House Study Bill 580 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF COMMERCE/INSURANCE DIVISION BILL) A BILL FOR An Act relating to various matters under the purview of the 1 insurance division of the department of commerce including 2 the Iowa grain indemnity fund board, uniform securities Act, 3 examination of insurance companies, life insurance companies 4 and associations, external review of health care coverage 5 decisions, insurance other than life, mortgage guaranty 6 insurance, cemetery and funeral merchandise and funeral 7 services, and regulation of cemeteries and making penalties 8 applicable. 9 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 10 TLSB 5409XD (11) 83 av/nh

S.F. _____ H.F. _____ Section 1. Section 20.4, Code Supplement 2009, is amended by 1 adding the following new subsection: 2 NEW SUBSECTION . 13. Full-time nonclerical employees of 3 the company regulation bureau of the insurance division of the 4 department of commerce. 5 Sec. 2. Section 22.7, Code Supplement 2009, is amended by 6 adding the following new subsection: 7 NEW SUBSECTION . 65. Information obtained by the 8 commissioner of insurance in the course of an examination of a 9 cemetery as provided in section 523I.213A, subsection 7. 10 Sec. 3. Section 203D.4, subsection 1, Code 2009, is amended 11 to read as follows: 12 1. The Iowa grain indemnity fund board is established 13 to advise the department on matters relating to the fund 14 and to perform the duties provided it in this chapter. The 15 board is composed of the secretary of agriculture or a 16 designee who shall serve as president; the commissioner of 17 insurance or a designee who shall serve as secretary; the 18 state treasurer or a designee who shall serve as treasurer; 19 and four representatives of the grain industry appointed by 20 the governor, subject to confirmation by the senate, two of 21 whom shall be representatives of producers and who shall 22 be actively participating producers, and two of whom shall 23 be representatives of licensed grain dealers and licensed 24 warehouse operators and who shall be actively participating 25 licensed grain dealers and licensed warehouse operators, each 26 of whom shall be selected from a list of three nominations 27 made by the secretary of agriculture. The term of membership 28 of the grain industry representatives is three years, and the 29 representatives are eligible for reappointment. However, 30 only actively participating producers, and grain dealers and 31 warehouse operators are eligible for reappointment. The 32 grain industry representatives are entitled to a per diem as 33 specified in section 7E.6 for each day spent in the performance 34 of the duties of the board, plus actual expenses incurred in 35 -1- LSB 5409XD (11) 83 av/nh 1/ 25

S.F. _____ H.F. _____ the performance of those duties. Four members of the board 1 constitute a quorum, and the affirmative vote of four members 2 is necessary for any action taken by the board, except that 3 a lesser number may adjourn a meeting. A vacancy in the 4 membership of the board does not impair the rights of a quorum 5 to exercise all the rights and perform all the duties of the 6 board. 7 Sec. 4. Section 502.305, subsection 2, Code Supplement 8 2009, is amended to read as follows: 9 2. Filing. Except as provided in subsection 10 and section 10 502.304A, subsection 3, paragraph “g” , a person who files a 11 registration statement or a notice filing shall pay a filing 12 fee of one-tenth of one percent of the proposed aggregate 13 sales price of the securities to be offered to persons in 14 this state pursuant to the registration statement or notice 15 filing. However, except as provided in subsection 10, section 16 502.302, subsection 1, paragraph “a” , and section 502.304A, 17 subsection 3, paragraph “g” , the annual filing fee shall not 18 be less than fifty dollars or more than one thousand dollars. 19 The administrator shall retain the filing fee even if the 20 notice filing is withdrawn or the registration is withdrawn, 21 denied, suspended, revoked, or abandoned. The fees collected 22 under this subsection shall be deposited as provided in section 23 505.7. The administrator may adopt rules requiring a filing 24 to be made electronically. The rules may provide for such 25 electronic filing either directly with the administrator or 26 with a designee of the administrator. The rules may require 27 that the filer pay any reasonable costs charged by the designee 28 of the administrator for processing the filings and that the 29 filer submit any fees paid through the designee. 30 Sec. 5. Section 507.4, subsection 2, Code 2009, is amended 31 to read as follows: 32 2. The commissioner may, when in the commissioner’s 33 judgment it is advisable, appoint assistants to aid in 34 conducting examinations. The commissioner shall employ 35 -2- LSB 5409XD (11) 83 av/nh 2/ 25

