House File 986 - Introduced HOUSE FILE 986 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 911) (SUCCESSOR TO HSB 256) A BILL FOR An Act relating to matters under the purview of the department 1 of insurance and financial services, and the utilities 2 commission, including financial literacy and exploitation, 3 tax confidentiality, health insurance rates, health savings 4 accounts, insurer withdrawals, property insurance, service 5 contracts, and cross-subsidization of public utilities, and 6 including penalties. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 1437HZ (2) 91 nls/ko

H.F. 986 DIVISION I 1 FINANCIAL LITERACY AND FINANCIAL EXPLOITATION 2 Section 1. Section 502.410, subsection 2, Code 2025, is 3 amended to read as follows: 4 2. Agents. The fee for an individual is forty dollars 5 when filing an application for registration as an agent, a fee 6 of forty dollars when filing a renewal of registration as an 7 agent, and a fee of forty dollars when filing for a change of 8 registration as an agent. Of each forty-dollar fee collected, 9 ten dollars is appropriated to the securities investor 10 education and financial literacy training fund established 11 under financial literacy and investor education fund created 12 in section 502.601, subsection 5 546.14, and ten dollars is 13 appropriated to the financial exploitation prevention fund 14 created in section 546.15 . If the filing results in a denial 15 or withdrawal, the administrator shall retain the fee. 16 Sec. 2. Section 502.601, subsection 4, Code 2025, is amended 17 by striking the subsection and inserting in lieu thereof the 18 following: 19 4. Financial literacy and investor education. Initiatives 20 involving financial literacy and investor education shall 21 comply with the initiatives in section 546.14, subsection 1, 22 and section 546.15, subsection 1. 23 Sec. 3. Section 502.601, subsection 5, Code 2025, is amended 24 by striking the subsection. 25 Sec. 4. Section 505.7, subsection 3, Code 2025, is amended 26 to read as follows: 27 3. Forty percent of the nonexamination Nonexamination 28 revenues payable to the division of insurance or the department 29 of revenue in connection with the regulation of insurance 30 companies or other entities subject to the regulatory 31 jurisdiction of the division shall be deposited in the commerce 32 revolving fund created in section 546.12 and shall be subject 33 to annual appropriation to the division for its operations 34 and is also subject to expenditure under subsection 6 . The 35 -1- LSB 1437HZ (2) 91 nls/ko 1/ 41

H.F. 986 remaining nonexamination revenues payable to the division of 1 insurance or the department of revenue shall be deposited in 2 the general fund of the state. 3 Sec. 5. Section 546.2, subsection 4, Code 2025, is amended 4 by adding the following new paragraph: 5 NEW PARAGRAPH . g. To identify and coordinate appropriate 6 opportunities for collaboration under sections 546.14 and 7 546.15 with the chief administrative officers of each division 8 and each chief administrative officer’s respective regulated 9 entities. 10 Sec. 6. NEW SECTION . 546.14 Financial literacy and investor 11 education fund. 12 1. The director shall develop and implement financial 13 literacy and investor education initiatives for the public by 14 providing education on financial topics, including but not 15 limited to the topics required to be offered and taught for 16 grades nine through twelve under section 256.11, subsection 5, 17 paragraph “k” , subparagraph (1). 18 2. A financial literacy and investor education fund is 19 created in the state treasury under the control of the director 20 for the purposes specified in subsection 1. The fund shall 21 consist of any moneys appropriated to the fund by the general 22 assembly and any other moneys available and obtained or 23 accepted by the department for placement in the fund including 24 all of the following: 25 a. Moneys appropriated to the fund pursuant to section 26 502.410, subsection 2. 27 b. Notwithstanding any provision of law to the contrary, 28 the director may, at the director’s discretion, transfer up to 29 two hundred fifty thousand dollars from the commerce revolving 30 fund created in section 546.12 to complete the objectives under 31 subsection 1. 32 c. Notwithstanding any provision of law to the contrary, 33 any moneys received by the department by reason of civil 34 penalties assessed pursuant to chapter 502 may be deposited 35 -2- LSB 1437HZ (2) 91 nls/ko 2/ 41

