House File 632 - Reprinted HOUSE FILE 632 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 454) (SUCCESSOR TO HSB 139) (As Amended and Passed by the House April 21, 2015 ) A BILL FOR An Act relating to various matters involving insurance and 1 the insurance division of the department of commerce and 2 including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 HF 632 (2) 86 av/nh/md

H.F. 632 Section 1. Section 22.7, subsection 58, Code 2015, is 1 amended to read as follows: 2 58. Information filed with the commissioner of insurance 3 pursuant to sections 523A.204 and , 523A.205, 523A.206, 4 523A.207, 523A.401, 523A.502A , and 523A.803 . 5 Sec. 2. Section 502.103, Code 2015, is amended to read as 6 follows: 7 502.103 References to federal statutes. 8 “Securities Act of 1933” , 15 U.S.C. §77a et seq.; “Securities 9 Exchange Act of 1934” , 15 U.S.C. §78a et seq.; “Public Utility 10 Holding Company Act of 1935” , 15 U.S.C. §79 et seq.; “Investment 11 Company Act of 1940” , 15 U.S.C. §80a-1 et seq.; “Investment 12 Advisers Act of 1940” , 15 U.S.C. §80b-1 et seq.; “Employee 13 Retirement Income Security Act of 1974” , 29 U.S.C. §1001 et 14 seq.; “National Housing Act” , 12 U.S.C. §1701; “Commodity 15 Exchange Act” , 7 U.S.C. §1 et seq.; “Internal Revenue Code” , 16 26 U.S.C. §1 et seq.; “Securities Investor Protection Act 17 of 1970” , 15 U.S.C. §78aaa et seq.; “Securities Litigation 18 Uniform Standards Act of 1998” , 112 Stat. 3227; “Small Business 19 Investment Act of 1958” , 15 U.S.C. §661 et seq.; and “Electronic 20 Signatures in Global and National Commerce Act” , 15 U.S.C. 21 §7001 et seq. ; and “ Dodd-Frank Wall Street Reform and Consumer 22 Protection Act” , Pub. L. No. 111–203 mean those federal statutes 23 and the rules and regulations adopted under those federal 24 statutes, as in effect on January 1, 2005 2015 . 25 Sec. 3. Section 502.202, Code 2015, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 24. Intrastate crowdfunding. 28 a. Definitions. As used in this subsection, unless the 29 context otherwise requires: 30 (1) “Intermediary” means a broker-dealer that is subject 31 to the registration requirements of section 502.401 and that 32 facilitates the offer and sale of securities by issuers to 33 investors through an internet-based system that is open to 34 and accessible by the general public. “Intermediary” also 35 -1- HF 632 (2) 86 av/nh/md 1/ 25

H.F. 632 means an entity registered with the administrator as an Iowa 1 crowdfunding portal. 2 (2) “Intrastate crowdfunding” means the offer or sale of a 3 security by an issuer in a transaction that is available for 4 purchase only by Iowa residents and by business organizations 5 located in, and organized and registered under the laws of, 6 this state. 7 (3) “Iowa crowdfunding portal” means an entity incorporated 8 or organized under the laws of this state, authorized to do 9 business in this state, and engaged exclusively in intrastate 10 crowdfunding offers and sales of exempt securities in this 11 state through an internet site and which does not operate or 12 facilitate a secondary market in securities. 13 b. Exemption not available. The exemption in this 14 subsection is not available to any of the following: 15 (1) A foreign issuer. 16 (2) An investment company, as defined in section 3 of the 17 federal Investment Company Act of 1940. 18 (3) A development stage company that either has no specific 19 business plan or purpose or has indicated that the company’s 20 business plan is to engage in a merger or acquisition with an 21 unidentified company or companies, or other entity or person. 22 (4) A company with a class of securities registered under 23 the federal Securities Exchange Act of 1934. 24 (5) Any person who is subject to a disqualifying event as 25 described in the regulations adopted in accordance with section 26 926 of the federal Dodd-Frank Wall Street Reform and Consumer 27 Protection Act, Pub. L. No. 111-203, or in rules adopted by the 28 administrator pursuant to chapter 17A. 29 c. Aggregate sales limit. The aggregate amount of 30 securities sold to all investors by the issuer during the 31 twelve-month period preceding the date of the offer or sale, 32 including any amount sold in reliance upon the exemption in 33 this subsection, shall not exceed one million dollars other 34 than either of the following: 35 -2- HF 632 (2) 86 av/nh/md 2/ 25

