HF 911 (LSB 1437HV (2) 91)

HOUSE FILE 911

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 256)

A BILL FOR

An Act relating to matters under the purview of the department of insurance and financial services including financial literacy and exploitation, tax confidentiality, health insurance rates, health savings accounts, insurer withdrawals, property insurance, and service contracts, and including penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
FINANCIAL LITERACY AND FINANCIAL EXPLOITATION

    Section 1.  Section 502.410, subsection 2, Code 2025, is amended to read as follows:
   2.  Agents.  The fee for an individual is forty dollars when filing an application for registration as an agent, a fee of forty dollars when filing a renewal of registration as an agent, and a fee of forty dollars when filing for a change of registration as an agent. Of each forty-dollar fee collected, ten dollars is appropriated to the securities investor education and financial literacy training fund established under financial literacy and investor education fund created in section 502.601, subsection 5 546.14, and ten dollars is appropriated to the financial exploitation prevention fund created in section 546.15. If the filing results in a denial or withdrawal, the administrator shall retain the fee.
    Sec. 2.  Section 502.601, subsection 4, Code 2025, is amended by striking the subsection and inserting in lieu thereof the following:
   4.  Financial literacy and investor education.  Initiatives involving financial literacy and investor education shall comply with the initiatives in section 546.14, subsection 1, and section 546.15, subsection 1.
    Sec. 3.  Section 502.601, subsection 5, Code 2025, is amended by striking the subsection.
    Sec. 4.  Section 505.7, subsection 3, Code 2025, is amended to read as follows:
   3.  Forty percent of the nonexamination Nonexamination revenues payable to the division of insurance or the department of revenue in connection with the regulation of insurance companies or other entities subject to the regulatory jurisdiction of the division shall be deposited in the commerce revolving fund created in section 546.12 and shall be subject to annual appropriation to the division for its operations and is also subject to expenditure under subsection 6. The remaining nonexamination revenues payable to the division of insurance or the department of revenue shall be deposited in the general fund of the state.
    Sec. 5.  Section 546.2, subsection 4, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  g.  To identify and coordinate appropriate opportunities for collaboration under sections 546.14 and 546.15 with the chief administrative officers of each division and each chief administrative officer’s respective regulated entities.
    Sec. 6.  NEW SECTION.  546.14  Financial literacy and investor education fund.
   1.  The director shall develop and implement financial literacy and investor education initiatives for the public by providing education on financial topics, including but not limited to the topics required to be offered and taught for grades nine through twelve under section 256.11, subsection 5, paragraph “k”, subparagraph (1).
   2.  A financial literacy and investor education fund is created in the state treasury under the control of the director for the purposes specified in subsection 1. The fund shall consist of any moneys appropriated to the fund by the general assembly and any other moneys available and obtained or accepted by the department for placement in the fund including all of the following:
   a.  Moneys appropriated to the fund pursuant to section 502.410, subsection 2.
   b.  Notwithstanding any provision of law to the contrary, the director may, at the director’s discretion, transfer up to two hundred fifty thousand dollars from the commerce revolving fund created in section 546.12 to complete the objectives under subsection 1.
   c.  Notwithstanding any provision of law to the contrary, any moneys received by the department by reason of civil penalties assessed pursuant to chapter 502 may be deposited in the financial literacy and investor education fund at the discretion of the director.
   d.  The director may collaborate with organizations with an interest in financial literacy and investor education. The director may accept a grant or donation to be placed in the financial literacy and investor education fund.
   3.  Notwithstanding any provision of law to the contrary, moneys in the financial literacy and investor education fund may be transferred to the financial exploitation prevention fund in section 546.15 at the discretion of the director.
   4.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund. Notwithstanding section 8.33, moneys appropriated in this section that remain unencumbered or unobligated at the close of a fiscal year shall not revert but shall remain available for expenditure for the purposes designated.
    Sec. 7.  NEW SECTION.  546.15  Financial exploitation prevention fund.
   1.  The director shall develop and implement initiatives to accomplish all of the following:
   a.  Educate the public on financial exploitation.
   b.  Assist individuals who are known, suspected, or potential victims of financial exploitation.
   c.  Conduct investigations, refer investigations to other law enforcement, and assist in the prosecution of persons involved in financial exploitation.
   2.  A financial exploitation prevention fund is created in the state treasury under the control of the director and consists of any moneys appropriated to the fund by the general assembly for the purposes of subsection 1, and any other moneys available and obtained or accepted by the department for placement in the fund including all of the following:
   a.  Moneys appropriated to the fund pursuant to section 502.410, subsection 2.
   b.  Notwithstanding any provision of law to the contrary, the director may, at the director’s discretion, transfer up to two hundred fifty thousand dollars from the commerce revolving fund to complete the objectives of this section.
   c.  Notwithstanding any provision of law to the contrary, any moneys received by the department as a result of civil penalties assessed pursuant to chapter 502 may be placed into the financial exploitation prevention fund at the discretion of the director.
   d.  The director may collaborate with organizations with an interest in financial exploitation prevention and education. 
   e.  The director may accept a grant or donation to be placed in the financial exploitation prevention fund.
   3.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund. Notwithstanding section 8.33, moneys appropriated in this section that remain unencumbered or unobligated at the close of a fiscal year shall not revert but shall remain available for expenditure for the purposes designated.
   4.  a.  All investigation files, investigation reports, and all other investigative information in the possession of the department pursuant to this section shall be confidential records under chapter 22, except as specifically provided in this section, and shall not be subject to release by discovery, subpoena, or other means of legal compulsion until opened for public inspection by the department, or upon the consent of the department, or until a court of competent jurisdiction determines, after notice to the department and hearing, that the department will not be unnecessarily hindered in accomplishing the purposes of this section if opened for public inspection. Investigative information in the possession of the department may be disclosed, in the director’s discretion, to appropriate regulatory or law enforcement agencies within the state, another state, the District of Columbia, or another territory or country.
   b.  The director may share documents, materials, or other information, including confidential and privileged documents, materials, or other information, with any person provided that the recipient agrees to maintain the confidential and privileged status of the document, material, or other information pursuant to Iowa law.
   c.  The director may receive documents, materials, or other information, including confidential and privileged documents, materials, or other information from any person and shall maintain as confidential and privileged any document, material, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or other information.
   d.  The director may enter into an agreement governing the sharing and use of documents, materials, or other information consistent with this section.
   e.  An investigator or other staff member of the department shall not be subject to subpoena in a civil action concerning any matter of which the department investigator or other staff member has knowledge pursuant to a pending or continuing investigation conducted by the department pursuant to this chapter.
    Sec. 8.  TRANSFER OF MONEYS.  On the effective date of this division of this Act, any unencumbered and unobligated moneys remaining in the securities investor education and financial literacy training fund created in section 502.601 shall be transferred to the financial literacy and investor education fund created in section 546.14, as enacted in this division of this Act.
