S.F. _____ H.F. _____ Section 1. NEW SECTION . 515J.1 Title. 1 This chapter shall be known and may be cited as the “Iowa 2 Private Flood Insurance Act” . 3 Sec. 2. NEW SECTION . 515J.2 Purpose. 4 The purpose of this chapter is to foster innovation in 5 private flood insurance, allow insurers to test private flood 6 insurance products in the market, and to provide consumers with 7 more flood insurance options. 8 Sec. 3. NEW SECTION . 515J.3 Definitions. 9 For purposes of this chapter, unless the context otherwise 10 requires: 11 1. “Advisory organization” means an organization that 12 develops and files advisory loss costs and standard policy 13 forms, and provides other services for property liability 14 insurers, regulators, and others. 15 2. “Commissioner” means the commissioner of insurance. 16 3. “Eligible surplus lines insurer” means the same as 17 defined in section 515I.2. 18 4. “Flood” means a general and temporary condition of 19 partial or complete inundation of two or more acres of normally 20 dry land area, or of two or more properties, at least one of 21 which is the policyholder’s property, caused by any of the 22 following: 23 a. The overflow of inland, tidal, or boundary waters. 24 b. The unusual and rapid accumulation or runoff of surface 25 waters from any source. 26 c. Mudflow. 27 d. Collapse or subsidence of land along the shore of a 28 lake, river, or similar body of water as a result of erosion 29 or undermining caused by waves or currents of water exceeding 30 anticipated cyclical levels. 31 5. “Flood insurance rate map” means the official map of a 32 community on which the federal emergency management agency 33 has delineated the special flood hazard areas, the base flood 34 elevations, and the risk premium zones applicable to the 35 -1- LSB 1337XD (7) 89 ko/rn 1/ 13

S.F. _____ H.F. _____ community. 1 6. “Forms” means policies, applications, and amendments to 2 policies or applications, used in connection with the sale of 3 private flood insurance under this chapter. 4 7. “Insurance producer” means the same as defined in section 5 522B.1. 6 8. “Insurer” means any person authorized by the commissioner 7 to engage in the business of insurance in this state. 8 9. “Mudflow” means a river of liquid and flowing mud on the 9 surfaces of normally dry land areas, as when earth is carried 10 by a current of water. “Mudflow” shall not include other earth 11 movements such as landslide, slope failure, or a saturated soil 12 mass moving by liquidity down a slope. 13 10. “National flood insurance program” means the program 14 authorized under the National Flood Insurance Act of 1968, as 15 amended, Pub. L. No. 90-48, 42 U.S.C. §4001 et seq. 16 11. “Non-standard flood insurance” means a private flood 17 insurance policy that does not meet the definition of “standard 18 flood insurance” as defined in this section. 19 12. “Policy” means an insurance policy, an insurance 20 contract, or an insurance endorsement. 21 13. “Policyholder” means a person who is identified as 22 the legal owner of an insurance policy under the terms of the 23 policy, or who is otherwise vested with legal title to the 24 policy through a valid assignment completed in accordance 25 with the terms of the policy and is properly recorded as the 26 legal owner of the policy in the records of the insurer. 27 “Policyholder” does not include a person who has a mere 28 beneficial interest in an insurance policy. 29 14. “Private flood insurance” means a personal lines policy 30 or a commercial policy issued by an insurer to provide coverage 31 to the policyholder for the peril of flood. 32 15. “Special flood hazard area” means an area having special 33 flood, mudflow, or flood-related erosion hazards as shown on a 34 flood insurance rate map. 35 -2- LSB 1337XD (7) 89 ko/rn 2/ 13