H.F. 632 (1) Securities sold to Iowa resident institutional 1 investors. 2 (2) Securities sold to the Iowa resident issuer’s 3 management. 4 d. Individual sales limit. The aggregate amount of 5 securities sold to an investor by the issuer during the 6 twelve-month period preceding the date of the offer or sale, 7 including any amount sold in reliance upon the exemption in 8 this subsection, shall not exceed five thousand dollars unless 9 the investor is an accredited investor who resides in Iowa. 10 For purposes of this individual sales limit, the following 11 investors shall be treated as one investor: 12 (1) A relative, spouse, or relative of the spouse of an 13 investor who has the same principal residence as the investor. 14 (2) A trust or estate in which an investor and any related 15 person collectively have more than fifty percent of the 16 beneficial interest, excluding contingent interests. 17 (3) A corporation or other organization of which an investor 18 and any related person collectively are beneficial owners of 19 more than fifty percent of the equity securities, excluding 20 directors’ qualifying shares, or equity interests. 21 e. Use of an intermediary. All offers and sales of 22 securities made in reliance upon the exemption in this 23 subsection shall be made through an intermediary’s internet 24 site. 25 f. Notice to administrator. Prior to the offer of any 26 security in this state made in reliance upon the exemption 27 in this subsection, the issuer shall file a notice with 28 the administrator in a form and format approved by the 29 administrator, and including the filing fee specified by rule, 30 if any. 31 g. Rulemaking. The administrator shall adopt all rules 32 necessary to implement the exemption in this subsection 33 including but not limited to all of the following: 34 (1) Mandatory disclosures. 35 -3- HF 632 (2) 86 av/nh/md 3/ 25

H.F. 632 (2) Restrictions on advertising and communications. 1 (3) Target amount, offering period, and escrow 2 requirements. 3 (4) Use and compensation of promoters. 4 (5) Restrictions on the sale of securities purchased under 5 the exemption in this subsection. 6 (6) Sales reports. 7 (7) Limitations on the offering price. 8 (8) Duties of an intermediary which shall include providing 9 the administrator with continuous investor-level access to the 10 intermediary’s internet site. 11 (9) Records maintenance. 12 (10) Duties and registration requirements for internet site 13 operators. 14 Sec. 4. Section 502.302, subsection 1, paragraph a, 15 subparagraph (1), Code 2015, is amended to read as follows: 16 (1) A person who is the issuer of a federal covered 17 security under section 18(b)(2) of the Securities Act of 18 1933 shall initially make a notice filing and annually renew 19 a notice filing in this state for an indefinite amount or a 20 fixed amount . The fixed amount must be for two hundred fifty 21 thousand dollars. 22 Sec. 5. Section 502.302, subsection 1, paragraph a, 23 subparagraph (2), unnumbered paragraph 1, Code 2015, is amended 24 to read as follows: 25 A notice filer shall pay a filing fee in the amount of 26 four hundred dollars when the notice is filed. If the amount 27 covered by the notice is indefinite, the notice filer shall pay 28 a filing fee of one thousand dollars. If the amount covered by 29 the notice is fixed, the notice filer shall pay a filing fee 30 of two hundred fifty dollars, and all of the following shall 31 apply: 32 Sec. 6. Section 502.302, subsection 1, paragraph a, 33 subparagraph (2), subparagraph divisions (a) and (b), Code 34 2015, are amended by striking the subparagraph divisions. 35 -4- HF 632 (2) 86 av/nh/md 4/ 25

