House File 2217 - Introduced HOUSE FILE 2217 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 536) A BILL FOR An Act relating to the regulation of insurance company holding 1 systems and providing assessments and penalties. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5210HV (1) 85 av/nh

H.F. 2217 Section 1. Section 521A.1, subsection 3, Code 2014, is 1 amended to read as follows: 2 3. “Control” , including controlling, controlled by, and 3 under common control with, shall mean the possession, direct 4 or indirect, of the power to direct or cause the direction 5 of the management and policies of a person, whether through 6 the ownership of voting securities, by contract other than 7 a commercial contract for goods or nonmanagement services, 8 or otherwise, unless the power is solely the result of an 9 official position with or a corporate office held by the 10 person. Control shall be presumed to exist if any person, 11 directly or indirectly, owns, controls, holds with the power 12 to vote, or holds proxies representing, ten percent or more of 13 the voting securities of any other person. This presumption 14 may be rebutted by a showing made in the manner provided in 15 section 521A.3, subsections 1 through 5, inclusive, or section 16 521A.4, subsection 11, whichever is applicable, that control 17 does not exist in fact. The commissioner may determine, after 18 furnishing all persons in interest notice and opportunity to 19 be heard and making specific findings of fact to support the 20 determination, that control exists in fact, notwithstanding the 21 absence of a presumption to that effect. 22 Sec. 2. Section 521A.1, Code 2014, is amended by adding the 23 following new subsections: 24 NEW SUBSECTION . 4A. “Enterprise risk” means any activity, 25 circumstance, event, or series of events involving one or more 26 affiliates of an insurer that, if not remedied promptly, is 27 likely to have a material adverse effect upon the financial 28 condition or liquidity of the insurer or its insurance holding 29 company system as a whole, including but not limited to 30 anything that would cause the insurer’s risk-based capital to 31 fall into a company-action-level event as set forth in section 32 521E.3 for insurers or section 521F.4 for health organizations, 33 or would cause the insurer to be in hazardous financial 34 condition pursuant to 191 IAC ch 110. 35 -1- LSB 5210HV (1) 85 av/nh 1/ 23

H.F. 2217 NEW SUBSECTION . 9A. “Supervisory college” means a temporary 1 or permanent forum for communication and cooperation between 2 regulators charged with supervision of an insurer or its 3 affiliates. 4 Sec. 3. Section 521A.3, subsection 1, paragraph a, Code 5 2014, is amended to read as follows: 6 a. No person other than the issuer shall make a tender offer 7 for or a request or invitation for tenders of, or enter into 8 any agreement to exchange securities for, seek to acquire, or 9 acquire, in the open market or otherwise, any voting security 10 of a domestic insurer if, after the consummation thereof, 11 such person would, directly or indirectly, or by conversion 12 or by exercise of any right to acquire, be in control of such 13 insurer, and no person shall enter into an agreement to merge 14 with or otherwise to acquire control of a domestic insurer 15 unless, at the time any such offer, request, or invitation is 16 first made or any such agreement is entered into, or prior to 17 the acquisition of such securities if no offer or agreement is 18 involved, such person has first filed with the commissioner 19 and has sent to such insurer, and such insurer has sent to its 20 shareholders, a statement containing the information required 21 by this section and such offer, request, invitation, agreement 22 or acquisition has been approved by the commissioner in the 23 manner hereinafter prescribed. 24 Sec. 4. Section 521A.3, subsection 1, Code 2014, is amended 25 by adding the following new paragraph: 26 NEW PARAGRAPH . 0b. For purposes of this section, any 27 controlling person of a domestic insurer seeking to divest its 28 controlling interest in the domestic insurer, in any manner, 29 shall file with the commissioner, with a copy to the insurer, 30 confidential notice of its proposed divestiture at least thirty 31 days prior to the cessation of control. The commissioner 32 shall determine those instances in which the party seeking to 33 divest or to acquire a controlling interest in an insurer, 34 shall be required to file for and obtain approval of the 35 -2- LSB 5210HV (1) 85 av/nh 2/ 23