S.F. _____ H.F. _____ 16. “Standard flood insurance” means a private flood 1 insurance policy that provides coverage that is at least 2 equivalent to the coverage provided under a standard flood 3 insurance policy issued under the national flood insurance 4 program for the same type of property, including when 5 considering deductibles, exclusions, and conditions offered by 6 the insurer. 7 Sec. 4. NEW SECTION . 515J.4 Standard flood insurance. 8 Standard flood insurance written by an insurer must meet all 9 of the following requirements: 10 1. The policy must contain a provision that advises the 11 policyholder of the availability of flood insurance coverage 12 under the national flood insurance program. 13 2. The policy must contain a mortgage interest clause 14 substantially similar to the mortgage interest clause in a 15 standard flood insurance policy issued under the national flood 16 insurance program. 17 3. The policy must contain a provision that allows the 18 policyholder to file suit not later than one calendar year 19 after the date of a written denial of all or part of a claim 20 made by the policyholder under the policy. The provision must 21 state that if the policyholder files a complaint with the 22 division prior to one calendar year after the date of a written 23 denial of all or part of a claim, the one calendar year in which 24 the policyholder may file suit shall commence on the first day 25 following the date on which the division closes the complaint. 26 4. The policy must contain cancellation provisions that are 27 as restrictive as the cancellation provisions in a standard 28 flood insurance policy issued under the national flood 29 insurance program. 30 5. All deductibles and policy limits must be prominently 31 displayed in a minimum ten point type on the policy 32 declarations page, or on the face page of the policy. 33 Sec. 5. NEW SECTION . 515J.5 Non-standard flood insurance. 34 An insurer may issue non-standard flood insurance that: 35 -3- LSB 1337XD (7) 89 ko/rn 3/ 13

S.F. _____ H.F. _____ 1. Provides supplemental flood insurance to a standard 1 flood insurance policy issued under the national flood 2 insurance program, or to standard flood insurance issued 3 pursuant to section 515J.4. 4 2. Defines “flood” more broadly than the term is defined in 5 section 515J.3. 6 3. Does not meet the requirements for discretionary 7 acceptance under 12 C.F.R. §208.25(c)(3)(iii)(A-D). 8 Sec. 6. NEW SECTION . 515J.6 Rate filings. 9 An admitted insurer that writes private flood insurance 10 pursuant to this chapter shall establish and file rates in 11 compliance with all applicable provisions of section 515F.5. 12 Sec. 7. NEW SECTION . 515J.7 Form filings —— prior approval. 13 1. An admitted insurer that writes private flood insurance 14 pursuant to this chapter shall file with the commissioner a 15 copy of all forms at least thirty calendar days prior to the 16 effective date of each form. Private flood insurance shall not 17 be issued or delivered to any person in this state until all 18 forms have been approved by the commissioner. 19 2. The commissioner may at any time review an insurer’s 20 forms, records of an insurer pertinent to the forms, and 21 relevant market conditions. The commissioner may disapprove 22 a form at any time and shall notify the insurer of the 23 disapproval. The commissioner may require an insurer to 24 provide, at the insurer’s expense, all information deemed 25 necessary by the commissioner to review a form. Within 26 sixty calendar days of notification by the commissioner of 27 disapproval of a form, the insurer shall file all information 28 with the commissioner that establishes that the form is in 29 compliance with this chapter and other applicable laws. The 30 insurer shall bear the burden of proving by a preponderance of 31 the evidence that a form complies with this chapter and other 32 applicable laws. Pursuant to section 515.152, an insurer may 33 appeal a final determination of the commissioner. 34 3. An advisory organization may file forms, in compliance 35 -4- LSB 1337XD (7) 89 ko/rn 4/ 13

