House Study Bill 83 - 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, providing 2 penalties, and including applicability and effective date 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1265DP (5) 85 av/nh

S.F. _____ H.F. _____ Section 1. Section 135.22A, subsection 2, paragraph g, Code 1 2013, is amended by striking the paragraph. 2 Sec. 2. Section 249A.3, Code 2013, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 15. An insurance policy or annuity 5 purchased to fund an irrevocable purchase agreement to furnish 6 cemetery merchandise, funeral merchandise, funeral services, 7 or a combination thereof as provided in chapter 523A, which is 8 owned by or assigned to a seller or a provider as defined in 9 section 523A.102, and in which the department is designated as 10 the primary beneficiary as provided in section 523A.304, shall 11 be excluded as a resource for eligibility under this chapter. 12 Sec. 3. Section 502.412, subsection 3, Code 2013, is amended 13 to read as follows: 14 3. Disciplinary penalties —— registrants. If the 15 administrator finds that the order is in the public interest 16 and subsection 4 , paragraphs “a” through “f” , “h” , “i” , “j” , 17 “l” , or “m” , authorizes the action, an order under this chapter 18 may censure, impose a bar, or impose a civil penalty in an 19 amount not to exceed a maximum of five ten thousand dollars 20 for a single violation or five hundred thousand one million 21 dollars for more than one violation, or in an amount as agreed 22 to by the parties, on a registrant, and, if the registrant is 23 a broker-dealer or investment adviser, a partner, officer, 24 director, or person having a similar status or performing 25 similar functions, or a person directly or indirectly in 26 control, of the broker-dealer or investment adviser. 27 Sec. 4. Section 502.604, subsection 4, Code 2013, is amended 28 to read as follows: 29 4. Civil penalty —— restitution —— corrective action. In a 30 final order under subsection 3 , the administrator may impose a 31 civil penalty up to an amount not to exceed a maximum of five 32 ten thousand dollars for a single violation or five hundred 33 thousand one million dollars for more than one violation, or 34 in an amount as agreed to by the parties, order restitution, 35 -1- LSB 1265DP (5) 85 av/nh 1/ 23

S.F. _____ H.F. _____ or take other corrective action as the administrator deems 1 necessary and appropriate to accomplish compliance with 2 the laws of the state relating to all securities business 3 transacted in the state. 4 Sec. 5. Section 502.604, Code 2013, is amended by adding the 5 following new subsection: 6 NEW SUBSECTION . 5A. Failure to obey cease and desist 7 order. A person who fails to obey a valid cease and desist 8 order issued by the administrator under this section may, after 9 notice and opportunity for a hearing, be subject to a civil 10 penalty in an amount of not less than one thousand dollars and 11 not to exceed ten thousand dollars for violating the order. 12 Each day the failure to obey the cease and desist order occurs 13 or continues constitutes a separate violation of the order. 14 The penalties provided in this subsection are in addition to, 15 and not exclusive of, other remedies that may be available. 16 Sec. 6. Section 505.8, subsection 10, Code 2013, is amended 17 to read as follows: 18 10. The commissioner may, after a hearing conducted 19 pursuant to chapter 17A , assess fines or penalties , ; assess 20 costs of an examination, investigation , or proceeding , ; 21 order restitution , ; or take other corrective action as the 22 commissioner deems necessary and appropriate to accomplish 23 compliance with the laws of the state relating to all insurance 24 business transacted in the state. 25 Sec. 7. NEW SECTION . 506.14 Voluntary dissolution of 26 domestic mutual insurance companies. 27 1. Any plan for voluntary dissolution of a domestic 28 mutual insurance company licensed to transact the business 29 of insurance under chapter 508, 515, 518, or 518A shall be 30 presented for approval by the commissioner not less than ninety 31 days in advance of notice of the plan to policyholders. 32 2. The commissioner shall approve the plan if the 33 commissioner finds that the plan complies with all applicable 34 provisions of law and is fair and equitable to the domestic 35 -2- LSB 1265DP (5) 85 av/nh 2/ 23

