Bill Text: IA HSB83 | 2013-2014 | 85th General Assembly | Introduced

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Bill Title: A study bill relating to various matters under the purview of the insurance division of the department of commerce, providing penalties, and including applicability and effective date provisions.

Spectrum: Unknown

Status: (N/A - Dead) 2013-02-27 - Voted - Commerce. [HSB83 Detail]

Download: Iowa-2013-HSB83-Introduced.html

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House Study Bill 83 - Introduced
SENATE/HOUSE FILE _____
BY (PROPOSED DEPARTMENT OF
COMMERCE/INSURANCE DIVISION
BILL)
A BILL FOR
An Act relating to various matters under the purview of the
insurance division of the department of commerce, providing
penalties, and including applicability and effective date
provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 135.22A, subsection 2, paragraph g, Code
2013, is amended by striking the paragraph.
Sec. 2. Section 249A.3, Code 2013, is amended by adding the
following new subsection:
NEW SUBSECTION . 15. An insurance policy or annuity
purchased to fund an irrevocable purchase agreement to furnish
cemetery merchandise, funeral merchandise, funeral services,
or a combination thereof as provided in chapter 523A, which is
owned by or assigned to a seller or a provider as defined in
section 523A.102, and in which the department is designated as
the primary beneficiary as provided in section 523A.304, shall
be excluded as a resource for eligibility under this chapter.
Sec. 3. Section 502.412, subsection 3, Code 2013, is amended
to read as follows:
3. Disciplinary penalties —— registrants. If the
administrator finds that the order is in the public interest
and subsection 4 , paragraphs “a” through “f” , “h” , “i” , “j” ,
“l” , or “m” , authorizes the action, an order under this chapter
may censure, impose a bar, or impose a civil penalty in an
amount not to exceed a maximum of five ten thousand dollars
for a single violation or five hundred thousand one million
dollars for more than one violation, or in an amount as agreed
to by the parties, on a registrant, and, if the registrant is
a broker-dealer or investment adviser, a partner, officer,
director, or person having a similar status or performing
similar functions, or a person directly or indirectly in
control, of the broker-dealer or investment adviser.
Sec. 4. Section 502.604, subsection 4, Code 2013, is amended
to read as follows:
4. Civil penalty —— restitution —— corrective action. In a
final order under subsection 3 , the administrator may impose a
civil penalty up to an amount not to exceed a maximum of five
ten thousand dollars for a single violation or five hundred
thousand one million dollars for more than one violation, or
in an amount as agreed to by the parties, order restitution,
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or take other corrective action as the administrator deems
necessary and appropriate to accomplish compliance with
the laws of the state relating to all securities business
transacted in the state.
Sec. 5. Section 502.604, Code 2013, is amended by adding the
following new subsection:
NEW SUBSECTION . 5A. Failure to obey cease and desist
order. A person who fails to obey a valid cease and desist
order issued by the administrator under this section may, after
notice and opportunity for a hearing, be subject to a civil
penalty in an amount of not less than one thousand dollars and
not to exceed ten thousand dollars for violating the order.
Each day the failure to obey the cease and desist order occurs
or continues constitutes a separate violation of the order.
The penalties provided in this subsection are in addition to,
and not exclusive of, other remedies that may be available.
Sec. 6. Section 505.8, subsection 10, Code 2013, is amended
to read as follows:
10. The commissioner may, after a hearing conducted
pursuant to chapter 17A , assess fines or penalties , ; assess
costs of an examination, investigation , or proceeding , ;
order restitution , ; or take other corrective action as the
commissioner deems necessary and appropriate to accomplish
compliance with the laws of the state relating to all insurance
business transacted in the state.
Sec. 7. NEW SECTION . 506.14 Voluntary dissolution of
domestic mutual insurance companies.
1. Any plan for voluntary dissolution of a domestic
mutual insurance company licensed to transact the business
of insurance under chapter 508, 515, 518, or 518A shall be
presented for approval by the commissioner not less than ninety
days in advance of notice of the plan to policyholders.
2. The commissioner shall approve the plan if the
commissioner finds that the plan complies with all applicable
provisions of law and is fair and equitable to the domestic
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mutual insurance company and its policyholders.