S.F. _____ H.F. _____ with subsection 1, on behalf of an insurer. If upon 1 preliminary review, the commissioner finds that a form does 2 not comply with this chapter or other applicable laws, the 3 commissioner shall disapprove the form and notify the advisory 4 organization that filed the form. Within sixty calendar 5 days of notification by the commissioner of disapproval of a 6 form, the advisory organization shall file all information 7 with the commissioner that establishes that the form is 8 in compliance with this chapter and other applicable laws. 9 The advisory organization shall bear the burden of proving 10 by a preponderance of the evidence that a form complies 11 with this chapter and other applicable laws. Pursuant to 12 section 515.152, an advisory organization may appeal a final 13 determination of the commissioner. 14 4. All form filings shall be confidential until the 15 effective date of the form. After the effective date of a 16 form, the form shall be posted on the division’s internet site 17 and available to the public. 18 Sec. 8. NEW SECTION . 515J.8 Continuity of coverage —— 19 notification to applicants. 20 1. An insurance producer shall provide a written notice 21 to an applicant for private flood insurance whose property is 22 located in a special flood hazard area and is covered by flood 23 insurance issued under the national flood insurance program 24 before the insurance producer places private flood insurance 25 with an insurer or with an eligible surplus lines insurer for 26 the applicant’s property. The notice must advise the applicant 27 that if the applicant discontinues flood insurance under the 28 national flood insurance program, and later wants to reinstate 29 coverage under the program, the applicant may be charged the 30 full-risk rate and no longer qualify for a subsidized rate 31 under the national flood insurance program. 32 2. An insurance producer, and an insurer or an eligible 33 surplus lines insurer with whom the insurance producer places 34 private flood insurance, shall retain a copy of the notice 35 -5- LSB 1337XD (7) 89 ko/rn 5/ 13

S.F. _____ H.F. _____ under subsection 1 for a minimum of five years. 1 Sec. 9. NEW SECTION . 515J.9 Surplus lines —— private flood 2 insurance. 3 If after conducting a diligent search a surplus lines 4 producer confirms that the full amount of private flood 5 insurance, or a specific type of private flood insurance, 6 cannot be obtained from an insurer, the surplus lines producer 7 may place a policy providing flood coverage with an eligible 8 surplus lines insurer. The surplus lines producer and the 9 eligible surplus lines insurer must each comply with the 10 applicable provisions of chapter 515I. 11 Sec. 10. NEW SECTION . 515J.10 Policy certification. 12 1. An insurer that writes private flood insurance under 13 this chapter may certify that private flood insurance issued 14 by the insurer meets or exceeds flood coverage provided under 15 the national flood insurance program by including the following 16 language on a declarations page or other policy documentation 17 provided to a policyholder: 18 This policy meets the definition of “private flood insurance” 19 contained in 42 U.S.C. §4012a(b)(7) and the corresponding 20 regulations. 21 2. An insurer may reference a certification pursuant to 22 subsection 1 in marketing materials, or in communications with 23 insurance producers, lending institutions, policyholders, or 24 prospective policyholders. 25 Sec. 11. NEW SECTION . 515J.11 Notice of renewal. 26 1. If an insurer offers to renew private flood insurance 27 that has a term of one year or less, the insurer shall provide 28 the policyholder with a notice that states the renewal terms, 29 the renewal premium, and the renewal premium due date at least 30 forty-five calendar days before the expiration date of the 31 private flood insurance. 32 2. If an insurer offers to renew private flood insurance 33 that has a term of more than one year, or an indefinite term, 34 the insurer shall provide the policyholder with a notice that 35 -6- LSB 1337XD (7) 89 ko/rn 6/ 13