H.F. 632 Sec. 7. Section 502.302, subsections 2 and 3, Code 2015, are 1 amended to read as follows: 2 2. Notice filing effectiveness and renewal. A notice filing 3 under subsection 1 is effective for one year commencing on 4 the later of the notice filing or the effectiveness of the 5 offering filed with the securities and exchange commission. 6 On or before expiration, the issuer may renew a notice filing 7 by filing a copy of those records filed by the issuer with 8 the securities and exchange commission that are required by 9 rule or order under this chapter to be filed and by paying 10 the a renewal fee required by subsection 1 , paragraph “a” of 11 four hundred dollars . A previously filed consent to service 12 of process complying with section 502.611 may be incorporated 13 by reference in a renewal. A renewed notice filing becomes 14 effective upon the expiration of the filing being renewed. 15 3. Notice filings for federal covered securities under 16 section 18(b)(4)(D). With respect to a security that is a 17 federal covered security under section 18(b)(4)(D) of the 18 Securities Act of 1933, 15 U.S.C. §77r(b)(4)(D), a rule under 19 this chapter may require a notice filing by or on behalf of an 20 issuer to include a copy of form D, including the appendix, as 21 promulgated by the securities and exchange commission, and a 22 consent to service of process complying with section 502.611 23 signed by the issuer not later than fifteen days after the 24 first sale of the federal covered security in this state and 25 the payment of a fee of one hundred dollars; and the payment of 26 a fee of two hundred fifty dollars for any late filing. 27 Sec. 8. Section 502.412, subsection 9, Code 2015, is amended 28 to read as follows: 29 9. Limit on investigation or proceeding. The administrator 30 shall not institute a proceeding under subsection 1, 2, 31 or 3 based solely on material facts actually known by the 32 administrator unless an investigation or the proceeding is 33 instituted within one year two years after the administrator 34 actually acquires knowledge of the material facts. 35 -5- HF 632 (2) 86 av/nh/md 5/ 25

H.F. 632 Sec. 9. Section 505.26, Code 2015, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 7. a. If a health carrier or pharmacy 3 benefits manager fails to use or accept the prior authorization 4 form that has been approved for use by the health carrier 5 or pharmacy benefits manager pursuant to this section, or 6 to respond to a health care provider’s request for prior 7 authorization of prescription drug benefits within seventy-two 8 hours of the health care provider’s submission of the form, 9 the request for prior authorization shall be considered to be 10 approved. 11 b. However, if the prior authorization request is incomplete 12 or additional information is required, the health carrier 13 or pharmacy benefits manager may request the additional 14 information within the seventy-two-hour period and once the 15 additional information is submitted the provisions of paragraph 16 “a” shall again apply. 17 c. Notwithstanding paragraphs “a” and “b” , the commissioner 18 may develop, by rule, minimum time periods for a health carrier 19 or pharmacy benefits manager to respond to a health care 20 provider’s request for prior authorization of prescription drug 21 benefits or for additional information, that are less than, but 22 in no case exceed seventy-two hours, as the commissioner deems 23 appropriate under the circumstances. 24 Sec. 10. Section 511.8, subsection 5, paragraphs a and b, 25 Code 2015, are amended to read as follows: 26 a. (1) If fixed interest-bearing obligations, the net 27 earnings of the issuing, assuming, or guaranteeing corporation 28 available for its fixed charges for a period of five fiscal 29 years next preceding the date of acquisition of the obligations 30 by such insurance company shall have averaged per year not 31 less than one and one-half times such average annual fixed 32 charges of the issuing, assuming, or guaranteeing corporation 33 applicable to such period, and, during at least one of the last 34 two years of such period, its net earnings shall have been 35 -6- HF 632 (2) 86 av/nh/md 6/ 25