Sec. 8. Section 507.10, subsection 4, paragraph a, Code
2013, is amended to read as follows:
a. All orders entered pursuant to subsection 3 , paragraph
“a” , shall be accompanied by findings and conclusions resulting
from the commissioner’s consideration and review of the
examination report, relevant examiner work papers, and any
written submissions or rebuttals. Any such order is a final
administrative decision and may be appealed pursuant to chapter
17A , and shall be served upon the company by certified mail,
together with a copy of the adopted examination report. Within
thirty days of the issuance of the adopted report, the company
shall file affidavits executed by each of its directors stating
under oath that they have received a copy of the adopted report
and related orders. The board of directors of the company
shall timely review the adopted report. The minutes of the
meeting of the board at which the adopted report is considered
shall reflect that each member of the board has reviewed the
adopted report.
Sec. 9. Section 507B.4, subsection 3, Code 2013, is amended
by adding the following new paragraph:
NEW PARAGRAPH . t. Refund of premium for duplication of
insurance. Failing to refund premiums paid for a Medicare
supplement policy after the effective date of a subsequently
purchased Medicare advantage plan, where there have been no
claims made on the Medicare supplement policy, and it can be
established that the carrier of the Medicare supplement policy
has no exposure to pay benefits if a claim is submitted to it
during the time that both the Medicare supplement policy and
the Medicare advantage plan are in effect. For the purposes
of this paragraph, “Medicare supplement policy” and “Medicare
advantage plan” mean the same as defined by the commissioner of
insurance pursuant to rules adopted under chapter 17A.
Sec. 10. NEW SECTION . 507C.17A Rehabilitation or
liquidation of certain covered domestic insurers.
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1. The provisions of this section apply in accordance
with Tit. II of the federal Dodd-Frank Wall Street Reform and
Consumer Protection Act, Pub. L. No. 111-203, 12 U.S.C. § 5301
et seq., with respect to a domestic insurer that is a covered
financial company, as that term is defined under 12 U.S.C. §
5381.
2. The commissioner may petition the district court for an
order of rehabilitation or liquidation of a domestic insurer
pursuant to this section on any of the following grounds:
a. Upon a determination and notification given by the
secretary of the treasury of the United States, in consultation
with the president of the United States, that the insurer is
a covered financial company satisfying the requirements of
12 U.S.C. § 5383(b), and the board of directors, or a body
performing similar functions of a board of directors, of the
insurer acquiesces or consents to the appointment of a receiver
pursuant to 12 U.S.C. § 5382(a)(1)(A)(i) with such consent
to be considered as consent to an order of rehabilitation or
liquidation.
b. Upon an order of the United States district court for
the District of Columbia under 12 U.S.C. § 5382(a)(1)(A)(iv)(I)
granting the petition of the secretary of the treasury of
the United States concerning the insurer under 12 U.S.C. §
5382(a)(1)(A)(i).
c. A petition by the secretary of the treasury of the United
States concerning the insurer is granted by operation of law
under 12 U.S.C. § 5382(a)(1)(A)(v).
3. Notwithstanding any other provision of law to the
contrary, after notice to the insurer, a district court
may grant an order of rehabilitation or liquidation within
twenty-four hours after the filing of such a petition pursuant
to this section.
4. If the district court does not make a determination on a
petition for an order of rehabilitation or liquidation filed by
the commissioner pursuant to this section within twenty-four
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hours after the filing of the petition, the order shall be
deemed granted by operation of law upon the expiration of the
twenty-four-hour period.
a. At the time that an order is deemed granted under this
subsection, the provisions of this chapter shall be deemed
to be in effect, and the commissioner shall be deemed to be
affirmed as receiver and to have all of the applicable powers
provided by this chapter, regardless of whether an order has
been entered by the district court.
b. If an order is deemed granted by operation of law under
this subsection, the district court shall expeditiously enter
an order of rehabilitation or liquidation that does all of the
following:
(1) Is effective as of the date that the order is deemed
granted by operation of law.
(2) Conforms to the provisions for rehabilitation or
liquidation of an insurer contained in this chapter, as
applicable.
5. An order of rehabilitation or liquidation made pursuant
to this section shall not be subject to a stay or injunction
pending appeal.
6. Nothing in this section shall be construed to supersede
or impair any other power or authority of the commissioner or
the district court under this chapter.
Sec. 11. Section 507E.5, subsection 2, Code 2013, is amended
to read as follows:
2. The commissioner may share documents, materials, or
other information, including confidential and privileged
documents, materials, or other information, with other
state, federal, and international regulatory agencies, with
the national association of insurance commissioners and its
affiliates or subsidiaries, and with local, state, federal, and
international law enforcement authorities, provided that the
recipient agrees to maintain the confidential and privileged
status of the document, material, or other information,
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pursuant to Iowa law.