S.F. _____ H.F. _____ mutual insurance company and its policyholders. 1 Sec. 8. Section 507.10, subsection 4, paragraph a, Code 2 2013, is amended to read as follows: 3 a. All orders entered pursuant to subsection 3 , paragraph 4 “a” , shall be accompanied by findings and conclusions resulting 5 from the commissioner’s consideration and review of the 6 examination report, relevant examiner work papers, and any 7 written submissions or rebuttals. Any such order is a final 8 administrative decision and may be appealed pursuant to chapter 9 17A , and shall be served upon the company by certified mail, 10 together with a copy of the adopted examination report. Within 11 thirty days of the issuance of the adopted report, the company 12 shall file affidavits executed by each of its directors stating 13 under oath that they have received a copy of the adopted report 14 and related orders. The board of directors of the company 15 shall timely review the adopted report. The minutes of the 16 meeting of the board at which the adopted report is considered 17 shall reflect that each member of the board has reviewed the 18 adopted report. 19 Sec. 9. Section 507B.4, subsection 3, Code 2013, is amended 20 by adding the following new paragraph: 21 NEW PARAGRAPH . t. Refund of premium for duplication of 22 insurance. Failing to refund premiums paid for a Medicare 23 supplement policy after the effective date of a subsequently 24 purchased Medicare advantage plan, where there have been no 25 claims made on the Medicare supplement policy, and it can be 26 established that the carrier of the Medicare supplement policy 27 has no exposure to pay benefits if a claim is submitted to it 28 during the time that both the Medicare supplement policy and 29 the Medicare advantage plan are in effect. For the purposes 30 of this paragraph, “Medicare supplement policy” and “Medicare 31 advantage plan” mean the same as defined by the commissioner of 32 insurance pursuant to rules adopted under chapter 17A. 33 Sec. 10. NEW SECTION . 507C.17A Rehabilitation or 34 liquidation of certain covered domestic insurers. 35 -3- LSB 1265DP (5) 85 av/nh 3/ 23

S.F. _____ H.F. _____ 1. The provisions of this section apply in accordance 1 with Tit. II of the federal Dodd-Frank Wall Street Reform and 2 Consumer Protection Act, Pub. L. No. 111-203, 12 U.S.C. § 5301 3 et seq., with respect to a domestic insurer that is a covered 4 financial company, as that term is defined under 12 U.S.C. § 5 5381. 6 2. The commissioner may petition the district court for an 7 order of rehabilitation or liquidation of a domestic insurer 8 pursuant to this section on any of the following grounds: 9 a. Upon a determination and notification given by the 10 secretary of the treasury of the United States, in consultation 11 with the president of the United States, that the insurer is 12 a covered financial company satisfying the requirements of 13 12 U.S.C. § 5383(b), and the board of directors, or a body 14 performing similar functions of a board of directors, of the 15 insurer acquiesces or consents to the appointment of a receiver 16 pursuant to 12 U.S.C. § 5382(a)(1)(A)(i) with such consent 17 to be considered as consent to an order of rehabilitation or 18 liquidation. 19 b. Upon an order of the United States district court for 20 the District of Columbia under 12 U.S.C. § 5382(a)(1)(A)(iv)(I) 21 granting the petition of the secretary of the treasury of 22 the United States concerning the insurer under 12 U.S.C. § 23 5382(a)(1)(A)(i). 24 c. A petition by the secretary of the treasury of the United 25 States concerning the insurer is granted by operation of law 26 under 12 U.S.C. § 5382(a)(1)(A)(v). 27 3. Notwithstanding any other provision of law to the 28 contrary, after notice to the insurer, a district court 29 may grant an order of rehabilitation or liquidation within 30 twenty-four hours after the filing of such a petition pursuant 31 to this section. 32 4. If the district court does not make a determination on a 33 petition for an order of rehabilitation or liquidation filed by 34 the commissioner pursuant to this section within twenty-four 35 -4- LSB 1265DP (5) 85 av/nh 4/ 23