H.F. 986 in the financial literacy and investor education fund at the 1 discretion of the director. 2 d. The director may collaborate with organizations with an 3 interest in financial literacy and investor education. The 4 director may accept a grant or donation to be placed in the 5 financial literacy and investor education fund. 6 3. Notwithstanding any provision of law to the contrary, 7 moneys in the financial literacy and investor education fund 8 may be transferred to the financial exploitation prevention 9 fund in section 546.15 at the discretion of the director. 10 4. Notwithstanding section 12C.7, subsection 2, interest or 11 earnings on moneys in the fund shall be credited to the fund. 12 Notwithstanding section 8.33, moneys appropriated in this 13 section that remain unencumbered or unobligated at the close of 14 a fiscal year shall not revert but shall remain available for 15 expenditure for the purposes designated. 16 Sec. 7. NEW SECTION . 546.15 Financial exploitation 17 prevention fund. 18 1. The director shall develop and implement initiatives to 19 accomplish all of the following: 20 a. Educate the public on financial exploitation. 21 b. Assist individuals who are known, suspected, or potential 22 victims of financial exploitation. 23 c. Conduct investigations, refer investigations to other law 24 enforcement, and assist in the prosecution of persons involved 25 in financial exploitation. 26 2. A financial exploitation prevention fund is created 27 in the state treasury under the control of the director and 28 consists of any moneys appropriated to the fund by the general 29 assembly for the purposes of subsection 1, and any other moneys 30 available and obtained or accepted by the department for 31 placement in the fund including all of the following: 32 a. Moneys appropriated to the fund pursuant to section 33 502.410, subsection 2. 34 b. Notwithstanding any provision of law to the contrary, the 35 -3- LSB 1437HZ (2) 91 nls/ko 3/ 41

H.F. 986 director may, at the director’s discretion, transfer up to two 1 hundred fifty thousand dollars from the commerce revolving fund 2 to complete the objectives of this section. 3 c. Notwithstanding any provision of law to the contrary, 4 any moneys received by the department as a result of civil 5 penalties assessed pursuant to chapter 502 may be placed into 6 the financial exploitation prevention fund at the discretion of 7 the director. 8 d. The director may collaborate with organizations with an 9 interest in financial exploitation prevention and education. 10 e. The director may accept a grant or donation to be placed 11 in the financial exploitation prevention fund. 12 3. Notwithstanding section 12C.7, subsection 2, interest or 13 earnings on moneys in the fund shall be credited to the fund. 14 Notwithstanding section 8.33, moneys appropriated in this 15 section that remain unencumbered or unobligated at the close of 16 a fiscal year shall not revert but shall remain available for 17 expenditure for the purposes designated. 18 4. a. All investigation files, investigation reports, 19 and all other investigative information in the possession of 20 the department pursuant to this section shall be confidential 21 records under chapter 22, except as specifically provided in 22 this section, and shall not be subject to release by discovery, 23 subpoena, or other means of legal compulsion until opened for 24 public inspection by the department, or upon the consent of 25 the department, or until a court of competent jurisdiction 26 determines, after notice to the department and hearing, 27 that the department will not be unnecessarily hindered in 28 accomplishing the purposes of this section if opened for public 29 inspection. Investigative information in the possession of 30 the department may be disclosed, in the director’s discretion, 31 to appropriate regulatory or law enforcement agencies within 32 the state, another state, the District of Columbia, or another 33 territory or country. 34 b. The director may share documents, materials, or other 35 -4- LSB 1437HZ (2) 91 nls/ko 4/ 41

H.F. 986 information, including confidential and privileged documents, 1 materials, or other information, with any person provided 2 that the recipient agrees to maintain the confidential 3 and privileged status of the document, material, or other 4 information pursuant to Iowa law. 5 c. The director may receive documents, materials, or other 6 information, including confidential and privileged documents, 7 materials, or other information from any person and shall 8 maintain as confidential and privileged any document, material, 9 or other information received with notice or the understanding 10 that it is confidential or privileged under the laws of the 11 jurisdiction that is the source of the document, material, or 12 other information. 13 d. The director may enter into an agreement governing the 14 sharing and use of documents, materials, or other information 15 consistent with this section. 16 e. An investigator or other staff member of the department 17 shall not be subject to subpoena in a civil action concerning 18 any matter of which the department investigator or other staff 19 member has knowledge pursuant to a pending or continuing 20 investigation conducted by the department pursuant to this 21 chapter. 22 Sec. 8. TRANSFER OF MONEYS. On the effective date of this 23 division of this Act, any unencumbered and unobligated moneys 24 remaining in the securities investor education and financial 25 literacy training fund created in section 502.601 shall be 26 transferred to the financial literacy and investor education 27 fund created in section 546.14, as enacted in this division of 28 this Act. 29 DIVISION II 30 TAX ON GROSS PREMIUMS —— CONFIDENTIALITY 31 Sec. 9. Section 432.1, Code 2025, is amended by adding the 32 following new subsection: 33 NEW SUBSECTION . 7. a. A tax return filed under this 34 section shall not be subject to inspection under chapter 22. 35 -5- LSB 1437HZ (2) 91 nls/ko 5/ 41

