Bill Text: IA HF454 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A bill for an act relating to various matters involving insurance and the insurance division of the department of commerce and including effective date provisions. (Formerly HSB 139) (See Cmte. Bill HF 632)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2015-04-21 - Withdrawn. H.J. 886. [HF454 Detail]
Download: Iowa-2015-HF454-Introduced.html
House File 454 - Introduced HOUSE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 139) A BILL FOR 1 An Act relating to various matters involving insurance and 2 the insurance division of the department of commerce and 3 including effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1287HV (2) 86 av/nh PAG LIN 1 1 Section 1. Section 22.7, subsection 58, Code 2015, is 1 2 amended to read as follows: 1 3 58. Information filed with the commissioner of insurance 1 4 pursuant to sections 523A.204and, 523A.205, 523A.206, 1 5 523A.207, 523A.401, 523A.502A, and 523A.803. 1 6 Sec. 2. Section 502.103, Code 2015, is amended to read as 1 7 follows: 1 8 502.103 References to federal statutes. 1 9 "Securities Act of 1933", 15 U.S.C. {77a et seq.; "Securities 1 10 Exchange Act of 1934", 15 U.S.C. {78a et seq.; "Public Utility 1 11 Holding Company Act of 1935", 15 U.S.C. {79 et seq.; "Investment 1 12 Company Act of 1940", 15 U.S.C. {80a=1 et seq.; "Investment 1 13 Advisers Act of 1940", 15 U.S.C. {80b=1 et seq.; "Employee 1 14 Retirement Income Security Act of 1974", 29 U.S.C. {1001 et 1 15 seq.; "National Housing Act", 12 U.S.C. {1701; "Commodity 1 16 Exchange Act", 7 U.S.C. {1 et seq.; "Internal Revenue Code", 1 17 26 U.S.C. {1 et seq.; "Securities Investor Protection Act 1 18 of 1970", 15 U.S.C. {78aaa et seq.; "Securities Litigation 1 19 Uniform Standards Act of 1998", 112 Stat. 3227; "Small Business 1 20 Investment Act of 1958", 15 U.S.C. {661 et seq.; and "Electronic 1 21 Signatures in Global and National Commerce Act", 15 U.S.C. 1 22 {7001 et seq.; and "Dodd=Frank Wall Street Reform and Consumer 1 23 Protection Act", Pub. L. No. 111=203 mean those federal statutes 1 24 and the rules and regulations adopted under those federal 1 25 statutes, as in effect on January 1,20052015. 1 26 Sec. 3. Section 502.202, Code 2015, is amended by adding the 1 27 following new subsection: 1 28 NEW SUBSECTION. 24. Intrastate crowdfunding. 1 29 a. Definitions. As used in this subsection, unless the 1 30 context otherwise requires: 1 31 (1) "Intermediary" means a broker=dealer that is subject 1 32 to the registration requirements of section 502.401 and that 1 33 facilitates the offer and sale of securities by issuers to 1 34 investors through an internet=based system that is open to 1 35 and accessible by the general public. If an intermediary's 2 1 activity as a broker=dealer is limited to offerings conducted 2 2 in accordance with the exemption in this subsection, the 2 3 administrator shall by rule list the specific broker=dealer 2 4 requirements with which the intermediary must comply. 2 5 (2) "Intrastate crowdfunding" means the offer or sale of a 2 6 security by an issuer in a transaction that is available for 2 7 purchase only by Iowa residents and by business organizations 2 8 located in, and organized and registered under the laws of, 2 9 this state. 2 10 b. Exemption not available. The exemption in this 2 11 subsection is not available to any of the following: 2 12 (1) A foreign issuer. 2 13 (2) An investment company, as defined in section 3 of the 2 14 federal Investment Company Act of 1940. 2 15 (3) A development stage company that either has no specific 2 16 business plan or purpose or has indicated that the company's 2 17 business plan is to engage in a merger or acquisition with an 2 18 unidentified company or companies, or other entity or person. 2 19 (4) A company with a class of securities registered under 2 20 the federal Securities Exchange Act of 1934. 2 21 (5) Any person who is subject to a disqualifying event as 2 22 described in the regulations adopted in accordance with section 2 23 926 of the federal Dodd=Frank Wall Street Reform and Consumer 2 24 Protection Act, Pub. L. No. 111=203, or in rules adopted by the 2 25 administrator pursuant to chapter 17A. 2 26 c. Aggregate sales limit. The aggregate amount of 2 27 securities sold to all investors by the issuer during the 2 28 twelve=month period preceding the date of the offer or sale, 2 29 including any amount sold in reliance upon the exemption in 2 30 this subsection, shall not exceed one million dollars other 2 31 than either of the following: 2 32 (1) Securities sold to Iowa resident institutional 2 33 investors. 2 34 (2) Securities sold to the Iowa resident issuer's 2 35 management. 