H.F. 2217 transaction. The information shall remain confidential until 1 the conclusion of the transaction unless the commissioner, in 2 the commissioner’s discretion, determines that confidential 3 treatment will interfere with enforcement of this section. If 4 the statement referred to in paragraph “a” is otherwise filed, 5 this paragraph “0b” shall not apply. 6 Sec. 5. Section 521A.3, subsection 2, paragraph a, 7 unnumbered paragraph 1, Code 2014, is amended to read as 8 follows: 9 The statement to be filed with the commissioner hereunder 10 shall be made under oath or affirmation and shall contain the 11 following information : 12 Sec. 6. Section 521A.3, subsection 2, paragraph a, Code 13 2014, is amended by adding the following new subparagraphs: 14 NEW SUBPARAGRAPH . (012) An agreement by the person required 15 to file the statement referred to in subsection 1 that the 16 person will provide the annual report specified in section 17 521A.4, subsection 11A for so long as control exists. 18 NEW SUBPARAGRAPH . (0012) An acknowledgment by the person 19 required to file the statement referred to in subsection 1 20 that the person and all subsidiaries within its control in 21 the insurance holding company system will provide information 22 to the commissioner upon request as necessary to evaluate 23 enterprise risk to the insurer. 24 Sec. 7. Section 521A.3, subsection 4, paragraph a, Code 25 2014, is amended by adding the following new subparagraph: 26 NEW SUBPARAGRAPH . (6) The merger or other acquisition of 27 control is not likely to be hazardous or prejudicial to the 28 insurance-buying public. 29 Sec. 8. Section 521A.3, subsection 4, paragraph b, Code 30 2014, is amended to read as follows: 31 b. The public hearing referred to in paragraph “a” shall be 32 held within thirty days after the commissioner has determined 33 that the statement required by subsection 1 is filed has 34 been completed and contains all the required information set 35 -3- LSB 5210HV (1) 85 av/nh 3/ 23

H.F. 2217 forth in subsection 2 , and at least twenty days’ notice of 1 the public hearing shall be given by the commissioner to the 2 person filing the statement and to the domestic insurer . Not 3 less than seven days’ notice of the public hearing shall be 4 given by the person filing the statement to the insurer and to 5 such other persons as may be designated by the commissioner. 6 The commissioner shall make a determination within thirty 7 days after the conclusion of the hearing. At the hearing, 8 the person filing the statement, the insurer, any person to 9 whom notice of hearing was sent, and any other person whose 10 interests may be affected shall have the right to present 11 evidence, examine and cross-examine witnesses, and offer oral 12 and written arguments and in connection therewith shall be 13 entitled to conduct discovery proceedings in the same manner as 14 is presently allowed in the district court of this state. All 15 discovery proceedings shall be concluded not later than three 16 days prior to the commencement of the public hearing. 17 Sec. 9. Section 521A.3, subsection 4, Code 2014, is amended 18 by adding the following new paragraph: 19 NEW PARAGRAPH . 0c. If the proposed merger or other 20 acquisition of control will require the approval of more than 21 one commissioner, the public hearing referred to in paragraph 22 “a” may be held on a consolidated basis upon request of the 23 person filing the statement referred to in subsection 1. 24 Such person may file the statement referred to in subsection 25 1 with the national association of insurance commissioners 26 within five days of making the request for a public hearing. 27 The commissioner may opt out of a consolidated hearing, and 28 shall provide notice to the applicant of the opt-out within 29 ten days of the receipt of the statement referred to in 30 subsection 1. A hearing conducted on a consolidated basis 31 shall be public and shall be held within the United States 32 before the commissioners of the states in which the insurers 33 are domiciled. Such commissioners shall hear and receive 34 evidence. The commissioner may attend such hearing in person 35 -4- LSB 5210HV (1) 85 av/nh 4/ 23