H.F. 986 It shall be unlawful for any present or former officer or 1 employee of the state to willfully or recklessly publish any 2 tax return filed under this section. A person who violates 3 this paragraph shall be guilty of a serious misdemeanor and, in 4 addition to any other penalty, shall be dismissed from state 5 office or discharged from state employment. 6 b. This section shall not be construed to prohibit the 7 department of revenue from turning over information and tax 8 returns in the department of revenue’s possession pursuant 9 to this subsection to duly authorized officers of the United 10 States, or tax officials of other states, pursuant to an 11 agreement between the commissioner of insurance and any of the 12 following: 13 (1) The secretary of the treasury of the United States, or 14 the secretary’s delegate. 15 (2) The commissioner of insurance of another state. 16 Sec. 10. Section 432.1A, Code 2025, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 8. a. A tax return filed under this 19 section shall not be subject to inspection under chapter 22. 20 It shall be unlawful for any present or former officer or 21 employee of the state to willfully or recklessly publish any 22 tax return filed under this section. A person who violates 23 this paragraph shall be guilty of a serious misdemeanor and, in 24 addition to any other penalty, shall be dismissed from state 25 office or discharged from state employment. 26 b. This section shall not be construed to prohibit the 27 department of revenue from turning over information and 28 tax returns in the department’s possession pursuant to this 29 subsection to duly authorized officers of the United States, or 30 tax officials of other states, pursuant to an agreement between 31 the commissioner of insurance and any of the following: 32 (1) The secretary of the treasury of the United States, or 33 the secretary’s delegate. 34 (2) The commissioner of insurance of another state. 35 -6- LSB 1437HZ (2) 91 nls/ko 6/ 41

H.F. 986 DIVISION III 1 HEALTH INSURANCE RATE INCREASES —— PUBLIC HEARINGS 2 Sec. 11. Section 505.19, subsection 2, Code 2025, is amended 3 to read as follows: 4 2. The commissioner shall may hold a public hearing 5 at the time a carrier files for proposed health insurance 6 rate increases exceeding the average annual health spending 7 growth rate as provided in subsection 1 , prior to approval or 8 disapproval of the proposed rate increases for that carrier by 9 the commissioner. 10 DIVISION IV 11 HEALTH SAVINGS ACCOUNTS AND QUALIFIED HIGH-DEDUCTIBLE HEALTH 12 PLANS —— COST-SHARING 13 Sec. 12. NEW SECTION . 509.3B Health savings accounts and 14 qualified high-deductible health plans —— cost-sharing. 15 If a copayment, coinsurance, or deductible paid as 16 cost-sharing by an enrollee under this chapter may result in 17 the enrollee becoming ineligible for a health savings account 18 associated with the enrollee’s qualified high-deductible 19 health plan under section 223 of the Internal Revenue Code, 20 the cost-sharing shall apply only to the enrollee’s qualified 21 high-deductible health plan after the enrollee satisfies the 22 enrollee’s minimum deductible, except for items or services 23 determined to be preventive care under section 223(c)(2)(C) of 24 the Internal Revenue Code. 25 Sec. 13. NEW SECTION . 514A.3C Health savings accounts and 26 qualified high-deductible health plans —— cost-sharing. 27 If a copayment, coinsurance, or deductible paid as 28 cost-sharing by an enrollee under this chapter may result in 29 the enrollee becoming ineligible for a health savings account 30 associated with the enrollee’s qualified high-deductible 31 health plan under section 223 of the Internal Revenue Code, 32 the cost-sharing shall apply only to the enrollee’s qualified 33 high-deductible health plan after the enrollee satisfies the 34 enrollee’s minimum deductible, except for items or services 35 -7- LSB 1437HZ (2) 91 nls/ko 7/ 41

