HSB 520 (LSB 5418YC (3) 91)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON YOUNG)

A BILL FOR

An Act relating to withdrawal requirements for insurance companies, insurance company affiliates, and other entities engaged in the business of insurance.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  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.  An insurer shall file a withdrawal plan with the commissioner in any of the following circumstances:
   a.  The insurer intends to reduce the insurer’s total annual premium volume in the state by fifty percent or more.
   b.  For an insurer whose premiums for the immediately preceding year are greater than one tenth of one percent of the total direct premiums written in this state by all insurers for that line of business in the four most recent quarters of published data on the division’s internet site, 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.
   c.  For any line of business with annual premiums greater than twenty thousand dollars, 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.
   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. 2.  Section 507B.4, subsection 3, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  w.  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.
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 withdrawal requirements for insurance companies, insurance company affiliates, and other entities engaged in the business of insurance.
   The bill requires an insurer, prior to withdrawing, to file a withdrawal plan (plan) with the commissioner of insurance (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 the bill.