S.F. _____ H.F. _____ states the renewal terms, the renewal premium, and the renewal 1 premium due date at least forty-five calendar days before the 2 anniversary date of the private flood insurance. 3 3. If notice is required pursuant to subsection 1 or 2, the 4 notice must be in writing and shall be sent to the policyholder 5 or to the broker of record at the policyholder’s or broker’s 6 last known mailing address or electronic mail address on file 7 with the insurer. All notices and documents that are delivered 8 by electronic means shall comply with the applicable provisions 9 of chapter 505B. 10 4. If an insurer fails to comply with the forty-five 11 calendar day notice requirement under subsection 1 or 2, a 12 policyholder or a broker of record may elect, within forty-five 13 calendar days following the receipt of notice, to cancel the 14 renewal policy. Earned premium for any period of coverage 15 during the forty-five calendar day period shall be calculated 16 pro rata based upon the premium applicable to the original 17 private flood insurance policy 18 Sec. 12. NEW SECTION . 515J.12 Cancellation or nonrenewal. 19 1. Standard flood insurance shall only be canceled by an 20 insurer pursuant to the cancellation provisions in section 21 515J.4, subsection 4. 22 2. Written notice of cancellation or nonrenewal of private 23 flood insurance, other than standard flood insurance, shall 24 be given by the insurer a minimum of forty-five calendar days 25 before the date of cancellation or nonrenewal, and shall be 26 given to each of the following: 27 a. The policyholder. 28 b. The federally insured institution that made the 29 designated loan secured by the property covered by the private 30 flood insurance, or to the servicer acting on the federally 31 insured institution’s behalf. 32 3. A notice under subsection 2 must: 33 a. State the date that the private flood insurance is 34 canceled or not renewed, and the date shall be no sooner 35 -7- LSB 1337XD (7) 89 ko/rn 7/ 13

S.F. _____ H.F. _____ than forty-five calendar days from the date of the notice of 1 cancellation or nonrenewal. 2 b. Advise the policyholder of the policyholder’s right 3 to request that the division review the cancellation or 4 nonrenewal. 5 c. Be filed with the commissioner subject to the use and 6 file requirements. 7 d. Be in writing and shall be sent to the policyholder and 8 to the federally insured institution at the policyholder’s and 9 the federally insured institution’s last known mailing address 10 or electronic mail address on file with the insurer. All 11 notices and documents that are delivered by electronic means 12 shall comply with the applicable provisions of chapter 505B. 13 Sec. 13. NEW SECTION . 515J.13 Unfair acts and deceptive 14 practices. 15 An insurer or an insurance producer that knowingly does any 16 of the following commits an unfair or deceptive act or practice 17 pursuant to section 507B.4, subsection 3, and shall be subject 18 to orders and penalties under chapter 507B: 19 1. Misrepresents a private flood insurance policy as 20 certified pursuant to section 515J.10, subsection 1. 21 2. Misrepresents the scope of coverage of private flood 22 insurance in marketing materials or an advertisement, or 23 in any communication with an insurance producer, a lending 24 institution, a policyholder, or a prospective policyholder. 25 Sec. 14. NEW SECTION . 515J.14 Writing private flood 26 insurance —— miscellaneous requirements. 27 1. At least thirty calendar days prior to writing private 28 flood insurance, an admitted insurer shall, pursuant to rules 29 adopted by the commissioner: 30 a. Notify the commissioner of the insurer’s intent to write 31 private flood insurance. 32 b. File a plan of operation and financial projections, or 33 revisions to a plan of operation and financial projections, 34 with the commissioner. 35 -8- LSB 1337XD (7) 89 ko/rn 8/ 13

S.F. _____ H.F. _____ 2. An insurer writing private flood insurance shall comply 1 with all applicable requirements of Title XIII, subtitle 1. 2 3. An insurer writing private flood insurance is subject to 3 examination pursuant to chapter 507. 4 4. An insurer writing private flood insurance shall 5 notify the commissioner, pursuant to rules adopted by the 6 commissioner, within forty-five calendar days of exiting the 7 private flood insurance market. 8 Sec. 15. NEW SECTION . 515J.15 Nondiscrimination. 9 1. An insurer shall not refuse to issue private flood 10 insurance, cancel private flood insurance, or refuse to 11 renew private flood insurance based on an applicant’s or a 12 policyholder’s status related to any of the following: 13 a. Age. 14 b. Sex. 15 c. Race. 16 d. Color. 17 e. Religion. 18 f. National origin. 19 g. Marital status. 20 h. Income level. 21 i. Occupation. 22 j. Military status. 23 k. Creed. 24 2. This section shall not prohibit an insurer from limiting 25 the issuance of private flood insurance under this chapter 26 to individuals who have engaged in, or are engaged in, a 27 particular profession or occupation. 28 3. An insurer may refuse to issue or to renew private flood 29 insurance based on a property’s exposure to flood. 30 Sec. 16. NEW SECTION . 515J.16 Rules. 31 The commissioner may adopt rules pursuant to chapter 17A as 32 necessary to administer this chapter. 33 Sec. 17. FUTURE REPEAL. Section 515J.8, subsection 1, is 34 repealed effective thirty calendar days after enactment of 35 -9- LSB 1337XD (7) 89 ko/rn 9/ 13