3 1 d. Individual sales limit. The aggregate amount of 3 2 securities sold to an investor by the issuer during the 3 3 twelve=month period preceding the date of the offer or sale, 3 4 including any amount sold in reliance upon the exemption in 3 5 this subsection, shall not exceed five thousand dollars unless 3 6 the investor is an accredited investor who resides in Iowa. 3 7 For purposes of this individual sales limit, the following 3 8 investors shall be treated as one investor: 3 9 (1) A relative, spouse, or relative of the spouse of an 3 10 investor who has the same principal residence as the investor. 3 11 (2) A trust or estate in which an investor and any related 3 12 person collectively have more than fifty percent of the 3 13 beneficial interest, excluding contingent interests. 3 14 (3) A corporation or other organization of which an investor 3 15 and any related person collectively are beneficial owners of 3 16 more than fifty percent of the equity securities, excluding 3 17 directors' qualifying shares, or equity interests. 3 18 e. Use of an intermediary. All offers and sales of 3 19 securities made in reliance upon the exemption in this 3 20 subsection shall be made through an intermediary's internet 3 21 site. 3 22 f. Notice to administrator. Prior to the offer of any 3 23 security in this state made in reliance upon the exemption 3 24 in this subsection, the issuer shall file a notice with 3 25 the administrator in a form and format approved by the 3 26 administrator, and including the filing fee specified by rule, 3 27 if any. 3 28 g. Rulemaking. The administrator shall adopt all rules 3 29 necessary to implement the exemption in this subsection 3 30 including but not limited to all of the following: 3 31 (1) Mandatory disclosures. 3 32 (2) Restrictions on advertising and communications. 3 33 (3) Target amount, offering period, and escrow 3 34 requirements. 3 35 (4) Use and compensation of promoters. 4 1 (5) Restrictions on the sale of securities purchased under 4 2 the exemption in this subsection. 4 3 (6) Sales reports. 4 4 (7) Limitations on the offering price. 4 5 (8) Duties of an intermediary which shall include providing 4 6 the administrator with continuous investor=level access to the 4 7 intermediary's internet site. 4 8 (9) Records maintenance. 4 9 (10) Duties and registration requirements for internet site 4 10 operators. 4 11 Sec. 4. Section 502.302, subsection 1, paragraph a, 4 12 subparagraph (1), Code 2015, is amended to read as follows: 4 13 (1) A person who is the issuer of a federal covered 4 14 security under section 18(b)(2) of the Securities Act of 4 15 1933 shall initially make a notice filing and annually renew 4 16 a notice filing in this statefor an indefinite amount or a 4 17 fixed amount.The fixed amount must be for two hundred fifty 4 18 thousand dollars.4 19 Sec. 5. Section 502.302, subsection 1, paragraph a, 4 20 subparagraph (2), unnumbered paragraph 1, Code 2015, is amended 4 21 to read as follows: 4 22 A notice filer shall pay a filing fee in the amount of 4 23 four hundred dollars when the notice is filed.If the amount 4 24 covered by the notice is indefinite, the notice filer shall pay 4 25 a filing fee of one thousand dollars. If the amount covered by 4 26 the notice is fixed, the notice filer shall pay a filing fee 4 27 of two hundred fifty dollars, and all of the following shall 4 28 apply:4 29 Sec. 6. Section 502.302, subsection 1, paragraph a, 4 30 subparagraph (2), subparagraph divisions (a) and (b), Code 4 31 2015, are amended by striking the subparagraph divisions. 4 32 Sec. 7. Section 502.302, subsections 2 and 3, Code 2015, are 4 33 amended to read as follows: 4 34 2. Notice filing effectiveness and renewal. A notice filing 4 35 under subsection 1 is effective for one year commencing on 5 1 the later of the notice filing or the effectiveness of the 5 2 offering filed with the securities and exchange commission. 5 3 On or before expiration, the issuer may renew a notice filing 5 4 by filing a copy of those records filed by the issuer with 5 5 the securities and exchange commission that are required by 5 6 rule or order under this chapter to be filed and by paying 5 7thea renewal feerequired by subsection 1, paragraph "a"of 5 8 four hundred dollars. A previously filed consent to service 5 9 of process complying with section 502.611 may be incorporated 5 10 by reference in a renewal. A renewed notice filing becomes 5 11 effective upon the expiration of the filing being renewed. 