Senate File 2364 - Introduced
SENATE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO SSB 3215)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to various matters under the purview of the
2 insurance division of the department of commerce including the
3 securities and regulated industries bureau, insurance premium
4 taxes, the uniform securities Act, insurance division
5 procedures, regulation of insurance companies and other
6 entities including administrative penalties, motor vehicle
7 service contracts, county and state mutual insurance
8 associations, reciprocal or interinsurance insurers,
9 consolidation, merger and reinsurance contracts, insurance
10 holding company systems, and cemeteries.
11 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
12 TLSB 5363SV 81
13 av/cf/24
PAG LIN
1 1 Section 1. Section 11.6, subsection 1, paragraph b,
1 2 subparagraph (6), Code Supplement 2005, is amended to read as
1 3 follows:
1 4 (6) A joint investment trust organized pursuant to chapter
1 5 28E shall file the audit reports required by this chapter with
1 6 the administrator of the securities and regulated industries
1 7 bureau of the insurance division of the department of commerce
1 8 within ten days of receipt from the auditor. The auditor of a
1 9 joint investment trust shall provide written notice to the
1 10 administrator of the time of delivery of the reports to the
1 11 joint investment trust.
1 12 Sec. 2. Section 22.7, Code Supplement 2005, is amended by
1 13 adding the following new subsections:
1 14 NEW SUBSECTION. 52. Information obtained and prepared by
1 15 the commissioner of insurance pursuant to section 507.14.
1 16 NEW SUBSECTION. 53. Information obtained and prepared by
1 17 the commissioner of insurance pursuant to section 507E.5.
1 18 Sec. 3. Section 432.1, subsection 3, Code Supplement 2005,
1 19 is amended to read as follows:
1 20 3. The applicable percent, as provided in subsection 4, of
1 21 the gross amount of premiums, assessments, and fees received
1 22 during the preceding calendar year by every company or
1 23 association other than life on contracts of insurance other
1 24 than life for business done in this state, including all
1 25 insurance upon property situated in this state, after
1 26 deducting the amounts returned upon canceled policies,
1 27 certificates and rejected applications but not including the
1 28 gross premiums written, assessments, and fees in connection
1 29 with ocean marine insurance authorized in section 515.48.
1 30 Sec. 4. Section 432.5, Code 2005, is amended to read as
1 31 follows:
1 32 432.5 RISK RETENTION GROUPS.
1 33 A risk retention group organized and operating pursuant to
1 34 Pub. L. No. 99=563, also known as the risk retention
1 35 amendments of 1986, shall pay as taxes to the director of
2 1 revenue an amount equal to the applicable percent, as provided
2 2 in section 432.1, subsection 4, of the gross amount of the
2 3 premiums received written during the previous calendar year
2 4 for risks placed in this state. A resident or nonresident
2 5 producer shall report and pay the taxes on the premiums for
2 6 risks that the producer has placed in this state with or on
2 7 behalf of a risk retention group. The failure of a risk
2 8 retention group to pay the tax imposed in this section shall
2 9 result in the risk retention group being considered an
2 10 unauthorized insurer under chapter 507A.
2 11 Sec. 5. Section 502.102, subsection 5, paragraph b,
2 12 subparagraph (3), Code Supplement 2005, is amended to read as
2 13 follows:
2 14 (3) An industrial loan company that is not an "insured
2 15 depository institution" as defined in section 3(c)(2) of the
2 16 Federal Deposit Insurance Act, 12 U.S.C. } 1813(c)(2), or any
2 17 successor federal statute.
2 18 Sec. 6. Section 502.102, subsection 27A, Code Supplement
2 19 2005, is amended to read as follows:
2 20 27A. "Securities and regulated industries bureau" means
2 21 the securities and regulated industries bureau of the
2 22 insurance division of the department of commerce.
2 23 Sec. 7. Section 502.201, subsection 8A, paragraph b,
2 24 unnumbered paragraph 1, Code 2005, is amended to read as
2 25 follows:
2 26 A mutual or cooperative organization, including a
2 27 cooperative association organized in good faith under and for
2 28 any of the purposes enumerated in chapter 497, 498, 499, or
2 29 501, or 501A, that deals in commodities or supplies goods or
2 30 services in transactions primarily with and for the benefit of
2 31 its members, if all of the following apply:
2 32 Sec. 8. Section 502.304, subsection 2A, Code 2005, is
2 33 amended to read as follows:
2 34 2A. REPORTS AND EXAMINATIONS. The administrator may by
2 35 rule or order require as a condition of registration by
3 1 qualification, and at the expense of the applicant or
3 2 registrant, that a report by an accountant, engineer,
3 3 appraiser, or other professional person be filed. The
3 4 administrator may also designate one or more employees of the
3 5 securities and regulated industries bureau to make an
3 6 examination of the business and records of an issuer of
3 7 securities for which a registration statement has been filed
3 8 by qualification, at the expense of the applicant or
3 9 registrant.
3 10 Sec. 9. Section 502.412, subsection 2, paragraph a, Code
3 11 Supplement 2005, is amended to read as follows:
3 12 a. Institute a revocation or suspension proceeding under
3 13 this subsection based solely on an order issued under a law of
3 14 another state that is reported to the administrator or a
3 15 designee of the administrator more than one year after the
3 16 date of the order on which it is based.
3 17 Sec. 10. Section 502.412, subsection 3, Code Supplement
3 18 2005, is amended to read as follows:
3 19 3. DISCIPLINARY PENALTIES == REGISTRANTS. If the
3 20 administrator finds that the order is in the public interest
3 21 and subsection 4, paragraphs "a" through "f", "h", "i", "j",
3 22 or "l", and or "m", authorizes the action, an order under this
3 23 chapter may censure, impose a bar, or impose a civil penalty
3 24 in an amount not to exceed a maximum of five thousand dollars
3 25 for a single violation or five hundred thousand dollars for
3 26 more than one violation, on a registrant, and, if the
3 27 registrant is a broker=dealer or investment adviser, a
3 28 partner, officer, director, or person having a similar status
3 29 or performing similar functions, or a person directly or
3 30 indirectly in control, of the broker=dealer or investment
3 31 adviser.
3 32 Sec. 11. Section 502.510, subsection 1, paragraph e, Code
3 33 2005, is amended to read as follows:
3 34 e. If the basis for relief under this section may have
3 35 been a violation of section 502.509, subsection 3 5, an offer
4 1 to reimburse in cash the consideration paid for the advice and
4 2 interest at the legal rate from the date of payment.
4 3 Sec. 12. Section 502.601, subsection 1, Code Supplement
4 4 2005, is amended to read as follows:
4 5 1. ADMINISTRATION. This chapter shall be administered by
4 6 the commissioner of insurance of this state. The
4 7 administrator shall appoint a deputy administrator who shall
4 8 be exempt from the merit system provisions of chapter 8A,
4 9 subchapter IV. The deputy administrator is the principal
4 10 operations officer of the securities and regulated industries
4 11 bureau of the insurance division of the department of
4 12 commerce. The deputy administrator is responsible to the
4 13 administrator for the routine administration of this chapter
4 14 and the management of the securities and regulated industries
4 15 bureau. In the absence of the administrator, whether because
4 16 of vacancy in the office, by reason of absence, physical
4 17 disability, or other cause, the deputy administrator shall be
4 18 the acting administrator and shall, for that period, have and
4 19 exercise the authority conferred upon the administrator. The
4 20 administrator may by order delegate to the deputy
4 21 administrator any or all of the functions assigned to the
4 22 administrator under this chapter. The administrator shall
4 23 employ officers, attorneys, accountants, and other employees
4 24 as needed for the administration of this chapter.
4 25 Sec. 13. Section 502A.1, subsection 1, Code 2005, is
4 26 amended to read as follows:
4 27 1. "Administrator" means the administrator of the
4 28 securities and regulated industries bureau of the insurance
4 29 division of the department of commerce.
4 30 Sec. 14. Section 502A.15, subsection 1, Code 2005, is
4 31 amended to read as follows:
4 32 1. This chapter shall be administered by the administrator
4 33 of the securities and regulated industries bureau of the
4 34 insurance division of the department of commerce.
4 35 Sec. 15. Section 505.16, subsection 2, Code 2005, is
5 1 amended to read as follows:
5 2 2. The insurance commissioner shall approve rules for
5 3 carrying out this section including rules relating to the
5 4 preparation of information to be provided before and after a
5 5 test and the protection of confidentiality of personal and
5 6 medical records of insurance applicants and policyholders.
5 7 The rules shall require a person engaged in the business of
5 8 insurance who receives results of a positive human
5 9 immunodeficiency virus test of an insurance applicant or
5 10 policyholder to report those results to a physician or
5 11 alternative testing site of the applicant's or policyholder's
5 12 choice, or if the applicant or policyholder does not choose a
5 13 physician or alternative testing site to receive the results,
5 14 to the Iowa department of public health.
5 15 Sec. 16. NEW SECTION. 505.27 CONSENT TO JURISDICTION.
5 16 A person committing any act governed by chapter 502, 502A,
5 17 505 through 523G, or 523I constitutes consent by that person
5 18 to the jurisdiction of the commissioner of insurance and the
5 19 district courts of this state.
5 20 Sec. 17. NEW SECTION. 505.28 ADMINISTRATIVE HEARINGS.
5 21 The commissioner of insurance shall have the authority to
5 22 appoint as a hearing officer a designee or an independent
5 23 administrative law judge. Duties of a hearing officer shall
5 24 include hearing contested cases arising from conduct governed
5 25 by chapters 502, 502A, 505 through 523G, and 523I. Sections
5 26 10A.801 and 17A.11 do not apply to the appointment of a
5 27 designee or an administrative law judge pursuant to this
5 28 section.
5 29 Sec. 18. Section 507.10, subsection 5, paragraph b, Code
5 30 2005, is amended to read as follows:
5 31 b. The commissioner is not prevented from disclosing the
5 32 content of an examination report, preliminary examination
5 33 report or results, or any matter relating to the report, to an
5 34 insurance department of any other state or country, to the
5 35 national association of insurance commissioners, or to law
6 1 enforcement officials of this or any other state or an agency
6 2 of the federal government at any time, so long as such agency
6 3 or office receiving the report, or matters relating to the
6 4 report, agrees in writing to maintain the confidentiality of
6 5 the report or such matters in a manner consistent with this
6 6 chapter.
6 7 Sec. 19. Section 507.14, Code 2005, is amended to read as
6 8 follows:
6 9 507.14 CONFIDENTIAL DOCUMENTS == EXCEPTIONS.
6 10 1. A preliminary report of an examination of a domestic or
6 11 foreign insurer, and all notes, work papers, or other
6 12 documents related to an examination of an insurer are not
6 13 public confidential records under chapter 22 except when
6 14 sought by the insurer to whom they relate, an insurance
6 15 regulator of another state, or the national association of
6 16 insurance commissioners, and shall be privileged and
6 17 confidential in any judicial or administrative proceeding
6 18 except any of the following:
6 19 1. a. An action commenced by the commissioner under
6 20 chapter 507C.
6 21 2. b. An administrative proceeding brought by the
6 22 insurance division under chapter 17A.
6 23 3. c. A judicial review proceeding under chapter 17A
6 24 brought by an insurer to whom the records relate.
6 25 4. d. An action or proceeding which arises out of the
6 26 criminal provisions of the laws of this state or the United
6 27 States.
6 28 5. e. An action brought in a shareholders' derivative
6 29 suit against an insurer.
6 30 6. f. An action brought to recover moneys or to recover
6 31 upon an indemnity bond for embezzlement, misappropriation, or
6 32 misuse of insurer funds.
6 33 2. A report of an examination of a domestic or foreign
6 34 insurer which is preliminary under the rules of the division
6 35 is not a public a confidential record under chapter 22 except
7 1 when sought by the insurer to which the report relates or an
7 2 insurance regulator of another state, and is privileged and
7 3 confidential in any judicial or administrative proceeding.
7 4 3. All work papers, notes, recorded information,
7 5 documents, market conduct annual statements, and copies
7 6 thereof that are produced or obtained by or disclosed to the
7 7 commissioner or any other person in the course of analysis by
7 8 the commissioner of the financial condition or market conduct
7 9 of an insurer are confidential records under chapter 22 and
7 10 shall be privileged and confidential in any judicial or
7 11 administrative proceeding except any of the following:
7 12 a. An action commenced by the commissioner under chapter
7 13 507C.
7 14 b. An administrative proceeding brought by the insurance
7 15 division under chapter 17A.
7 16 c. A judicial review proceeding under chapter 17A brought
7 17 by an insurer to whom the records relate.
7 18 d. An action or proceeding which arises out of the
7 19 criminal provisions of the laws of this state or the United
7 20 States.
7 21 4. Confidential documents, materials, information,
7 22 administrative or judicial orders, or other actions may be
7 23 disclosed to a regulatory official of any state, federal
7 24 agency, or foreign country provided that the recipients are
7 25 required, under their law, to maintain their confidentiality.
7 26 Confidential records may be disclosed to the national
7 27 association of insurance commissioners provided that the
7 28 association certifies by written statement that the
7 29 confidentiality of the records will be maintained.
7 30 5. A financial statement filed by an employer self=
7 31 insuring workers' compensation liability pursuant to section
7 32 87.11, or the working papers of an examiner or the division in
7 33 connection with calculating appropriate security and reserves
7 34 for the self=insured employer are not public confidential
7 35 records under chapter 22 except when sought by the employer to
8 1 which the financial statement or working papers relate or an
8 2 insurance or workers' compensation self=insurance regulator of
8 3 another state, and are privileged and confidential in any
8 4 judicial or administrative proceeding. The financial
8 5 information of a nonpublicly traded employer which self=
8 6 insures for workers' compensation liability pursuant to
8 7 section 87.11 is protected as proprietary trade secrets to the
8 8 extent consistent with the commissioner's duties to oversee
8 9 the security of self=insured workers' compensation liability.
8 10 6. Analysis notes, work papers, or other documents related
8 11 to the analysis of an insurer are not public confidential
8 12 records under chapter 22.
8 13 Sec. 20. Section 507A.4, Code 2005, is amended by adding
8 14 the following new subsection:
8 15 NEW SUBSECTION. 10. a. A self=funded health benefit plan
8 16 sponsored by an employer in this state under the federal
8 17 Employee Retirement Income Security Act of 1974, as codified
8 18 in 29 U.S.C. } 1169, which provides health benefits to
8 19 independent contractors of the employer and to spouses and
8 20 dependents of the independent contractors, if the plan is
8 21 granted a waiver from the provisions of this chapter by the
8 22 commissioner and meets all of the following conditions:
8 23 (1) There is a written contract between the sponsor of the
8 24 health benefit plan and the independent contractor which
8 25 establishes the relationship between the parties to the
8 26 contract and provides for the personal services to be provided
8 27 by the independent contractor to the sponsor of the health
8 28 benefit plan pursuant to the contract.
8 29 (2) The personal services to be provided by the
8 30 independent contractor pursuant to the contract are directly
8 31 related to the principal business of the sponsor of the health
8 32 benefit plan.
8 33 (3) The contract provides that the independent contractor
8 34 will provide services to the sponsor of the health benefit
8 35 plan on an exclusive basis.
9 1 (4) The inclusion of the independent contractor in the
9 2 sponsor's health benefit plan is incidental to the contractual
9 3 relationship between the sponsor of the health benefit plan
9 4 and the independent contractor.
9 5 (5) Independent contractors and their spouses and
9 6 dependents included in an employer=sponsored health benefit
9 7 plan do not in total equal more than one=third of the total
9 8 persons covered by the health benefit plan.
9 9 (6) The health benefit plan is administered by an
9 10 authorized insurer or an authorized third=party administrator.
9 11 b. The sponsor of the health benefit plan shall file an
9 12 application for waiver from the provisions of this chapter
9 13 with the commissioner as prescribed by the commissioner and
9 14 shall file periodic statements and information as required by
9 15 the commissioner. The commissioner shall adopt rules pursuant
9 16 to chapter 17A implementing this subsection. All statements
9 17 and information filed with or disclosed to the commissioner
9 18 pursuant to this subsection are confidential records pursuant
9 19 to chapter 22.
9 20 c. If at any time the commissioner determines that a
9 21 health benefit plan for which a waiver has been granted does
9 22 not meet all of the conditions of paragraph "a", and the rules
9 23 adopted by the commissioner under paragraph "b", the
9 24 commissioner may terminate the waiver granted to the health
9 25 benefit plan.
9 26 d. A self=funded employer=sponsored health benefit plan
9 27 which has a valid waiver from the provisions of this chapter
9 28 shall not be considered any of the following:
9 29 (1) An insurance company or association of any kind or
9 30 character under section 432.1.
9 31 (2) A member insurer of the Iowa life and health insurance
9 32 guaranty association as defined in section 508C.5, subsection
9 33 8.
9 34 (3) A carrier under chapter 513B.
9 35 (4) A member of the Iowa individual health benefit
10 1 reinsurance association under section 513C.10.
10 2 (5) An entity subject to chapter 514C.
10 3 (6) A multiple employer welfare arrangement as defined in
10 4 subsection 9.
10 5 e. A self=funded employer=sponsored health benefit plan
10 6 which has received a waiver from the provisions of this
10 7 chapter shall be considered to be a self=funded employer=
10 8 sponsored health benefit plan under the federal Employee
10 9 Retirement Income Security Act of 1974, as codified in 29
10 10 U.S.C. } 1169, and not subject to this title so long as the
10 11 waiver is in effect.
10 12 f. The provision of health benefits to an independent
10 13 contract or by a self=funded employer=sponsored health benefit
10 14 plan which meets all of the conditions of paragraph "a" shall
10 15 not in and of itself create an employer=employee relationship
10 16 between the independent contractor and the sponsor of the
10 17 health benefit plan.
10 18 Sec. 21. Section 507A.7, subsection 3, Code 2005, is
10 19 amended to read as follows:
10 20 3. Nothing in subsection 1 of this section shall be
10 21 construed to prevent an unauthorized person or foreign or
10 22 alien insurer from filing a motion to quash a writ or to set
10 23 aside service thereof made in the manner provided in sections
10 24 507A.5 and section 507A.6, on the ground that such
10 25 unauthorized person or insurer has not done any of the acts
10 26 enumerated in section 507A.3.
10 27 Sec. 22. Section 507A.9, subsection 1, Code 2005, is
10 28 amended to read as follows:
10 29 1. Effective with For all premiums collected during the
10 30 calendar year 1967, except premiums on lawfully procured
10 31 surplus lines insurance, every unauthorized insurer shall pay
10 32 to the commissioner of insurance before March 1, next
10 33 succeeding the calendar year in which the insurance was so
10 34 effectuated, continued, or renewed a premium tax of two
10 35 percent of on gross premiums charged for such insurance on
11 1 subjects resident, located, or to be performed in this state
11 2 equal to the applicable percent, as provided in section 432.1.
11 3 Such insurance whether procured through negotiation or an
11 4 application, in whole or in part occurring or made within or
11 5 outside of this state, or for which premiums in whole or in
11 6 part are remitted directly or indirectly from within or
11 7 outside of this state, shall be deemed to be insurance
11 8 procured or continued in this state. The term "premium"
11 9 includes all premiums, membership fees, assessments, dues, and
11 10 any other consideration for insurance. If the tax prescribed
11 11 by this section is not paid within the time stated, the tax
11 12 shall be increased by a penalty of twenty=five percent and by
11 13 the amount of an additional penalty computed at the rate of
11 14 one percent per month or any part thereof from the date such
11 15 payment was due to the date paid.
11 16 Sec. 23. Section 507B.4, Code 2005, is amended by adding
11 17 the following new subsections:
11 18 NEW SUBSECTION. 9A. USE OF INQUIRIES. Considering either
11 19 of the following events for purposes of surcharging,
11 20 declining, nonrenewing, or canceling personal lines property
11 21 and casualty insurance coverage or a binder for personal lines
11 22 property and casualty insurance coverage:
11 23 a. An applicant's or insured's inquiry into the type or
11 24 level of coverage of a policy, or an inquiry into whether a
11 25 policy will cover a loss.
11 26 b. An insured's inquiry regarding coverage of a policy for
11 27 a loss if the insured does not file a claim.
11 28 NEW SUBSECTION. 9B. HISTORY OF A PROPERTY. Declining to
11 29 insure a property not previously owned by an applicant for
11 30 personal lines property and casualty insurance, based solely
11 31 on the loss history of a previous owner of the property,
11 32 unless the insurer can provide evidence that the previous
11 33 owner did not repair damage to the property.
11 34 NEW SUBSECTION. 9C. DISCLOSURE OF USE OF CLAIMS HISTORY.
11 35 Failing to inform an applicant at the time that an application
12 1 for personal lines property and casualty insurance is made, in
12 2 writing or in the same medium as the application is made, that
12 3 the insurer will consider the applicant's or insured's claims
12 4 history in determining whether to decline, cancel, nonrenew,
12 5 or surcharge such a policy, and that a claim made by an
12 6 insured will be reported to an insurance support organization.
