HF 398 (LSB 1461HV (1) 85)

HOUSE FILE 398

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 144)

A BILL FOR

An Act relating to the duties and responsibilities of insurance producers under insurance policies or contracts.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 522B.1, Code 2013, is amended by adding the following new subsections:
   NEW SUBSECTION.  7A.  “Intended beneficiary” means a person who is not listed as a beneficiary of an insurance policy or contract in the records of the insurer.
   NEW SUBSECTION.  12A.  “Policy owner” means the person who is identified as the legal owner of an insurance policy or contract under the terms of the insurance policy or contract, or who is otherwise vested with legal title to the insurance policy or contract through a valid assignment completed in accordance with the terms of the insurance policy or contract and is properly recorded as the legal owner of the policy or contract in the records of the insurer. “Policy owner” does not include a person who has a mere beneficial interest in an insurance policy or contract.
    Sec. 2.  Section 522B.11, subsection 7, Code 2013, is amended by striking the subsection and inserting in lieu thereof the following:
   7.
  a.  Unless otherwise specified in this chapter, the duties and responsibilities of an insurance producer are limited to using reasonable care, diligence, and judgment in procuring the insurance requested of the insurance producer by the policy owner.
   b.  An insurance producer has no duty to change the beneficiary of an insurance policy or contract unless clear written evidence of the policy owner’s intent to name an intended beneficiary as a beneficiary of the policy or contract is presented to the insurance producer or insurer in the manner required by the policy or contract, prior to the payment of any insurance benefits under the policy or contract. Such evidence shall be provided in the same manner as a claim for benefits under the policy or contract.
   c.  An insurance producer is not in the business of supplying information to others and has no duty to provide advice or information unless the insurance producer holds oneself out as an insurance specialist, consultant, or counselor and receives compensation for consultation and advice apart from commissions paid by an insurer.
   d.  An insurance producer may agree to accept additional duties and responsibilities not specified in this chapter. Any agreement by an insurance producer to accept such additional duties and responsibilities shall be in writing and signed by the insurance producer and the policy owner.
   e.  The general assembly declares that the holdings of Langwith v. Am. Nat’l Gen. Ins. Co., 793 N.W.2d 215 (Iowa 2010) and Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91 (Iowa 2012) are abrogated to the extent that they impose higher or greater duties and responsibilities on insurance producers than those set forth in this subsection.
EXPLANATION
   This bill relates to the duties and responsibilities of insurance producers licensed under Code chapter 522B.
   The bill provides that an “intended beneficiary” of an insurance policy or contract is a person who is not listed as a beneficiary in the insurer’s records. A “policy owner” is defined as the person who is identified as the legal owner of an insurance policy or contract under the terms of the policy or contract, or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and is properly recorded as the legal owner in the records of the insurer. “Policy owner” does not include a person who has a mere beneficial interest in an insurance policy or contract.
   The bill provides that unless otherwise specified in Code chapter 522B, the duties and responsibilities of an insurance producer are limited to using reasonable care, diligence, and judgment in procuring the insurance requested by the policy owner. An insurance producer has no duty to change the beneficiary of an insurance policy or contract unless clear written evidence of such intent is presented to the insurance producer or insurer in the manner required in the policy or contract, prior to the payment of insurance benefits. The evidence must be provided in the same manner as a claim for benefits.
   The bill provides that an insurance producer is not in the business of providing information to others and has no duty to provide advice or information unless the insurance producer holds oneself out as an insurance specialist, consultant, or counselor and receives compensation for consultation and advice apart from commissions paid by an insurer. An insurance producer may agree to accept additional duties and responsibilities pursuant to a written agreement signed by the insurance producer and the policy owner.
   The bill declares the intent of the general assembly to abrogate the holdings of two recent cases decided by the Iowa supreme court to the extent that those holdings impose higher or greater duties and responsibilities on insurance producers than those set forth in the bill.