DIVISION II
TAX ON GROSS PREMIUMS —— CONFIDENTIALITY

    Sec. 9.  Section 432.1, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  7.  a.  A tax return filed under this section shall not be subject to inspection under chapter 22. It shall be unlawful for any present or former officer or employee of the state to willfully or recklessly publish any tax return filed under this section. A person who violates this paragraph shall be guilty of a serious misdemeanor and, in addition to any other penalty, shall be dismissed from state office or discharged from state employment.
   b.  This section shall not be construed to prohibit the department of revenue from turning over information and tax returns in the department of revenue’s possession pursuant to this subsection to duly authorized officers of the United States, or tax officials of other states, pursuant to an agreement between the commissioner of insurance and any of the following:
   (1)  The secretary of the treasury of the United States, or the secretary’s delegate.
   (2)  The commissioner of insurance of another state.
    Sec. 10.  Section 432.1A, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  8.  a.  A tax return filed under this section shall not be subject to inspection under chapter 22. It shall be unlawful for any present or former officer or employee of the state to willfully or recklessly publish any tax return filed under this section. A person who violates this paragraph shall be guilty of a serious misdemeanor and, in addition to any other penalty, shall be dismissed from state office or discharged from state employment.
   b.  This section shall not be construed to prohibit the department of revenue from turning over information and tax returns in the department’s possession pursuant to this subsection to duly authorized officers of the United States, or tax officials of other states, pursuant to an agreement between the commissioner of insurance and any of the following:
   (1)  The secretary of the treasury of the United States, or the secretary’s delegate.
   (2)  The commissioner of insurance of another state.
DIVISION III
HEALTH INSURANCE RATE INCREASES —— PUBLIC HEARINGS

    Sec. 11.  Section 505.19, subsection 2, Code 2025, is amended to read as follows:
   2.  The commissioner shall may hold a public hearing at the time a carrier files for proposed health insurance rate increases exceeding the average annual health spending growth rate as provided in subsection 1, prior to approval or disapproval of the proposed rate increases for that carrier by the commissioner.
DIVISION IV
HEALTH SAVINGS ACCOUNTS AND QUALIFIED HIGH-DEDUCTIBLE HEALTH PLANS —— COST-SHARING

    Sec. 12.  NEW SECTION.  509.3B  Health savings accounts and qualified high-deductible health plans —— cost-sharing.
   If a copayment, coinsurance, or deductible paid as cost-sharing by an enrollee under this chapter may result in the enrollee becoming ineligible for a health savings account associated with the enrollee’s qualified high-deductible health plan under section 223 of the Internal Revenue Code, the cost-sharing shall apply only to the enrollee’s qualified high-deductible health plan after the enrollee satisfies the enrollee’s minimum deductible, except for items or services determined to be preventive care under section 223(c)(2)(C) of the Internal Revenue Code.
    Sec. 13.  NEW SECTION.  514A.3C  Health savings accounts and qualified high-deductible health plans —— cost-sharing.
   If a copayment, coinsurance, or deductible paid as cost-sharing by an enrollee under this chapter may result in the enrollee becoming ineligible for a health savings account associated with the enrollee’s qualified high-deductible health plan under section 223 of the Internal Revenue Code, the cost-sharing shall apply only to the enrollee’s qualified high-deductible health plan after the enrollee satisfies the enrollee’s minimum deductible, except for items or services determined to be preventive care under section 223(c)(2)(C) of the Internal Revenue Code.
DIVISION V
INSURANCE COMPANY WITHDRAWAL REQUIREMENTS

    Sec. 14.  NEW SECTION.  505.36  Insurer —— withdrawal requirements.
   1.  Definitions.  As used in this section, unless the context otherwise requires: 
   a.  “Commissioner” means the commissioner of insurance.
   b.  “Insurer” means an insurance company, an affiliate of an insurance company, or other legal entity authorized to engage in the business of insurance in this state, including a reciprocal exchange, an interinsurance exchange, and a lloyd’s plan. “Insurer” does not include an eligible surplus lines insurer under chapter 515I, a county mutual insurance association under chapter 518, a state mutual insurance association under chapter 518A, an entity offering health coverage, or an entity offering accident and sickness coverage.
   2.  Exemption.  This section shall not apply to a transfer of business from one insurer to another insurer if the insurer to whom the business is being transferred is all of the following:
   a.  Within the same insurance holding company system as the insurer from whom business is being transferred. 
   b.  Authorized to engage in the business of insurance in this state.
   c.  Not a reciprocal or interinsurance exchange, a lloyd’s plan, a state mutual insurance association, or a county mutual insurance association.
   3.  Withdrawal plan required.
   a.  An insurer shall file a withdrawal plan with the commissioner in any of the following circumstances:
   (1)  The insurer intends to reduce the insurer’s total annual premium volume in the state by fifty percent or more.
   (2)  The insurer intends to reduce the insurer’s total annual premium in the state in a line of insurance by seventy-five percent or more.
   (3)  The insurer intends to reduce the insurer’s total annual premium volume in the state in a line of private passenger automobile insurance, homeowners insurance, or dwelling property insurance by fifty percent or more.
   b.  If an insurer intends to restrict writing new business in the state, but not to an extent that requires the insurer to file a plan for orderly withdrawal under paragraph “a”, the insurer shall provide prior written notice to the commissioner of the insurer’s intent to restrict writing new business in the state.
   4.  Withdrawal plan.
   a.  A withdrawal plan filed under this section shall provide for all of the following:
   (1)  The insurer fulfilling all contractual obligations.
   (2)  The insurer providing service to all policyholders and claimants.
   (3)  The insurer meeting all statutory obligations, including but not limited to payment of assessments to the guaranty fund and participation in an assigned risk plan.
   b.  A withdrawal plan filed pursuant to this section shall, at a minimum, include all of the following:
   (1)  The date on which the insurer proposes to commence execution of the withdrawal plan, and the date on which execution of the withdrawal plan will be completed.
   (2)  The reason for withdrawal for each line of insurance.
   (3)  Each policy form by number, and all of the following information:
   (a)  The total number of policyholders.
   (b)  The total amount of premiums impacted for each line of insurance.
   (4)  The total number of insurance producers impacted for each line of insurance.
   (5)  A copy of the notification the insurer will provide to each impacted insurance producer.
   (6)  A copy of the notification or nonrenewal the insurer will provide to each impacted policyholder.
   (7)  Details regarding the insurer’s fulfillment of contractual obligations to the insurer’s policyholders during the withdrawal.
   (8)  Whether replacement coverage will be provided to a policyholder and, if so, the insurer shall provide all of the following:
   (a)  The insurer’s relationship with the replacing insurer.
   (b)  The underwriting requirements and rates that will be used to underwrite the policyholder.
   (9)  An estimate of the percentage of the Iowa market affected by withdrawal.
   (10)  Any third-party contracts that provide for continuity of coverage for policyholders.
   (11)  A list of the lines of insurance that the insurer will continue to offer in the state.
   5.  Commissioner approval.
   a.  Except as provided in paragraph “b”, the commissioner shall approve a withdrawal plan that has been determined to meet all of the following requirements:
   (1)  The withdrawal plan provides a minimum of one hundred eighty calendar days’ notice to the commissioner.
