House File 489 - Reprinted HOUSE FILE 489 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 83) (As Amended and Passed by the House March 12, 2013 ) A BILL FOR An Act relating to various matters under the purview of the 1 insurance division of the department of commerce, providing 2 penalties, and including applicability and effective date 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 HF 489 (4) 85 av/nh/md

H.F. 489 Section 1. Section 135.22A, subsection 2, paragraph g, Code 1 2013, is amended by striking the paragraph. 2 Sec. 2. Section 249A.3, Code 2013, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 15. An insurance policy or annuity 5 purchased to fund an irrevocable purchase agreement to furnish 6 cemetery merchandise, funeral merchandise, funeral services, 7 or a combination thereof as provided in chapter 523A, which is 8 owned by or assigned to a seller or a provider as defined in 9 section 523A.102, and in which the department is designated as 10 the primary beneficiary as provided in section 523A.304, shall 11 be excluded as a resource for eligibility under this chapter. 12 Sec. 3. Section 502.102, subsection 16, paragraph c, Code 13 2013, is amended to read as follows: 14 c. Is employed by or associated with a federal covered 15 investment adviser, unless the individual has a “place of 16 business” in this state as that term is defined by rule adopted 17 by the securities and exchange commission under section 203A 18 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-3a, 19 administrator pursuant to chapter 17A and is any of the 20 following: 21 (1) An “investment adviser representative” as that term is 22 defined by rule adopted under section 203A of the Investment 23 Advisers Act of 1940, 15 U.S.C. § 80b-3a. 24 (2) Not a “supervised person” as that term is defined in 25 section 202(a)(25) of the Investment Advisers Act of 1940, 15 26 U.S.C. § 80b-2(a)(25) by rule adopted by the administrator 27 pursuant to chapter 17A . 28 Sec. 4. Section 502.412, subsection 3, Code 2013, is amended 29 to read as follows: 30 3. Disciplinary penalties —— registrants. If the 31 administrator finds that the order is in the public interest 32 and subsection 4 , paragraphs “a” through “f” , “h” , “i” , “j” , 33 “l” , or “m” , authorizes the action, an order under this chapter 34 may censure, impose a bar, or impose a civil penalty in an 35 -1- HF 489 (4) 85 av/nh/md 1/ 18

H.F. 489 amount not to exceed a maximum of five ten thousand dollars 1 for a single violation or five hundred thousand one million 2 dollars for more than one violation, or in an amount as agreed 3 to by the parties, on a registrant, and, if the registrant is 4 a broker-dealer or investment adviser, a partner, officer, 5 director, or person having a similar status or performing 6 similar functions, or a person directly or indirectly in 7 control, of the broker-dealer or investment adviser. 8 Sec. 5. Section 502.604, subsection 4, Code 2013, is amended 9 to read as follows: 10 4. Civil penalty —— restitution —— corrective action. In a 11 final order under subsection 3 , the administrator may impose a 12 civil penalty up to an amount not to exceed a maximum of five 13 ten thousand dollars for a single violation or five hundred 14 thousand one million dollars for more than one violation, or 15 in an amount as agreed to by the parties, order restitution, 16 or take other corrective action as the administrator deems 17 necessary and appropriate to accomplish compliance with 18 the laws of the state relating to all securities business 19 transacted in the state. 20 Sec. 6. Section 502.604, Code 2013, is amended by adding the 21 following new subsection: 22 NEW SUBSECTION . 5A. Failure to obey cease and desist 23 order. A person who fails to obey a valid cease and desist 24 order issued by the administrator under this section may, after 25 notice and opportunity for a hearing, be subject to a civil 26 penalty in an amount of not less than one thousand dollars and 27 not to exceed ten thousand dollars for violating the order. 28 Each day the failure to obey the cease and desist order occurs 29 or continues constitutes a separate violation of the order. 30 The penalties provided in this subsection are in addition to, 31 and not exclusive of, other remedies that may be available. 32 Sec. 7. Section 505.8, subsection 10, Code 2013, is amended 33 to read as follows: 34 10. The commissioner may, after a hearing conducted 35 -2- HF 489 (4) 85 av/nh/md 2/ 18

