House Study Bill 737 



                                       SENATE/HOUSE FILE       
                                       BY  (PROPOSED DEPARTMENT OF
                                            COMMERCE/INSURANCE
                                            DIVISION BILL)


    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
  3    uniform securities; duties of the insurance division including
  4    a consumer advocate and rate reviews; confidential
  5    information; examinations; insurance trade practices;
  6    insurance fraud; the Iowa life and health insurance guaranty
  7    association; viatical settlement contracts; general agents and
  8    third=party administrators; life insurance companies; health
  9    maintenance organizations; utilization and cost control;
 10    external review of health care coverage decisions; insurance
 11    other than life; workers' compensation liability insurance;
 12    consolidation, merger, and reinsurance; cemetery and funeral
 13    merchandise and funeral services; and cemeteries, making
 14    appropriations, and providing an effective date.
 15 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
 16 TLSB 5431XD 82
 17 av/nh/5

PAG LIN



  1  1    Section 1.  Section 22.7, Code Supplement 2007, is amended
  1  2 by adding the following new subsection:
  1  3    NEW SUBSECTION.  60.  Information obtained and prepared by
  1  4 the commissioner of insurance as provided in section 507.14.
  1  5    Sec. 2.  Section 502.201, subsection 9E, Code 2007, is
  1  6 amended to read as follows:
  1  7    9E.  VIATICAL SETTLEMENT INVESTMENT CONTRACTS.  A viatical
  1  8 settlement investment contract, or fractional or pooled
  1  9 interest in such contract, provided any of the following
  1 10 conditions are satisfied:
  1 11    a.  The assignment, transfer, sale, devise, or bequest of a
  1 12 death benefit of a life insurance policy or contract is made
  1 13 by the viator to an insurance company as provided under Title
  1 14 XIII, subtitle 1.
  1 15    b.  The assignment, transfer, sale, devise, or bequest of a
  1 16 life insurance policy or contract, for any value less than the
  1 17 expected death benefit, is made by the viator to a family
  1 18 member or other person who enters into no more than one such
  1 19 agreement in a calendar year.
  1 20    c.  A life insurance policy or contract is assigned to a
  1 21 bank, savings bank, savings and loan association, credit
  1 22 union, or other licensed lending institution as collateral for
  1 23 a loan.
  1 24    d.  Accelerated benefits are exercised as provided in the
  1 25 life insurance policy or contract and consistent with
  1 26 applicable law.
  1 27    e.  The assignment, transfer, sale, devise, or bequest of
  1 28 the death benefit or ownership of a life insurance policy or
  1 29 contract made by the policyholder or contract owner to a
  1 30 viatical settlement provider, if the viatical settlement
  1 31 transaction complies with chapter 508E, including rules
  1 32 adopted pursuant to that chapter.
  1 33    Sec. 3.  Section 502.202, subsection 9, Code 2007, is
  1 34 amended to read as follows:
  1 35    9.  SPECIFIED EXCHANGE TRANSACTIONS.  A transaction in a
  2  1 security, whether or not the security or transaction is
  2  2 otherwise exempt, in exchange for one or more bona fide
  2  3 outstanding securities, claims, or property interests, or
  2  4 partly in such exchange and partly for cash, if the terms and
  2  5 conditions of the issuance and exchange or the delivery and
  2  6 exchange and the fairness of the terms and conditions have
  2  7 been approved by the administrator after a hearing by a court;
  2  8 by an official or agency of the United States; by a state
  2  9 securities, banking, or insurance agency; or by any other
  2 10 government authority expressly authorized by law to grant such
  2 11 approvals.
  2 12    Sec. 4.  Section 502.402, subsection 2, paragraph a, Code
  2 13 2007, is amended to read as follows:
  2 14    a.  An individual who represents a broker=dealer in
  2 15 effecting transactions in this state limited to those
  2 16 described in section 15(h)(2) of the Securities Exchange Act
  2 17 of 1934, 15 U.S.C. } 78(o)(2) 78(h)(2).
  2 18    Sec. 5.  Section 502.410, subsection 2, Code 2007, is
  2 19 amended to read as follows:
  2 20    2.  AGENTS.  The fee for an individual is thirty forty
  2 21 dollars when filing an application for registration as an
  2 22 agent, a fee of thirty forty dollars when filing a renewal of
  2 23 registration as an agent, and a fee of thirty forty dollars
  2 24 when filing for a change of registration as an agent.  Of each
  2 25 forty=dollar fee collected, ten dollars is appropriated to the
  2 26 securities investor education and financial literacy training
  2 27 fund established under section 502.601, subsection 5.  If the
  2 28 filing results in a denial or withdrawal, the administrator
  2 29 shall retain the fee.
  2 30    Sec. 6.  Section 502.601, subsection 4, Code 2007, is
  2 31 amended to read as follows:
  2 32    4.  INVESTOR EDUCATION AND FINANCIAL LITERACY.  The
  2 33 administrator may develop and implement investor education and
  2 34 financial literacy initiatives to inform the public about
  2 35 investing in securities, with particular emphasis on the
  3  1 prevention and detection of securities fraud.  In developing
  3  2 and implementing these initiatives, the administrator may
  3  3 collaborate with public and nonprofit organizations with an
  3  4 interest in investor education and financial literacy.  The
  3  5 administrator may accept a grant or donation from a person
  3  6 that who is not affiliated with the securities industry or
  3  7 from a nonprofit organization, regardless of whether the
  3  8 organization is affiliated with the securities industry, to
  3  9 develop and implement investor education and financial
  3 10 literacy initiatives.  This subsection does not authorize the
  3 11 administrator to require participation or monetary
  3 12 contributions of a registrant in an investor education or
  3 13 financial literacy program.
  3 14    Sec. 7.  Section 502.601, subsection 5, Code 2007, is
  3 15 amended to read as follows:
  3 16    5.  THE SECURITIES INVESTOR EDUCATION AND FINANCIAL
  3 17 LITERACY TRAINING FUND.  A securities investor education and
  3 18 financial literacy training fund is created in the state
  3 19 treasury under the control of the administrator to provide
  3 20 moneys for the purposes specified in subsection 4.  All moneys
  3 21 received by the state by reason of civil penalties pursuant to
  3 22 this chapter and the moneys appropriated to the fund pursuant
  3 23 to section 502.410, subsection 2, shall be deposited in the
  3 24 securities investor education and financial literacy training
  3 25 fund.  Notwithstanding section 12C.7, interest or earnings on
  3 26 moneys deposited into the fund shall be credited to the fund.
  3 27 Notwithstanding section 8.33, unencumbered or unobligated
  3 28 moneys remaining in the fund shall not revert but shall be
  3 29 available for expenditure for the following fiscal year.
  3 30 However, if, on June 30, unencumbered or unobligated moneys
  3 31 remaining in the fund exceed two five hundred thousand
  3 32 dollars, moneys in excess of that amount shall revert to the
  3 33 general fund of the state in the same manner as provided in
  3 34 section 8.33.
  3 35    Sec. 8.  Section 505.8, Code Supplement 2007, is amended by
  4  1 adding the following new subsection:
  4  2    NEW SUBSECTION.  5A.  a.  The commissioner shall establish
  4  3 a bureau, to be known as the "consumer advocate bureau", which
  4  4 shall be responsible for ensuring fair treatment of consumers
  4  5 by persons in the business of insurance and for preventing
  4  6 unfair or deceptive trade practices in the insurance
  4  7 marketplace.
  4  8    b.  The consumer advocate bureau shall receive and
  4  9 investigate consumer complaints and inquiries from the public,
  4 10 and shall conduct investigations to determine whether any
  4 11 person has violated any provision of the insurance code.  When
  4 12 necessary or appropriate to protect the public interest or
  4 13 consumers, the commissioner may conduct administrative
  4 14 hearings as provided in section 505.29.
  4 15    c.  The consumer advocate bureau shall perform other
  4 16 functions as may be assigned to it by the commissioner.
  4 17    d.  The commissioner shall prepare and deliver a report to
  4 18 the general assembly by January 15 of each year that contains
  4 19 findings and recommendations regarding the activities of the
  4 20 consumer advocate bureau including but not limited to all of
  4 21 the following:
  4 22    (1)  An overview of the functions of the bureau.
  4 23    (2)  The structure of the bureau including the number and
  4 24 type of staff positions.
  4 25    (3)  Statistics showing the number of complaints handled by
  4 26 the bureau and their disposition, and the disposition of
  4 27 similar issues in other states.
  4 28    (4)  Recommendations from the commissioner about additional
  4 29 consumer protection functions that would be appropriate and
  4 30 useful for the bureau to fulfill.
  4 31    Sec. 9.  Section 505.8, subsection 6, Code Supplement 2007,
  4 32 is amended to read as follows:
  4 33    6.  a.  Notwithstanding chapter 22, the commissioner shall
  4 34 keep confidential the information submitted to the insurance
  4 35 division or obtained by the insurance division in the course
  5  1 of an investigation or inquiry pursuant to subsection 5A,
  5  2 including all notes, work papers, or other documents related
  5  3 to the investigation.  Information obtained by the
  5  4 commissioner in the course of investigating a complaint or
  5  5 inquiry may, in the discretion of the commissioner, be
  5  6 provided to the insurance company or insurance producer that
  5  7 is the subject of the complaint or inquiry, to the consumer
  5  8 who filed the complaint or inquiry, and to the individual
  5  9 insured who is the subject of the complaint or inquiry,
  5 10 without waiving the confidentiality afforded to the
  5 11 commissioner or to other persons by this subsection.  The
  5 12 commissioner may disclose or release information that is
  5 13 otherwise confidential under this subsection, in the course of
  5 14 an administrative or judicial proceeding.
  5 15    a.  b.  Notwithstanding chapter 22, the commissioner shall
  5 16 keep confidential both information obtained in the course of
  5 17 an investigation and information by or submitted to the
  5 18 insurance division pursuant to chapters 514J and 515D.
  5 19    b.  c.  The commissioner shall adopt rules protecting the
  5 20 privacy of information held by an insurer or an agent
  5 21 consistent with the federal Gramm=Leach=Bliley Act, Pub. L.
  5 22 No. 106=102.
  5 23    c.  d.  However, notwithstanding Notwithstanding paragraphs
  5 24 "a", and "b", and "c", if the commissioner determines that it
  5 25 is necessary or appropriate in the public interest or for the
  5 26 protection of the public, the commissioner may share
  5 27 information with other regulatory authorities or governmental
  5 28 agencies or may publish information concerning a violation of
  5 29 this chapter or a rule or order under this chapter.  Such
  5 30 information may be redacted so that personally identifiable
  5 31 information is not made available.
