SENATE FILE 416

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO SSB 1097)

A BILL FOR

An Act relating to the scope of duty of an insurance producer in procuring insurance for a client.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  NEW SECTION.  522B.2A  Scope of duty.
   1.  The scope of duty of an insurance producer to a client is limited to using reasonable care, diligence, and judgment in procuring the insurance coverage requested by the client unless the insurance producer holds oneself out as an insurance specialist, consultant, or counselor and receives compensation for consultation and advice apart from premiums paid by the client or commissions paid by an insurer.
   2.  The general assembly declares that this section shall be interpreted so that the holding of Langwith v. Am. Nat’l Gen. Ins. Co., (No. 08-0778) (Iowa 2010) is abrogated to the extent that decision expands the scope of duty of an insurance producer to a client, in favor of prior judicial interpretation limiting an insurance producer’s scope of duty to that scope of duty described in subsection 1.
EXPLANATION
   New Code section 522B.2A provides that the scope of duty of a person licensed as an insurance producer to a client is limited to using reasonable care, diligence, and judgment in procuring the insurance coverage requested by the client, unless the insurance producer holds oneself out as an insurance specialist, consultant, or counselor and receives compensation for consultation and advice apart from premiums paid by the client or commissions paid by an insurer.
   The bill further provides that the new Code section shall be interpreted to abrogate the holding of a case entitled Langwith v. Am. Nat’l Gen. Ins. Co., decided by the Iowa supreme court on December 30, 2010, to the extent that case expands the scope of duty of an insurance producer to a client, in favor of prior judicial interpretation as described in the bill.
   In the Langwith case, the Iowa supreme court determined, among other determinations in the case, that its previous decisions had placed unjustified limitations on the circumstances that might be considered in determining the duty undertaken by an insurance producer to procure insurance for a client. The court held, among other holdings in the case, that it is for the fact finder to determine, based on a consideration of all the circumstances, the agreement of the parties with respect to the service to be rendered by an insurance producer and whether that service was performed with the skill and knowledge normally possessed by insurance producers under like circumstances.