H.F. 2217 or by telecommunication. 1 Sec. 10. Section 521A.4, subsection 2, Code 2014, is amended 2 by adding the following new paragraphs: 3 NEW PARAGRAPH . 0e. If requested by the commissioner, the 4 insurer shall include financial statements of or within an 5 insurance holding company system, including all affiliates. 6 Financial statements may include but are not limited to annual 7 audited financial statements filed with the United States 8 securities and exchange commission pursuant to the federal 9 Securities Act of 1933, as amended, or the federal Securities 10 Exchange Act of 1934, as amended. An insurer required to file 11 financial statements pursuant to this paragraph may satisfy the 12 request by providing the commissioner with the most recently 13 filed financial statements of the parent corporation that have 14 been filed with the United States securities and exchange 15 commission. 16 NEW PARAGRAPH . 00e. Statements that the insurer’s board of 17 directors oversees corporate governance and internal controls 18 and that the insurer’s officers or senior management have 19 approved, implemented, and continue to maintain and monitor 20 corporate governance and internal control procedures. 21 NEW PARAGRAPH . f. Any other information required by the 22 commissioner by rule or by regulation. 23 Sec. 11. Section 521A.4, subsection 11, Code 2014, is 24 amended to read as follows: 25 11. Disclaimer. Any person may file with the commissioner 26 a disclaimer of affiliation with any authorized insurer or such 27 a disclaimer may be filed by such insurer or any member of an 28 insurance holding company system. The disclaimer shall fully 29 disclose all material relationships and basis for affiliation 30 between such person and such insurer as well as the basis for 31 disclaiming such affiliation. After a disclaimer has been 32 filed, the insurer shall be relieved of any duty to register or 33 report under this section which may arise out of the insurer’s 34 relationship with such person unless and until the commissioner 35 -5- LSB 5210HV (1) 85 av/nh 5/ 23

H.F. 2217 disallows such a disclaimer. The commissioner shall disallow 1 such a disclaimer only after furnishing all parties in interest 2 with notice and opportunity to be heard and after making 3 specific findings of fact to support such disallowance. A 4 disclaimer of affiliation shall be deemed to have been granted 5 unless the commissioner, within thirty days following receipt 6 of a complete disclaimer, notifies the filing party that the 7 disclaimer is disallowed. In the event of disallowance, the 8 disclaiming party may request an administrative hearing, which 9 shall be granted. The disclaiming party shall be relieved of 10 its duty to register under this section if approval of the 11 disclaimer has been granted by the commissioner, or if the 12 disclaimer is deemed to have been granted. 13 Sec. 12. Section 521A.4, Code 2014, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 11A. Enterprise risk report. The ultimate 16 controlling person of every insurer subject to registration 17 shall also file an annual enterprise risk report. The report 18 shall, to the best of the ultimate controlling person’s 19 knowledge and belief, identify the material risks within the 20 insurance holding company system that could pose enterprise 21 risk to the insurer. The report shall be filed with the lead 22 state commissioner of the insurance holding company system as 23 determined by the procedures within the financial analysis 24 handbook adopted by the national association of insurance 25 commissioners. 26 Sec. 13. Section 521A.4, subsection 12, Code 2014, is 27 amended to read as follows: 28 12. Violations. The failure to file a registration 29 statement or a summary of the registration statement or an 30 enterprise risk report required by this section within the time 31 specified for the filing is a violation of this section . 32 Sec. 14. Section 521A.5, subsection 1, paragraph a, Code 33 2014, is amended by adding the following new subparagraph: 34 NEW SUBPARAGRAPH . (02) Agreements for cost-sharing 35 -6- LSB 5210HV (1) 85 av/nh 6/ 23