H.F. 986 determined to be preventive care under section 223(c)(2)(C) of 1 the Internal Revenue Code. 2 DIVISION V 3 INSURANCE COMPANY WITHDRAWAL REQUIREMENTS 4 Sec. 14. NEW SECTION . 505.36 Insurer —— withdrawal 5 requirements. 6 1. Definitions. As used in this section, unless the context 7 otherwise requires: 8 a. “Commissioner” means the commissioner of insurance. 9 b. “Insurer” means an insurance company, an affiliate of 10 an insurance company, or other legal entity authorized to 11 engage in the business of insurance in this state, including 12 a reciprocal exchange, an interinsurance exchange, and a 13 lloyd’s plan. “Insurer” does not include an eligible surplus 14 lines insurer under chapter 515I, a county mutual insurance 15 association under chapter 518, a state mutual insurance 16 association under chapter 518A, an entity offering health 17 coverage, or an entity offering accident and sickness coverage. 18 2. Exemption. This section shall not apply to a transfer of 19 business from one insurer to another insurer if the insurer to 20 whom the business is being transferred is all of the following: 21 a. Within the same insurance holding company system as the 22 insurer from whom business is being transferred. 23 b. Authorized to engage in the business of insurance in this 24 state. 25 c. Not a reciprocal or interinsurance exchange, a lloyd’s 26 plan, a state mutual insurance association, or a county mutual 27 insurance association. 28 3. Withdrawal plan required. 29 a. An insurer shall file a withdrawal plan with the 30 commissioner in any of the following circumstances: 31 (1) The insurer intends to reduce the insurer’s total annual 32 premium volume in the state by fifty percent or more. 33 (2) The insurer intends to reduce the insurer’s total annual 34 premium in the state in a line of insurance by seventy-five 35 -8- LSB 1437HZ (2) 91 nls/ko 8/ 41

H.F. 986 percent or more. 1 (3) The insurer intends to reduce the insurer’s total annual 2 premium volume in the state in a line of private passenger 3 automobile insurance, homeowners insurance, or dwelling 4 property insurance by fifty percent or more. 5 b. If an insurer intends to restrict writing new business 6 in the state, but not to an extent that requires the insurer 7 to file a plan for orderly withdrawal under paragraph “a” , the 8 insurer shall provide prior written notice to the commissioner 9 of the insurer’s intent to restrict writing new business in the 10 state. 11 4. Withdrawal plan. 12 a. A withdrawal plan filed under this section shall provide 13 for all of the following: 14 (1) The insurer fulfilling all contractual obligations. 15 (2) The insurer providing service to all policyholders and 16 claimants. 17 (3) The insurer meeting all statutory obligations, 18 including but not limited to payment of assessments to the 19 guaranty fund and participation in an assigned risk plan. 20 b. A withdrawal plan filed pursuant to this section shall, 21 at a minimum, include all of the following: 22 (1) The date on which the insurer proposes to commence 23 execution of the withdrawal plan, and the date on which 24 execution of the withdrawal plan will be completed. 25 (2) The reason for withdrawal for each line of insurance. 26 (3) Each policy form by number, and all of the following 27 information: 28 (a) The total number of policyholders. 29 (b) The total amount of premiums impacted for each line of 30 insurance. 31 (4) The total number of insurance producers impacted for 32 each line of insurance. 33 (5) A copy of the notification the insurer will provide to 34 each impacted insurance producer. 35 -9- LSB 1437HZ (2) 91 nls/ko 9/ 41

H.F. 986 (6) A copy of the notification or nonrenewal the insurer 1 will provide to each impacted policyholder. 2 (7) Details regarding the insurer’s fulfillment of 3 contractual obligations to the insurer’s policyholders during 4 the withdrawal. 5 (8) Whether replacement coverage will be provided to a 6 policyholder and, if so, the insurer shall provide all of the 7 following: 8 (a) The insurer’s relationship with the replacing insurer. 9 (b) The underwriting requirements and rates that will be 10 used to underwrite the policyholder. 11 (9) An estimate of the percentage of the Iowa market 12 affected by withdrawal. 13 (10) Any third-party contracts that provide for continuity 14 of coverage for policyholders. 15 (11) A list of the lines of insurance that the insurer will 16 continue to offer in the state. 17 5. Commissioner approval. 18 a. Except as provided in paragraph “b” , the commissioner 19 shall approve a withdrawal plan that has been determined to 20 meet all of the following requirements: 21 (1) The withdrawal plan provides a minimum of one hundred 22 eighty calendar days’ notice to the commissioner. 23 (2) The withdrawal plan includes notice to policyholders as 24 required by chapter 515. 25 (3) The withdrawal plan complies with subsection 4. 26 b. If the commissioner finds that a withdrawal plan does 27 not comply with paragraph “a” , the commissioner may modify, 28 restrict, limit, or deny the withdrawal plan. 29 c. An insurer may request a hearing within thirty calendar 30 days of the commissioner’s decision to modify, restrict, limit, 31 or deny the insurer’s withdrawal plan. A hearing under this 32 paragraph shall be held within sixty calendar days of the 33 insurer’s request unless a later date is agreed to by the 34 insurer and the commissioner, or permitted by the commissioner 35 -10- LSB 1437HZ (2) 91 nls/ko 10/ 41