H.F. 489 pursuant to chapter 17A , assess fines or penalties , ; assess 1 costs of an examination, investigation , or proceeding , ; 2 order restitution , ; or take other corrective action as the 3 commissioner deems necessary and appropriate to accomplish 4 compliance with the laws of the state relating to all insurance 5 business transacted in the state. 6 Sec. 8. NEW SECTION . 506.14 Voluntary dissolution of 7 domestic mutual insurance companies. 8 1. Any plan for voluntary dissolution of a domestic 9 mutual insurance company licensed to transact the business 10 of insurance under chapter 508, 515, 518, or 518A shall be 11 presented for approval by the commissioner not less than ninety 12 days in advance of notice of the plan to policyholders. 13 2. The commissioner shall approve the plan if the 14 commissioner finds that the plan complies with all applicable 15 provisions of law and is fair and equitable to the domestic 16 mutual insurance company and its policyholders. 17 Sec. 9. Section 507.10, subsection 4, paragraph a, Code 18 2013, is amended to read as follows: 19 a. All orders entered pursuant to subsection 3 , paragraph 20 “a” , shall be accompanied by findings and conclusions resulting 21 from the commissioner’s consideration and review of the 22 examination report, relevant examiner work papers, and any 23 written submissions or rebuttals. Any such order is a final 24 administrative decision and may be appealed pursuant to chapter 25 17A , and shall be served upon the company by certified mail, 26 together with a copy of the adopted examination report. Within 27 thirty days of the issuance of the adopted report, the company 28 shall file affidavits executed by each of its directors stating 29 under oath that they have received a copy of the adopted report 30 and related orders. The board of directors of the company 31 shall timely review the adopted report. The minutes of the 32 meeting of the board at which the adopted report is considered 33 shall reflect that each member of the board has reviewed the 34 adopted report. 35 -3- HF 489 (4) 85 av/nh/md 3/ 18

H.F. 489 Sec. 10. NEW SECTION . 507C.17A Rehabilitation or 1 liquidation of certain covered domestic insurers. 2 1. The provisions of this section apply in accordance 3 with Tit. II of the federal Dodd-Frank Wall Street Reform and 4 Consumer Protection Act, Pub. L. No. 111-203, 12 U.S.C. § 5301 5 et seq., with respect to a domestic insurer that is a covered 6 financial company, as that term is defined under 12 U.S.C. § 7 5381. 8 2. The commissioner may petition the district court for an 9 order of rehabilitation or liquidation of a domestic insurer 10 pursuant to this section on any of the following grounds: 11 a. Upon a determination and notification given by the 12 secretary of the treasury of the United States, in consultation 13 with the president of the United States, that the insurer is 14 a covered financial company satisfying the requirements of 15 12 U.S.C. § 5383(b), and the board of directors, or a body 16 performing similar functions of a board of directors, of the 17 insurer acquiesces or consents to the appointment of a receiver 18 pursuant to 12 U.S.C. § 5382(a)(1)(A)(i) with such consent 19 to be considered as consent to an order of rehabilitation or 20 liquidation. 21 b. Upon an order of the United States district court for 22 the District of Columbia under 12 U.S.C. § 5382(a)(1)(A)(iv)(I) 23 granting the petition of the secretary of the treasury of 24 the United States concerning the insurer under 12 U.S.C. § 25 5382(a)(1)(A)(i). 26 c. A petition by the secretary of the treasury of the United 27 States concerning the insurer is granted by operation of law 28 under 12 U.S.C. § 5382(a)(1)(A)(v). 29 3. Notwithstanding any other provision of law to the 30 contrary, after notice to the insurer, a district court 31 may grant an order of rehabilitation or liquidation within 32 twenty-four hours after the filing of such a petition pursuant 33 to this section. 34 4. If the district court does not make a determination on a 35 -4- HF 489 (4) 85 av/nh/md 4/ 18