12 7 NEW SUBSECTION. 15. REQUIRED DISCLOSURES. Failing to
12 8 inform a prospective purchaser of insurance that an insurance
12 9 producer is acting as a licensed insurance producer, or
12 10 failing to disclose the full name of the insurance company
12 11 which the insurance producer will represent in the insurance
12 12 sales presentation. In sales presentations where an insurance
12 13 producer is not involved, an insurer shall disclose the full
12 14 name of the insurer to a prospective purchaser.
12 15 NEW SUBSECTION. 16. INFORMATION. Failing or refusing to
12 16 furnish any policyholder or applicant, upon reasonable
12 17 request, information to which that individual is entitled.
12 18 Sec. 24. Section 507B.4, Code 2005, is amended by adding
12 19 the following new unnumbered paragraph:
12 20 NEW UNNUMBERED PARAGRAPH. For purposes of subsections 9A,
12 21 9B, and 9C, "personal lines property and casualty insurance"
12 22 means insurance sold to individuals and families primarily for
12 23 noncommercial purposes as provided in chapter 522B.
12 24 Sec. 25. NEW SECTION. 507B.4B SUITABILITY.
12 25 1. A person shall not recommend to any individual the
12 26 purchase, sale, or exchange of any annuity contract, or any
12 27 rider, endorsement, or amendment thereto, unless the person
12 28 has reasonable grounds to believe that the recommendation is
12 29 suitable for the individual based on a reasonable inquiry into
12 30 the individual's financial status, investment objectives, and
12 31 other relevant information.
12 32 2. A person engaged in the business of annuities shall
12 33 establish and maintain a system to monitor recommendations
12 34 made, that is reasonably designed to achieve compliance with
12 35 subsection 1.
13 1 3. The commissioner shall adopt rules pursuant to chapter
13 2 17A establishing procedures and standards for implementation
13 3 of the suitability requirements of subsection 1.
13 4 Sec. 26. NEW SECTION. 507B.15 ADMINISTRATIVE HEARINGS.
13 5 Section 505.28 is applicable to hearings required by
13 6 sections 507B.6, 507B.6A, and 507B.7.
13 7 Sec. 27. Section 507C.2, subsection 13, Code Supplement
13 8 2005, is amended by adding the following new unnumbered
13 9 paragraph:
13 10 NEW UNNUMBERED PARAGRAPH. "General assets" does not
13 11 include that portion of the assets of the insurer allocated to
13 12 and accumulated in a separate account established pursuant to
13 13 section 508A.1, unless otherwise provided by the applicable
13 14 policy, annuity, agreement, instrument, or contract. However,
13 15 if any assets allocated to and accumulated in a separate
13 16 account, after the satisfaction of any liabilities with regard
13 17 to the operation of the separate account, are in excess of an
13 18 amount equal to the reserves and other liabilities with
13 19 respect to the separate account, the excess shall be treated
13 20 as part of the general assets of the insurer.
13 21 Sec. 28. Section 507C.42, unnumbered paragraph 1, Code
13 22 2005, is amended to read as follows:
13 23 The priority of distribution of claims from the insurer's
13 24 estate shall be in accordance with the order in which each
13 25 class of claims is set forth. Claims in each class shall be
13 26 paid in full or adequate funds retained for the payment before
13 27 the members of the next class receive any payment. Subclasses
13 28 shall not be established within a class. As used in this
13 29 section, "insurer's estate" means the general assets of the
13 30 insurer. The order of distribution of claims is:
13 31 Sec. 29. Section 507C.42, subsection 2, Code 2005, is
13 32 amended to read as follows:
13 33 2. CLASS 2. Claims under policies, including claims of
13 34 the federal or any state or local government, for losses
13 35 incurred, including third=party claims, claims against the
14 1 insurer for liability for bodily injury or for injury to or
14 2 destruction of tangible property which are not under policies,
14 3 claims of a guaranty association or foreign guaranty
14 4 association, claims under funding agreements as provided in
14 5 section 508.31A, subsection 3, claims for an insufficiency in
14 6 the assets allocated to and accumulated in a separate account
14 7 as provided in section 508A.1, subsection 8, and claims for
14 8 unearned premium. Claims under life insurance and annuity
14 9 policies, whether for death proceeds, annuity proceeds, or
14 10 investment values, shall be treated as loss claims. That
14 11 portion of a loss, indemnification for which is provided by
14 12 other benefits or advantages recovered by the claimant, shall
14 13 not be included in this class, other than benefits or
14 14 advantages recovered or recoverable in discharge of familial
14 15 obligations of support or by way of succession at death or as
14 16 proceeds of life insurance, or as gratuities. A payment by an
14 17 employer to an employee is not a gratuity.
14 18 Sec. 30. Section 507E.5, Code 2005, is amended by striking
14 19 the section and inserting in lieu thereof the following:
14 20 507E.5 CONFIDENTIALITY.
14 21 1. All investigation files, investigation reports, and all
14 22 other investigative information in the possession of the
14 23 bureau are confidential records under chapter 22 except as
14 24 specifically provided in this section and are not subject to
14 25 discovery, subpoena, or other means of legal compulsion for
14 26 their release until opened for public inspection by the
14 27 bureau, or upon the consent of the bureau, or until a court of
14 28 competent jurisdiction determines, after notice to the bureau
14 29 and hearing, that the bureau will not be unnecessarily
14 30 hindered in accomplishing the purposes of this chapter by
14 31 their opening for public inspection. However, investigative
14 32 information in the possession of the bureau may be disclosed,
14 33 in the commissioner's discretion, to appropriate licensing
14 34 authorities within this state, another state or the District
14 35 of Columbia, or a territory or country in which a licensee is
15 1 licensed or has applied for a license.
15 2 2. The commissioner may share documents, materials, or
15 3 other information, including confidential and privileged
15 4 documents, materials, or other information, with other state,
15 5 federal, and international regulatory agencies, with the
15 6 national association of insurance commissioners and its
15 7 affiliates or subsidiaries, and with state, federal, and
15 8 international law enforcement authorities, provided that the
15 9 recipient agrees to maintain the confidential and privileged
15 10 status of the document, material, or other information,
15 11 pursuant to Iowa law.
15 12 3. The commissioner may receive documents, materials, or
15 13 other information, including otherwise confidential and
15 14 privileged documents, materials, or other information, from
15 15 other local, state, federal, and international regulatory
15 16 agencies, the national association of insurance commissioners
15 17 and its affiliates or subsidiaries, and local, state, federal,
15 18 and international law enforcement authorities, and shall
15 19 maintain as confidential and privileged any document,
15 20 material, or other information received with notice or the
15 21 understanding that it is confidential or privileged under the
15 22 laws of the jurisdiction that is the source of the document,
15 23 material, or other information.
15 24 4. The commissioner may enter into agreements governing
15 25 the sharing and use of documents, materials, or other
15 26 information consistent with this section.
15 27 5. An investigator or other staff member of the bureau is
15 28 not subject to subpoena in a civil action concerning any
15 29 matter of which the investigator or other staff member has
15 30 knowledge pursuant to a pending or continuing investigation
15 31 being conducted by the bureau pursuant to this chapter.
15 32 Sec. 31. Section 508.13, Code 2005, is amended to read as
15 33 follows:
15 34 508.13 ANNUAL CERTIFICATE OF AUTHORITY.
15 35 1. On receipt of an application for a certificate of
16 1 authority or renewal of a certificate of authority, fees, the
16 2 deposit provided in section 511.8, subsection 16, and the
16 3 statement, and the statement and evidence of investment of
16 4 foreign companies, all of which shall be renewed annually, by
16 5 the first day of March, the commissioner of insurance shall
16 6 issue a certificate or a renewal of a certificate setting
16 7 forth the corporate name of the company, its home office, that
16 8 it has fully complied with the laws of the state and is
16 9 authorized to transact the business of life insurance for the
16 10 ensuing year, which certificate shall expire on the first day
16 11 of June of the ensuing year, or sooner upon thirty days'
16 12 notice given by the commissioner, of the next annual valuation
16 13 of its policies. Such certificate shall be renewed annually,
16 14 upon the renewal of the deposit and statement by a domestic
16 15 company, or of the statement and evidence of investment by a
16 16 foreign company, and compliance with the conditions above
16 17 required, and be subject to revocation as the original
16 18 certificate.
16 19 2. A company shall submit annually on or before March 1 a
16 20 completed application for renewal of its certificate of
16 21 authority. A certificate of authority shall expire on the
16 22 first day of June next succeeding its issue and shall be
16 23 renewed annually so long as the company transacts business in
16 24 accordance with all legal requirements of the state.
16 25 3. A company that fails to timely file an application for
16 26 renewal of its certificate of authority shall pay an
16 27 administrative penalty of five hundred dollars to the
16 28 treasurer of state for deposit in the general fund of the
16 29 state as provided in section 505.7.
16 30 4. A copy of a certificate of authority, when certified by
16 31 the commissioner, shall be admissible in evidence for or
16 32 against a company, with the same effect as the original.
16 33 Sec. 32. Section 508A.1, Code 2005, is amended by adding
16 34 the following new subsection:
16 35 NEW SUBSECTION. 8. If the assets of an insurer allocated
17 1 to and accumulated in a separate account in connection with
17 2 any policy, annuity, agreement, instrument, or contract, after
17 3 the satisfaction of any liabilities with regard to the
17 4 operation of the separate account, are insufficient to fully
17 5 satisfy the insurer's express obligations under the policy,
17 6 annuity, agreement, instrument, or contract, then claims for
17 7 the unsatisfied portions of the insurer's obligations shall be
17 8 class 2 claims under section 507C.42, subsection 2.
17 9 Sec. 33. Section 509.1, subsection 1, paragraph b, Code
17 10 2005, is amended to read as follows:
17 11 b. The premium for the group life policy shall be paid by
17 12 the policyholder, either wholly from the employer's funds or
17 13 funds contributed by the employer, or partly from such funds
17 14 and partly from funds contributed by the insured employees, or
17 15 from both. No A policy, except of group accident and health,
17 16 may be issued on which the entire premium is to be derived
17 17 from funds contributed by the insured employees. A policy
17 18 insurance on which part of the premium is to be derived from
17 19 funds contributed by the insured employees may be placed in
17 20 force only if at least seventy=five percent of the then
17 21 eligible employees, excluding any as to whom evidence of
17 22 individual insurability is not satisfactory to the insurer,
17 23 elect to make the required contributions. A policy on which
17 24 no part of the premium is to be derived from funds contributed
17 25 by the insured employees must insure all eligible employees,
17 26 or all except any as to whom evidence of individual
17 27 insurability is not satisfactory to the insurer. As used in
17 28 this paragraph, "accident and health insurance" does not
17 29 include disability income insurance.
17 30 Sec. 34. Section 509A.15, subsection 1, paragraph d, Code
17 31 2005 is amended to read as follows:
17 32 d. That the governing body has contracted or otherwise
17 33 arranged with a third=party administrator who holds a current
17 34 certificate of registration issued by the commissioner
17 35 pursuant to section 510.21, or with a person not required to
18 1 obtain the certificate as an a third=party administrator as
18 2 defined in section 510.11, subsection 1.
18 3 Sec. 35. Section 509A.15, subsection 4, Code 2005, is
18 4 amended to read as follows:
18 5 4. One or more political subdivisions of the state or one
18 6 or more school corporations maintaining self=insured plans
18 7 with yearly claims that do not exceed one two percent of each
18 8 entity's general fund budget shall be exempt from the
18 9 requirements of this section where the plan insures employees
18 10 for all or part of a deductible, coinsurance payments, drug
18 11 costs, short=term disability benefits, vision benefits, or
18 12 dental benefits.
18 13 The yearly claim amount shall be determined annually on the
18 14 policy renewal date, or an alternative date established by
18 15 rule, by a plan administrator or political subdivision or
18 16 school corporation employee to be designated by the plan
18 17 administrator. The exemption shall not apply for the year
18 18 following a year in which yearly claims are determined to
18 19 exceed one two percent of the political subdivision's or
18 20 school corporation's general fund budget.
18 21 Sec. 36. Section 509B.1, subsection 4, Code 2005, is
18 22 amended by striking the subsection.
18 23 Sec. 37. Section 509B.5, subsection 1, Code 2005, is
18 24 amended to read as follows:
18 25 1. Employers or group policyholders shall notify all
18 26 employees or members of their continuation and conversion
18 27 rights within ten days of termination of employment or
18 28 membership. The notice shall be in writing and delivered in
18 29 person or mailed to the person's last known address. However,
18 30 continuation and conversion rights shall not be denied because
18 31 of failure to provide proper notice. After receiving proper
18 32 notice the employee or member may request and shall receive
18 33 continuation or conversion coverage in accordance with this
18 34 chapter within ten days of the request, notwithstanding any
18 35 other time limitation provided by this chapter. Notification
19 1 as provided in this section supersedes section 515.80 as that
19 2 section relates to accident and health insurance.
19 3 Sec. 38. Section 510.11, Code 2005, is amended by striking
19 4 the section and inserting in lieu thereof the following:
19 5 510.11 DEFINITIONS.
19 6 1. "Life or health insurance" includes but is not limited
19 7 to the following:
19 8 a. Individual or group accident and sickness insurance
19 9 providing coverage on an expense=incurred basis.
19 10 b. An individual or group hospital or medical service
19 11 contract issued pursuant to chapter 509, 514, or 514A.
19 12 c. An individual or group health maintenance organization
19 13 contract regulated under chapter 514B.
19 14 d. An individual or group Medicare supplemental policy.
19 15 e. A long=term care policy.
19 16 f. An individual or group life insurance policy or annuity
19 17 issued pursuant to chapter 508, 508A, or 509A.
19 18 2. "Third=party administrator" means a person who collects
19 19 charges or premiums from, or who adjusts or settles claims on,
19 20 residents of this state in connection with life or health
19 21 insurance coverage or annuities other than any of the
19 22 following:
19 23 a. A union or association on behalf of its members.
19 24 b. An insurance company which is either licensed in this
19 25 state or acting as an insurer with respect to a policy
19 26 lawfully issued and delivered by it in and pursuant to the
19 27 laws of a state in which the insurer was authorized to do
19 28 insurance business.
19 29 c. An entity licensed under chapter 514, including its
19 30 sales representatives licensed in this state when engaged in
19 31 the performance of their duties as sales representatives.
19 32 d. A life or health agent or broker licensed in this
19 33 state, whose activities are limited exclusively to the sale of
19 34 insurance.
19 35 e. A creditor on behalf of its debtors with respect to
20 1 insurance covering a debt between the creditor and its
20 2 debtors.
20 3 f. A trust, its trustees, agents, and employees acting
20 4 under the trust, established in conformity with 29 U.S.C. }
20 5 186.
20 6 g. A trust exempt from taxation under section 501(a) of
20 7 the Internal Revenue Code, its trustees, and employees acting
20 8 under the trust.
20 9 h. A custodian, its agents, and employees acting pursuant
20 10 to a custodial account which meets the requirements of section
20 11 401(f) of the Internal Revenue Code.
20 12 i. A bank, credit union, or other financial institution
20 13 which is subject to supervision or examination by federal or
20 14 state banking authorities.
20 15 j. A credit card=issuing company which advances for and
20 16 collects premiums or charges from its credit card holders who
20 17 have authorized it to do so, if the company does not adjust or
20 18 settle claims.
20 19 k. A person who adjusts or settles claims in the normal
20 20 course of the person's practice or employment as an attorney,
20 21 and who does not collect charges or premiums in connection
20 22 with life or health insurance coverage or annuities.
20 23 Sec. 39. Section 510.12, Code 2005, is amended to read as
20 24 follows:
20 25 510.12 WRITTEN AGREEMENT NECESSARY.
20 26 A person shall not act as an a third=party administrator
20 27 without a written agreement between the third=party
20 28 administrator and the insurer, and the written agreement shall
20 29 be retained as part of the official records of both the
20 30 insurer and the third=party administrator for the duration of
20 31 the agreement plus five years. The written agreement shall
20 32 contain provisions which include the requirements of sections
20 33 510.11 through 510.16, except insofar as those requirements do
20 34 not apply to the functions performed by the third=party
20 35 administrator.
21 1 When a policy is issued to a trustee, a copy of the trust
21 2 agreement and any amendments to the trust agreement shall be
21 3 furnished to the insurer by the third=party administrator and
21 4 shall be retained as part of the official records of both the
21 5 insurer and the third=party administrator for the duration of
21 6 the policy plus five years.
21 7 Sec. 40. Section 510.13, Code 2005, is amended to read as
21 8 follows:
21 9 510.13 PAYMENT TO THIRD=PARTY ADMINISTRATOR.
21 10 If an insurer uses the services of an a third=party
21 11 administrator under the terms of a written contract as
21 12 required in section 510.12, payment to the third=party
21 13 administrator of any premiums or charges for insurance by or
21 14 on behalf of the insured shall be deemed to have been received
21 15 by the insurer, and the payment of return premiums or claims
21 16 by the insurer to the third=party administrator shall not be
21 17 deemed payment to the insured or claimant until the payments
21 18 are received by the insured or claimant. This section does
21 19 not limit any right of the insurer against the third=party
21 20 administrator resulting from the third=party administrator's
21 21 failure to make payments to the insurer, insureds, or
21 22 claimants.
21 23 Sec. 41. Section 510.14, Code 2005, is amended to read as
21 24 follows:
21 25 510.14 MAINTENANCE OF INFORMATION.
21 26 An A third=party administrator shall maintain at its
21 27 principal administrative office for the duration of the
21 28 written agreement referred to in section 510.12 plus five
21 29 years, adequate books and records of all transactions between
21 30 it, insurers, and insured persons. The third=party
21 31 administrator's books and records shall be maintained in
21 32 accordance with prudent standards of insurance recordkeeping.
21 33 The commissioner shall have access to such books and records
21 34 for the purpose of examination, audit, and inspection. Trade
21 35 secrets contained in an a third=party administrator's books
22 1 and records, including but not limited to the identity and
22 2 addresses of policyholders and certificate holders, shall be
22 3 confidential, except the commissioner may use trade secret
22 4 information in any proceeding instituted against the third=
22 5 party administrator. The insurer retains the right to
22 6 continuing access to the third=party administrator's books and
22 7 records sufficient to permit the insurer to fulfill all of its
22 8 contractual obligations to insured persons, subject to any
22 9 restrictions in the written agreement between the insurer and
22 10 third=party administrator on the proprietary rights of the
22 11 parties in the third=party administrator's books and records.
22 12 Sec. 42. Section 510.15, Code 2005, is amended to read as
22 13 follows:
22 14 510.15 APPROVAL OF ADVERTISING.
22 15 An A third=party administrator may use only such
22 16 advertising pertaining to the business underwritten by an
22 17 insurer as has been approved by the insurer in advance of its
22 18 use.
22 19 Sec. 43. Section 510.17, Code 2005, is amended to read as
22 20 follows:
22 21 510.17 PREMIUM COLLECTION.
22 22 1. All insurance charges or premiums collected by an a
22 23 third=party administrator on behalf of or for an insurer, and
22 24 return premiums received from the insurer, shall be held by
22 25 the third=party administrator in a fiduciary capacity. Such
22 26 funds shall be immediately remitted to the person or persons
22 27 entitled to them, or shall be deposited promptly in a
22 28 fiduciary bank account established and maintained by the
22 29 third=party administrator. If charges or premiums so
22 30 deposited have been collected on behalf of or for more than
22 31 one insurer, the third=party administrator shall cause the
22 32 bank in which the fiduciary account is maintained to keep
22 33 records clearly recording the deposits in and withdrawals from
22 34 the account on behalf of or for each insurer. The third=party
22 35 administrator shall promptly obtain and keep copies of all
23 1 such records and, upon request of an insurer, shall furnish
23 2 the insurer with copies of the records pertaining to deposits
23 3 and withdrawals on behalf of or for that insurer.
23 4 2. The third=party administrator shall not pay a claim by
23 5 withdrawal from the fiduciary account. Withdrawals from the
23 6 fiduciary account shall be made, as provided in the written
23 7 agreement between the third=party administrator and the
23 8 insurer, for any of the following:
23 9 a. Remittance to an insurer entitled thereto.
23 10 b. Deposit in an account maintained in the name of the
23 11 insurer.
23 12 c. Transfer to and deposit in a claims=paying account,
23 13 with claims to be paid as provided in section 510.18.
23 14 d. Payment to a group policyholder for remittance to the
23 15 insurer entitled thereto.
23 16 e. Payment to the third=party administrator of its
23 17 commission, fees, or charges.
23 18 f. Remittance of return premiums to the persons entitled
23 19 thereto.
23 20 Sec. 44. Section 510.18, Code 2005, is amended to read as
23 21 follows:
23 22 510.18 PAYMENT OF CLAIMS.
23 23 A claim paid by the third=party administrator from funds
23 24 collected on behalf of the insurer shall be paid only on a
23 25 draft, check, or by electronic funds transfer as authorized by
23 26 the insurer.
23 27 Sec. 45. Section 510.19, Code 2005, is amended to read as
23 28 follows:
23 29 510.19 CLAIM ADJUSTMENT AND SETTLEMENT.
23 30 The compensation paid to an a third=party administrator
23 31 shall not be contingent on claim experience on policies for
23 32 which the third=party administrator adjusts or settles claims.