  5 32    d.  e.  The commissioner may adopt rules protecting the
  5 33 privacy of information submitted to the insurance division
  5 34 consistent with this section.
  5 35    Sec. 10.  Section 505.8, subsection 10, Code Supplement
  6  1 2007, is amended to read as follows:
  6  2    10.  For the purpose of an investigation made under any
  6  3 chapter of this subtitle, the commissioner or the
  6  4 commissioner's designee may administer oaths and affirmations,
  6  5 subpoena witnesses, seek compulsory attendance, take evidence,
  6  6 require the filing of statements, and require the production
  6  7 of any records that the commissioner considers relevant or
  6  8 material to the investigation, pursuant to rules adopted under
  6  9 chapter 17A.  The confidentiality provisions of subsection 6,
  6 10 shall apply to information and material obtained pursuant to
  6 11 this subsection.
  6 12    Sec. 11.  Section 505.15, Code 2007, is amended to read as
  6 13 follows:
  6 14    505.15  ACTUARIAL, PROFESSIONAL, AND SPECIALIST STAFF.
  6 15    1.  The commissioner may appoint a staff of actuaries as
  6 16 necessary to carry out the duties of the division.  The
  6 17 actuarial staff shall do all of the following:
  6 18    1.  a.  Perform analyses of rate filings.
  6 19    2.  b.  Perform audits of submitted loss data.
  6 20    3.  c.  Conduct rate hearings and serve as expert
  6 21 witnesses.
  6 22    4.  d.  Prepare, review, and dispense data on the insurance
  6 23 business.
  6 24    5.  e.  Assist in public education concerning the insurance
  6 25 business.
  6 26    6.  f.  Identify any impending problem areas in the
  6 27 insurance business.
  6 28    7.  g.  Assist in examinations of insurance companies.
  6 29    2.  The commissioner may retain attorneys, appraisers,
  6 30 independent actuaries, independent certified public
  6 31 accountants, or other professionals or specialists to assist
  6 32 the division in carrying out its duties in regard to rate
  6 33 filing reviews.  The reasonable cost of retaining such
  6 34 professionals and specialists shall be borne by the insurer
  6 35 which is the subject of the rate filing review.
  7  1    Sec. 12.  Section 507.4, Code 2007, is amended to read as
  7  2 follows:
  7  3    507.4  EXAMINERS == SALARIES.
  7  4    1.  The commissioner of insurance is hereby authorized to
  7  5 may appoint insurance examiners, at least one of whom shall be
  7  6 an experienced actuary, and at least one of whom shall be an
  7  7 experienced and competent fire insurance accountant, and who,
  7  8 while conducting examinations, shall possess all the powers
  7  9 conferred upon the commissioner of insurance for such
  7 10 purposes.  The entire time of the examiners shall be under the
  7 11 control of the said commissioner, and shall be employed as the
  7 12 commissioner may direct.
  7 13    2.  The said commissioner may, when in the commissioner's
  7 14 judgment it is advisable, appoint assistants to aid in making
  7 15 conducting examinations.  Said examiners shall be compensated
  7 16 on the basis of the normal workweek of the insurance division
  7 17 at a salary to be fixed by the commissioner subject, however,
  7 18 to the provisions of section 505.14.  The commissioner shall
  7 19 employ rates of compensation consistent with current standards
  7 20 in the industry for certified public accountants, attorneys,
  7 21 and skilled insurance examiners.  The commissioner may use
  7 22 compensation rates suggested by the national association of
  7 23 insurance commissioners.  Said compensation Compensation shall
  7 24 be paid from appropriations for such purposes upon
  7 25 certification of the commissioner, which shall be reimbursed
  7 26 as provided in sections 507.8 and 507.9.
  7 27    Sec. 13.  Section 507B.3, Code 2007, is amended to read as
  7 28 follows:
  7 29    507B.3  UNFAIR COMPETITION OR UNFAIR AND DECEPTIVE ACTS OR
  7 30 PRACTICES PROHIBITED.
  7 31    1.  A person shall not engage in this state in any trade
  7 32 practice which is defined in this chapter as, or determined
  7 33 pursuant to section 507B.6 to be, an unfair method of
  7 34 competition, or an unfair or deceptive act or practice in the
  7 35 business of insurance.  The issuance of a qualified charitable
  8  1 gift annuity as provided in chapter 508F does not constitute a
  8  2 trade practice in violation of this chapter.
  8  3    2.  The commissioner shall have power to examine and
  8  4 investigate into the affairs of every person engaged in the
  8  5 business of insurance in this state in order to determine
  8  6 whether such person has been or is engaged in any unfair
  8  7 method of competition or in any unfair or deceptive act or
  8  8 practice prohibited by this section.  The commissioner shall
  8  9 keep confidential the information submitted to the insurance
  8 10 division, or obtained by the insurance division in the course
  8 11 of an investigation pursuant to section 505.8, subsection 6.
  8 12    3.  Information obtained by the commissioner in the course
  8 13 of investigating a consumer complaint may, in the discretion
  8 14 of the commissioner, be provided to the insurance company or
  8 15 insurance producer which is the subject of the complaint or to
  8 16 the consumer who filed the complaint or the individual insured
  8 17 who is the subject of the complaint without waiving the
  8 18 confidentiality afforded by this section to the commissioner
  8 19 or other persons.
  8 20    Sec. 14.  Section 507E.6, Code 2007, is amended to read as
  8 21 follows:
  8 22    507E.6  DUTIES OF INSURER.
  8 23    An insurer which believes that a claim or application for
  8 24 insurance coverage is being made which is a violation of
  8 25 section 507E.3 shall provide, within sixty days of the receipt
  8 26 of such claim or application, written notification to the
  8 27 bureau of the claim or application on a form prescribed by the
  8 28 bureau, including any additional information requested by the
  8 29 bureau related to the claim or application or the party making
  8 30 the claim or application.  The fraud bureau shall review each
  8 31 notification and determine whether further investigation is
  8 32 warranted.  If the bureau determines that further
  8 33 investigation is warranted, the bureau shall conduct an
  8 34 independent investigation of the facts surrounding the claim
  8 35 or application for insurance coverage to determine the extent,
  9  1 if any, to which fraud occurred in the submission of the claim
  9  2 or application.  The bureau shall report any alleged violation
  9  3 of law disclosed by the investigation to the appropriate
  9  4 licensing agency or prosecuting authority having jurisdiction
  9  5 with respect to such violation.
  9  6    Sec. 15.  Section 508C.3, subsection 2, Code 2007, is
  9  7 amended to read as follows:
  9  8    2.  This chapter shall provide coverage to the persons
  9  9 specified in subsection 1 under direct life insurance
  9 10 policies, health insurance policies including long=term care
  9 11 insurance and disability insurance policies, annuity
  9 12 contracts, supplemental contracts, certificates under group
  9 13 policies or contracts, and unallocated annuity contracts
  9 14 issued by member insurers.
  9 15    Sec. 16.  Section 508C.6, subsection 1, paragraphs c and d,
  9 16 Code 2007, are amended to read as follows:
  9 17    c.  An annuity account.  A plan established under section
  9 18 401, 403(b), or 457 of the United States Internal Revenue Code
  9 19 shall be covered by the annuity account.
  9 20    d.  An unallocated annuity contract account, excluding
  9 21 plans established under section 401, 403(b), or 457 of the
  9 22 United States Internal Revenue Code.
  9 23    Sec. 17.  Section 508C.8, subsection 8, Code 2007, is
  9 24 amended by striking the subsection and inserting in lieu
  9 25 thereof the following:
  9 26    8.  a.  The benefits that the association may become
  9 27 obligated to cover shall in no event exceed the lesser of
  9 28 either of the following:
  9 29    (1)  The contractual obligations for which the insurer is
  9 30 liable or would have been liable if it were not an impaired or
  9 31 insolvent insurer.
  9 32    (2)  Any of the following:
  9 33    (a)  With respect to one life, regardless of the number of
  9 34 policies or contracts:
  9 35    (i)  Three hundred thousand dollars in life insurance death
 10  1 benefits, but not more than one hundred thousand dollars in
 10  2 net cash surrender and net cash withdrawal values for life
 10  3 insurance, or three hundred fifty thousand dollars in the
 10  4 aggregate.
 10  5    (ii)  Three hundred thousand dollars for health insurance
 10  6 benefits including any net cash surrender and net cash
 10  7 withdrawal values.
 10  8    (iii)  Two hundred fifty thousand dollars in the present
 10  9 value of annuity benefits, including net cash surrender and
 10 10 net cash withdrawal values.
 10 11    (b)  (i)  With respect to each individual benefit plan
 10 12 established under section 401, 403(b), or 457 of the United
 10 13 States Internal Revenue Code, or each unallocated annuity
 10 14 contract account, excluding a plan established under section
 10 15 401, 403(b), or 457 of the United States Internal Revenue
 10 16 Code, not more than two hundred fifty thousand dollars in the
 10 17 aggregate, in present value annuity benefits, including net
 10 18 cash surrender and net cash withdrawal values for the
 10 19 beneficiaries of the deceased individual.
 10 20    (ii)  However, the association shall not in any event be
 10 21 obligated to cover more than an aggregate of three hundred
 10 22 fifty thousand dollars in benefits with respect to any one
 10 23 life under subparagraph subdivision (a) and this subparagraph
 10 24 subdivision (b), or more than five million dollars in benefits
 10 25 to one owner of multiple nongroup policies of life insurance
 10 26 regardless of whether the policy owner is an individual, firm,
 10 27 corporation, or other person, and whether the persons insured
 10 28 are officers, managers, employees, or other persons, and
 10 29 regardless of the number of policies and contracts held by the
 10 30 owner.
 10 31    (c)  With respect to a plan sponsor whose plan owns,
 10 32 directly or in trust, one or more unallocated annuity
 10 33 contracts not included under subparagraph subdivision (b), not
 10 34 more than five million dollars in benefits, regardless of the
 10 35 number of contracts held by the plan sponsor.  However, where
 11  1 one or more such unallocated annuity contracts are covered
 11  2 contracts under this chapter and are owned by a trust or other
 11  3 entity for the benefit of two or more plan sponsors, the
 11  4 association shall provide coverage if the largest interest in
 11  5 the trust or entity owning the contract is held by a plan
 11  6 sponsor whose principal place of business is in the state but
 11  7 in no event shall the association be obligated to cover more
 11  8 than five million dollars in benefits in the aggregate with
 11  9 respect to all such unallocated contracts.