S.F. _____ H.F. _____ hours after the filing of the petition, the order shall be 1 deemed granted by operation of law upon the expiration of the 2 twenty-four-hour period. 3 a. At the time that an order is deemed granted under this 4 subsection, the provisions of this chapter shall be deemed 5 to be in effect, and the commissioner shall be deemed to be 6 affirmed as receiver and to have all of the applicable powers 7 provided by this chapter, regardless of whether an order has 8 been entered by the district court. 9 b. If an order is deemed granted by operation of law under 10 this subsection, the district court shall expeditiously enter 11 an order of rehabilitation or liquidation that does all of the 12 following: 13 (1) Is effective as of the date that the order is deemed 14 granted by operation of law. 15 (2) Conforms to the provisions for rehabilitation or 16 liquidation of an insurer contained in this chapter, as 17 applicable. 18 5. An order of rehabilitation or liquidation made pursuant 19 to this section shall not be subject to a stay or injunction 20 pending appeal. 21 6. Nothing in this section shall be construed to supersede 22 or impair any other power or authority of the commissioner or 23 the district court under this chapter. 24 Sec. 11. Section 507E.5, subsection 2, Code 2013, is amended 25 to read as follows: 26 2. The commissioner may share documents, materials, or 27 other information, including confidential and privileged 28 documents, materials, or other information, with other 29 state, federal, and international regulatory agencies, with 30 the national association of insurance commissioners and its 31 affiliates or subsidiaries, and with local, state, federal, and 32 international law enforcement authorities, provided that the 33 recipient agrees to maintain the confidential and privileged 34 status of the document, material, or other information, 35 -5- LSB 1265DP (5) 85 av/nh 5/ 23

S.F. _____ H.F. _____ pursuant to Iowa law. 1 Sec. 12. Section 511.8, subsection 14, Code 2013, is amended 2 to read as follows: 3 14. Urban real estate and personal property. 4 a. Personal or real property or both located within the 5 United States or the Dominion of Canada, other than real 6 property used or to be used primarily for agricultural, 7 horticultural, ranching or mining purposes, which produces 8 income or which by suitable improvement will produce income. 9 However, personal property acquired under this subsection shall 10 be acquired for the purpose of entering into a contract for 11 the sale or for a use under which the contractual payments 12 may reasonably be expected to result in the recovery of the 13 investment and an investment return within the anticipated 14 useful life of the property. Legal title to the real property 15 may be acquired subject to a contract of sale. 16 b. “Real property” as used in this subsection includes a all 17 of the following: 18 (1) A leasehold of real estate , an . 19 (2) An undivided interest in a leasehold of real estate , and 20 an . 21 (3) An undivided interest in the fee title of real estate. 22 (4) A controlling membership, partnership, shareholder, or 23 trust interest in any entity created solely for the purpose 24 of owning and operating any of the interests described in 25 subparagraph (1), (2), or (3), if the entity is expressly 26 limited to that purpose within its organizational documents. 27 c. Investments under this subsection are not eligible in 28 excess of ten percent of the legal reserve. 29 Sec. 13. Section 511.8, subsection 23, Code 2013, is amended 30 by adding the following new paragraph: 31 NEW PARAGRAPH . g. For securities loaned pursuant to this 32 subsection that are included in the legal reserve of the life 33 insurance company or association, the collateral received for 34 the loaned securities shall not be eligible for inclusion in 35 -6- LSB 1265DP (5) 85 av/nh 6/ 23

S.F. _____ H.F. _____ the legal reserve. 1 Sec. 14. Section 511.40, Code 2013, is amended by adding the 2 following new subsection: 3 NEW SUBSECTION . 5. a. The gross amount of premiums 4 received by a life insurance company or association for an 5 employer-owned life insurance contract which has not been 6 allocated to another state shall be allocated to this state 7 for purposes of section 432.1, subsection 1, if either of the 8 following is applicable: 9 (1) The contract is issued or delivered in this state. 10 (2) The company or association is domiciled in this state. 11 b. To the extent that premiums are allocated to this state 12 pursuant to paragraph “a” , the provisions of section 505.14 are 13 not applicable to those premiums. 14 c. As used in this subsection, “employer-owned life 15 insurance contract” means a policy which provides coverage on 16 a life for which the employer has an insurable interest under 17 this section or a similar provision of the laws of another 18 state and the policy is owned by either the employer or a trust 19 established by the employer for the benefit of the employer or 20 the employer’s active or retired employees. 21 Sec. 15. Section 514.4, Code 2013, is amended to read as 22 follows: 23 514.4 Directors. 24 1. At least two-thirds of the directors of a hospital 25 service corporation, medical service corporation, dental 26 service corporation, or pharmaceutical or optometric service 27 corporation subject to this chapter shall be at all times 28 subscribers and not more than one-third of the directors 29 shall be providers as provided in this section . The board of 30 directors of each corporation shall consist of at least nine 31 members. 32 2. A subscriber director is a director of the board of 33 a corporation who is a subscriber and who is not a provider 34 of health care pursuant to section 514B.1, subsection 7 , a 35 -7- LSB 1265DP (5) 85 av/nh 7/ 23