23 33 This section does not prevent the compensation of an a third=
23 34 party administrator from being based on premiums or charges
23 35 collected or number of claims paid or processed.
24 1 Sec. 46. Section 510.20, Code 2005, is amended to read as
24 2 follows:
24 3 510.20 NOTIFICATION REQUIRED.
24 4 When the services of an a third=party administrator are
24 5 used, the third=party administrator shall provide a written
24 6 notice, approved by the insurer, to insured individuals,
24 7 advising them of the identity of and relationship among the
24 8 third=party administrator, the policyholder, and the insurer.
24 9 When an a third=party administrator collects funds, it must
24 10 shall identify and state separately in writing to the person
24 11 paying to the third=party administrator any charge or premium
24 12 for insurance coverage the amount of any such charge or
24 13 premium specified by the insurer for such insurance coverage.
24 14 Sec. 47. Section 510.21, Code 2005, is amended to read as
24 15 follows:
24 16 510.21 CERTIFICATE OF REGISTRATION REQUIRED.
24 17 A person shall not act as or represent oneself to be an a
24 18 third=party administrator in this state, other than an
24 19 adjuster licensed in this state for the kinds of business for
24 20 which the person is acting as an a third=party administrator,
24 21 unless the person holds a current certificate of registration
24 22 as an a third=party administrator issued by the commissioner
24 23 of insurance. A certificate of registration as an a third=
24 24 party administrator is renewable every three years. Failure
24 25 to hold a certificate subjects the third=party administrator
24 26 to the sanctions set out in section 507B.7. The certificate
24 27 shall be issued by the commissioner to an a third=party
24 28 administrator unless the commissioner, after due notice and
24 29 hearing, determines that the third=party administrator is not
24 30 competent, trustworthy, financially responsible, or of good
24 31 personal and business reputation, or has had a previous
24 32 application for an insurance license denied for cause within
24 33 the preceding five years.
24 34 An application for registration shall be accompanied by a
24 35 filing fee of one hundred dollars. After notice and hearing,
25 1 the commissioner may impose any or all of the sanctions set
25 2 out in section 507B.7, upon finding that either the third=
25 3 party administrator violated any of the requirements of
25 4 section 515.134 and sections 510.1A through 510.20 and this
25 5 section, or the third=party administrator is not competent,
25 6 trustworthy, financially responsible, or of good personal and
25 7 business reputation.
25 8 Sec. 48. Section 510.22, subsections 1 and 3, Code 2005,
25 9 are amended to read as follows:
25 10 1. The person acting as an a third=party administrator is
25 11 primarily in a business other than that of a third=party
25 12 administrator.
25 13 3. The regular duties being performed as an a third=party
25 14 administrator are such that the covered persons are not likely
25 15 to be injured by a waiver of such requirements.
25 16 Sec. 49. Section 510.23, Code 2005, is amended to read as
25 17 follows:
25 18 510.23 UNFAIR COMPETITION OR UNFAIR AND DECEPTIVE ACTS OR
25 19 PRACTICES PROHIBITED.
25 20 An A third=party administrator is subject to chapter 507B
25 21 relating to unfair insurance trade practices.
25 22 Sec. 50. Section 511.8, subsection 1, paragraph b, Code
25 23 2005, is amended to read as follows:
25 24 b. Bonds or other evidences of indebtedness issued,
25 25 assumed, or guaranteed by the United States of America, or by
25 26 any agency or instrumentality of the United States of America
25 27 include investments in an open=end management investment
25 28 company registered with the federal securities and exchange
25 29 commission under the federal Investment Company Act of 1940,
25 30 15 U.S.C. } 80(a) 80a=1 et seq., and operated in accordance
25 31 with 17 C.F.R. } 270.2a=7, the portfolio of which is limited
25 32 to the United States government obligations described in
25 33 paragraph "a", and which are included in the national
25 34 association of insurance commissioners' securities valuation
25 35 office's United States direct obligations==full faith and
26 1 credit exempt list.
26 2 Sec. 51. Section 511.8, subsection 18, Code 2005, is
26 3 amended by adding the following new paragraph:
26 4 NEW PARAGRAPH c. Common stocks or shares issued by any
26 5 federal home loan bank under the Federal Home Loan Bank Act,
26 6 12 U.S.C. } 1421 et seq., and the Acts amendatory thereof, are
26 7 eligible if the total investment in those stocks or shares
26 8 does not exceed one=half of one percent of the legal reserve.
26 9 Sec. 52. Section 511.8, subsection 22, paragraph b, Code
26 10 2005, is amended by striking the paragraph and inserting in
26 11 lieu thereof the following:
26 12 b. To be eligible as investments, financial instruments
26 13 used in hedging transactions shall be either of the following:
26 14 (1) Be between an insurer and a counterparty that meets
26 15 the qualifications established in subsection 5 for an issuer,
26 16 obligor, or guarantor of bonds or other evidences of
26 17 indebtedness issued, assumed, or guaranteed by a corporation
26 18 incorporated under the laws of the United States or of any
26 19 state, district, or insular or territorial possession thereof,
26 20 or Canada, or that meets the qualifications established in
26 21 subsection 19 for an issuer, obligor, or guarantor of bonds or
26 22 other evidences of indebtedness issued, assumed, or guaranteed
26 23 by a corporation incorporated under the laws of a foreign
26 24 government other than Canada.
26 25 (2) Be between an insurer and a conduit and be
26 26 collateralized by cash or obligations which are eligible under
26 27 subsection 1, 2, 3, 5, 19, or 24, are deposited with a
26 28 custodian bank as defined in subsection 21, and are held under
26 29 a written agreement with the custodian bank that complies with
26 30 subsection 21 and provides for the proceeds of the collateral,
26 31 subject to the terms and conditions of the applicable
26 32 collateral or other credit support agreement, to be remitted
26 33 to the legal reserve deposit of the company or association and
26 34 to vest in the state in accordance with section 508.18
26 35 whenever proceedings under that section are instituted.
27 1 Paragraphs "c", "d", and "e" of this subsection are not
27 2 applicable to investments in financial instruments used in
27 3 hedging transactions eligible pursuant to this subparagraph.
27 4 As used in this subparagraph, "conduit" means a person within
27 5 an insurer's insurance holding company system, as defined in
27 6 section 521A.1, subsection 5, which aggregates hedging
27 7 transactions by other persons within the insurance holding
27 8 company system and replicates them with counterparties.
27 9 (a) Financial instruments used in hedging transactions
27 10 between an insurer and a conduit which are collateralized by
27 11 obligations eligible under subsection 5, 19, or 24 are
27 12 eligible only to the extent that such securities deposited as
27 13 collateral are not in excess of two percent of the legal
27 14 reserve in the securities of any one corporation, less any
27 15 securities of that corporation owned by the insurer or which
27 16 are the subject of hedging transactions by the insurer, that
27 17 are included in the insurer's legal reserve.
27 18 (b) 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 or by cash equivalents
27 21 eligible under subsection 24, other than a class one money
27 22 market fund, are eligible only to the extent that such
27 23 securities deposited as collateral are not in excess of ten
27 24 percent of the legal reserve, less any obligations eligible
27 25 under subsection 5 or cash equivalents eligible under
27 26 subsection 24, other than a class one money market fund, owned
27 27 by the insurer or which are the subject of hedging
27 28 transactions by the insurer, that are included in the
27 29 insurer's legal reserve.
27 30 (c) Financial instruments used in hedging transactions
27 31 between an insurer and a conduit which are collateralized by
27 32 obligations eligible under subsection 19 are eligible only to
27 33 the extent that such securities deposited as collateral are
27 34 not in excess of twenty percent of the legal reserve, less any
27 35 securities eligible under subsection 19 owned by the insurer
28 1 or which are the subject of hedging transactions by the
28 2 insurer, that are included in the insurer's legal reserve.
28 3 (3) Financial instruments used in hedging transactions
28 4 shall be eligible only as provided by this paragraph "b" and
28 5 rules adopted by the commission pursuant to chapter 17A
28 6 setting standards for hedging transactions between an insurer
28 7 and a conduit as authorized under section 521A.5, subsection
28 8 1, paragraph "b".
28 9 Sec. 53. Section 511.8, subsection 22, paragraph e, Code
28 10 2005, is amended to read as follows:
28 11 e. Investments in financial instruments of foreign
28 12 governments or foreign corporate obligations, other than
28 13 Canada, used in hedging transactions are not eligible in
28 14 excess of shall be included in the limitation contained in
28 15 subsection 19 that allows only twenty percent of the legal
28 16 reserve, less any foreign investment authorized by subsection
28 17 19 owned by the company or association and in which its legal
28 18 reserve is invested of the company or association to be
28 19 invested in such foreign investments, except insofar as the
28 20 financial instruments are collateralized by cash or United
28 21 States government obligations as authorized by subsection 1
28 22 deposited with a custodian bank as defined in subsection 21,
28 23 and held under a written agreement with the custodian bank
28 24 that complies with subsection 21 and provides for the proceeds
28 25 of the collateral, subject to the terms and conditions of the
28 26 applicable collateral or other credit support agreement, to be
28 27 remitted to the legal reserve deposit of the company or
28 28 association and to vest in the state in accordance with
28 29 section 508.18 whenever proceedings under that section are
28 30 instituted.
28 31 This paragraph "e" does not authorize the inclusion of
28 32 financial instruments used in hedging transactions in an
28 33 insurer's legal reserve that are in excess of the eligibility
28 34 limitation provided in paragraph "d" unless the financial
28 35 instruments are collateralized as provided in this paragraph
29 1 "e".
29 2 Sec. 54. Section 511.8, Code 2005, is amended by adding
29 3 the following new subsection:
29 4 NEW SUBSECTION. 24. CASH EQUIVALENTS.
29 5 a. As used in this subsection, unless the context
29 6 otherwise requires:
29 7 (1) "Cash equivalents" means highly liquid investments
29 8 with an original term to maturity of ninety days or less that
29 9 are all of the following:
29 10 (a) Readily convertible to a known amount of cash without
29 11 penalty.
29 12 (b) So near maturity that the investment presents an
29 13 insignificant risk of change in value.
29 14 (c) Rated any of the following:
29 15 (i) "P=1" by Moody's investors services, inc.
29 16 (ii) "A=1" by Standard and Poor's division of McGraw=Hill
29 17 companies, inc., or by the national association of insurance
29 18 commissioners' securities valuation office.
29 19 (iii) Equivalent by a nationally recognized statistical
29 20 rating organization that is recognized by the national
29 21 association of insurance commissioners' securities valuation
29 22 office.
29 23 (2) "Class one money market fund" means investments in an
29 24 open=end management investment company registered with the
29 25 federal securities and exchange commission under the federal
29 26 Investment Company Act of 1940, 15 U.S.C. } 80a=1 et seq., and
29 27 operated in accordance with 17 C.F.R. } 270.2a=7, that
29 28 qualifies for investment using the bond class one reserve
29 29 factor under the purposes and procedures of the national
29 30 association of insurance commissioners' securities valuation
29 31 office.
29 32 b. Cash equivalents include a class one money market fund.
29 33 c. Cash equivalents, other than a class one money market
29 34 fund, are not eligible in excess of two percent of the legal
29 35 reserve in the obligations of any one corporation, and are not
30 1 eligible in excess of ten percent of the legal reserve.
30 2 Sec. 55. Section 512B.25, Code 2005, is amended to read as
30 3 follows:
30 4 512B.25 ANNUAL LICENSE == RENEWAL.
30 5 A society which is authorized to transact business in this
30 6 state on January 1, 1991, and a society licensed on or after
30 7 January 1, 1991, may continue in business until June 1, 1991.
30 8 The authority of the a society to transact business in this
30 9 state may thereafter be renewed annually. A license
30 10 terminates on the succeeding June 1. However, a license
30 11 issued shall continue in full force and effect until a new
30 12 license is issued or specifically refused. A society shall
30 13 submit annually on or before March 1 a completed application
30 14 for renewal of its license. For each license or renewal the
30 15 society shall pay the commissioner a fee of fifty dollars. A
30 16 society that fails to timely file an application for renewal
30 17 shall pay an administrative penalty of five hundred dollars to
30 18 the treasurer of state for deposit in the general fund of the
30 19 state as provided in section 505.7. A duly certified copy or
30 20 duplicate of the license is prima facie evidence that the
30 21 licensee is a fraternal benefit society within the meaning of
30 22 this chapter.
30 23 Sec. 56. Section 512B.27, subsection 3, Code 2005, is
30 24 amended by striking the subsection.
30 25 Sec. 57. Section 513C.9, subsection 1, Code 2005, is
30 26 amended by striking the subsection.
30 27 Sec. 58. NEW SECTION. 514.9A CERTIFICATE OF AUTHORITY ==
30 28 RENEWAL.
30 29 A certificate of authority of a corporation formed under
30 30 this chapter expires on June 1 succeeding its issue and shall
30 31 be renewed annually so long as the corporation transacts its
30 32 business in accordance with all legal requirements. A
30 33 corporation shall submit annually, on or before March 1, a
30 34 completed application for renewal of its certificate of
30 35 authority. A corporation that fails to timely file an
31 1 application for renewal shall pay an administrative penalty of
31 2 five hundred dollars to the treasurer of state for deposit in
31 3 the general fund of the state as provided in section 505.7. A
31 4 duly certified copy or duplicate of the certificate is
31 5 admissible in evidence for or against the corporation with the
31 6 same effect as the original.
31 7 Sec. 59. Section 514B.3, subsection 10, Code 2005, is
31 8 amended by striking the subsection.
31 9 Sec. 60. NEW SECTION. 514B.3B CERTIFICATE OF AUTHORITY
31 10 == RENEWAL.
31 11 A certificate of authority of a health maintenance
31 12 organization formed under this chapter expires on June 1
31 13 succeeding its issue and shall be renewed annually so long as
31 14 the organization transacts its business in accordance with all
31 15 legal requirements. A health maintenance organization shall
31 16 submit annually, on or before March 1, a completed application
31 17 for renewal of its certificate of authority. A health
31 18 maintenance organization that fails to timely file an
31 19 application for renewal shall pay an administrative penalty of
31 20 five hundred dollars to the treasurer of state for deposit in
31 21 the general fund of the state as provided in section 505.7. A
31 22 duly certified copy or duplicate of the certificate is
31 23 admissible in evidence for or against the organization with
31 24 the same effect as the original.
31 25 Sec. 61. Section 514B.12, Code 2005, is amended to read as
31 26 follows:
31 27 514B.12 ANNUAL REPORT.
31 28 1. A health maintenance organization shall annually on or
31 29 before the first day of March file with the commissioner or a
31 30 depository designated by the commissioner a report verified by
31 31 at least two of the principal officers of the health
31 32 maintenance organization and covering the preceding calendar
31 33 year. The report shall be on forms prescribed by the
31 34 commissioner and shall include:
31 35 1. a. Financial statements of the organization including
32 1 a balance sheet as of the end of the preceding calendar year
32 2 and statement of profit and loss for the year then ended,
32 3 certified by a certified public accountant or an independent
32 4 public accountant.
32 5 2. b. Any material changes in the information submitted
32 6 pursuant to section 514B.3.
32 7 3. c. The number of persons enrolled during the year, the
32 8 number of enrollees as of the end of the year and the number
32 9 of enrollments terminated during the year.
32 10 4. d. Other information relating to the performance of
32 11 the health maintenance organization as is necessary to enable
32 12 the commissioner to carry out the commissioner's duties under
32 13 this chapter.
32 14 2. The commissioner shall refuse to renew a certificate of
32 15 authority of a health maintenance organization that fails to
32 16 comply with the provisions of this section and the
32 17 organization's right to transact new business in this state
32 18 shall immediately cease until the organization has so
32 19 complied.
32 20 3. A health maintenance organization that fails to timely
32 21 file the report required under subsection 1 is in violation of
32 22 this section and shall pay an administrative penalty of five
32 23 hundred dollars to the treasurer of state for deposit in the
32 24 general fund of the state as provided in section 505.7.
32 25 4. The commissioner may give notice to a health
32 26 maintenance organization that the organization has not timely
32 27 filed the report required under subsection 1 and is in
32 28 violation of this section. If the organization fails to file
32 29 the required report and comply with this section within ten
32 30 days of the date of the notice, the organization shall pay an
32 31 additional administrative penalty of one hundred dollars for
32 32 each day that the failure continues to the treasurer of state
32 33 for deposit in the general fund of the state as provided in
32 34 section 505.7.
32 35 Sec. 62. Section 514B.22, Code 2005, is amended by
33 1 striking the section and inserting in lieu thereof the
33 2 following:
33 3 514B.22 FEES.
33 4 When not otherwise provided, a foreign or domestic health
33 5 maintenance organization doing business in this state shall
33 6 pay the commissioner of insurance the fees as required in
33 7 section 511.24.
33 8 Sec. 63. Section 514B.33, Code 2005, is amended by adding
33 9 the following new subsection:
33 10 NEW SUBSECTION. 3A. Sections 514B.3B and 514B.12 apply to
33 11 all foreign and domestic limited service organizations
33 12 authorized to do business in this state.
33 13 Sec. 64. Section 514C.1, Code 2005, is amended to read as
33 14 follows:
33 15 514C.1 SUPPLEMENTAL COVERAGE FOR ADOPTED OR NEWLY BORN
33 16 CHILDREN.
33 17 1. Any policy of individual or group accident and sickness
33 18 insurance providing coverage on an expense incurred basis, and
33 19 any individual or group hospital or medical service contracts
33 20 issued pursuant to chapters 509, 514, and 514A, which provide
33 21 coverage for a family member of the insured or subscriber
33 22 shall also provide that the health insurance benefits
33 23 applicable for children shall, subject to the enrollment
33 24 requirements of this section, be payable with respect to a
33 25 newly born child of the insured or subscriber from the moment
33 26 of birth, or, in the situation of a newly adopted child of a
33 27 covered person, such child shall be covered from the earlier
33 28 of any of the following:
33 29 a. The date of placement of the child for the purpose of
33 30 adoption and continuing in the same manner as for other
33 31 dependents of the covered person, unless the placement is
33 32 disrupted prior to legal adoption and the child is removed
33 33 from placement.
33 34 b. The date of entry of an order granting the covered
33 35 person custody of the child for purposes of adoption.
34 1 c. The effective date of adoption.
34 2 2. The coverage for adopted or newly born children shall
34 3 consist of coverage for injury or sickness including the
34 4 necessary care and treatment of medically diagnosed congenital
34 5 defects and birth abnormalities and is not subject to any
34 6 preexisting condition exclusion.
34 7 3. If payment of a specific premium or subscription fee is
34 8 required to provide coverage for a newly born child, the
34 9 policy or contract may require that notification of birth of a
34 10 newly born child and payment of the required premium or fees
34 11 must be furnished to the insurer or nonprofit service or
34 12 indemnity corporation within thirty=one sixty days after the
34 13 date of birth in order to have coverage continue beyond such
34 14 thirty=one day period.
34 15 4. If payment of a specific premium or subscription fee is
34 16 not required to provide coverage for a newly born child, the
34 17 policy or contract may require that notification of birth of a
34 18 newly born child must be furnished to the insurer or nonprofit
34 19 service or indemnity corporation within sixty days after the
34 20 date of birth in order for coverage to be provided for the
34 21 child from the date of birth.
34 22 5. a. If payment of a specific premium or subscription
34 23 fee is required to provide coverage for a newly adopted child
34 24 or child placed for adoption, the policy or contract may
34 25 require that notification of the adoption or placement for
34 26 adoption and payment of the required premium or fees must be
34 27 furnished to the insurer or nonprofit service or indemnity
34 28 corporation within sixty days after the coverage is required
34 29 to begin under this section.
34 30 b. If payment of a specific premium or subscription fee is
34 31 not required to provide coverage for a newly adopted child or
34 32 child placed for adoption, the policy or contract may require
34 33 that notification of the adoption or placement for adoption
34 34 must be furnished to the insurer or nonprofit service or
34 35 indemnity corporation within sixty days after the coverage is
35 1 required to begin under this section.
35 2 c. If a covered person fails to provide the required
35 3 notice or to make payment of premium or subscription fees
35 4 within the sixty=day period required in this subsection, the
35 5 newly adopted child or child placed for adoption shall be
35 6 treated no less favorably by a health carrier than other
35 7 dependents of the covered person, other than newly born
35 8 children, who seek coverage under a policy or contract at a
35 9 time other than the time when the dependent is first eligible
35 10 to apply for coverage.
35 11 Sec. 65. Section 514C.3, Code 2005, is amended to read as
35 12 follows:
35 13 514C.3 DENTIST'S SERVICES UNDER ACCIDENT AND SICKNESS
35 14 INSURANCE POLICIES.
35 15 A policy of accident and sickness insurance issued in this
35 16 state which provides payment or reimbursement for any service
35 17 which is within the lawful scope of practice of a licensed
35 18 dentist shall provide benefits for the service whether the
35 19 service is performed by a licensed physician or a licensed
35 20 dentist. As used in this section, "licensed physician"
35 21 includes persons licensed under chapter 148, 150, or 150A and
35 22 "policy of accident and sickness insurance" includes
35 23 individual policies or contracts issued pursuant to chapter
35 24 514, 514A, or 514B, and group policies as defined in section
35 25 509B.1, subsections subsection 3 and 4.