H.F. 489 petition for an order of rehabilitation or liquidation filed by 1 the commissioner pursuant to this section within twenty-four 2 hours after the filing of the petition, the order shall be 3 deemed granted by operation of law upon the expiration of the 4 twenty-four-hour period. 5 a. At the time that an order is deemed granted under this 6 subsection, the provisions of this chapter shall be deemed 7 to be in effect, and the commissioner shall be deemed to be 8 affirmed as receiver and to have all of the applicable powers 9 provided by this chapter, regardless of whether an order has 10 been entered by the district court. 11 b. If an order is deemed granted by operation of law under 12 this subsection, the district court shall expeditiously enter 13 an order of rehabilitation or liquidation that does all of the 14 following: 15 (1) Is effective as of the date that the order is deemed 16 granted by operation of law. 17 (2) Conforms to the provisions for rehabilitation or 18 liquidation of an insurer contained in this chapter, as 19 applicable. 20 5. An order of rehabilitation or liquidation made pursuant 21 to this section shall not be subject to a stay or injunction 22 pending appeal. 23 6. Nothing in this section shall be construed to supersede 24 or impair any other power or authority of the commissioner or 25 the district court under this chapter. 26 Sec. 11. Section 511.8, subsection 14, Code 2013, is amended 27 to read as follows: 28 14. Urban real estate and personal property. 29 a. Personal or real property or both located within the 30 United States or the Dominion of Canada, other than real 31 property used or to be used primarily for agricultural, 32 horticultural, ranching or mining purposes, which produces 33 income or which by suitable improvement will produce income. 34 However, personal property acquired under this subsection shall 35 -5- HF 489 (4) 85 av/nh/md 5/ 18

H.F. 489 be acquired for the purpose of entering into a contract for 1 the sale or for a use under which the contractual payments 2 may reasonably be expected to result in the recovery of the 3 investment and an investment return within the anticipated 4 useful life of the property. Legal title to the real property 5 may be acquired subject to a contract of sale. 6 b. “Real property” as used in this subsection includes a all 7 of the following: 8 (1) A leasehold of real estate , an . 9 (2) An undivided interest in a leasehold of real estate , and 10 an . 11 (3) An undivided interest in the fee title of real estate. 12 (4) A controlling membership, partnership, shareholder, or 13 trust interest in any entity created solely for the purpose 14 of owning and operating any of the interests described in 15 subparagraph (1), (2), or (3), if the entity is expressly 16 limited to that purpose within its organizational documents. 17 c. Investments under this subsection are not eligible in 18 excess of ten percent of the legal reserve. 19 Sec. 12. Section 511.8, subsection 22, paragraph i, 20 subparagraph (2), Code 2013, is amended to read as follows: 21 (2) Securities pledged as collateral for financial 22 instruments used in highly effective hedging transactions 23 together with securities pledged to a counterparty, clearing 24 organization, or clearinghouse on an upfront basis in 25 the form of initial margin, independent amount, or other 26 securities pledged as a precondition of entering into financial 27 instruments used in highly effective hedging transactions 28 pursuant to subparagraph (1), are not eligible in excess of 29 ten percent of the legal reserve of the life insurance company 30 or association, less any financial instruments used in hedging 31 transactions held in the legal reserve under this subsection . 32 Sec. 13. Section 511.8, subsection 22, paragraph i, 33 subparagraph (3), Code 2013, is amended by striking the 34 subparagraph. 35 -6- HF 489 (4) 85 av/nh/md 6/ 18

H.F. 489 Sec. 14. Section 511.8, subsection 23, Code 2013, is amended 1 by adding the following new paragraph: 2 NEW PARAGRAPH . g. For securities loaned pursuant to this 3 subsection that are included in the legal reserve of the life 4 insurance company or association, the collateral received for 5 the loaned securities shall not be eligible for inclusion in 6 the legal reserve. 7 Sec. 15. Section 511.40, Code 2013, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 5. a. The gross amount of premiums 10 received by a life insurance company or association for an 11 employer-owned life insurance contract which has not been 12 allocated to another state shall be allocated to this state 13 for purposes of section 432.1, subsection 1, if either of the 14 following is applicable: 15 (1) The contract is issued or delivered in this state. 16 (2) The company or association is domiciled in this state. 17 b. To the extent that premiums are allocated to this state 18 pursuant to paragraph “a” , the provisions of section 505.14 are 19 not applicable to those premiums. 20 c. As used in this subsection, “employer-owned life 21 insurance contract” means a policy which provides coverage on 22 a life for which the employer has an insurable interest under 23 this section or a similar provision of the laws of another 24 state and the policy is owned by either the employer or a trust 25 established by the employer for the benefit of the employer or 26 the employer’s active or retired employees. 27 Sec. 16. Section 514.4, Code 2013, is amended to read as 28 follows: 29 514.4 Directors. 30 1. At least two-thirds of the directors of a hospital 31 service corporation, medical service corporation, dental 32 service corporation, or pharmaceutical or optometric service 33 corporation subject to this chapter shall be at all times 34 subscribers and not more than one-third of the directors 35 -7- HF 489 (4) 85 av/nh/md 7/ 18

