House File 398 - Introduced HOUSE FILE 398 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 144) A BILL FOR An Act relating to the duties and responsibilities of insurance 1 producers under insurance policies or contracts. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1461HV (1) 85 av/nh

H.F. 398 Section 1. Section 522B.1, Code 2013, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 7A. “Intended beneficiary” means a person 3 who is not listed as a beneficiary of an insurance policy or 4 contract in the records of the insurer. 5 NEW SUBSECTION . 12A. “Policy owner” means the person who 6 is identified as the legal owner of an insurance policy or 7 contract under the terms of the insurance policy or contract, 8 or who is otherwise vested with legal title to the insurance 9 policy or contract through a valid assignment completed in 10 accordance with the terms of the insurance policy or contract 11 and is properly recorded as the legal owner of the policy or 12 contract in the records of the insurer. “Policy owner” does 13 not include a person who has a mere beneficial interest in an 14 insurance policy or contract. 15 Sec. 2. Section 522B.11, subsection 7, Code 2013, is amended 16 by striking the subsection and inserting in lieu thereof the 17 following: 18 7. a. Unless otherwise specified in this chapter, the 19 duties and responsibilities of an insurance producer are 20 limited to using reasonable care, diligence, and judgment in 21 procuring the insurance requested of the insurance producer by 22 the policy owner. 23 b. An insurance producer has no duty to change the 24 beneficiary of an insurance policy or contract unless clear 25 written evidence of the policy owner’s intent to name an 26 intended beneficiary as a beneficiary of the policy or contract 27 is presented to the insurance producer or insurer in the manner 28 required by the policy or contract, prior to the payment of any 29 insurance benefits under the policy or contract. Such evidence 30 shall be provided in the same manner as a claim for benefits 31 under the policy or contract. 32 c. An insurance producer is not in the business of supplying 33 information to others and has no duty to provide advice or 34 information unless the insurance producer holds oneself out as 35 -1- LSB 1461HV (1) 85 av/nh 1/ 3

H.F. 398 an insurance specialist, consultant, or counselor and receives 1 compensation for consultation and advice apart from commissions 2 paid by an insurer. 3 d. An insurance producer may agree to accept additional 4 duties and responsibilities not specified in this chapter. Any 5 agreement by an insurance producer to accept such additional 6 duties and responsibilities shall be in writing and signed by 7 the insurance producer and the policy owner. 8 e. The general assembly declares that the holdings of 9 Langwith v. Am. Nat’l Gen. Ins. Co., 793 N.W.2d 215 (Iowa 2010) 10 and Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91 (Iowa 11 2012) are abrogated to the extent that they impose higher or 12 greater duties and responsibilities on insurance producers than 13 those set forth in this subsection. 14 EXPLANATION 15 This bill relates to the duties and responsibilities of 16 insurance producers licensed under Code chapter 522B. 17 The bill provides that an “intended beneficiary” of an 18 insurance policy or contract is a person who is not listed as 19 a beneficiary in the insurer’s records. A “policy owner” is 20 defined as the person who is identified as the legal owner of 21 an insurance policy or contract under the terms of the policy 22 or contract, or who is otherwise vested with legal title to 23 the policy or contract through a valid assignment completed 24 in accordance with the terms of the policy or contract and is 25 properly recorded as the legal owner in the records of the 26 insurer. “Policy owner” does not include a person who has a 27 mere beneficial interest in an insurance policy or contract. 28 The bill provides that unless otherwise specified in Code 29 chapter 522B, the duties and responsibilities of an insurance 30 producer are limited to using reasonable care, diligence, 31 and judgment in procuring the insurance requested by the 32 policy owner. An insurance producer has no duty to change the 33 beneficiary of an insurance policy or contract unless clear 34 written evidence of such intent is presented to the insurance 35 -2- LSB 1461HV (1) 85 av/nh 2/ 3

H.F. 398 producer or insurer in the manner required in the policy or 1 contract, prior to the payment of insurance benefits. The 2 evidence must be provided in the same manner as a claim for 3 benefits. 4 The bill provides that an insurance producer is not in the 5 business of providing information to others and has no duty to 6 provide advice or information unless the insurance producer 7 holds oneself out as an insurance specialist, consultant, 8 or counselor and receives compensation for consultation 9 and advice apart from commissions paid by an insurer. An 10 insurance producer may agree to accept additional duties and 11 responsibilities pursuant to a written agreement signed by the 12 insurance producer and the policy owner. 13 The bill declares the intent of the general assembly to 14 abrogate the holdings of two recent cases decided by the Iowa 15 supreme court to the extent that those holdings impose higher 16 or greater duties and responsibilities on insurance producers 17 than those set forth in the bill. 18 -3- LSB 1461HV (1) 85 av/nh 3/ 3