The
2 5 failure of a risk retention group to pay the tax imposed in
2 6 this section shall result in the risk retention group being
2 7 considered an unauthorized insurer under chapter 507A.
2 8 Sec. 5. NEW SECTION. 505.7A CIVIL PENALTIES.
2 9 Unless specifically provided for in this subtitle,
2 10 penalties imposed under this subtitle by order of the
2 11 commissioner of insurance after hearing shall not exceed one
2 12 thousand dollars for each act or violation of this subtitle,
2 13 up to an aggregate of ten thousand dollars, unless the person
2 14 knew or reasonably should have known the person was in
2 15 violation of this subtitle, in which case the penalty shall
2 16 not exceed five thousand dollars for each act or violation, up
2 17 to an aggregate of fifty thousand dollars in any one six=month
2 18 period.
2 19 Sec. 6. Section 505A.1, article III, subsections 1 and 2,
2 20 Code Supplement 2003, are amended to read as follows:
2 21 1. The compacting states hereby create and establish an
2 22 entity a joint public agency known as the interstate insurance
2 23 product regulation commission. Pursuant to article IV, the
2 24 commission has the power to develop uniform standards for
2 25 product lines, receive and provide prompt review of products
2 26 filed therewith, and give approval to those product filings
2 27 satisfying applicable uniform standards, provided it is not
2 28 intended for the commission to be the exclusive entity for
2 29 receipt and review of insurance product filings. Nothing
2 30 herein shall prohibit any insurer from filing its product in
2 31 any state wherein the insurer is licensed to conduct the
2 32 business of insurance, and any such filing shall be subject to
2 33 the laws of the state where filed.
2 34 2. The commission is a body corporate comprising each and
2 35 politic, and an instrumentality of the compacting state.
3 1 Sec. 7. Section 505A.1, article III, subsection 3, Code
3 2 Supplement 2003, is amended by striking the subsection.
3 3 Sec. 8. Section 505A.1, article V, subsection 1, paragraph
3 4 c, subparagraphs (3) and (4), Code Supplement 2003, are
3 5 amended to read as follows:
3 6 (3) Providing reasonable standards and procedures:
3 7 (a) For the establishment and meetings of other
3 8 committees.
3 9 (b) Governing any general or specific delegation of any
3 10 authority or function of the commission.
3 11 (4) Providing reasonable procedures for calling and
3 12 conducting meetings of the commission, and that consists of a
3 13 majority of commission members ensuring reasonable advance
3 14 notice of each such meeting, and providing for the right of
3 15 citizens to attend each such meeting with enumerated
3 16 exceptions designed to protect the public's interest, the
3 17 privacy of individuals, and insurers' proprietary information,
3 18 including trade secrets. The commission may meet in camera
3 19 only after a majority of the entire membership votes to close
3 20 a meeting en toto or in part. As soon as practicable, the
3 21 commission shall make public:
3 22 (a) A copy of the vote to close the meeting, revealing the
3 23 vote of each member, with no proxy votes allowed.
3 24 (b) Votes taken during such meeting.
3 25 Sec. 9. Section 505A.1, article V, subsection 1, paragraph
3 26 c, Code Supplement 2003, is amended by adding the following
3 27 new subparagraph:
3 28 NEW SUBPARAGRAPH. (8) Promulgating a code of ethics to
3 29 address permissible and prohibited activities of commission
3 30 members and employees.
3 31 Sec. 10. Section 505A.1, article V, subsection 1, Code
3 32 Supplement 2003, is amended by adding the following new
3 33 paragraph:
3 34 NEW PARAGRAPH. d. The commission shall publish its bylaws
3 35 in a convenient form and file a copy of the bylaws, along with
4 1 any amendments, with the appropriate agency or officer in each
4 2 of the compacting states.
4 3 Sec. 11. Section 505A.1, article VII, subsection 2, Code
4 4 Supplement 2003, is amended to read as follows:
4 5 2. RULEMAKING PROCEDURE. Rules and operating procedures
4 6 shall be made pursuant to a rulemaking process that conforms
4 7 to the model state administrative procedure act of 1981 as
4 8 amended, as may be appropriate to the operations of the
4 9 commission. Before the commission adopts a uniform standard,
4 10 the commission shall give written notice to the relevant state
4 11 legislative committee or committees in each compacting state
4 12 responsible for insurance issues of its intention to adopt the
4 13 uniform standard. The commission, in adopting a uniform
4 14 standard, shall consider fully all submitted materials and
4 15 issue a concise explanation of its decision.
4 16 Sec. 12. Section 505A.1, article VIII, subsection 1, Code
4 17 Supplement 2003, is amended to read as follows:
4 18 1. The commission shall promulgate rules to establish
4 19 establishing conditions and procedures under which the
4 20 commission shall make its information and official records
4 21 available to the public for inspection or copying for public
4 22 inspection and copying of its information and official
4 23 records, except such information and records involving the
4 24 privacy of individuals and insurers' trade secrets. The
4 25 commission may promulgate additional rules under which it may
4 26 make available to federal and state agencies, including law
4 27 enforcement agencies, records, and information otherwise
4 28 exempt from disclosure, and may enter into agreements with
4 29 such agencies to receive or exchange information or records
4 30 subject to nondisclosure and confidentiality provisions.
4 31 Sec. 13. Section 505A.1, article VIII, subsection 4,
4 32 paragraphs a and b, Code Supplement 2003, are amended to read
4 33 as follows:
4 34 a. With respect to the commissioner's market regulation of
4 35 a product or advertisement that is approved or certified to
5 1 the commission, no activity of an insurer the content of the
5 2 product or advertisement shall not constitute a violation of
5 3 the provisions, standards, or requirements of this compact
5 4 except upon a final order of the commission, issued at the
5 5 request of a commissioner after prior notice to the insurer
5 6 and an opportunity for hearing before the commission.
5 7 b. Before a commissioner may bring an action for violation
5 8 of any provision, standard, or requirement of this compact
5 9 relating to the use content of an advertisement not approved
5 10 or certified to the commission, the commission, or an
5 11 authorized commission officer or employee, must authorize the
5 12 action. However, authorization pursuant to this paragraph
5 13 does not require notice to the insurer, opportunity for
5 14 hearing, or disclosure of requests for authorization or
5 15 records of the commission's action on such requests.
5 16 Sec. 14. Section 505A.1, article XI, subsection 1, Code
5 17 Supplement 2003, is amended to read as follows:
5 18 1. Not later than thirty days after the commission has
5 19 given notice of a disapproved product or advertisement filed
5 20 with the commission, the insurer or third=party filer whose
5 21 filing was disapproved may appeal the determination to a
5 22 review panel appointed by the commission. The commission
5 23 shall adopt rules to establish procedures for appointing such
5 24 review panels and provide for notice and hearing. The
5 25 decision of the review panel shall be the final action of the
5 26 commission and not subject to review by any court.
5 27 Notwithstanding the foregoing, an An allegation that the
5 28 commission, in disapproving a product or advertisement filed
5 29 with the commission, acted arbitrarily, capriciously, or in a
5 30 manner that is an abuse of discretion or otherwise not in
5 31 accordance with the law, is subject to judicial review in
5 32 accordance with article III, section 5.
5 33 Sec. 15. Section 505A.1, article XII, subsection 6, Code
5 34 Supplement 2003, is amended to read as follows:
5 35 6. The commission shall keep complete and accurate
6 1 accounts of all its internal receipts, including grants and
6 2 donations, and disbursements of all funds under its control.
6 3 The internal financial accounts of the commission shall be
6 4 subject to the accounting procedures established under its
6 5 bylaws. The financial accounts and reports, including the
6 6 system of internal controls and procedures of the commission,
6 7 shall be audited annually by an independent certified public
6 8 accountant. Upon the determination of the commission, but no
6 9 less frequently than every three years, the review of the
6 10 independent auditor shall include a management and performance
6 11 audit of the commission. The commission shall make an annual
6 12 report to the governor and legislature of the compacting
6 13 states, which shall include a report of the independent audit.
6 14 The commission's internal accounts, any work papers related to
6 15 any internal audit, and any work papers related to the
6 16 independent audit, shall not be confidential, provided that
6 17 and such materials may be shared with the commissioner of any
6 18 compacting state and shall remain confidential pursuant to
6 19 article VII upon request; provided, however, that any work
6 20 papers related to any internal or independent audit and any
6 21 information regarding the privacy of the individuals and
6 22 insurers' proprietary information, including trade secrets,
6 23 shall remain confidential.