H.F. 986 for good cause. 1 6. Resumption of writing insurance after withdrawal. An 2 insurer that withdraws from writing all lines of insurance 3 in the state shall not, without prior approval of the 4 commissioner, resume writing insurance in the state for a 5 minimum of five years from the date of completion of the 6 insurer’s withdrawal. 7 7. Remedies. A violation of this section shall constitute 8 an unfair method of competition and unfair or deceptive act or 9 practice under section 507B.4. 10 8. Rules. The commissioner may adopt rules pursuant 11 to chapter 17A as necessary to administer and enforce this 12 section. 13 Sec. 15. Section 507B.4, subsection 3, Code 2025, is amended 14 by adding the following new paragraph: 15 NEW PARAGRAPH . v. Improper withdrawal of an 16 insurer. Failure of an insurer to comply with section 17 505.36. As used in this paragraph, “insurer” means the same as 18 defined in section 505.36, subsection 1. 19 DIVISION VI 20 REPLACEMENT COST, ACTUAL CASH VALUE, AND LINE OF SIGHT 21 Sec. 16. NEW SECTION . 515.116 Line of sight. 22 1. Definitions. As used in this section, unless the context 23 otherwise requires: 24 a. “Actual cash value” means the replacement cost of 25 property at the time of loss, less depreciation, if any. 26 b. “Line of sight” means any location a reasonable person 27 would stand, on the ground or any floor of an insured’s damaged 28 structure, to view, without obstruction or the use of aerial 29 tools or technology, the damaged area of the interior or 30 exterior of the damaged structure from a reasonable distance. 31 “Line of sight” is not limited to a view of the insured’s 32 damaged structure from the location at which the damage 33 occurred. 34 c. “Reasonable distance” means, for exterior repair or 35 -11- LSB 1437HZ (2) 91 nls/ko 11/ 41

H.F. 986 replacement, a vantage point approximately thirty feet from 1 where the repair or replacement is to occur. A “reasonable 2 distance” for interior repair or replacement means a vantage 3 point approximately five feet from where the repair or 4 replacement is to occur. Based on a particular property, 5 “reasonable distance” may be determined to be greater than or 6 less than thirty feet for exterior repair, or greater than or 7 less than five feet for interior repair. 8 d. “Reasonably similar appearance” means if, within a line 9 of sight, a person viewing the repaired or replaced property 10 would find the property to resemble the property’s preloss 11 condition. Whether a replacement results in a reasonably 12 similar appearance is a fact-specific determination made 13 on a case-by-case basis considering the totality of the 14 circumstances. 15 e. “Reasonably similar product” means a product of like 16 kind, quality, color, and size. “Reasonably similar product” 17 does not mean an exact match. 18 2. Replacement cost. For an insurance policy providing 19 for the adjustment and settlement of first-party losses based 20 on replacement cost, unless the insurance policy, a rider, or 21 an endorsement specifically provides otherwise, all of the 22 following shall apply: 23 a. When a loss requires repair or replacement of a product 24 or part, consequential physical damage incurred during the 25 repair or replacement of the product or part, not otherwise 26 excluded by the policy, shall be included in the calculation of 27 loss. The insured shall not be required to pay for betterment 28 or other costs, except for any applicable deductible. 29 b. When a loss requires replacement of a product and the 30 product to be replaced remains available for purchase, the 31 identical product shall be used to repair or replace the 32 damaged product, even if the undamaged existing product shows 33 discoloration due to age or normal wear and tear. If the 34 identical product is not available for purchase, the insurer 35 -12- LSB 1437HZ (2) 91 nls/ko 12/ 41