Sec. 12. Section 511.8, subsection 14, Code 2013, is amended
to read as follows:
14. Urban real estate and personal property.
a. Personal or real property or both located within the
United States or the Dominion of Canada, other than real
property used or to be used primarily for agricultural,
horticultural, ranching or mining purposes, which produces
income or which by suitable improvement will produce income.
However, personal property acquired under this subsection shall
be acquired for the purpose of entering into a contract for
the sale or for a use under which the contractual payments
may reasonably be expected to result in the recovery of the
investment and an investment return within the anticipated
useful life of the property. Legal title to the real property
may be acquired subject to a contract of sale.
b. “Real property” as used in this subsection includes a all
of the following:
(1) A leasehold of real estate , an .
(2) An undivided interest in a leasehold of real estate , and
an .
(3) An undivided interest in the fee title of real estate.
(4) A controlling membership, partnership, shareholder, or
trust interest in any entity created solely for the purpose
of owning and operating any of the interests described in
subparagraph (1), (2), or (3), if the entity is expressly
limited to that purpose within its organizational documents.
c. Investments under this subsection are not eligible in
excess of ten percent of the legal reserve.
Sec. 13. Section 511.8, subsection 23, Code 2013, is amended
by adding the following new paragraph:
NEW PARAGRAPH . g. For securities loaned pursuant to this
subsection that are included in the legal reserve of the life
insurance company or association, the collateral received for
the loaned securities shall not be eligible for inclusion in
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the legal reserve.
Sec. 14. Section 511.40, Code 2013, is amended by adding the
following new subsection:
NEW SUBSECTION . 5. a. The gross amount of premiums
received by a life insurance company or association for an
employer-owned life insurance contract which has not been
allocated to another state shall be allocated to this state
for purposes of section 432.1, subsection 1, if either of the
following is applicable:
(1) The contract is issued or delivered in this state.
(2) The company or association is domiciled in this state.
b. To the extent that premiums are allocated to this state
pursuant to paragraph “a” , the provisions of section 505.14 are
not applicable to those premiums.
c. As used in this subsection, “employer-owned life
insurance contract” means a policy which provides coverage on
a life for which the employer has an insurable interest under
this section or a similar provision of the laws of another
state and the policy is owned by either the employer or a trust
established by the employer for the benefit of the employer or
the employer’s active or retired employees.
Sec. 15. Section 514.4, Code 2013, is amended to read as
follows:
514.4 Directors.
1. At least two-thirds of the directors of a hospital
service corporation, medical service corporation, dental
service corporation, or pharmaceutical or optometric service
corporation subject to this chapter shall be at all times
subscribers and not more than one-third of the directors
shall be providers as provided in this section . The board of
directors of each corporation shall consist of at least nine
members.
2. A subscriber director is a director of the board of
a corporation who is a subscriber and who is not a provider
of health care pursuant to section 514B.1, subsection 7 , a
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person who has material financial or fiduciary interest in the
delivery of health care services or a related industry, an
employee of an institution which provides health care services,
or a spouse or a member of the immediate family of such a
person. However, a subscriber director of a dental service
corporation may be an employee, officer, director, or trustee
of a hospital or other entity that does not have a provider
contract with the dental service corporation. A subscriber
director of a hospital or medical service corporation shall be
a subscriber of the services of that corporation.
3. A provider director of a corporation subject to this
chapter shall be at all times a person who has a material
financial interest in or is a fiduciary to or an employee
of or is a spouse or member of the immediate family of a
provider having a contract with such corporation to render to
its subscribers the services of such corporation or who is a
hospital trustee.
4. A director may serve on a board of only one corporation
at a time subject to this chapter .
5. The commissioner of insurance shall adopt rules pursuant
to chapter 17A to implement the process of the election of
subscriber directors of the board of directors of a corporation
to ensure the representation of a broad spectrum of subscriber
interest on each board and establish criteria for the selection
of nominees. The rules shall provide for an independent
subscriber nominating committee to serve until the composition
of the board of directors meets the percentage requirements
of this section . Once the composition requirements of this
section are met, the nominations for subscriber directors
shall be made by the subscriber directors of the board under
procedures the board establishes which shall also permit
nomination by a petition of at least fifty subscribers. The
board shall also establish procedures to permit nomination of
provider directors by petition of at least fifty participating
providers. A member of the board of directors of a corporation
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subject to this chapter shall not serve on the independent
subscriber nominating committee. The nominating committee
shall consist of subscribers as defined in this section . The
rules of the commissioner of insurance shall also permit
nomination of subscriber directors by a petition of at least
fifty subscribers, and nomination of provider directors
by a petition of at least fifty participating providers.