H.F. 2217 services and management shall include such provisions as 1 required by rule issued by the commissioner. 2 Sec. 15. Section 521A.5, subsection 1, paragraph b, 3 subparagraph (5), Code 2014, is amended by striking the 4 subparagraph. 5 Sec. 16. Section 521A.5, subsection 1, paragraph c, Code 6 2014, is amended to read as follows: 7 c. A domestic insurer and a person in its holding company 8 system shall not enter into any of the following transactions, 9 unless the domestic insurer notifies the commissioner in 10 writing of its intention to enter into the transaction at least 11 thirty days prior to entering into the transaction or within a 12 shorter time permitted by the commissioner and the commissioner 13 has not disapproved of the transaction within the time period: 14 (1) All reinsurance pooling agreements. 15 (1) (2) All reinsurance agreements or modifications to such 16 agreements in which the reinsurance premium or a change in the 17 insurer’s liabilities , or the projected reinsurance premium 18 or a change in the insurer’s liabilities in any of the next 19 three years, equals or exceeds five percent of the insurer’s 20 surplus as regards policyholders, as of the next preceding 21 December 31, including those agreements which may require as 22 consideration the transfer of assets from an insurer to a 23 nonaffiliate, if an agreement or understanding exists between 24 the insurer and nonaffiliate that any portion of such assets 25 will be transferred to one or more affiliates of the insurer. 26 (2) (3) All management agreements, service contracts, 27 and all other cost-sharing arrangements involving at least 28 one-half of one percent of the insurer’s surplus as of the 29 next preceding December 31 . A guarantee which is quantifiable 30 as to amount is not subject to the notice requirements of 31 this paragraph “c” unless it exceeds the lesser of one-half 32 of one percent of the insurer’s admitted assets or ten 33 percent of surplus as regards policyholders as of the next 34 preceding December 31. Further, all guarantees which are 35 -7- LSB 5210HV (1) 85 av/nh 7/ 23

H.F. 2217 not quantifiable as to amount are subject to the notice 1 requirements of this paragraph “c” . 2 (4) Direct or indirect acquisitions or investments in a 3 person that controls the insurer or in an affiliate of the 4 insurer in an amount which, together with its present holdings 5 in such investments, exceeds two and one-half percent of 6 the insurer’s surplus to policyholders. Direct or indirect 7 acquisitions or investments in subsidiaries acquired pursuant 8 to section 521A.2 or authorized under any other section of this 9 chapter, or in nonsubsidiary insurance affiliates that are 10 subject to the provisions of this chapter, are exempt from this 11 subparagraph. 12 (3) (5) Any material transactions specified by rule which 13 the commissioner determines may adversely affect the interests 14 of the domestic insurer’s policyholders. 15 Sec. 17. Section 521A.5, Code 2014, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 4. Management of domestic insurers subject 18 to registration. 19 a. Notwithstanding the control of a domestic insurer by any 20 person, the officers and directors of the insurer shall not 21 thereby be relieved of any obligation or liability to which 22 they would otherwise be subject by law, and the insurer shall 23 be managed so as to assure its separate operating identity 24 consistent with this chapter. 25 b. Nothing in this section shall preclude a domestic insurer 26 from having or sharing a common management, or cooperative or 27 joint use of personnel, property, or services with one or more 28 other persons under arrangements meeting the standards of this 29 section. 30 c. Not less than one-third of the directors of a domestic 31 insurer, and not less than one-third of the members of each 32 committee of the board of directors of any domestic insurer, 33 shall be persons who are not officers or employees of the 34 insurer or of any entity controlling, controlled by, or under 35 -8- LSB 5210HV (1) 85 av/nh 8/ 23

H.F. 2217 common control with the insurer and who are not beneficial 1 owners of a controlling interest in the voting stock of the 2 insurer or entity. At least one such person must be included 3 in any quorum for the transaction of business at any meeting 4 of the board of directors or any committee of the board of 5 directors. 6 d. The board of directors of a domestic insurer shall 7 establish one or more committees comprised solely of directors 8 who are not officers or employees of the insurer or of any 9 entity controlling, controlled by, or under common control with 10 the insurer and who are not beneficial owners of a controlling 11 interest in the voting stock of the insurer or any such entity. 12 The committee or committees shall have responsibility for 13 recommending or nominating candidates for director for election 14 by shareholders or policyholders, evaluating the performance 15 of officers deemed to be principal officers of the insurer, 16 and recommending to the board of directors the selection and 17 compensation of the principal officers. 18 e. The provisions of paragraphs “c” and “d” shall not apply 19 to a domestic insurer if the person controlling the insurer, 20 such as an insurer, a mutual insurance holding company, or 21 a publicly held corporation, has a board of directors and 22 committees of the board of directors that meet the requirements 23 of paragraphs “c” and “d” with respect to such controlling 24 entity. 25 f. An insurer may make application to the commissioner 26 for a waiver from the requirements of this subsection if 27 the insurer’s annual direct written and assumed premium, 28 excluding premiums reinsured with the federal crop insurance 29 corporation and federal flood program, is less than three 30 hundred million dollars. An insurer may also make application 31 to the commissioner for a waiver from the requirements of this 32 subsection based upon unique circumstances. The commissioner 33 may consider various factors including but not limited to 34 the type of business entity, volume of business written, 35 -9- LSB 5210HV (1) 85 av/nh 9/ 23