5 12 3. Notice filings for federal covered securities under 5 13 section 18(b)(4)(D). With respect to a security that is a 5 14 federal covered security under section 18(b)(4)(D) of the 5 15 Securities Act of 1933, 15 U.S.C. {77r(b)(4)(D), a rule under 5 16 this chapter may require a notice filing by or on behalf of an 5 17 issuer to include a copy of form D, including the appendix, as 5 18 promulgated by the securities and exchange commission, and a 5 19 consent to service of process complying with section 502.611 5 20 signed by the issuer not later than fifteen days after the 5 21 first sale of the federal covered security in this state and 5 22 the payment of a fee of one hundred dollars; and the payment of 5 23 a fee of two hundred fifty dollars for any late filing. 5 24 Sec. 8. Section 502.412, subsection 9, Code 2015, is amended 5 25 to read as follows: 5 26 9. Limit on investigation or proceeding. The administrator 5 27 shall not institute a proceeding under subsection 1, 2, 5 28 or 3 based solely on material facts actually known by the 5 29 administrator unless an investigation or the proceeding is 5 30 instituted withinone yeartwo years after the administrator 5 31 actually acquires knowledge of the material facts. 5 32 Sec. 9. Section 511.8, subsection 5, paragraphs a and b, 5 33 Code 2015, are amended to read as follows: 5 34 a. (1) If fixed interest=bearing obligations, the net 5 35 earnings of the issuing, assuming, or guaranteeing corporation 6 1 available for its fixed charges for a period of five fiscal 6 2 years next preceding the date of acquisition of the obligations 6 3 by such insurance company shall have averaged per year not 6 4 less than one and one=half times such average annual fixed 6 5 charges of the issuing, assuming, or guaranteeing corporation 6 6 applicable to such period, and, during at least one of the last 6 7 two years of such period, its net earnings shall have been 6 8 not less than one and one=half times its fixed charges for 6 9 such year; or if, at the date of acquisition, the obligations 6 10 areadequately secured and have investment qualities and 6 11 characteristics wherein the speculative elements are not 6 12 predominantinvestment grade as defined by the commissioner by 6 13 rule. 6 14 (2) However, with respect to fixed interest=bearing 6 15 obligations which are issued, assumed, or guaranteed by a 6 16 financial company, the net earnings by the financial company 6 17 available for its fixed charges for the period of five fiscal 6 18 years preceding the date of acquisition of the obligations by 6 19 the insurance company shall have averaged per year not less 6 20 than one and one=fourth times such average annual fixed charges 6 21 of the issuing, assuming, or guaranteeing financial company 6 22 applicable to such period, and, during at least one of the last 6 23 two years of the period, its net earnings shall have been not 6 24 less than one and one=fourth times its fixed charges for such 6 25 year; or if, at the date of acquisition, the obligations are 6 26adequately secured and speculative elements are not predominant 6 27 in their investment qualities and characteristicsinvestment 6 28 grade as defined by the commissioner by rule. As used in 6 29 this subparagraph (2), "financial company" means a corporation 6 30 which on the average over its last five fiscal years preceding 6 31 the date of acquisition of its obligations by the insurer, 6 32 has had at least fifty percent of its net income, including 6 33 income derived from subsidiaries, derived from the business 6 34 of wholesale, retail, installment, mortgage, commercial, 6 35 industrial or consumer financing, or from banking or factoring, 7 1 or from similar or related lines of business. 7 2 b. If adjustment, income, or other contingent interest 7 3 obligations, the net earnings of the issuing, assuming, or 7 4 guaranteeing corporation available for its fixed charges 7 5 for a period of five fiscal years next preceding the date 7 6 of acquisition of the obligations by such insurance company 7 7 shall have averaged per year not less than one and one=half 7 8 times such average annual fixed charges of the issuing, 7 9 assuming, or guaranteeing corporation and its average annual 7 10 maximum contingent interest applicable to such period and, 7 11 during at least one of the last two years of such period, its 7 12 net earnings shall have been not less than one and one=half 7 13 times the sum of its fixed charges and maximum contingent 7 14 interest for such year, or if, at the date of acquisition, 7 15 the obligations areadequately secure and have investment 7 16 qualities and characteristics and speculative elements are not 7 17 predominantinvestment grade as defined by the commissioner by 7 18 rule. 7 19 Sec. 10. Section 511.8, subsection 6, paragraph a, 7 20 subparagraph (1), subparagraph division (b), unnumbered 7 21 paragraph 1, Code 2015, is amended to read as follows: 7 22 The net earnings available for fixed charges and preferred 7 23 dividends of the issuing corporation shall have been, for 7 24 each of the five fiscal