These petitions shall be considered only by the independent
nominating committee during the duration of the committee.
Following the discontinuance of the committee, the petition
process shall be continued and the board of directors of the
corporation shall consider the petitions. The independent
subscriber nominating committee is not subject to chapter 17A .
The nominating committee shall not receive per diem or expenses
for the performance of their duties.
6. Population factors, representation of different
geographic regions, and the demography of the service area of
the corporation subject to this chapter shall be considered
when making nominations for the board of directors of a
corporation subject to this chapter .
7. A corporation serving states in addition to Iowa shall be
required to implement this section only for directors who are
residents of Iowa and elected as board members from Iowa.
Sec. 16. Section 515.69, subsection 1, Code 2013, is amended
to read as follows:
1. A stock insurance company organized under or by the
laws of any other state or foreign government for the purpose
specified in this chapter , shall not, directly or indirectly,
take risks or transact business of insurance in this state
unless the company has two and one-half million dollars of
actual paid-up capital, and a surplus in cash or invested in
securities authorized by law of not less than two and one-half
million dollars, possesses the actual amount of capital and
surplus required of any company organized pursuant to this
chapter, or if the company is a mutual insurance company, the
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actual amount of surplus required of any mutual insurance
company organized pursuant to this chapter, exclusive of assets
deposited in a state, territory, district, or country for the
special benefit or security of those insured in that state,
territory, district, or country.
Sec. 17. Section 515.136, Code 2013, is amended to read as
follows:
515.136 Value of building —— liability.
The insurance company or association issuing such policy may
show the actual value of said property at date of policy, and
any depreciation in the value thereof before the loss occurred;
but the said An insurance company or association shall be
liable for the actual value of the property insured at the date
of the loss, unless such value exceeds the amount stated in the
policy.
Sec. 18. Section 515A.7, subsection 1, paragraph b,
subparagraph (5), Code 2013, is amended to read as follows:
(5) An insurer may adopt a scheduled or schedule rating plan
providing for credits or debits in an amount not exceeding the
maximum modification allowed as set forth by the commissioner
by rule. This amount shall be in addition to the permitted
deviations set forth in subparagraphs (1) through (4).
Sec. 19. Section 518.14, subsection 4, paragraph f,
unnumbered paragraph 1, Code 2013, is amended to read as
follows:
Common stocks, common stock equivalents, mutual fund shares,
securities convertible into common stocks or common stock
equivalents, or preferred stocks issued or guaranteed by a
corporation incorporated under the laws of the United States
or a state, or the laws of Canada or a province of Canada ,
or by limited partnerships publicly traded on a nationally
established stock exchange in the United States . Aggregate
investments in nondividend paying stocks shall not exceed five
percent of surplus.
Sec. 20. Section 518A.12, subsection 4, paragraph f,
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unnumbered paragraph 1, Code 2013, is amended to read as
follows:
Common stocks, common stock equivalents, mutual fund shares,
securities convertible into common stocks or common stock
equivalents, or preferred stocks issued or guaranteed by a
corporation incorporated under the laws of the United States
or a state, or the laws of Canada or a province of Canada ,
or by limited partnerships publicly traded on a nationally
established stock exchange in the United States . Aggregate
investments in nondividend paying stocks shall not exceed five
percent of surplus.
Sec. 21. Section 521E.1, subsection 4, unnumbered paragraph
1, Code 2013, is amended to read as follows:
“Domestic insurer” means an insurance company domiciled in
this state and licensed to transact the business of insurance
under chapter 508 , 512B, 515 , or 520 , except that it shall not
include any of the following:
Sec. 22. Section 521E.1, subsection 4, paragraph b, Code
2013, is amended by striking the paragraph.
Sec. 23. Section 521E.1, subsections 6 and 7, Code 2013, are
amended to read as follows:
6. “Foreign insurer” means an insurance company not
domiciled in this state which is licensed to transact the
business of insurance in this state under chapter 508 , 512B,
515 , or 520 .
7. “Life and health insurer” means an insurance company
licensed under chapter 508 , a fraternal benefit society
organized under chapter 512B, or a licensed property and
casualty insurer writing only accident and health insurance
under chapter 515 .
Sec. 24. Section 521E.3, subsection 1, paragraph a,
subparagraph (2), Code 2013, is amended to read as follows:
(2) For a life and health insurer, the insurer’s
total adjusted capital is greater than or equal to its
company-action-level risk-based capital but less than the
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product of its authorized-control-level risk-based capital and
two and one-half three , and has a negative trend.