S.F. _____ H.F. _____ person who has material financial or fiduciary interest in the 1 delivery of health care services or a related industry, an 2 employee of an institution which provides health care services, 3 or a spouse or a member of the immediate family of such a 4 person. However, a subscriber director of a dental service 5 corporation may be an employee, officer, director, or trustee 6 of a hospital or other entity that does not have a provider 7 contract with the dental service corporation. A subscriber 8 director of a hospital or medical service corporation shall be 9 a subscriber of the services of that corporation. 10 3. A provider director of a corporation subject to this 11 chapter shall be at all times a person who has a material 12 financial interest in or is a fiduciary to or an employee 13 of or is a spouse or member of the immediate family of a 14 provider having a contract with such corporation to render to 15 its subscribers the services of such corporation or who is a 16 hospital trustee. 17 4. A director may serve on a board of only one corporation 18 at a time subject to this chapter . 19 5. The commissioner of insurance shall adopt rules pursuant 20 to chapter 17A to implement the process of the election of 21 subscriber directors of the board of directors of a corporation 22 to ensure the representation of a broad spectrum of subscriber 23 interest on each board and establish criteria for the selection 24 of nominees. The rules shall provide for an independent 25 subscriber nominating committee to serve until the composition 26 of the board of directors meets the percentage requirements 27 of this section . Once the composition requirements of this 28 section are met, the nominations for subscriber directors 29 shall be made by the subscriber directors of the board under 30 procedures the board establishes which shall also permit 31 nomination by a petition of at least fifty subscribers. The 32 board shall also establish procedures to permit nomination of 33 provider directors by petition of at least fifty participating 34 providers. A member of the board of directors of a corporation 35 -8- LSB 1265DP (5) 85 av/nh 8/ 23

S.F. _____ H.F. _____ subject to this chapter shall not serve on the independent 1 subscriber nominating committee. The nominating committee 2 shall consist of subscribers as defined in this section . The 3 rules of the commissioner of insurance shall also permit 4 nomination of subscriber directors by a petition of at least 5 fifty subscribers, and nomination of provider directors 6 by a petition of at least fifty participating providers. 7 These petitions shall be considered only by the independent 8 nominating committee during the duration of the committee. 9 Following the discontinuance of the committee, the petition 10 process shall be continued and the board of directors of the 11 corporation shall consider the petitions. The independent 12 subscriber nominating committee is not subject to chapter 17A . 13 The nominating committee shall not receive per diem or expenses 14 for the performance of their duties. 15 6. Population factors, representation of different 16 geographic regions, and the demography of the service area of 17 the corporation subject to this chapter shall be considered 18 when making nominations for the board of directors of a 19 corporation subject to this chapter . 20 7. A corporation serving states in addition to Iowa shall be 21 required to implement this section only for directors who are 22 residents of Iowa and elected as board members from Iowa. 23 Sec. 16. Section 515.69, subsection 1, Code 2013, is amended 24 to read as follows: 25 1. A stock insurance company organized under or by the 26 laws of any other state or foreign government for the purpose 27 specified in this chapter , shall not, directly or indirectly, 28 take risks or transact business of insurance in this state 29 unless the company has two and one-half million dollars of 30 actual paid-up capital, and a surplus in cash or invested in 31 securities authorized by law of not less than two and one-half 32 million dollars, possesses the actual amount of capital and 33 surplus required of any company organized pursuant to this 34 chapter, or if the company is a mutual insurance company, the 35 -9- LSB 1265DP (5) 85 av/nh 9/ 23