S.F. _____ H.F. _____ rates of compensation consistent with current standards in 1 the industry for certified public accountants, attorneys, 2 and skilled insurance examiners. The commissioner may use 3 compensation rates suggested by the national association of 4 insurance commissioners. Insurance examiners employed under 5 this section shall be exempt from the merit system provisions 6 of chapter 8A, subchapter IV, under section 8A.412, subsection 7 17. Pay plans which are substantially equivalent to those 8 for examiners under section 524.208 shall be established for 9 exempt company regulation bureau employees who examine the 10 accounts and affairs of companies subject to the supervision 11 and regulation of the commissioner. Compensation shall be paid 12 from appropriations for such purposes upon certification of the 13 commissioner, which shall be reimbursed as provided in sections 14 507.8 and 507.9. 15 Sec. 6. NEW SECTION . 508.33A Limited purpose subsidiary 16 life insurance companies. 17 1. As used in this section unless the context otherwise 18 requires: 19 a. “Affiliated company” means a domestic life insurance 20 company that is a directly or indirectly wholly owned 21 subsidiary of the same parent. 22 b. “Parent” means a person as defined in section 521A.1 23 who directly or indirectly through one or more intermediaries 24 wholly owns the organizing life insurance company. 25 c. “Risks” means risks associated with the life insurance 26 policies and contracts written by the ceding domestic life 27 insurance company or assumed by the ceding domestic life 28 insurance company from an affiliated company, which were 29 written by the affiliated company and for which the ceding 30 domestic life insurance company holds direct statutory reserves 31 for those policies and contracts as required by section 508.36. 32 2. a. A domestic life insurance company organized pursuant 33 to the provisions of this chapter may organize a domestic 34 limited purpose subsidiary life insurance company pursuant 35 -3- LSB 5409XD (11) 83 av/nh 3/ 25

S.F. _____ H.F. _____ to the provisions of this chapter that is wholly owned by 1 the organizing life insurance company. The limited purpose 2 subsidiary life insurance company may reinsure risks of the 3 organizing life insurance company, reinsure risks of affiliated 4 companies, and access alternative forms of financing. 5 b. A limited purpose subsidiary life insurance company 6 shall submit a plan of operation to the commissioner, and the 7 commissioner shall approve the plan of operation with such 8 amendments as the commissioner requires, before the limited 9 purpose subsidiary life insurance company assumes any risks 10 under a reinsurance contract. The plan of operation and any 11 records, books, documents, reports, or other information that 12 the commissioner requires a limited purpose subsidiary life 13 insurance company to produce or disclose pursuant to rules 14 adopted under subsection 6 or pursuant to an order of the 15 commissioner shall be treated the same as information obtained 16 by or disclosed to the commissioner pursuant to section 521A.6 17 and the commissioner shall have the powers enumerated in 18 section 521A.6 as to that insurer. 19 3. The organizing life insurance company may invest funds 20 from its surplus in a limited purpose subsidiary life insurance 21 company organized pursuant to this section. 22 4. The organizing life insurance company’s officers and 23 directors may serve as officers and directors of a limited 24 purpose subsidiary life insurance company organized pursuant to 25 this section. 26 5. A limited purpose subsidiary life insurance company 27 organized pursuant to this section shall be deemed to be 28 licensed to transact the business of reinsurance for the 29 purposes of section 521B.2, subsection 1, but may only 30 reinsure risks of its organizing life insurance company and 31 of affiliated companies. A limited purpose subsidiary life 32 insurance company organized pursuant to this section may, upon 33 approval of the commissioner, purchase reinsurance to cede the 34 reinsurance risks assumed by the limited purpose subsidiary 35 -4- LSB 5409XD (11) 83 av/nh 4/ 25