years immediately preceding the date 7 25 of acquisition, not less than one and one=half times the sum 7 26 of the annual fixed charges and contingent interest, if any, 7 27 and the annual preferred dividend requirements as of the date 7 28 of acquisition; or at the date of acquisition the preferred 7 29 stockhasis investmentqualities and characteristics wherein 7 30 speculative elements are not predominantgrade as defined by 7 31 the commissioner by rule. 7 32 Sec. 11. Section 511.8, subsection 8, unnumbered paragraph 7 33 1, Code 2015, is amended to read as follows: 7 34 Securities included under subsections 5, 6, and 7, and 7 35 subsection 9, paragraph "h", shall not be eligible: 8 1 Sec. 12. Section 511.8, subsection 8, paragraph b, 8 2 unnumbered paragraph 1, Code 2015, is amended to read as 8 3 follows: 8 4 The investments of any company or association insuchthe 8 5 securities of a corporation shall notbe eligible in excess of 8 6exceed the following percentages of the legal reserve of such 8 7 company or association: 8 8 Sec. 13. Section 511.8, subsection 8, paragraph b, 8 9 subparagraphs (1) and (2), Code 2015, are amended to read as 8 10 follows: 8 11 (1)With the exception of public securitiesFor any one 8 12 corporation other than a public utility company, two percent 8 13 of the legal reservein the securities of any one corporation. 8 14FiveFor any one public utility company, five percent of the 8 15 legal reservein the securities of any one public utility 8 16 corporation. 8 17 (2)Seventy=five percent of the legal reserve in the 8 18 securities described in subsection 5 issued by other than 8 19 public utility corporations. Fifty percent of the legal 8 20 reserve in theFor securities described in subsection 5 issued 8 21 by public utilitycorporationscompanies, fifty percent of the 8 22 legal reserve. 8 23 Sec. 14. Section 511.8, subsection 9, Code 2015, is amended 8 24 by adding the following new paragraph: 8 25 NEW PARAGRAPH. h. Mezzanine real estate loans subject to 8 26 the following conditions: 8 27 (1) The terms of the mezzanine real estate loan agreement 8 28 shall do all of the following: 8 29 (a) Require that each pledgor abstain from granting 8 30 additional security interests in the equity interest pledged. 8 31 (b) Set forth techniques to minimize the likelihood or 8 32 impact of a bankruptcy filing on the part of the real estate 8 33 owner or the mezzanine real estate loan borrower consistent 8 34 with the national association of insurance commissioners' 8 35 accounting practices and procedures manual. 9 1 (c) Require the real estate owner or mezzanine real estate 9 2 loan borrower to do all of the following: 9 3 (i) Hold no assets other than, in the case of the real 9 4 estate owner, the real property, and in the case of the 9 5 mezzanine real estate loan borrower, the equity interest of the 9 6 real estate owner. 9 7 (ii) Not engage in any business other than, in the case 9 8 of the real estate owner, the ownership and operation of the 9 9 real estate, and in the case of the mezzanine real estate loan 9 10 borrower, holding an ownership interest in the real estate 9 11 owner. 9 12 (iii) Not incur additional debt, other than limited trade 9 13 payables, a first mortgage loan, or mezzanine real estate 9 14 loans. 9 15 (2) At the time of purchase, the sum of the first mortgage 9 16 and the mezzanine real estate loans shall not exceed ninety 9 17 percent of the value of the real estate evidenced by a 9 18 current appraisal and the mezzanine real estate loan shall be 9 19 classified as CM4 or better in accordance with the national 9 20 association of insurance commissioners' rating methodology, or 9 21 an equivalent or successor rating. 9 22 (3) The value of a company's or association's total 9 23 investments qualified under this paragraph "h" shall not exceed 9 24 three percent of the legal reserve subject to the following 9 25 conditions: 9 26 (a) The value of a company's or association's total 9 27 investments qualified under this paragraph "h" in mezzanine 9 28 real estate loans classified as CM3 in accordance with the 9 29 national association of insurance commissioners' rating 9 30 methodology or an equivalent or successor rating at the time of 9 31 purchase shall not exceed two percent of the legal reserve. 9 32 (b) The value of a company's or association's total 9 33 investments qualified under this paragraph "h" in mezzanine 9 34 real estate loans classified as CM4 in accordance with the 9 35 national association of insurance commissioners' rating 10 1 methodology or an equivalent or successor rating at the time of 10 2 purchase shall not exceed one percent of the legal reserve. 10 3 (4) For purposes of this paragraph "h", "mezzanine real 10 4 estate loan" means a loan secured by a pledge of a direct or 10 5 indirect equity interest in an entity that owns real estate. 