Sec. 25. Section 522C.6, Code 2013, is amended by adding the
following new subsection:
NEW SUBSECTION . 3. a. A licensed public adjuster who,
after hearing, is found to have violated this chapter or any
rule adopted or order issued pursuant to this chapter, may
be ordered to cease and desist from engaging in the conduct
resulting in the violation and may be assessed a civil penalty
as provided in section 505.7A.
b. A person who, after hearing, is found to have violated
this chapter by acting as a public adjuster without proper
licensure may be ordered to cease and desist from engaging in
the conduct resulting in the violation and may be assessed a
civil penalty according to the provisions of chapter 507A.
c. If a person has engaged, is engaging, or is about to
engage in any act or practice constituting a violation of
this chapter or any rule adopted or order issued pursuant to
this chapter, the commissioner may issue a summary order that
includes a brief statement of findings of fact, conclusions of
law, and policy reasons for the order, and that directs the
person to cease and desist from engaging in the act or practice
constituting the violation and that may assess a civil penalty
or take other affirmative action as in the judgment of the
commissioner is necessary to assure that the person complies
with the requirements of this chapter as provided in chapter
507A.
d. If a person does not comply with an order issued pursuant
to this subsection, the commissioner may petition a court of
competent jurisdiction to enforce the order. The court shall
not require the commissioner to post a bond in an action or
proceeding under this subsection. If the court finds, after
notice and opportunity for hearing, that the person is not in
compliance with an order, the court may adjudge the person to
be in civil contempt of the order. The court may impose a civil
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penalty against the person for contempt in an amount not less
than three thousand dollars but not greater than ten thousand
dollars for each violation and may grant any other relief that
the court determines is just and proper in the circumstances.
Sec. 26. Section 523A.301, Code 2013, is amended to read as
follows:
523A.301 Definition.
As used in sections 523A.302 and , 523A.303 , and 523A.304,
“director” means the director of human services.
Sec. 27. Section 523A.303, subsection 1, unnumbered
paragraph 1, Code 2013, is amended to read as follows:
If funds remain in a nonguaranteed irrevocable burial trust
fund or from the proceeds of an insurance policy or annuity
made payable or assigned to the seller or a provider after the
payment of funeral and burial expenses in accordance with the
conditions and terms of the purchase agreement for cemetery
merchandise, funeral merchandise, or funeral services, the
seller shall comply with all of the following:
Sec. 28. NEW SECTION . 523A.304 Disbursement of insurance or
annuity proceeds —— medical assistance debts.
1. If an insurance policy or annuity is purchased or
assigned to fund a purchase agreement and the insured or
annuitant is or may become a recipient of medical assistance
benefits under chapter 249A, unless the primary beneficiary of
the policy or annuity is the spouse or disabled child of the
insured or annuitant, the insurance policy or annuity shall
designate, or shall be amended to designate, the department
as the primary beneficiary of any funds that remain from the
proceeds of the insurance policy or annuity after payment of
funeral and burial expenses in accordance with the terms and
conditions of the purchase agreement.
2. If the funds remaining from the proceeds of the insurance
policy or annuity are disbursed as provided in subsection 1
and as otherwise provided in the insurance policy or annuity,
if applicable, the seller, provider, or insurer shall not be
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liable to the director, the estate of the deceased insured or
annuitant, a personal representative, or any other interested
person for the remaining funds, and any lien imposed by the
director shall be unenforceable against the seller, provider,
or insurer.
3. This section applies to an insurance policy or annuity
issued prior to January 1, 2014, that funds a purchase
agreement for an insured or annuitant who receives or may
receive medical assistance benefits under chapter 249A, and who
dies on or after January 1, 2015.
4. This section applies to an insurance policy or annuity
issued on or after January 1, 2014, to fund a purchase
agreement for an insured or annuitant who receives or may
receive medical assistance benefits under chapter 249A, and who
dies on or after January 1, 2014, and on or after the date of
issuance of the insurance policy or annuity.
Sec. 29. Section 598.20A, Code 2013, is amended to read as
follows:
598.20A Beneficiary revocation —— life insurance.
1. Except as preempted by federal law, if a decree of
dissolution, annulment, or separate maintenance is issued after
an insured the policy owner of an insurance contract insuring
the policy owner’s own life has designated the insured’s policy
owner’s spouse or one or more relatives of the insured’s policy
owner’s spouse as a beneficiary under a life insurance policy
in effect on the date of the decree, a provision in the life
insurance policy making such a designation is voided by the
issuance of the decree unless any of the following apply:
a. The decree designates the insured’s policy owner’s former
spouse or one or more relatives of the insured’s policy owner’s
spouse as beneficiary.
b. After issuance of the decree, the insured policy owner
executes a designation of beneficiary form provided by the
insurance company naming the insured’s policy owner’s former
spouse or one or more relatives of the insured’s policy owner’s
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former spouse as beneficiary.
c. The insured policy owner and the insured’s policy owner’s
former spouse remarry.