H.F. 986 shall use a reasonably similar product to achieve a reasonably 1 similar appearance. 2 3. Actual cash value. For an insurance policy providing 3 for adjustment and settlement of first-party losses based on 4 actual cash value, unless the insurance policy, a rider, or 5 an endorsement specifically provides otherwise, all of the 6 following shall apply: 7 a. For residential fire and extended coverage, the insurer 8 shall determine the actual cash value. The insurer shall 9 provide a copy of the claim file worksheet detailing all 10 deductions for depreciation. Upon request by the insured, the 11 insurer shall provide a detailed written explanation of the 12 manner in which depreciation was calculated. 13 b. Where the insured’s interest is limited because 14 damaged property has nominal or no economic value, or a value 15 disproportionate to replacement cost less depreciation, a 16 determination of actual cash value shall not be required. At 17 the request of the insured, the insurer shall provide a written 18 explanation of the basis for limiting the amount of recovery, 19 the amount payable under the policy, and the manner in which 20 actual cash value was determined. 21 DIVISION VII 22 SERVICE COMPANIES, SERVICE CONTRACTS, AND LICENSES 23 Sec. 17. Section 507B.4, subsection 3, Code 2025, is amended 24 by adding the following new paragraph: 25 NEW PARAGRAPH . v. Service contracts. Failure of a person 26 in the business of service contracts to comply with chapter 27 523C. 28 Sec. 18. Section 523C.1, Code 2025, is amended by adding the 29 following new subsections: 30 NEW SUBSECTION . 1A. “Communicating in a verifiable manner” 31 means communication by in-person delivery, email, or, if there 32 is an auditable record of the communication, by telephone. 33 NEW SUBSECTION . 6A. “Person” means an individual or a 34 business entity. 35 -13- LSB 1437HZ (2) 91 nls/ko 13/ 41

H.F. 986 NEW SUBSECTION . 12A. “Service contract holder” means the 1 original purchaser of a service contract or the successor in 2 interest or transferee entitled to services under the service 3 contract. 4 NEW SUBSECTION . 12B. “Substitute part” means a part that is 5 not issued by the original part manufacturer, including but not 6 limited to a remanufactured part, an aftermarket part, and a 7 part obtained from a salvage yard. 8 NEW SUBSECTION . 12C. “Support services” means a person that 9 provides services that support, or a person that works under 10 the direction of, a licensed service company in connection with 11 the issuance, offer for sale, sale, or administration of a 12 service contract in this state, including but not limited to a 13 person that provides marketing, administrative, or technical 14 support to a service company. 15 Sec. 19. Section 523C.1, subsection 4, Code 2025, is amended 16 to read as follows: 17 4. “Motor vehicle” means any vehicle that is self-propelled 18 vehicle and subject to registration under chapter 321 or 19 chapter 321I . 20 Sec. 20. Section 523C.2, Code 2025, is amended by striking 21 the section and inserting in lieu thereof the following: 22 523C.2 License required. 23 1. A person that shall be contractually obligated to the 24 service contract holder under the terms of the service contract 25 shall not directly or indirectly issue, offer for sale, or 26 sell a motor vehicle service contract or residential service 27 contract in this state unless the person is a licensed service 28 company. 29 2. This chapter shall not apply to any person that provides 30 support services. A service company that utilizes support 31 services shall ensure the support services’ compliance with the 32 issuance, offer for sale, or sale of a service contract under 33 this chapter. 34 3. A service company shall maintain a license for the 35 -14- LSB 1437HZ (2) 91 nls/ko 14/ 41

H.F. 986 duration of time that the service company is contractually 1 obligated to a service contract holder under the terms of a 2 service contract. 3 4. A service company shall report to the commissioner 4 within thirty calendar days any material change to the 5 information submitted by the service company in the service 6 company’s initial license application, or license renewal 7 application, including a change in the service company’s 8 contact information, ownership, officers or directors directly 9 responsible for the provider’s service contract business, 10 or any other change that substantially affects the service 11 company’s operations in the state. 12 5. A service company shall report to the commissioner any 13 administrative action taken against the service company in 14 another jurisdiction within thirty calendar days of the final 15 disposition. The report shall include a copy of the order, 16 consent to the order, and other relevant legal documents. 17 6. Within thirty calendar days of the initial pretrial 18 hearing date, a service company shall report to the 19 commissioner a criminal prosecution in any jurisdiction of an 20 owner with more than a ten percent ownership stake, an officer, 21 or a director directly responsible for the service contract 22 business of the service company, for an offense involving 23 dishonesty or a false statement including but not limited 24 to fraud, theft, misappropriation of funds, falsification 25 of documents, deceptive acts or practices, or other related 26 offenses. The report shall include a copy of the initial 27 complaint filed, the order resulting from the hearing, and any 28 other relevant legal documents. 29 Sec. 21. Section 523C.3, Code 2025, is amended by striking 30 the section and inserting in lieu thereof the following: 31 523C.3 Application for license. 32 1. Application for a license as a service company 33 shall be filed with the commissioner on a form approved 34 by the commissioner and shall include all of the following 35 -15- LSB 1437HZ (2) 91 nls/ko 15/ 41