 11 10    b.  The limitations on the association's obligation to
 11 11 cover benefits that are set forth under this subsection do not
 11 12 take into account the association's subrogation and assignment
 11 13 rights or the extent to which such benefits could be provided
 11 14 out of the assets of the impaired or insolvent insurer that
 11 15 are attributable to covered policies.  The association's
 11 16 obligations under this chapter may be met by the use of assets
 11 17 attributable to covered policies or reimbursed to the
 11 18 association pursuant to the association's subrogation and
 11 19 assignment rights.
 11 20    Sec. 18.  Section 508C.8, subsection 9, Code 2007, is
 11 21 amended to read as follows:
 11 22    9.  The association has no obligation for either of the
 11 23 following:
 11 24    a.  To continue coverage, or to pay a claim for benefits to
 11 25 any person under an individual accident, health, or disability
 11 26 policy accruing more than three years following the date the
 11 27 member insurer is adjudicated to be insolvent.
 11 28    b.  To to issue a group conversion policy of any nature to
 11 29 a person or to continue a group coverage in force for more
 11 30 than sixty days following the date the member insurer was
 11 31 adjudicated to be insolvent.
 11 32    Sec. 19.  NEW SECTION.  508E.5  PUBLIC RECORDS.
 11 33    All information filed with the commissioner pursuant to the
 11 34 requirements of this chapter and its implementing rules shall
 11 35 constitute a public record that is open for public inspection.
 12  1    Sec. 20.  Section 510.5, subsection 1, paragraph d, Code
 12  2 2007, is amended to read as follows:
 12  3    d.  Separate records of business written by a managing
 12  4 general agent shall be maintained.  An insurer shall have
 12  5 access and a right to copy all accounts and records related to
 12  6 the insurer's business in a form usable by the insurer and the
 12  7 commissioner shall have access to all books, bank accounts,
 12  8 and records of a managing general agent in a form usable by
 12  9 the commissioner.  Such records shall be retained at least
 12 10 until after completion by the insurance division of the next
 12 11 triennial examination of the insurer.
 12 12    Sec. 21.  Section 511.8, subsection 6, paragraph a,
 12 13 subparagraph (2), unnumbered paragraph 1, Code 2007, is
 12 14 amended to read as follows:
 12 15    The net earnings available for fixed charges and preferred
 12 16 dividends of the issuing corporation shall have been, for each
 12 17 of the five fiscal years immediately preceding the date of
 12 18 acquisition, not less than one and one=half times the sum of
 12 19 the annual fixed charges and contingent interest, if any, and
 12 20 the annual preferred dividend requirements as of the date of
 12 21 acquisition, unless at the date of acquisition the issuing
 12 22 corporation documents that the preferred stock has investment
 12 23 qualities and characteristics wherein speculative elements are
 12 24 not predominant.
 12 25    Sec. 22.  Section 511.8, subsection 9, paragraphs a, b, c,
 12 26 e, and g, Code 2007, are amended to read as follows:
 12 27    a.  (1)  Bonds, notes, obligations, or other evidences of
 12 28 indebtedness secured by mortgages or deeds of trust which are
 12 29 a first or second lien upon otherwise unencumbered real
 12 30 property and appurtenances thereto within the United States of
 12 31 America, or any insular or territorial possession of the
 12 32 United States, or the Dominion of Canada, and upon leasehold
 12 33 estates in real property where fifty years or more of the term
 12 34 including renewals is unexpired, provided that at the date of
 12 35 acquisition the total indebtedness secured by the first or
 13  1 second lien shall not exceed ninety percent of the value of
 13  2 the property upon which it is a lien.  However, a company or
 13  3 organization shall not acquire an indebtedness secured by a
 13  4 first or second lien upon a single parcel of real property, or
 13  5 upon a leasehold interest in a single parcel of real property,
 13  6 in excess of two percent of its legal reserve.  These
 13  7 limitations do not apply to obligations described in
 13  8 paragraphs "b", "c", "d", "e", and "f", and "g" of this
 13  9 subsection.
 13 10    (2)  Improvements and appurtenances to real property shall
 13 11 not be considered in estimating the value of the property
 13 12 unless the owner contracts to keep the property adequately
 13 13 insured during the life of the loan in some reliable fire
 13 14 insurance companies, or associations, the insurance to be made
 13 15 payable in case of loss to the mortgagee, trustee, or assignee
 13 16 as its interest appears at the time of the loss.
 13 17    (3)  For the purpose of this subsection a mortgage or deed
 13 18 of trust is not other than a first or second lien upon
 13 19 property by reason of the existence of taxes or assessments
 13 20 that are not delinquent, instruments creating or reserving
 13 21 mineral, oil, or timber rights, rights of way, joint
 13 22 driveways, sewer rights, rights in walls or by reason of
 13 23 building restrictions or other like restrictive covenants, or
 13 24 when the real estate is subject to lease in whole or in part
 13 25 whereby rents or profits are reserved to the owner.
 13 26    b.  Bonds, notes, or other evidences of indebtedness
 13 27 representing loans and advances of credit that have been
 13 28 issued, guaranteed, or insured, in accordance with the terms
 13 29 and provisions of an Act of Congress of the United States of
 13 30 America approved June 27, 1934, entitled the "National Housing
 13 31 Act", 48 Stat. 1246, 12 U.S.C. } 1701, et seq., as heretofore
 13 32 and hereafter amended to and including January 1, 2008, or of
 13 33 an Act of Congress of the United States of America approved
 13 34 July 24, 1970, entitled the "Federal Home Loan Mortgage
 13 35 Corporation Act", 84 Stat. 451, 12 U.S.C. } 1451, et seq., as
 14  1 amended to and including January 1, 2008.
 14  2    c.  Bonds, notes, or other evidences of indebtedness
 14  3 representing loans and advances of credit that have been
 14  4 issued or guaranteed, in whole or in part, in accordance with
 14  5 the terms and provisions of Title III of an Act of Congress of
 14  6 the United States of America approved June 22, 1944, known as
 14  7 Public Law 346, Pub. L. No. 78=268, cited as the "Servicemen's
 14  8 Readjustment Act of 1944", 58 Stat. 284, recodified at 72
 14  9 Stat. 1105, 1273, 38 U.S.C. } 3701, et seq., as heretofore and
 14 10 hereafter amended to and including January 1, 2008.
 14 11    e.  Bonds, notes, or other evidences of indebtedness
 14 12 representing loans and advances of credit that have been
 14 13 issued or guaranteed, in whole or in part, in accordance with
 14 14 Title I of the Bankhead=Jones Farm Tenant Act, an Act of the
 14 15 Congress of the United States, cited as the "Farmers Home
 14 16 Administration Act of 1946", 60 Stat. 1062, as heretofore or
 14 17 hereafter amended to and including the effective date or dates
 14 18 of its repeal as set forth in 76 Stat. 318, or with Title III
 14 19 of an Act of Congress of the United States of America approved
 14 20 August 8, 1961, entitled the "Consolidated Farm and Rural
 14 21 Development Act", 75 Stat. 307, 7 U.S.C. } 1921, et seq., as
 14 22 amended to and including January 1, 2008.
 14 23    g.  Bonds, notes or other evidences of indebtedness
 14 24 representing loans and advances of credit that have been
 14 25 issued, guaranteed, or insured, in accordance with the terms
 14 26 and provisions of an Act of the federal Parliament of the
 14 27 Dominion of Canada approved March 18, 1954, cited as the
 14 28 "National Housing Act, 1954" Act", R.S.C. 1985, c. N=11 as
 14 29 heretofore and hereafter amended to and including January 1,
 14 30 2008.
 14 31    Sec. 23.  Section 511.8, subsection 22, paragraph a, Code
 14 32 2007, is amended by adding the following new subparagraph:
 14 33    NEW SUBPARAGRAPH.  (4)  "United States government=sponsored
 14 34 enterprise" means the federal national mortgage corporation
 14 35 under 12 U.S.C. } 1716=23i of the National Housing Act and the
 15  1 federal home loan marketing association under the Federal Home
 15  2 Loan Mortgage Act, 12 U.S.C. } 1451=59.
 15  3    Sec. 24.  Section 511.8, subsection 22, paragraphs c, d,
 15  4 and e, Code 2007, are amended to read as follows:
 15  5    c.  Investments in financial instruments used in hedging
 15  6 transactions are not eligible in excess of two percent of the
 15  7 legal reserve in the financial instruments of any one
 15  8 corporation, less any securities of that corporation owned by
 15  9 the company or association and in which its legal reserve is
 15 10 invested, except insofar as the financial instruments are
 15 11 collateralized by cash, or United States government
 15 12 obligations as authorized by subsection 1, or obligations of
 15 13 or guaranteed by a United States government=sponsored
 15 14 enterprise which on the date they are pledged as collateral
 15 15 are adequately secured and have investment qualities and
 15 16 characteristics wherein the speculative elements are not
 15 17 predominant, which are deposited with a custodian bank as
 15 18 defined in subsection 21, and held under a written agreement
 15 19 with the custodian bank that complies with subsection 21 and
 15 20 provides for the proceeds of the collateral, subject to the
 15 21 terms and conditions of the applicable collateral or other
 15 22 credit support agreement, to be remitted to the legal reserve
 15 23 deposit of the company or association and to vest in the state
 15 24 in accordance with section 508.18 whenever proceedings under
 15 25 that section are instituted.
 15 26    d.  Investments in financial instruments used in hedging
 15 27 transactions are not eligible in excess of ten percent of the
 15 28 legal reserve, except insofar as the financial instruments are
 15 29 collateralized by cash, or United States government
 15 30 obligations as authorized by subsection 1, or obligations of
 15 31 or guaranteed by a United States government=sponsored
 15 32 enterprise which on the date they are pledged as collateral
 15 33 are adequately secured and have investment qualities and
 15 34 characteristics wherein the speculative elements are not
 15 35 predominant, which are deposited with a custodian bank as
 16  1 defined in subsection 21, and held under a written agreement
 16  2 with the custodian bank that complies with subsection 21 and
 16  3 provides for the proceeds of the collateral, subject to the
 16  4 terms and conditions of the applicable collateral or other
 16  5 credit support agreement, to be remitted to the legal reserve
 16  6 deposit of the company or association and to vest in the state
 16  7 in accordance with section 508.18 whenever proceedings under
 16  8 that section are instituted.