H.F. 632 not less than one and one-half times its fixed charges for 1 such year; or if, at the date of acquisition, the obligations 2 are adequately secured and have investment qualities and 3 characteristics wherein the speculative elements are not 4 predominant investment grade as defined by the commissioner by 5 rule . 6 (2) However, with respect to fixed interest-bearing 7 obligations which are issued, assumed, or guaranteed by a 8 financial company, the net earnings by the financial company 9 available for its fixed charges for the period of five fiscal 10 years preceding the date of acquisition of the obligations by 11 the insurance company shall have averaged per year not less 12 than one and one-fourth times such average annual fixed charges 13 of the issuing, assuming, or guaranteeing financial company 14 applicable to such period, and, during at least one of the last 15 two years of the period, its net earnings shall have been not 16 less than one and one-fourth times its fixed charges for such 17 year; or if, at the date of acquisition, the obligations are 18 adequately secured and speculative elements are not predominant 19 in their investment qualities and characteristics investment 20 grade as defined by the commissioner by rule . As used in 21 this subparagraph (2), “financial company” means a corporation 22 which on the average over its last five fiscal years preceding 23 the date of acquisition of its obligations by the insurer, 24 has had at least fifty percent of its net income, including 25 income derived from subsidiaries, derived from the business 26 of wholesale, retail, installment, mortgage, commercial, 27 industrial or consumer financing, or from banking or factoring, 28 or from similar or related lines of business. 29 b. If adjustment, income, or other contingent interest 30 obligations, the net earnings of the issuing, assuming, or 31 guaranteeing corporation available for its fixed charges 32 for a period of five fiscal years next preceding the date 33 of acquisition of the obligations by such insurance company 34 shall have averaged per year not less than one and one-half 35 -7- HF 632 (2) 86 av/nh/md 7/ 25

H.F. 632 times such average annual fixed charges of the issuing, 1 assuming, or guaranteeing corporation and its average annual 2 maximum contingent interest applicable to such period and, 3 during at least one of the last two years of such period, its 4 net earnings shall have been not less than one and one-half 5 times the sum of its fixed charges and maximum contingent 6 interest for such year, or if, at the date of acquisition, 7 the obligations are adequately secure and have investment 8 qualities and characteristics and speculative elements are not 9 predominant investment grade as defined by the commissioner by 10 rule . 11 Sec. 11. Section 511.8, subsection 6, paragraph a, 12 subparagraph (1), subparagraph division (b), unnumbered 13 paragraph 1, Code 2015, is amended to read as follows: 14 The net earnings available for fixed charges and preferred 15 dividends of the issuing corporation shall have been, for 16 each of the five fiscal years immediately preceding the date 17 of acquisition, not less than one and one-half times the sum 18 of the annual fixed charges and contingent interest, if any, 19 and the annual preferred dividend requirements as of the date 20 of acquisition; or at the date of acquisition the preferred 21 stock has is investment qualities and characteristics wherein 22 speculative elements are not predominant grade as defined by 23 the commissioner by rule . 24 Sec. 12. Section 511.8, subsection 8, unnumbered paragraph 25 1, Code 2015, is amended to read as follows: 26 Securities included under subsections 5, 6, and 7 , and 27 subsection 9, paragraph “h” , shall not be eligible: 28 Sec. 13. Section 511.8, subsection 8, paragraph b, 29 unnumbered paragraph 1, Code 2015, is amended to read as 30 follows: 31 The investments of any company or association in such the 32 securities of a corporation shall not be eligible in excess of 33 exceed the following percentages of the legal reserve of such 34 company or association: 35 -8- HF 632 (2) 86 av/nh/md 8/ 25

H.F. 632 Sec. 14. Section 511.8, subsection 8, paragraph b, 1 subparagraphs (1) and (2), Code 2015, are amended to read as 2 follows: 3 (1) With the exception of public securities For any one 4 corporation other than a public utility company , two percent 5 of the legal reserve in the securities of any one corporation . 6 Five For any one public utility company, five percent of the 7 legal reserve in the securities of any one public utility 8 corporation . 9 (2) Seventy-five percent of the legal reserve in the 10 securities described in subsection 5 issued by other than 11 public utility corporations. Fifty percent of the legal 12 reserve in the For securities described in subsection 5 issued 13 by public utility corporations companies, fifty percent of the 14 legal reserve . 15 Sec. 15. Section 511.8, subsection 9, Code 2015, is amended 16 by adding the following new paragraph: 17 NEW PARAGRAPH . h. Mezzanine real estate loans subject to 18 the following conditions: 19 (1) The terms of the mezzanine real estate loan agreement 20 shall do all of the following: 21 (a) Require that each pledgor abstain from granting 22 additional security interests in the equity interest pledged. 23 (b) Set forth techniques to minimize the likelihood or 24 impact of a bankruptcy filing on the part of the real estate 25 owner or the mezzanine real estate loan borrower consistent 26 with the national association of insurance commissioners’ 27 accounting practices and procedures manual. 28 (c) Require the real estate owner or mezzanine real estate 29 loan borrower to do all of the following: 30 (i) Hold no assets other than, in the case of the real 31 estate owner, the real property, and in the case of the 32 mezzanine real estate loan borrower, the equity interest of the 33 real estate owner. 34 (ii) Not engage in any business other than, in the case 35 -9- HF 632 (2) 86 av/nh/md 9/ 25