35 26 Sec. 66. Section 514E.7, Code Supplement 2005, is amended
35 27 by adding the following new subsection:
35 28 NEW SUBSECTION. 6. The association is not required to
35 29 make plan coverage available to an individual who is covered
35 30 or is eligible for any continued group coverage under Internal
35 31 Revenue Code } 4980B, the federal Employee Retirement Income
35 32 Security Act of 1974, codified at 29 U.S.C. } 1001 et seq.,
35 33 the federal Public Health Service Act of July 1, 1944,
35 34 codified at 42 U.S.C. } 201 et seq., or any continued group
35 35 coverage required by the state. For purposes of this
36 1 subsection, an individual who would have been eligible for
36 2 such continuation of group coverage, but is not eligible
36 3 solely because the individual or other responsible party
36 4 failed to make the required election of coverage during the
36 5 applicable time period, or terminated such coverage prior to
36 6 the end of such applicable time period, shall be deemed to be
36 7 eligible for such group coverage until the date on which the
36 8 individual's continuing group coverage would have expired had
36 9 an election been made or a termination not occurred.
36 10 Sec. 67. Section 514J.7, Code 2005, is amended by adding
36 11 the following new subsections:
36 12 NEW SUBSECTION. 9. If an enrollee dies before the
36 13 completion of the external review process, the process shall
36 14 continue to completion if there is potential liability of a
36 15 carrier or organized delivery system to the estate of the
36 16 enrollee.
36 17 NEW SUBSECTION. 10. a. If an enrollee who has already
36 18 received a service or treatment under a plan requests external
36 19 review of the plan's coverage decision and changes to another
36 20 plan before the external review process is completed, the
36 21 carrier or organized delivery system whose coverage was in
36 22 effect at the time the service or treatment was received is
36 23 responsible for completing the external review process.
36 24 b. If an enrollee who has not yet received service or
36 25 treatment requests external review of a plan's coverage
36 26 decision and then changes to another plan prior to receipt of
36 27 the service or treatment and completion of the external review
36 28 process, the external review process shall begin anew with the
36 29 enrollee's current carrier or organized delivery system. In
36 30 this instance, the external review process shall be conducted
36 31 in an expedited manner.
36 32 Sec. 68. Section 515.24, Code 2005, is amended to read as
36 33 follows:
36 34 515.24 TAX == COMPUTATION.
36 35 For the purpose of determining the basis of any tax upon
37 1 the "gross amount of premiums", or "gross receipts from
37 2 premiums, assessments, fees, and promissory obligations", now
37 3 or hereafter imposed upon any fire or casualty insurance
37 4 company under any law of this state, such gross amount or
37 5 gross receipts shall consist of the gross written premiums or
37 6 receipts for direct insurance, without including or deducting
37 7 any amounts received or paid for reinsurance except that any
37 8 company reinsuring windstorm or hail risks written by county
37 9 mutual insurance associations shall be required to pay a two
37 10 percent tax on as a tax, the applicable percent provided in
37 11 section 432.1, calculated upon the gross amount of reinsurance
37 12 premiums received upon such risks, but with such other
37 13 deductions as provided by law, and in addition deducting any
37 14 so=called dividend or return of savings or gains to
37 15 policyholders; provided that as to any deposits or deposit
37 16 premiums received by any such company, the taxable premiums
37 17 shall be the portion of such deposits or deposit premiums
37 18 earned during the year with such deductions therefrom as
37 19 provided by law.
37 20 Sec. 69. Section 515.42, Code 2005, is amended to read as
37 21 follows:
37 22 515.42 TENURE OF CERTIFICATE == RENEWAL == EVIDENCE.
37 23 Such A certificate of authority shall expire on the first
37 24 day of June next succeeding its issue, and shall be renewed
37 25 annually so long as such company shall transact business in
37 26 accordance with the requirements of law; a copy of which
37 27 certificate, when certified to by the commissioner of
37 28 insurance, shall be admissible in evidence for or against a
37 29 company with the same effect as the original. A company shall
37 30 submit annually, on or before March 1, a completed application
37 31 for renewal of its certificate of authority. A company that
37 32 fails to timely file an application for renewal shall pay an
37 33 administrative penalty of five hundred dollars to the
37 34 treasurer of state for deposit in the general fund of the
37 35 state as provided in section 505.7.
38 1 Sec. 70. NEW SECTION. 515.147A ADMINISTRATIVE PENALTY.
38 2 1. An excess and surplus lines insurance agent that fails
38 3 to timely file the report required in section 515.147 is in
38 4 violation of this section and shall pay an administrative
38 5 penalty of five hundred dollars to the treasurer of state for
38 6 deposit in the general fund of the state as provided in
38 7 section 505.7.
38 8 2. The commissioner shall refuse to renew the license of
38 9 an agent that fails to comply with the provisions of section
38 10 515.147 and this section and the agent's right to transact new
38 11 business in this state shall immediately cease until the agent
38 12 has so complied.
38 13 3. The commissioner may give notice to an agent that the
38 14 agent has not timely filed the report required under section
38 15 515.147 and is in violation of this section. If the agent
38 16 fails to file the required report within ten days of the date
38 17 of the notice, the agent shall pay an additional
38 18 administrative penalty of one hundred dollars for each day
38 19 that the failure continues to the treasurer of state for
38 20 deposit in the general fund of the state as provided in
38 21 section 505.7.
38 22 Sec. 71. Section 515A.6, subsection 1, Code 2005, is
38 23 amended to read as follows:
38 24 1. a. A corporation, an unincorporated association, a
38 25 partnership or an individual, whether located within or
38 26 outside this state, may make application to the commissioner
38 27 for license as a rating organization for such kinds of
38 28 insurance, or subdivision or class of risk or a part or
38 29 combination thereof as are specified in its application and
38 30 shall file therewith (a) a with the application all of the
38 31 following:
38 32 (1) A copy of its constitution, its articles of agreement
38 33 or association or its certificate of incorporation, and of its
38 34 bylaws, rules and regulations governing the conduct of its
38 35 business, (b) a.
39 1 (2) A list of its members and subscribers, (c) the.
39 2 (3) The name and address of a resident of this state upon
39 3 whom notices or orders of the commissioner or process
39 4 affecting such rating organization may be served and (d) a.
39 5 (4) A statement of its qualifications as a rating
39 6 organization.
39 7 b. If the commissioner finds that the applicant is
39 8 competent, trustworthy, and otherwise qualified to act as a
39 9 rating organization and that its constitution, articles of
39 10 agreement or association or certificate of incorporation, and
39 11 its bylaws, rules and regulations governing the conduct of its
39 12 business conform to the requirements of law, the commissioner
39 13 shall issue a license specifying the kinds of insurance, or
39 14 subdivisions or classes of risks or parts or combinations
39 15 thereof for which the applicant is authorized to act as a
39 16 rating organization. Every such application shall be granted
39 17 or denied in whole or in part by the commissioner within sixty
39 18 days of the date of its filing with the commissioner.
39 19 c. Licenses issued pursuant to this section shall remain
39 20 in effect for three years unless sooner suspended or revoked
39 21 by the commissioner. The fee for said license shall be
39 22 twenty=five dollars.
39 23 d. Licenses issued pursuant to this section may be
39 24 suspended or revoked by the commissioner, after hearing upon
39 25 notice, in the event the rating organization ceases to meet
39 26 the requirements of this subsection.
39 27 e. Every rating organization shall notify the commissioner
39 28 promptly of every change in (a) its any of the following:
39 29 (1) Its constitution, its articles of agreement or
39 30 association, or its certificate of incorporation, and its
39 31 bylaws, rules and regulations governing the conduct of its
39 32 business, (b) its.
39 33 (2) Its list of members and subscribers and (c) the.
39 34 (3) The name and address of the resident of this state
39 35 designated by it upon whom notices or orders of the
40 1 commissioner or process affecting such rating organization may
40 2 be served.
40 3 Sec. 72. Section 515A.9, Code 2005, is amended to read as
40 4 follows:
40 5 515A.9 INFORMATION TO BE FURNISHED INSUREDS == HEARINGS
40 6 AND APPEALS OF INSUREDS.
40 7 Every rating organization and every insurer which makes its
40 8 own rate shall, within a reasonable time after receiving
40 9 written request therefor and upon payment of such reasonable
40 10 charge as it may make, furnish to any insured affected by a
40 11 rate made by it, or to the authorized representative of such
40 12 insured, all pertinent information as to such rate. Every
40 13 rating organization and every insurer which makes its own
40 14 rates shall provide within this state reasonable means whereby
40 15 any person aggrieved by the application of its rating system
40 16 may be heard, in person or by the person's authorized
40 17 representative, on the person's written request to review the
40 18 manner in which such rating system has been applied in
40 19 connection with the insurance afforded the person. Such
40 20 review of the manner in which a rating system has been applied
40 21 is not a contested case under chapter 17A. If the rating
40 22 organization or insurer fails to grant or reject such request
40 23 within thirty days after it is made, applicant may proceed in
40 24 the same manner as if the application had been rejected. Any
40 25 party affected by the action of such rating organization or
40 26 such insurer on such request may, within thirty days after
40 27 written notice of such action, appeal to the commissioner,
40 28 who, after a hearing held upon not less than ten days' written
40 29 notice to the appellant and to such rating organization or
40 30 insurer, may affirm or reverse such action. Such appeal to
40 31 the commissioner of the manner in which a rating system has
40 32 been applied is not a contested case under chapter 17A.
40 33 Sec. 73. Section 515A.10, subsection 2, Code 2005, is
40 34 amended to read as follows:
40 35 2. Every advisory organization shall file with the
41 1 commissioner (a) a all of the following:
41 2 a. A copy of its constitution, its articles of agreement
41 3 or association or its certificate of incorporation and of its
41 4 bylaws, rules and regulations governing its activities, (b) a.
41 5 b. A list of its members, (c) the.
41 6 c. The name and address of a resident of this state upon
41 7 whom notices or orders of the commissioner or process issued
41 8 at the commissioner's direction may be served, and (d) an.
41 9 d. An agreement that the commissioner may examine such
41 10 advisory organization in accordance with the provisions of
41 11 section 515A.12.
41 12 Sec. 74. Section 515B.16, Code 2005, is amended to read as
41 13 follows:
41 14 515B.16 ACTIONS AGAINST THE ASSOCIATION.
41 15 Any action against the association shall be brought against
41 16 the association in the association's own name. The Polk
41 17 county district court shall have exclusive jurisdiction and
41 18 venue of such actions. Service of the original notice in
41 19 actions against the association may be made on any officer of
41 20 the association or upon the commissioner of insurance on
41 21 behalf of the association. The commissioner shall promptly
41 22 transmit any notice so served upon the commissioner to the
41 23 association. Any action against the association shall be
41 24 commenced within three years after the date of the order of
41 25 liquidation.
41 26 Sec. 75. Section 515E.3, unnumbered paragraph 2, Code
41 27 2005, is amended by striking the unnumbered paragraph.
41 28 Sec. 76. NEW SECTION. 515E.3A FOREIGN RISK RETENTION
41 29 GROUP MAY BECOME DOMESTIC.
41 30 1. A risk retention group that is organized under the laws
41 31 of any other state for the purpose of writing insurance, as
41 32 authorized by this chapter, may redomesticate to this state by
41 33 doing all of the following:
41 34 a. Complying with section 490.902.
41 35 b. Complying with all of the requirements of law relative
42 1 to the organization and licensing of a domestic risk retention
42 2 group and the capital and surplus requirement set forth in
42 3 subsection 4.
42 4 c. Designating its principal place of business in this
42 5 state.
42 6 2. A risk retention group that meets the requirements of
42 7 subsection 1 shall be entitled to a certificate of its
42 8 corporate existence and a license to transact business in this
42 9 state, and be subject in all respects to the authority and
42 10 jurisdiction of this state.
42 11 3. The certificate of authority, producer appointments and
42 12 licenses, rates, and other items which are in existence at the
42 13 time a risk retention group transfers its corporate domicile
42 14 to this state pursuant to this section shall continue in full
42 15 force and effect upon such transfer. For purposes of existing
42 16 authorizations and all other corporate purposes, the risk
42 17 retention group is deemed to be the same entity as it was
42 18 prior to the transfer of its domicile. All outstanding
42 19 policies of any transferring risk retention group shall remain
42 20 in full force and effect.
42 21 4. A risk retention group redomesticating to this state
42 22 pursuant to this chapter shall comply with the minimum capital
42 23 and surplus requirements of chapter 521E or five million
42 24 dollars, whichever is greater. If the risk retention group's
42 25 prior domestic regulator allowed the use of letters of credit
42 26 to meet that regulator's surplus requirements, the risk
42 27 retention group may continue to use the letters of credit to
42 28 meet this state's minimum surplus requirements for up to five
42 29 years from the date of redomestication in this state. The
42 30 risk retention group shall eliminate a minimum of twenty
42 31 percent of the letters of credit being used each year based
42 32 upon the aggregate amount of letters of credit being used to
42 33 meet surplus requirements at the time of redomestication in
42 34 this state.
42 35 5. Letters of credit used by a risk retention group to
43 1 meet surplus requirements shall be clean, irrevocable, and
43 2 unconditionally issued or confirmed by a qualified United
43 3 States financial institution as defined in section 521B.4,
43 4 subsection 2. The beneficiary of each letter of credit being
43 5 used shall be the commissioner.
43 6 6. If a risk retention group redomesticating to this state
43 7 fails to comply with the provisions of this section, the
43 8 commissioner shall take action as prescribed in chapter 507C.
43 9 7. The commissioner shall adopt rules pursuant to chapter
43 10 17A to implement this section.
43 11 Sec. 77. Section 515E.4, subsection 1, unnumbered
43 12 paragraph 1, Code 2005, is amended to read as follows:
43 13 Notice of operations and designation of commissioner as
43 14 agent. Before offering insurance in this state, a risk
43 15 retention group shall submit to the commissioner all of the
43 16 following:
43 17 Sec. 78. Section 515E.4, subsection 1, paragraph c, Code
43 18 2005, is amended by striking the paragraph.
43 19 Sec. 79. Section 515E.8, subsection 3, Code 2005, is
43 20 amended by striking the subsection.
43 21 Sec. 80. Section 515F.4, subsection 5, Code 2005, is
43 22 amended to read as follows:
43 23 5. The rates may contain a provision for contingencies and
43 24 an allowance permitting a reasonable profit. In determining
43 25 the reasonableness of the profit, consideration shall be given
43 26 to investment income attributable to unearned premium and loss
43 27 reserves. Income from other sources shall not be considered.
43 28 Sec. 81. Section 515F.8, subsection 3, paragraph a,
43 29 subparagraph (3), Code 2005, is amended to read as follows:
43 30 (3) The name and address of one or more residents of this
43 31 state upon whom notices, process affecting it, or orders of
43 32 the commissioner may be served.
43 33 Sec. 82. Section 515F.13, subsection 2, paragraph c, Code
43 34 2005, is amended to read as follows:
43 35 c. A pool shall file with the commissioner a copy of its
44 1 constitution; its articles of incorporation, agreement, or
44 2 association; its bylaws, rules, and regulations governing its
44 3 activities; its members; the name and address of a resident of
44 4 this state upon whom notices or orders of the commissioner or
44 5 process may be served; and any changes in amendments or
44 6 changes in the foregoing.
44 7 Sec. 83. Section 515G.1, Code 2005, is amended by adding
44 8 the following new subsections:
44 9 NEW SUBSECTION. 2A. "Eligible policyholder" means a
44 10 policyholder who had a policy in force with a mutual insurer
44 11 at any time during the three=year period immediately preceding
44 12 the date of the adoption of a plan of conversion by the mutual
44 13 insurer's board of directors, including the date of adoption
44 14 of the plan of conversion, and who, therefore, is eligible to
44 15 receive an equitable share of the remaining statutory surplus
44 16 of the mutual insurer, after provision for the base value for
44 17 voting policyholders, as a result of the conversion.
44 18 NEW SUBSECTION. 5. "Voting policyholder" means a
44 19 policyholder who had a policy in force as provided in section
44 20 515G.4.
44 21 Sec. 84. Section 515G.2, Code 2005, is amended to read as
44 22 follows:
44 23 515G.2 MUTUAL INSURER BECOMING STOCK COMPANY ==
44 24 AUTHORIZATION.
44 25 1. A mutual insurer may become a stock insurance company
44 26 pursuant to a plan of conversion established and approved in
44 27 the manner provided by this chapter. The plan of conversion
44 28 shall be adopted by the board of directors of the insurer to
44 29 become effective on a future stated date.
44 30 2. A plan of conversion may provide that a mutual
44 31 insurance company may convert into a domestic stock insurance
44 32 company, convert and merge, or convert and consolidate with a
44 33 domestic stock insurance company, as provided in chapter 490
44 34 or chapter 491, whichever is applicable. However, a mutual
44 35 insurance company is not required to comply with sections
45 1 490.1102 and 490.1104 or sections 491.102 through 491.105
45 2 relating to approval of merger or consolidation plans by
45 3 boards of directors and shareholders.
45 4 3. If conversion from a mutual insurer to a stock company
45 5 is to be undertaken by a transaction which would be governed
45 6 by chapter 521 or 521A, but the plan of conversion adopted by
45 7 the board of directors of the insurer includes approval of an
45 8 acquisition of control, merger, consolidation, or reinsurance,
45 9 then chapter 521 or 521A shall not be applicable to the
45 10 transaction. However, in that case, the commissioner may
45 11 require any information from the person or persons acquiring
45 12 control of the insurer as could be required under chapter 521
45 13 or 521A, and may disapprove the transaction on any basis on
45 14 which it could be disapproved under chapter 521 or 521A.
45 15 Sec. 85. Section 515G.3, subsection 3, Code 2005, is
45 16 amended to read as follows:
45 17 3. The manner and basis of exchanging the equitable share
45 18 of each mutual policyholder with a policy in force as provided
45 19 in section 515G.4 for securities or other consideration, or
45 20 both, of the stock corporation or an affiliate into which the
45 21 mutual insurer is to be converted and the disposition of any
45 22 unclaimed shares. The plan shall also provide that each
45 23 person who had a policy of insurance in effect on the date of
45 24 adoption of the plan is entitled to receive in exchange for an
45 25 equitable share, without additional payment, consideration
45 26 payable in voting common shares of the insurer, or other
45 27 consideration, or both. The equitable share of the
45 28 policyholder in the mutual insurer may include a rights of
45 29 each voting policyholder and each eligible policyholder of the
45 30 mutual insurer to be converted to a stock company pursuant to
45 31 this chapter. Such exchange may include a base value for each
45 32 voting policyholder in recognition of the voting
45 33 policyholder's voting rights as a mutual policyholder as well
45 34 as consideration to be provided to each eligible policyholder
45 35 in exchange for the eligible policyholder's rights as a mutual
46 1 policyholder of the mutual insurer to be converted. After
46 2 determining the base value for to be provided to each voting
46 3 policyholder in recognition of the voting rights of the voting
46 4 policyholder and the balance of such, the equitable share of
46 5 its each eligible policyholder in the remaining statutory
46 6 surplus of the mutual insurer, plus any adjustments for
46 7 nonadmitted assets or additional value permitted by the
46 8 commissioner, to be provided to each eligible policyholder
46 9 shall be determined by the ratio which the net earned premiums
46 10 the eligible policyholder has properly and timely paid to the
46 11 mutual insurer on insurance policies in effect during the
46 12 three years three=year period immediately preceding the
46 13 adoption of the plan of conversion, including the date of the
46 14 adoption of the plan of conversion, bears to the total net
46 15 earned premiums received by the mutual insurer from all
46 16 eligible policyholders during that three=year period. The
46 17 base value to be provided to each voting policyholder in
46 18 recognition of voting rights and the equitable share of each
46 19 eligible policyholder may be exchanged, without additional
46 20 payment, for securities or other consideration, or both, of
46 21 the stock corporation or an affiliate into which the mutual
46 22 insurer is to be converted. If the base value for each voting
46 23 policyholder or the equitable share of the each eligible
46 24 policyholder entitles the policyholder to the purchase of a
46 25 fractional share of stock, the policyholder has the option to
46 26 receive the value of the fractional share in cash or purchase
46 27 a full share by paying the balance in cash. However,
46 28 policyholders due a de minimus amount, as established by the
46 29 commissioner, need not be offered the value of the fractional
46 30 share or the option to purchase a full share. The plan shall
46 31 also provide for the disposition of any unclaimed shares.
46 32 Sec. 86. Section 516E.1, Code Supplement 2005, is amended
46 33 by adding the following new subsections:
46 34 NEW SUBSECTION. 2A. "Financial institution" means an
46 35 institution that is all of the following:
47 1 a. Organized or, in the case of the office of a foreign
47 2 banking organization located in the United States, licensed,
47 3 under the laws of the United States or any state, and granted
47 4 authority to operate with fiduciary powers.
47 5 b. Regulated, supervised, and examined by federal or state
47 6 authorities empowered to regulate banks and trust companies.
47 7 NEW SUBSECTION. 5A. "Premium" means the consideration
47 8 paid to an insurer for a reimbursement insurance policy.