S.F. _____ H.F. _____ life insurance company. 1 6. The commissioner shall adopt rules pursuant to chapter 2 17A concerning limited purpose subsidiary life insurance 3 companies, including but not limited to the organization, plans 4 of operation, capital requirements including risk-based capital 5 requirements, reserves, authorized investments, reinsurance 6 assumed, material transaction restrictions and requirements, 7 dividends and distributions, operations, and the conditions, 8 forms, and approval of financing of limited purpose subsidiary 9 life insurance companies organized pursuant to this section. 10 7. Admitted assets of a limited purpose subsidiary 11 life insurance company shall include assets approved by 12 the commissioner which shall be deemed to be, and reported 13 as, admitted assets of the limited purpose subsidiary life 14 insurance company. 15 8. The provisions of sections 508.5, 508.6, and 511.8, 16 section 521.2, subsection 4, sections 521A.4 and 521A.5, and 17 chapter 521E shall not be applicable to a limited purpose 18 subsidiary life insurance company organized pursuant to this 19 section. 20 9. A limited purpose subsidiary life insurance company 21 shall not be organized pursuant to this section prior to the 22 effective date of rules adopted by the commissioner regulating 23 the organization and operation of limited purpose subsidiary 24 life insurance companies as provided in subsection 6. 25 Sec. 7. Section 511.8, subsection 5, Code Supplement 2009, 26 is amended to read as follows: 27 5. Corporate obligations. Subject to the restrictions 28 contained in subsection 8 hereof , bonds or other evidences of 29 indebtedness issued, assumed, or guaranteed by a corporation 30 incorporated under the laws of the United States of America, or 31 of any state, district, or insular or territorial possession 32 thereof; or of the Dominion of Canada, or any province thereof; 33 and which meet the following qualifications: 34 a. (1) If fixed interest-bearing obligations, the net 35 -5- LSB 5409XD (11) 83 av/nh 5/ 25

S.F. _____ H.F. _____ earnings of the issuing, assuming , or guaranteeing corporation 1 available for its fixed charges for a period of five fiscal 2 years next preceding the date of acquisition of the obligations 3 by such insurance company shall have averaged per year not 4 less than one and one-half times such average annual fixed 5 charges of the issuing, assuming , or guaranteeing corporation 6 applicable to such period, and, during at least one of the last 7 two years of such period, its net earnings shall have been 8 not less than one and one-half times its fixed charges for 9 such year; or if, at the date of acquisition, the obligations 10 are adequately secured and have investment qualities and 11 characteristics wherein the speculative elements are not 12 predominant. 13 (2) However, with respect to fixed interest-bearing 14 obligations which are issued, assumed , or guaranteed by a 15 financial company, the net earnings by the financial company 16 available for its fixed charges for the period of five fiscal 17 years preceding the date of acquisition of the obligations by 18 the insurance company shall have averaged per year not less 19 than one and one-fourth times such average annual fixed charges 20 of the issuing, assuming , or guaranteeing financial company 21 applicable to such period, and, during at least one of the last 22 two years of the period, its net earnings shall have been not 23 less than one and one-fourth times its fixed charges for such 24 year; or if, at the date of acquisition, the obligations are 25 adequately secured and speculative elements are not predominant 26 in their investment qualities and characteristics. As used 27 in this paragraph subparagraph (2) , “financial company” means 28 a corporation which on the average over its last five fiscal 29 years preceding the date of acquisition of its obligations 30 by the insurer, has had at least fifty percent of its net 31 income, including income derived from subsidiaries, derived 32 from the business of wholesale, retail, installment, mortgage, 33 commercial, industrial or consumer financing, or from banking 34 or factoring, or from similar or related lines of business. 35 -6- LSB 5409XD (11) 83 av/nh 6/ 25

S.F. _____ H.F. _____ b. If adjustment, income , or other contingent interest 1 obligations, the net earnings of the issuing, assuming , or 2 guaranteeing corporation available for its fixed charges 3 for a period of five fiscal years next preceding the date 4 of acquisition of the obligations by such insurance company 5 shall have averaged per year not less than one and one-half 6 times such average annual fixed charges of the issuing, 7 assuming , or guaranteeing corporation and its average annual 8 maximum contingent interest applicable to such period and, 9 during at least one of the last two years of such period, its 10 net earnings shall have been not less than one and one-half 11 times the sum of its fixed charges and maximum contingent 12 interest for such year, or if, at the date of acquisition, 13 the obligations are adequately secure and have investment 14 qualities and characteristics and speculative elements are not 15 predominant. 16 c. Are securities that at the date of acquisition are 17 rated three by the securities valuation office of the 18 national association of insurance commissioners or have the 19 equivalent rating by a rating organization that is approved 20 by the national association of insurance commissioners as an 21 acceptable rating organization and are listed or admitted to 22 trading on a securities exchange in the United States or are 23 publicly held and actively traded in the over-the-counter 24 market and market quotations are readily available. If 25 a security acquired under this paragraph is subsequently 26 downgraded from a three rating by the securities valuation 27 office of the national association of insurance commissioners 28 or the equivalent by a national association of insurance 29 commissioners’ acceptable rating organization, the security no 30 longer qualifies as a legal reserve investment. 31 d. The term “net earnings available for fixed charges” as 32 used herein shall mean in this section means the net income 33 after deducting all operating and maintenance expenses, taxes 34 other than any income taxes, depreciation , and depletion, but 35 -7- LSB 5409XD (11) 83 av/nh 7/ 25