S.F. _____ H.F. _____ actual amount of surplus required of any mutual insurance 1 company organized pursuant to this chapter, exclusive of assets 2 deposited in a state, territory, district, or country for the 3 special benefit or security of those insured in that state, 4 territory, district, or country. 5 Sec. 17. Section 515.136, Code 2013, is amended to read as 6 follows: 7 515.136 Value of building —— liability. 8 The insurance company or association issuing such policy may 9 show the actual value of said property at date of policy, and 10 any depreciation in the value thereof before the loss occurred; 11 but the said An insurance company or association shall be 12 liable for the actual value of the property insured at the date 13 of the loss, unless such value exceeds the amount stated in the 14 policy. 15 Sec. 18. Section 515A.7, subsection 1, paragraph b, 16 subparagraph (5), Code 2013, is amended to read as follows: 17 (5) An insurer may adopt a scheduled or schedule rating plan 18 providing for credits or debits in an amount not exceeding the 19 maximum modification allowed as set forth by the commissioner 20 by rule. This amount shall be in addition to the permitted 21 deviations set forth in subparagraphs (1) through (4). 22 Sec. 19. Section 518.14, subsection 4, paragraph f, 23 unnumbered paragraph 1, Code 2013, is amended to read as 24 follows: 25 Common stocks, common stock equivalents, mutual fund shares, 26 securities convertible into common stocks or common stock 27 equivalents, or preferred stocks issued or guaranteed by a 28 corporation incorporated under the laws of the United States 29 or a state, or the laws of Canada or a province of Canada , 30 or by limited partnerships publicly traded on a nationally 31 established stock exchange in the United States . Aggregate 32 investments in nondividend paying stocks shall not exceed five 33 percent of surplus. 34 Sec. 20. Section 518A.12, subsection 4, paragraph f, 35 -10- LSB 1265DP (5) 85 av/nh 10/ 23

S.F. _____ H.F. _____ unnumbered paragraph 1, Code 2013, is amended to read as 1 follows: 2 Common stocks, common stock equivalents, mutual fund shares, 3 securities convertible into common stocks or common stock 4 equivalents, or preferred stocks issued or guaranteed by a 5 corporation incorporated under the laws of the United States 6 or a state, or the laws of Canada or a province of Canada , 7 or by limited partnerships publicly traded on a nationally 8 established stock exchange in the United States . Aggregate 9 investments in nondividend paying stocks shall not exceed five 10 percent of surplus. 11 Sec. 21. Section 521E.1, subsection 4, unnumbered paragraph 12 1, Code 2013, is amended to read as follows: 13 “Domestic insurer” means an insurance company domiciled in 14 this state and licensed to transact the business of insurance 15 under chapter 508 , 512B, 515 , or 520 , except that it shall not 16 include any of the following: 17 Sec. 22. Section 521E.1, subsection 4, paragraph b, Code 18 2013, is amended by striking the paragraph. 19 Sec. 23. Section 521E.1, subsections 6 and 7, Code 2013, are 20 amended to read as follows: 21 6. “Foreign insurer” means an insurance company not 22 domiciled in this state which is licensed to transact the 23 business of insurance in this state under chapter 508 , 512B, 24 515 , or 520 . 25 7. “Life and health insurer” means an insurance company 26 licensed under chapter 508 , a fraternal benefit society 27 organized under chapter 512B, or a licensed property and 28 casualty insurer writing only accident and health insurance 29 under chapter 515 . 30 Sec. 24. Section 521E.3, subsection 1, paragraph a, 31 subparagraph (2), Code 2013, is amended to read as follows: 32 (2) For a life and health insurer, the insurer’s 33 total adjusted capital is greater than or equal to its 34 company-action-level risk-based capital but less than the 35 -11- LSB 1265DP (5) 85 av/nh 11/ 23

