Senate File 2349 - Introduced
SENATE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO SF 2233)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the preneed sale of cemetery and funeral
2 merchandise and funeral services.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 5542SV 82
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PAG LIN
1 1 Section 1. Section 523A.102, subsection 27, Code
1 2 Supplement 2007, is amended to read as follows:
1 3 27. "Seller" or "preneed seller" means a person doing
1 4 business within this state, including a person doing business
1 5 within this state who sells insurance, who advertises, sells,
1 6 promotes, or offers to furnish cemetery merchandise, funeral
1 7 merchandise, funeral services, or a combination thereof when
1 8 performance or delivery may be more than one hundred twenty
1 9 days following the initial payment on the account whether the
1 10 transaction is completed or offered in person, through the
1 11 mail, over the telephone, by the internet, or through any
1 12 other means of commerce. "Seller" or "preneed seller"
1 13 includes any person performing any term of a purchase
1 14 agreement executed within this state, and any person
1 15 identified under a burial account as the provider of cemetery
1 16 merchandise, funeral merchandise, funeral services, or a
1 17 combination thereof. "Seller" or "preneed seller" does not
1 18 include a person who has an ownership interest in a seller or
1 19 preneed seller but who is not actively engaged in advertising,
1 20 selling, promoting, or offering to furnish such cemetery
1 21 merchandise, funeral merchandise, funeral services, or a
1 22 combination thereof.
1 23 Sec. 2. Section 523A.201, subsections 2, 3, and 8, Code
1 24 Supplement 2007, are amended to read as follows:
1 25 2. If a seller agrees to furnish cemetery merchandise,
1 26 funeral merchandise, funeral services, or a combination
1 27 thereof and performance or delivery may be more than one
1 28 hundred twenty days following the initial payment on the
1 29 account, a minimum of eighty percent of all payments made
1 30 under the purchase agreement shall be placed and remain in
1 31 trust until the person for whose benefit the funds were paid
1 32 dies. Beginning on January 1, 2009, the minimum amount of all
1 33 payments made under a purchase agreement which shall be placed
1 34 and remain in trust shall increase by two percent each year
1 35 until by January 1, 2018, and every year thereafter, the total
2 1 amount of all payments made under a purchase agreement shall
2 2 be placed in and remain in trust as provided in this section.
2 3 3. If a purchase agreement for cemetery merchandise,
2 4 funeral merchandise, funeral services, or a combination
2 5 thereof provides that payments are to be made in installments,
2 6 the seller shall deposit eighty percent of each payment in the
2 7 trust fund until the full amount required to be placed in
2 8 trust has been deposited. If the purchase agreement is
2 9 financed with or sold to a financial institution, the purchase
2 10 agreement shall be considered paid in full and the trust
2 11 requirements shall be satisfied within fifteen days after the
2 12 seller receives funds from the financial institution.
2 13 Beginning on January 1, 2009, the minimum amount of each
2 14 installment payment made under a purchase agreement which
2 15 shall be placed and remain in trust shall increase by two
2 16 percent each year until by January 1, 2018, and every year
2 17 thereafter, the total amount of all installment payments made
2 18 under a purchase agreement shall be placed in and remain in
2 19 trust as provided in this section.
2 20 8. Interest or income earned on amounts deposited in trust
2 21 shall remain in trust under the same terms and conditions as
2 22 payments made under the purchase agreement, except provided
2 23 that:
2 24 a. Interest or income earned on or before June 30, 2007,
2 25 on amounts deposited in trust on or before June 30, 2007, may
2 26 be withdrawn on or before December 31, 2008, in an amount
2 27 representing the difference between the amount needed to
2 28 adjust the trust funds for inflation as set by the
2 29 commissioner based on the consumer price index and the
2 30 interest or income earned during the preceding year, not to
2 31 exceed fifty percent of the total interest or income on a
2 32 calendar=year basis.