2. If a beneficiary designation is not effective pursuant to
subsection 1 , the benefits or proceeds of the life insurance
policy are payable to an alternate beneficiary, or if there is
no alternate beneficiary, to the estate of the insured policy
owner .
3. An insurer who pays benefits or proceeds of a life
insurance policy to a beneficiary under a designation that is
void pursuant to subsection 1 is not liable for payment to an
alternative beneficiary as provided under subsection 2 unless
both of the following apply:
a. At least ten days prior to payment of the benefits
or proceeds of the life insurance policy to the designated
beneficiary, the insurer receives written notice at the home
office of the insurer that the designation of the beneficiary
is not effective pursuant to subsection 1 .
b. The insurer has failed to interplead the benefits or
proceeds of the life insurance policy in a court of competent
jurisdiction in accordance with the rules of civil procedure.
4. This section does not limit the right of a beneficiary
to seek recovery from any person or entity that erroneously
receives or collects the benefits or proceeds from a life
insurance policy.
5. This section does not affect the right of an insured’s a
policy owner’s former spouse to assert an ownership interest in
a life insurance policy insuring the life of the policy owner
that is not disclosed to the insured’s policy owner’s spouse
prior to the decree of dissolution, annulment, or separate
maintenance and that is not addressed by the decree.
6. For purposes of this section , “relative of the insured’s
policy owner’s spouse” means a person who is related to the
insured’s policy owner’s former spouse by blood, adoption,
or affinity, and who, subsequent to a decree of dissolution,
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annulment, or separate maintenance, ceases to be related to the
insured policy owner by blood, adoption, or affinity.
Sec. 30. EFFECTIVE UPON ENACTMENT. The following
provision or provisions of this Act, being deemed of immediate
importance, take effect upon enactment:
1. The section of this Act enacting section 507C.17A.
EXPLANATION
This bill relates to various matters under the purview of the
insurance division of the department of commerce.
DEPARTMENT OF PUBLIC HEALTH. Code section 135.22A(2)(g)
is stricken to remove the commissioner of insurance from the
membership of the advisory council on brain injuries.
MEDICAL ASSISTANCE. New Code section 249A.3(15) provides
that an insurance policy or annuity purchased to fund an
irrevocable purchase agreement to furnish cemetery and funeral
merchandise, funeral services, or a combination thereof as
provided in Code chapter 523A, which is owned or assigned
to a seller or provider and in which the department of
human services is designated as the primary beneficiary, is
excluded as a resource for determining eligibility for medical
assistance under Code chapter 249A. For purposes of this
provision, a “seller” is a person doing business in this state,
including one who sells insurance, who sells or offers to
furnish cemetery and funeral merchandise, funeral services, or
a combination of those products on a preneed basis.
UNIFORM SECURITIES ACT (BLUE SKY LAW). Code section
502.412(3) is amended to increase the amount of the
disciplinary penalty for registrants that the administrator
(commissioner of insurance or the commissioner’s deputy) can
impose for a violation of the Code chapter from a maximum of
$5,000 to $10,000 for a single violation, and from $500,000 to
$1 million for more than one violation, or in such amount as
agreed to by the parties.
Code section 502.604(4) is amended to increase the amount
of a civil penalty the administrator can impose against a
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person for engaging in an act, practice, or course of business
in violation of the Code chapter from a maximum of $5,000 to
$10,000 for a single violation, and from $500,000 to $1 million
for more than one violation, or in an amount agreed to by the
parties.
New Code section 502.604(5A) provides that a person
who fails to obey a valid cease and desist order issued by
the administrator may be subject to a civil penalty in an
amount of not less than $1,000 and not more than $10,000 for
violating the order. Each day the failure to obey continues
constitutes a separate violation. The penalties provided in
this subsection are in addition to, and not exclusive of other
remedies that may be available.
INSURANCE DIVISION. Code section 505.8(10) is amended to
allow the commissioner to assess the costs of the examination
of a regulated entity necessary to accomplish compliance with
the insurance laws of this state.