H.F. 632 of the real estate owner, the ownership and operation of the 1 real estate, and in the case of the mezzanine real estate loan 2 borrower, holding an ownership interest in the real estate 3 owner. 4 (iii) Not incur additional debt, other than limited trade 5 payables, a first mortgage loan, or mezzanine real estate 6 loans. 7 (2) At the time of purchase, the sum of the first mortgage 8 and the mezzanine real estate loans shall not exceed ninety 9 percent of the value of the real estate evidenced by a 10 current appraisal and the mezzanine real estate loan shall be 11 classified as CM4 or better in accordance with the national 12 association of insurance commissioners’ rating methodology, or 13 an equivalent or successor rating. 14 (3) The value of a company’s or association’s total 15 investments qualified under this paragraph “h” shall not exceed 16 three percent of the legal reserve subject to the following 17 conditions: 18 (a) The value of a company’s or association’s total 19 investments qualified under this paragraph “h” in mezzanine 20 real estate loans classified as CM3 in accordance with the 21 national association of insurance commissioners’ rating 22 methodology or an equivalent or successor rating at the time of 23 purchase shall not exceed two percent of the legal reserve. 24 (b) The value of a company’s or association’s total 25 investments qualified under this paragraph “h” in mezzanine 26 real estate loans classified as CM4 in accordance with the 27 national association of insurance commissioners’ rating 28 methodology or an equivalent or successor rating at the time of 29 purchase shall not exceed one percent of the legal reserve. 30 (4) For purposes of this paragraph “h” , “mezzanine real 31 estate loan” means a loan secured by a pledge of a direct or 32 indirect equity interest in an entity that owns real estate. 33 Sec. 16. Section 511.8, subsection 13, Code 2015, is amended 34 to read as follows: 35 -10- HF 632 (2) 86 av/nh/md 10/ 25

H.F. 632 13. Collateral loans. Loans secured by collateral 1 consisting of any securities assets or investments qualified in 2 under this section , provided the amount of the loan is not in 3 excess of ninety percent of the value of the securities assets 4 or investments . Provided further that subsection 8 shall apply 5 to the collateral securities assets or investments pledged 6 to the payment of loans authorized in qualified under this 7 subsection . 8 Sec. 17. Section 511.8, subsection 18, paragraph a, Code 9 2015, is amended to read as follows: 10 a. (1) Common stocks , or shares , or equity interests issued 11 by solvent corporations or institutions are eligible if the 12 total investment in the common stocks , or shares in , or equity 13 interests of the corporations or institutions does not exceed 14 ten percent of legal reserve, provided not more than one-half 15 percent of the legal reserve is invested in common stocks , 16 or shares , or equity interests of any one corporation or 17 institution . However, the not more than four percent of legal 18 reserve shall be invested in common stocks , or shares shall be 19 , or equity interests which do not meet one of the following 20 requirements: 21 (a) Are listed or admitted to trading on an established 22 foreign securities exchange or a securities exchange in the 23 United States or shall be . 24 (b) Are publicly held and traded in the “over-the-counter 25 market” and , provided that market quotations shall be readily 26 available , and further, the investment . 27 (2) An investment in common stocks, shares, or equity 28 interests shall not create a conflict of interest for an 29 officer or director of the company between the insurance 30 company and the corporation whose common stocks , or shares , or 31 equity interests are purchased. 32 Sec. 18. Section 511.8, subsection 20, paragraph b, Code 33 2015, is amended to read as follows: 34 b. For purposes of this subsection , “venture capital 35 -11- HF 632 (2) 86 av/nh/md 11/ 25