 16  9    e.  (1)  Investments in financial instruments of foreign
 16 10 governments or foreign corporate obligations, other than
 16 11 Canada, used in hedging transactions shall be included in the
 16 12 limitation contained in subsection 19 that allows only twenty
 16 13 percent of the legal reserve of the company or association to
 16 14 be invested in such foreign investments, except insofar as the
 16 15 financial instruments are collateralized by cash, or United
 16 16 States government obligations as authorized by subsection 1,
 16 17 or obligations of or guaranteed by a United States
 16 18 government=sponsored enterprise which on the date they are
 16 19 pledged as collateral are adequately secured and have
 16 20 investment qualities and characteristics wherein the
 16 21 speculative elements are not predominant, which are deposited
 16 22 with a custodian bank as defined in subsection 21, and held
 16 23 under a written agreement with the custodian bank that
 16 24 complies with subsection 21 and provides for the proceeds of
 16 25 the collateral, subject to the terms and conditions of the
 16 26 applicable collateral or other credit support agreement, to be
 16 27 remitted to the legal reserve deposit of the company or
 16 28 association and to vest in the state in accordance with
 16 29 section 508.18 whenever proceedings under that section are
 16 30 instituted.
 16 31    (2)  This paragraph "e" does not authorize the inclusion of
 16 32 financial instruments used in hedging transactions in an
 16 33 insurer's legal reserve that are in excess of the eligibility
 16 34 limitation provided in paragraph "d" unless the financial
 16 35 instruments are collateralized as provided in this paragraph
 17  1 "e".
 17  2    Sec. 25.  NEW SECTION.  514B.17A  RECISION.
 17  3    1.  A health maintenance organization may rescind an
 17  4 enrollee's membership in the health maintenance organization
 17  5 if the enrollee makes a material false statement or
 17  6 misrepresentation in the enrollee's application for
 17  7 membership.  A written notice of recision shall be sent to the
 17  8 enrollee by certified mail addressed to the enrollee and sent
 17  9 to the enrollee's last address known to the health maintenance
 17 10 organization and shall state the reason for the recision.  The
 17 11 enrollee may appeal the recision to the commissioner as
 17 12 provided by the commissioner by rules adopted under chapter
 17 13 17A.
 17 14    2.  An enrollee's membership in a health maintenance
 17 15 organization shall not be rescinded as provided in subsection
 17 16 1 more than two years after the date of the enrollee's
 17 17 enrollment in the health maintenance organization.
 17 18    Sec. 26.  NEW SECTION.  514F.6  CREDENTIALING ==
 17 19 RETROSPECTIVE PAYMENT.
 17 20    The commissioner shall adopt rules to provide for the
 17 21 retrospective payment of clean claims for covered services
 17 22 provided by a physician during the credentialing period, once
 17 23 the physician is credentialed.  For purposes of this section,
 17 24 "physician" means a licensed doctor of medicine and surgery or
 17 25 a licensed doctor of osteopathic medicine and surgery, and
 17 26 "credentialing period" means the time period between the
 17 27 health insurer's receipt of a physician's application for
 17 28 credentialing and approval of that application by the health
 17 29 insurer.  "Credentialing" means a process through which a
 17 30 health insurer makes a determination based on criteria
 17 31 established by the health insurer concerning whether a
 17 32 physician is eligible to provide health care services to an
 17 33 insured and to receive reimbursement for the health care
 17 34 services provided under an agreement entered into between the
 17 35 physician and the health insurer.  "Clean claim" means the
 18  1 same as defined in section 507B.4A, subsection 2, paragraph
 18  2 "b".
 18  3    Sec. 27.  Section 514J.3, Code 2007, is amended to read as
 18  4 follows:
 18  5    514J.3  EXCLUSIONS.
 18  6    This chapter does not apply to a hospital confinement
 18  7 indemnity, credit, dental, vision, long=term care, disability
 18  8 income insurance coverage, coverage issued as a supplement to
 18  9 liability insurance, workers' compensation or similar
 18 10 insurance, or automobile medical payment insurance.
 18 11    Sec. 28.  Section 515.103, subsection 2, paragraph e,
 18 12 subparagraphs (1) and (2), Code Supplement 2007, are amended
 18 13 to read as follows:
 18 14    (1)  Treats the consumer as if the consumer has neutral
 18 15 credit information, as defined by the insurer, resulting in
 18 16 underwriting or rating the consumer the same as if the
 18 17 consumer had an average credit rating or insurance score.
 18 18    (2)  Excludes In underwriting, excludes the use of credit
 18 19 information as an underwriting factor and only uses other
 18 20 underwriting criteria.
 18 21    Sec. 29.  Section 515A.2, subsection 1, Code 2007, is
 18 22 amended by adding the following new paragraph:
 18 23    NEW PARAGRAPH.  g.  "Schedule rating plan" means a rating
 18 24 plan by which an insurer increases or decreases workers'
 18 25 compensation rates to reflect the individual risk
 18 26 characteristics of the subject of the insurance.
 18 27    Sec. 30.  Section 515A.3, subsection 1, paragraph b, Code
 18 28 2007, is amended to read as follows:
 18 29    b.  Due consideration shall be given to past and
 18 30 prospective loss experience within and outside this state, to
 18 31 the conflagration and catastrophe hazards, to a reasonable
 18 32 margin for underwriting profit and contingencies, to
 18 33 dividends, savings, or unabsorbed premium deposits allowed or
 18 34 returned by insurers to their policyholders, members or
 18 35 subscribers, to past and prospective expenses both countrywide
 19  1 and those specially applicable to this state, and to all other
 19  2 relevant factors within and outside this state; and in the
 19  3 case of fire insurance rates consideration shall be given to
 19  4 the experience of the fire insurance business during a period
 19  5 of not less than the most recent five=year period for which
 19  6 such experience is available.
 19  7    Sec. 31.  Section 515A.4, Code 2007, is amended to read as
 19  8 follows:
 19  9    515A.4  RATE FILINGS.
 19 10    1.  a.  Every insurer shall file with the commissioner,
 19 11 except as to inland marine risks which by general custom of
 19 12 the business are not written according to manual rates or
 19 13 rating plans, every manual, minimum, class rate, rating
 19 14 schedule or rating plan and every other rating rule, and every
 19 15 modification of any of the foregoing which it proposes to use.
 19 16 Every such filing shall state the proposed effective date
 19 17 thereof, and shall indicate the character and extent of the
 19 18 coverage contemplated.
 19 19    b.  When a filing is not accompanied by the information
 19 20 upon which the insurer supports such filing, and the
 19 21 commissioner does not have sufficient information to determine
 19 22 whether such filing meets the requirements of this chapter,
 19 23 the commissioner shall require such insurer to furnish the
 19 24 information upon which it supports such filing and in such
 19 25 event the waiting period shall commence as of the date such
 19 26 information is furnished.  Until the required information is
 19 27 furnished, the filing shall not be deemed complete or
 19 28 available for use by the insurer.
 19 29    c.  The information furnished in support of a filing may
 19 30 include the experience or judgment of the insurer or rating
 19 31 organization making the filing, its interpretation of any
 19 32 statistical data it relies upon, the experience of other
 19 33 insurers or rating organizations, or any other relevant
 19 34 factors.  A When a filing is deemed complete, the filing and
 19 35 any supporting information shall be open to public inspection
 20  1 upon filing.  Specific inland marine rates on risks specially
 20  2 rated, made by a rating organization, shall be filed with the
 20  3 commissioner.
 20  4    2.  An insurer may satisfy its obligation to make such
 20  5 filings by becoming a member of, or a subscriber to, a
 20  6 licensed rating organization which makes such filings, and by
 20  7 authorizing the commissioner to accept such filings on its
 20  8 behalf; provided that nothing contained in this chapter shall
 20  9 be construed as requiring any insurer to become a member of or
 20 10 a subscriber to any rating organization.
 20 11    3.  The commissioner shall review filings as soon as
 20 12 reasonably possible after they have been made in order to
 20 13 determine whether they meet the requirements of this chapter.
 20 14    4.  Subject to the exception specified in subsection 5 of
 20 15 this section, each Each complete filing shall be on file for a
 20 16 waiting period of thirty days before it becomes effective,
 20 17 which period may be extended by the commissioner for an
 20 18 additional period not to exceed fifteen days if the
 20 19 commissioner gives written notice within the waiting period to
 20 20 the insurer or rating organization which made the filing that
 20 21 the commissioner needs additional time for the consideration
 20 22 of the filing.  Upon written application by the insurer or
 20 23 rating organization, the commissioner may authorize a filing
 20 24 which the commissioner has reviewed to become effective before
 20 25 the expiration of the waiting period or any extension of the
 20 26 period.  A filing shall be deemed to meet the requirements of
 20 27 this chapter unless disapproved by the commissioner within
 20 28 thirty days of receipt by the commissioner before the
 20 29 expiration of the waiting period or an extension of the
 20 30 waiting period.
 20 31    5.  Specific inland marine rates on risks specially rated
 20 32 by a rating organization, or any specific filing with respect
 20 33 to a surety or guaranty bond required by law or by court or
 20 34 executive order, rule or regulation of a public body and not
 20 35 covered by a previous filing, shall become effective when
 21  1 filed and shall be deemed to meet the requirements of this
 21  2 chapter until such time as the commissioner reviews the filing
 21  3 and so long thereafter as the filing remains in effect.
 21  4    6.  5.  Under such rules and regulations as the
 21  5 commissioner shall adopt the commissioner may, by written
 21  6 order, suspend or modify the requirement of filing as to any
 21  7 kind of insurance, subdivision or combination thereof, or as
 21  8 to classes of risks, the rates for which cannot practicably be
 21  9 filed before they are used.  Such order, rules and regulations
 21 10 shall be made known to insurers and rating organizations
 21 11 affected thereby.  The commissioner may make such examination
 21 12 as the commissioner may deem advisable to ascertain whether
 21 13 any rates affected by such order meet the standards set forth
 21 14 in paragraph "b" of subsection 1 of section 515A.3.
 21 15    7.  6.  Upon the written application of the insured,
 21 16 stating the insured's reasons therefor, filed with and
 21 17 approved by the commissioner a rate in excess of that provided
 21 18 by a filing otherwise applicable may be used on any specific
 21 19 risk.
 21 20    8.  7.  No insurer shall make or issue a contract or policy
 21 21 except in accordance with the filings which are in effect for
 21 22 said the insurer as provided in this chapter or in accordance
 21 23 with subsections 6 subsection 5 or 7 of this section 6.  This
 21 24 subsection shall not apply to contracts or policies for inland
 21 25 marine risks as to which filings are not required.
 21 26    9.  8.  If a hearing is requested pursuant to section
 21 27 515A.6, subsection 7, a filing shall not take effect until
 21 28 thirty days after formal approval is given by the
 21 29 commissioner.
 21 30    Sec. 32.  Section 515A.5, Code 2007, is amended to read as
 21 31 follows:
 21 32    515A.5  DISAPPROVAL OF FILINGS.