6 24 Sec. 16. Section 505A.1, article XVI, subsection 1,
6 25 paragraph b, Code Supplement 2003, is amended to read as
6 26 follows:
6 27 b. For any product approved or certified to the
6 28 commission, the rules, uniform standards, and any other
6 29 requirements of the commission shall constitute the exclusive
6 30 provisions applicable to the content, approval, and
6 31 certification of such products. For advertisement that is
6 32 subject to the commission's authority, any rule, uniform
6 33 standard, or other requirement of the commission which governs
6 34 the content of the advertisement shall constitute the
6 35 exclusive provision that a commissioner may apply to the
7 1 content of the advertisement. Notwithstanding the foregoing,
7 2 action taken by the commission shall not abrogate or restrict:
7 3 (1) The access of any person, including the attorney
7 4 general, to state courts.
7 5 (2) Remedies available under state law related to breach
7 6 of contract, tort, general consumer protection laws, or
7 7 general consumer protection regulations that apply to the sale
7 8 or advertisement of the product or other laws not specifically
7 9 directed to the content of the product.
7 10 (3) State law relating to the construction of insurance
7 11 contracts.
7 12 (4) The authority of the attorney general of the state,
7 13 including but not limited to maintaining any actions or
7 14 proceedings, as authorized by law.
7 15 Sec. 17. Section 507.14, Code 2003, is amended by adding
7 16 the following new unnumbered paragraph:
7 17 NEW UNNUMBERED PARAGRAPH. Analysis notes, work papers, or
7 18 other documents related to the analysis of an insurer are not
7 19 public records under chapter 22.
7 20 Sec. 18. Section 507.16, Code 2003, is amended to read as
7 21 follows:
7 22 507.16 UNLAWFUL SOLICITATION OF BUSINESS.
7 23 Any It shall be unlawful for any officer, manager, agent,
7 24 or representative of any insurance company contemplated by
7 25 this chapter, who, with knowledge that its certificate of
7 26 authority has been suspended or revoked, or that it is
7 27 insolvent, or is doing an unlawful or unauthorized business,
7 28 solicits to solicit or receive applications for insurance for
7 29 said the company, or receives applications therefor, or does
7 30 to do any other act or thing toward receiving or procuring any
7 31 new business for said the company, shall be deemed guilty of a
7 32 serious misdemeanor, and the. The provisions of sections
7 33 511.16 and 511.17 are hereby extended to all companies
7 34 contemplated by this chapter.
7 35 Sec. 19. Section 507A.10, Code 2003, is amended to read as
8 1 follows:
8 2 507A.10 CEASE AND DESIST ORDER ORDERS == CIVIL PENALTY AND
8 3 CRIMINAL PENALTIES.
8 4 1. Upon a determination by the commissioner, after a
8 5 hearing conducted pursuant to chapter 17A, that a person or
8 6 insurer has violated a provision of this chapter, the
8 7 commissioner shall reduce the findings of the hearing to
8 8 writing and deliver a copy of the findings to the person or
8 9 insurer, may issue an order requiring the person or insurer to
8 10 cease and desist from engaging in the conduct resulting in the
8 11 violation, and may assess a civil penalty of not more than
8 12 fifty thousand dollars against the person or insurer.
8 13 2. a. Upon a determination by the commissioner that a
8 14 person or insurer has engaged, is engaging, or is about to
8 15 engage in any act or practice constituting a violation of this
8 16 chapter or a rule adopted or order issued under this chapter,
8 17 the commissioner may issue a summary order, including a brief
8 18 statement of findings of fact, conclusions of law, and policy
8 19 reasons for the decision, and directing the person or insurer
8 20 to cease and desist from engaging in the act or practice or to
8 21 take other affirmative action as is in the judgment of the
8 22 commissioner necessary to comply with the requirements of this
8 23 chapter.
8 24 b. A person to whom a summary order has been issued under
8 25 this subsection may contest the order by filing a request for
8 26 a contested case proceeding and hearing as provided in chapter
8 27 17A and in accordance with rules adopted by the commissioner.
8 28 However, the person shall have at least thirty days from the
8 29 date that the order is issued in order to file the request.
8 30 Section 17A.18A is inapplicable to a summary order issued
8 31 under this subsection. If a hearing is not timely requested,
8 32 the summary order becomes final by operation of law. The
8 33 order shall remain effective from the date of issuance until
8 34 the date the order becomes final by operation of law or is
8 35 overturned by a presiding officer or court following a request
9 1 for hearing.
9 2 c. A person or insurer violating a summary order issued
9 3 under this subsection shall be deemed in contempt of that
9 4 order. The commissioner may petition the district court to
9 5 enforce the order as certified by the commissioner. The
9 6 district court shall find the person in contempt of the order
9 7 if the court finds after hearing that the person or insurer is
9 8 not in compliance with the order. The court may assess a
9 9 civil penalty against the person or insurer and may issue
9 10 further orders as it deems appropriate.
9 11 3. A person acting as an insurance producer, as defined in
9 12 chapter 522B, without proper licensure, or an insurer who
9 13 willfully violates any provision of this chapter, or any rule
9 14 adopted or order issued under this chapter, is guilty of a
9 15 class "D" felony.
9 16 4. A person acting as an insurance producer, as defined in
9 17 chapter 522B, without proper licensure, or an insurer who
9 18 willfully violates any provision of this chapter, or any rule
9 19 adopted or order issued under this chapter, and when such
9 20 violation results in a loss of more than ten thousand dollars,
9 21 is guilty of a class "C" felony.
9 22 5. The commissioner may refer such evidence as is
9 23 available concerning violations of this chapter or of any rule
9 24 adopted or order issued under this chapter, or of the failure
9 25 of a person to comply with the licensing requirements of
9 26 chapter 522B, to the attorney general or the proper county
9 27 attorney who may, with or without such reference, institute
9 28 the appropriate criminal proceedings under this chapter.
9 29 6. This chapter does not limit the power of the state to
9 30 punish any person for any conduct that constitutes a crime
9 31 under any other statute.
9 32 Sec. 20. Section 507B.2, subsection 1, Code 2003, is
9 33 amended to read as follows:
9 34 1. "Person" shall mean any individual, corporation,
9 35 association, partnership, reciprocal exchange, interinsurer,
10 1 fraternal beneficiary association, and any other legal entity
10 2 engaged in the business of insurance, including agents,
10 3 brokers insurance producers and adjusters. "Person" shall
10 4 also mean any corporation operating under the provisions of
10 5 chapter 514 and any benevolent association as defined and
10 6 operated under chapter 512A. For purposes of this chapter,
10 7 corporations operating under the provisions of chapter 514 and
10 8 chapter 512A shall be deemed to be engaged in the business of
10 9 insurance.
10 10 Sec. 21. Section 507B.3, Code Supplement 2003, is amended
10 11 by adding the following new subsection:
10 12 NEW SUBSECTION. 3. Information obtained by the
10 13 commissioner in the course of investigating a consumer
10 14 complaint may, in the discretion of the commissioner, be
10 15 provided to the insurance company or insurance producer which
10 16 is the subject of the complaint or to the consumer who filed
10 17 the complaint or the individual insured who is the subject of
10 18 the complaint without waiving the confidentiality afforded by
10 19 this section to the commissioner or other persons.
10 20 Sec. 22. Section 507B.6, subsection 5, Code 2003, is
10 21 amended to read as follows:
10 22 5. Statements of charges, notices, orders, subpoenas, and
10 23 other processes of the commissioner under this chapter may be
10 24 served by anyone duly authorized by the commissioner, either
10 25 in the manner provided by law for service of process in civil
10 26 actions, or by mailing a copy thereof by restricted certified
10 27 mail to the person affected by such the statement, notice,
10 28 order, subpoena, or other process at the person's residence or
10 29 principal office or place of business. The verified return by
10 30 the person so serving such the statement, notice, order,
10 31 subpoena, or other process, setting forth the manner of such
10 32 service, shall be proof of the same service, and the return
10 33 receipt for such the statement, notice, order, subpoena, or
10 34 other process, and mailed by restricted certified mail as
10 35 aforesaid, shall be proof of the service of the same.
11 1 Sec. 23. NEW SECTION. 507B.6A SUMMARY CEASE AND DESIST
11 2 ORDERS.
11 3 1. Upon a determination by the commissioner that a person
11 4 or insurer has engaged, is engaging, or is about to engage in
11 5 any act or practice constituting a violation of this chapter
11 6 or a rule adopted or order issued under this chapter, the
11 7 commissioner may issue a summary order, including a brief
11 8 statement of findings of fact, conclusions of law, and policy
11 9 reasons for the decision, and directing the person or insurer
11 10 to cease and desist from engaging in the act or practice or to
11 11 take other affirmative action as is in the judgment of the
11 12 commissioner necessary to comply with the requirements of this
11 13 chapter.