   (2)  The withdrawal plan includes notice to policyholders as required by chapter 515.
   (3)  The withdrawal plan complies with subsection 4.
   b.  If the commissioner finds that a withdrawal plan does not comply with paragraph “a”, the commissioner may modify, restrict, limit, or deny the withdrawal plan.
   c.  An insurer may request a hearing within thirty calendar days of the commissioner’s decision to modify, restrict, limit, or deny the insurer’s withdrawal plan. A hearing under this paragraph shall be held within sixty calendar days of the insurer’s request unless a later date is agreed to by the insurer and the commissioner, or permitted by the commissioner for good cause.
   6.  Resumption of writing insurance after withdrawal.  An insurer that withdraws from writing all lines of insurance in the state shall not, without prior approval of the commissioner, resume writing insurance in the state for a minimum of five years from the date of completion of the insurer’s withdrawal.
   7.  Remedies.  A violation of this section shall constitute an unfair method of competition and unfair or deceptive act or practice under section 507B.4.
   8.  Rules.  The commissioner may adopt rules pursuant to chapter 17A as necessary to administer and enforce this section.
    Sec. 15.  Section 507B.4, subsection 3, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  v.  Improper withdrawal of an insurer.  Failure of an insurer to comply with section 505.36. As used in this paragraph, “insurer” means the same as defined in section 505.36, subsection 1.
DIVISION VI
REPLACEMENT COST, ACTUAL CASH VALUE, AND LINE OF SIGHT

    Sec. 16.  NEW SECTION.  515.116  Line of sight.
   1.  Definitions.  As used in this section, unless the context otherwise requires:
   a.  “Actual cash value” means the replacement cost of property at the time of loss, less depreciation, if any.
   b.  “Line of sight” means any location a reasonable person would stand, on the ground or any floor of an insured’s damaged structure, to view, without obstruction or the use of aerial tools or technology, the damaged area of the interior or exterior of the damaged structure from a reasonable distance. “Line of sight” is not limited to a view of the insured’s damaged structure from the location at which the damage occurred.
   c.  “Reasonable distance” means, for exterior repair or replacement, a vantage point approximately thirty feet from where the repair or replacement is to occur. A “reasonable distance” for interior repair or replacement means a vantage point approximately five feet from where the repair or replacement is to occur. Based on a particular property, “reasonable distance” may be determined to be greater than or less than thirty feet for exterior repair, or greater than or less than five feet for interior repair.
   d.  “Reasonably similar appearance” means if, within a line of sight, a person viewing the repaired or replaced property would find the property to resemble the property’s preloss condition. Whether a replacement results in a reasonably similar appearance is a fact-specific determination made on a case-by-case basis considering the totality of the circumstances.
   e.  “Reasonably similar product” means a product of like kind, quality, color, and size. “Reasonably similar product” does not mean an exact match.
   2.  Replacement cost.  For an insurance policy providing for the adjustment and settlement of first-party losses based on replacement cost, unless the insurance policy, a rider, or an endorsement specifically provides otherwise, all of the following shall apply:
   a.  When a loss requires repair or replacement of a product or part, consequential physical damage incurred during the repair or replacement of the product or part, not otherwise excluded by the policy, shall be included in the calculation of loss. The insured shall not be required to pay for betterment or other costs, except for any applicable deductible.
   b.  When a loss requires replacement of a product and the product to be replaced remains available for purchase, the identical product shall be used to repair or replace the damaged product, even if the undamaged existing product shows discoloration due to age or normal wear and tear. If the identical product is not available for purchase, the insurer shall use a reasonably similar product to achieve a reasonably similar appearance.
   3.  Actual cash value.  For an insurance policy providing for adjustment and settlement of first-party losses based on actual cash value, unless the insurance policy, a rider, or an endorsement specifically provides otherwise, all of the following shall apply:
   a.  For residential fire and extended coverage, the insurer shall determine the actual cash value. The insurer shall provide a copy of the claim file worksheet detailing all deductions for depreciation. Upon request by the insured, the insurer shall provide a detailed written explanation of the manner in which depreciation was calculated.
   b.  Where the insured’s interest is limited because damaged property has nominal or no economic value, or a value disproportionate to replacement cost less depreciation, a determination of actual cash value shall not be required. At the request of the insured, the insurer shall provide a written explanation of the basis for limiting the amount of recovery, the amount payable under the policy, and the manner in which actual cash value was determined.
DIVISION VII
SERVICE COMPANIES, SERVICE CONTRACTS, AND LICENSES

    Sec. 17.  Section 507B.4, subsection 3, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  v.  Service contracts.  Failure of a person in the business of service contracts to comply with chapter 523C.
    Sec. 18.  Section 523C.1, Code 2025, is amended by adding the following new subsections:
   NEW SUBSECTION.  1A.  “Communicating in a verifiable manner” means communication by in-person delivery, email, or, if there is an auditable record of the communication, by telephone.
   NEW SUBSECTION.  6A.  “Person” means an individual or a business entity.
   NEW SUBSECTION.  12A.  “Service contract holder” means the original purchaser of a service contract or the successor in interest or transferee entitled to services under the service contract.
   NEW SUBSECTION.  12B.  “Substitute part” means a part that is not issued by the original part manufacturer, including but not limited to a remanufactured part, an aftermarket part, and a part obtained from a salvage yard.
   NEW SUBSECTION.  12C.  “Support services” means a person that provides services that support, or a person that works under the direction of, a licensed service company in connection with the issuance, offer for sale, sale, or administration of a service contract in this state, including but not limited to a person that provides marketing, administrative, or technical support to a service company.
    Sec. 19.  Section 523C.1, subsection 4, Code 2025, is amended to read as follows:
   4.  “Motor vehicle” means any vehicle that is self-propelled vehicle and subject to registration under chapter 321 or chapter 321I.
    Sec. 20.  Section 523C.2, Code 2025, is amended by striking the section and inserting in lieu thereof the following:
   523C.2  License required.
   1.  A person that shall be contractually obligated to the service contract holder under the terms of the service contract shall not directly or indirectly issue, offer for sale, or sell a motor vehicle service contract or residential service contract in this state unless the person is a licensed service company.
   2.  This chapter shall not apply to any person that provides support services. A service company that utilizes support services shall ensure the support services’ compliance with the issuance, offer for sale, or sale of a service contract under this chapter. 
   3.  A service company shall maintain a license for the duration of time that the service company is contractually obligated to a service contract holder under the terms of a service contract.
   4.  A service company shall report to the commissioner within thirty calendar days any material change to the information submitted by the service company in the service company’s initial license application, or license renewal application, including a change in the service company’s contact information, ownership, officers or directors directly responsible for the provider’s service contract business, or any other change that substantially affects the service company’s operations in the state.
   5.  A service company shall report to the commissioner any administrative action taken against the service company in another jurisdiction within thirty calendar days of the final disposition. The report shall include a copy of the order, consent to the order, and other relevant legal documents.