10 6 Sec. 15. Section 511.8, subsection 13, Code 2015, is amended 10 7 to read as follows: 10 8 13. Collateral loans. Loans secured by collateral 10 9 consisting of anysecuritiesassets or investments qualifiedin 10 10under this section, provided the amount of the loan is not in 10 11 excess of ninety percent of the value of thesecuritiesassets 10 12 or investments. Provided further that subsection 8 shall apply 10 13 to the collateralsecuritiesassets or investments pledged 10 14 to the payment of loansauthorized inqualified under this 10 15 subsection. 10 16 Sec. 16. Section 511.8, subsection 18, paragraph a, Code 10 17 2015, is amended to read as follows: 10 18 a. (1) Common stocks,orshares, or equity interests issued 10 19 by solvent corporations or institutions are eligible if the 10 20 total investment in the common stocks,orsharesin, or equity 10 21 interests of the corporations or institutions does not exceed 10 22 ten percent of legal reserve, provided not more than one=half 10 23 percent of the legal reserve is invested in common stocks, 10 24orshares, or equity interests of any one corporation or 10 25 institution. However,thenot more than four percent of legal 10 26 reserve shall be invested in common stocks,orsharesshall be 10 27, or equity interests which do not meet one of the following 10 28 requirements: 10 29 (a) Are listed or admitted to trading on an established 10 30 foreign securities exchange or a securities exchange in the 10 31 United Statesor shall be. 10 32 (b) Are publicly held and traded in the "over=the=counter 10 33 market"and, provided that market quotations shall be readily 10 34 available, and further, the investment. 10 35 (2) An investment in common stocks, shares, or equity 11 1 interests shall not create a conflict of interest for an 11 2 officer or director of the company between the insurance 11 3 company and the corporation whose common stocks,orshares, or 11 4 equity interests are purchased. 11 5 Sec. 17. Section 511.8, subsection 20, paragraph b, Code 11 6 2015, is amended to read as follows: 11 7 b. For purposes of this subsection, "venture capital 11 8 fund" means a corporation, partnership, proprietorship, or 11 9 other entity formed under the laws of the United States, or 11 10 a state, district, or territory of the United States, whose 11 11 principal business is or will be the making of investments in, 11 12 and the provision of significant managerial assistance to, 11 13 small businesses which meet the small business administration 11 14 definition of small business. "Equity interests" means limited 11 15 partnership interests and other equity interests in which 11 16 liability is limited to the amount of the investment, but does 11 17 not mean general partnership interests or other interests 11 18 involving general liability. "Venture capital fund" includes an 11 19 equity interest in the Iowa fund of funds as defined in section 11 20 15E.62 and an equity interest in an innovation fund as defined 11 21 in section 15E.52. 11 22 Sec. 18. Section 511.8, subsection 22, paragraphs c and d, 11 23 Code 2015, are amended to read as follows: 11 24 c. Investments in financial instruments used in hedging 11 25 transactions are not eligible in excess of two percent of 11 26 the legal reserve in the financial instruments of any one 11 27 corporation, less any securities of that corporation owned 11 28 by the company or association and in which its legal reserve 11 29 is invested, except insofar as the financial instruments are 11 30 collateralized by cash, United States government obligations 11 31 as authorized by subsection 1, or obligations of or guaranteed 11 32 by a United States government=sponsored enterprise which on 11 33 the date they are pledged as collateral areadequately secured 11 34 and have investment qualities and characteristics wherein the 11 35 speculative elements are not predominantinvestment grade as 12 1 defined by the commissioner by rule, which are deposited with a 12 2 custodian bank as defined in subsection 21, and held under a 12 3 written agreement with the custodian bank that complies with 12 4 subsection 21 and provides for the proceeds of the collateral, 12 5 subject to the terms and conditions of the applicable 12 6 collateral or other credit support agreement, to be remitted to 12 7 the legal reserve deposit of the company or association and to 12 8 vest in the state in accordance with section 508.18 whenever 12 9 proceedings under that section are instituted. 