11 14 2. A person who has been issued a summary order under this
11 15 section may contest the order by filing a request for a
11 16 contested case proceeding and hearing as provided in chapter
11 17 17A and in accordance with the rules adopted by the
11 18 commissioner. However, the person shall have at least thirty
11 19 days from the date that the order is issued in order to file
11 20 the request. Section 17A.18A is inapplicable to a summary
11 21 order issued under this section. The order shall remain
11 22 effective from the date of issuance unless overturned by a
11 23 presiding officer or court following a request for hearing.
11 24 If a hearing is not timely requested, the summary order
11 25 becomes final by operation of law.
11 26 3. A person or insurer violating a summary order issued
11 27 under this section shall be deemed in contempt of that order.
11 28 The commissioner may petition the district court to enforce
11 29 the order as certified by the commissioner. The district
11 30 court shall adjudge the person in contempt of the order if the
11 31 court finds after hearing that the person or insurer is not in
11 32 compliance with the order. The court may assess a civil
11 33 penalty against the person or insurer and may issue further
11 34 orders as it deems appropriate.
11 35 Sec. 24. Section 507B.7, Code 2003, is amended to read as
12 1 follows:
12 2 507B.7 CEASE AND DESIST ORDERS AND MODIFICATIONS THEREOF
12 3 PENALTIES.
12 4 1. If, after such hearing, the commissioner determines
12 5 that the a person charged has engaged in an unfair method of
12 6 competition or an unfair or deceptive act or practice, the
12 7 commissioner shall reduce the findings to writing and shall
12 8 issue and cause to be served upon the person charged with the
12 9 violation a copy of such findings, an order requiring such
12 10 person to cease and desist from engaging in such method of
12 11 competition, act, or practice, and if the act or practice is a
12 12 violation of section 507B.4, 507B.4A, or 507B.5, the
12 13 commissioner may at the commissioner's discretion order any
12 14 one or more of the following:
12 15 a. Payment of a civil penalty of not more than one
12 16 thousand dollars for each act or violation of this subtitle,
12 17 but not to exceed an aggregate of ten thousand dollars, unless
12 18 the person knew or reasonably should have known the person was
12 19 in violation of section 507B.4, 507B.4A, or 507B.5 this
12 20 subtitle, in which case the penalty shall be not more than
12 21 five thousand dollars for each act or violation, but not to
12 22 exceed an aggregate penalty of fifty thousand dollars in any
12 23 one six=month period. If the commissioner finds that a
12 24 violation of section 507B.4, 507B.4A, or 507B.5 this subtitle
12 25 was directed, encouraged, condoned, ignored, or ratified by
12 26 the employer of the person or by an insurer, the commissioner
12 27 shall also assess a fine to the employer or insurer.
12 28 b. Suspension or revocation of the license of a person as
12 29 defined in section 507B.2, subsection 1, if the person knew or
12 30 reasonably should have known the person was in violation of
12 31 section 507B.4, 507B.4A, or 507B.5 this subtitle.
12 32 c. Payment of interest at the rate of ten percent per
12 33 annum if the commissioner finds that the insurer failed to pay
12 34 interest as required under section 507B.4, subsection 12.
12 35 2. Until the expiration of the time allowed under section
13 1 507B.8 for filing a petition for review if no such petition
13 2 has been duly filed within such time, or, if a petition for
13 3 review has been filed within such time, then until the
13 4 transcript of the record in the proceeding has been filed in
13 5 the district court, as hereinafter provided, the commissioner
13 6 may at any time, upon such notice and in such manner as the
13 7 commissioner may deem proper, modify or set aside in whole or
13 8 in part any order issued by the commissioner under this
13 9 section.
13 10 3. After the expiration of the time allowed for filing
13 11 such a petition for review if no such petition has been duly
13 12 filed within such time, the commissioner may at any time,
13 13 after notice and opportunity for hearing, reopen and alter,
13 14 modify, or set aside, in whole or in part, any order issued by
13 15 the commissioner under this section, whenever in the
13 16 commissioner's opinion conditions of fact or of law have so
13 17 changed as to require such action, or if the public interest
13 18 shall so require.
13 19 4. Any person who violates a cease and desist order of the
13 20 commissioner, and while such order is in effect, may, after
13 21 notice and hearing and upon order of the commissioner, be
13 22 subject at the discretion of the commissioner to any one or
13 23 more of the following:
13 24 a. A monetary penalty of not more than ten thousand
13 25 dollars for each and every act or violation.
13 26 b. Suspension or revocation of such person's license.
13 27 Sec. 25. Section 507C.6, subsection 4, Code 2003, is
13 28 amended by striking the subsection and inserting in lieu
13 29 thereof the following:
13 30 4. It shall be unlawful for a person as defined in
13 31 subsection 1 to fail to cooperate with the commissioner, or to
13 32 obstruct or interfere with the commissioner in the conduct of
13 33 a delinquency proceeding or an investigation preliminary or
13 34 incidental to a delinquency proceeding, or to violate a valid
13 35 order of the commissioner.
14 1 Sec. 26. Section 507C.11, unnumbered paragraph 1, Code
14 2 2003, is amended to read as follows:
14 3 Notwithstanding chapter 22, in all administrative
14 4 proceedings pursuant to sections 507C.9 and 507C.10 all
14 5 orders, records, and documents pertaining to or a part of the
14 6 record of the proceedings are confidential except as is
14 7 necessary to obtain compliance with a proceeding. However,
14 8 the records may be released if either of the following occurs:
14 9 Sec. 27. Section 509.18, Code 2003, is amended to read as
14 10 follows:
14 11 509.18 PROHIBITED DEPOSIT IN FINANCIAL INSTITUTION.
14 12 A company or its agent licensed to sell a policy of credit
14 13 life or credit accident and health insurance or certificate
14 14 under a policy of group credit life or credit accident and
14 15 health insurance shall not deposit or offer to deposit funds
14 16 in a financial institution of this state in exchange for the
14 17 privilege of selling such insurance to or on behalf of the
14 18 financial institution. Any person violating the provisions of
14 19 this section shall be guilty of a simple misdemeanor.
14 20 Sec. 28. Section 511.8, subsection 1, Code Supplement
14 21 2003, is amended to read as follows:
14 22 1. UNITED STATES GOVERNMENT OBLIGATIONS.
14 23 a. Bonds or other evidences of indebtedness issued,
14 24 assumed, or guaranteed by the United States of America, or by
14 25 any agency or instrumentality thereof of the United States of
14 26 America.
14 27 b. Bonds or other evidences of indebtedness issued,
14 28 assumed, or guaranteed by the United States of America, or by
14 29 any agency or instrumentality of the United States of America
14 30 include investments in an open=end management investment
14 31 company registered with the federal securities and exchange
14 32 commission under the federal Investment Company Act of 1940,
14 33 15 U.S.C. } 80(a), and operated in accordance with 17 C.F.R. }
14 34 270.2a=7, the portfolio of which is limited to the United
14 35 States government obligations described in paragraph "a", and
15 1 which are included in the national association of insurance
15 2 commissioners' securities valuation office's United States
15 3 direct obligations=full faith and credit exempt list.
15 4 Sec. 29. Section 511.8, subsection 19, unnumbered
15 5 paragraph 1, Code Supplement 2003, is amended to read as
15 6 follows:
15 7 Bonds or other evidences of indebtedness, not to include
15 8 currency, issued, assumed, or guaranteed by a foreign
15 9 government other than Canada, or by a corporation incorporated
15 10 under the laws of a foreign government other than Canada.
15 11 Such governmental obligations must be valid, legally
15 12 authorized and issued, and on the date of acquisition have
15 13 predominantly investment qualities and characteristics as
15 14 provided by rule. Such corporate obligations must meet the
15 15 qualifications established in subsection 5 for bonds and other
15 16 evidences of indebtedness issued, assumed, or guaranteed by a
15 17 corporation incorporated under the laws of the United States
15 18 or Canada. Foreign investments authorized by this subsection
15 19 are not eligible in excess of ten twenty percent of the legal
15 20 reserve of the life insurance company or association.
15 21 Investments in obligations of a foreign government, other than
15 22 Canada and the United Kingdom, are not eligible in excess of
15 23 two percent of the legal reserve in the securities of foreign
15 24 governments of any one foreign nation. Investments in
15 25 obligations of the United Kingdom are not eligible in excess
15 26 of four percent of the legal reserve. Investments in a
15 27 corporation incorporated under the laws of a foreign
15 28 government other than Canada are not eligible in excess of two
15 29 percent of the legal reserve in the securities of any one
15 30 foreign corporation.