47 9 NEW SUBSECTION. 9A. "Service company fee" means the
47 10 consideration paid for a service contract.
47 11 Sec. 87. Section 516E.1, subsection 8, Code Supplement
47 12 2005, is amended to read as follows:
47 13 8. "Reimbursement insurance policy" means a contractual
47 14 liability insurance policy of insurance issued to a service
47 15 company and pursuant to which the insurer agrees, for the
47 16 benefit of the service contract holders, to discharge all of
47 17 the obligations and liabilities of the service company under
47 18 the terms of service contracts issued by the service company
47 19 in the event of nonperformance by the service company. For
47 20 the purposes of this definition, "all obligations and
47 21 liabilities" include, but are not limited to, failure of the
47 22 service company to perform under the service contract and the
47 23 return of the unearned service company fee in the event of the
47 24 service company's unwillingness or inability to reimburse the
47 25 unearned service company fee in the event of termination of a
47 26 service contract that either provides reimbursement to a
47 27 service company under the terms of insured service contracts
47 28 issued or sold by the service company, or, in the event of
47 29 nonperformance by the service company, pays, on behalf of the
47 30 service company, all covered contractual obligations incurred
47 31 by the service company under the terms of the insured service
47 32 contracts issued or sold by the service company.
47 33 Sec. 88. Section 516E.2, subsection 3, Code Supplement
47 34 2005, is amended to read as follows:
47 35 3. In order to assure the faithful performance of a
48 1 service company's obligations to its service contract holders,
48 2 the administrator may by rule require service contracts shall
48 3 be secured by a reimbursement insurance policy in compliance
48 4 with the requirements set forth in section 516E.4 or the
48 5 service company shall comply with the financial responsibility
48 6 and security standards set forth in section 516E.21.
48 7 Sec. 89. Section 516E.2, subsection 4, paragraph f, Code
48 8 Supplement 2005, is amended by striking the paragraph.
48 9 Sec. 90. Section 516E.3, Code Supplement 2005, is amended
48 10 to read as follows:
48 11 516E.3 FILING AND FEE REQUIREMENTS.
48 12 1. SERVICE COMPANIES.
48 13 a. A service contract shall not be issued, sold, or
48 14 offered for sale in this state unless a true and correct copy
48 15 of the service contract, and the service company's
48 16 reimbursement insurance policy, if applicable, have been filed
48 17 with the commissioner by the service company.
48 18 b. A service company shall file a consent to service of
48 19 process on the commissioner, and such other information as the
48 20 commissioner requires, annually with the commissioner no later
48 21 than the first day of August. If the first day of August
48 22 falls on a weekend or a holiday, the date for filing shall be
48 23 the next business day. In addition to the annual filing, the
48 24 service company shall promptly file copies of any amended
48 25 documents if material amendments have been made in the
48 26 materials on file with the commissioner. If an annual filing
48 27 is made after the first of August and sales have occurred
48 28 during the period when the service company was in
48 29 noncompliance with this section, the commissioner shall assess
48 30 an additional filing fee that is two times the amount normally
48 31 required for an annual filing. A fee shall not be charged for
48 32 interim filings made to keep the materials filed with the
48 33 division current and accurate. The annual filing shall be
48 34 accompanied by a filing fee determined by the commissioner
48 35 which shall be sufficient to defray the costs of administering
49 1 this chapter.
49 2 c. A service company shall promptly file the following
49 3 information with the commissioner:
49 4 (1) A change in the name or ownership of the service
49 5 company.
49 6 (2) The termination of the service company's business.
49 7 The service company is not required to submit a fee as part
49 8 of this filing.
49 9 2. PROVIDERS.
49 10 a. A service contract shall not be sold or offered for
49 11 sale in this state unless a true and correct copy of the
49 12 service contract has been filed with the commissioner by the
49 13 provider.
49 14 b. a. A provider shall file a consent to service of
49 15 process on the commissioner, a notice with the name and
49 16 ownership of the provider, and such other information as the
49 17 commissioner requires, annually with the commissioner no later
49 18 than August 1. If August 1 falls on a weekend or a holiday,
49 19 the date for filing shall be the next business day. In
49 20 addition to the annual filing, the provider shall promptly
49 21 file copies of any amended documents if material amendments
49 22 have been made in the materials on file with the commissioner.
49 23 If an annual filing is made after August 1 and sales have
49 24 occurred during the period when the provider was in
49 25 noncompliance with this section, the commissioner shall assess
49 26 an additional filing fee that is two times the amount normally
49 27 required for an annual filing. A fee shall not be charged for
49 28 interim filings made to keep the materials filed with the
49 29 division current and accurate. The annual filing shall be
49 30 accompanied by a filing fee in the amount of one hundred
49 31 dollars.
49 32 c. b. A provider shall promptly file the following
49 33 information with the commissioner:
49 34 (1) A change in the name or ownership of the provider.
49 35 (2) The termination of the provider's business.
50 1 A provider is not required to submit a fee as part of this
50 2 filing.
50 3 Sec. 91. Section 516E.4, subsection 1, Code Supplement
50 4 2005, is amended by striking the subsection and inserting in
50 5 lieu thereof the following:
50 6 1. REQUIREMENTS. A reimbursement insurance policy
50 7 insuring a service contract issued, sold, or offered for sale
50 8 in this state shall provide for all of the following:
50 9 a. The reimbursement insurance policy shall, in the event
50 10 of the service company's failure to perform under the service
50 11 contract or otherwise, either reimburse or pay on behalf of
50 12 the service company any covered amounts that the service
50 13 company is legally obligated to pay under the service
50 14 contract, including the return of any unearned service company
50 15 fee owed by the service company to the service contract
50 16 holder.
50 17 b. An insurer that issues a reimbursement insurance policy
50 18 shall assume full responsibility for the administration of
50 19 claims made pursuant to a service contract in the event that
50 20 the service company is unable to do so.
50 21 c. If a service covered under a service contract is not
50 22 provided by the service company within sixty days of proof of
50 23 loss by the service contract holder, the service contract
50 24 holder is entitled to apply directly against the reimbursement
50 25 insurance policy of the service company.
50 26 Sec. 92. Section 516E.4, Code Supplement 2005, is amended
50 27 by adding the following new subsections:
50 28 NEW SUBSECTION. 4. OBLIGATIONS INSURED. If a service
50 29 company secures its service contracts with a reimbursement
50 30 insurance policy, the reimbursement insurance policy shall
50 31 insure one hundred percent of the obligations of all service
50 32 contracts sold by the service company.
50 33 NEW SUBSECTION. 5. QUALIFICATIONS OF INSURER. An insurer
50 34 issuing a reimbursement insurance policy under this chapter
50 35 shall be authorized, registered, or otherwise permitted to
51 1 transact business in this state, or shall be an excess and
51 2 surplus lines insurer authorized, registered, or otherwise
51 3 permitted to transact business in this state, and shall meet
51 4 one of the following requirements:
51 5 a. At the time the policy is filed with the commissioner,
51 6 and continuously thereafter, the insurer maintains surplus as
51 7 to policyholders and paid=in capital of at least fifteen
51 8 million dollars and annually files copies of the insurer's
51 9 financial statements, national association of insurance
51 10 commissioners annual statement, and actuarial certification,
51 11 if required and filed in the insurer's state of domicile.
51 12 b. At the time the policy is filed with the commissioner
51 13 and continuously thereafter, the insurer does all of the
51 14 following:
51 15 (1) Maintains surplus as to policyholders and paid=in
51 16 capital of less than fifteen million dollars but at least ten
51 17 million dollars.
51 18 (2) Demonstrates to the satisfaction of the commissioner
51 19 that the insurer maintains a ratio of net written premiums,
51 20 wherever written, to surplus as to policyholders and paid=in
51 21 capital of not greater than three to one.
51 22 (3) Files copies annually of the insurer's financial
51 23 statements, national association of insurance commissioners
51 24 annual statement, and actuarial certification, if required and
51 25 filed in the insurer's state of domicile.
51 26 Sec. 93. Section 516E.5, subsection 1, Code Supplement
51 27 2005, is amended to read as follows:
51 28 1. a. A service contract insured by a reimbursement
51 29 insurance policy shall not be issued, sold, or offered for
51 30 sale in this state unless the contract conspicuously states
51 31 that the obligations of the service company to the service
51 32 contract holder are guaranteed under a reimbursement insurance
51 33 policy, including a statement in substantially the following
51 34 form:
51 35 "Obligations of the service company under this service
52 1 contract are guaranteed under a reimbursement insurance
52 2 policy. If the service company fails to pay or provide
52 3 service on a claim within sixty days after proof of loss has
52 4 been filed with the service company, the service contract
52 5 holder is entitled to make a claim directly against the
52 6 reimbursement insurance policy."
52 7 b. A claim against a reimbursement insurance policy shall
52 8 also include a claim for return of the unearned consideration
52 9 service company fee paid for the service contract in excess of
52 10 the premium paid. A service contract shall conspicuously
52 11 state the name and address of the issuer of the reimbursement
52 12 insurance policy for that service contract.
52 13 c. A service contract issued, sold, or offered for sale in
52 14 this state that is not insured under a reimbursement insurance
52 15 policy shall contain a statement in substantially the
52 16 following form:
52 17 "Obligations of the service company under this service
52 18 contract are backed by the full faith and credit of the
52 19 service company."
52 20 Sec. 94. Section 516E.5, subsection 2, paragraphs a and b,
52 21 Code Supplement 2005, are amended to read as follows:
52 22 a. Clearly and conspicuously states the name and address
52 23 of the service company, and describes the service company's
52 24 obligations to perform services or to arrange for the
52 25 performance of services under the service contract, and states
52 26 that the obligations of the service company to the service
52 27 contract holder are guaranteed under a reimbursement insurance
52 28 policy.
52 29 b. Clearly and conspicuously states the name and address
52 30 of the issuer of the reimbursement insurance policy, if
52 31 applicable.
52 32 Sec. 95. Section 516E.9, Code Supplement 2005, is amended
52 33 to read as follows:
52 34 516E.9 MISREPRESENTATIONS OF STATE APPROVAL.
52 35 A service company shall not represent or imply in any
53 1 manner that the service company has been sponsored,
53 2 recommended, or approved or that the service company's
53 3 abilities or qualifications have in any respect been passed
53 4 upon by the state of Iowa, including the commissioner, the
53 5 insurance division, or the division's securities and regulated
53 6 industries bureau.
53 7 Sec. 96. Section 516E.15, subsection 1, paragraph b, Code
53 8 Supplement 2005, is amended to read as follows:
53 9 b. A provider, or service company, or third=party
53 10 administrator that fails to file documents and information
53 11 with the commissioner as required pursuant to section 516E.3
53 12 may be subject to a civil penalty. The amount of the civil
53 13 penalty shall not be more than four hundred dollars plus two
53 14 dollars for each service contract that the person executed
53 15 prior to satisfying the filing requirement. However, a person
53 16 who fails to file information regarding a change in the name
53 17 or the termination of the business of a provider, or service
53 18 company, or third=party administrator as required pursuant to
53 19 section 516E.3 is subject to a civil penalty of not more than
53 20 five hundred dollars.
53 21 Sec. 97. NEW SECTION. 516E.20 APPLICATION OF INSURANCE
53 22 LAWS.
53 23 The sale of a service contract under this chapter shall not
53 24 be deemed to include the sale of insurance. Unless a service
53 25 company, third=party administrator, or provider is otherwise
53 26 engaged in the sale of insurance, the insurance laws of this
53 27 state are not applicable to the service company, third party
53 28 administrator, or provider of such a service contract.
53 29 Sec. 98. NEW SECTION. 516E.21 FINANCIAL RESPONSIBILITY
53 30 AND SECURITY REQUIREMENTS IN LIEU OF REIMBURSEMENT INSURANCE
53 31 POLICY.
53 32 1. In lieu of obtaining a reimbursement insurance policy
53 33 as provided in section 516E.2, subsection 3, a service company
53 34 may secure its service contracts by maintaining a funded
53 35 reserve account which complies with all of the following:
54 1 a. The reserve account shall be in a custodial account at
54 2 a financial institution that is dedicated to the service
54 3 company's outstanding obligations under service contracts
54 4 issued and outstanding in this state.
54 5 b. The reserve account shall comply with rules adopted by
54 6 the commissioner pursuant to chapter 17A establishing
54 7 requirements for reserve accounts, reserve account agreements,
54 8 or the method of valuing marketable securities as necessary to
54 9 protect holders of service contracts issued and outstanding in
54 10 this state. The commissioner may require amendments to
54 11 reserve account agreements that are not in compliance with the
54 12 provisions of this section.
54 13 c. The reserve account shall not be an amount that is less
54 14 than forty percent of the gross consideration received, less
54 15 claims paid, on the sale of service contracts issued and
54 16 outstanding by the service company in this state.
54 17 d. The reserve account shall be subject to examination and
54 18 review by the commissioner or a designee on the premises of
54 19 the financial institution where the account is located and the
54 20 financial institution shall, upon request, produce documents
54 21 or records as necessary to allow the commissioner or a
54 22 designee to verify the value and safety of the assets of the
54 23 reserve account.
54 24 2. The service company shall annually provide the
54 25 commissioner with one of the following:
54 26 a. A copy of the service company's financial statements.
54 27 b. If the service company's financial statements are
54 28 consolidated with those of its parent company, a copy of the
54 29 parent company's most recent form 10=K or form 20=F filed with
54 30 the federal securities and exchange commission within the last
54 31 calendar year, or if the parent company does not file with the
54 32 federal securities and exchange commission, a copy of the
54 33 parent company's audited financial statements showing a net
54 34 worth of at least one hundred million dollars. If the service
54 35 company's financial statements are consolidated with those of
55 1 its parent company, the service company shall also provide a
55 2 copy of a written agreement by the parent company guaranteeing
55 3 the obligations of the service company under service contracts
55 4 issued and outstanding by the service company in this state.
55 5 3. If a service contract company secures its contracts by
55 6 maintaining a funded reserve account as provided in subsection
55 7 1 but does not have or maintain a minimum net worth or
55 8 stockholders equity of one hundred million dollars or more,
55 9 the service company shall also meet one of the following
55 10 requirements:
55 11 a. Maintain a security deposit trust fund which complies
55 12 with all of the following:
55 13 (1) The security deposit trust fund shall be in an account
55 14 at a financial institution.
55 15 (2) The security deposit trust fund shall be held,
55 16 invested, and administered for the benefit and protection of
55 17 service contract holders in this state in the event of
55 18 nonperformance of the service contract by the service company.
55 19 (3) The security deposit trust fund shall comply with
55 20 rules adopted by the commissioner pursuant to chapter 17A,
55 21 establishing the form, terms, and conditions of security
55 22 deposit trust fund agreements established pursuant to this
55 23 paragraph "a".
55 24 (4) The security deposit trust fund shall be subject to
55 25 recovery by any service contract holder sustaining actionable
55 26 injury due to the failure of the service company to perform
55 27 its obligations under the service contract. A holder of a
55 28 service contract issued in this state may, in the event of
55 29 nonperformance by the service company, maintain an action and
55 30 file a claim against the security deposit trust fund
55 31 maintained by the service company.
55 32 (5) The security deposit trust fund shall not be
55 33 commingled with other funds of the service company.
55 34 (6) The security deposit trust fund shall have a value of
55 35 not less than five percent of the gross consideration received
56 1 by the service company, less claims paid, for the sale of all
56 2 service contracts issued and in force in this state, but not
56 3 less than twenty=five thousand dollars, and consists of one or
56 4 more of the following:
56 5 (a) Cash.
56 6 (b) Securities of the type eligible for deposit by
56 7 insurers authorized to transact business in this state.
56 8 (c) Certificates of deposit.
56 9 (d) Another form of security as prescribed by the
56 10 commissioner by rule.
56 11 b. File a surety bond with the commissioner that is issued
56 12 by a surety company authorized to do business in this state,
56 13 and that complies with all of the following:
56 14 (1) The surety bond is conditioned upon the service
56 15 company's faithful performance of service contracts subject to
56 16 this chapter.
56 17 (2) The surety bond is for the benefit of and subject to
56 18 recovery by any service contract holder sustaining actionable
56 19 injury due to the failure of the service company to perform
56 20 its obligations under a service contract. The surety's
56 21 liability shall extend to all service contracts issued by the
56 22 service company and outstanding in this state. A holder of a
56 23 service contract issued in this state may, in the event of
56 24 nonperformance of the contract by the service company,
56 25 maintain an action and file a claim against the surety bond
56 26 filed by the service company.
56 27 (3) The surety bond is for an amount that is not less than
56 28 five percent of the gross consideration received by the
56 29 service company, less claims paid, for the sale of all service
56 30 contracts issued and in force in this state, but not less than
56 31 twenty=five thousand dollars.
56 32 (4) The surety bond cannot be canceled by the surety
56 33 except upon written notice of cancellation by the surety to
56 34 the commissioner by restricted certified mail, and not prior
56 35 to the expiration of sixty days after receipt of the notice by
57 1 the commissioner.
57 2 Sec. 99. Section 518.15, Code 2005, is amended to read as
57 3 follows:
57 4 518.15 REPORTS, AND EXAMINATIONS, AND RENEWALS.
57 5 1. The president or the vice president and secretary of
57 6 each association authorized to do business under this chapter
57 7 shall annually before the first day of March prepare under
57 8 oath and file with the commissioner of insurance a full, true
57 9 and complete statement of the condition of such association on
57 10 the last day of the preceding year. The commissioner of
57 11 insurance shall prescribe the report forms and shall determine
57 12 the information and data to be reported.
57 13 2. Such associations shall pay the same expenses of any
57 14 examination made or ordered to be made by the commissioner of
57 15 insurance and the same fees for the annual reports and annual
57 16 certificates of authority as are required to be paid by
57 17 domestic companies organized and doing business under chapter
57 18 515, which certificates shall expire June 1 of the year
57 19 following the date of issue.
57 20 3. A certificate of authority of an association formed
57 21 under this chapter expires on June 1 succeeding its issue and
57 22 shall be renewed annually so long as the association transacts
57 23 its business in accordance with all legal requirements. An
57 24 association shall submit annually, on or before March 1, a
57 25 completed application for renewal of its certificate of
57 26 authority.
57 27 4. The commissioner shall refuse to renew the certificate
57 28 of authority of an association that fails to comply with the
57 29 provisions of this chapter.
57 30 5. An association formed under this chapter that fails to
57 31 timely file the statement required under subsection 1 or the
57 32 application for renewal required under subsection 3 is in
57 33 violation of this section and shall pay an administrative
57 34 penalty of five hundred dollars to the treasurer of state for
57 35 deposit in the general fund of the state as provided in
58 1 section 505.7. The association's right to transact new
58 2 business in this state shall immediately cease until the
58 3 association has fully complied with this chapter.
58 4 6. The commissioner may give notice to an association that
58 5 the association has not timely filed the statement required
58 6 under subsection 1 or an application for renewal under
58 7 subsection 3 and is in violation of this section. If the
58 8 association fails to file the required statement or
58 9 application and comply with this section within ten days of
58 10 the date of the notice, the association shall pay an
58 11 additional administrative penalty of one hundred dollars for
58 12 each day that the failure continues to the treasurer of state
58 13 for deposit in the general fund of the state as provided in
58 14 section 505.7.
58 15 Sec. 100. Section 518A.18, Code 2005, is amended to read
58 16 as follows:
58 17 518A.18 ANNUAL REPORT == PENALTIES.
58 18 1. An association doing business under this chapter, on or
58 19 before March 1 of each year, shall prepare under oath and file
58 20 with the commissioner of insurance an accurate and complete
58 21 statement of the condition of the association as of the last
58 22 day of the preceding calendar year. The statement shall
58 23 conform to the annual statement blank prepared pursuant to
58 24 instructions prescribed by the commissioner. All financial
58 25 information reflected in the annual report shall be kept and
58 26 prepared pursuant to accounting practices and procedures
58 27 prescribed by the commissioner. Statements filed with the
58 28 commissioner pursuant to this section shall be tabulated and
58 29 published by the commissioner of insurance in the annual
58 30 report of insurance.
58 31 2. An association that fails to timely file the statement
58 32 required under subsection 1 is in violation of this section
58 33 and shall pay an administrative penalty of five hundred
58 34 dollars for each violation to the treasurer of state for
58 35 deposit in the general fund of the state as provided in
59 1 section 505.7.
59 2 3. The commissioner may give notice to an association that
59 3 the association has not timely filed the statement required
59 4 under subsection 1 and is in violation of this section. If
59 5 the association fails to file the required statement and
59 6 comply with this section within ten days of the date of the
59 7 notice, the association shall pay an additional administrative
59 8 penalty of one hundred dollars for each day that each failure
59 9 continues to the treasurer of state for deposit in the general
59 10 fund of the state as provided in section 505.7.
59 11 4. The association's right to transact new business in
59 12 this state shall immediately cease until the association has
59 13 fully complied with this chapter.