 21 33    1.  If within the waiting period or any extension thereof
 21 34 as provided in subsection 4 of section 515A.4, the
 21 35 commissioner finds that a filing does not meet the
 22  1 requirements of this chapter, the commissioner shall send to
 22  2 the insurer or rating organization which made such filing,
 22  3 written notice in a printed or electronic format of
 22  4 disapproval of such filing specifying therein in what respects
 22  5 the commissioner finds such filing fails to meet the
 22  6 requirements of this chapter and stating that such filing
 22  7 shall not become effective.
 22  8    2.  If within thirty days after a specific inland marine
 22  9 rate on a risk especially rated by a rating organization
 22 10 subject to subsection 5 of section 515A.4 has become effective
 22 11 or, if within thirty days after a special surety or guaranty
 22 12 filing subject to subsection 5 of section 515A.4 has become
 22 13 effective, the commissioner finds that such filing does not
 22 14 meet the requirements of this chapter, the commissioner shall
 22 15 send to the rating organization or insurer which made such
 22 16 filing written notice of disapproval of such filing specifying
 22 17 therein in what respects the commissioner finds that such
 22 18 filing fails to meet the requirements of this chapter and
 22 19 stating when, within a reasonable period thereafter, such
 22 20 filing shall be deemed no longer effective.  Said disapproval
 22 21 shall not affect any contract made or issued prior to the
 22 22 expiration of the period set forth in said notice.
 22 23    3.  2.  If at At any time subsequent to the applicable
 22 24 review period provided for in subsection 1 or 2 of this
 22 25 section, the commissioner finds that a filing does not meet
 22 26 the requirements of this chapter, the may hold a hearing to
 22 27 determine whether a filing meets the requirements of this
 22 28 chapter.  The commissioner shall, after provide notice of a
 22 29 hearing held upon not less than ten days' written notice,
 22 30 specifying the matters to be considered at such hearing, days
 22 31 prior to the hearing to every insurer and rating organization
 22 32 which made such the filing, specifying the matters to be
 22 33 considered at the hearing.  If the commissioner finds that a
 22 34 filing does not meet the requirements of this chapter, the
 22 35 commissioner shall issue an order specifying in what respects
 23  1 the commissioner finds that such the filing fails to meet the
 23  2 requirements of this chapter, and stating when, within a
 23  3 reasonable period thereafter, such the filing shall be deemed
 23  4 no longer effective.  Copies of said the order shall be sent
 23  5 to every such insurer and rating organization which made the
 23  6 filing.  Said The order shall not affect any contract or
 23  7 policy made or issued prior to the expiration of the period
 23  8 set forth in said the order.
 23  9    4.  3.  a.  Any person or organization aggrieved with
 23 10 respect to any filing which is in effect may make written
 23 11 application to the commissioner for a hearing thereon,
 23 12 provided, however, that the insurer or rating organization
 23 13 that made or uses the filing shall not be authorized to
 23 14 proceed under this subsection.  Such application shall specify
 23 15 the grounds to be relied upon by the applicant and such
 23 16 application must show that the person or organization making
 23 17 such application has a specific economic interest affected by
 23 18 the filing.  If the commissioner shall find finds that the
 23 19 application is made in good faith, that the applicant has a
 23 20 specific economic interest, that the applicant would be so
 23 21 aggrieved if the applicant's grounds are established, and that
 23 22 such grounds otherwise justify holding such a hearing, the
 23 23 commissioner shall within thirty days after receipt of such
 23 24 application hold a hearing, upon not less than ten days'
 23 25 written notice to the applicant and to every insurer and
 23 26 rating organization which made such the filing.  No rating or
 23 27 advisory organization shall have any status under this chapter
 23 28 to make application for a hearing on any filing made by an
 23 29 insurer with the commissioner.
 23 30    b.  If, after such hearing, the commissioner finds that the
 23 31 filing does not meet the requirements of this chapter, the
 23 32 commissioner shall issue an order specifying in what respects
 23 33 the commissioner finds that such filing fails to meet the
 23 34 requirements of this chapter, and stating when, within a
 23 35 reasonable period thereafter, such filing shall be deemed no
 24  1 longer effective.  Copies of said the order shall be sent to
 24  2 the applicant and to every such insurer and rating
 24  3 organization.  Said The order shall not affect any contract or
 24  4 policy made or issued prior to the expiration of the period
 24  5 set forth in said the order.
 24  6    5.  4.  No filing shall be disapproved if the rates thereby
 24  7 produced meet the requirements of this chapter.
 24  8    Sec. 33.  Section 515A.6, subsection 1, paragraph c, Code
 24  9 Supplement 2007, is amended to read as follows:
 24 10    c.  Licenses issued pursuant to this section shall remain
 24 11 in effect for three years unless sooner suspended or revoked
 24 12 by the commissioner.  The fee for said the license shall be
 24 13 twenty=five one hundred dollars.
 24 14    Sec. 34.  Section 515A.6, subsection 7, paragraph a, Code
 24 15 Supplement 2007, is amended to read as follows:
 24 16    a.  The commissioner shall provide notice of the filing of
 24 17 the proposed rates at least thirty days before the effective
 24 18 date of the proposed rates by publishing a notice in the Iowa
 24 19 administrative bulletin on the internet web site of the
 24 20 insurance division of the department of commerce.
 24 21    Sec. 35.  Section 515A.6, subsection 7, Code Supplement
 24 22 2007, is amended by adding the following new paragraphs:
 24 23    NEW PARAGRAPH.  g.  Absent a request for a hearing as
 24 24 provided in paragraph "b", the commissioner shall issue an
 24 25 order approving or disapproving the proposed rates.
 24 26    NEW PARAGRAPH.  h.  The waiting period for a workers'
 24 27 compensation insurance rate filing shall commence no earlier
 24 28 than the date that notice of the insurance rate filing is
 24 29 published.
 24 30    Sec. 36.  Section 515A.7, Code 2007, is amended to read as
 24 31 follows:
 24 32    515A.7  UNIFORM RATING PLANS AND DEVIATIONS.
 24 33    1.  a.  Every member of or subscriber to a rating
 24 34 organization insurer shall adhere to the filings made on its
 24 35 behalf by such a rating organization except that any such
 25  1 insurer may make written application to the commissioner to
 25  2 file a deviation from the class rates, schedules, rating
 25  3 plans, or rules respecting any kind of insurance, or class of
 25  4 risk within a kind of insurance, or a combination thereof for
 25  5 approval by the commissioner.  Such application The deviation
 25  6 filed shall specify the basis for the modification and a copy
 25  7 shall also be sent simultaneously to such rating organization.
 25  8 In considering the application to file such deviation filed,
 25  9 the commissioner shall give consideration to the available
 25 10 statistics and the principles for rate making as provided in
 25 11 section 515A.3.  The commissioner shall issue an order
 25 12 permitting approve the deviation filed for such insurer to be
 25 13 filed if the commissioner finds it to be justified and it
 25 14 shall thereupon become effective.  The commissioner shall
 25 15 issue an order denying such application disapprove the
 25 16 deviation filed if the commissioner finds that the deviation
 25 17 applied for does not meet the requirements of this chapter.
 25 18    Each deviation permitted to be filed shall remain in effect
 25 19 for a period of not less than one year from the effective date
 25 20 unless sooner withdrawn by the insurer with the approval of
 25 21 the commissioner or until terminated in accordance with the
 25 22 provisions of section 515A.5.
 25 23    b.  A deviation may be filed for approval by the
 25 24 commissioner as follows:
 25 25    (1)  An insurer may file for approval by the commissioner
 25 26 of a uniform percentage rate deviation to be applied to the
 25 27 class rates of the rating organization's filing subject to
 25 28 limitations as set forth by the commissioner by rule.  A rate
 25 29 deviation from the approved class rates of a rating
 25 30 organization shall not cause the rate charged a policyholder
 25 31 to exceed the approved assigned risk rates.
 25 32    (2)  A rating organization or insurer may offer
 25 33 retrospective plans in policies which generate at least one
 25 34 hundred thousand dollars in annual countrywide premiums on
 25 35 workers' compensation liability insurance.
 26  1    (3)  An insurer may offer large deductible programs on
 26  2 policies which generate at least one hundred thousand dollars
 26  3 in annual countrywide premiums on workers' compensation
 26  4 liability insurance.  The minimum large deductible which may
 26  5 be offered is twenty=five thousand dollars, which may be
 26  6 applied to indemnity and medical losses.
 26  7    (4)  An insurer may offer small deductible programs with
 26  8 deductibles in a range of up to ten thousand dollars and which
 26  9 apply only to medical losses.  Losses shall be reported on a
 26 10 net basis in accordance with the statistical plan filed by a
 26 11 rating organization.
 26 12    (5)  An insurer may adopt a scheduled or rating plan
 26 13 providing for credits or debits in an amount not exceeding the
 26 14 maximum modification allowed as set forth by the commissioner
 26 15 by rule.  This amount shall be in addition to the permitted
 26 16 deviations set forth in subparagraphs (1) through (4).
 26 17    (6)  The commissioner may authorize other types of
 26 18 deviations by rule when there is no approved rate, schedule,
 26 19 rating plan, or rule applicable to the deviation filed, on
 26 20 file with the insurance division for a rating organization.
 26 21    2.  The commissioner may adopt rules pursuant to chapter
 26 22 17A to limit deviations and maximum schedule or rating plan
 26 23 modifications.
 26 24    3.  All dividends shall be paid based upon loss
 26 25 sensitivity.  Dividends are deemed a return of profit to
 26 26 insureds.  Accordingly, dividends shall not be guaranteed by
 26 27 an insurer without regard to profits.  Dividends may be
 26 28 offered in conjunction with deviated rates or with scheduled
 26 29 rates or in combination therewith.  For the purposes of this
 26 30 subsection, "loss sensitivity" means the profitability of the
 26 31 policyholder individually or as a member of a homogenous
 26 32 group.
 26 33    Sec. 37.  Section 515A.8, Code 2007, is amended to read as
 26 34 follows:
 26 35    515A.8  APPEAL BY MINORITY MEMBER OR SUBSCRIBER.
 27  1    1.  Any member or subscriber to a rating organization may
 27  2 appeal to the commissioner from the action or decision of such
 27  3 rating organization in approving or rejecting any proposed
 27  4 change in or addition to the filings of such rating
 27  5 organization and the commissioner shall, after a hearing held
 27  6 upon not less than ten days' written notice to the appellant,
 27  7 and to such rating organization, issue an order approving the
 27  8 action or decision of such rating organization or directing it
 27  9 to give further consideration to such proposal, or, if such
 27 10 appeal is from the action or decision of the rating
 27 11 organization in rejecting a proposed addition to its filings,
 27 12 the commissioner may, in the event the commissioner finds that
 27 13 such action or decision was unreasonable, issue an order
 27 14 directing the rating organization to make an addition to its
 27 15 filings, on behalf of its members and subscribers, in a manner
 27 16 consistent with the findings, within a reasonable time after
 27 17 the issuance of such order.