H.F. 489 shall be providers as provided in this section . The board of 1 directors of each corporation shall consist of at least nine 2 members. 3 2. A subscriber director is a director of the board of 4 a corporation who is a subscriber and who is not a provider 5 of health care pursuant to section 514B.1, subsection 7 , a 6 person who has material financial or fiduciary interest in the 7 delivery of health care services or a related industry, an 8 employee of an institution which provides health care services, 9 or a spouse or a member of the immediate family of such a 10 person. However, a subscriber director of a dental service 11 corporation may be an employee, officer, director, or trustee 12 of a hospital or other entity that does not have a provider 13 contract with the dental service corporation. A subscriber 14 director of a hospital or medical service corporation shall be 15 a subscriber of the services of that corporation. 16 3. A provider director of a corporation subject to this 17 chapter shall be at all times a person who has a material 18 financial interest in or is a fiduciary to or an employee 19 of or is a spouse or member of the immediate family of a 20 provider having a contract with such corporation to render to 21 its subscribers the services of such corporation or who is a 22 hospital trustee. 23 4. A director may serve on a board of only one corporation 24 at a time subject to this chapter . 25 5. The commissioner of insurance shall adopt rules pursuant 26 to chapter 17A to implement the process of the election of 27 subscriber directors of the board of directors of a corporation 28 to ensure the representation of a broad spectrum of subscriber 29 interest on each board and establish criteria for the selection 30 of nominees. The rules shall provide for an independent 31 subscriber nominating committee to serve until the composition 32 of the board of directors meets the percentage requirements 33 of this section . Once the composition requirements of this 34 section are met, the nominations for subscriber directors 35 -8- HF 489 (4) 85 av/nh/md 8/ 18

H.F. 489 shall be made by the subscriber directors of the board under 1 procedures the board establishes which shall also permit 2 nomination by a petition of at least fifty subscribers. The 3 board shall also establish procedures to permit nomination of 4 provider directors by petition of at least fifty participating 5 providers. A member of the board of directors of a corporation 6 subject to this chapter shall not serve on the independent 7 subscriber nominating committee. The nominating committee 8 shall consist of subscribers as defined in this section . The 9 rules of the commissioner of insurance shall also permit 10 nomination of subscriber directors by a petition of at least 11 fifty subscribers, and nomination of provider directors 12 by a petition of at least fifty participating providers. 13 These petitions shall be considered only by the independent 14 nominating committee during the duration of the committee. 15 Following the discontinuance of the committee, the petition 16 process shall be continued and the board of directors of the 17 corporation shall consider the petitions. The independent 18 subscriber nominating committee is not subject to chapter 17A . 19 The nominating committee shall not receive per diem or expenses 20 for the performance of their duties. 21 6. Population factors, representation of different 22 geographic regions, and the demography of the service area of 23 the corporation subject to this chapter shall be considered 24 when making nominations for the board of directors of a 25 corporation subject to this chapter . 26 7. A corporation serving states in addition to Iowa shall be 27 required to implement this section only for directors who are 28 residents of Iowa and elected as board members from Iowa. 29 Sec. 17. Section 515.26, Code 2013, is amended to read as 30 follows: 31 515.26 Directors. 32 The affairs of a company organized as provided by this 33 chapter shall be managed by a number of directors, of not less 34 than five nor more than twenty-one. In the case of a mutual 35 -9- HF 489 (4) 85 av/nh/md 9/ 18