H.F. 986 information: 1 a. The name and principal address of the applicant. 2 b. The state of incorporation of the applicant. 3 c. The name and address of the applicant’s registered agent 4 for service of process in Iowa. 5 d. The legal name of all of the following: 6 (1) Each owner of the service company that has a greater 7 than ten percent ownership stake in the service company. 8 (2) Each officer of the service company. 9 (3) Each director directly responsible for the business of 10 the service company. 11 e. A certificate of good standing for the applicant issued 12 by the secretary of state and dated not more than thirty 13 calendar days from the date of the application. 14 f. Evidence of compliance with section 523C.5. 15 g. A copy of each motor vehicle service contract form to be 16 used, issued, or offered for sale in this state by the service 17 company. 18 h. A copy of each residential service contract form to be 19 used, issued, or offered for sale in this state by the service 20 company. 21 i. A national association of insurance commissioners’ 22 biographical affidavit and the verification of the biographical 23 affidavit for the chief executive officer and chief financial 24 officer of the service company, or for the individuals in 25 the equivalent positions. The service company shall use a 26 third-party vendor from a list of vendors approved by the 27 commissioner to verify the biographical affidavits. The 28 service company shall pay all costs associated with the 29 required verifications. 30 j. A list of any disciplinary actions taken against the 31 service company, or any of the service company’s owners, 32 officers, or directors directly responsible for the provider’s 33 service contract business, in the immediately preceding ten 34 years by a regulatory agency or state attorney general in any 35 -16- LSB 1437HZ (2) 91 nls/ko 16/ 41

H.F. 986 jurisdiction. 1 2. The application shall be accompanied by all of the 2 following: 3 a. A license fee in the amount of five hundred dollars. 4 b. A fee in the amount of thirty-five dollars for each motor 5 vehicle service contract form provided pursuant to subsection 6 1, paragraph “g” . 7 3. If the application for a service company license contains 8 the information under subsection 1, is accompanied by the fees 9 under subsection 2, and the commissioner has not denied the 10 application pursuant to section 523C.9, the commissioner shall 11 issue the license to the applicant. 12 4. Fees collected under this section shall be deposited 13 into the service company oversight fund as provided in section 14 523C.24. 15 Sec. 22. Section 523C.4, Code 2025, is amended by striking 16 the section and inserting in lieu thereof the following: 17 523C.4 License expiration and renewal. 18 1. A license issued under this chapter shall be valid for a 19 period of one year. A license that is not renewed prior to the 20 expiration date shall be deemed expired. Prior to a license 21 expiration date, and if a renewal application was submitted at 22 least fourteen calendar days prior to the license expiration 23 date, the commissioner may extend the renewal period for an 24 additional thirty calendar days. 25 2. An application for license renewal shall include the 26 information required for an initial license as described in 27 section 523C.3, subsection 1, paragraphs “a” through “f” , 28 and a list of each service contract form the service company 29 continues to use, offer for sale, or issue in the state, 30 including the service contract form name, number, and the date 31 the form was last revised. 32 3. The license renewal application shall be accompanied by 33 all of the following: 34 a. A license renewal fee in the amount of two hundred 35 -17- LSB 1437HZ (2) 91 nls/ko 17/ 41