59 14 Sec. 101. Section 518A.35, subsection 1, Code 2005, is
59 15 amended to read as follows:
59 16 1. A state mutual insurance association doing business
59 17 under this chapter shall on or before the first day of March,
59 18 each year, pay to the director of revenue, or a depository
59 19 designated by the director, a sum equivalent to the applicable
59 20 percent of the gross receipts from premiums and fees for
59 21 business done within the state, including all insurance upon
59 22 property situated in the state without including or deducting
59 23 any amounts received or paid for reinsurance. However, a
59 24 company reinsuring windstorm or hail risks written by county
59 25 mutual insurance associations is required to pay the
59 26 applicable percent tax on the gross amount of reinsurance
59 27 premiums received written upon such risks, but after deducting
59 28 the amount returned upon canceled policies and rejected
59 29 applications covering property situated within the state, and
59 30 dividends returned to policyholders on property situated
59 31 within the state. For purposes of this section, "applicable
59 32 percent" means the same as specified in section 432.1,
59 33 subsection 4.
59 34 Sec. 102. Section 518A.40, Code 2005, is amended to read
59 35 as follows:
60 1 518A.40 ANNUAL FEES == RENEWALS == PENALTIES.
60 2 1. Such associations shall pay the same fees for annual
60 3 reports and annual certificates of authority as are required
60 4 to be paid by domestic companies organized and doing business
60 5 under chapter 515, which certificates shall expire May 1 of
60 6 the year following the date of issue.
60 7 2. A certificate of authority of an association formed
60 8 under this chapter shall be renewed annually so long as the
60 9 organization transacts its business in accordance with all
60 10 legal requirements. Such an association shall submit
60 11 annually, on or before March 1, a completed application for
60 12 renewal of its certificate of authority.
60 13 3. The commissioner shall refuse to renew the certificate
60 14 of authority of a state mutual insurance association that
60 15 fails to comply with the provisions of this chapter and the
60 16 association's right to transact new business in this state
60 17 shall immediately cease until the association has so complied.
60 18 4. An association that fails to timely file the
60 19 application for renewal required under subsection 2 is in
60 20 violation of this section and shall pay an administrative
60 21 penalty of five hundred dollars to the treasurer of state for
60 22 deposit in the general fund of the state as provided in
60 23 section 505.7.
60 24 Sec. 103. Section 518C.17, Code 2005, is amended to read
60 25 as follows:
60 26 518C.17 ACTIONS AGAINST THE ASSOCIATION.
60 27 An action against the association shall be brought against
60 28 it in the association's own name and only in the Polk county
60 29 district court. Service of original notice in an action
60 30 against the association may shall be made on any officer of
60 31 the association or upon the commissioner of insurance on its
60 32 behalf. The commissioner shall promptly transmit any notice
60 33 served upon the commissioner to the association.
60 34 Sec. 104. Section 520.4, subsection 9, Code 2005, is
60 35 amended by striking the subsection.
61 1 Sec. 105. Section 520.5, Code 2005, is amended to read as
61 2 follows:
61 3 520.5 ACTIONS == VENUE == COMMISSIONER AS PROCESS AGENT.
61 4 Concurrently with the filing of the declaration provided
61 5 for by the terms of section 520.4, the attorney shall file
61 6 with the commissioner of insurance, an instrument in writing
61 7 executed by the attorney for said subscribers, conditioned
61 8 that, upon the issuance of certificate of authority provided
61 9 for in this chapter, action may be brought in the county in
61 10 which the property or person insured thereunder is located,
61 11 and that service of process shall be had upon the commissioner
61 12 of insurance or upon the attorney in fact in all suits in this
61 13 state, whether arising out of such policies, contracts,
61 14 agreements or otherwise, which service shall be valid and
61 15 binding upon all subscribers exchanging at any time reciprocal
61 16 or interinsurance contracts through such attorney. All suits
61 17 of every kind and description brought against such reciprocal
61 18 exchange or the subscribers thereto on account of their
61 19 connection therewith, must be brought against the attorney in
61 20 fact therefor or the exchange as such, and shall not be
61 21 brought against any of the subscribers thereto individually on
61 22 account of their connection with or membership in such
61 23 reciprocal exchange, and must be brought in the manner and
61 24 method above provided.
61 25 Sec. 106. Section 520.7, Code 2005, is amended to read as
61 26 follows:
61 27 520.7 JUDGMENT == SATISFACTION.
61 28 A judgment rendered in any such case where service of
61 29 process has been so had upon the commissioner of insurance,
61 30 attorney in fact shall be valid and binding against any and
61 31 all such subscribers as their interests appear and such
61 32 judgment may be satisfied out of the funds in the possession
61 33 of the attorney belonging to such subscribers.
61 34 Sec. 107. Section 520.10, Code 2005, is amended to read as
61 35 follows:
62 1 520.10 ANNUAL REPORT == EXAMINATION == PENALTIES.
62 2 1. Such attorney shall, within the time limited for filing
62 3 the annual statement by insurance companies transacting the
62 4 same kind of business, make a report, under oath, to the
62 5 commissioner of insurance for each calendar year, showing the
62 6 financial condition of affairs at the office where such
62 7 contracts are issued and shall, at any and all times, furnish
62 8 such additional information and reports as may be required;
62 9 provided, however, that the attorney shall not be required to
62 10 furnish the names and addresses of any subscribers except in
62 11 case of an unpaid final judgment. The business affairs,
62 12 records, and assets of any such organization shall be subject
62 13 to examination by the commissioner of insurance at any
62 14 reasonable time, and such examination shall be at the expense
62 15 of the organization examined.
62 16 2. A certificate of authority of a reciprocal or
62 17 interinsurance insurer authorized under this chapter shall be
62 18 renewed annually in accordance with section 520.12 so long as
62 19 the insurer transacts its business in accordance with all
62 20 legal requirements.
62 21 3. The commissioner shall refuse to renew the certificate
62 22 of authority of a reciprocal or interinsurance insurer that
62 23 fails to comply with the provisions of this chapter and the
62 24 insurer's right to transact new business in this state shall
62 25 immediately cease until the insurer has so complied.
62 26 4. A reciprocal or interinsurance insurer that fails to
62 27 timely file the report required under subsection 1 is in
62 28 violation of this section and shall pay an administrative
62 29 penalty of five hundred dollars to the treasurer of state for
62 30 deposit in the general fund of the state as provided in
62 31 section 505.7.
62 32 5. The commissioner may give notice to a reciprocal or
62 33 interinsurance insurer that the insurer has not timely filed
62 34 the report required under subsection 1 and is in violation of
62 35 this section. If the insurer fails to file the required
63 1 report and comply with this section within ten days of the
63 2 date of the notice, the insurer shall pay an additional
63 3 administrative penalty of one hundred dollars for each day
63 4 that the failure continues to the treasurer of state for
63 5 deposit in the general fund of the state as provided in
63 6 section 505.7.
63 7 Sec. 108. Section 520.12, Code 2005, is amended to read as
63 8 follows:
63 9 520.12 CERTIFICATE OF AUTHORITY == RENEWAL == PENALTIES.
63 10 1. Upon compliance with the requirements of this chapter,
63 11 the commissioner of insurance shall issue a certificate of
63 12 authority or a license to the attorney, authorizing the
63 13 attorney to make such contracts of insurance, which license
63 14 shall specify the kind or kinds of insurance and shall contain
63 15 the name of the attorney, the location of the principal office
63 16 and the name or designation under which such contracts of
63 17 insurance are issued. The certificate of authority shall
63 18 expire on the first day of June next succeeding its issue, and
63 19 shall be renewed annually as long as the company transacts
63 20 business in accordance with the requirements of law. A copy
63 21 of the certificate, when certified by the commissioner of
63 22 insurance, shall be admissible in evidence for or against a
63 23 company with the same effect as the original.
63 24 2. A reciprocal or interinsurance insurer shall submit
63 25 annually, on or before March 1, a completed application for
63 26 renewal of the insurer's certificate of authority. An insurer
63 27 that fails to timely file an application for renewal shall pay
63 28 an administrative fee of five hundred dollars to the treasurer
63 29 of state for deposit in the general fund of the state as
63 30 provided in section 505.7.
63 31 Sec. 109. Section 521.1, Code 2005, is amended to read as
63 32 follows:
63 33 521.1 DEFINITIONS.
63 34 For the purposes of this chapter:
63 35 1. "Affected company" or "affected mutual company" means
64 1 the company being merged with and into the surviving company.
64 2 2. "Commission" means the commission created in section
64 3 521.5.
64 4 3. "Commissioner" means the commissioner of insurance.
64 5 4. "Company" or "companies" when used in this chapter
64 6 means a company or association organized under chapter 508,
64 7 511, 515, 518, 518A, or 520, and includes a mutual insurance
64 8 holding company organized pursuant to section 521A.14.
64 9 Sec. 110. Section 521.2, Code 2005, is amended to read as
64 10 follows:
64 11 521.2 LIFE COMPANIES == CONSOLIDATION, MERGER, AND
64 12 REINSURANCE.
64 13 1. One or more domestic mutual insurance companies
64 14 organized under chapter 491 may merge or consolidate with a
64 15 domestic or foreign mutual insurance company as provided in
64 16 this chapter. Sections 491.101 through 491.105 shall not be
64 17 applicable to a merger or consolidation of a domestic mutual
64 18 insurance company pursuant to this chapter.
64 19 2. One or more domestic insurance companies organized
64 20 under chapter 490 may merge with a domestic or foreign
64 21 insurance company as provided in chapter 490 with the approval
64 22 of the commission pursuant to this chapter.
64 23 3. The provisions of this chapter shall not be applicable
64 24 to the merger or consolidation of a domestic mutual company
64 25 with a stock company pursuant to chapter 508B or chapter 515G.
64 26 4. A domestic mutual insurance company organized under the
64 27 laws of this state to do the business of life insurance,
64 28 either on the stock, mutual, stipulated premium, or assessment
64 29 plan, shall not consolidate with any other company or reinsure
64 30 its risks, or any part of such risks, with any other company,
64 31 or assume or reinsure the whole or any part of the risks of
64 32 any other company, except as provided in this chapter.
64 33 However, this chapter shall not be construed to prevent any
64 34 company, as defined in section 521.1, from reinsuring a
64 35 fractional part of any single risk.
65 1 Sec. 111. Section 521.3, Code 2005, is amended by striking
65 2 the section and inserting in lieu thereof the following:
65 3 521.3 SUBMISSION OF PLAN AND APPLICATION TO COMMISSIONER
65 4 OF INSURANCE.
65 5 Any company proposing to consolidate, merge, or enter into
65 6 any reinsurance contract with another company shall file a
65 7 plan and an application in support of the plan with the
65 8 commissioner. The plan shall set forth the terms of the
65 9 proposed contract of consolidation, merger, or reinsurance,
65 10 along with any other information requested by the
65 11 commissioner.
65 12 Sec. 112. Section 521.4, Code 2005, is amended by striking
65 13 the section and inserting in lieu thereof the following:
65 14 521.4 PROCEDURE == NOTICE.
65 15 The commission may hear and determine an application, and
65 16 approve, disapprove, or require modification of a plan
65 17 submitted under section 521.3 without notice and without
65 18 public hearing. The commission may require a public hearing
65 19 when necessary to conserve the interests of the members,
65 20 policyholders, or shareholders of the affected company. In
65 21 such cases the commission shall require the affected company
65 22 to mail to all of its members, policyholders, or shareholders
65 23 written notice of the public hearing stating that an
65 24 application and plan have been filed with the commission, the
65 25 nature of the plan, and the date, time, and place of the
65 26 public hearing on the application and plan. The commission
65 27 shall determine the number of days prior to the public hearing
65 28 that notice is required to be given to the members or
65 29 shareholders, which shall be no fewer than ten nor more than
65 30 sixty days.
65 31 Sec. 113. Section 521.5, Code 2005, is amended to read as
65 32 follows:
65 33 521.5 COMMISSION TO HEAR PETITION CREATED.
65 34 For the purpose of hearing and determining such petition, a
65 35 A commission consisting of the commissioner of insurance and
66 1 the attorney general is hereby created to hear and determine
66 2 the application and to approve, disapprove, or require
66 3 modification of the plan prior to approval.
66 4 Sec. 114. Section 521.6, Code 2005, is amended to read as
66 5 follows:
66 6 521.6 EXAMINATION.
66 7 The commission may make such examination into examine the
66 8 affairs and condition of any company or companies as it may
66 9 deem deems proper, and shall have the power to summon and
66 10 compel the attendance and testimony of witnesses, and the
66 11 production of books and papers before said the commission and
66 12 may administer oaths.
66 13 Sec. 115. Section 521.7, Code 2005, is amended to read as
66 14 follows:
66 15 521.7 APPEARANCE BY MEMBERS, POLICYHOLDERS, OR
66 16 SHAREHOLDERS.
66 17 When notice shall have been is given as above provided in
66 18 section 521.4, any member, policyholder, or stockholder
66 19 shareholder of said the affected company or companies shall
66 20 have the right to appear before said the commission and be
66 21 heard with reference to said petition regarding the
66 22 application and plan.
66 23 Sec. 116. Section 521.8, Code 2005, is amended to read as
66 24 follows:
66 25 521.8 AUTHORIZATION.
66 26 Said The commission, if satisfied that the interests of the
66 27 members, policyholders, or shareholders of said the affected
66 28 company or companies are properly protected and no reasonable
66 29 objection to said petition the application and plan exists,
66 30 may authorize approve, disapprove, or require modification of
66 31 the proposed plan of consolidation, merger, or reinsurance or
66 32 may direct such modification thereof as may seem to it best
66 33 for the interests of the policyholders; and said prior to
66 34 approval. The commission may make such order and disposition
66 35 of the assets of any such company thereafter remaining as
67 1 shall be just and equitable.
67 2 Sec. 117. Section 521.10, Code 2005, is amended by
67 3 striking the section and inserting in lieu thereof the
67 4 following:
67 5 521.10 ELECTION CALLED.
67 6 1. The commission may require an affected company to
67 7 submit the plan of consolidation, merger, or reinsurance to a
67 8 vote by its members. The plan shall be submitted at a meeting
67 9 called for that purpose, upon not less than thirty days'
67 10 notice. Member approval of the plan requires the affirmative
67 11 vote of two=thirds of all members voting in person, by ballot,
67 12 or by proxy.
67 13 2. Approval by the members of a mutual company of a plan
67 14 of merger or reinsurance is not required if all of the
67 15 following conditions are satisfied:
67 16 a. The company will survive the merger or is the
67 17 reinsurer.
67 18 b. At the time of the merger or reinsurance, the number of
67 19 members of the surviving company is greater than the number of
67 20 members of the affected company.
67 21 c. At the time of the merger or reinsurance, the surplus
67 22 of the surviving company is greater than the surplus of the
67 23 affected company.
67 24 Sec. 118. Section 521.13, Code 2005, is amended by
67 25 striking the section and inserting in lieu thereof the
67 26 following:
67 27 521.13 REINSURANCE TRANSACTIONS == EXEMPTION.
67 28 Reinsurance as provided in sections 515.49, 518.17,
67 29 518A.44, and 520.21 is exempt from the requirements of this
67 30 chapter.
67 31 Sec. 119. Section 521.14, Code 2005, is amended to read as
67 32 follows:
67 33 521.14 EXPENSES AND COSTS == HOW PAID.
67 34 All expenses and costs incident to proceedings under the
67 35 provisions of this chapter, shall be paid by the company or
68 1 companies bringing filing the petition application and plan.
68 2 Sec. 120. Section 521.16, Code 2005, is amended to read as
68 3 follows:
68 4 521.16 APPLICABILITY OF CHAPTER SECTION 521A.3.
68 5 Chapter 521A is The provisions of section 521A.3 shall also
68 6 be applicable to a merger or consolidation made pursuant
68 7 subject to this chapter, and the provisions of chapter 521A
68 8 and this chapter shall apply exclusively with respect to such
68 9 merger or consolidation.
68 10 Sec. 121. NEW SECTION. 521.17 ADDITIONAL FILING
68 11 REQUIREMENTS == PLANS AND ARTICLES OF MERGER OR CONSOLIDATION.
68 12 A company filing a plan to merge or consolidate shall, in
68 13 addition to and after meeting the requirements of this
68 14 chapter, make all appropriate filings with and pay appropriate
68 15 fees to the secretary of state required under chapter 490 or
68 16 491.
68 17 Sec. 122. NEW SECTION. 521.18 ARTICLES OF MERGER OR
68 18 CONSOLIDATION == FILING FEES AND APPROVAL.
68 19 A company filing a plan to merge or consolidate under the
68 20 provisions of this chapter shall file its articles of merger
68 21 or consolidation with the commission for its approval. The
68 22 fee for filing articles of merger or consolidation with the
68 23 commission is fifty dollars.
68 24 Sec. 123. Section 521A.1, subsection 6, Code 2005, is
68 25 amended to read as follows:
68 26 6. "Insurer" means a company qualified and licensed by the
68 27 insurance division to transact the business of insurance in
68 28 this state by certificate issued pursuant to chapters 508,
68 29 512B, 514, 514B, 515, 515E, and 520, except that it shall not
68 30 include:
68 31 a. Agencies agencies, authorities, or instrumentalities of
68 32 the United States, its possessions and territories, the
68 33 commonwealth of Puerto Rico, the District of Columbia, or a
68 34 state or political subdivision of a state.
68 35 b. Fraternal benefit societies.
69 1 c. Nonprofit medical, hospital or dental service
69 2 associations.
69 3 Sec. 124. Section 521A.2, subsection 1, paragraph c, Code
69 4 2005, is amended to read as follows:
69 5 c. Investing, reinvesting, or trading in securities and
69 6 financial instruments as defined in section 511.8, subsection
69 7 22, for its own account, that of its parent, any subsidiary of
69 8 its parent, or any affiliate or subsidiary.
69 9 Sec. 125. Section 521A.2, subsection 3, Code 2005, is
69 10 amended by adding the following new paragraph:
69 11 NEW PARAGRAPH. d. Invest, reinvest, and trade in
69 12 financial instruments as defined in section 511.8, subsection
69 13 22, for its own account, that of its parent, any subsidiary of
69 14 its parent, or any affiliate or subsidiary.
69 15 Sec. 126. Section 521A.3, subsection 7, Code 2005, is
69 16 amended to read as follows:
69 17 7. JURISDICTION == CONSENT TO SERVICE OF PROCESS. The
69 18 district court is hereby vested with jurisdiction over every
69 19 person not resident, domiciled, or authorized to do business
69 20 in this state who files a statement with the commissioner
69 21 under this section, and over all actions involving such person
69 22 arising out of violations of this section, and each such
69 23 person shall be deemed to have performed acts equivalent to
69 24 and constituting an appointment by such a person of the
69 25 commissioner to be the person's true and lawful attorney upon
69 26 whom may be served all lawful process, notice or demand in any
69 27 action, suit or proceeding arising out of violations of this
69 28 section. Copies of all such lawful process, notice or demand
69 29 shall be served on the commissioner and transmitted by
69 30 registered or certified mail by the commissioner to such
69 31 person at the person's last known address.
69 32 Sec. 127. Section 521B.2, subsection 6, paragraph a,
69 33 subparagraph (2), Code 2005, is amended to read as follows:
69 34 (2) That the commissioner or an attorney designated in the
69 35 agreement is the true and lawful attorney of the assuming
70 1 insurer upon whom may be served any lawful process in any
70 2 action, suit, or proceeding instituted by or on behalf of the
70 3 ceding company.
70 4 Sec. 128. Section 521C.3, subsection 4, paragraph b, Code
70 5 2005, is amended to read as follows:
70 6 b. A reinsurance intermediary license applicant, as a
70 7 condition precedent to receiving or holding a license, shall
70 8 designate the commissioner as agent for service of process,
70 9 and also shall furnish the commissioner with the name and
70 10 address of a resident of this state upon whom notices or
70 11 orders of the commissioner or process affecting such
70 12 nonresident reinsurance intermediary may be served. The
70 13 licensee shall promptly notify the commissioner in writing of
70 14 a change of the designated agent for service of process, and
70 15 the change becomes effective upon acknowledgment by the
70 16 commissioner.
70 17 Sec. 129. NEW SECTION. 522B.16B WRITTEN CONSENT TO
70 18 ENGAGE OR PARTICIPATE IN BUSINESS OF INSURANCE.
70 19 1. A person who is prohibited by 18 U.S.C. } 1033 from
70 20 engaging or participating in the business of insurance because
70 21 that person has been convicted of a crime under that statute
70 22 or of a felony involving dishonesty or breach of trust may
70 23 apply to the commissioner for written consent to engage or
70 24 participate in the business of insurance in this state.
70 25 2. The commissioner, by rule, shall establish a procedure
70 26 and standards for issuing such a written consent.
70 27 3. The commissioner shall not issue an insurance producer
70 28 license to an applicant who has been convicted of a crime as
70 29 set forth in subsection 1 unless the applicant has first
70 30 obtained a written consent from the commissioner to engage or
70 31 participate in the business of insurance in this state.
70 32 4. The commissioner shall not renew or issue an insurance
70 33 producer license to an insurance producer licensee who has
70 34 been convicted of a crime as set forth in subsection 1, unless
70 35 that licensee has first obtained a written consent from the
71 1 commissioner to engage or participate in the business of
71 2 insurance in this state.