   6.  Within thirty calendar days of the initial pretrial hearing date, a service company shall report to the commissioner a criminal prosecution in any jurisdiction of an owner with more than a ten percent ownership stake, an officer, or a director directly responsible for the service contract business of the service company, for an offense involving dishonesty or a false statement including but not limited to fraud, theft, misappropriation of funds, falsification of documents, deceptive acts or practices, or other related offenses. The report shall include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents.
    Sec. 21.  Section 523C.3, Code 2025, is amended by striking the section and inserting in lieu thereof the following:
   523C.3  Application for license.
   1.  Application for a license as a service company shall be filed with the commissioner on a form approved by the commissioner and shall include all of the following information:
   a.  The name and principal address of the applicant.
   b.  The state of incorporation of the applicant.
   c.  The name and address of the applicant’s registered agent for service of process in Iowa.
   d.  The legal name of all of the following:
   (1)  Each owner of the service company that has a greater than ten percent ownership stake in the service company.
   (2)  Each officer of the service company.
   (3)  Each director directly responsible for the business of the service company.
   e.  A certificate of good standing for the applicant issued by the secretary of state and dated not more than thirty calendar days from the date of the application.
   f.  Evidence of compliance with section 523C.5.
   g.  A copy of each motor vehicle service contract form to be used, issued, or offered for sale in this state by the service company.
   h.  A copy of each residential service contract form to be used, issued, or offered for sale in this state by the service company.
   i.  A national association of insurance commissioners’ biographical affidavit and the verification of the biographical affidavit for the chief executive officer and chief financial officer of the service company, or for the individuals in the equivalent positions. The service company shall use a third-party vendor from a list of vendors approved by the commissioner to verify the biographical affidavits. The service company shall pay all costs associated with the required verifications.
   j.  A list of any disciplinary actions taken against the service company, or any of the service company’s owners, officers, or directors directly responsible for the provider’s service contract business, in the immediately preceding ten years by a regulatory agency or state attorney general in any jurisdiction.
   2.  The application shall be accompanied by all of the following:
   a.  A license fee in the amount of five hundred dollars.
   b.  A fee in the amount of thirty-five dollars for each motor vehicle service contract form provided pursuant to subsection 1, paragraph “g”.
   3.  If the application for a service company license contains the information under subsection 1, is accompanied by the fees under subsection 2, and the commissioner has not denied the application pursuant to section 523C.9, the commissioner shall issue the license to the applicant.
   4.  Fees collected under this section shall be deposited into the service company oversight fund as provided in section 523C.24.
    Sec. 22.  Section 523C.4, Code 2025, is amended by striking the section and inserting in lieu thereof the following:
   523C.4  License expiration and renewal.
   1.  A license issued under this chapter shall be valid for a period of one year. A license that is not renewed prior to the expiration date shall be deemed expired. Prior to a license expiration date, and if a renewal application was submitted at least fourteen calendar days prior to the license expiration date, the commissioner may extend the renewal period for an additional thirty calendar days.
   2.  An application for license renewal shall include the information required for an initial license as described in section 523C.3, subsection 1, paragraphs “a” through “f”, and a list of each service contract form the service company continues to use, offer for sale, or issue in the state, including the service contract form name, number, and the date the form was last revised.
   3.  The license renewal application shall be accompanied by all of the following:
   a.  A license renewal fee in the amount of two hundred dollars.
   b.  A fee in the amount of three percent of the aggregate amount of payments the service company received for the sale or issuance of residential service contracts in this state during the period beginning on the date the service company’s license was issued until the date of the service company’s renewal filing, provided that such fee shall be no less than one hundred dollars and no greater than fifty thousand dollars.
   c.  A fee in the amount of thirty-five dollars for each motor vehicle service contract form filed with the commissioner that the service company continues to use, offer for sale, or issue in the state.
   d.  The number of motor vehicle service contracts and the number of residential service contracts issued during the immediately preceding calendar year by the service company in this state.
   e.  The number of motor vehicle service contracts and the number of residential service contracts canceled during the immediately preceding calendar year by the service company in this state.
   f.  The total dollar amount of refunds issued to service contract holders by the service company during the immediately preceding calendar year for canceled motor vehicle service contracts in this state, and the total dollar amount of refunds issued to service contract holders by the service company during the immediately preceding calendar year for canceled residential service contracts in this state.
   g.  The total dollar amount of motor vehicle service contract fees, and the total dollar amount of residential service contract fees, collected during the immediately preceding calendar year by the service company for contracts sold in this state.
   h.  The number of claims filed with the service company for motor vehicle service contracts in this state during the immediately preceding calendar year, and the number of claims filed with the service company for residential service contracts in this state during the immediately preceding calendar year.
   i.  The total dollar amount of claims paid by the service company for motor vehicle service contracts sold by the service company in this state during the immediately preceding calendar year, and the total dollar amount of claims paid by the service company for residential service contracts sold by the service company in this state during the immediately preceding calendar year.
   j.  The total number of claims during the immediately preceding calendar year for motor vehicle service contracts in this state that did not result in repair, replacement, payment, or other thing of value to the service contract holder by the service company, and the total number of claims during the immediately preceding calendar year for residential service contracts in this state that did not result in repair, replacement, payment, or other thing of value to the service contract holder by the service company.
   k.  The total number of written complaints regarding motor vehicle service contracts received by the service company during the immediately preceding calendar year, and the total number of written complaints regarding residential service contracts received by the service company during the immediately preceding calendar year, including complaints received directly from a consumer, indirectly on behalf of a consumer from a third party other than a regulatory agency, and from a regulatory agency.
   l.  The number of lawsuits filed by a third party or a regulatory agency, against the service company during the immediately preceding calendar year regarding service contracts issued, offered for sale, or sold by the service company.
   4.  If the license renewal application complies with this section, and the commissioner has not refused to renew the license pursuant to section 523C.9, the commissioner shall renew the license. If the commissioner refuses renewal of a license pursuant to section 523C.9, the refusal shall be in writing setting forth the grounds for the refusal.
   5.  If a service company submits a license renewal application after the license has expired, the service company shall pay a reinstatement fee of eight hundred dollars, and applicable fees pursuant to subsection 3.
   6.  a.  A service company whose license has expired, and is not within an additional thirty-day extension period granted by the commissioner pursuant to section 523C.4, subsection 1, shall not offer, extend, or renew a service contract until the service company’s license has been renewed, or the service company has been issued a new license.
   b.  If, at the time a service contract is issued or sold in this state, the service company has an expired license that is not within an additional thirty-day extension period granted by the commissioner pursuant to section 523C.4, subsection 1, the service contract may be canceled at the discretion of the service contract holder. If a service contract holder chooses to cancel a service contract, the full purchase price of the service contract, less any claims paid, shall be refunded to the service contract holder within thirty calendar days. A ten percent penalty shall be added each month to the refund if the refund is not paid to the service contract holder within the thirty calendar days.