 27 18    2.  If such appeal is based upon the failure of the rating
 27 19 organization to make a filing on behalf of such member or
 27 20 subscriber, which is based on a system of expense provisions
 27 21 which differs, in accordance with the right granted in
 27 22 paragraph "c" of subsection 1 of section 515A.3, from the
 27 23 system of expense provisions included in a filing made by the
 27 24 rating organization, the commissioner shall, if the
 27 25 commissioner grants the appeal, order the rating organization
 27 26 to make the requested filing for use by the appellant.  In
 27 27 deciding such appeal the commissioner shall apply the
 27 28 standards set forth in section 515A.3.
 27 29    Sec. 38.  Section 515A.13, Code 2007, is amended to read as
 27 30 follows:
 27 31    515A.13  RATE ADMINISTRATION.
 27 32    1.  RECORDING AND REPORTING OF LOSS AND EXPENSE EXPERIENCE.
 27 33 The commissioner shall promulgate reasonable rules and
 27 34 statistical plans, reasonably adapted to each of the rating
 27 35 systems on file with the commissioner, which may be modified
 28  1 from time to time and which shall be used thereafter by each
 28  2 insurer in the recording and reporting of its loss and
 28  3 countrywide expense experience, in order that the experience
 28  4 of all insurers may be made available at least annually in
 28  5 such form and detail as may be necessary to aid the
 28  6 commissioner in determining whether rating systems comply with
 28  7 the standards set forth in section 515A.3.  Such rules and
 28  8 plans may also provide for the recording and reporting of
 28  9 expense experience items which are specially applicable to
 28 10 this state and are not susceptible of determination by a
 28 11 prorating of countywide expense experience.  In promulgating
 28 12 such rules and plans, the commissioner shall give due
 28 13 consideration to the rating systems on file and, in order that
 28 14 such rules and plans may be as uniform as is practicable among
 28 15 the several states, to the rules and to the form of the plans
 28 16 used for such rating systems in other states.  No insurer
 28 17 shall be required to record or report its loss experience on a
 28 18 classification basis that is inconsistent with the rating
 28 19 system filed by it.  The commissioner may designate one or
 28 20 more rating organizations or other agencies to assist in
 28 21 gathering such experience and making compilations thereof, and
 28 22 such compilations shall be made available, subject to
 28 23 reasonable rules promulgated by the commissioner, to insurers
 28 24 and rating organizations.
 28 25    2.  INTERCHANGE OF RATING PLAN DATA.  Reasonable rules and
 28 26 plans may be promulgated by the commissioner for the
 28 27 interchange of data necessary for the application of rating
 28 28 plans.
 28 29    3.  CONSULTATION WITH OTHER STATES.  In order to further
 28 30 uniform administration of rate regulatory laws, the
 28 31 commissioner and every insurer and rating organization may
 28 32 exchange information and experience data with insurance
 28 33 supervisory officials, insurers and rating organizations in
 28 34 other states and may consult with them with respect to rate
 28 35 making and the application of rating systems.
 29  1    4.  RULES AND REGULATIONS.  The commissioner may make
 29  2 reasonable rules necessary to effect the purposes of this
 29  3 chapter.
 29  4    5.  PROHIBITED RELEASE.  A person other than the
 29  5 commissioner or the commissioner's designee shall not release
 29  6 to another person, other than to the servicing insurer of the
 29  7 policy or to the commissioner or the commissioner's designee,
 29  8 experience, payroll, loss data, expiration date of a policy,
 29  9 or classification information without the prior written
 29 10 approval of the policyholder.  A violation of this section
 29 11 shall be considered an unfair trade practice pursuant to
 29 12 chapter 507B.
 29 13    Sec. 39.  Section 515A.17, Code 2007, is amended to read as
 29 14 follows:
 29 15    515A.17  PENALTIES.
 29 16    1.  The commissioner may, if the commissioner finds that
 29 17 any person or organization has violated any provision of this
 29 18 chapter, impose a penalty of not more than fifty one thousand
 29 19 dollars for each such violation, but if the commissioner finds
 29 20 such violation to be willful the commissioner may impose a
 29 21 penalty of not more than five hundred thousand dollars for
 29 22 each such violation.  Such penalties may be in addition to any
 29 23 other penalty provided by law.
 29 24    2.  The commissioner may suspend the license of any rating
 29 25 organization or insurer which fails to comply with an order of
 29 26 the commissioner within the time limited by such order, or any
 29 27 extension thereof which the commissioner may grant.  The
 29 28 commissioner shall not suspend the license of any rating
 29 29 organization or insurer for failure to comply with an order
 29 30 until the time prescribed for an appeal therefrom has expired
 29 31 or if an appeal has been taken, until such order has been
 29 32 affirmed.  The commissioner may determine when a suspension of
 29 33 license shall become effective and it shall remain in effect
 29 34 for the period fixed by the commissioner, unless the
 29 35 commissioner modifies or rescinds such suspension, or until
 30  1 the order upon which such suspension is based is modified,
 30  2 rescinded, or reversed.
 30  3    3.  No A penalty shall not be imposed and no a license
 30  4 shall not be suspended or revoked except upon a written order
 30  5 of the commissioner, stating the commissioner's findings, made
 30  6 after a hearing held upon not less than ten days' written
 30  7 notice to such person or organization specifying the alleged
 30  8 violation.
 30  9    Sec. 40.  NEW SECTION.  515A.19A  RULES.
 30 10    The commissioner may adopt rules pursuant to chapter 17A as
 30 11 necessary and convenient to administer this chapter.
 30 12    Sec. 41.  Section 521.16, Code 2007, is amended to read as
 30 13 follows:
 30 14    521.16  APPLICABILITY OF SECTION 521A.3.
 30 15    The For an insurer subject to chapter 521A, the provisions
 30 16 of section 521A.3 shall also be applicable to a merger or
 30 17 consolidation subject to this chapter.  As used in this
 30 18 section, "insurer" means the same as defined in section
 30 19 521A.1.
 30 20    Sec. 42.  Section 523A.206, subsection 5, paragraphs a and
 30 21 b, Code Supplement 2007, are amended to read as follows:
 30 22    a.  The refusal of a seller, by its officers, directors,
 30 23 employees, or agents, to submit to an examination or to comply
 30 24 with a reasonable written request of an examiner shall
 30 25 constitute grounds for the suspension, revocation, or
 30 26 nonrenewal of denial of an application to renew any license
 30 27 held by the seller to engage in business subject to the
 30 28 commissioner's jurisdiction.
 30 29    b.  If a seller declines or refuses to submit to an
 30 30 examination as provided in this chapter, the commissioner
 30 31 shall immediately suspend, revoke, or nonrenew deny an
 30 32 application to renew any license held by the seller or
 30 33 business to engage in business subject to the commissioner's
 30 34 jurisdiction, and shall report the commissioner's action to
 30 35 the attorney general, who shall immediately apply to the
 31  1 district court for the appointment of a receiver to administer
 31  2 the final affairs of the seller.
 31  3    Sec. 43.  Section 523A.401, subsection 7, Code Supplement
 31  4 2007, is amended to read as follows:
 31  5    7.  The seller of a purchase agreement subject to this
 31  6 chapter which is to be funded by insurance proceeds shall
 31  7 obtain all permits licenses required to be obtained and comply
 31  8 with all reporting requirements under this chapter.  A parent
 31  9 company, provider, or seller shall not pledge, borrow from, or
 31 10 otherwise encumber an insurance policy funding a purchase
 31 11 agreement.
 31 12    Sec. 44.  Section 523A.402, subsection 7, Code Supplement
 31 13 2007, is amended to read as follows:
 31 14    7.  The seller of a purchase agreement subject to this
 31 15 chapter which is to be funded by annuity proceeds shall obtain
 31 16 all permits licenses required to be obtained and comply with
 31 17 all reporting requirements under this chapter.  A parent
 31 18 company, provider, or seller shall not pledge, borrow from, or
 31 19 otherwise encumber an annuity funding a purchase agreement.
 31 20    Sec. 45.  Section 523A.405, subsection 8, Code Supplement
 31 21 2007, is amended to read as follows:
 31 22    8.  The amount of the surety bond shall equal eighty
 31 23 percent of the payments received pursuant to purchase
 31 24 agreements, or the applicable portion thereof, for cemetery
 31 25 merchandise, funeral merchandise, funeral services, or a
 31 26 combination thereof and the amount needed to adjust the amount
 31 27 of the surety bond for inflation as set by the commissioner
 31 28 based on the consumer price index.  The seller shall review
 31 29 the amount of the surety bond no less than annually and shall
 31 30 increase the bond as necessary to reflect additional payments.
 31 31 The amount needed to adjust for inflation shall be added
 31 32 annually to the surety bond during the first quarter of the
 31 33 establishment's seller's fiscal year.
 31 34    Sec. 46.  Section 523A.501, subsection 3, paragraphs a and
 31 35 b, Code Supplement 2007, are amended to read as follows:
 32  1    a.  The commissioner shall request and obtain,
 32  2 notwithstanding section 692.2, subsection 5, criminal history
 32  3 data for any applicant for an initial license issued pursuant
 32  4 to this section, any applicant for reinstatement of a license
 32  5 issued pursuant to this section, or any licensee who is being
 32  6 monitored as a result of a commission order an order of the
 32  7 commissioner or agreement resolving an administrative
 32  8 disciplinary action, for the purpose of evaluating the
 32  9 applicant's or licensee's eligibility for licensure or
 32 10 suitability for continued practice as a preneed seller.  The
 32 11 commissioner shall adopt rules pursuant to chapter 17A to
 32 12 implement this section.  The commissioner shall inform the
 32 13 applicant or licensee of the criminal history requirement and
 32 14 obtain a signed waiver from the applicant or licensee prior to
 32 15 submitting a criminal history data request.
 32 16    b.  A request for criminal history data shall be submitted
 32 17 to the department of public safety, division of criminal
 32 18 investigation, pursuant to section 692.2, subsection 1.  The
 32 19 commissioner may also require such applicants or licensees to
 32 20 provide a full set of fingerprints, in a form and manner
 32 21 prescribed by the commission commissioner.  Such fingerprints
 32 22 may be submitted to the federal bureau of investigation
 32 23 through the state criminal history repository for a national
 32 24 criminal history check.  The commissioner may authorize
 32 25 alternate methods or sources for obtaining criminal history
 32 26 record information.  The commissioner may, in addition to any
 32 27 other fees, charge and collect such amounts as may be incurred
 32 28 by the commissioner, the department of public safety, or the
 32 29 federal bureau of investigation in obtaining criminal history
 32 30 information.  Amounts collected shall be considered repayment
 32 31 receipts as defined in section 8.2.