71 3 Sec. 130. Section 523A.601, subsection 1, paragraph i,
71 4 Code 2005, is amended to read as follows:
71 5 i. Include an explanation of regulatory oversight by the
71 6 insurance division in twelve point boldface type, in
71 7 substantially the following language:
71 8 THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY THE IOWA
71 9 INSURANCE DIVISION. YOU MAY CALL THE INSURANCE DIVISION AT
71 10 (..) ..... (515)281=4441. WRITTEN INQUIRIES OR COMPLAINTS
71 11 SHOULD BE MAILED TO THE IOWA SECURITIES AND REGULATED
71 12 INDUSTRIES BUREAU, (STREET ADDRESS), (CITY) 330 MAPLE STREET,
71 13 DES MOINES, IOWA (ZIP CODE) 50319.
71 14 Sec. 131. Section 523A.602, subsection 2, paragraph b,
71 15 Code 2005, is amended by adding the following new
71 16 subparagraph:
71 17 NEW SUBPARAGRAPH. (1A) If a purchase agreement is
71 18 canceled before the purchase price is paid in full, a
71 19 purchaser requests a transfer of the trust assets upon
71 20 cancellation of a purchase agreement before the purchase price
71 21 is paid in full, or another establishment provides cemetery
71 22 merchandise, funeral merchandise, funeral services, or a
71 23 combination thereof, designated in a purchase agreement before
71 24 the purchase price is paid in full, the seller shall refund or
71 25 transfer within thirty days of receiving a written demand no
71 26 less than the amount paid by the purchaser, less any actual
71 27 expenses incurred by the seller pursuant to the purchase
71 28 agreement as set forth in the purchase agreement under section
71 29 523A.601, subsection 1, paragraph "f". The amount of the
71 30 actual expenses deducted by the seller shall not exceed ten
71 31 percent of the total original purchase price of the applicable
71 32 cemetery merchandise, funeral merchandise, funeral services,
71 33 or a combination thereof. The seller may also deduct the
71 34 value of the cemetery merchandise, funeral merchandise, and
71 35 funeral services already received by, delivered to, or
72 1 warehoused for the purchaser.
72 2 Sec. 132. Section 523I.102, Code Supplement 2005, is
72 3 amended by adding the following new subsections:
72 4 NEW SUBSECTION. 0A. "Abandoned cemetery" means a cemetery
72 5 that is not operating on a regular basis, is not offering to
72 6 sell or provide interments or other services reasonably
72 7 necessary for interments, and is not providing or permitting
72 8 reasonable ingress or egress to the cemetery for the purpose
72 9 of visiting interment spaces.
72 10 NEW SUBSECTION. 49. "Veterans cemetery" means a cemetery
72 11 that is owned or operated by the state of Iowa or by the
72 12 United States for the burial of veterans.
72 13 Sec. 133. Section 523I.103, subsection 1, paragraph a,
72 14 Code Supplement 2005, is amended to read as follows:
72 15 a. All cemeteries, except religious cemeteries that
72 16 commenced business prior to July 1, 2005, and veterans
72 17 cemeteries.
72 18 Sec. 134. Section 523I.201, subsection 1, Code Supplement
72 19 2005, is amended to read as follows:
72 20 1. This chapter shall be administered by the commissioner.
72 21 The deputy administrator appointed pursuant to section
72 22 523A.801 502.601 shall be the principal operations officer
72 23 responsible to the commissioner for the routine administration
72 24 of this chapter and management of the administrative staff.
72 25 In the absence of the commissioner, whether because of vacancy
72 26 in the office due to absence, physical disability, or other
72 27 cause, the deputy administrator shall, for the time being,
72 28 have and exercise the authority conferred upon the
72 29 commissioner. The commissioner may by order from time to time
72 30 delegate to the deputy administrator any or all of the
72 31 functions assigned to the commissioner in this chapter. The
72 32 deputy administrator shall employ officers, attorneys,
72 33 accountants, and other employees as needed for administering
72 34 this chapter.
72 35 Sec. 135. Section 523I.309, subsection 1, Code Supplement
73 1 2005, is amended to read as follows:
73 2 1. Any available member of the following classes of
73 3 persons, in the priority listed, shall have the right to
73 4 control the interment, relocation, or disinterment of a
73 5 decedent's remains within or from a cemetery:
73 6 a. The attorney in fact of the decedent pursuant to a
73 7 durable power of attorney for health care.
73 8 b. a. The surviving spouse of the decedent, if not
73 9 legally separated from the decedent.
73 10 c. b. The decedent's surviving adult children. If there
73 11 is more than one surviving adult child, any adult child who
73 12 can confirm, in writing, that all other adult children have
73 13 been notified of the proposed interment, relocation, or
73 14 disinterment may authorize the interment, relocation, or
73 15 disinterment, unless the cemetery receives an objection to
73 16 such action from another adult child of the decedent.
73 17 Alternatively, a majority of the surviving adult children of
73 18 the decedent whose whereabouts are reasonably ascertainable
73 19 shall have such right to control.
73 20 d. c. A The surviving parent parents of the decedent
73 21 whose whereabouts are reasonably ascertainable.
73 22 d. A surviving adult grandchild of the decedent. If there
73 23 is more than one surviving adult grandchild, any adult
73 24 grandchild who can confirm, in writing, that all other adult
73 25 grandchildren have been notified of the proposed interment,
73 26 relocation, or disinterment may authorize the interment,
73 27 relocation, or disinterment, unless the cemetery receives an
73 28 objection to such action from another adult grandchild of the
73 29 decedent. Alternatively, a majority of the surviving adult
73 30 grandchildren of the decedent whose whereabouts are reasonably
73 31 ascertainable shall have such right to control.
73 32 e. A surviving adult sibling of the decedent. If there is
73 33 more than one surviving adult sibling, any adult sibling who
73 34 can confirm, in writing, that all other adult siblings have
73 35 been notified of the proposed interment, relocation, or
74 1 disinterment may authorize the interment, relocation, or
74 2 disinterment, unless the cemetery receives an objection to
74 3 such action from another adult sibling of the decedent.
74 4 Alternatively, a majority of the surviving adult siblings of
74 5 the decedent whose whereabouts are reasonably ascertainable
74 6 shall have such right to control.
74 7 f. A surviving grandparent of the decedent. If there is
74 8 more than one surviving grandparent, any grandparent who can
74 9 confirm, in writing, that all other grandparents have been
74 10 notified of the proposed interment, relocation, or
74 11 disinterment may authorize the interment, relocation, or
74 12 disinterment, unless the cemetery receives an objection to
74 13 such action from another grandparent of the decedent.
74 14 Alternatively, a majority of the surviving grandparents of the
74 15 decedent whose whereabouts are reasonably ascertainable shall
74 16 have such right to control.
74 17 g. The legal guardian of the decedent at the time of the
74 18 decedent's death. An adult person in the next degree of
74 19 kinship to the decedent in the order named by law to inherit
74 20 the estate of the decedent under the rules of inheritance for
74 21 intestate succession.
74 22 h. The county medical examiner, if responsible for the
74 23 decedent's remains.
74 24 A cemetery may await a court order before proceeding with
74 25 the interment, relocation, or disinterment of a decedent's
74 26 remains within or from a cemetery if the cemetery is aware of
74 27 a dispute between an authorized person under this section and
74 28 the executor named in the decedent's will or a personal
74 29 representative appointed by a court, or is aware of a dispute
74 30 among authorized persons with the same priority under this
74 31 subsection.
74 32 Sec. 136. Section 523I.312, subsection 2, paragraph n,
74 33 Code Supplement 2005, is amended by striking the paragraph and
74 34 inserting in lieu thereof the following:
74 35 n. Include an explanation of regulatory oversight by the
75 1 insurance division in twelve point boldface type, in
75 2 substantially the following language:
75 3 THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY THE IOWA
75 4 INSURANCE DIVISION. YOU MAY CALL THE INSURANCE DIVISION WITH
75 5 INQUIRIES OR COMPLAINTS AT (515)281=4441. WRITTEN INQUIRIES
75 6 OR COMPLAINTS SHOULD BE MAILED TO: IOWA SECURITIES AND
75 7 REGULATED INDUSTRIES BUREAU, 330 MAPLE STREET, DES MOINES,
75 8 IOWA 50319.
75 9 Sec. 137. Section 523I.316, subsection 3, Code Supplement
75 10 2005, is amended to read as follows:
75 11 3. DUTY TO PRESERVE AND PROTECT.
75 12 a. A governmental subdivision having a cemetery, or a
75 13 burial site that is not located within a dedicated cemetery,
75 14 within its jurisdiction, for which preservation is not
75 15 otherwise provided, shall preserve and protect the cemetery or
75 16 burial site as necessary to restore or maintain its physical
75 17 integrity as a cemetery or burial site. The governmental
75 18 subdivision may enter into an agreement to delegate the
75 19 responsibility for the preservation and protection of the
75 20 cemetery or burial site to a private organization interested
75 21 in historical preservation.
75 22 b. A governmental subdivision is authorized to expend
75 23 public funds, in any manner authorized by law, in connection
75 24 with such a cemetery or burial site.
75 25 c. As used in this subsection, "preserve and protect"
75 26 means to keep the cemetery or burial site and any records
75 27 thereof safe from destruction, peril, or other adversity, and
75 28 includes the placement of signs, markers, fencing, or other
75 29 appropriate features identifying the site as a cemetery or
75 30 burial site.
75 31 Sec. 138. NEW SECTION. 523I.317 DUTY TO PROVIDE PUBLIC
75 32 ACCESS.
75 33 A cemetery shall provide or permit public access to the
75 34 cemetery, at reasonable times and subject to reasonable
75 35 regulations, so that owners of interment rights and other
76 1 members of the public have reasonable ingress and egress to
76 2 the cemetery.
76 3 Sec. 139. NEW SECTION. 523I.403 ACQUISITION OF ABANDONED
76 4 CEMETERIES == GOVERNMENTAL SUBDIVISIONS.
76 5 1. A governmental subdivision may acquire an abandoned
76 6 cemetery, including ownership of any unsold interment spaces
76 7 in the cemetery. A governmental subdivision that acquires a
76 8 cemetery under this section shall have legal title to the
76 9 cemetery and is authorized to acquire land for use of the
76 10 cemetery, receive gifts, and receive and administer endowments
76 11 for the care of the cemetery or any part thereof.
76 12 2. A governmental subdivision shall use due diligence in
76 13 identifying the owners of an abandoned cemetery and shall
76 14 provide notice of its intent to acquire the cemetery as
76 15 provided in this section. If the governmental subdivision is
76 16 unable to locate the owner of the abandoned cemetery, the
76 17 governmental subdivision shall publish notice of its intent to
76 18 acquire the cemetery for three successive weeks in a newspaper
76 19 of general circulation in the county in which the cemetery is
76 20 located.
76 21 3. A cemetery's owner may object to the acquisition of a
76 22 cemetery by a governmental subdivision. In order to reassert
76 23 ownership rights to the cemetery, the owner shall provide or
76 24 permit public access to the cemetery, at reasonable times and
76 25 subject to reasonable regulations, so that owners of interment
76 26 rights and other members of the public have reasonable ingress
76 27 and egress to the cemetery. If the cemetery's owner provides
76 28 or permits such public access within twenty=four months after
76 29 receiving notice of the governmental subdivision's intent to
76 30 acquire the cemetery, the governmental subdivision shall not
76 31 proceed with its action to acquire the cemetery.
76 32 Sec. 140. NEW SECTION. 523I.404 ACQUISITION OF ABANDONED
76 33 CEMETERIES == CEMETERY ASSOCIATIONS.
76 34 1. Any person who has a relative interred in an abandoned
76 35 cemetery or who owns interment rights in an abandoned cemetery
77 1 may organize a cemetery association for the cemetery. The
77 2 cemetery association shall be incorporated as a nonprofit
77 3 corporation pursuant to chapter 504A. A corporation formed in
77 4 this manner may acquire legal title to the cemetery if an
77 5 owner cannot be located.
77 6 2. A cemetery association shall use due diligence in
77 7 identifying the owner of an abandoned cemetery and shall
77 8 provide notice of the association's intent to acquire the
77 9 cemetery as provided in this section. If the cemetery
77 10 association is unable to locate the owner of the abandoned
77 11 cemetery, the cemetery association shall publish notice of
77 12 intent to acquire the cemetery for three successive weeks in a
77 13 newspaper of general circulation in the county in which the
77 14 cemetery is located.
77 15 3. A cemetery's owner may object to the acquisition of a
77 16 cemetery by a cemetery association. In order to reassert
77 17 ownership rights to the cemetery, the owner shall provide or
77 18 permit public access to the cemetery, at reasonable times and
77 19 subject to reasonable regulations, so that members of the
77 20 cemetery association and other members of the public have
77 21 reasonable ingress and egress to the cemetery. If the
77 22 cemetery's owner provides or permits such public access within
77 23 twenty=four months after receiving notice of the interested
77 24 person's intent to acquire the cemetery, the cemetery
77 25 association shall not proceed with its action to acquire the
77 26 cemetery.
77 27 Sec. 141. Section 523I.508, subsection 4, Code Supplement
77 28 2005, is amended to read as follows:
77 29 4. DELEGATES TO CONVENTIONS. A township having one or
77 30 more cemeteries under its control may designate, not up to
77 31 exceed two, officials from each cemetery as delegates to
77 32 attend meetings of cemetery officials, and certain expenses,
77 33 including association dues, of the delegates not to exceed
77 34 exceeding twenty=five dollars for each delegate, of the
77 35 delegates including association dues, may be paid out of the
78 1 cemetery fund of the township.
78 2 Sec. 142. Section 636.20, Code 2005, is amended to read as
78 3 follows:
78 4 636.20 SUIT ON BOND == SERVICE.
78 5 Whenever suit is required to be brought on any bond given
78 6 by such company, service shall be had upon any agent of such
78 7 company in this state, and if there is no agent in the state,
78 8 then service may be had by serving the commissioner of
78 9 insurance in any manner now or hereinafter permitted by law
78 10 fifteen days before the term of court in which the suit is
78 11 sought to be brought.
78 12 Sec. 143. Sections 507A.5, 509B.4, 511.27, 511.28, 511.29,
78 13 512B.33, 514.2A, 515.73, 515.74, 520.6, 521.9, 521.11, 521.12,
78 14 523C.20, 523C.21, and 636.21, Code 2005, are repealed.
78 15 Sec. 144. Sections 516E.12 and 516E.17, Code Supplement
78 16 2005, are repealed.
78 17 EXPLANATION
78 18 This bill relates to various matters under the purview of
78 19 the insurance division of the department of commerce,
78 20 including the securities and regulated industries bureau,
78 21 insurance premium taxes, the uniform securities Act, insurance
78 22 division procedures, regulation of insurance companies and
78 23 other entities including administrative penalties, motor
78 24 vehicle service contracts, county and state mutual insurance
78 25 associations, reciprocal or interinsurance insurers,
78 26 consolidation, merger, and reinsurance contracts, insurance
78 27 holding company systems, and cemeteries.
78 28 SECURITIES AND REGULATED INDUSTRIES BUREAU == The bill
78 29 amends numerous references to the securities bureau of the
78 30 division of insurance of the department of commerce in the
78 31 Code to refer to the new name of the bureau, which is the
78 32 securities and regulated industries bureau.
78 33 PREMIUM TAXES == Code section 432.1 is amended to provide
78 34 that premium taxes paid by insurance companies are computed on
78 35 gross premiums written. Code section 432.5 is amended to
79 1 provide that premium taxes paid by risk retention groups are
79 2 computed on gross premiums written.
79 3 UNIFORM SECURITIES ACT AMENDMENTS == Code section
79 4 502.102(5)(b)(3) of the state uniform securities Act is
79 5 amended to specify that an industrial loan company that is not
79 6 an "insured depository institution" as defined under federal
79 7 law is not a "depository institution" for purposes of the Act.
79 8 Code section 502.201(8A)(b), unnumbered paragraph 1, is
79 9 amended to provide that securities issued by a mutual or
79 10 cooperative association organized under Code chapter 501A are
79 11 exempt from certain provisions of Code chapter 502.
79 12 Code section 502.412(2)(a) is amended to provide that an
79 13 administrative action for revocation or cancellation of the
79 14 registration cannot be started against a person registered
79 15 under the state uniform securities Act based solely on an
79 16 order issued by another state more than one year after the
79 17 date of that order.
79 18 Code section 502.412(3) is amended to provide that if any
79 19 one of the specified provisions authorizes an administrative
79 20 action, a disciplinary order may be issued.
79 21 Code section 502.510(1)(e) is amended to change a cross=
79 22 reference from Code section 502.509(3) to Code section
79 23 502.509(5) as a basis for civil liability, since Code section
79 24 502.510(1)(c) already refers to Code section 502.509(3).
79 25 INSURANCE DIVISION PROCEDURES == Code section 505.16(2) is
79 26 amended to require the insurance commissioner to adopt rules
79 27 concerning applications for insurance that require persons
79 28 engaged in the insurance business who receive positive HIV
79 29 tests of an applicant or policyholder to report those results
79 30 to a physician or alternative testing site of the applicant's
79 31 or policyholder's choice or to the Iowa department of public
79 32 health.
79 33 New Code section 505.27 provides that commission of any act
79 34 by a person under Code chapter 502, 502A, chapters 505 through
79 35 523G, or chapter 523I constitutes consent by that person to
80 1 the jurisdiction of the commissioner of insurance and the
80 2 district courts of this state.
80 3 New Code section 505.28 provides that the commissioner of
80 4 insurance has the authority to appoint a designee or an
80 5 independent administrative law judge to hear contested cases
80 6 arising from conduct regulated by the insurance commission.
80 7 Code section 507.10(5)(b) is amended to provide that the
80 8 commissioner of insurance can disclose certain information
80 9 obtained during examination of insurance companies to the
80 10 national association of insurance commissioners.
80 11 Code section 507.14 is amended to provide that certain
80 12 specified information produced, obtained by, or disclosed to
80 13 the commissioner in the course of analysis of the financial
80 14 condition or market conduct of an insurer is a confidential
80 15 record under Code chapter 22 and is privileged and
80 16 confidential except under specified circumstances. Code
80 17 section 22.7 is also amended to specify that information
80 18 obtained pursuant to Code section 507.14 is a confidential
80 19 public record.
80 20 Code section 507A.4 is amended by adding a new subsection
80 21 providing that self=funded health benefit plans sponsored by
80 22 an employer in this state which provide health benefits to
80 23 independent contractors of such an employer, and their
80 24 dependents, are granted a waiver from the requirements of Code
80 25 chapter 507A pertaining to unauthorized insurers, if the plans
80 26 meet specified conditions.
80 27 Code section 507A.9(1) is amended to provide that premium
80 28 taxes on unauthorized insurers shall be computed on gross
80 29 premiums charged equal to the applicable percent under Code
80 30 section 432.1 instead of on 2 percent of gross premiums
80 31 charged.
80 32 Code section 507B.4 is amended to provide that the
80 33 following constitute unfair or deceptive insurance trade
80 34 practices: improper use of inquiries by an applicant or
80 35 insured about coverage or loss, improper use of loss history
81 1 of a property, failure to disclose use of claims history,
81 2 failure to disclose the full name of the insurance company,
81 3 and failure to produce information to which a policyholder or
81 4 applicant is entitled.
81 5 Code section 507B.4 is amended to define "personal lines
81 6 property and casualty insurance" as insurance sold to
81 7 individuals and families primarily for noncommercial purposes
81 8 as provided in Code chapter 522B.
81 9 New Code section 507B.4B provides that a person shall not
81 10 recommend an annuity contract to any individual unless the
81 11 person has reasonable grounds to believe that the annuity is
81 12 suitable for that individual and shall establish and maintain
81 13 a system to monitor recommendations made, that is reasonably
81 14 designed to achieve compliance with the suitability
81 15 requirements of the section. The bill also requires the
81 16 commissioner to adopt rules pursuant to Code chapter 17A
81 17 establishing standards for implementation of the suitability
81 18 requirements of the section.
81 19 New Code section 507B.15 provides that new Code section
81 20 505.28 allowing the commissioner to appoint a designee or an
81 21 independent administrative law judge to hear contested cases
81 22 is applicable to hearings required under Code sections 507B.6,
81 23 507B.6A, and 507B.7 concerning regulation of insurance trade
81 24 practices.
81 25 Code section 507C.2 is amended to provide that general
81 26 assets of an insurer for purposes of supervision,
81 27 rehabilitation, and liquidation provisions of the chapter do
81 28 not include that portion of assets of the insurer allocated
81 29 and accumulated in a separate account providing for life
81 30 insurance or annuities, depending on the amounts contained in
81 31 such separate accounts.
81 32 Code section 507C.42 is amended to specify that claims
81 33 considered "class 2" for purposes of establishing a priority
81 34 of distribution of claims from an insurer's estate under the
81 35 supervision, rehabilitation, and liquidation provisions of the
82 1 chapter include claims under funding agreements under Code
82 2 section 508.31A, and claims for an insufficiency in the assets
82 3 allocated and accumulated in a separate account under Code
82 4 section 508A.1.
82 5 Code section 507C.42 is also amended to provide that for
82 6 purposes of the section, "insurer's estate" means the general
82 7 assets of the insurer.