15 31 Sec. 30. Section 511.8, subsection 22, paragraph e, Code
15 32 Supplement 2003, is amended to read as follows:
15 33 e. Investments in financial instruments of foreign
15 34 governments or foreign corporate obligations, other than
15 35 Canada, used in hedging transactions are not eligible in
16 1 excess of ten twenty percent of the legal reserve, less any
16 2 foreign investment authorized by subsection 19 owned by the
16 3 company or association and in which its legal reserve is
16 4 invested, except insofar as the financial instruments are
16 5 collateralized by cash or United States government obligations
16 6 as authorized by subsection 1 deposited with a custodian bank
16 7 as defined in subsection 21, and held under a written
16 8 agreement with the custodian bank that complies with
16 9 subsection 21 and provides for the proceeds of the collateral,
16 10 subject to the terms and conditions of the applicable
16 11 collateral or other credit support agreement, to be remitted
16 12 to the legal reserve deposit of the company or association and
16 13 to vest in the state in accordance with section 508.18
16 14 whenever proceedings under that section are instituted.
16 15 Sec. 31. Section 511.8, Code Supplement 2003, is amended
16 16 by adding the following new subsection:
16 17 NEW SUBSECTION. 23. SECURITY LOANS.
16 18 a. A life insurance company or association may loan
16 19 securities held by it in its legal reserve to a broker=dealer
16 20 registered under the Securities Exchange Act of 1934, a
16 21 national bank, or a state bank, foreign bank, or trust company
16 22 that is a member of the United States federal reserve system,
16 23 and the loaned securities shall continue to be eligible for
16 24 inclusion in the legal reserve of the life insurance company
16 25 or association.
16 26 b. The loan shall be fully collateralized by cash, cash
16 27 equivalents, or obligations issued or guaranteed by the United
16 28 States or an agency or instrumentality of the United States.
16 29 The life insurance company or association shall take delivery
16 30 of the collateral either directly or through an authorized
16 31 custodian.
16 32 c. If the loan is collateralized by cash or cash
16 33 equivalents, the cash or cash equivalent collateral may be
16 34 reinvested by the life insurance company or association in
16 35 either individual securities which are eligible for inclusion
17 1 in the legal reserve of the life insurance company or
17 2 association or in repurchase agreements fully collateralized
17 3 by such securities if the life insurance company or
17 4 association takes delivery of the collateral either directly
17 5 or through an authorized custodian or pooled fund comprised of
17 6 individual securities which are eligible for inclusion in the
17 7 legal reserve of the life insurance company or association.
17 8 If such reinvestment is made in individual securities or in
17 9 repurchase agreements, the individual securities or the
17 10 securities which collateralize the repurchase agreements shall
17 11 mature in less than two hundred seventy days. If such
17 12 reinvestment is made in a pooled fund, the average maturity of
17 13 the securities comprising such pooled fund must be less than
17 14 two hundred seventy days. Individual securities and
17 15 securities comprising the pooled fund shall be investment
17 16 grade.
17 17 d. The loan shall be evidenced by a written agreement
17 18 which provides all of the following:
17 19 (1) That the loan will be fully collateralized at all
17 20 times during the term of the loan, and that the collateral
17 21 will be adjusted as necessary each business day during the
17 22 term of the loan to maintain the required collateralization in
17 23 the event of market value changes in the loaned securities or
17 24 collateral.
17 25 (2) If the loan is fully collateralized by cash or cash
17 26 equivalents, the cash or cash equivalent may be reinvested by
17 27 the life insurance company or association as provided in
17 28 paragraph "c".
17 29 (3) That the loan may be terminated by the life insurance
17 30 company or association at any time, and that the borrower
17 31 shall return the loaned stocks or obligations or equivalent
17 32 stocks or obligations within five business days after
17 33 termination.
17 34 (4) That the life insurance company or association has the
17 35 right to retain the collateral or use the collateral to
18 1 purchase investments equivalent to the loaned securities if
18 2 the borrower defaults under the terms of the agreement, and
18 3 that the borrower remains liable for any losses and expenses
18 4 incurred by the life insurance company or association due to
18 5 default that are not covered by the collateral.
18 6 e. Securities loaned pursuant to this subsection are not
18 7 eligible for inclusion in the legal reserve of the life
18 8 insurance company or association in excess of twenty percent
18 9 of the legal reserve.
18 10 Sec. 32. Section 511.16, Code 2003, is amended to read as
18 11 follows:
18 12 511.16 ILLEGAL BUSINESS.
18 13 Any It shall be unlawful for any officer, manager, or agent
18 14 of any life insurance company or association who, with
18 15 knowledge that it is doing business in an unlawful manner or
18 16 is insolvent, solicits to solicit or receive applications for
18 17 insurance with said the company or association, or receives
18 18 applications therefor, or does to do any other act or thing
18 19 towards toward procuring or receiving any new business for
18 20 such the company or association, shall be guilty of an
18 21 aggravated misdemeanor.
18 22 Sec. 33. Section 512A.8, Code 2003, is amended to read as
18 23 follows:
18 24 512A.8 PENALTIES VIOLATION.
18 25 Except as otherwise provided by law, it shall be unlawful
18 26 for any person or corporation to operate a benevolent
18 27 association in this state except as provided for in this
18 28 chapter. Any person violating the provisions of this chapter
18 29 shall be guilty of a serious misdemeanor.
18 30 Sec. 34. Section 512B.35, Code 2003, is amended to read as
18 31 follows:
18 32 512B.35 PENALTIES FALSE OR FRAUDULENT STATEMENTS.
18 33 1. A person who It shall be unlawful for a person
18 34 knowingly makes to make a false or fraudulent statement or
18 35 representation in or relating to an application for membership
19 1 or for the purpose of obtaining money from or a benefit in a
19 2 society, is guilty of a fraudulent practice.
19 3 2. A person who willfully makes It shall be unlawful for a
19 4 person to willfully make a false or fraudulent statement in a
19 5 verified report or declaration under oath required or
19 6 authorized by this chapter, or of a material fact or thing
19 7 contained in a sworn statement concerning the death or
19 8 disability of an insured for the purpose of procuring payment
19 9 of a benefit named in the certificate, is guilty of perjury.
19 10 3. A person who solicits It shall be unlawful for a person
19 11 to solicit membership for, or in any manner assists to assist
19 12 in procuring membership in, a society not licensed to do
19 13 business in this state, is guilty of a serious misdemeanor.
19 14 4. A person guilty of a willful violation of, or neglect
19 15 or refusal to comply with, a provision of this chapter for
19 16 which a penalty is not otherwise prescribed, is guilty of a
19 17 simple misdemeanor.
19 18 Sec. 35. Section 513C.3, subsection 15, Code Supplement
19 19 2003, is amended by adding the following new unnumbered
19 20 paragraph:
19 21 NEW UNNUMBERED PARAGRAPH. For purposes of this subsection,
19 22 an association policy under chapter 514E is not considered
19 23 "qualifying existing coverage" or "qualifying previous
19 24 coverage".
19 25 Sec. 36. Section 513C.8, Code 2003, is amended to read as
19 26 follows:
19 27 513C.8 HEALTH BENEFIT PLAN STANDARDS.
19 28 The commissioner board of directors of the Iowa
19 29 comprehensive health insurance association, with the approval
19 30 of the commissioner, shall adopt by rule the form and level of
19 31 coverage of the basic health benefit plan and the standard
19 32 health benefit plan for the individual market which shall
19 33 provide benefits substantially similar to those as provided
19 34 for under chapter 513B with respect to small group coverage,
19 35 but which shall be appropriately adjusted at least every three
20 1 years to reflect the current state of the individual market.
20 2 Sec. 37. Section 513C.10, subsection 1, paragraph a, Code
20 3 Supplement 2003, is amended to read as follows:
20 4 a. All persons that provide health benefit plans in this
20 5 state including insurers providing accident and sickness
20 6 insurance under chapter 509, 514, or 514A, whether on an
20 7 individual or group basis; fraternal benefit societies
20 8 providing hospital, medical, or nursing benefits under chapter
20 9 512B; and health maintenance organizations, organized delivery
20 10 systems, and all other entities providing health insurance or
20 11 health benefits subject to state insurance regulation, and all
20 12 other insurers as designated by the board of directors of the
20 13 Iowa comprehensive health insurance association with the
20 14 approval of the commissioner shall be members of the
20 15 association.