 32 32    Sec. 47.  Section 523A.501, subsection 4, Code Supplement
 32 33 2007, is amended to read as follows:
 32 34    4.  The commissioner shall request and obtain a financial
 32 35 history for any applicant for an initial license issued
 33  1 pursuant to this section, any applicant for reinstatement of a
 33  2 license issued pursuant to this section, or any licensee who
 33  3 is being monitored as a result of a commission order an order
 33  4 of the commissioner or agreement resolving an administrative
 33  5 disciplinary action, for the purpose of evaluating the
 33  6 applicant's or licensee's eligibility for licensure or
 33  7 suitability for continued practice as a preneed seller.
 33  8 "Financial history" means the record of a person's current
 33  9 loans, the date of a person's loans, the amount of the loans,
 33 10 the person's payment record on the loans, current liens
 33 11 against the person's property, and the person's most recent
 33 12 financial statement setting forth the assets, liabilities, and
 33 13 the net worth of the person.
 33 14    Sec. 48.  Section 523A.502, subsection 4, paragraphs a and
 33 15 b, Code Supplement 2007, are amended to read as follows:
 33 16    a.  The commissioner shall request and obtain,
 33 17 notwithstanding section 692.2, subsection 5, criminal history
 33 18 data for any applicant for an initial license issued pursuant
 33 19 to this section, any applicant for reinstatement of a license
 33 20 issued pursuant to this section, or any licensee who is being
 33 21 monitored as a result of a commission order an order of the
 33 22 commissioner or agreement resolving an administrative
 33 23 disciplinary action, for the purpose of evaluating the
 33 24 applicant's or licensee's eligibility for licensure or
 33 25 suitability for continued practice as a sales agent.  The
 33 26 commissioner shall adopt rules pursuant to chapter 17A to
 33 27 implement this section.  The commissioner shall inform the
 33 28 applicant or licensee of the criminal history requirement and
 33 29 obtain a signed waiver from the applicant or licensee prior to
 33 30 submitting a criminal history data request.
 33 31    b.  A request for criminal history data shall be submitted
 33 32 to the department of public safety, division of criminal
 33 33 investigation, pursuant to section 692.2, subsection 1.  The
 33 34 commissioner may also require such applicants or licensees, to
 33 35 provide a full set of fingerprints, in a form and manner
 34  1 prescribed by the commission commissioner.  Such fingerprints
 34  2 may be submitted to the federal bureau of investigation
 34  3 through the state criminal history repository for a national
 34  4 criminal history check.  The commissioner may authorize
 34  5 alternate methods or sources for obtaining criminal history
 34  6 record information.  The commissioner may, in addition to any
 34  7 other fees, charge and collect such amounts as may be incurred
 34  8 by the commissioner, the department of public safety, or the
 34  9 federal bureau of investigation in obtaining criminal history
 34 10 information.  Amounts collected shall be considered repayment
 34 11 receipts as defined in section 8.2.
 34 12    Sec. 49.  Section 523A.502, subsection 5, Code Supplement
 34 13 2007, is amended to read as follows:
 34 14    5.  The A sales license shall be renewed every four years
 34 15 by filing the form prescribed by the commissioner under
 34 16 subsection 3, accompanied by a renewal fee in an amount set by
 34 17 the commissioner by rule.
 34 18    Sec. 50.  Section 523A.603, subsection 2, Code Supplement
 34 19 2007, is amended to read as follows:
 34 20    2.  If a purchase agreement is funded by a surety bond, the
 34 21 purchaser shall receive a notice from the surety company that
 34 22 evidences coverage under the bond, the name of the purchaser
 34 23 or beneficiary, and the amount of coverage.  If the purchase
 34 24 agreement is paid with a single payment, the purchaser shall
 34 25 receive notice of the surety bond within sixty days of making
 34 26 the payment.  If the purchase agreement is being paid with
 34 27 multiple, periodic payments, the purchaser shall receive
 34 28 notice of the surety bond within sixty days of making the
 34 29 first payment and within sixty days of making the last
 34 30 payment.  Compliance with this notice requirement does not
 34 31 require a seller to purchase individual surety bonds for each
 34 32 purchaser and beneficiary.  A seller may file a single bond
 34 33 with the commissioner.
 34 34    Sec. 51.  Section 523A.807, subsection 3, paragraph a, Code
 34 35 Supplement 2007, is amended to read as follows:
 35  1    a.  Payment of a civil penalty of not more than one
 35  2 thousand dollars for each violation, but not exceeding an
 35  3 aggregate of ten thousand dollars during any six=month period,
 35  4 except that if the commissioner finds that the person knew or
 35  5 reasonably should have known that the person was in violation
 35  6 of such provisions or rules adopted pursuant thereto, the
 35  7 penalty shall be not more than five thousand dollars for each
 35  8 violation, but not exceeding an aggregate of fifty thousand
 35  9 dollars during any six=month period.  The commissioner shall
 35 10 assess the penalty on the employer of an individual and not on
 35 11 the individual, if the commissioner finds that the violations
 35 12 committed by the individual were directed, encouraged,
 35 13 condoned, ignored, or ratified by the individual's employer.
 35 14    Sec. 52.  Section 523A.901, subsection 9, paragraph a,
 35 15 subparagraph (2), subparagraph subdivision (d), Code
 35 16 Supplement 2007, is amended to read as follows:
 35 17    (d)  The creditor receiving the transfer was an officer, or
 35 18 an employee, attorney, or other person who was in fact in a
 35 19 position of comparable influence in the business of the seller
 35 20 to an officer whether or not the person held the position of
 35 21 an officer, owner, or other person, firm, corporation,
 35 22 association, or aggregation of persons with whom the seller
 35 23 did not deal at arm's length.
 35 24    Sec. 53.  Section 523I.102, subsection 8, Code Supplement
 35 25 2007, is amended to read as follows:
 35 26    8.  "Commissioner" means the commissioner of insurance or
 35 27 the commissioner's designee authorized in section 523A.801.
 35 28    Sec. 54.  Section 523I.201, subsection 1, Code Supplement
 35 29 2007, is amended to read as follows:
 35 30    1.  This chapter shall be administered by the commissioner.
 35 31 The commissioner shall may employ officers, attorneys,
 35 32 accountants, and other employees as needed for administering
 35 33 this chapter.
 35 34    Sec. 55.  Section 508.30, Code 2007, is repealed.
 35 35    Sec. 56.  EFFECTIVE DATE.  The section of this Act amending
 36  1 section 515A.7, Code 2007, being deemed of immediate
 36  2 importance, takes effect upon enactment.
 36  3                           EXPLANATION
 36  4    This bill relates to various matters under the purview of
 36  5 the insurance division of the department of commerce including
 36  6 uniform securities; duties of the insurance division including
 36  7 a consumer advocate bureau and rate reviews; examinations;
 36  8 insurance fraud; the Iowa life and health insurance guaranty
 36  9 association; general agents and third=party administrators;
 36 10 life insurance companies; health maintenance organizations;
 36 11 insurance other than life; workers' compensation liability
 36 12 insurance; consolidation, merger, and reinsurance; cemetery
 36 13 and funeral merchandise and funeral services; and cemeteries.
 36 14    UNIFORM SECURITIES ACT.  Code section 502.201(9E) is
 36 15 amended to make the terminology consistent with the language
 36 16 contained in Code section 502.102(31A).
 36 17    Code section 502.202(9) is amended to provide that certain
 36 18 exchange transactions are exempt from certain registration and
 36 19 notice filing requirements for securities only if approved
 36 20 after hearing by a court or specified government agency or
 36 21 authority.
 36 22    Code section 502.402(2)(a) is amended to correct an
 36 23 incorrect citation to the United States Code.
 36 24    Code section 502.410(2) is amended to increase the
 36 25 registration or renewal of registration fee for a securities
 36 26 agent from $30 to $40 and to appropriate $10 of that fee to
 36 27 the securities investor education and financial literacy
 36 28 training fund established under Code section 502.601(5).  Code
 36 29 section 502.601(4) is amended to expand the investor education
 36 30 initiatives developed and implemented by the insurance
 36 31 division to include financial literacy.  Code section
 36 32 502.601(5) is amended to coordinate with these changes and to
 36 33 provide that moneys may remain in the fund after the end of
 36 34 the state fiscal year in an amount not exceeding $500,000,
 36 35 instead of $200,000.
 37  1    INSURANCE DIVISION == CONSUMER ADVOCATE BUREAU == RATE
 37  2 REVIEWS.  Code section 505.8, concerning the powers and duties
 37  3 of the commissioner of insurance, is amended to require the
 37  4 commissioner to establish a consumer advocate bureau with the
 37  5 responsibility to ensure fair treatment of consumers by
 37  6 persons in the business of insurance and to prevent unfair or
 37  7 deceptive trade practices in the insurance marketplace.  The
 37  8 commissioner is required to make an annual report to the
 37  9 general assembly of findings and recommendations regarding the
 37 10 activities of the consumer advocate bureau.
 37 11    Code section 505.8(6) is amended to require the
 37 12 commissioner to keep confidential the information submitted to
 37 13 or obtained by the division in the course of an investigation
 37 14 or inquiry conducted by the consumer advocate bureau and to
 37 15 allow the disclosure of such information to the parties to the
 37 16 complaint or inquiry and in the course of an administrative or
 37 17 judicial proceeding.  A coordinating amendment is made to Code
 37 18 section 22.7 to specify that such records are an exception to
 37 19 the Iowa open records law.
 37 20    Code section 505.8(10) is also amended to provide that the
 37 21 confidentiality provisions of 505.8(6) apply to information
 37 22 and material obtained by the commissioner pursuant to any
 37 23 investigation made under Code chapter 505.
 37 24    Code section 505.15 is amended to specify that the
 37 25 commissioner of insurance may retain attorneys, appraisers,
 37 26 independent actuaries and certified public accountants, and
 37 27 other professionals and specialists to assist the division in
 37 28 conducting rate filing reviews.
 37 29    EXAMINATIONS.  Code section 507.4 is amended to provide
 37 30 that the commissioner may employ insurance examiners at rates
 37 31 of compensation consistent with current standards in the
 37 32 insurance industry.