H.F. 489 company, all such directors shall be policyholders. 1 Sec. 18. Section 515.35, subsection 4, paragraph f, Code 2 2013, is amended to read as follows: 3 f. Stocks , limited partnership interests, and limited 4 liability company interests . 5 (1) A company may invest in common stocks, common stock 6 equivalents, mutual fund shares, securities convertible into 7 common stocks or common stock equivalents, or preferred stocks 8 issued or guaranteed by a corporation incorporated under the 9 laws of the United States or a state of the United States, or 10 the laws of Canada or a province of Canada. 11 (1) (a) Stocks purchased under this section shall not 12 exceed one hundred percent of capital and surplus. With the 13 approval of the commissioner, a company may invest any amount 14 in common stocks, preferred stocks, or other securities of one 15 or more subsidiaries provided that after such investments the 16 insurer’s surplus as regards policyholders will be reasonable 17 in relation to the insurer’s outstanding liabilities and 18 adequate to its financial needs. 19 (2) (b) A company shall not invest more than ten percent of 20 its capital and surplus in the stocks of any one corporation. 21 (2) In addition to those investments permitted under 22 subparagraph (1), a company may invest in or otherwise 23 acquire and hold a limited partnership interest in any limited 24 partnership formed under the laws of any state, commonwealth, 25 or territory of the United States, or under the laws of the 26 United States. A company may invest in or otherwise acquire 27 and hold a member interest in any limited liability company 28 formed under the laws of any state, commonwealth, or territory 29 of the United States or under the laws of the United States. 30 A limited partnership or limited liability company interest 31 shall not be acquired if the investment, valued at cost, 32 exceeds two percent of the capital and surplus of the company 33 or if the investment, plus the book value on the date of the 34 investment of all limited partnership or limited liability 35 -10- HF 489 (4) 85 av/nh/md 10/ 18

H.F. 489 company interests then held by the company and held under the 1 authority of this subparagraph, exceeds ten percent of the 2 capital and surplus of the company. A limited partnership 3 or limited liability company interest shall not be acquired 4 under this subparagraph unless the limited partnership or 5 limited liability company is audited annually by an independent 6 auditor. 7 Sec. 19. Section 515.48, Code 2013, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 11. Insure risks on an excess and aggregate 10 limit basis. 11 Sec. 20. Section 515.69, subsection 1, Code 2013, is amended 12 to read as follows: 13 1. A stock insurance company organized under or by the 14 laws of any other state or foreign government for the purpose 15 specified in this chapter , shall not, directly or indirectly, 16 take risks or transact business of insurance in this state 17 unless the company has two and one-half million dollars of 18 actual paid-up capital, and a surplus in cash or invested in 19 securities authorized by law of not less than two and one-half 20 million dollars, possesses the actual amount of capital and 21 surplus required of any company organized pursuant to this 22 chapter, or if the company is a mutual insurance company, the 23 actual amount of surplus required of any mutual insurance 24 company organized pursuant to this chapter, exclusive of assets 25 deposited in a state, territory, district, or country for the 26 special benefit or security of those insured in that state, 27 territory, district, or country. 28 Sec. 21. Section 515.128, subsection 1, Code 2013, is 29 amended to read as follows: 30 1. An insurer shall not fail to renew a commercial line 31 policy or contract of insurance except by notice to the 32 named insured as provided in this section . Nonrenewal of a 33 commercial line policy or contract includes a decision by the 34 insurer not to renew the policy or contract, an increase in 35 -11- HF 489 (4) 85 av/nh/md 11/ 18