20 16 Sec. 38. Section 513C.10, subsection 4, Code Supplement
20 17 2003, is amended to read as follows:
20 18 4. The board shall develop procedures and assessment
20 19 mechanisms and make assessments and distributions as required
20 20 to equalize the individual carrier and organized delivery
20 21 system gains or losses so that each carrier or organized
20 22 delivery system receives the same ratio of paid claims to
20 23 ninety percent of earned premiums as the aggregate of all
20 24 basic and standard plans insured by all carriers and organized
20 25 delivery systems in the state.
20 26 Sec. 39. Section 514E.1, subsection 2, Code Supplement
20 27 2003, is amended to read as follows:
20 28 2. "Association policy" means an individual or group
20 29 policy issued by the association that provides the coverage
20 30 specified in section 514E.4 as set forth in the benefit plans
20 31 adopted by the association's board of directors and approved
20 32 by the commissioner.
20 33 Sec. 40. Section 514E.1, subsections 7, 8, and 12, Code
20 34 Supplement 2003, are amended by striking the subsections.
20 35 Sec. 41. Section 514E.1, subsection 9, Code Supplement
21 1 2003, is amended by adding the following new paragraph:
21 2 NEW PARAGRAPH. f. Who has been confirmed eligible under
21 3 the federal Trade Adjustment Act of 2002, Pub. L. No. 107=
21 4 210, as a recipient under that Act, by the department of
21 5 workforce development and the federal internal revenue
21 6 service.
21 7 Sec. 42. Section 514E.1, subsection 13, Code Supplement
21 8 2003, is amended to read as follows:
21 9 13. "Health care services" means services, the coverage of
21 10 which is authorized under chapter 509, chapter 514, chapter
21 11 514A, or chapter 514B as limited by sections 514E.4 and 514E.5
21 12 benefit plans established by the association's board of
21 13 directors, with the approval of the commissioner and includes
21 14 services for the purposes of preventing, alleviating, curing,
21 15 or healing human illness, injury or physical disability.
21 16 Sec. 43. Section 514E.2, subsection 1, unnumbered
21 17 paragraph 1, Code Supplement 2003, is amended to read as
21 18 follows:
21 19 The Iowa comprehensive health insurance association is
21 20 established as a nonprofit corporation. The association shall
21 21 assure that health insurance, as limited by sections 514E.4
21 22 and 514E.5, is benefit plans as authorized in section 514E.1,
21 23 subsection 2, for an association policy, are made available to
21 24 each eligible Iowa resident and each federally eligible
21 25 individual applying to the association for coverage. The
21 26 association shall also be responsible for administering the
21 27 Iowa individual health benefit reinsurance association
21 28 pursuant to all of the terms and conditions contained in
21 29 chapter 513C.
21 30 Sec. 44. Section 514E.2, subsection 1, paragraph a, Code
21 31 Supplement 2003, is amended to read as follows:
21 32 a. All carriers as defined in section 514E.1, subsection
21 33 3, and all organized delivery systems licensed by the director
21 34 of public health providing health insurance or health care
21 35 services in Iowa and all other insurers designated by the
22 1 association's board of directors and approved by the
22 2 commissioner shall be members of the association.
22 3 Sec. 45. Section 514E.2, subsection 6, Code Supplement
22 4 2003, is amended by striking the subsection and inserting in
22 5 lieu thereof the following:
22 6 6. Rates for coverages issued by the association shall
22 7 reflect rating characteristics used in the individual
22 8 insurance market. The rates for a given classification shall
22 9 not be more than one hundred fifty percent of the average
22 10 premium or payment rate for the classification charged by the
22 11 five carriers with the largest health insurance premium or
22 12 payment volume in the state during the preceding calendar
22 13 year. In determining the average rate of the five largest
22 14 carriers, the rates or payments charged by the carriers shall
22 15 be actuarially adjusted to determine the rate or payment that
22 16 would have been charged for benefits similar to those issued
22 17 by the association.
22 18 Sec. 46. Section 514E.4, Code 2003, is amended by striking
22 19 the section and inserting in lieu thereof the following:
22 20 514E.4 ASSOCIATION POLICY == COVERAGE AND BENEFIT
22 21 REQUIREMENTS == DEDUCTIBLES == COINSURANCE.
22 22 The association policy shall pay for medically necessary
22 23 eligible health care services as established in the benefit
22 24 plans adopted by the association's board of directors and
22 25 approved by the commissioner. The plans shall provide
22 26 benefits, deductibles, and coinsurance that reflect the
22 27 current state of the individual insurance market. The board
22 28 may modify the benefits provided under the plans to reflect
22 29 the current state of the individual insurance market with the
22 30 approval of the commissioner.
22 31 Sec. 47. Section 514E.7, subsection 1, Code 2003, is
22 32 amended by adding the following new unnumbered paragraph:
22 33 NEW UNNUMBERED PARAGRAPH. The association shall rescind
22 34 coverage for an individual who no longer resides in the state.
22 35 Sec. 48. Section 514E.7, subsection 5, Code 2003, is
23 1 amended by adding the following new paragraph:
23 2 NEW PARAGRAPH. f. The individual is eligible for Medicare
23 3 based upon age.
23 4 Sec. 49. Section 514E.8, subsection 1, Code 2003, is
23 5 amended to read as follows:
23 6 1. An association policy shall contain provisions under
23 7 which the association is obligated to renew the contract
23 8 coverage for an individual until the day on which the
23 9 individual in whose name the contract is issued first becomes
23 10 eligible for Medicare coverage, except that in a family policy
23 11 covering both husband and wife, the age of the younger spouse
23 12 shall be used as the basis for meeting the durational
23 13 requirements of this subsection. However, when the individual
23 14 in whose name the contract is issued becomes eligible for
23 15 Medicare coverage, the person shall be eligible for the
23 16 Medicare supplement plan offered by the association based on
23 17 age.
23 18 Sec. 50. Section 514E.11, Code 2003, is amended to read as
23 19 follows:
23 20 514E.11 NOTICE OF ASSOCIATION POLICY.
23 21 Every carrier, including a health maintenance organization
23 22 subject to chapter 514B and an organized delivery system,
23 23 authorized to provide health care insurance or coverage for
23 24 health care services in Iowa, shall provide a notice of the
23 25 availability of coverage by the association to any person who
23 26 receives a rejection of coverage for health insurance or
23 27 health care services, or a notice to any person who is
23 28 informed that a rate for health insurance or coverage for
23 29 health care services that will exceed the rate of an
23 30 association policy, and that person is eligible to apply for
23 31 health insurance provided by the association. Application for
23 32 the health insurance shall be on forms prescribed by the
23 33 association's board of directors and made available to the
23 34 carriers and organized delivery systems and other entities
23 35 providing health care insurance or coverage for health care
24 1 services regulated by the commissioner.
24 2 Sec. 51. Section 515.35, subsection 3, paragraph a,
24 3 subparagraph (2), Code Supplement 2003, is amended by striking
24 4 the subparagraph and inserting in lieu thereof the following:
24 5 (2) A company may loan securities held by it to a broker=
24 6 dealer registered under the Securities Exchange Act of 1934, a
24 7 national bank, or a state bank, foreign bank, or trust company
24 8 that is a member of the United States federal reserve system,
24 9 and the loaned securities shall continue to be allowable
24 10 investments of the company.
24 11 (a) The loan shall be fully collateralized by cash, cash
24 12 equivalents, or obligations issued or guaranteed by the United
24 13 States or an agency or instrumentality of the United States.
24 14 The company shall take delivery of the collateral either
24 15 directly or through an authorized custodian.
24 16 (b) If the loan is collateralized by cash or cash
24 17 equivalents, the cash or cash equivalent collateral may be
24 18 reinvested by the company in either individual securities
24 19 which are allowable investments of the company or in
24 20 repurchase agreements fully collateralized by such securities
24 21 if the company takes delivery of the collateral either
24 22 directly or through an authorized custodian or a pooled fund
24 23 comprised of individual securities which are allowable
24 24 investments of the company. If such reinvestment is made in
24 25 individual securities or in repurchase agreements, the
24 26 individual securities or the securities which collateralize
24 27 the repurchase agreements shall mature in less than two
24 28 hundred seventy days. If such reinvestment is made in a
24 29 pooled fund, the average maturity of the securities comprising
24 30 such pooled fund must be less than two hundred seventy days.
24 31 Individual securities and securities comprising the pooled
24 32 fund shall be investment grade.