    Sec. 23.  Section 523C.7, Code 2025, is amended by striking the section and inserting in lieu thereof the following:
   523C.7  Disclosure to service contract holders —— contract form —— required provisions.
   1.  A service contract shall not be issued, sold, or offered for sale in this state unless the service company does all of the following:
   a.  Provides a receipt for the purchase of the service contract to the service contract holder.
   b.  Provides a complete sample copy of the service contract to the consumer prior to purchase. A service company may comply with this paragraph by providing the consumer with a complete electronic sample copy of the service contract, or directing the consumer to a complete sample copy of the service contract at an internet site. A paper copy of the sample service contract shall be provided upon the request of the consumer at the expense of the service company.
   c.  Provides a fully executed paper or electronic copy of the service contract to the service contract holder within ten calendar days of the date the service contract holder purchased the service contract. A paper copy of the executed service contract shall be provided to the service contract holder upon request of the service contract holder at the expense of the service company.
   2.  A service contract issued, sold, or offered for sale in the state shall comply with all of the following, as applicable:
   a.  A service contract shall be written in clear, understandable language in at least ten point type.
   b.  (1)  A service contract insured by a reimbursement insurance policy as provided in section 523C.5, subsection 1, shall include a statement in substantially the following form:
Obligations of the service company under this service contract are guaranteed under a reimbursement insurance policy. If the service company fails to pay or provide service on a claim within sixty days after proof of loss has been filed with the service company, the service contract holder is entitled to make a claim directly against the reimbursement insurance policy.

   (2)  A service contract insured by a reimbursement insurance policy shall conspicuously state the name and address of the issuer of the reimbursement insurance policy for that service contract. A claim against a reimbursement insurance policy shall also include a claim for return of any refund due in accordance with paragraphs “m” and “n”.
   c.  A service contract not insured under a reimbursement insurance policy shall contain a statement in substantially the following form:
Obligations of the service company under this service contract are backed by the full faith and credit of the service company and are not guaranteed under a reimbursement insurance policy.

   d.  A service contract shall state the name and address of the service company obligated to perform services under the contract, and shall conspicuously identify the service company, any third-party administrator, and the service contract holder to the extent that the name and address of the service contract holder has been furnished. The identities of such parties shall not be required to be printed on the contract in advance and may be added to the contract at the time of sale.
   e.  A service contract shall clearly state the total purchase price of the service contract and the terms under which the service contract is sold. The total purchase price shall not be required to be printed on the contract in advance and may be added to the contract at the time of sale.
   f.  If prior approval of repair work is required, a service contract shall conspicuously describe the procedure for obtaining prior approval and for making a claim, including a toll-free telephone number for claim service, and the procedure for obtaining emergency repairs performed outside of normal business hours.
   g.  A service contract shall clearly state any waiting period applicable to coverage under the service contract, and the date on which coverage begins.
   h.  A service contract shall clearly state the existence of any deductible amount.
   i.  A service contract shall specify the merchandise or services, or both, to be provided and any limitations, exceptions, or exclusions.
   j.  A service contract shall clearly state the conditions on which the use of substitute parts or services will be allowed. Such conditions shall comply with applicable state and federal laws.
   k.  A service contract shall clearly state any terms, restrictions, or conditions governing the transferability of the service contract.
   l.  A service contract shall clearly state the instructions for cancellation of the service contract by the service contract holder. Cancellation instructions shall include all necessary information for a service contract holder to complete a cancellation. Cancellation instructions shall include the phone number, email address, or mailing address necessary for the cancellation of the service contract, as well as any other information that the service contract holder must use to cancel the contract. A service company shall accept cancellation of a service contract from a service contract holder by telephone, email, or mail, or any other cost-effective and accessible method of communication. The method of cancellation utilized by a service company for the cancellation of a service contract shall be as accessible as the method utilized by the service company for the service contract holder to enter into the service contract.
   m.  A service contract shall clearly state the terms and conditions governing the cancellation of the contract prior to the termination or expiration date of the contract by the service company or the service contract holder. If the service company cancels the contract, the service company shall mail a written notice of termination to the service contract holder at least fifteen calendar days before the date of the termination. Prior notice of cancellation by the service company shall not be required if the reason for cancellation is nonpayment of the purchase price, a material misrepresentation by the service contract holder to the service company or the support services for the service company, or a substantial breach of duty by the service contract holder relating to the covered product or use of the covered product. The notice of cancellation shall state the effective date of the cancellation and the reason for the cancellation. If a service contract is canceled by the service company for any reason other than nonpayment of the purchase price, the service company shall refund the service contract holder in an amount equal to one hundred percent of the unearned purchase price paid, calculated on a pro rata basis based upon elapsed time or mileage, less any claims paid. The service company may also charge a reasonable administrative fee in an amount no greater than ten percent of the total purchase price. A ten percent penalty shall be added each month to the refund if the refund is not paid to the service contract holder within thirty calendar days.
   n.  (1)  A service contract shall permit the original service contract holder who purchased the contract to cancel the service contract within at least thirty calendar days of the effective date of the service contract, provided no claims have been paid under the service contract, or within a longer period of time as permitted under the service contract. If a claim has not been paid under the service contract prior to cancellation by the service contract holder, the service contract is void and the full purchase price of the service contract shall be refunded to the service contract holder. A ten percent penalty shall be added each month to a refund if the refund is not paid to the service contract holder within thirty calendar days, unless the service contract holder fails to provide the information required by the service contract to complete the cancellation.
   (2)  If the service contract holder cancels the service contract in violation of subparagraph (1), the service company shall refund the service contract holder an amount equal to one hundred percent of the unearned purchase price paid, calculated on a pro rata basis based upon elapsed time or mileage, less any claims paid. The service company may also charge a reasonable administrative fee in an amount no greater than ten percent of the total purchase price. A ten percent penalty shall be added each month to a refund if the refund is not paid to the service contract holder within thirty calendar days of the service contract cancellation request, unless the service contract holder fails to provide the information required in the service contract to complete the cancellation.
   o.  A service contract shall set forth all obligations and duties of the service contract holder, including but not limited to the duty to protect against any further damage, and the obligation to follow an owner’s manual and to perform, or have performed, all required service or maintenance.
   p.  A service contract shall clearly state if the contract covers or excludes consequential damages and preexisting conditions, if applicable. A service contract may, but is not required to, cover damage resulting from rust, corrosion, or damage caused by a part or system not covered under the service contract.
   q.  A service contract shall clearly state the service call fee, if any, charged to the service contract holder.
   r.  A service contract shall state the name and address of the commissioner, the current toll-free telephone number of the division, and a statement that a consumer may file a complaint with the division, including by filing a complaint on the division’s internet site.
   s.  If a residential service contract relates to heating, cooling, plumbing, or electrical service, and the claim being made by the service contract holder is essential to the health and safety of the service contract holder or, if applicable, the service contract holder’s family, the service company shall ensure all of the following:
   (1)  Repair or replacement of the essential good commences within forty-eight hours after the report of the claim, and is completed as soon as reasonably practicable.