S.F. _____ H.F. _____ federal legislation mandating that for purposes of applying 1 any statutory, regulatory, or administrative continuous 2 coverage requirement, including under 42 U.S.C. §4014(g), the 3 administrator of the federal emergency management agency shall 4 consider any period during which a property was continuously 5 covered by flood insurance, either through the national flood 6 insurance program or the private market, that was used to 7 satisfy the requirements under 42 U.S.C. §4012a(a) to be a 8 period of continuous coverage. The commissioner of insurance 9 shall notify the Iowa Code editor upon the occurrence of this 10 condition. 11 Sec. 18. APPLICABILITY. 12 1. This Act applies sixty calendar days after the date 13 of enactment to private flood insurance initially delivered, 14 issued for delivery, continued, or renewed in this state on or 15 after the date of enactment. 16 2. This Act applies one hundred eighty calendar days after 17 the date of enactment to private flood insurance that has been 18 initially delivered, issued for delivery, continued, or renewed 19 in this state prior to the date of enactment. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 This bill establishes the “Iowa Private Flood Insurance Act” 24 to foster innovation in private flood insurance, allow insurers 25 to test private flood insurance products in the market, and to 26 provide consumers with more flood insurance options. 27 “Private flood insurance” is defined in the bill as a 28 personal lines or commercial policy issued by an insurer to 29 provide coverage to the policyholder for the peril of flood. 30 “Flood” is also defined in the bill. 31 The bill permits insurers to write standard flood insurance 32 if the policy advises the policyholder of the availability of 33 flood insurance coverage under the national flood insurance 34 program (NFIP), it contains a mortgage interest clause 35 -10- LSB 1337XD (7) 89 ko/rn 10/ 13

S.F. _____ H.F. _____ substantially similar to the mortgage interest clause in a 1 standard flood insurance policy (SFIP) issued under the NFIP, 2 it advises the policyholder of the process for filing suit 3 over a denied claim, it contains cancellation provisions as 4 restrictive as the cancellation provisions in an SFIP issued 5 under the NFIP, and all deductibles and policy limits are 6 prominently displayed on the policy declarations page or the 7 face page of the policy. “Standard flood insurance policy” is 8 defined in the bill as a private flood insurance policy that 9 provides coverage that is at least equivalent to the coverage 10 provided under a standard flood insurance policy issued under 11 the national flood insurance program for the same type of 12 property, including when considering deductibles, exclusions, 13 and conditions offered by the insurer. 14 The bill also permits insurers to issue non-standard flood 15 insurance that provides supplemental flood insurance to an SFIP 16 issued under the NFIP or to standard flood insurance issued by 17 an insurer under the bill; or that defines “flood” more broadly 18 than the term is defined in the bill; or that does not meet 19 the requirements for discretionary acceptance under 12 C.F.R. 20 §208.25(c)(3)(iii)(A-D). 21 An admitted insurer that writes private flood insurance must 22 establish and file rates in compliance with all applicable 23 provisions of Code chapter 515F and, as detailed in the bill, 24 receive prior approval from the commissioner of insurance 25 (commissioner) on form filings. 26 An insurance producer must provide a written notice to 27 an applicant for private flood insurance whose property is 28 located in a special flood hazard area and is covered by flood 29 insurance under the NFIP before the producer places private 30 flood insurance with an insurer or an eligible surplus lines 31 insurer for the applicant’s property. “Special flood hazard 32 area” is defined in the bill. The notice must advise the 33 applicant that if the applicant discontinues flood coverage 34 under the NFIP and later wants to reinstate coverage, the 35 -11- LSB 1337XD (7) 89 ko/rn 11/ 13