24 33 (c) The loan shall be evidenced by a written agreement
24 34 which provides all of the following:
24 35 (i) That the loan will be fully collateralized at all
25 1 times during the term of the loan, and that the collateral
25 2 will be adjusted as necessary each business day during the
25 3 term of the loan to maintain the required collateralization in
25 4 the event of market value changes in the loaned securities or
25 5 collateral.
25 6 (ii) If the loan is fully collateralized by cash or cash
25 7 equivalents, the cash or cash equivalent collateral may be
25 8 reinvested by the company as provided in subparagraph
25 9 subdivision (b).
25 10 (iii) That the loan may be terminated by the company at
25 11 any time, and that the borrower shall return the loaned stocks
25 12 and obligations or equivalent stocks or obligations within
25 13 five business days after termination.
25 14 (iv) That the company has the right to retain the
25 15 collateral or use the collateral to purchase investments
25 16 equivalent to the loaned securities if the borrower defaults
25 17 under the terms of the agreement, and that the borrower
25 18 remains liable for any losses and expenses incurred by the
25 19 company due to default that are not covered by the collateral.
25 20 (d) Securities loaned pursuant to this subparagraph (2)
25 21 are not eligible for investment of the company in excess of
25 22 twenty percent of admitted assets.
25 23 Sec. 52. Section 515.35, subsection 4, paragraph a, Code
25 24 Supplement 2003, is amended by adding the following new
25 25 unnumbered paragraph:
25 26 NEW UNNUMBERED PARAGRAPH. Bonds or other evidences of
25 27 indebtedness issued, assumed, or guaranteed by the United
25 28 States of America, or by any agency or instrumentality of the
25 29 United States of America include investments in an open=end
25 30 management investment company registered with the federal
25 31 securities and exchange commission under the federal
25 32 Investment Company Act of 1940, 15 U.S.C. } 80(a) and operated
25 33 in accordance with 17 C.F.R. } 270.2a=7, the portfolio of
25 34 which is limited to the United States government obligations
25 35 described in this paragraph "a", and which are included in the
26 1 national association of insurance commissioners' securities
26 2 valuation office's United States direct obligation=full faith
26 3 and credit list.
26 4 Sec. 53. Section 515.35, subsection 4, paragraph i,
26 5 subparagraphs (3) and (4), Code Supplement 2003, are amended
26 6 to read as follows:
26 7 (3) A company may invest in the obligations of a foreign
26 8 government other than Canada or of a corporation incorporated
26 9 under the laws of a foreign government other than Canada. Any
26 10 such governmental obligation must be valid, legally authorized
26 11 and issued, and on the date of acquisition have predominantly
26 12 investment qualities and characteristics as provided by rule.
26 13 Any such corporate obligation must on the date of acquisition
26 14 have investment qualities and characteristics, and must not
26 15 have speculative elements which are predominant, as provided
26 16 by rule. A company shall not invest more than two percent of
26 17 its admitted assets in the obligations of a foreign government
26 18 other than Canada and the United Kingdom. Investments in
26 19 obligations of the United Kingdom are not eligible in excess
26 20 of four percent of admitted assets. A company shall not
26 21 invest more than two percent of its admitted assets in the
26 22 obligations of a corporation incorporated under the laws of a
26 23 foreign government other than a corporation incorporated under
26 24 the laws of Canada.
26 25 (4) A company shall not invest more than ten twenty
26 26 percent of its admitted assets in foreign investments pursuant
26 27 to this paragraph.
26 28 Sec. 54. Section 515.120, Code 2003, is amended to read as
26 29 follows:
26 30 515.120 VIOLATIONS.
26 31 Any It shall be unlawful for any officer, manager, or agent
26 32 of any insurance company or association who, with knowledge
26 33 that it is doing business in an unlawful manner, or is
26 34 insolvent, solicits to solicit or receive applications for
26 35 insurance with said the company or association, or receives
27 1 applications therefor, or does to do any other act or thing
27 2 towards toward procuring or receiving any new business for
27 3 such company or association, shall be guilty of a serious
27 4 misdemeanor.
27 5 Sec. 55. Section 515.121, Code 2003, is amended to read as
27 6 follows:
27 7 515.121 OFFICERS PUNISHED.
27 8 Any It shall be unlawful for any of the following to fail
27 9 to comply with or to violate any of the requirements of this
27 10 chapter:
27 11 1. The president, secretary, or other officer of any
27 12 company organized under the laws of this state, or any.
27 13 2. Any officer or person doing or attempting to do
27 14 business in this state for any insurance company organized
27 15 either within or without this state, failing to comply with
27 16 any of the requirements of this chapter, or violating any of
27 17 the provisions thereof, shall be guilty of a simple
27 18 misdemeanor.
27 19 Sec. 56. Section 515.140, Code 2003, is amended to read as
27 20 follows:
27 21 515.140 VIOLATIONS == STATUS OF POLICY.
27 22 Any It shall be unlawful for any insurance company, its
27 23 officers or agents, or either of them, violating to violate
27 24 any of the provisions of section 515.138, by issuing,
27 25 delivering, or offering to issue or deliver any policy of fire
27 26 insurance on property in this state other or different from
27 27 than the standard form, herein as provided for, shall be
27 28 guilty of a simple misdemeanor in statute, but any policy so
27 29 issued or delivered shall, nevertheless, be binding upon the
27 30 company issuing or delivering the same, and such policy. The
27 31 company shall, until the payment of such fine a penalty
27 32 assessed by order after hearing, be disqualified from doing
27 33 any insurance business in this state; but any policy so issued
27 34 or delivered shall, nevertheless, be binding upon the company
27 35 issuing or delivering the same.
28 1 Sec. 57. Section 518A.41, Code 2003, is amended to read as
28 2 follows:
28 3 518A.41 INSURANCE PRODUCERS TO BE LICENSED.
28 4 No A person or corporation shall not solicit any an
28 5 application for insurance for any association in this state
28 6 without having procured from the commissioner of insurance a
28 7 license authorizing the person or corporation to act as an
28 8 insurance producer. Violation of this provision shall
28 9 constitute a serious misdemeanor.
28 10 Sec. 58. Section 520.14, Code 2003, is amended to read as
28 11 follows:
28 12 520.14 VIOLATIONS == EXCEPTIONS.
28 13 Any It shall be unlawful for an attorney who shall to
28 14 exchange any contracts of insurance of the kind and character
28 15 specified in this chapter, or any for an attorney or
28 16 representative of such the attorney, who shall to solicit or
28 17 negotiate any applications for the same without the attorney
28 18 having first complied with the foregoing provisions, shall be
28 19 deemed guilty of a simple misdemeanor. For the purpose of
28 20 organization and upon issuance of permit by the commissioner
28 21 of insurance, powers of attorney and applications for such
28 22 contracts may be solicited without compliance with the
28 23 provisions of this chapter, but no an attorney, agent, or
28 24 other person shall not make any such contracts of indemnity
28 25 until all of the provisions of this chapter shall have been
28 26 complied with.
28 27 Sec. 59. Section 522B.11, subsection 1, Code 2003, is
28 28 amended by adding the following new paragraph:
28 29 NEW PARAGRAPH. q. Is the subject of an order of the
28 30 securities administrator of this state or any other state,
28 31 province, district, or territory, denying, suspending,
28 32 revoking, or otherwise taking action against a registration as
28 33 a broker=dealer, agent, investment adviser, or investment
28 34 adviser representative.
28 35 Sec. 60. Section 522B.11, subsection 5, Code 2003, is
29 1 amended to read as follows:
29 2 5. The commissioner may conduct an investigation of any
29 3 suspected violation of this chapter pursuant to section 507B.6
29 4 and may enforce the provisions and impose any penalty or
29 5 remedy authorized by this chapter and chapter 507B against any
29 6 person who is under investigation for, or charged with, a
29 7 violation of either chapter even if the person's license has
29 8 been surrendered or has lapsed by operation of law.
29 9 Sec. 61. Section 522B.11, Code 2003, is amended by adding
29 10 the following new subsection:
29 11 NEW SUBSECTION. 6. a. In order to assure a free flow of
29 12 information for accomplishing the purposes of this section,
29 13 all complaint files, investigation files, other investigation
29 14 reports, and other investigative information in the possession
29 15 of the commissioner or the commissioner's employees or agents
29 16 that relates to licensee discipline are privileged and
29 17 confidential, and are not subject to discovery, subpoena, or
29 18 other means of legal compulsion for their release to a person
29 19 other than the licensee, and are not admissible in evidence in
29 20 a judicial or administrative proceeding other than the
29 21 proceeding involving licensee discipline. A final written
29 22 decision of the commissioner in a disciplinary proceeding is a
29 23 public record.