S.F. _____ H.F. _____ nonrecurring items of income or expense may be excluded. 1 e. The term “fixed charges” as used herein shall include in 2 this section includes interest on unfunded debt and funded debt 3 on a parity with or having a priority to the obligation under 4 consideration. 5 f. The term “corporation” as used in this chapter includes 6 a joint stock association, a limited liability company, a 7 partnership, or a trust. 8 g. The securities, real estate, and mortgages described in 9 this section include participations, which means instruments 10 evidencing partial or undivided collective interests in such 11 securities, real estate, and mortgages. 12 Sec. 8. Section 511.8, subsection 8, Code Supplement 2009, 13 is amended by adding the following new paragraph: 14 NEW PARAGRAPH . d. In addition to the restrictions contained 15 in paragraphs “a” and “b” , the investments of any company 16 or association in securities included under subsection 5, 17 paragraph “c” , are not eligible in excess of two percent of the 18 legal reserve, but not more than one-eighth of one percent of 19 the legal reserve shall be invested in the securities of any 20 one corporation. 21 Sec. 9. Section 511.8, subsection 16, Code Supplement 2009, 22 is amended to read as follows: 23 16. Deposit of securities. 24 a. Securities in an amount not less than the legal reserve 25 as defined in this section shall be deposited and the deposit 26 maintained with the commissioner of insurance or at such places 27 as the commissioner may designate as will properly safeguard 28 them. There may be included in the deposit an amount of cash 29 on hand not in excess of five percent of the deposit required, 30 that deposit to be evidenced by a certified check, certificate 31 of deposit, or other evidence satisfactory to the commissioner 32 of insurance. Deposits of securities may be made in excess 33 of the amounts required by this section. A stock company 34 organized under the laws of this state shall not be required to 35 -8- LSB 5409XD (11) 83 av/nh 8/ 25

S.F. _____ H.F. _____ make a deposit until the legal reserve, as ascertained by the 1 commissioner, exceeds the amount deposited by it as capital. 2 Real estate may be made a part of the deposit by furnishing 3 evidence of ownership satisfactory to the commissioner and 4 by conveying the real estate to the commissioner or the 5 commissioner’s successors in office by warranty deed. The 6 commissioner and the successors in office shall hold the real 7 estate in trust for the benefit of the policyholders of the 8 company or members of the association. Real estate mortgage 9 loans and policy loans may be made a part of the deposit by 10 filing a verified statement of the loans with the commissioner, 11 which statement is subject to check at the discretion of the 12 commissioner. 13 b. The securities comprising the deposit of a company 14 or association against which proceedings are pending under 15 section 508.18 shall vest in the state for the benefit of all 16 policyholders of the company or association. 17 c. Securities or title to real estate on deposit may be 18 withdrawn at any time and other eligible securities may be 19 substituted, provided the amount maintained on deposit is 20 equal to the sum of the legal reserve and twenty-five thousand 21 dollars. In the case of real estate the commissioner shall 22 execute and deliver to the company or association a quitclaim 23 deed to the real estate. Any company or association shall, 24 if requested by the commissioner, at the time of withdrawing 25 any securities on deposit, designate for what purpose the 26 same securities are being withdrawn. 27 d. Companies or associations having securities or title 28 to real estate on deposit with the commissioner of insurance 29 shall have the right to collect all dividends, interest, rent, 30 or other income from the deposit unless proceedings against 31 the company or association are pending under section 508.18, 32 in which event the commissioner shall collect such interest, 33 dividends, rent, or other income and add the same to the 34 deposit. 35 -9- LSB 5409XD (11) 83 av/nh 9/ 25