DOMESTIC INSURANCE COMPANIES. New Code section 506.14
provides that any plan for the voluntary dissolution of a
domestic mutual insurance company licensed in this state shall
be presented for approval by the commissioner not less than 90
days prior to notice of the plan to the policyholders. The
commissioner must approve the plan if it complies with all
applicable laws and is fair and equitable to the company and to
its policyholders.
EXAMINATION OF INSURANCE COMPANIES. Code section
507.10(4)(a) is amended to allow the board of directors of
an insurance company to signal that each member has reviewed
an examination report with a notation in the board’s meeting
minutes instead of by filing affidavits indicating that each
member has received a copy of the report.
INSURANCE TRADE PRACTICES. New Code section 507B.4(3)(t)
makes it an unfair or deceptive act or practice in the business
of insurance to fail to refund premiums paid for a Medicare
supplement policy after the effective date of a subsequently
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purchased Medicare advantage plan if the insurer has no
exposure to pay benefits under the Medicare supplement policy
during the time that both the supplement policy and the
advantage plan are in effect.
INSURERS SUPERVISION, REHABILITATION, AND LIQUIDATION.
New Code section 507C.17A contains provisions that apply in
accordance with the federal Dodd-Frank Wall Street Reform and
Consumer Protection Act to a domestic insurer that is a covered
financial company, as that term is defined in federal law.
The bill provides that the commissioner of insurance may
file a petition in the state district court for an order of
rehabilitation or liquidation of such a domestic insurer upon
receiving notice from the secretary of the treasury of the
United States that the insurer acquiesces or consents to the
appointment of a receiver; upon an order of the United States
district court for the District of Columbia as to that insurer;
or when a petition of the secretary of the treasury of the
United States concerning the insurer is granted by operation
of law.
Notwithstanding any other provision of law to the contrary,
the state district court, after notice to the insurer, may
grant an order on such a petition within 24 hours after the
filing of the petition. If the district court does not make a
determination on the petition within 24 hours of its filing,
the order is deemed granted by operation of law upon expiration
of the 24-hour period.
At the time an order is deemed granted, the provisions of
Code chapter 507C are deemed to be in effect, the commissioner
is deemed to be affirmed as the receiver and to have all of
the applicable powers provided by Code chapter 507C, and the
state district court must expeditiously enter an order of
rehabilitation or liquidation. An order of rehabilitation or
liquidation made pursuant to the provisions of the bill is not
subject to a stay or injunction pending appeal.
This provision is effective upon enactment.
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INSURANCE FRAUD. Code section 507E.5(2) is amended to allow
the commissioner to share documents with local as well as
state, federal, and international law enforcement authorities
if the recipient agrees to maintain the confidentiality of
confidential and privileged documents that are shared.
LIFE INSURANCE COMPANIES AND ASSOCIATIONS. Code section
511.8(14) is amended to provide that a life insurance company
can include in its legal reserve as real property a controlling
membership, partnership, shareholder, or trust interest in any
entity created solely for the purpose of owning and operating a
leasehold of real estate, an undivided interest in a leasehold
of real estate, or an undivided interest in the fee title of
real estate. The entity must be expressly limited to that
purpose by its organizational documents.
Code section 511.8(23) is amended to provide that if
securities held in a life insurance company’s legal reserve are
loaned, the collateral received for the loaned securities is
not eligible for inclusion in the legal reserve.
New Code section 511.40(5) provides that the gross amount of
premiums received by a life insurance company or association
for an employer-owned life insurance contract shall be
allocated to this state for purposes of calculating the state
premium tax if the contract is issued or delivered in this
state or the company or association is domiciled in this state.
For purposes of the subsection, “employer-owned life insurance
contract” means a policy which provides coverage on a life for
which the employer has an insurable interest under this Code
section or the laws of another state and the policy is owned by
either the employer or a trust established by the employer for
the benefit of the employer or the employer’s active or retired
employees.
NONPROFIT HEALTH SERVICE CORPORATIONS. Code section 514.4
is amended to provide that a person who is affiliated with a
hospital or other entity that does not have a provider contract
with a dental service corporation can serve as a subscriber
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director of that corporation.
INSURANCE OTHER THAN LIFE. Code section 515.69(1) is
amended to require that a foreign stock insurance company must
possess the actual amount of capital and surplus required of
any company organized pursuant to Code chapter 515, or if the
insurer is a mutual company, the actual amount of surplus
required of any mutual company organized pursuant to Code
chapter 515. Currently, a foreign stock insurance company is
required to have $2.5 million of actual paid-up capital, and a
surplus in cash or invested in securities authorized by law of
not less than $2.5 million.