H.F. 2217 availability of qualified board members, or the ownership or 1 organizational structure of the entity. 2 Sec. 18. Section 521A.6, Code 2014, is amended to read as 3 follows: 4 521A.6 Examination. 5 1. Power of commissioner. Subject to the limitation 6 contained in this section and in addition to the powers 7 which the commissioner has under chapter 507 relating to the 8 examination of insurers, the commissioner may also order an 9 insurer registered under section 521A.4 to produce records, 10 books, or other information papers in the possession of the 11 insurer or its affiliates as reasonably necessary to ascertain 12 the financial condition of the insurer or to determine 13 compliance with this chapter . If the insurer fails to comply 14 with the order, the commissioner may examine the affiliates 15 to obtain the information shall have the power to examine any 16 insurer registered under section 521A.4 and its affiliates to 17 ascertain the financial condition of the insurer, including 18 the enterprise risk to the insurer by the ultimate controlling 19 party, or by any entity or combination of entities within the 20 insurance holding company system, or by the insurance holding 21 company system on a consolidated basis . 22 2. Access to books and records —— penalty. 23 a. The commissioner may order an insurer registered under 24 section 521A.4 to produce records, books, or other information 25 papers in the possession of the insurer or its affiliates as 26 reasonably necessary or to determine compliance with this 27 chapter. 28 b. To determine compliance with this chapter, the 29 commissioner may order any insurer registered under section 30 521A.4 to produce information not in the possession of the 31 insurer if the insurer can obtain access to such information 32 pursuant to a contractual relationship, statutory obligation, 33 or other method. In the event the insurer cannot obtain the 34 information requested by the commissioner, the insurer shall 35 -10- LSB 5210HV (1) 85 av/nh 10/ 23

H.F. 2217 provide the commissioner a detailed explanation of the reason 1 that the insurer cannot obtain the information and the identity 2 of the holder of the information. Whenever it appears to the 3 commissioner that the detailed explanation is without merit, 4 the commissioner may require, after notice and hearing, the 5 insurer to pay a penalty of five hundred dollars for each day’s 6 delay, or may suspend or revoke the insurer’s certificate of 7 authority. 8 3. Compelling production. In the event the insurer fails 9 to comply with an order, the commissioner shall have the power 10 to examine the affiliates to obtain the information. The 11 commissioner shall also have the power to issue subpoenas, to 12 administer oaths, and to examine under oath any person for 13 purposes of determining compliance with this section. Upon 14 the failure or refusal of any person to obey a subpoena, the 15 commissioner may petition a court of competent jurisdiction, 16 and upon proper showing, the court may enter an order 17 compelling the witness to appear and testify or produce 18 documentary evidence. Failure to obey the court order shall 19 be punishable as contempt of court. Every person shall be 20 obliged to attend as a witness at the place specified in the 21 subpoena, when subpoenaed, anywhere within the state. Such 22 a person shall be entitled to the same fees and mileage, if 23 claimed, as a witness in district court, which fees, mileage, 24 and actual expense, if any, necessarily incurred in securing 25 the attendance of witnesses, and their testimony, shall be 26 itemized and charged against, and be paid by, the company being 27 examined. 28 2. 4. Use of consultants. The commissioner may retain at 29 the registered insurer’s expense such attorneys, actuaries, 30 accountants and other experts not otherwise a part of the 31 commissioner’s staff as shall be reasonably necessary to assist 32 in the conduct of the examination under subsection 1 , 2, or 3 33 of this section . Any persons so retained shall be under the 34 direction and control of the commissioner and shall act in a 35 -11- LSB 5210HV (1) 85 av/nh 11/ 23