S.F. _____ H.F. _____ product of its authorized-control-level risk-based capital and 1 two and one-half three , and has a negative trend. 2 Sec. 25. Section 522C.6, Code 2013, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 3. a. A licensed public adjuster who, 5 after hearing, is found to have violated this chapter or any 6 rule adopted or order issued pursuant to this chapter, may 7 be ordered to cease and desist from engaging in the conduct 8 resulting in the violation and may be assessed a civil penalty 9 as provided in section 505.7A. 10 b. A person who, after hearing, is found to have violated 11 this chapter by acting as a public adjuster without proper 12 licensure may be ordered to cease and desist from engaging in 13 the conduct resulting in the violation and may be assessed a 14 civil penalty according to the provisions of chapter 507A. 15 c. If a person has engaged, is engaging, or is about to 16 engage in any act or practice constituting a violation of 17 this chapter or any rule adopted or order issued pursuant to 18 this chapter, the commissioner may issue a summary order that 19 includes a brief statement of findings of fact, conclusions of 20 law, and policy reasons for the order, and that directs the 21 person to cease and desist from engaging in the act or practice 22 constituting the violation and that may assess a civil penalty 23 or take other affirmative action as in the judgment of the 24 commissioner is necessary to assure that the person complies 25 with the requirements of this chapter as provided in chapter 26 507A. 27 d. If a person does not comply with an order issued pursuant 28 to this subsection, the commissioner may petition a court of 29 competent jurisdiction to enforce the order. The court shall 30 not require the commissioner to post a bond in an action or 31 proceeding under this subsection. If the court finds, after 32 notice and opportunity for hearing, that the person is not in 33 compliance with an order, the court may adjudge the person to 34 be in civil contempt of the order. The court may impose a civil 35 -12- LSB 1265DP (5) 85 av/nh 12/ 23

S.F. _____ H.F. _____ penalty against the person for contempt in an amount not less 1 than three thousand dollars but not greater than ten thousand 2 dollars for each violation and may grant any other relief that 3 the court determines is just and proper in the circumstances. 4 Sec. 26. Section 523A.301, Code 2013, is amended to read as 5 follows: 6 523A.301 Definition. 7 As used in sections 523A.302 and , 523A.303 , and 523A.304, 8 “director” means the director of human services. 9 Sec. 27. Section 523A.303, subsection 1, unnumbered 10 paragraph 1, Code 2013, is amended to read as follows: 11 If funds remain in a nonguaranteed irrevocable burial trust 12 fund or from the proceeds of an insurance policy or annuity 13 made payable or assigned to the seller or a provider after the 14 payment of funeral and burial expenses in accordance with the 15 conditions and terms of the purchase agreement for cemetery 16 merchandise, funeral merchandise, or funeral services, the 17 seller shall comply with all of the following: 18 Sec. 28. NEW SECTION . 523A.304 Disbursement of insurance or 19 annuity proceeds —— medical assistance debts. 20 1. If an insurance policy or annuity is purchased or 21 assigned to fund a purchase agreement and the insured or 22 annuitant is or may become a recipient of medical assistance 23 benefits under chapter 249A, unless the primary beneficiary of 24 the policy or annuity is the spouse or disabled child of the 25 insured or annuitant, the insurance policy or annuity shall 26 designate, or shall be amended to designate, the department 27 as the primary beneficiary of any funds that remain from the 28 proceeds of the insurance policy or annuity after payment of 29 funeral and burial expenses in accordance with the terms and 30 conditions of the purchase agreement. 31 2. If the funds remaining from the proceeds of the insurance 32 policy or annuity are disbursed as provided in subsection 1 33 and as otherwise provided in the insurance policy or annuity, 34 if applicable, the seller, provider, or insurer shall not be 35 -13- LSB 1265DP (5) 85 av/nh 13/ 23

S.F. _____ H.F. _____ liable to the director, the estate of the deceased insured or 1 annuitant, a personal representative, or any other interested 2 person for the remaining funds, and any lien imposed by the 3 director shall be unenforceable against the seller, provider, 4 or insurer. 5 3. This section applies to an insurance policy or annuity 6 issued prior to January 1, 2014, that funds a purchase 7 agreement for an insured or annuitant who receives or may 8 receive medical assistance benefits under chapter 249A, and who 9 dies on or after January 1, 2015. 10 4. This section applies to an insurance policy or annuity 11 issued on or after January 1, 2014, to fund a purchase 12 agreement for an insured or annuitant who receives or may 13 receive medical assistance benefits under chapter 249A, and who 14 dies on or after January 1, 2014, and on or after the date of 15 issuance of the insurance policy or annuity. 16 Sec. 29. Section 598.20A, Code 2013, is amended to read as 17 follows: 18 598.20A Beneficiary revocation —— life insurance. 19 1. Except as preempted by federal law, if a decree of 20 dissolution, annulment, or separate maintenance is issued after 21 an insured the policy owner of an insurance contract insuring 22 the policy owner’s own life has designated the insured’s policy 23 owner’s spouse or one or more relatives of the insured’s policy 24 owner’s spouse as a beneficiary under a life insurance policy 25 in effect on the date of the decree, a provision in the life 26 insurance policy making such a designation is voided by the 27 issuance of the decree unless any of the following apply: 28 a. The decree designates the insured’s policy owner’s former 29 spouse or one or more relatives of the insured’s policy owner’s 30 spouse as beneficiary. 31 b. After issuance of the decree, the insured policy owner 32 executes a designation of beneficiary form provided by the 33 insurance company naming the insured’s policy owner’s former 34 spouse or one or more relatives of the insured’s policy owner’s 35 -14- LSB 1265DP (5) 85 av/nh 14/ 23