H.F. 489 the premium of twenty-five percent or more, an increase in 1 the deductible of twenty-five percent or more, or a material 2 reduction in the limits or coverage of the policy or contract. 3 However, a premium charge which is assessed after the beginning 4 date of the policy period for which the premium is due shall 5 not be deemed a premium increase for the purpose of this 6 section . 7 Sec. 22. NEW SECTION . 515.128A Material changes in 8 commercial lines policies or contracts —— notice required. 9 1. If an insurer has an increase in the premium rates of 10 twenty-five percent or more, an increase in the deductible 11 of twenty-five percent or more, or a material reduction in 12 the limits or coverage of the policy or contract, the insurer 13 shall notify the named insured by a letter of explanation of 14 the changes by mail at least forty-five days prior to the 15 expiration date of the policy or contract. However, a premium 16 charge that is assessed after the beginning date of the policy 17 or contract period for which the premium is due shall not be 18 deemed a premium increase for the purposes of this section. 19 2. If the insurer fails to meet the notice requirements of 20 this section, the named insured has the option of continuing 21 the policy or contract for the remainder of the notice 22 period plus an additional thirty days at the premium rate of 23 the existing policy or contract. A post office department 24 certificate of mailing to the named insured at the address 25 shown in the policy or contract is proof of receipt of the 26 mailing. 27 Sec. 23. Section 515.136, Code 2013, is amended to read as 28 follows: 29 515.136 Value of building —— liability. 30 The insurance company or association issuing such policy may 31 show the actual value of said property at date of policy, and 32 any depreciation in the value thereof before the loss occurred; 33 but the said An insurance company or association shall be 34 liable for the actual cash value of the property insured at the 35 -12- HF 489 (4) 85 av/nh/md 12/ 18

H.F. 489 date of the loss, unless such value exceeds the amount stated 1 in the policy. 2 Sec. 24. Section 515A.7, subsection 1, paragraph b, 3 subparagraph (5), Code 2013, is amended to read as follows: 4 (5) An insurer may adopt a scheduled or schedule rating plan 5 providing for credits or debits in an amount not exceeding the 6 maximum modification allowed as set forth by the commissioner 7 by rule. This amount shall be in addition to the permitted 8 deviations set forth in subparagraphs (1) through (4). 9 Sec. 25. Section 518.14, subsection 4, paragraph f, 10 unnumbered paragraph 1, Code 2013, is amended to read as 11 follows: 12 Common stocks, common stock equivalents, mutual fund 13 shares, securities convertible into common stocks or common 14 stock equivalents, or preferred stocks issued or guaranteed 15 by a corporation incorporated under the laws of the United 16 States or a state, or the laws of Canada or a province of 17 Canada , or limited partnerships publicly traded on a nationally 18 established stock exchange in the United States . Aggregate 19 investments in nondividend paying stocks shall not exceed five 20 percent of surplus. 21 Sec. 26. Section 518A.12, subsection 4, paragraph f, 22 unnumbered paragraph 1, Code 2013, is amended to read as 23 follows: 24 Common stocks, common stock equivalents, mutual fund 25 shares, securities convertible into common stocks or common 26 stock equivalents, or preferred stocks issued or guaranteed 27 by a corporation incorporated under the laws of the United 28 States or a state, or the laws of Canada or a province of 29 Canada , or limited partnerships publicly traded on a nationally 30 established stock exchange in the United States . Aggregate 31 investments in nondividend paying stocks shall not exceed five 32 percent of surplus. 33 Sec. 27. Section 521E.1, subsection 4, unnumbered paragraph 34 1, Code 2013, is amended to read as follows: 35 -13- HF 489 (4) 85 av/nh/md 13/ 18

H.F. 489 “Domestic insurer” means an insurance company domiciled in 1 this state and licensed to transact the business of insurance 2 under chapter 508 , 512B, 515 , or 520 , except that it shall not 3 include any of the following: 4 Sec. 28. Section 521E.1, subsection 4, paragraph b, Code 5 2013, is amended by striking the paragraph. 6 Sec. 29. Section 521E.1, subsections 6 and 7, Code 2013, are 7 amended to read as follows: 8 6. “Foreign insurer” means an insurance company not 9 domiciled in this state which is licensed to transact the 10 business of insurance in this state under chapter 508 , 512B, 11 515 , or 520 . 12 7. “Life and health insurer” means an insurance company 13 licensed under chapter 508 , a fraternal benefit society 14 organized under chapter 512B, or a licensed property and 15 casualty insurer writing only accident and health insurance 16 under chapter 515 . 17 Sec. 30. Section 521E.3, subsection 1, paragraph a, 18 subparagraph (2), Code 2013, is amended to read as follows: 19 (2) For a life and health insurer, the insurer’s 20 total adjusted capital is greater than or equal to its 21 company-action-level risk-based capital but less than the 22 product of its authorized-control-level risk-based capital and 23 two and one-half three , and has a negative trend. 24 Sec. 31. Section 522C.6, Code 2013, is amended by adding the 25 following new subsection: 26 NEW SUBSECTION . 3. a. A licensed public adjuster who, 27 after hearing, is found to have violated this chapter or any 28 rule adopted or order issued pursuant to this chapter, may 29 be ordered to cease and desist from engaging in the conduct 30 resulting in the violation and may be assessed a civil penalty 31 as provided in section 505.7A. 32 b. A person who, after hearing, is found to have violated 33 this chapter by acting as a public adjuster without proper 34 licensure may be ordered to cease and desist from engaging in 35 -14- HF 489 (4) 85 av/nh/md 14/ 18