H.F. 2217 purely advisory capacity. 1 3. 5. Expenses. Each registered insurer producing for 2 examination records, books and papers pursuant to subsection 1 , 3 2, or 3 of this section shall be liable for and shall pay the 4 expense of such examination in accordance with section 507.7 . 5 Sec. 19. NEW SECTION . 521A.6A Supervisory colleges. 6 1. Power of commissioner. With respect to any insurer 7 registered under section 521A.4 and in accordance with 8 subsection 3 of this section, the commissioner shall have 9 the power to participate in a supervisory college for any 10 domestic insurer that is part of an insurance holding company 11 system with international operations in order to determine 12 compliance by the insurer with this chapter. The powers of the 13 commissioner with respect to supervisory colleges include but 14 are not limited to the following: 15 a. Initiating the establishment of a supervisory college. 16 b. Clarifying the membership and participation of other 17 supervisors in the supervisory college. 18 c. Clarifying the functions of the supervisory college and 19 the role of other regulators, including the establishment of a 20 group-wide supervisor. 21 d. Coordinating the ongoing activities of the supervisory 22 college, including planning meetings, supervisory activities, 23 and processes for information sharing. 24 e. Establishing a crisis management plan. 25 2. Selection of group-wide supervisor. In the event a 26 group-wide supervisor is established for a supervisory college 27 as described in subsection 1, the commissioner is authorized, 28 but not required, to act as the group-wide supervisor. In 29 order to determine whether the commissioner or another chief 30 insurance regulatory official is the appropriate group-wide 31 supervisor, the commissioner shall, in cooperation with other 32 supervisors, consider the following factors and the relative 33 scale of each: 34 a. The extent to which the insurance holding company 35 -12- LSB 5210HV (1) 85 av/nh 12/ 23

H.F. 2217 system’s insurance operations are domiciled in Iowa. 1 b. The location where the insurance holding company system 2 is based or the place of domicile of the insurance holding 3 company system’s ultimate controlling person. 4 c. The locations of the insurance holding company system’s 5 executive offices. 6 d. The locations of origin of the insurance business of the 7 insurance holding company system. 8 e. The locations of the assets and liabilities of the 9 insurance holding company system. 10 f. The locations of the business operations and activities 11 of the insurance holding company system. 12 g. Whether another chief insurance regulatory official is 13 acting or seeking to act as the lead group-wide supervisor 14 under a regulatory system that the commissioner determines to 15 be either of the following: 16 (1) Substantially similar to that provided under the laws of 17 the state of Iowa. 18 (2) Otherwise sufficient in terms of provision of 19 group-wide supervision, enterprise risk analysis, and 20 cooperation with other chief insurance regulatory officials. 21 h. Whether a chief insurance regulatory official acting 22 or seeking to act as the lead group-wide supervisor provides 23 the commissioner with reasonably reciprocal recognition and 24 cooperation. 25 3. Commissioner as group-wide supervisor. If the 26 commissioner is the group-wide supervisor as described in 27 subsection 2, the commissioner is authorized to engage in 28 conducting and coordinating any of the following group-wide 29 supervision activities: 30 a. Assessing the enterprise risks within the international 31 insurance group in accordance with the “own risk and solvency 32 assessments” requirements of chapter 522. 33 b. Requesting from any member of an international insurance 34 group subject to the commissioner’s supervision information 35 -13- LSB 5210HV (1) 85 av/nh 13/ 23