Code section 515.136 is amended to provide that an insurance
company or association is liable for the actual value of the
property insured at a date of a loss, unless that value exceeds
the amount stated in the policy. Currently, the insurer
issuing such a policy may show the actual value of the property
at the date of issuance of the policy and any depreciation in
the value of the property after a loss occurred but is still
liable for the actual value of the property insured on the date
of loss or the policy amount, whichever is less.
WORKERS’ COMPENSATION LIABILITY INSURANCE. Code section
515A.7(1)(b)(5) is amended to remove a reference to a
“scheduled rating plan”, a term that is not defined in the Code
chapter.
COUNTY MUTUAL INSURANCE ASSOCIATIONS. Code section
518.14(4)(f) is amended to allow county mutual insurance
associations to invest in stocks that are issued or guaranteed
by limited partnerships publicly traded on a nationally
established stock exchange in the United States.
STATE MUTUAL INSURANCE ASSOCIATIONS. Code section
518A.12(4)(f) is amended to allow state mutual insurance
associations to invest in stocks that are issued or guaranteed
by limited partnerships publicly traded on a nationally
established stock exchange in the United States.
RISK-BASED CAPITAL REQUIREMENTS FOR INSURERS. Code section
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521E.1(4) is amended to provide that for purposes of the Code
chapter, a fraternal benefit society organized under Code
chapter 512B is a domestic insurer. Code section 521E.1(4)(b),
which excepted a fraternal benefit society from inclusion as
a domestic insurer, is stricken. Corresponding changes to
include such a society are made in Code section 521E.1(6) and
(7).
Code section 521E.3(1)(a)(2) is amended to provide that for
a life and health insurer, a company-action-level event means
the insurer’s total adjusted capital is greater than or equal
to its company-action-level risk-based capital but less than
the product of its authorized-control-level risk-based capital
and three, instead of two and one-half, and has a negative
trend.
LICENSING OF PUBLIC ADJUSTERS. Code section 522C.6 is
amended to add provisions allowing the commissioner of
insurance to hold hearings, issue cease and desist orders,
assess civil penalties, and petition for enforcement of those
orders by the district court against persons who violate
the provisions of Code chapter 522C. The district court is
authorized to adjudge a violator in civil contempt of an order
and to impose a civil penalty for contempt of not less than
$3,000 but not more than $10,000 for each violation and grant
any other relief the court determines is just and proper under
the circumstances.
CEMETERY AND FUNERAL MERCHANDISE AND FUNERAL SERVICES. Code
section 523A.301 is amended to provide that for purposes of new
Code section 523A.304, “director” means the director of human
services.
Code section 523A.303(1) is amended so that the section
only applies to funds remaining in a nonguaranteed irrevocable
burial trust fund and does not apply to the proceeds of an
insurance policy or annuity assigned to a preneed seller or
provider of cemetery and funeral merchandise, and funeral
services.
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New Code section 523A.304 provides that if an insurance
policy or annuity is purchased or assigned to fund a preneed
purchase agreement and the insured or annuitant is or may
become a recipient of medical assistance benefits under Code
chapter 249A, unless the primary beneficiary of the policy
or annuity is the spouse or disabled child of the insured or
annuitant, the insurance policy or annuity shall designate,
or be amended to designate, the department of human services
as the primary beneficiary of any funds that remain from the
proceeds of the insurance policy or annuity after payment of
funeral and burial expenses in accordance with the conditions
and terms of the preneed purchase agreement.
If the remaining funds are disbursed as required, the
preneed seller, the provider of the merchandise and services,
and the insurer shall not be liable to the director of human
services, the estate of the deceased insured or annuitant, a
personal representative, or any other interested person for the
remaining funds and any lien imposed by the director against a
seller, provider, or insurer is unenforceable.
This provision applies to an insurance policy or annuity
purchased prior to January 1, 2014, that funds a preneed
purchase agreement for an insured or annuitant who receives
or may receive medical assistance benefits under Code chapter
249A and who dies on or after January 1, 2015. The provision
also applies to an insurance policy or annuity issued on or
after January 1, 2014, to fund a preneed purchase agreement for
an insured or annuitant who receives or may receive medical
assistance benefits, and who dies on or after January 1, 2014,
and on or after the date of issuance of the insurance policy or
annuity.
DISSOLUTION OF MARRIAGE AND DOMESTIC RELATIONS. Code
section 598.20A is amended to provide that it is the policy
owner of an insurance contract insuring the policy owner’s own
life, not the insured, who designates the beneficiary of the
policy and is authorized to make changes in that designation
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after a decree of dissolution of marriage, annulment, or
separate maintenance.
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