 37 33    INSURANCE TRADE PRACTICES.  Code section 507B.3 is amended
 37 34 by striking provisions relating to the power of the
 37 35 commissioner to examine, investigate, and obtain information
 38  1 on persons engaged in the business of insurance in this state
 38  2 about prohibited insurance trade practices.  These powers are
 38  3 now included in new provisions contained in Code section
 38  4 505.8(5A) and (6).
 38  5    INSURANCE FRAUD.  Code section 507E.6 is amended to require
 38  6 an insurer who believes that an application for insurance
 38  7 contains fraudulent submissions to report such a violation to
 38  8 the consumer fraud bureau of the insurance division for
 38  9 investigation.  This amendment conforms this Code section to
 38 10 the language contained in Code section 507E.3 concerning
 38 11 fraudulent submissions.
 38 12    IOWA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION.  Code
 38 13 section 508C.3(2) is amended to provide that for the purposes
 38 14 of coverage under this Code chapter, long=term care insurance
 38 15 and disability insurance policies are covered as health
 38 16 insurance policies.
 38 17    Code section 508C.6(1)(c) and (d) are amended to provide
 38 18 that certain deferred compensation plans are covered under the
 38 19 guaranty association's annuity account.
 38 20    Code section 508C.8(8) is amended by rewriting the
 38 21 subsection to increase the obligation of the guaranty
 38 22 association to cover contractual obligations of impaired or
 38 23 insolvent insurers.  The association's liability is limited to
 38 24 the lesser of what the insurer is liable or would have been
 38 25 liable for if the insurer was not impaired or insolvent, or
 38 26 specified statutory limitations based on the type of benefits
 38 27 or plan.
 38 28    Code section 508C.8(9) is amended to expand the
 38 29 association's coverage of certain claims by striking a
 38 30 limitation on when such claims must accrue in order to be
 38 31 covered or paid.
 38 32    VIATICAL SETTLEMENT CONTRACTS.  New Code section 508E.5
 38 33 provides that all information filed with the commissioner
 38 34 pursuant to the requirements of this chapter and its
 38 35 implementing rules constitutes a public record that is open
 39  1 for public inspection.
 39  2    GENERAL AGENTS AND THIRD=PARTY ADMINISTRATORS.  Code
 39  3 section 510.5(1) is amended to remove an inaccurate reference
 39  4 to triennial examination of insurers.
 39  5    LIFE INSURANCE COMPANIES AND ASSOCIATIONS.  Code section
 39  6 511.8(6) is amended to allow a life insurance company to
 39  7 invest in preferred stocks only if at the date of their
 39  8 acquisition the stocks have specified earnings and preferred
 39  9 dividends, unless the issuing corporation documents at the
 39 10 date of their acquisition that such stocks have investment
 39 11 qualities and characteristics where the speculative elements
 39 12 are not predominant.
 39 13    Code section 511.8(9) is amended to make references to
 39 14 federal and Canadian statutes as of a fixed date, update
 39 15 references to legislation, and add references to statutes
 39 16 creating the federal national mortgage association.
 39 17    Code section 511.8(22) is amended by adding a definition of
 39 18 "government=sponsored enterprise".  Code section 511.8(22) is
 39 19 also amended to allow a life insurance company to invest in
 39 20 certain financial instruments used in hedging transactions
 39 21 that are obligations of or obligations guaranteed by a United
 39 22 States government=sponsored enterprise which on the date they
 39 23 are pledged as collateral are adequately secured and have
 39 24 investment qualities and characteristics where the speculative
 39 25 elements are not predominant.
 39 26    HEALTH MAINTENANCE ORGANIZATIONS.  New Code section
 39 27 514B.17A allows a health maintenance organization to rescind
 39 28 an enrollee's membership for making a material false statement
 39 29 or misrepresentation in the enrollee's application for
 39 30 membership upon written notice to the enrollee and allows
 39 31 appeal of the recision.  An enrollee's membership cannot be
 39 32 rescinded for these reasons more than two years after the date
 39 33 of enrollment.
 39 34    UTILIZATION AND COST CONTROL.  New Code section 514F.6
 39 35 requires the commissioner to adopt rules to provide for the
 40  1 retrospective payment of clean claims for covered services
 40  2 provided by a physician during the time before a physician's
 40  3 application for credentialing has been approved by a health
 40  4 insurer.  Credentialing is an insurance process through which
 40  5 a health insurer makes a determination concerning whether a
 40  6 physician is eligible to provide health care services to an
 40  7 insured to receive reimbursement from the insurer.
 40  8    EXTERNAL REVIEW OF HEALTH CARE COVERAGE DECISIONS.  Code
 40  9 section 514J.3 is amended to provide that claims for dental
 40 10 insurance coverage are subject to external review
 40 11 requirements.
 40 12    INSURANCE OTHER THAN LIFE.  Code section 515.103(2) is
 40 13 amended to allow an insurer to consider the absence of credit
 40 14 information or the inability to calculate an insurance score
 40 15 in underwriting or rating personal insurance, if the insurer
 40 16 treats the consumer as if the consumer has neutral credit
 40 17 information, and this results in underwriting or rating the
 40 18 consumer the same as if the consumer had an average credit
 40 19 rating or insurance score, or if the insurer in underwriting
 40 20 excludes the use of credit information as an underwriting
 40 21 factor and only uses other underwriting criteria.
 40 22    WORKERS' COMPENSATION LIABILITY INSURANCE.  Code section
 40 23 515A.2(1) is amended to define "schedule rating plan".
 40 24    Code section 515A.3(1) is amended to remove an outdated
 40 25 reference and references to insurance other than workers'
 40 26 compensation insurance.
 40 27    Code section 515A.4, concerning rate filings, is amended to
 40 28 remove references to insurance other than workers'
 40 29 compensation insurance, to specify that a filing is not deemed
 40 30 complete or available for use by an insurer until all required
 40 31 information is furnished, and to specify that a filing is
 40 32 deemed complete unless disapproved by the commissioner of
 40 33 insurance within the waiting period or an extension thereof.
 40 34    Code section 515A.5, concerning disapproval of rate
 40 35 filings, is amended to allow the notices of disapproval to be
 41  1 sent to insurers or rating organizations electronically, to
 41  2 remove a reference to insurance other than workers'
 41  3 compensation insurance, and to allow the commissioner to hold
 41  4 a hearing to determine whether the filing meets all
 41  5 requirements upon notice specifying the matters to be
 41  6 considered at the hearing.
 41  7    Code section 515A.6(1) is amended to increase the license
 41  8 fee for rating organizations from $25 to $100.
 41  9    Code section 515A.6(7) is amended to provide that the
 41 10 commissioner of insurance shall provide notice of the filing
 41 11 of proposed rates on the internet web site of the insurance
 41 12 division instead of in the Iowa administrative bulletin.
 41 13    Code section 515A.6(7) is also amended to add new
 41 14 provisions allowing the commissioner to approve or disapprove
 41 15 proposed rates unless there is a request for hearing, and
 41 16 specifying that the waiting period for an insurance rate
 41 17 filing shall commence no earlier than the date the notice of
 41 18 the rate filing is published.
 41 19    Code section 515A.7 is amended to require an insurer to
 41 20 file rather than apply for approval of a deviation from its
 41 21 class rates, schedules, rating plans, or rules, and to require
 41 22 the commissioner to approve such a filing rather than issuing
 41 23 an order of approval.  A provision requiring a filed deviation
 41 24 to remain in effect for a period of not less than one year
 41 25 from the effective date unless withdrawn or terminated is
 41 26 stricken.  The bill specifies what filings for approval of
 41 27 deviations and schedule rating plan modifications may contain,
 41 28 allows the commissioner to adopt rules to limit such
 41 29 deviations and modifications, and requires that all dividends
 41 30 be paid upon loss sensitivity, meaning the profitability of
 41 31 the policyholder individually or as a member of a homogenous
 41 32 group.  This provision of the bill takes effect upon
 41 33 enactment.
 41 34    Code section 515A.8 is amended to conform terminology used
 41 35 in the Code section.
 42  1    Code section 515A.13 is amended to make the format
 42  2 consistent with other Code sections in the Code chapter.
 42  3    Code section 515A.17 is amended by increasing the penalty
 42  4 for a violation of this Code chapter to not more than $1,000
 42  5 instead of $50 for one violation, and not more than $5,000
 42  6 instead of $500 for each willful violation.
 42  7    New Code section 515A.19A gives the commissioner of
 42  8 insurance the authority to adopt rules pursuant to Code
 42  9 chapter 17A as necessary and convenient to administer Code
 42 10 chapter 515A.
 42 11    CONSOLIDATION, MERGER, AND REINSURANCE.  Code section
 42 12 521.16 is amended to specify that the submission requirements
 42 13 of Code section 521A.3 are only applicable to insurers that
 42 14 are subject to Code chapter 521A, insurance holding company
 42 15 systems.
 42 16    CEMETERY AND FUNERAL MERCHANDISE AND FUNERAL SERVICES.
 42 17 Code section 523A.206(5) is amended to replace use of the term
 42 18 "nonrenewal" or "nonrenew" with the words "denial of any
 42 19 application to renew".
 42 20    Code section 523A.401(7) is amended to correct a reference
 42 21 to a "permit" instead of a "license" and to prohibit a parent
 42 22 company of a seller, a seller, or a provider from pledging,
 42 23 borrowing from, or otherwise encumbering an insurance policy
 42 24 that funds a purchase agreement for cemetery and funeral
 42 25 merchandise, and funeral services.
 42 26    Code section 523A.402(7) is amended to correct a reference
 42 27 to a "permit" instead of a "license" and to prohibit a parent
 42 28 company of a seller, a seller, or a provider from pledging,
 42 29 borrowing from, or otherwise encumbering an annuity that funds
 42 30 such a purchase agreement.
 42 31    Code section 523A.405(8) is amended to correct terminology
 42 32 to make it consistent with the rest of the Code chapter.
 42 33    Code sections 523A.501(3), 523A.501(4), and 523A.502(4) are
 42 34 amended to make terminology more accurate and consistent with
 42 35 the rest of the Code chapter.
 43  1    Code section 523A.603(2) is amended to make the language
 43  2 consistent with that contained in Code section 523A.601(6).
 43  3    Code section 523A.807(3) is amended with a technical
 43  4 correction.
 43  5    Code section 523A.901(9) is amended with a technical
 43  6 correction.
 43  7    IOWA CEMETERY ACT.  Code section 523I.102(8) removes an
 43  8 incorrect internal reference.
 43  9    Code section 523I.201(1) is amended to make it consistent
 43 10 with similar language contained in Code section 523A.801(1).
 43 11    LIFE INSURANCE COMPANIES.  Code section 508.30 is repealed
 43 12 because it is no longer applicable.
 43 13 LSB 5431XD 82
 43 14 av/nh/5.1