S.F. _____ H.F. _____ e. Any company or association receiving payments or partial 1 payments of principal on any securities deposited with the 2 commissioner of insurance shall notify the commissioner of such 3 fact at such times and in such manner as the commissioner may 4 prescribe, giving the amount and date of payment. 5 f. The commissioner of insurance may receive on deposit 6 securities or title to real estate of alien companies 7 authorized to do business in the state of Iowa, for the purpose 8 of securing its policyholders in the state of Iowa and the 9 United States. The provisions hereof of this subsection not 10 inconsistent with the deposit agreement shall apply to the 11 deposits of such alien companies. 12 g. Common stocks or shares issued by any federal home 13 loan bank eligible for inclusion in the legal reserve under 14 subsection 18, paragraph “c” , may be made a part of a deposit 15 by filing a verified statement of the common stocks or shares 16 issued by a federal home loan bank that are held in the legal 17 reserve. Attached to the statement shall be the annual capital 18 stock statement of the respective federal home loan bank 19 showing membership stock balance and activity-based stock 20 balance. 21 Sec. 10. Section 511.8, subsection 23, paragraphs c and e, 22 Code Supplement 2009, are amended to read as follows: 23 c. If the loan is collateralized by cash or cash 24 equivalents, the cash or cash equivalent collateral may be 25 reinvested by the life insurance company or association in 26 either class one money market funds as defined in subsection 27 24, individual securities which are eligible for inclusion 28 in the legal reserve of the life insurance company or 29 association , or in repurchase agreements fully collateralized 30 by such securities if the life insurance company or association 31 takes delivery of the collateral either directly or through an 32 authorized custodian or pooled fund comprised of individual 33 securities which are eligible for inclusion in the legal 34 reserve of the life insurance company or association. If such 35 -10- LSB 5409XD (11) 83 av/nh 10/ 25

S.F. _____ H.F. _____ reinvestment is made in individual securities or in repurchase 1 agreements, the individual securities or the securities which 2 collateralize the repurchase agreements shall mature in less 3 than two hundred seventy days. If such reinvestment is made 4 in a pooled fund, the average maturity of the securities 5 comprising such pooled fund must be less than two hundred 6 seventy one hundred eighty days or less and the individual 7 maturities of the securities comprising such pooled fund 8 must be three hundred ninety-seven days or less . Individual 9 securities and securities comprising the pooled fund shall be 10 investment grade. As used in this paragraph, “maturity” means 11 the earlier of the fixed date on which the holder of the 12 security is unconditionally entitled to receive principal 13 and interest in full or the date on which the holder of the 14 security is unconditionally entitled upon demand to receive 15 principal and interest in full. 16 e. Securities loaned pursuant to this subsection 17 are not eligible for inclusion in the legal reserve of 18 the life insurance company or association in excess of 19 twenty ten percent of the legal reserve. 20 Sec. 11. Section 511.8, subsection 23, Code Supplement 21 2009, is amended by adding the following new paragraph: 22 NEW PARAGRAPH . f. A life insurance company or association 23 may continue to hold in the legal reserve of the life insurance 24 company or association securities which are the subject of a 25 reverse repurchase agreement. If such securities are held in 26 the legal reserve of a life insurance company or association, 27 the securities shall be subject to the limitations of paragraph 28 “e” as if they were securities loaned pursuant to this 29 subsection. 30 Sec. 12. Section 514J.7, subsection 2, Code 2009, is amended 31 to read as follows: 32 2. The independent review entity, within three business 33 days of receipt of the notice, shall select a person to perform 34 the external review and shall provide notice to the enrollee 35 -11- LSB 5409XD (11) 83 av/nh 11/ 25