H.F. 986 dollars. 1 b. A fee in the amount of three percent of the aggregate 2 amount of payments the service company received for the sale 3 or issuance of residential service contracts in this state 4 during the period beginning on the date the service company’s 5 license was issued until the date of the service company’s 6 renewal filing, provided that such fee shall be no less than 7 one hundred dollars and no greater than fifty thousand dollars. 8 c. A fee in the amount of thirty-five dollars for each motor 9 vehicle service contract form filed with the commissioner that 10 the service company continues to use, offer for sale, or issue 11 in the state. 12 d. The number of motor vehicle service contracts and the 13 number of residential service contracts issued during the 14 immediately preceding calendar year by the service company in 15 this state. 16 e. The number of motor vehicle service contracts and the 17 number of residential service contracts canceled during the 18 immediately preceding calendar year by the service company in 19 this state. 20 f. The total dollar amount of refunds issued to service 21 contract holders by the service company during the immediately 22 preceding calendar year for canceled motor vehicle service 23 contracts in this state, and the total dollar amount of refunds 24 issued to service contract holders by the service company 25 during the immediately preceding calendar year for canceled 26 residential service contracts in this state. 27 g. The total dollar amount of motor vehicle service contract 28 fees, and the total dollar amount of residential service 29 contract fees, collected during the immediately preceding 30 calendar year by the service company for contracts sold in this 31 state. 32 h. The number of claims filed with the service company 33 for motor vehicle service contracts in this state during 34 the immediately preceding calendar year, and the number of 35 -18- LSB 1437HZ (2) 91 nls/ko 18/ 41

H.F. 986 claims filed with the service company for residential service 1 contracts in this state during the immediately preceding 2 calendar year. 3 i. The total dollar amount of claims paid by the service 4 company for motor vehicle service contracts sold by the service 5 company in this state during the immediately preceding calendar 6 year, and the total dollar amount of claims paid by the service 7 company for residential service contracts sold by the service 8 company in this state during the immediately preceding calendar 9 year. 10 j. The total number of claims during the immediately 11 preceding calendar year for motor vehicle service contracts 12 in this state that did not result in repair, replacement, 13 payment, or other thing of value to the service contract 14 holder by the service company, and the total number of claims 15 during the immediately preceding calendar year for residential 16 service contracts in this state that did not result in repair, 17 replacement, payment, or other thing of value to the service 18 contract holder by the service company. 19 k. The total number of written complaints regarding motor 20 vehicle service contracts received by the service company 21 during the immediately preceding calendar year, and the 22 total number of written complaints regarding residential 23 service contracts received by the service company during the 24 immediately preceding calendar year, including complaints 25 received directly from a consumer, indirectly on behalf of a 26 consumer from a third party other than a regulatory agency, and 27 from a regulatory agency. 28 l. The number of lawsuits filed by a third party or a 29 regulatory agency, against the service company during the 30 immediately preceding calendar year regarding service contracts 31 issued, offered for sale, or sold by the service company. 32 4. If the license renewal application complies with this 33 section, and the commissioner has not refused to renew the 34 license pursuant to section 523C.9, the commissioner shall 35 -19- LSB 1437HZ (2) 91 nls/ko 19/ 41

H.F. 986 renew the license. If the commissioner refuses renewal of a 1 license pursuant to section 523C.9, the refusal shall be in 2 writing setting forth the grounds for the refusal. 3 5. If a service company submits a license renewal 4 application after the license has expired, the service company 5 shall pay a reinstatement fee of eight hundred dollars, and 6 applicable fees pursuant to subsection 3. 7 6. a. A service company whose license has expired, and is 8 not within an additional thirty-day extension period granted 9 by the commissioner pursuant to section 523C.4, subsection 1, 10 shall not offer, extend, or renew a service contract until the 11 service company’s license has been renewed, or the service 12 company has been issued a new license. 13 b. If, at the time a service contract is issued or sold in 14 this state, the service company has an expired license that is 15 not within an additional thirty-day extension period granted 16 by the commissioner pursuant to section 523C.4, subsection 1, 17 the service contract may be canceled at the discretion of the 18 service contract holder. If a service contract holder chooses 19 to cancel a service contract, the full purchase price of the 20 service contract, less any claims paid, shall be refunded to 21 the service contract holder within thirty calendar days. A ten 22 percent penalty shall be added each month to the refund if the 23 refund is not paid to the service contract holder within the 24 thirty calendar days. 25 Sec. 23. Section 523C.7, Code 2025, is amended by striking 26 the section and inserting in lieu thereof the following: 27 523C.7 Disclosure to service contract holders —— contract 28 form —— required provisions. 29 1. A service contract shall not be issued, sold, or offered 30 for sale in this state unless the service company does all of 31 the following: 32 a. Provides a receipt for the purchase of the service 33 contract to the service contract holder. 34 b. Provides a complete sample copy of the service contract 35 -20- LSB 1437HZ (2) 91 nls/ko 20/ 41