H.F. 632 fund” means a corporation, partnership, proprietorship, or 1 other entity formed under the laws of the United States, or 2 a state, district, or territory of the United States, whose 3 principal business is or will be the making of investments in, 4 and the provision of significant managerial assistance to, 5 small businesses which meet the small business administration 6 definition of small business. “Equity interests” means limited 7 partnership interests and other equity interests in which 8 liability is limited to the amount of the investment, but does 9 not mean general partnership interests or other interests 10 involving general liability. “Venture capital fund” includes an 11 equity interest in the Iowa fund of funds as defined in section 12 15E.62 and an equity interest in an innovation fund as defined 13 in section 15E.52 . 14 Sec. 19. Section 511.8, subsection 22, paragraphs c and d, 15 Code 2015, are amended to read as follows: 16 c. Investments in financial instruments used in hedging 17 transactions are not eligible in excess of two percent of 18 the legal reserve in the financial instruments of any one 19 corporation, less any securities of that corporation owned 20 by the company or association and in which its legal reserve 21 is invested, except insofar as the financial instruments are 22 collateralized by cash, United States government obligations 23 as authorized by subsection 1 , or obligations of or guaranteed 24 by a United States government-sponsored enterprise which on 25 the date they are pledged as collateral are adequately secured 26 and have investment qualities and characteristics wherein the 27 speculative elements are not predominant investment grade as 28 defined by the commissioner by rule , which are deposited with a 29 custodian bank as defined in subsection 21 , and held under a 30 written agreement with the custodian bank that complies with 31 subsection 21 and provides for the proceeds of the collateral, 32 subject to the terms and conditions of the applicable 33 collateral or other credit support agreement, to be remitted to 34 the legal reserve deposit of the company or association and to 35 -12- HF 632 (2) 86 av/nh/md 12/ 25

H.F. 632 vest in the state in accordance with section 508.18 whenever 1 proceedings under that section are instituted. 2 d. Investments in financial instruments used in hedging 3 transactions are not eligible in excess of ten percent of the 4 legal reserve, except insofar as the financial instruments are 5 collateralized by cash, United States government obligations 6 as authorized by subsection 1 , or obligations of or guaranteed 7 by a United States government-sponsored enterprise which on 8 the date they are pledged as collateral are adequately secured 9 and have investment qualities and characteristics wherein the 10 speculative elements are not predominant investment grade as 11 defined by the commissioner by rule , which are deposited with a 12 custodian bank as defined in subsection 21 , and held under a 13 written agreement with the custodian bank that complies with 14 subsection 21 and provides for the proceeds of the collateral, 15 subject to the terms and conditions of the applicable 16 collateral or other credit support agreement, to be remitted to 17 the legal reserve deposit of the company or association and to 18 vest in the state in accordance with section 508.18 whenever 19 proceedings under that section are instituted. 20 Sec. 20. Section 511.8, subsection 22, paragraph e, 21 subparagraph (1), Code 2015, is amended to read as follows: 22 (1) Investments in financial instruments of foreign 23 governments or foreign corporate obligations, other than 24 Canada, used in hedging transactions shall be included 25 in the limitation contained in subsection 19 that allows 26 only twenty percent of the legal reserve of the company or 27 association to be invested in such foreign investments, except 28 insofar as the financial instruments are collateralized by 29 cash, United States government obligations as authorized by 30 subsection 1 , or obligations of or guaranteed by a United 31 States government-sponsored enterprise which on the date 32 they are pledged as collateral are adequately secured and 33 have investment qualities and characteristics wherein the 34 speculative elements are not predominant investment grade as 35 -13- HF 632 (2) 86 av/nh/md 13/ 25