S.F. _____ H.F. _____ former spouse as beneficiary. 1 c. The insured policy owner and the insured’s policy owner’s 2 former spouse remarry. 3 2. If a beneficiary designation is not effective pursuant to 4 subsection 1 , the benefits or proceeds of the life insurance 5 policy are payable to an alternate beneficiary, or if there is 6 no alternate beneficiary, to the estate of the insured policy 7 owner . 8 3. An insurer who pays benefits or proceeds of a life 9 insurance policy to a beneficiary under a designation that is 10 void pursuant to subsection 1 is not liable for payment to an 11 alternative beneficiary as provided under subsection 2 unless 12 both of the following apply: 13 a. At least ten days prior to payment of the benefits 14 or proceeds of the life insurance policy to the designated 15 beneficiary, the insurer receives written notice at the home 16 office of the insurer that the designation of the beneficiary 17 is not effective pursuant to subsection 1 . 18 b. The insurer has failed to interplead the benefits or 19 proceeds of the life insurance policy in a court of competent 20 jurisdiction in accordance with the rules of civil procedure. 21 4. This section does not limit the right of a beneficiary 22 to seek recovery from any person or entity that erroneously 23 receives or collects the benefits or proceeds from a life 24 insurance policy. 25 5. This section does not affect the right of an insured’s a 26 policy owner’s former spouse to assert an ownership interest in 27 a life insurance policy insuring the life of the policy owner 28 that is not disclosed to the insured’s policy owner’s spouse 29 prior to the decree of dissolution, annulment, or separate 30 maintenance and that is not addressed by the decree. 31 6. For purposes of this section , “relative of the insured’s 32 policy owner’s spouse” means a person who is related to the 33 insured’s policy owner’s former spouse by blood, adoption, 34 or affinity, and who, subsequent to a decree of dissolution, 35 -15- LSB 1265DP (5) 85 av/nh 15/ 23

S.F. _____ H.F. _____ annulment, or separate maintenance, ceases to be related to the 1 insured policy owner by blood, adoption, or affinity. 2 Sec. 30. EFFECTIVE UPON ENACTMENT. The following 3 provision or provisions of this Act, being deemed of immediate 4 importance, take effect upon enactment: 5 1. The section of this Act enacting section 507C.17A. 6 EXPLANATION 7 This bill relates to various matters under the purview of the 8 insurance division of the department of commerce. 9 DEPARTMENT OF PUBLIC HEALTH. Code section 135.22A(2)(g) 10 is stricken to remove the commissioner of insurance from the 11 membership of the advisory council on brain injuries. 12 MEDICAL ASSISTANCE. New Code section 249A.3(15) provides 13 that an insurance policy or annuity purchased to fund an 14 irrevocable purchase agreement to furnish cemetery and funeral 15 merchandise, funeral services, or a combination thereof as 16 provided in Code chapter 523A, which is owned or assigned 17 to a seller or provider and in which the department of 18 human services is designated as the primary beneficiary, is 19 excluded as a resource for determining eligibility for medical 20 assistance under Code chapter 249A. For purposes of this 21 provision, a “seller” is a person doing business in this state, 22 including one who sells insurance, who sells or offers to 23 furnish cemetery and funeral merchandise, funeral services, or 24 a combination of those products on a preneed basis. 25 UNIFORM SECURITIES ACT (BLUE SKY LAW). Code section 26 502.412(3) is amended to increase the amount of the 27 disciplinary penalty for registrants that the administrator 28 (commissioner of insurance or the commissioner’s deputy) can 29 impose for a violation of the Code chapter from a maximum of 30 $5,000 to $10,000 for a single violation, and from $500,000 to 31 $1 million for more than one violation, or in such amount as 32 agreed to by the parties. 33 Code section 502.604(4) is amended to increase the amount 34 of a civil penalty the administrator can impose against a 35 -16- LSB 1265DP (5) 85 av/nh 16/ 23