H.F. 489 the conduct resulting in the violation and may be assessed a 1 civil penalty according to the provisions of chapter 507A. 2 c. If a person has engaged, is engaging, or is about to 3 engage in any act or practice constituting a violation of 4 this chapter or any rule adopted or order issued pursuant to 5 this chapter, the commissioner may issue a summary order that 6 includes a brief statement of findings of fact, conclusions of 7 law, and policy reasons for the order, and that directs the 8 person to cease and desist from engaging in the act or practice 9 constituting the violation and that may assess a civil penalty 10 or take other affirmative action as in the judgment of the 11 commissioner is necessary to assure that the person complies 12 with the requirements of this chapter as provided in chapter 13 507A. 14 d. If a person does not comply with an order issued pursuant 15 to this subsection, the commissioner may petition a court of 16 competent jurisdiction to enforce the order. The court shall 17 not require the commissioner to post a bond in an action or 18 proceeding under this subsection. If the court finds, after 19 notice and opportunity for hearing, that the person is not in 20 compliance with an order, the court may adjudge the person to 21 be in civil contempt of the order. The court may impose a civil 22 penalty against the person for contempt in an amount not less 23 than three thousand dollars but not greater than ten thousand 24 dollars for each violation and may grant any other relief that 25 the court determines is just and proper in the circumstances. 26 Sec. 32. Section 523A.301, Code 2013, is amended to read as 27 follows: 28 523A.301 Definition. 29 As used in sections 523A.302 and , 523A.303 , and 523A.304, 30 “director” means the director of human services. 31 Sec. 33. Section 523A.303, subsection 1, unnumbered 32 paragraph 1, Code 2013, is amended to read as follows: 33 If funds remain in a nonguaranteed irrevocable burial trust 34 fund or from the proceeds of an insurance policy or annuity 35 -15- HF 489 (4) 85 av/nh/md 15/ 18

H.F. 489 made payable or assigned to the seller or a provider after the 1 payment of funeral and burial expenses in accordance with the 2 conditions and terms of the purchase agreement for cemetery 3 merchandise, funeral merchandise, or funeral services, the 4 seller shall comply with all of the following: 5 Sec. 34. NEW SECTION . 523A.304 Disbursement of insurance or 6 annuity proceeds —— medical assistance debts. 7 1. If an insurance policy or annuity is purchased or 8 assigned to fund a purchase agreement and the insured or 9 annuitant is or may become a recipient of medical assistance 10 benefits under chapter 249A, unless the primary beneficiary 11 of the policy or annuity is the spouse or disabled child of 12 the insured or annuitant, the policy owner of the insurance 13 policy or annuity shall designate, or shall amend the insurance 14 policy or annuity to designate, the department as the primary 15 beneficiary of any funds that remain from the proceeds of the 16 insurance policy or annuity after payment of funeral and burial 17 expenses in accordance with the terms and conditions of the 18 purchase agreement. 19 2. If the funds remaining from the proceeds of the insurance 20 policy or annuity are disbursed as provided in subsection 1 21 and as otherwise provided in the insurance policy or annuity, 22 if applicable, the seller, provider, or insurer shall not be 23 liable to the director, the estate of the deceased insured or 24 annuitant, a personal representative, or any other interested 25 person for the remaining funds, and any lien imposed by the 26 director shall be unenforceable against the seller, provider, 27 or insurer. 28 3. This section applies to an insurance policy or annuity 29 issued prior to January 1, 2014, that funds a purchase 30 agreement for an insured or annuitant who receives or may 31 receive medical assistance benefits under chapter 249A, and who 32 dies on or after January 1, 2014. 33 4. This section applies to an insurance policy or annuity 34 issued on or after January 1, 2014, to fund a purchase 35 -16- HF 489 (4) 85 av/nh/md 16/ 18