82 8 Code section 507E.5 is stricken and rewritten to provide
82 9 that specified information obtained by the insurance
82 10 commission during the course of an insurance fraud
82 11 investigation is a confidential record except as specified in
82 12 this section. Code section 22.7 is also amended to provide
82 13 that such information is a confidential record.
82 14 INSURANCE COMPANIES AND OTHER ENTITIES == Code section
82 15 508.13 is amended to clarify the process for life insurance
82 16 companies to renew their certificates of authority annually.
82 17 Failure to timely file an application for renewal is
82 18 punishable by an administrative penalty of $500.
82 19 Code section 508A.1 is amended to correspond to the changes
82 20 to Code section 507C.42 by providing that insufficiencies in
82 21 assets allocated and accumulated in separate accounts
82 22 providing for life insurance or annuities are class 2 claims
82 23 under Code chapter 507C.
82 24 Code section 509.1(1)(b) is amended to provide that
82 25 premiums for group life, accident, or health insurance can be
82 26 paid by the policyholder from funds of the employer, the
82 27 insured employee, or both. The section is also amended to
82 28 provide that accident and health insurance does not include
82 29 disability income insurance.
82 30 Code section 509A.15(1) is amended to provide that the
82 31 governing body of a self=insurance plan of a political
82 32 subdivision or school corporation must certify that the plan
82 33 has a contract or other arrangement with a currently
82 34 registered third=party administrator.
82 35 Code section 509A.15(4) is amended to provide that a self=
83 1 insurance plan of a political subdivision or school
83 2 corporation is exempt from the certification requirements of
83 3 the section if yearly claims do not exceed 2 percent, instead
83 4 of 1 percent, of the entity's general fund budget.
83 5 Code chapter 509B is amended to eliminate the requirement
83 6 that group accident or health insurance policies provide
83 7 individual or converted policies for an employee or member
83 8 whose coverage under the group policy has been terminated.
83 9 Code section 514C.3 is amended to remove a cross=reference to
83 10 Code chapter 509B that is stricken by the bill.
83 11 Code chapter 510, beginning with Code section 510.11
83 12 concerning administrators of health or life insurance
83 13 coverage, is amended by changing the term "administrator" to
83 14 "third=party administrator" wherever it appears in that
83 15 chapter.
83 16 Code section 511.8(1)(b), concerning investment of funds by
83 17 life insurance companies and associations, is amended to
83 18 correct a citation to the federal Investment Company Act of
83 19 1940.
83 20 Code section 511.8(18) is amended to specify that the
83 21 allowable limit of certain common stocks or shares in which a
83 22 life insurance company or association may invest is not more
83 23 than one=half of 1 percent of the legal reserve.
83 24 Code section 511.8(22)(b), concerning requirements for
83 25 financial instruments used in hedging transactions by life
83 26 insurance companies, is stricken and rewritten to allow
83 27 certain financial instruments between an insurer and a
83 28 qualified corporation or a "conduit" to be eligible for
83 29 inclusion in the legal reserve of the insurer. If the
83 30 financial instrument is with a conduit that is not a qualified
83 31 counterparty, the obligation of the financial instrument must
83 32 be secured by cash; United States government obligations;
83 33 state, District of Columbia, territorial, or municipal
83 34 obligations; Canadian government, provincial, or municipal
83 35 obligations; qualified United States and Canadian corporate
84 1 obligations; qualified foreign government or corporate
84 2 obligations; and cash equivalents. For purposes of the bill,
84 3 a "conduit" means a person within an insurer's insurance
84 4 holding company system, which aggregates hedging transactions
84 5 by other persons within the insurance holding company system
84 6 and replicates them with counterparts.
84 7 Code section 511.8(22)(e) is amended to require that
84 8 financial instruments used in hedging transactions that are
84 9 secured by foreign government or corporate obligations are
84 10 included in the limitation that only 20 percent of the legal
84 11 reserve of an insurer can be invested in such foreign
84 12 investments unless such financial instruments are secured as
84 13 specified.
84 14 Code section 511.8 is also amended by adding a new
84 15 definition for "cash equivalents" and specifying the
84 16 permissible use of such investments as part of life insurance
84 17 company or association assets.
84 18 Code section 512B.25 is amended to provide an
84 19 administrative penalty of $500 for a fraternal benefit society
84 20 that fails to timely file its annual application for renewal
84 21 of the society's license.
84 22 New Code section 514.9A provides an administrative penalty
84 23 of $500 for a carrier or organized delivery system issuing
84 24 individual health care benefits that fails to timely file an
84 25 annual application for renewal of its certificate of
84 26 authority.
84 27 New Code section 514.3B provides an administrative penalty
84 28 of $500 for a health maintenance organization that fails to
84 29 timely file an annual application for renewal of its
84 30 certificate of authority.
84 31 Code section 514B.12 is amended to provide an
84 32 administrative penalty of $500 for a health maintenance
84 33 organization that fails to timely file its annual report and
84 34 an additional administrative penalty of $100 for each day that
84 35 the failure continues after the organization has received
85 1 notice of the failure from the commissioner.
85 2 Code section 514B.22 is amended to provide that a foreign
85 3 or domestic health maintenance organization doing business in
85 4 this state is required to pay fees to cover the costs of
85 5 examinations of the organization by the commissioner.
85 6 Code section 514B.33 is amended to provide that limited
85 7 service organizations doing business in this state are
85 8 required to timely file an application for renewal of their
85 9 authority and an annual report and are subject to
85 10 administrative penalties for failure to do so.
85 11 Code section 514C.1 is amended to expand requirements for
85 12 supplemental coverage of newly born children to include
85 13 adopted children of an insured under certain policies of
85 14 individual or group accident and health insurance and to
85 15 further specify requirements applicable to newly born and
85 16 adopted children of an insured.
85 17 Code section 514C.3 is amended to specify that a "policy of
85 18 accident and sickness insurance" for purposes of paying for a
85 19 dentist's services includes an individual policy or contract
85 20 issued pursuant to Code chapter 514, 514A, or 514B.
85 21 Code section 514E.7 is amended by adding a new subsection
85 22 6, allowing certain persons to remain eligible for coverage
85 23 under the Iowa comprehensive health insurance association in
85 24 the event of a voluntary termination of such coverage.
85 25 Code section 514J.7, concerning the external review process
85 26 for appeal of a denial of health care coverage, is amended to
85 27 provide that an uncompleted review will continue if the
85 28 enrollee dies or changes to another health care plan before
85 29 the review is completed.
85 30 Code section 515.24 is amended to provide that premium
85 31 taxes for insurance companies other than life are computed on
85 32 gross written premiums, except that premium taxes on windstorm
85 33 and hail risk reinsurance are computed according to the
85 34 applicable percent provided in Code section 432.1 upon the
85 35 gross amount of premiums received.
86 1 Code section 515.42 is amended to provide an administrative
86 2 penalty of $500 for an insurance company other than life that
86 3 fails to timely file the annual application for renewal of its
86 4 certificate of authority.
86 5 New Code section 515.147A provides an administrative
86 6 penalty of $500 and nonrenewal of the license of an excess and
86 7 surplus lines insurance agent that fails to timely file the
86 8 annual business activity report required under Code section
86 9 515.147. The new section provides for an additional
86 10 administrative penalty of $100 for each day that the failure
86 11 continues after the agent receives notice of the failure from
86 12 the commissioner.
86 13 Code section 515A.9 is amended to provide that a request of
86 14 a person to a rating organization or an insurer for review of
86 15 the manner in which the organization's or insurer's rating
86 16 system has been applied to that person is not a contested case
86 17 under Code chapter 17A, nor is an appeal to the commissioner
86 18 of insurance from such a review by an organization or insurer.
86 19 New Code section 515E.3A provides procedures and criteria
86 20 for allowing a foreign risk retention group to become a
86 21 domestic insurer in this state.
86 22 Code section 515F.4(5) is amended to provide that in
86 23 determining what is a reasonable profit during the ratemaking
86 24 process, the commissioner may consider income from sources
86 25 other than investment income attributable to unearned premium
86 26 and loss reserves.
86 27 Code section 515G.1 is amended to define who is an
86 28 "eligible policyholder" and a "voting policyholder" for the
86 29 purposes of mutual insurance company conversions.
86 30 Code sections 515G.2 and 515G.3 are amended to specify
86 31 requirements for carrying out the conversion of a mutual
86 32 insurance company into a stock domestic insurance company,
86 33 including the exchange and valuation of rights of
86 34 policyholders of the mutual insurer.
86 35 MOTOR VEHICLE SERVICE CONTRACTS == Code section 516E.1(8)
87 1 is amended to redefine a "reimbursement insurance policy" as a
87 2 contractual liability policy that provides reimbursement to a
87 3 service company for services provided under a service
87 4 contract, or pays for service obligations incurred under a
87 5 service contract in the event of nonperformance by the service
87 6 company.
87 7 Code section 516E.1 is also amended to define "financial
87 8 institution", "premium", and "service company fee" as used in
87 9 the context of motor vehicle service contracts.
87 10 Code section 516E.2(3) is amended to require that service
87 11 contracts be secured by a reimbursement insurance policy in
87 12 compliance with Code section 516E.4 or the service company
87 13 must comply with financial responsibility standards
87 14 established for service companies in new Code section 516E.21.
87 15 Code section 516E.2(4)(e) is amended by striking the
87 16 requirement that a service company not issue or offer a
87 17 service contract until the proper filing fee has been paid.
87 18 Code section 516E.3 is amended to reflect that not all
87 19 service companies are required to have reimbursement
87 20 insurance.
87 21 Code section 516E.4(1) is amended to provide specific
87 22 requirements for reimbursement insurance policies insuring
87 23 motor vehicle service contracts.
87 24 Code section 516E.5(1) is amended to require the disclosure
87 25 in a service contract of whether or not the service contract
87 26 is insured by reimbursement insurance. Code section 516E.5(2)
87 27 is amended to coordinate with the change in subsection 1.
87 28 Code section 516E.15(1)(b) is amended to provide that a
87 29 service contract provider or service company, but not a third=
87 30 party administrator, may be penalized and subject to
87 31 injunctive relief for failure to file documents and
87 32 information required in Code section 516E.3.
87 33 New Code section 516E.20 provides that the sale of a motor
87 34 vehicle service contract under Code chapter 516E does not
87 35 constitute the sale of insurance unless a service company,
88 1 provider, or third=party administrator is otherwise engaged in
88 2 the sale of insurance, and the insurance laws of this state
88 3 are not applicable to the service company, provider, or third=
88 4 party administrator of a service contract.
88 5 New Code section 516E.21 sets forth specific statutory
88 6 financial responsibility and security requirements for motor
88 7 vehicle service companies that choose to maintain a funded
88 8 reserve account instead of obtaining a reimbursement insurance
88 9 policy as provided in Code section 516E.2.
88 10 COUNTY AND STATE MUTUAL INSURANCE ASSOCIATIONS == Code
88 11 section 518.15 provides an administrative penalty of $500 for
88 12 a county mutual insurance association that fails to timely
88 13 file an annual application for renewal of its certificate of
88 14 authority or an annual condition statement. There is an
88 15 additional administrative penalty of $100 for each day that
88 16 the failure continues after the association is notified of the
88 17 failure by the commissioner.
88 18 Code section 518A.18 provides an administrative penalty of
88 19 $500 for a state mutual association that fails to timely file
88 20 an annual condition statement. The bill also provides an
88 21 administrative penalty of $100 for each day that the failure
88 22 to file continues after the association receives notice of the
88 23 failure from the commissioner.
88 24 Code section 518A.35(1) is amended to provide that premium
88 25 taxes on windstorm and hail risk reinsurance issued by state
88 26 mutual insurance associations are computed on the gross amount
88 27 of reinsurance premiums written instead of received.
88 28 Code section 518A.40 is amended to provide an
88 29 administrative penalty of $500 for a state mutual insurance
88 30 association that fails to timely file an annual application
88 31 for renewal of its certificate of authority.
88 32 RECIPROCAL OR INTERINSURANCE INSURERS == Code section
88 33 520.10 is amended to provide for an administrative penalty of
88 34 $500 for the failure of a reciprocal or interinsurance insurer
88 35 to timely file an annual financial report and an additional
89 1 penalty of $100 for each day that the failure continues after
89 2 the insurer receives notice of the failure from the
89 3 commissioner.
89 4 Code section 520.12 is amended to provide an administrative
89 5 penalty of $500 for the failure of a reciprocal or
89 6 interinsurance insurer to timely file an annual application
89 7 for renewal of the insurer's certificate of authority.
89 8 CONSOLIDATION, MERGER, AND REINSURANCE == Code section
89 9 521.1 is amended to include definitions for "affected
89 10 company", meaning a company being merged with a surviving
89 11 company; "commission", meaning the commission created in Code
89 12 chapter 521; and "commissioner", meaning the commissioner of
89 13 insurance.
89 14 Code section 521.2 is amended to apply to the consolidation
89 15 or merger of a domestic insurance company organized under Code
89 16 chapter 490 or 491 with a domestic or foreign mutual insurance
89 17 company. Code chapter 521 is not applicable to mergers or
89 18 consolidations of domestic mutual companies with stock
89 19 companies pursuant to Code chapter 508B or 515G. Code chapter
89 20 521 is also applicable to a domestic company that assumes or
89 21 reinsures the risks of any other company.
89 22 Code section 521.3 is stricken and rewritten to provide
89 23 that a company proposing to consolidate, merge, or enter into
89 24 a reinsurance contract submit an application and plan with the
89 25 commissioner setting forth the terms of the proposal.
89 26 Code section 521.4 is stricken and rewritten to provide the
89 27 procedure by which a commission consisting of the attorney
89 28 general and the commissioner of insurance may hear and
89 29 determine whether to approve, disapprove, or require
89 30 modification of a plan to consolidate, merge, or reinsure.
89 31 The bill allows the commission to proceed without notice or a
89 32 public hearing or to require notice and public hearing when it
89 33 deems necessary to conserve the interests of members,
89 34 policyholders, or shareholders of the affected company.
89 35 Code section 521.5 is amended to empower the commission to
90 1 hear and determine the application, and to approve,
90 2 disapprove, or require modification of the plan of
90 3 consolidation, merger, or reinsurance prior to approval.
90 4 Code section 521.6 is amended to modernize the language
90 5 used.
90 6 Code section 521.7 is amended to require that notice of
90 7 hearing on an application and plan of consolidation, merger,
90 8 or reinsurance shall be given to members, policyholders, or
90 9 shareholders of an affected company.
90 10 Code sections 521.9, 521.11, and 521.12 are redundant and
90 11 unnecessary as a result of the other amendments to Code
90 12 chapter 521 and are repealed.
90 13 Code section 521.10 is stricken and rewritten to provide
90 14 procedures for submission of a plan to members of an affected
90 15 company for approval by a two=thirds vote of all members
90 16 voting in person, by ballot, or by proxy and specify those
90 17 cases where approval by members is not required.
90 18 Code section 521.13 is amended to provide that certain
90 19 companies that purchase reinsurance are exempt from the
90 20 requirements of Code chapter 521.
90 21 Code section 521.14 is amended to provide that the expenses
90 22 and costs incident to proceeding under Code chapter 521 must
90 23 be paid by the company filing an application and plan under
90 24 the chapter.
90 25 Code section 521.16 is amended to provide that the
90 26 provisions of Code section 521A.3 concerning acquisition of
90 27 control of or merger with domestic insurers are applicable to
90 28 mergers or consolidations subject to Code chapter 521.
90 29 New Code section 521.17 provides that a company filing a
90 30 plan to merge and consolidate under Code chapter 521 is
90 31 required to make all appropriate filings and pay all
90 32 appropriate fees required under Code chapter 490 or 491, as
90 33 applicable.
90 34 New Code section 521.18 requires a company filing a plan to
90 35 merge or consolidate under Code chapter 521 to file its
91 1 articles of merger or consolidation with the commission for
91 2 its approval and pay a filing fee of $50.
91 3 INSURANCE HOLDING COMPANY SYSTEMS == Code section 521A.1(6)
91 4 is amended to remove the exemption from regulation under Code
91 5 chapter 521A of a company licensed under Code chapter 512B
91 6 (fraternal benefit society) and Code chapter 514 (nonprofit
91 7 health service corporations).
91 8 Code section 521A.2, subsections 1 and 3, are amended to
91 9 allow an insurer to invest in financial instruments used in
91 10 hedging transactions for its own account, that of its parent,
91 11 a subsidiary of its parent, or any affiliate or subsidiary.
91 12 MISCELLANEOUS PROVISIONS == New Code section 522B.16B
91 13 establishes a procedure by which a person who is prohibited by
91 14 federal law from engaging or participating in the business of
91 15 insurance because of conviction of a crime under federal law
91 16 or a felony involving dishonesty or breach of trust may apply
91 17 to the commissioner of insurance for written consent to engage
91 18 or participate in insurance business in this state.
91 19 CEMETERY PROVISIONS == Code section 523A.602(2)(b) is
91 20 amended to provide for cancellation and refund rights under a
91 21 purchase agreement for cemetery merchandise, funeral
91 22 merchandise, funeral services, or a combination thereof, when
91 23 the purchase agreement is canceled before the purchase price
91 24 is paid in full or another establishment provides the
91 25 merchandise or services before the purchase price is paid in
91 26 full.
91 27 Code section 523I.102 is amended by adding definitions for
91 28 "abandoned cemetery" and "veterans cemetery".
91 29 Code section 523I.103(1)(a) is amended to exempt veterans
91 30 cemeteries from the provisions of Code chapter 523I.
91 31 Code section 523I.201(1) is amended so that the cross=
91 32 reference in the subsection is consistent with that contained
91 33 in Code section 523A.801 naming as the deputy administrator of
91 34 the chapter the principal operations officer of the securities
91 35 and regulated industries bureau of the insurance division of
92 1 the department of commerce.
92 2 Code section 523I.309(1) is amended to establish a priority
92 3 for the right to control interment, relocation, or
92 4 disinterment of remains of a deceased person and a procedure
92 5 to determine the right to control when there are multiple
92 6 members of a class or there is disagreement among the members
92 7 of a class.
92 8 Code section 523I.316(3) is amended to authorize a
92 9 governmental subdivision to expend public funds to preserve
92 10 and protect a cemetery or burial site in its jurisdiction that
92 11 is not located within a dedicated cemetery.
92 12 New Code section 523I.317 provides that a cemetery must
92 13 provide or permit access to the cemetery to members of the
92 14 public and owners of interment rights, at reasonable times and
92 15 subject to reasonable regulations.
92 16 New Code section 523I.403 provides that a governmental
92 17 subdivision may acquire an abandoned cemetery after attempting
92 18 to notify the cemetery's owners and providing notice of its
92 19 intent to acquire the cemetery. The section also provides for
92 20 objection to such acquisition by a cemetery's owners but
92 21 requires the owners to provide public access to the cemetery
92 22 within 24 months of receiving notice of the proposed
92 23 acquisition in order to stop the acquisition.
92 24 New Code section 523I.404 provides for the acquisition of
92 25 an abandoned cemetery by a person who has a relative interred
92 26 in the cemetery or who owns interment rights in the cemetery.
92 27 The section requires such a person to organize a cemetery
92 28 association incorporated as a nonprofit corporation under Code
92 29 chapter 504A and attempt to identify the cemetery's owners and
92 30 give the owners notice of the proposed acquisition. The
92 31 section provides for objection by a cemetery's owners but
92 32 requires the owners to provide public access to the cemetery
92 33 within 24 months of receiving notice of the proposed
92 34 acquisition in order to stop the acquisition.
92 35 Code section 523I.508(4) is amended to provide that the
93 1 expenses of county officials who attend meetings of cemetery
93 2 officials as delegates may be paid out of the cemetery fund of
93 3 the township in an amount not exceeding $25 for each delegate,
93 4 including association dues.
93 5 ELIMINATION OF COMMISSIONER OF INSURANCE SERVING AS AGENT
93 6 FOR SERVICE OF PROCESS == Code sections 507A.5, 511.27,
93 7 511.28, 511.29, 512B.33, 514.2A, 515.73, 515.74, 520.6,
93 8 521.11, 521.12, 523C.20, 523C.21, and 636.21, Code 2005, are
93 9 repealed to eliminate the requirement that the commissioner of
93 10 insurance serve as an agent to receive service of process.
93 11 Code section 516E.12, Code Supplement 2005, is repealed to
93 12 eliminate the requirement that the commissioner of insurance
93 13 serve as an agent to receive service of process.
93 14 Code sections 507A.7(3), 514B.3(10), 515A.6(1), 515A.10,
93 15 515B.16, 515E.3, 515E.4, 515E.8, 515F.8(3)(a)(3),
93 16 515F.13(2)(c), 518C.17, 520.4(9), 520.5, 520.7, 521A.3(7),
93 17 521B.2(6)(a)(2), and 521C.3(4)(b), Code 2005, are amended to
93 18 eliminate the requirement that the commissioner serve as an
93 19 agent to receive service of process. Code section 516E.3,
93 20 Code Supplement 2005, is amended to eliminate the requirement
93 21 that the commissioner serve as an agent to receive service of
93 22 process.
93 23 LSB 5363SV 81
93 24 av:nh/cf/24