   (2)  If the service company determines that the service company cannot complete a repair, replacement, or service within three calendar days after the report of the claim, the service contract holder may seek an outside provider to complete the repair, replacement, or service. The service company shall cover reasonable costs associated with a repair, replacement, or service completed by an outside service provider up to the maximum dollar amount covered by the service contract. 
   (3)  Notice is provided to the service contract holder if a repair cannot practicably be completed within three calendar days after the report of the claim. The service company shall provide a status report to the service contract holder by communicating in a verifiable manner as soon as practicable, but no later than three calendar days after the date of the report of the claim. The status report must include all of the following:
   (a)  A list of all required repairs, replacements, or services and the estimated cost to the service contract holder.
   (b)  The primary reason the required repair, replacement, or service will take longer than three calendar days, including the status of all parts required for the repair, replacement, or service.
   (c)  The current estimated length of time to complete the repair, replacement, or service.
   (d)  The telephone number of the service company in the event the service contract holder or the commissioner wants to make an inquiry concerning the claim, and a commitment by the service company to respond to an inquiry no later than one business day after the date the inquiry is received.
   (e)  A statement that if the service contract holder is not satisfied with the manner in which the service company handles the claim under the terms of service contract, the service contract holder may file a complaint with the division pursuant to paragraph “r”.
   (f)  A notice to the service contract holder that the service contract holder may seek an outside service provider to complete the repair, replacement, or service, and that the service company will cover reasonable costs associated with a repair, replacement, or service completed by an outside service provider up to the maximum dollar amount covered by the service contract.
    Sec. 24.  NEW SECTION.  523C.8  Service contract forms —— fees.
   1.  A service company shall file with the division an accurate copy of each service contract form prior to using the service contract form for the sale of a service contract in this state.
   2.  At the time of filing each motor vehicle service contract form with the division a service company shall pay a fee in the amount of thirty-five dollars for each motor vehicle service contract form.
   3.  Notwithstanding section 523C.7, a service company may continue to use a service contract form that is noncompliant with this chapter until June 30, 2026, provided no changes are made to the service contract form and the service contract form was filed with the division in 2024. 
    Sec. 25.  Section 523C.9, Code 2025, is amended by striking the section and inserting in lieu thereof the following:
   523C.9  License denial, nonrenewal, suspension, or revocation.
   1.  The commissioner may suspend or revoke the license of, deny an application for a license from, or refuse to renew the license of, a service company, or may levy a civil penalty as provided in section 523C.13 against a service company, for any of the following reasons:
   a.  The service company violated this chapter, a lawful order, regulation, or subpoena.
   b.  The service company failed to pay a final judgment rendered against the service company in this state within sixty calendar days after the date the judgment became final.
   c.  The service company, without just cause, refused to perform, or negligently or incompetently performed, a service required to be performed under the service company’s service contracts and the refusal, or negligent or incompetent performance, has occurred with such frequency as to indicate the general business practices of the service company are negligent or incompetent, as determined by the commissioner.
   d.  The service company violated section 523C.13.
   e.  The service company failed to demonstrate financial responsibility pursuant to section 523C.5, if applicable.
   f.  The service company failed to maintain a corporate certificate of good standing with the secretary of state.
   g.  The service company provided incorrect, misleading, incomplete, or materially untrue information in the service company’s license application.
   h.  The service company obtained or attempted to obtain a license through misrepresentation or fraud.
   i.  The service company improperly withheld, misappropriated, or converted any money or property received in the course of business as a service company.
   j.  The service company intentionally misrepresented the terms of an actual or proposed service contract.
   k.  Within the immediately preceding ten years, an owner, officer, or director of the service company has been convicted of a criminal offense involving any aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance.
   l.  An owner, officer, or director of the service company has been convicted of a criminal offense involving dishonesty or a false statement, including but not limited to fraud, theft, misappropriation of funds, falsification of documents, deceptive acts or practices, or other related offenses.
   m.  The service company admitted to committing, or was found to have committed, any unfair trade practice or fraud.
   n.  The service company used fraudulent, coercive, or dishonest practices, or demonstrated incompetence, untrustworthiness, or financial irresponsibility, in conducting business in this state or any other state.
   o.  The service company had a service company license or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory.
   p.  The service company failed, or refused, to cooperate in an investigation conducted by the commissioner of insurance.
   2.  If the commissioner suspends or revokes the license of, denies the application for licensure of, or refuses to renew the license of, a service company pursuant to this section, the commissioner shall notify the service company, in writing, and provide the reason for the suspension, revocation, denial, or nonrenewal. The licensee or applicant may request a hearing on the suspension, revocation, nonrenewal, or denial, and a hearing shall be conducted according to section 507B.6.
    Sec. 26.  Section 523C.12, Code 2025, is amended to read as follows:
   523C.12  Optional examination Examinations.
   The commissioner, or a the commissioner’s designee, of the commissioner may make an examination of the books and records of a service company, including records involving communications with service contract holders, copies of contracts and records of claims and expenditures, and verify its records related to the service company’s assets, liabilities, and reserves. The actual costs of the examination shall be borne by the service company. The costs of an examination under this section shall not exceed an amount equal to ten percent of the service company’s reported net income associated with doing business in the state in the previous immediately preceding fiscal year.
    Sec. 27.  Section 523C.13, Code 2025, is amended by striking the section and inserting in lieu thereof the following:
   523C.13  Prohibited acts or practices —— penalty —— violations —— contracts voided.
   1.  A service company, or the service company’s support services, that offers service contracts for sale in this state, shall not, directly or indirectly, represent in any manner, whether by written solicitation or telemarketing, a false, deceptive, or misleading statement with respect to any of the following:
   a.  The service company’s affiliation with a motor vehicle manufacturer or importer.
   b.  The validity or expiration of a warranty.
   c.  A motor vehicle service contract holder’s coverage under a motor vehicle service contract, including statements suggesting that the service contract holder must purchase a new service contract in order to maintain coverage under the existing service contract or warranty.
   d.  Descriptions of the service contract as a “policy”.
   2.  A licensed service company which offers service contracts for sale in this state shall not, directly or indirectly, do any of the following:
   a.  Fail to complete, or fail to ensure the completion of, a repair, maintenance, replacement, service, or indemnification of expenses associated with a covered claim within a reasonable period of time.
   b.  Create or use any advertising that does not include the name of the licensed service company.
   c.  Use any method of marketing that may induce the purchase of a service contract through force, fear, or threats, whether explicit or implied.
   d.  Create or use any service contract marketing materials that contain incorrect or misleading information.
   e.  Use, offer for sale, or issue in this state a service contract form that has not been submitted as part of a license application pursuant to section 523C.3, as part of a license application renewal pursuant to section 523C.4, or submitted to the division during the service company’s current license period.