29 24 b. Investigative information in the possession of the
29 25 commissioner or the commissioner's employees or agents that
29 26 relates to licensee discipline may be disclosed, in the
29 27 commissioner's discretion, to appropriate licensing
29 28 authorities within this state, the appropriate licensing
29 29 authority in another state, the District of Columbia, or a
29 30 territory or country in which the licensee is licensed or has
29 31 applied for a license.
29 32 c. If the investigative information in the possession of
29 33 the commissioner or the commissioner's employees or agents
29 34 indicates a crime has been committed, the information shall be
29 35 reported to the proper law enforcement agency.
30 1 d. Pursuant to the provisions of section 17A.19,
30 2 subsection 6, upon an appeal by the licensee, the commissioner
30 3 shall transmit the entire record of the contested case to the
30 4 reviewing court.
30 5 e. Notwithstanding the provisions of section 17A.19,
30 6 subsection 6, if a waiver of privilege has been involuntary
30 7 and evidence has been received at a disciplinary hearing, the
30 8 court shall issue an order to withhold the identity of the
30 9 individual whose privilege was waived.
30 10 Sec. 62. NEW SECTION. 522B.16A DUTIES OF LICENSEES.
30 11 1. An insurance producer has a continuing duty and
30 12 obligation to keep, at the insurance producer's place of
30 13 business, usual and customary records pertaining to
30 14 transactions undertaken by the insurance producer. All such
30 15 records shall be kept available and open for inspection by the
30 16 commissioner or the commissioner's representative at any time
30 17 during regular business hours, provided that the commissioner
30 18 or the commissioner's representative is not entitled to
30 19 inspect any records prepared in anticipation of litigation or
30 20 that are subject to any privilege recognized in chapter 622.
30 21 Such records shall be maintained for a minimum of three years
30 22 following the completion of an insurance transaction.
30 23 2. An insurance producer who willfully fails to comply
30 24 with this section commits a violation of this chapter and is
30 25 subject to sanctions under section 522B.11.
30 26 Sec. 63. Section 523A.401, subsection 6, paragraph c, Code
30 27 2003, is amended to read as follows:
30 28 c. The insurance policy shall not allow for contesting
30 29 coverage, be contestable, or limit death benefits in the case
30 30 of suicide, with respect to that portion of the face amount of
30 31 the policy that is required by paragraph "b". The policy
30 32 shall not refer to physical examination, or otherwise operate
30 33 as an exclusion, limitation, or condition other than requiring
30 34 submission of proof of death or surrender of policy at the
30 35 time the prepaid purchase agreement is funded, matures, or is
31 1 canceled, as the case may be.
31 2 Sec. 64. Section 523A.402, subsection 6, paragraph c, Code
31 3 2003, is amended to read as follows:
31 4 c. The annuity shall not allow for contesting coverage, be
31 5 contestable, or limit death benefits in the case of suicide,
31 6 with respect to that portion of the face amount of the annuity
31 7 which is required by paragraph "b". The annuity shall refer
31 8 to physical examination, or otherwise operate as an exclusion,
31 9 limitation, or condition other than requiring submission of
31 10 proof of death or surrender of the annuity at the time the
31 11 prepaid purchase agreement is funded, matures, or is canceled,
31 12 as the case may be.
31 13 Sec. 65. Section 523A.501, subsection 6, Code 2003, is
31 14 amended to read as follows:
31 15 6. If no denial order is in effect and no proceeding is
31 16 pending under section 523A.503, the application becomes
31 17 effective at noon of the thirtieth day after a completed
31 18 application or an amendment completing the application is
31 19 filed, unless waived by the applicant. The commissioner may
31 20 specify an earlier effective date. Automatic effectiveness
31 21 under this subsection shall not be deemed approval of the
31 22 application. If the commissioner does not grant the permit,
31 23 the commissioner shall notify the person in writing of the
31 24 reasons for the denial. The permit shall disclose on its face
31 25 the permit holder's employer or the establishment on whose
31 26 behalf the applicant will be making or attempting to make
31 27 sales, the permit number, and the expiration date.
31 28 Sec. 66. Section 523A.502, subsection 7, Code 2003, is
31 29 amended to read as follows:
31 30 7. A sales permit is not assignable or transferable. A
31 31 permit holder selling all or part of a business shall cancel
31 32 the permit establishment's sales permits and the purchaser
31 33 shall apply for a new permit sales permits in the purchaser's
31 34 name within thirty days of the sale.
31 35 Sec. 67. Section 523A.503, subsection 1, unnumbered
32 1 paragraph 1, Code 2003, is amended to read as follows:
32 2 The commissioner may, pursuant to chapter 17A, deny any
32 3 permit application, or immediately suspend, or revoke, or
32 4 otherwise impose disciplinary action related to any permit
32 5 issued under this chapter for several reasons, including but
32 6 not limited to:
32 7 Sec. 68. Section 523A.503, subsection 3, Code 2003, is
32 8 amended to read as follows:
32 9 3. Except as provided in subsection 2, a permit shall not
32 10 be revoked, or suspended, or otherwise be the subject of
32 11 disciplinary action except after notice and hearing under
32 12 chapter 17A.
32 13 Sec. 69. Section 523A.503, Code 2003, is amended by adding
32 14 the following new subsection:
32 15 NEW SUBSECTION. 6. The commissioner may impose a civil
32 16 penalty in an amount not exceeding ten thousand dollars per
32 17 violation against any person violating this chapter. Each day
32 18 of a continuing violation constitutes a separate offense.
32 19 Sec. 70. Sections 506.7, 507B.11, 508.27, 511.18, 514.6,
32 20 514A.9, 514B.29, 515.132, 515.145, and 521.15, Code 2003, are
32 21 repealed.
32 22 Sec. 71. Sections 514.6, 514E.5, and 514E.6, Code 2003,
32 23 are repealed.
32 24 EXPLANATION
32 25 This bill contains revisions throughout the various
32 26 chapters comprising the insurance code. The bill also
32 27 contains certain revisions to Code chapter 523A, pertaining to
32 28 cemetery and funeral merchandise and services.
32 29 The bill deletes references to Code chapters 507B and 522B,
32 30 regarding unfair trade practices in insurance and the
32 31 licensing of insurance producers, respectively, throughout
32 32 Code chapter 272C, which relates to continuing education and
32 33 regulation for certain professions and occupations.
32 34 The bill modifies terminology in Code section 432.5 to
32 35 refer to "producer" instead of "agent", and also to conform to
33 1 the current insurance premium tax rate provision in Code
33 2 chapter 432. Code section 507B.2 also makes a similar change
33 3 in terminology from "agents" and "brokers" to "producers".
33 4 The bill creates a new centralized civil penalty section in
33 5 Code section 505.7A, in conjunction with other changes
33 6 throughout the bill that eliminate or modify penalties in many
33 7 provisions throughout the insurance code. The new provision
33 8 is intended to apply to all prohibited acts in Title XIII,
33 9 subtitle 1, regarding insurance and related regulation, where
33 10 a penalty is imposed by order of the insurance commissioner
33 11 after hearing. Penalties shall not exceed $1,000 for each
33 12 violation, or $10,000 in the aggregate, unless the person knew
33 13 or reasonably should have known the behavior violated an Iowa
33 14 statute, in which case the penalty shall not exceed $5,000 for
33 15 each violation, or $50,000 in the aggregate in any one six=
33 16 month period. Code sections 507C.6, 509.18, 512A.8, 512B.35,
33 17 515.120, 515.121, 515.140, 518A.41, and 520.14 are updated in
33 18 form and language, as part of this consolidation of general
33 19 penalties in new Code section 505.7A.
33 20 Code sections 507.16, 511.16, and 515.120, relating to
33 21 unlawful solicitation of business for insolvent or unlawful
33 22 insurers, are also all updated in form and language, according
33 23 to the penalty provision now in Code section 505.7A, as
33 24 described above.
33 25 The bill makes a number of modifications to certain
33 26 terminology and terms used in the interstate insurance product
33 27 regulation compact in Code section 505A.1, enacted in 2003.
33 28 The change to article III, for example, now specifies that the
33 29 entity to be formed will be a joint public agency, and not
33 30 only a body corporate, but also a body politic and an
33 31 instrumentality of the compacting state. Modifications to
33 32 article V provide for more specific rights relating to
33 33 meetings of the commission, including advance notice, public
33 34 attendance, and protection of proprietary information. A
33 35 specific procedure is mandated for closed meetings. Similar
34 1 types of specification are made through modifications to
34 2 articles VII, VIII, XI, XII, and XVI.