H.F. 489 agreement for an insured or annuitant who receives or may 1 receive medical assistance benefits under chapter 249A, and who 2 dies on or after January 1, 2014, and on or after the date of 3 issuance of the insurance policy or annuity. 4 Sec. 35. Section 598.20A, Code 2013, is amended to read as 5 follows: 6 598.20A Beneficiary revocation —— life insurance. 7 1. Except as preempted by federal law, if a decree of 8 dissolution, annulment, or separate maintenance is issued after 9 an insured the policy owner of an insurance contract insuring 10 the policy owner’s own life has designated the insured’s policy 11 owner’s spouse or one or more relatives of the insured’s policy 12 owner’s spouse as a beneficiary under a life insurance policy 13 in effect on the date of the decree, a provision in the life 14 insurance policy making such a designation is voided by the 15 issuance of the decree unless any of the following apply: 16 a. The decree designates the insured’s policy owner’s former 17 spouse or one or more relatives of the insured’s policy owner’s 18 spouse as beneficiary. 19 b. After issuance of the decree, the insured policy owner 20 executes a designation of beneficiary form provided by the 21 insurance company naming the insured’s policy owner’s former 22 spouse or one or more relatives of the insured’s policy owner’s 23 former spouse as beneficiary. 24 c. The insured policy owner and the insured’s policy owner’s 25 former spouse remarry. 26 2. If a beneficiary designation is not effective pursuant to 27 subsection 1 , the benefits or proceeds of the life insurance 28 policy are payable to an alternate beneficiary, or if there is 29 no alternate beneficiary, to the estate of the insured policy 30 owner . 31 3. An insurer who pays benefits or proceeds of a life 32 insurance policy to a beneficiary under a designation that is 33 void pursuant to subsection 1 is not liable for payment to an 34 alternative beneficiary as provided under subsection 2 unless 35 -17- HF 489 (4) 85 av/nh/md 17/ 18

H.F. 489 both of the following apply: 1 a. At least ten days prior to payment of the benefits 2 or proceeds of the life insurance policy to the designated 3 beneficiary, the insurer receives written notice at the home 4 office of the insurer that the designation of the beneficiary 5 is not effective pursuant to subsection 1 . 6 b. The insurer has failed to interplead the benefits or 7 proceeds of the life insurance policy in a court of competent 8 jurisdiction in accordance with the rules of civil procedure. 9 4. This section does not limit the right of a beneficiary 10 to seek recovery from any person or entity that erroneously 11 receives or collects the benefits or proceeds from a life 12 insurance policy. 13 5. This section does not affect the right of an insured’s a 14 policy owner’s former spouse to assert an ownership interest in 15 a life insurance policy insuring the life of the policy owner 16 that is not disclosed to the insured’s policy owner’s spouse 17 prior to the decree of dissolution, annulment, or separate 18 maintenance and that is not addressed by the decree. 19 6. For purposes of this section , “relative of the insured’s 20 policy owner’s spouse” means a person who is related to the 21 insured’s policy owner’s former spouse by blood, adoption, 22 or affinity, and who, subsequent to a decree of dissolution, 23 annulment, or separate maintenance, ceases to be related to the 24 insured policy owner by blood, adoption, or affinity. 25 Sec. 36. EFFECTIVE UPON ENACTMENT. The following 26 provision or provisions of this Act, being deemed of immediate 27 importance, take effect upon enactment: 28 1. The section of this Act enacting section 507C.17A. 29 Sec. 37. EFFECTIVE DATE. The following provision or 30 provisions of this Act take effect January 1, 2014: 31 1. The section of this Act amending section 523A.303, 32 subsection 1, unnumbered paragraph 1. 33 -18- HF 489 (4) 85 av/nh/md 18/ 18