12 10 d. Investments in financial instruments used in hedging 12 11 transactions are not eligible in excess of ten percent of the 12 12 legal reserve, except insofar as the financial instruments are 12 13 collateralized by cash, United States government obligations 12 14 as authorized by subsection 1, or obligations of or guaranteed 12 15 by a United States government=sponsored enterprise which on 12 16 the date they are pledged as collateral areadequately secured 12 17 and have investment qualities and characteristics wherein the 12 18 speculative elements are not predominantinvestment grade as 12 19 defined by the commissioner by rule, which are deposited with a 12 20 custodian bank as defined in subsection 21, and held under a 12 21 written agreement with the custodian bank that complies with 12 22 subsection 21 and provides for the proceeds of the collateral, 12 23 subject to the terms and conditions of the applicable 12 24 collateral or other credit support agreement, to be remitted to 12 25 the legal reserve deposit of the company or association and to 12 26 vest in the state in accordance with section 508.18 whenever 12 27 proceedings under that section are instituted. 12 28 Sec. 19. Section 511.8, subsection 22, paragraph e, 12 29 subparagraph (1), Code 2015, is amended to read as follows: 12 30 (1) Investments in financial instruments of foreign 12 31 governments or foreign corporate obligations, other than 12 32 Canada, used in hedging transactions shall be included 12 33 in the limitation contained in subsection 19 that allows 12 34 only twenty percent of the legal reserve of the company or 12 35 association to be invested in such foreign investments, except 13 1 insofar as the financial instruments are collateralized by 13 2 cash, United States government obligations as authorized by 13 3 subsection 1, or obligations of or guaranteed by a United 13 4 States government=sponsored enterprise which on the date 13 5 they are pledged as collateral areadequately secured and 13 6 have investment qualities and characteristics wherein the 13 7 speculative elements are not predominantinvestment grade as 13 8 defined by the commissioner by rule, which are deposited with a 13 9 custodian bank as defined in subsection 21, and held under a 13 10 written agreement with the custodian bank that complies with 13 11 subsection 21 and provides for the proceeds of the collateral, 13 12 subject to the terms and conditions of the applicable 13 13 collateral or other credit support agreement, to be remitted to 13 14 the legal reserve deposit of the company or association and to 13 15 vest in the state in accordance with section 508.18 whenever 13 16 proceedings under that section are instituted. 13 17 Sec. 20. Section 514G.102, Code 2015, is amended to read as 13 18 follows: 13 19 514G.102 Scope. 13 20 The requirements of this chapter apply to policies delivered 13 21 or issued for delivery in this state on or after July 1, 2008. 13 22 The requirements of this chapter related to independent review 13 23 of benefit trigger determinations apply to all claims made on 13 24 or after January 1, 2009. The requirements of this chapter 13 25 related to prompt payment of claims and the payment of interest 13 26 apply to all long=term care insurance policies. This chapter 13 27 is not intended to supersede the obligations of entities 13 28 subject to this chapter to comply with the substance of other 13 29 applicable insurance laws not in conflict with this chapter, 13 30 except that laws and regulations designed and intended to apply 13 31 to Medicare supplement insurance policies shall not be applied 13 32 to long=term care insurance. 13 33 Sec. 21. Section 515.35, subsection 4, paragraph m, Code 13 34 2015, is amended to read as follows: 13 35 m. Venture capital funds. Shares or equity interests in 14 1 venture capital funds which agree to invest an amount equal to 14 2 at least fifty percent of the investments by a company in small 14 3 businesses having their principal offices within this state and 14 4 having either more than one=half of their assets within this 14 5 state or more than one=half of their employees employed within 14 6 this state. A company shall not invest more than five percent 14 7 of its capital and surplus under this paragraph. For purposes 14 8 of this paragraph, "venture capital fund" means a corporation, 14 9 partnership, proprietorship, or other entity formed under the 14 10 laws of the United States, or a state, district, or territory 14 11 of the United States, whose principal business is or will be 14 12 the making of investments in, and the provision of significant 14 13 managerial assistance to, small businesses which meet the small 14 14 business administration definition of small business. "Equity 14 15 interests" means limited partnership interests and other equity 14 16 interests in which liability is limited to the amount of the 14 17 investment, but does not mean general partnership interests or 14 18 other interests involving general liability. "Venture capital 14 19 fund" includes an equity interest in the Iowa fund of funds 14 20 as defined in section 15E.62 and an equity interest in an 14 21 innovation fund as defined in section 15E.52. 