H.F. 2217 necessary and appropriate to assess enterprise risk in 1 accordance with chapter 522. 2 c. Communicating with other insurance regulatory officials 3 regarding members within the international insurance group and 4 sharing relevant information, subject to the confidentiality 5 provisions of section 521A.7, through supervisory colleges as 6 set forth in this section. 7 d. Other group-wide supervisory activities as considered 8 appropriate by the commissioner and as defined by the 9 commissioner by rule. 10 4. Expenses —— assessment. Each registered insurer 11 subject to this section shall be liable for and shall pay the 12 reasonable expenses of the commissioner’s participation in a 13 supervisory college in accordance with subsection 5, including 14 reasonable travel expenses. For purposes of this section, 15 a supervisory college may be convened as either a temporary 16 or permanent forum for communication and cooperation between 17 the regulators charged with the supervision of the insurer or 18 its affiliates, and the commissioner may establish a regular 19 assessment to the insurer for the payment of these expenses. 20 5. Supervisory college. In order to assess the business 21 strategy, financial position, legal and regulatory position, 22 risk exposure, risk management and governance processes, 23 and as part of the examination of individual insurers 24 in accordance with section 521A.6, the commissioner may 25 participate in a supervisory college with other regulators 26 charged with supervision of an insurer or its affiliates, 27 including other state, federal, and international regulatory 28 agencies. The commissioner may enter into agreements in 29 accordance with section 521A.7, subsection 3, providing the 30 basis for cooperation between the commissioner and the other 31 regulatory agencies, and the activities of the supervisory 32 college. Nothing in this section shall delegate to the 33 supervisory college the authority of the commissioner to 34 regulate or supervise the insurer or its affiliates within the 35 -14- LSB 5210HV (1) 85 av/nh 14/ 23

H.F. 2217 commissioner’s jurisdiction. 1 Sec. 20. Section 521A.7, Code 2014, is amended to read as 2 follows: 3 521A.7 Confidential treatment. 4 1. All information, documents , and copies thereof obtained 5 by or disclosed to the commissioner or any other person in 6 the course of an examination or investigation made pursuant 7 to section 521A.6 or 521A.6A, and all information reported 8 pursuant to sections 521A.4 and 521A.5 , shall be given 9 confidential treatment and shall not be subject to subpoena 10 and shall not be made public by the commissioner or any other 11 person, except to insurance departments of other states, 12 without the prior written consent of the insurer to which it 13 pertains unless the commissioner, after giving the insurer 14 and its affiliates who would be affected thereby, notice and 15 opportunity to be heard, determines that the interests of 16 policyholders, shareholders , or the public will be served 17 by the publication thereof, in which event the commissioner 18 may publish all or any part thereof in such manner as the 19 commissioner may deem appropriate. 20 2. Neither the commissioner nor any person who received 21 documents, materials, or other information while acting under 22 the authority of the commissioner or with whom such documents, 23 materials, or other information are shared pursuant to this 24 chapter shall be permitted or required to testify in any 25 private civil action concerning any confidential documents, 26 materials, or other information subject to subsection 1. 27 3. In order to assist in the performance of the 28 commissioner’s duties, the commissioner: 29 a. May share documents, materials, or other information, 30 including the confidential and privileged documents, materials, 31 or information subject to subsection 1, with other state, 32 federal, and international regulatory agencies, with the 33 national association of insurance commissioners and its 34 affiliates and subsidiaries, and with state, federal, and 35 -15- LSB 5210HV (1) 85 av/nh 15/ 23

H.F. 2217 international law enforcement authorities, including members 1 of any supervisory college described in section 521A.6A, 2 provided that the recipient agrees in writing to maintain 3 the confidentiality and privileged status of the document, 4 material, or other information, and has verified in writing the 5 legal authority to maintain confidentiality. 6 b. Notwithstanding paragraph “a” , the commissioner may only 7 share confidential and privileged documents, materials, or 8 information filed pursuant to section 521A.4, subsection 11A, 9 with commissioners of states having statutes or regulations 10 substantially similar to subsection 1 of this section and who 11 have agreed in writing not to disclose such information. 12 c. May receive documents, materials, or information, 13 including otherwise confidential and privileged documents, 14 materials, or information from the national association of 15 insurance commissioners and its affiliates and subsidiaries and 16 from regulatory and law enforcement officials of other foreign 17 or domestic jurisdictions, and shall maintain as confidential 18 or privileged any document, material, or information received 19 with notice or the understanding that it is confidential or 20 privileged under the laws of the jurisdiction that is the 21 source of the document, material, or information. 22 d. Shall enter into written agreements with the national 23 association of insurance commissioners governing sharing and 24 use of information provided pursuant to this chapter consistent 25 with this subsection that shall do all of the following: 26 (1) Specify procedures and protocols regarding the 27 confidentiality and security of information shared with 28 the national association of insurance commissioners and 29 subsidiaries pursuant to this chapter, including procedures 30 and protocols for sharing by the association with other state, 31 federal, or international regulators. 32 (2) Specify that ownership of information shared with 33 the national association of insurance commissioners and its 34 affiliates and subsidiaries pursuant to this chapter remains 35 -16- LSB 5210HV (1) 85 av/nh 16/ 23