S.F. _____ H.F. _____ applicant may be charged the full-risk rate and no longer 1 qualify for a subsidized rate under the NFIP. Under the bill, 2 this requirement is repealed effective 30 calendar days after 3 enactment of federal legislation mandating that for purposes 4 of applying any statutory, regulatory, or administrative 5 continuous coverage requirement, including under 42 U.S.C. 6 §4014(g), the administrator of the federal emergency management 7 agency must consider any period during which a property was 8 continuously covered by flood insurance, either through the 9 NFIP or the private market, that was used to satisfy the 10 requirements under 42 U.S.C. §4012a(a) to be a period of 11 continuous coverage. The commissioner is required to notify 12 the Iowa Code editor upon the occurrence of this condition. 13 The bill permits a surplus lines producer, after conducting 14 a diligent search that confirms that the full amount of private 15 flood insurance, or a specific type of private flood insurance, 16 cannot be obtained from an insurer, to place a policy providing 17 flood coverage with an eligible surplus lines insurer. The 18 bill requires the surplus lines producer and the eligible 19 surplus lines insurer to comply with the applicable provisions 20 of Code chapter 515I. 21 An insurer that writes private flood insurance may certify 22 that a policy issued by the insurer meets or exceeds flood 23 coverage provided under the NFIP by including language as 24 specified in the bill on a declarations page or other policy 25 documentation provided to a policyholder. The insurer may 26 reference the certification in marketing materials, and 27 communications with insurance producers, lending institutions, 28 policyholders, and prospective policyholders. 29 The requirements for renewal, nonrenewal, and cancellation 30 of private flood insurance are detailed in the bill. 31 An insurer or an insurance producer that knowingly 32 misrepresents a policy as being certified, or misrepresents 33 the scope of coverage of private flood insurance in marketing 34 materials, advertisements, or in a communication with an 35 -12- LSB 1337XD (7) 89 ko/rn 12/ 13

S.F. _____ H.F. _____ insurance producer, a lending institution, a policyholder, or 1 a prospective policyholder commits an unfair or deceptive act 2 or practice, and is subject to orders and penalties under Code 3 chapter 507B. 4 The bill requires that an admitted insurer, at least 30 5 days prior to writing private flood insurance, notifies the 6 commissioner and files a plan of operation and financial 7 projections. An insurer must also notify the commissioner 8 within 45 days of exiting the private flood insurance market. 9 An insurer that writes private flood insurance must comply with 10 all applicable requirements of Code Title XIII, subtitle 1, and 11 is subject to examination pursuant to Code chapter 507. 12 The bill prohibits an insurer from refusing to issue or 13 renew private flood insurance, or from canceling private 14 flood insurance, based on an applicant’s or a policyholder’s 15 age, sex, race, color, religion, national origin, marital 16 status, income level, occupation, military status, or creed. 17 An insurer may, however, limit the issuance of private flood 18 insurance to individuals who have engaged in, or are engaged 19 in, a particular profession or occupation, and may refuse to 20 issue or renew private flood insurance due to a property’s 21 exposure to flood. 22 The commissioner may adopt rules pursuant to Code chapter 23 17A as necessary to administer the bill. 24 The bill applies 60 calendar days after the date of enactment 25 to private flood insurance initially delivered, issued for 26 delivery, continued, or renewed in this state on or after the 27 date of enactment. The bill applies 180 calendar days after 28 the date of enactment to private flood insurance that has been 29 initially delivered, issued for delivery, continued, or renewed 30 in this state prior to the date of enactment. 31 -13- LSB 1337XD (7) 89 ko/rn 13/ 13