S.F. _____ H.F. _____ person for engaging in an act, practice, or course of business 1 in violation of the Code chapter from a maximum of $5,000 to 2 $10,000 for a single violation, and from $500,000 to $1 million 3 for more than one violation, or in an amount agreed to by the 4 parties. 5 New Code section 502.604(5A) provides that a person 6 who fails to obey a valid cease and desist order issued by 7 the administrator may be subject to a civil penalty in an 8 amount of not less than $1,000 and not more than $10,000 for 9 violating the order. Each day the failure to obey continues 10 constitutes a separate violation. The penalties provided in 11 this subsection are in addition to, and not exclusive of other 12 remedies that may be available. 13 INSURANCE DIVISION. Code section 505.8(10) is amended to 14 allow the commissioner to assess the costs of the examination 15 of a regulated entity necessary to accomplish compliance with 16 the insurance laws of this state. 17 DOMESTIC INSURANCE COMPANIES. New Code section 506.14 18 provides that any plan for the voluntary dissolution of a 19 domestic mutual insurance company licensed in this state shall 20 be presented for approval by the commissioner not less than 90 21 days prior to notice of the plan to the policyholders. The 22 commissioner must approve the plan if it complies with all 23 applicable laws and is fair and equitable to the company and to 24 its policyholders. 25 EXAMINATION OF INSURANCE COMPANIES. Code section 26 507.10(4)(a) is amended to allow the board of directors of 27 an insurance company to signal that each member has reviewed 28 an examination report with a notation in the board’s meeting 29 minutes instead of by filing affidavits indicating that each 30 member has received a copy of the report. 31 INSURANCE TRADE PRACTICES. New Code section 507B.4(3)(t) 32 makes it an unfair or deceptive act or practice in the business 33 of insurance to fail to refund premiums paid for a Medicare 34 supplement policy after the effective date of a subsequently 35 -17- LSB 1265DP (5) 85 av/nh 17/ 23

S.F. _____ H.F. _____ purchased Medicare advantage plan if the insurer has no 1 exposure to pay benefits under the Medicare supplement policy 2 during the time that both the supplement policy and the 3 advantage plan are in effect. 4 INSURERS SUPERVISION, REHABILITATION, AND LIQUIDATION. 5 New Code section 507C.17A contains provisions that apply in 6 accordance with the federal Dodd-Frank Wall Street Reform and 7 Consumer Protection Act to a domestic insurer that is a covered 8 financial company, as that term is defined in federal law. 9 The bill provides that the commissioner of insurance may 10 file a petition in the state district court for an order of 11 rehabilitation or liquidation of such a domestic insurer upon 12 receiving notice from the secretary of the treasury of the 13 United States that the insurer acquiesces or consents to the 14 appointment of a receiver; upon an order of the United States 15 district court for the District of Columbia as to that insurer; 16 or when a petition of the secretary of the treasury of the 17 United States concerning the insurer is granted by operation 18 of law. 19 Notwithstanding any other provision of law to the contrary, 20 the state district court, after notice to the insurer, may 21 grant an order on such a petition within 24 hours after the 22 filing of the petition. If the district court does not make a 23 determination on the petition within 24 hours of its filing, 24 the order is deemed granted by operation of law upon expiration 25 of the 24-hour period. 26 At the time an order is deemed granted, the provisions of 27 Code chapter 507C are deemed to be in effect, the commissioner 28 is deemed to be affirmed as the receiver and to have all of 29 the applicable powers provided by Code chapter 507C, and the 30 state district court must expeditiously enter an order of 31 rehabilitation or liquidation. An order of rehabilitation or 32 liquidation made pursuant to the provisions of the bill is not 33 subject to a stay or injunction pending appeal. 34 This provision is effective upon enactment. 35 -18- LSB 1265DP (5) 85 av/nh 18/ 23