34 3 The bill adds a new unnumbered paragraph to Code section
34 4 507.14 to provide specifically that analysis notes, work
34 5 papers, or other documents related to the analysis of an
34 6 insurer are not public records under Code chapter 22, in
34 7 addition to the specified reports, notes, and work papers
34 8 already not considered public documents under Code chapter 22.
34 9 Code section 507A.10, relating to civil penalties and cease
34 10 and desist orders for unauthorized insurers, is expanded to
34 11 provide additional procedures relating to summary orders,
34 12 requests for contested case proceedings, contempt orders,
34 13 criminal penalties, and referral to criminal authorities.
34 14 Code section 507B.3 is amended to add a new paragraph to
34 15 allow the commissioner to provide information from an
34 16 investigation regarding insurance trade practices to a company
34 17 or producer that is the subject of the complaint or to the
34 18 consumer who filed the complaint without being deemed to have
34 19 waived confidentiality provisions.
34 20 Code section 507B.6 is amended to allow the service of
34 21 subpoenas, in addition to other documents currently listed, by
34 22 restricted certified mail. The language is also updated.
34 23 Similarly, new Code section 507B.6A is added to provide
34 24 procedures for the issuance of summary cease and desist
34 25 orders, requests for contested case proceedings, and contempt
34 26 orders in insurance trade practices cases.
34 27 Code section 507B.7, regarding cease and desist orders for
34 28 insurance trade practices, alters the penalty provisions
34 29 related to the cease and desist orders by removing the
34 30 connection of the violation to knowledge of violation of
34 31 certain statutory provisions before the imposition of a civil
34 32 penalty, and instead requiring only a general standard that
34 33 the person knew or reasonably should have known that the
34 34 conduct was in violation of Iowa law. In addition, the
34 35 commissioner is newly empowered to impose an additional
35 1 penalty when a person violates a cease and desist order, after
35 2 notice and hearing, and upon order.
35 3 The word "orders" is added to Code section 507C.11 to
35 4 specify that such documents, in addition to other records and
35 5 documents comprising the record of a proceeding, are
35 6 confidential.
35 7 Code sections 511.8 and 515.35 are amended to specify that
35 8 certain investments in open=end management investment
35 9 companies, the portfolio of which is limited to United States
35 10 government obligations, as further delineated in the
35 11 respective Code sections, meet the definition of certain bonds
35 12 specified under those Code sections.
35 13 Code sections 511.8 and 515.35 are also modified regarding
35 14 the allowable percentage insurance companies or associations
35 15 may invest in foreign government bonds. Code section 511.8 is
35 16 further modified regarding the amount that may be used for
35 17 hedging transactions, and a new subsection is added regarding
35 18 security loans. Code section 515.35 is further modified
35 19 regarding the loaning of securities by an insurance company.
35 20 Regarding program eligibility under the individual health
35 21 insurance market reforms chapter, the bill modifies Code
35 22 section 513C.3 by specifying that an association policy under
35 23 Code chapter 514E is not considered "qualifying existing
35 24 coverage" or "qualifying previous coverage".
35 25 With regard to program administration, basic and standard
35 26 plan offerings are eliminated over time, which the bill
35 27 implements through the amendments to Code section 513C.4 and
35 28 repeals of Code sections 513E.5 and 513E.6, effective January
35 29 1, 2005.
35 30 The bill amends Code section 513C.8 to provide that the
35 31 board of directors of the Iowa comprehensive health insurance
35 32 association, instead of the commissioner but with commissioner
35 33 approval, shall adopt forms and levels of coverage of basic
35 34 and standard individual health benefit plans for the
35 35 individual market that are substantially similar to the
36 1 current state of the individual market.
36 2 The bill amends Code section 513C.10, subsection 1,
36 3 paragraph "a", to provide that all insurers, as designated by
36 4 the board of directors of the Iowa comprehensive health
36 5 insurance association with the approval of the commissioner,
36 6 shall be included as members of the Iowa individual health
36 7 benefit reinsurance association.
36 8 The bill amends Code section 513C.10, subsection 4, to
36 9 provide that the Iowa individual health benefit reinsurance
36 10 association shall develop not only procedures but assessment
36 11 mechanisms to make assessments and distributions as required
36 12 to equalize individual carrier and organized delivery system
36 13 gains or losses.
36 14 The bill amends Code chapter 514E relating to the Iowa
36 15 comprehensive health insurance association (ICHA) and
36 16 specifically amends Code section 514E.7 to limit eligible
36 17 participants to residents. Code section 514E.11, regarding
36 18 notification of potential eligibility for ICHA, is also
36 19 modified. The bill also modifies Code sections 514E.1 and
36 20 514E.2 related to the federal Trade Adjustment Act, Pub. L.
36 21 No. 107=210, because the ICHA is the mechanism designated by
36 22 the governor pursuant to the trade Act.
36 23 Code section 514E.4 is amended relating to the payment of
36 24 medically necessary health care services. The bill also
36 25 addresses the provision of benefits, deductibles, and
36 26 coinsurance reflective of current individual insurance market
36 27 conditions in that Code section. The ICHA board is authorized
36 28 to make benefit changes from time to time to remain current
36 29 with market conditions. Code sections 514E.5 and 514E.6,
36 30 containing lists of excluded expenses and benefit limitations,
36 31 are repealed effective January 1, 2005. Corresponding changes
36 32 are made to delete unused definitions from Code section
36 33 514E.1. Changes are also made to Code section 513C.8 to
36 34 remove an outdated reference to Code chapter 513B, and to Code
36 35 sections 514E.7 and 514E.8 to coordinate that Code language
37 1 with Medicare requirements.
37 2 Regarding rate structures, Code section 514E.2 is amended
37 3 to allow for adjustments in ICHA rates to reflect rating
37 4 characteristics in the marketplace.
37 5 Code section 522B.11, regarding insurance producer license
37 6 denial, nonrenewal, or revocation, is modified in several
37 7 respects. A new paragraph is added relating to discipline or
37 8 penalty relative to an order against an individual as a
37 9 broker=dealer, agent, investment adviser, or investment
37 10 adviser representative. A new reference is added to the
37 11 commissioner's power to investigate suspected violations of
37 12 Code chapter 522B pursuant to Code section 507B.6. Finally, a
37 13 new provision is added to address the status of investigative
37 14 files as confidential, but final written decisions of the
37 15 commissioner as public records, although the commissioner has
37 16 the discretion to share investigative information with other
37 17 licensing authorities, and evidence of a crime must be
37 18 referred to law enforcement.
37 19 New Code section 522B.16A addresses duties of licensees,
37 20 including a duty to keep certain records pertaining to
37 21 insurance transactions undertaken by a producer, available for
37 22 inspection by the commissioner or the commissioner's
37 23 representative, for at least three years. Licensure sanctions
37 24 and civil penalties apply to a violation.
37 25 The bill modifies Code sections 523A.401 and 523A.402 in
37 26 the cemetery and funeral merchandise and services chapter,
37 27 relating to contestability clauses and death benefit
37 28 limitations in certain policies and annuities.
37 29 The bill also makes several changes to establishment and
37 30 sales permits for cemetery and funeral merchandise and
37 31 services. The bill deletes the requirement in Code section
37 32 523A.501 that a permit disclose on its face the permit
37 33 holder's employer or establishment, the permit number, and
37 34 expiration date. Code section 523A.502 is modified to refer
37 35 to the establishment's sales permits. Several changes are
38 1 made to Code section 523A.503 to refer to disciplinary action
38 2 which may be imposed in relation to a permit, as well as a
38 3 civil penalty not to exceed $10,000 for violations of the Code
38 4 chapter.
38 5 The bill repeals Code sections 506.7 (general penalty
38 6 provision), 507B.11 (penalty for violation of cease and desist
38 7 order), 508.27 (penalty provision related to Code section
38 8 508.25, relating to use of form for which prior approval has
38 9 not been obtained), 511.18 (fraud in procuring insurance),
38 10 514.6 (rate approval for nonprofit health service
38 11 corporations), 514A.9 (general penalty provision), 514B.29
38 12 (general penalty provision), 514E.5 and 514E.6 (lists of
38 13 excluded expenses and benefit limitations), 515.132 (general
38 14 penalty provision), 515.145 (penalty provision for violation
38 15 of Code section 515.142, relating to operation of fire
38 16 insurance companies), and 521.15 (general penalty provision).
38 17 These repeals are made in conjunction with the consolidation
38 18 of general penalties and the new general penalty provision in
38 19 Code section 505.7A.
38 20 LSB 5319HV 80
38 21 av/gg/14.1