2 33 b. Interest or income earned on or before June 30, 2008,
2 34 on amounts deposited in trust on or before June 30, 2008, may
2 35 be withdrawn on or before December 31, 2008, by a limited
3 1 liability corporation that was formed in 2002 for the purpose
3 2 of purchasing a cemetery from a foreign entity reorganizing
3 3 under bankruptcy and such corporation is comprised of six
3 4 establishments all located within the same county may withdraw
3 5 so much of the interest or income as represents in an amount
3 6 representing the difference between the amount needed to
3 7 adjust the trust funds for inflation as set by the
3 8 commissioner based on the consumer price index and the
3 9 interest or income earned during the preceding year not to
3 10 exceed fifty percent of the total interest or income on a
3 11 calendar=year basis.
3 12 c. The early withdrawal of interest or income under this
3 13 provision paragraph "a" or "b" of this subsection does not
3 14 affect the purchaser's right to a credit of such interest or
3 15 income in the event of a nonguaranteed price agreement,
3 16 cancellation, or nonperformance by such limited liability
3 17 corporation the seller.
3 18 d. Authorization of early withdrawal of interest or income
3 19 under paragraph "a" or "b" of this subsection is contingent
3 20 upon the seller's full compliance with all applicable laws and
3 21 rules governing trust funds under this chapter. The burden of
3 22 proof is on the seller to demonstrate such compliance in an
3 23 examination or other request by the commissioner. A seller's
3 24 failure to demonstrate such compliance is grounds for license
3 25 revocation or other disciplinary action and shall result in
3 26 such remedial orders by the commissioner as the commissioner
3 27 deems necessary to replace improperly withdrawn interest or
3 28 income.
3 29 Sec. 3. Section 523A.203, subsection 6, Code Supplement
3 30 2007, is amended by adding the following new paragraph:
3 31 NEW PARAGRAPH. d. Use any funds required to be held in
3 32 trust pursuant to section 523A.201 to purchase an insurance
3 33 policy or annuity.
3 34 Sec. 4. Section 523A.405, subsection 8, Code Supplement
3 35 2007, is amended to read as follows:
4 1 8. The amount of the surety bond shall equal eighty
4 2 percent of the payments received pursuant to purchase
4 3 agreements, or the applicable portion thereof, for cemetery
4 4 merchandise, funeral merchandise, funeral services, or a
4 5 combination thereof, and the amount needed to adjust the
4 6 amount of the surety bond for inflation as set by the
4 7 commissioner based on the consumer price index. The seller
4 8 shall review the amount of the surety bond no less than
4 9 annually and shall increase the bond as necessary to reflect
4 10 additional payments. The amount needed to adjust for
4 11 inflation shall be added annually to the surety bond during
4 12 the first quarter of the establishment's seller's fiscal year.
4 13 Beginning on January 1, 2009, the minimum amount of the surety
4 14 bond shall increase by two percent each year until by January
4 15 1, 2018, and every year thereafter, the amount of the surety
4 16 bond shall equal the total amount of the payments received
4 17 pursuant to purchase agreements, or the applicable portion
4 18 thereof, for cemetery merchandise, funeral merchandise,
4 19 funeral services, or a combination thereof, and the amount
4 20 needed to adjust the amount of the surety bond for inflation
4 21 as set by the commissioner based on the consumer price index.
4 22 Sec. 5. Section 523A.502, subsection 6, Code Supplement
4 23 2007, is amended to read as follows:
4 24 6. A sales agent licensed pursuant to this section shall
4 25 satisfactorily fulfill continuing education requirements for
4 26 the license as prescribed by the commissioner by rule.
4 27 However, this continuing education requirement is not
4 28 applicable to a sales agent who is also a licensed insurance
4 29 producer under chapter 522B or a licensed funeral director
4 30 under chapter 156.
4 31 Sec. 6. Section 523A.601, subsection 6, paragraph a, Code
4 32 Supplement 2007, is amended to read as follows:
4 33 a. A purchase agreement that is funded by a trust shall
4 34 include a conspicuous statement in language substantially
4 35 similar to the following language:
5 1 "For your prearranged funeral agreement, we will deposit
5 2 not less than eighty percent of your payments in trust at
5 3 (name of financial institution), (street address), (city),
5 4 (state) (zip code) within fifteen days following receipt of
5 5 the funds. Beginning on January 1, 2009, the minimum amount
5 6 of your payments that will be placed in trust will increase by
5 7 two percent each year until by January 1, 2018, and every year
5 8 thereafter, the total amount of all payments you make under
5 9 your prearranged funeral agreement will be placed in trust
5 10 within fifteen days following receipt of the funds. For your
5 11 protection, you have the right to contact the financial
5 12 institution directly to confirm that the deposit of these
5 13 funds occurred as required by law. If you are unable to
5 14 confirm the deposit of these funds in trust, you may contact
5 15 the Iowa insurance division for assistance by calling the
5 16 insurance division at (telephone number) or by mail at (street
5 17 address), (city), Iowa (zip code)."