   3.  The commissioner may adopt rules pursuant to chapter 17A that regulate service contracts to prohibit misrepresentation, false advertising, defamation, boycotts, coercion, intimidation, false statements and entries, and unfair discrimination or practices. If the commissioner finds that a person has violated rules adopted under this section, the commissioner may order any or all of the following:
   a.  Payment of a civil penalty of not more than one thousand dollars for each act or violation, not to exceed an aggregate of ten thousand dollars, unless the person knew or reasonably should have known the person was in violation of this section, in which case the civil penalty shall be not more than five thousand dollars for each act or violation, not to exceed an aggregate of fifty thousand dollars in any one consecutive six-month period. If the commissioner finds a violation of this section was directed, encouraged, condoned, ignored, or ratified by the employer of the person the commissioner may assess the penalty to the employer and not the person. Any civil penalties collected under this subsection shall be deposited as provided in section 505.7.
   b.  Suspension or revocation of the person’s license, if the person knew or reasonably should have known the person was in violation of this section.
   4.  A violation of this chapter shall constitute an unlawful practice pursuant to section 714.16.
   5.  A person shall not engage, directly or indirectly, in any unfair method of competition, or an unfair or deceptive act or practice, in the business of service contracts. Any violation of this chapter constitutes an unfair method of competition, or an unfair or deceptive act or practice. If, after hearing, the commissioner determines that a person has engaged in an unfair method of competition or an unfair or deceptive act or practice, the provisions of sections 507B.6 through 507B.8 shall apply. 
    Sec. 28.  Section 523C.22, Code 2025, is amended to read as follows:
   523C.22  Claim procedures.
   A licensed service company shall promptly provide a written explanation to the service contract holder, describing the reasons for denying a claim or for the offer of a compromise settlement, based on all relevant facts or legal requirements and referring to applicable provisions of the service contract.  The written explanation shall provide instructions to the service contract holder on the process for an appeal, second review, arbitration, or similar provisions included in the contract, as well as information on how to file a complaint with the division, including the internet site on which to locate the division’s complaint form.
    Sec. 29.  Section 523C.23, subsection 1, paragraph c, Code 2025, is amended by striking the paragraph.
    Sec. 30.  Section 523C.23, subsection 2, Code 2025, is amended to read as follows:
   2.  Except as provided in section 523C.19, a A proceeding instituted under this chapter shall be conducted pursuant to chapter 17A and rules adopted by the commissioner pursuant to chapter 17A.
    Sec. 31.  NEW SECTION.  523C.25  Confidentiality.
   1.  Notwithstanding chapter 22, the commissioner shall maintain the confidentiality of information submitted to the division or obtained by the division in the course of an investigation, examination, or inquiry pursuant to this chapter, including all notes, work papers, or other documents. Information obtained by the commissioner in the course of investigating a complaint or inquiry may, at the discretion of the commissioner, be provided to the service company that is the subject of the complaint or inquiry and the consumer who filed the complaint or inquiry, without waiving the confidentiality afforded to the commissioner or to any other person by this section. The commissioner may disclose or release information that is otherwise confidential under this subsection in the course of an administrative or judicial proceeding.
   2.  Notwithstanding subsection 1, if the commissioner determines that it is necessary in the public interest, the commissioner may share information with other regulatory authorities or government agencies, or may publish service company-related data or information collected under this chapter. Such information may be redacted so that neither personally identifiable information nor service company identifiable information is made available.
    Sec. 32.  Section 714.16, subsection 2, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  r.  It is an unlawful practice for a person to violate chapter 523C.
    Sec. 33.  REPEAL.  Section 523C.19, Code 2025, is repealed.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to matters under the purview of the department of insurance and financial services including financial literacy and exploitation, tax confidentiality, health insurance rates, health savings accounts, insurer withdrawals, property insurance, and service contracts.
   DIVISION I —— FINANCIAL LITERACY AND FINANCIAL EXPLOITATION.  Division I appropriates $10 of each fee collected from the filing of an application as an agent of a real estate broker or dealer to the financial literacy and investor education fund (education fund), and to the financial exploitation prevention fund (prevention fund), both of which are created in the bill. Initiatives by the commissioner of insurance (commissioner) involving financial literacy and investor education shall comply with the requirements of the bill.
   Under the bill, nonexamination revenues payable to the insurance division (division) or the department of revenue (DOR) in connection with the regulation of insurance companies shall be deposited in the commerce revolving fund, rather than 40 percent as is required under current law. The director of the department of insurance and financial services (director) shall be responsible for identifying and coordinating appropriate opportunities for collaboration on financial literacy and exploitation with the chief administrative officers (CAO) of each division and each CAO’s respective regulated entities.
   The bill creates the education fund under the control of the director. The director shall develop and implement financial literacy and investor education initiatives for the public by providing education on financial topics, including topics required to be offered and taught for grades 9 through 12. The education fund consists of moneys as detailed in the bill. Notwithstanding any provision of law to the contrary, moneys in the education fund may be moved to the prevention fund at the discretion of the director.
   The bill creates the prevention fund, under which the director shall develop and implement initiatives to educate the public on financial exploitation; assist individuals who are known, suspected, or potential victims of financial exploitation; and to conduct investigations, refer investigations to other law enforcement, and assist in the prosecution of persons involved in financial exploitation. The prevention fund consists of moneys as detailed in the bill. 
   All investigation files, investigation reports, and all other investigative information in the possession of the department of insurance and financial services (department) shall be confidential and shall not be subject to release by discovery, subpoena, or other means of legal compulsion until opened for public inspection by the department, or upon the consent of the department, or until a court determines the department will not be unnecessarily hindered if opened for public inspection. Investigative information in the possession of the department may be disclosed, shared, or received in the circumstances detailed in the bill. An investigator or staff member of the department shall not be subject to subpoena concerning any pending or continuing investigation conducted by the department.
   On the effective date of division I of the bill, all unencumbered and unobligated moneys remaining in the securities investor education and financial literacy training fund in Code section 502.601 shall be transferred to the education fund.
   DIVISION II —— TAX ON GROSS PREMIUMS —— CONFIDENTIALITY.  Under division II, a tax return filed under Code section 432.1 (tax on gross premiums —— exclusions) or 432.1A (tax on premiums —— captive companies) shall not be open to inspection. It shall be unlawful for any present or former officer or employee of the state to willfully or recklessly publish any such tax return. A person who does so is guilty of a serious misdemeanor and, in addition to any other penalty, shall be dismissed from office or discharged from employment. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $430 but no more than $2,560. The bill does not prohibit the DOR from turning over information and tax returns in the DOR’s possession to duly authorized officers of the United States or tax officials of other states pursuant to an agreement.
   DIVISION III —— HEALTH INSURANCE RATE INCREASES —— PUBLIC HEARINGS. Division III permits the commissioner to hold a public hearing at the time a carrier files for proposed health insurance rate increases exceeding the average annual health spending growth rate, rather than requiring the commissioner to hold such public hearing as is the case under current law.
   DIVISION IV —— HEALTH SAVINGS ACCOUNTS AND QUALIFIED HIGH-DEDUCTIBLE HEALTH PLANS —— COST-SHARING. Under division IV, if a copayment, coinsurance, or deductible paid as cost-sharing by an enrollee in an individual or group accident or health insurance plan would result in the enrollee becoming ineligible for a health savings account associated with the enrollee’s qualified high-deductible health plan (HDHP), the cost-sharing shall apply only to the enrollee’s qualified HDHP after the enrollee satisfies the enrollee’s minimum deductible, except for items or services determined to be preventive.