S.F. _____ H.F. _____ and the carrier containing a brief description of the person 1 including the reasons the person selected is an expert in 2 the treatment of the medical condition under review. The 3 independent review entity does not need to shall, upon request 4 from the enrollee or the enrollee’s treating health care 5 provider, disclose the name of the person. A copy of the 6 notice shall be sent by facsimile to the commissioner. If the 7 independent review entity does not have a person who is an 8 expert in the treatment of the medical condition under review 9 and certified by the commissioner to conduct an independent 10 review, the independent review entity may either decline the 11 review request or may request from the commissioner additional 12 time to have such an expert certified. The independent review 13 entity shall notify the commissioner by facsimile of its choice 14 between these options within three business days of receipt of 15 the notice from the carrier or organized delivery system. The 16 commissioner shall provide a notice to the enrollee and carrier 17 or organized delivery system of the independent review entity’s 18 decision and of the commissioner’s decision as to how to 19 proceed with the external review process within three business 20 days of receipt of the independent review entity’s decision. 21 Sec. 13. Section 515.125, subsection 1, Code 2009, is 22 amended to read as follows: 23 1. Unless otherwise provided in section 515.127 , or 24 515.128, 515.129A, 515.129B, or 515.129C, a policy or contract 25 of insurance provided for in this chapter shall not be 26 forfeited, suspended, or canceled except by notice to the 27 insured as provided in this chapter. A notice of cancellation 28 is not effective unless mailed or delivered by the insurer to 29 the named insured at least thirty days before the effective 30 date of cancellation, or, where cancellation is for nonpayment 31 of a premium, assessment, or installment provided for in the 32 policy, or in a note or contract for the payment thereof, at 33 least ten days prior to the date of cancellation. The notice 34 may be made in person, or by sending by mail a letter addressed 35 -12- LSB 5409XD (11) 83 av/nh 12/ 25

S.F. _____ H.F. _____ to the insured at the insured’s address as given in or upon 1 the policy, anything in the policy, application, or a separate 2 agreement to the contrary notwithstanding. 3 Sec. 14. NEW SECTION . 515.129A Cancellation of personal 4 lines policies or contracts. 5 1. A personal lines policy or contract of insurance which 6 has been in effect for more than sixty days shall not be 7 canceled except by notice to the insured as provided in this 8 chapter. 9 2. Notice of cancellation of a personal lines policy or 10 contract of insurance is not effective unless the cancellation 11 is based on one or more of the following reasons: 12 a. Nonpayment of premium. 13 b. Failure to pay dues or fees where payment of dues or fees 14 is a prerequisite to obtaining or continuing insurance coverage 15 in force. 16 c. Discovery of fraud or material misrepresentation made 17 by or with the knowledge of the named insured in obtaining, 18 continuing, or presenting a claim under the policy. 19 d. Actions by the insured which substantially change or 20 increase the risk insured. 21 e. The insured has acted in a manner which the insured knew 22 or should have known was in violation or breach of a term or 23 condition of the insurance policy or contract. 24 f. The occurrence of a change in the risk that substantially 25 increases a hazard insured against after insurance coverage has 26 been issued or renewed. 27 Sec. 15. NEW SECTION . 515.129B Nonrenewal of personal lines 28 policies or contracts. 29 1. An insurer shall not refuse to renew a personal lines 30 policy or contract of insurance unless at least thirty days 31 before the end of the policy or contract period the insurer 32 delivers or mails to the first named insured, at the last known 33 address of the first named insured, written notice of the 34 insurer’s intention not to renew the policy or contract upon 35 -13- LSB 5409XD (11) 83 av/nh 13/ 25

S.F. _____ H.F. _____ expiration of the current policy or contract period as provided 1 in section 515.129C. 2 2. The notice of intention not to renew shall include or be 3 accompanied by a written explanation of the insurer’s specific 4 reason or reasons for the nonrenewal. 5 Sec. 16. NEW SECTION . 515.129C Notice of renewal or 6 nonrenewal of personal lines policies of contracts. 7 1. At least thirty days before the end of the policy or 8 contract term, an insurer shall mail or deliver to the last 9 known address of the first named insured a renewal policy or 10 contract, an offer to renew the current policy or contract, or 11 a notice of nonrenewal of the policy or contract. Information 12 concerning the renewal policy or contract, the offer to 13 renew the policy or contract, or the notice of nonrenewal of 14 the policy or contract shall also be mailed, delivered, or 15 transmitted electronically to the last known address of the 16 producer of record of the policy or contract. Proof of such 17 mailing or delivery to the first named insured’s last known 18 address shall be maintained by the insurer. 19 a. An offer to renew the policy or contract shall state 20 the renewal premium and the date that the premium is due. The 21 renewal premium shall be based on the known exposure as of the 22 date of the offer to renew. 23 b. If the renewal premium is not received by the due date 24 or the policy or contract expiration date, whichever is later, 25 the policy or contract lapses. 26 2. If an insurer fails to comply with the notice 27 requirements of this section, the policy or contract shall be 28 extended on the same terms and conditions for another policy or 29 contract term or until the effective date of similar insurance 30 procured by the insured, whichever is earlier. The insurer may 31 make continued coverage contingent upon the payment of premium. 32 3. Renewal of a policy or contract does not constitute a 33 waiver or estoppel with respect to grounds for cancellation 34 that existed before the effective date of the renewal. 35 -14- LSB 5409XD (11) 83 av/nh 14/ 25