5 18 Sec. 7. NEW SECTION. 523A.810A ELECTRONIC FILING.
5 19 The commissioner shall, by rule, develop a system and
5 20 procedures and a format for electronic filing of documents
5 21 required to be filed with the commissioner under this chapter.
5 22 Sec. 8. Section 523A.811, subsection 1, paragraph c, Code
5 23 Supplement 2007, is amended to read as follows:
5 24 c. The amount of funds currently held in trust for
5 25 cemetery merchandise, funeral merchandise, and funeral
5 26 services is less than eighty percent of all payments made
5 27 under the purchase agreements referred to in the amount
5 28 required in section 523A.201, subsection 2 or 3, as
5 29 applicable.
5 30 EXPLANATION
5 31 This bill relates to the sale of cemetery and funeral
5 32 merchandise and funeral services that are furnished more than
5 33 120 days after the initial payment on the account.
5 34 Code section 523A.102 is amended to provide that the
5 35 definition of "seller" or "preneed seller" does not include a
6 1 person who has an ownership interest in such a seller or
6 2 preneed seller but who is not actively engaged in furnishing
6 3 cemetery and funeral merchandise and funeral services.
6 4 Code section 523A.201(2) is amended to provide that
6 5 beginning on January 1, 2009, the minimum amount of payments
6 6 made under a purchase agreement for such merchandise and
6 7 services that is required to be held in trust increases by 2
6 8 percent per year for 10 years until January 1, 2018, and
6 9 thereafter the total amount of all payments made are required
6 10 to be held in trust. Currently, only 80 percent of such
6 11 payments are required to be held in trust. A similar
6 12 requirement applies to installment payments made under a
6 13 purchase agreement in Code section 523A.201(3).
6 14 Code section 523A.201(8) is amended to allow interest or
6 15 income earned on certain amounts deposited in trust to be
6 16 withdrawn by the seller by specified dates.
6 17 Code section 523A.203(6) is amended to provide that a
6 18 preneed seller shall not use any funds required to be held in
6 19 trust pursuant to Code section 523A.201 to purchase an
6 20 insurance policy or annuity. Such funds include payments made
6 21 to a seller pursuant to a preneed sales of merchandise
6 22 purchase or agreement.
6 23 Code section 523A.405 is amended to provide that the
6 24 minimum amount of a surety bond that is filed in lieu of a
6 25 trust fund for payments received under a purchase agreement
6 26 must also, beginning on January 1, 2009, increase by 2 percent
6 27 per year until by January 1, 2018, and every year thereafter
6 28 the amount of the bond must equal the total amount of payments
6 29 received, or the applicable portion received for cemetery and
6 30 funeral merchandise and funeral services, plus an amount
6 31 needed to adjust the bond for inflation.
6 32 Code section 523A.502 is amended to provide that continuing
6 33 education requirements for sales agents do not apply to a
6 34 sales agent who is also a licensed insurance producer under
6 35 Code chapter 522B or a licensed funeral director under Code
7 1 chapter 156.
7 2 Code section 523A.601 is amended to require that the
7 3 disclosure information given to purchasers of such merchandise
7 4 and services inform them of the increased trust fund
7 5 requirements.
7 6 New Code section 523A.810A requires the commissioner of
7 7 insurance to develop, by rule, a system and procedures for
7 8 electronic filing of documents under this Code chapter.
7 9 Code section 523A.811 is amended to provide that the
7 10 commissioner of insurance must notify the attorney general of
7 11 the potential need for establishment of a receivership for a
7 12 seller who is not meeting the increased trust fund
7 13 requirements.
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