H.F. 632 defined by the commissioner by rule , which are deposited with a 1 custodian bank as defined in subsection 21 , and held under a 2 written agreement with the custodian bank that complies with 3 subsection 21 and provides for the proceeds of the collateral, 4 subject to the terms and conditions of the applicable 5 collateral or other credit support agreement, to be remitted to 6 the legal reserve deposit of the company or association and to 7 vest in the state in accordance with section 508.18 whenever 8 proceedings under that section are instituted. 9 Sec. 21. Section 514G.102, Code 2015, is amended to read as 10 follows: 11 514G.102 Scope. 12 The requirements of this chapter apply to policies delivered 13 or issued for delivery in this state on or after July 1, 2008. 14 The requirements of this chapter related to independent review 15 of benefit trigger determinations apply to all claims made on 16 or after January 1, 2009. The requirements of this chapter 17 related to prompt payment of claims and the payment of interest 18 apply to all long-term care insurance policies. This chapter 19 is not intended to supersede the obligations of entities 20 subject to this chapter to comply with the substance of other 21 applicable insurance laws not in conflict with this chapter , 22 except that laws and regulations designed and intended to apply 23 to Medicare supplement insurance policies shall not be applied 24 to long-term care insurance. 25 Sec. 22. Section 515.35, subsection 4, paragraph m, Code 26 2015, is amended to read as follows: 27 m. Venture capital funds. Shares or equity interests in 28 venture capital funds which agree to invest an amount equal to 29 at least fifty percent of the investments by a company in small 30 businesses having their principal offices within this state and 31 having either more than one-half of their assets within this 32 state or more than one-half of their employees employed within 33 this state. A company shall not invest more than five percent 34 of its capital and surplus under this paragraph. For purposes 35 -14- HF 632 (2) 86 av/nh/md 14/ 25

H.F. 632 of this paragraph, “venture capital fund” means a corporation, 1 partnership, proprietorship, or other entity formed under the 2 laws of the United States, or a state, district, or territory 3 of the United States, whose principal business is or will be 4 the making of investments in, and the provision of significant 5 managerial assistance to, small businesses which meet the small 6 business administration definition of small business. “Equity 7 interests” means limited partnership interests and other equity 8 interests in which liability is limited to the amount of the 9 investment, but does not mean general partnership interests or 10 other interests involving general liability. “Venture capital 11 fund” includes an equity interest in the Iowa fund of funds 12 as defined in section 15E.62 and an equity interest in an 13 innovation fund as defined in section 15E.52 . 14 Sec. 23. Section 515.125, subsection 2, Code 2015, is 15 amended to read as follows: 16 2. An insurer shall not fail to renew a policy except by 17 notice to the insured as provided in this chapter . A notice 18 of intention not to renew is not effective unless mailed or 19 delivered by the insurer to the named insured at least thirty 20 days prior to the expiration date of the policy. A notice 21 of intention not to renew is not required if the insured is 22 transferred from an insurer to an affiliate for future coverage 23 as a result of a merger, acquisition, or company restructuring 24 and if the transfer results in the same or broader coverage 25 insurance company admitted in Iowa which is an affiliate of, as 26 defined in section 521A.1, the transferring insurer and all of 27 the following conditions are met: 28 a. The transfer does not result in an interruption in 29 coverage. 30 b. The rating of the affiliate from the A.M. Best company or 31 a substitute rating service acceptable to the commissioner, is 32 the same or better than the rating of the transferring insurer. 33 c. The transfer results in the same or broader coverage. 34 d. Notice of the transfer is delivered to the insured or 35 -15- HF 632 (2) 86 av/nh/md 15/ 25

H.F. 632 sent by first class mail to the insured’s last known address 1 not less than thirty days prior to the transfer. The notice 2 required by this paragraph is not required in the event that 3 the insured requests or consents to the transfer. 4 e. The notice of transfer provides the name and telephone 5 number of the insured’s insurance producer, agent, or agency, 6 if any . 7 Sec. 24. Section 515.128, subsection 3, Code 2015, is 8 amended to read as follows: 9 3. This section applies to all forms of commercial property 10 and casualty insurance written pursuant to this chapter . It 11 does not apply if the insurer has offered to renew or if the 12 insured fails to pay a premium due or any advance premium 13 required by the insurer for renewal. A notice of nonrenewal 14 is not required if the insured is transferred from an insurer 15 to an affiliate for future coverage as a result of a merger, 16 acquisition, or company restructuring and if the transfer 17 results in the same or broader coverage insurance company 18 admitted in Iowa which is an affiliate of, as defined in 19 section 521A.1, the transferring insurer and all of the 20 following conditions are met: 21 a. The transfer does not result in an interruption in 22 coverage. 23 b. The rating of the affiliate from the A.M. Best company or 24 a substitute rating service acceptable to the commissioner, is 25 the same or better than the rating of the transferring insurer. 26 c. The transfer results in the same or broader coverage. 27 d. Notice of the transfer is delivered to the insured or 28 sent by first class mail to the insured’s last known address 29 not less than forty-five days prior to the transfer. The 30 notice required by this paragraph is not required in the event 31 that the insured requests or consents to the transfer. 32 e. The notice of transfer provides the name and telephone 33 number of the insured’s insurance producer, agent, or agency, 34 if any . 35 -16- HF 632 (2) 86 av/nh/md 16/ 25