   DIVISION V —— INSURANCE COMPANY WITHDRAWAL REQUIREMENTS.  Division V requires an insurer, prior to withdrawing, to file a withdrawal plan (plan) with the commissioner if the insurer intends to reduce the insurer’s total annual premium volume in the state by 50 percent or more, intends to reduce the insurer’s total annual premium in the state in a line of insurance by 75 percent or more, or intends to reduce the insurer’s total annual premium volume in the state in a line of private passenger automobile insurance, homeowners insurance, or dwelling property insurance by 50 percent or more. Withdrawal requirements do not apply to a transfer of business from one insurer to another insurer that are both within the same insurance holding company system if the insurer to whom the business is being transferred is authorized to engage in the business of insurance in the state, and the business is not a reciprocal or interinsurance exchange, a lloyd’s plan, or a state or county mutual insurance association. “Insurer” is defined in the bill.
   If the plan meets all of the requirements as described in the bill, the commissioner shall approve the plan. If the commissioner finds that a plan does not meet all requirements, the commissioner may modify, restrict, limit, or deny the withdrawal plan. An insurer may request a hearing on the commissioner’s decision as described in the bill.
   An insurer that withdraws from writing all lines of insurance in the state shall not, without prior approval of the commissioner, resume writing insurance in the state for a minimum of five years. A violation of the withdrawal requirements constitutes an unfair method of competition and unfair or deceptive act or practice. The commissioner may adopt rules to administer and enforce division V.
   DIVISION VI —— REPLACEMENT COST, ACTUAL CASH VALUE, AND LINE OF SIGHT. Division VI requires for an insurance policy providing for the adjustment and settlement of first-party losses based on replacement cost when a loss requires repair or replacement of a product or part, consequential physical damage shall be included in the calculation of loss, and the insured shall not be required to pay for betterment or other costs, except for any deductible. When a loss requires replacement of a damaged product and the product is available for purchase, the identical product shall be used, or if it is not available, the insurer shall use a reasonably similar product.
   For a policy providing for adjustment and settlement of first-party losses based on actual cash value (ACV), for residential fire and extended coverage, the insurer shall determine the ACV and shall provide a copy of the claim file worksheet. 
   For an insurance policy providing for the adjustment and settlement of first-party losses based on ACV, where the insured’s interest is limited because damaged property has nominal or no economic value, or a value disproportionate to replacement cost less depreciation, a determination of ACV shall not be required.
   DIVISION VII —— SERVICE COMPANIES, SERVICE CONTRACTS, AND LICENSES. Division VII prohibits a person who shall be contractually obligated to a service contract holder under the terms of a service contract from issuing, offering for sale, or selling a motor vehicle service contract or residential service contract in the state unless the person is a licensed service company. The requirements of the bill do not apply to any person who provides support services.
   A service company shall maintain a license for the entirety of any service contract that the service company has entered. A service company shall report to the commissioner within 30 calendar days any material change to the information submitted in the initial or renewal application.
   An application for a license as a service company shall be filed with the commissioner and include all required information as described in the bill, and be accompanied by a $500 license fee and a $35 fee for each motor vehicle service contract form provided by the service company in the application. A license shall be valid for one year and shall be renewed on or before the date the license expires.
   An application for license renewal shall include the information required for an initial license, a list of each service contract form, and the information and fees as described in the bill. If the renewal application meets the requirements, and the commissioner has not refused to renew the license, the commissioner shall renew the license. If the commissioner denies renewal, the denial shall be in writing.
   If a service company fails to renew their license on or before the final day of the license period, the company’s license shall be deemed expired. Prior to a license expiration date, and if a renewal application was submitted at least 14 days prior to the license expiration date, the commissioner may extend the renewal period an additional 30 calendar days. If a service company submits an application or renewal application after the license has expired, the service company shall pay a $800 reinstatement fee and shall file a service company license renewal application, including payment of applicable fees, with the division. Restrictions on a service company whose license term has expired are detailed in the bill. 
   A service contract shall not be issued, sold, or offered for sale unless the service company provides a receipt for the purchase of the service contract to the service contract holder (holder), provides a complete sample copy of the service contract prior to purchase, and provides a completed paper or electronic copy of the service contract to the holder within 10 calendar days of purchase. A paper copy of the sample copy of the service contract, or the service contract, shall be provided upon the request of the consumer at the expense of the service company.
   A service contract issued, sold, or offered for sale in the state shall comply with all of the requirements described in the bill. The requirements for a reimbursement insurance policy that relates to goods that are essential to the health and safety of the service contract holder are detailed in the bill. 
   A service company shall file with the division an accurate copy of each service contract form prior to using the service contract form and, at the time of filing shall pay a $35 fee for each motor vehicle service contract form. A service company may continue to use a noncompliant service contract form until June 30, 2026, provided no changes are made to the form, and the service contract form was filed with the division in 2024.
   The commissioner may suspend or revoke the license of, deny an application for license from, or refuse to renew the license of, a service company, or may levy a civil penalty against a service company, for any of the reasons described in the bill. The commissioner shall notify the service company in writing of the reason for the suspension, revocation, nonrenewal, or denial. The licensee or applicant may request a hearing.
   The commissioner may make examination of the books and records of a service company. The actual costs of the examination shall be borne by the service company, not to exceed 10 percent of the service company’s reported net income associated with doing business in the state in the immediately preceding fiscal year.
   A service company that offers service contracts for sale, or the service company’s support services, shall not represent in any manner a false, deceptive, or misleading statement with respect to the service company’s affiliation with a motor vehicle manufacturer or importer, the validity or expiration of a warranty, a motor vehicle service contract holder’s coverage under a motor vehicle service contract, or describing the service contract as a policy.
   A service company shall not engage in a prohibited act or practice as detailed in the bill. The commissioner may adopt rules pursuant to Code chapter 17A which regulate service contracts to prohibit specified practices. If the commissioner finds that a person has violated such rules, the commissioner may order payment of a civil penalty as described in the bill, or suspend or revoke a service company’s license. A person shall not engage in any unfair method of competition, or an unfair or deceptive act or practice, in the service contract business.
   A written explanation to a service contract holder after a licensed service company denies a claim or offers a compromise settlement shall provide instructions to the service contract holder on appeals, second reviews, arbitration, or similar provisions included in the contract, as well as information on how to file a complaint with the division, including the internet site to the division’s complaint form.
   The commissioner shall maintain the confidentiality of information submitted to the division or obtained by the division in the course of an investigation, examination, or inquiry, including all notes, work papers, or other documents and the information as described in the bill. The commissioner may disclose or release information that is otherwise confidential in the circumstances detailed in the bill. Such information may be redacted so that neither personally identifiable information nor service company identifiable information is made available.
   The division repeals Code section 523C.19.