H.F. 2217 with the commissioner and the association’s use of the 1 information is subject to the direction of the commissioner. 2 (3) Require prompt notice to be given to an insurer whose 3 confidential information in the possession of the national 4 association of insurance commissioners pursuant to this chapter 5 is subject to a request or subpoena to the association for 6 disclosure or production. 7 (4) Require the national association of insurance 8 commissioners and its affiliates and subsidiaries to consent to 9 intervention by an insurer in any judicial or administrative 10 action in which the association and its affiliates and 11 subsidiaries may be required to disclose confidential 12 information about the insurer shared with the association and 13 its affiliates and subsidiaries pursuant to this chapter. 14 4. The sharing of information by the commissioner pursuant 15 to this chapter shall not constitute a delegation of regulatory 16 authority or rulemaking, and the commissioner is solely 17 responsible for the administration, execution, and enforcement 18 of the provisions of this chapter. 19 5. No waiver of any applicable privilege or claim of 20 confidentiality in the documents, materials, or information 21 shall occur as a result of disclosure to the commissioner 22 under this section or as a result of sharing as authorized in 23 subsection 3. 24 6. Documents, materials, or other information in the 25 possession or control of the national association of insurance 26 commissioners pursuant to this chapter shall be confidential 27 by law and privileged, shall not be subject to chapter 22, 28 shall not be subject to subpoena, and shall not be subject 29 to discovery or admissible in evidence in any private civil 30 action. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to the regulation of insurance company 35 -17- LSB 5210HV (1) 85 av/nh 17/ 23

H.F. 2217 holding systems by the commissioner of insurance and provides 1 assessments and penalties. 2 Code section 521A.1 is amended to change the definition 3 of what constitutes “control” so that the presumption of 4 control can be rebutted in a specified manner and so that 5 the commissioner of insurance, after notice and hearing, may 6 determine that control of an entity exists in fact even without 7 a presumption to that effect. 8 New Code section 521A.1(4A) adds a definition of “enterprise 9 risk” which means an activity, circumstance, event, or series 10 of events involving one or more affiliates of an insurer that 11 if not remedied promptly is likely to have a material adverse 12 effect upon the financial condition or liquidity of the insurer 13 or its insurance company holding system as a whole. 14 New Code section 521A.1(9A) adds a definition of 15 “supervisory college” which is a temporary or permanent forum 16 for communication and cooperation between regulators charged 17 with supervision of an insurer or its affiliates. 18 Code section 521A.3(1) is amended to eliminate a requirement 19 that a tender offer or other request or invitation for tenders 20 made by an insurer must be sent to the insurer’s shareholders. 21 Code section 521A.3(1) is also amended to require the 22 controlling person of a domestic insurer seeking to divest its 23 controlling interest in the insurer to file a confidential 24 notice of its proposed divestiture with the commissioner at 25 least 30 days prior to the cessation of control. In some 26 circumstances, the commissioner may require a party seeking 27 to divest or acquire a controlling interest in an insurer to 28 obtain approval of the transaction. The information shall 29 remain confidential until the conclusion of the transaction 30 unless the commissioner determines that confidential treatment 31 will interfere with enforcement of the statute. 32 Code section 521A.3(2) is amended to add additional 33 information that must be included in the required statement 34 filed with the commissioner by an insurer seeking acquisition 35 -18- LSB 5210HV (1) 85 av/nh 18/ 23