14 22 Sec. 22. Section 521A.5, subsection 4, paragraph d, Code 14 23 2015, is amended to read as follows: 14 24 d. The board of directors of a domestic insurer shall 14 25 establish one or more committees comprised solely of directors 14 26whoor other persons appointed by the board, the majority of 14 27 whom are not officers or employees of the insurer or of any 14 28 entity controlling, controlled by, or under common control with 14 29 the insurer and who are not beneficial owners of a controlling 14 30 interest in the voting stock of the insurer or any such entity. 14 31 The committee or committees shall have responsibility for 14 32 recommending or nominating candidates for director for election 14 33 by shareholders or policyholders, evaluating the performance 14 34 of officers deemed to be principal officers of the insurer, 14 35 and recommending to the board of directors the selection and 15 1 compensation of the principal officers. 15 2 Sec. 23. Section 523A.102, subsection 8, Code 2015, is 15 3 amended by striking the subsection. 15 4 Sec. 24. Section 523A.102, Code 2015, is amended by adding 15 5 the following new subsection: 15 6 NEW SUBSECTION. 13A. "Guaranteed" means that the 15 7 preneed seller has agreed to accept the funds available from 15 8 contractual payments made by the purchaser and the allocable 15 9 portion of accumulated income as payment in full for the 15 10 applicable items of merchandise and services selected and 15 11 identified in the purchase agreement, and that the purchaser, 15 12 beneficiary, and the beneficiary's estate are not obligated to 15 13 pay any additional costs related to updated charges for price 15 14 increases on the merchandise and services selected even if the 15 15 additional costs exceed the funds available from contractual 15 16 payments made by the purchaser and the allocable portion of 15 17 accumulated income. This provision does not prevent the 15 18 inclusion of nonguaranteed items in an otherwise guaranteed 15 19 purchase agreement. 15 20 Sec. 25. Section 523A.204, subsection 3, Code 2015, is 15 21 amended to read as follows: 15 22 3. All records maintained by the commissioner under this 15 23 section shall be confidential pursuant to section 22.7, 15 24 subsection 58, and shall not be made available for inspection 15 25 or copying except upon the approval of the commissioner or the 15 26 attorney general, or except when sought by the preneed seller 15 27 to whom the records relate. Such records shall be privileged 15 28 and confidential in any judicial or administrative proceeding 15 29 except any of the following: 15 30 a. An action commenced by the commissioner. 15 31 b. An administrative proceeding brought by the insurance 15 32 division. 15 33 c. An action or proceeding which arises out of the criminal 15 34 provisions of the laws of this state or of the United States. 15 35 d. An action brought by the insurance division or 16 1 the attorney general to recover moneys for embezzlement, 16 2 misappropriation, or misuse of trust funds. 16 3 Sec. 26. Section 523A.204, subsections 4 and 5, Code 2015, 16 4 are amended by striking the subsections. 16 5 Sec. 27. Section 523A.205, subsection 2, Code 2015, is 16 6 amended by striking the subsection. 16 7 Sec. 28. Section 523A.205, subsection 3, Code 2015, is 16 8 amended to read as follows: 16 9 3.Notwithstanding chapter 22, allAll records maintained 16 10 by the commissioner under this section shall be confidential 16 11 pursuant to section 22.7, subsection 58, and shall not be made 16 12 available for inspection or copying except upon approval of the 16 13 commissioner or the attorney general, or except when sought by 16 14 the financial institution to whom the records relate. Such 16 15 records shall be privileged and confidential in any judicial or 16 16 administrative proceeding except any of the following: 16 17 a. An action commenced by the commissioner. 16 18 b. An administrative proceeding brought by the insurance 16 19 division. 16 20 c. An action or proceeding which arises out of the criminal 16 21 provisions of the laws of this state or of the United States. 16 22 d. An action brought by the insurance division or 16 23 the attorney general to recover moneys for embezzlement, 16 24 misappropriation, or misuse of trust funds. 