H.F. 632 Sec. 25. Section 521A.5, subsection 4, paragraph d, Code 1 2015, is amended to read as follows: 2 d. The board of directors of a domestic insurer shall 3 establish one or more committees comprised solely of directors 4 who or other persons appointed by the board, the majority of 5 whom are not officers or employees of the insurer or of any 6 entity controlling, controlled by, or under common control with 7 the insurer and who are not beneficial owners of a controlling 8 interest in the voting stock of the insurer or any such entity. 9 The committee or committees shall have responsibility for 10 recommending or nominating candidates for director for election 11 by shareholders or policyholders, evaluating the performance 12 of officers deemed to be principal officers of the insurer, 13 and recommending to the board of directors the selection and 14 compensation of the principal officers. 15 Sec. 26. Section 523A.102, subsection 8, Code 2015, is 16 amended by striking the subsection. 17 Sec. 27. Section 523A.204, subsection 3, Code 2015, is 18 amended to read as follows: 19 3. All records maintained by the commissioner under this 20 section shall be confidential pursuant to section 22.7, 21 subsection 58 , and shall not be made available for inspection 22 or copying except upon the approval of the commissioner or the 23 attorney general , or except when sought by the preneed seller 24 to whom the records relate . Such records shall be privileged 25 and confidential in any judicial or administrative proceeding 26 except any of the following: 27 a. An action commenced by the commissioner. 28 b. An administrative proceeding brought by the insurance 29 division. 30 c. An action or proceeding which arises out of the criminal 31 provisions of the laws of this state or of the United States. 32 d. An action brought by the insurance division or 33 the attorney general to recover moneys for embezzlement, 34 misappropriation, or misuse of trust funds. 35 -17- HF 632 (2) 86 av/nh/md 17/ 25

H.F. 632 Sec. 28. Section 523A.204, subsections 4 and 5, Code 2015, 1 are amended by striking the subsections. 2 Sec. 29. Section 523A.205, subsection 2, Code 2015, is 3 amended by striking the subsection. 4 Sec. 30. Section 523A.205, subsection 3, Code 2015, is 5 amended to read as follows: 6 3. Notwithstanding chapter 22 , all All records maintained 7 by the commissioner under this section shall be confidential 8 pursuant to section 22.7, subsection 58, and shall not be made 9 available for inspection or copying except upon approval of the 10 commissioner or the attorney general , or except when sought by 11 the financial institution to whom the records relate . Such 12 records shall be privileged and confidential in any judicial or 13 administrative proceeding except any of the following: 14 a. An action commenced by the commissioner. 15 b. An administrative proceeding brought by the insurance 16 division. 17 c. An action or proceeding which arises out of the criminal 18 provisions of the laws of this state or of the United States. 19 d. An action brought by the insurance division or 20 the attorney general to recover moneys for embezzlement, 21 misappropriation, or misuse of trust funds. 22 Sec. 31. Section 523A.206, subsection 6, Code 2015, is 23 amended by striking the subsection and inserting in lieu 24 thereof the following: 25 6. All records maintained by the commissioner under this 26 section, including work papers, notes, recorded information, 27 documents, and copies thereof that are produced or obtained 28 by or disclosed to the commissioner or another person in the 29 course of a compliance examination, shall be confidential 30 pursuant to section 22.7, subsection 58, and shall not be 31 made available for inspection and copying except upon the 32 approval of the commissioner or the attorney general. Such 33 records shall be privileged and confidential in any judicial or 34 administrative proceeding except any of the following: 35 -18- HF 632 (2) 86 av/nh/md 18/ 25