S.F. _____ H.F. _____ Sec. 17. Section 515C.5, Code 2009, is amended to read as 1 follows: 2 515C.5 Limit of outstanding liability. 3 1. A Unless a request to suspend the requirements of 4 this section is granted by the commissioner as set forth in 5 subsection 2, a mortgage guaranty insurer shall not at any time 6 have outstanding a total liability, net of reinsurance, in 7 excess of twenty-five times its capital, unassigned funds and 8 contingency reserve. It A mortgage guaranty insurer shall not 9 insure loans secured by properties in a single housing tract or 10 in a contiguous tract (not which is not separated by more than 11 one-half mile) mile in excess of ten percent of its capital, 12 unassigned funds , and contingency reserve. Coverage may be 13 provided only if the properties in such tract are residential 14 buildings, buildings designed for occupancy by not more than 15 four families, or owner-occupied mobile homes. 16 2. Upon request of a mortgage guaranty insurer, the 17 commissioner may suspend the requirements contained in 18 subsection 1 for such time and under such conditions as the 19 commissioner may order. The commissioner may adopt rules as 20 necessary relating to the consideration of such requests for 21 suspension of those requirements. 22 Sec. 18. Section 523A.102, Code 2009, is amended by adding 23 the following new subsections: 24 NEW SUBSECTION . 16A. “Irrevocable purchase agreement” means 25 a purchase agreement that does not allow a distribution of 26 trust assets, including insurance or annuity proceeds, to the 27 purchaser or beneficiary prior to the death of the beneficiary, 28 other than the ability of the purchaser to direct the transfer 29 of the trust assets to another licensed seller. 30 NEW SUBSECTION . 25A. “Revocable purchase agreement” means 31 a purchase agreement that allows the purchaser to cancel the 32 purchase agreement and direct a distribution or refund of the 33 trust assets. 34 Sec. 19. Section 523A.204, subsection 4, Code Supplement 1 -15- LSB 5409XD (11) 83 av/nh 15/ 25

S.F. _____ H.F. _____ 2009, is amended to read as follows: 2 4. The commissioner shall levy an administrative penalty 3 in the amount of up to five hundred dollars against a preneed 4 seller that fails to file the annual report when due, payable 5 to the state for deposit as provided in section 505.7. 6 However, the commissioner may waive the administrative penalty 7 upon a showing of good cause or financial hardship. 8 Sec. 20. Section 523A.207, Code 2009, is amended to read as 9 follows: 10 523A.207 Audits by certified public accountants. 11 1. A purchase agreement shall not be sold or transferred, 12 as part of the sale of a business or the assets of a business, 13 until an audit has been performed by a certified public 14 accountant and filed with the commissioner that expresses the 15 auditor’s opinion of the adequacy of funding related to the 16 purchase agreements to be sold or transferred. 17 2. If the person selling or transferring a purchase 18 agreement fails to comply with the requirements of subsection 19 1, the obligation to file an audit report shall be shared by 20 any preneed seller who assumes the obligations of the purchase 21 agreement. In addition, the person selling or transferring the 22 purchase agreement shall remain jointly and severally liable 23 to perform the terms of the purchase agreement until the audit 24 report is received by the commissioner. 25 Sec. 21. Section 523A.401, subsection 5, paragraph a, Code 26 2009, is amended to read as follows: 27 a. Except as necessary and appropriate to satisfy the 28 requirements regarding burial trust funds under Title XIX of 29 the federal Social Security Act, the The policy shall not 30 be owned by the seller, the policy shall not be irrevocably 31 assigned to the seller, and the assignment of proceeds from the 32 insurance policy to the seller shall be limited to the seller’s 33 interests as they appear in the purchase agreement, and 34 conditioned on the seller’s delivery of cemetery merchandise, 35 funeral merchandise, and funeral services pursuant to a 1 -16- LSB 5409XD (11) 83 av/nh 16/ 25

S.F. _____ H.F. _____ purchase agreement. 2 Sec. 22. Section 523A.401, Code 2009, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 9. The commissioner, by rule, may require 5 written trust agreements and establish terms and conditions for 6 trusts holding insurance policies. The seller or any officer, 7 director, agent, employee, or affiliate of the seller shall not 8 serve as a trustee. The commissioner may require amendments to 9 a trust agreement that is not in accord with the provisions of 10 this chapter or rules adopted under this chapter. 11 Sec. 23. Section 523A.402, subsection 5, paragraph a, Code 12 2009, is amended to read as follows: 13 a. Except as necessary and appropriate to satisfy the 14 requirements regarding burial trust funds under Title XIX of 15 the federal Social Security Act, the The annuity shall not be 16 owned by the seller or irrevocably assigned to the seller and 17 any designation of the seller as a beneficiary shall not be 18 made irrevocable. 19 Sec. 24. Section 523A.402, Code 2009, is amended by adding 20 the following new subsection: 21 NEW SUBSECTION . 9. The commissioner, by rule, may require 22 written trust agreements and establish terms and conditions for 23 trusts holding annuities. The seller or any officer, director, 24 agent, employee, or affiliate of the seller shall not serve as 25 a trustee. The commissioner may require amendments to a trust 26 agreement that is not in accord with the provisions of this 27 chapter or rules adopted under this chapter. 28 Sec. 25. Section 523A.502A, subsection 3, Code Supplement 29 2009, is amended to read as follows: 30 3. The commissioner shall levy an administrative penalty 31 in the amount of up to five hundred dollars against a sales 32 agent who fails to file an annual report when due, payable to 33 the state for deposit as provided in section 505.7. However, 34 the commissioner may waive the administrative penalty upon a 35 showing of good cause or financial hardship. 1 -17- LSB 5409XD (11) 83 av/nh 17/ 25

S.F. _____ H.F. _____ Sec. 26. Section 523A.601, subsection 1, paragraph b, Code 2 2009, is amended to read as follows: 3 b. Specify the cemetery merchandise, funeral merchandise, 4 funeral services, or a combination thereof to be provided, and 5 the cost of each merchandise item or service , if selected . 6 Sec. 27. Section 523A.601, subsection 1, paragraphs f and g, 7 Code 2009, are amended to read as follows: 8 f. State Unless the purchaser or beneficiary is receiving or 9 has applied to receive Medicaid or supplemental security income 10 benefits, state that the purchase of the cemetery merchandise, 11 funeral merchandise, and funeral services is revocable and 12 specify the damages for cancellation, if any . The purchase 13 agreement may provide that if the purchaser or beneficiary is 14 receiving or has applied to receive Medicaid or supplemental 15 security income benefits, the purchase agreement may be an 16 irrevocable purchase agreement, subject to the requirements of 17 section 523A.602, subsection 4. 18 g. State clearly who has the authority to cancel, amend, or 19 revoke the purchase agreement to purchase cemetery merchandise, 20 funeral merchandise, and funeral services and specify the 21 penalties for cancellation, if any . 22 Sec. 28. Section 523A.602, subsection 3, Code 2009, is 23 amended to read as follows: 24 3. This section does not prohibit a purchaser who is 25 or may become eligible for receiving or has applied to 26 receive benefits under Title Tit. XIX of the federal Social 27 Security Act from making a guaranteed price purchase agreement 28 irrevocable , subject to the requirements of subsection 4, to 29 the extent that federal law or regulations require that such 30 an agreement be irrevocable for purposes of a purchaser’s 31 eligibility for benefits under Title Tit. XIX of the federal 32 Social Security Act, as permitted under federal law. The 33 seller of credit sale agreements shall comply with the 34 requirements of chapter 537, the Iowa consumer credit code, 35 and is subject to the remedies and penalties provided in that 1 -18- LSB 5409XD (11) 83 av/nh 18/ 25