16 25 Sec. 29. Section 523A.206, subsection 6, Code 2015, is 16 26 amended by striking the subsection and inserting in lieu 16 27 thereof the following: 16 28 6. All records maintained by the commissioner under this 16 29 section, including work papers, notes, recorded information, 16 30 documents, and copies thereof that are produced or obtained 16 31 by or disclosed to the commissioner or another person in the 16 32 course of a compliance examination, shall be confidential 16 33 pursuant to section 22.7, subsection 58, and shall not be 16 34 made available for inspection and copying except upon the 16 35 approval of the commissioner or the attorney general. Such 17 1 records shall be privileged and confidential in any judicial or 17 2 administrative proceeding except any of the following: 17 3 a. An action commenced by the commissioner. 17 4 b. An administrative proceeding brought by the insurance 17 5 division. 17 6 c. An action or proceeding which arises out of the criminal 17 7 provisions of the laws of this state or of the United States. 17 8 d. An action brought by the insurance division or 17 9 the attorney general to recover moneys for embezzlement, 17 10 misappropriation, or misuse of trust funds. 17 11 Sec. 30. Section 523A.207, Code 2015, is amended to read as 17 12 follows: 17 13 523A.207 Audits by certified public accountants == penalty. 17 14 1. A purchase agreement shall not be sold or transferred, 17 15 as part of the sale of a business or the assets of a business, 17 16 until an audit has been performed by a certified public 17 17 accountant and filed with the commissioner that expresses the 17 18 auditor's opinion of the adequacy of funding related to the 17 19 purchase agreements to be sold or transferred. If the buyer 17 20 of a purchase agreement sold or transferred as part of the 17 21 sale of a business or the assets of a business, fails to file 17 22 such an audit, the commissioner shall suspend the preneed 17 23 seller's license of the buyer and the preneed sales license of 17 24 any sales agent in the employ of the buyer until the audit is 17 25 filed. In addition, the commissioner shall assess a penalty 17 26 against the buyer in an amount up to one hundred dollars for 17 27 each day that the audit remains unfiled. The commissioner 17 28 shall allow a thirty=day grace period after the date that a 17 29 purchase agreement is sold or transferred before suspension of 17 30 a license or assessment of a penalty for failure to file an 17 31 audit pursuant to this section. 17 32 2. All records maintained by the commissioner under this 17 33 section shall be confidential pursuant to section 22.7, 17 34 subsection 58, and shall not be made available for inspection 17 35 or copying except upon approval of the commissioner or the 18 1 attorney general, or except when sought by the preneed seller 18 2 to whom the records relate. Such records shall be privileged 18 3 and confidential in any judicial or administrative proceeding 18 4 except any of the following: 18 5 a. An action commenced by the commissioner. 18 6 b. An administrative proceeding brought by the insurance 18 7 division. 18 8 c. An action or proceeding which arises out of the criminal 18 9 provisions of the laws of this state or of the United States. 18 10 d. An action brought by the insurance division or 18 11 the attorney general to recover moneys for embezzlement, 18 12 misappropriation, or misuse of trust funds. 18 13 Sec. 31. Section 523A.401, subsection 8, Code 2015, is 18 14 amended to read as follows: 18 15 8. An insurance company issuing policies funding purchase 18 16 agreements subject to this chapter shall file an annual report 18 17 with the commissioner on a form prescribed by the commissioner. 18 18 The report shall list the applicable insurance policies 18 19 outstanding for each seller.Computer printouts may be 18 20 submitted so long as each legibly provides the same information 18 21 required in the prescribed form.18 22 Sec. 32. Section 523A.401, Code 2015, is amended by adding 18 23 the following new subsection: 18 24 NEW SUBSECTION. 10. All records maintained by the 18 25 commissioner under this section shall be confidential 18 26 pursuant to section 22.7, subsection 58, and shall not be made 18 27 available for inspection or copying except upon approval of the 18 28 commissioner or the attorney general, or except when sought 18 29 by the insurance company to whom the records relate. Such 18 30 records shall be privileged and confidential in any judicial or 18 31 administrative proceeding except any of the following: 18 32 a. An action commenced by the commissioner. 18 33 b. An administrative proceeding brought by the insurance 18 34 division. 18 35 c. An action or proceeding which arises out of the criminal 19 1 provisions of the laws of this state or of the United States. 19 2 d. An action brought by the insurance division or 19 3 the attorney general to recover moneys for embezzlement, 19 4 misappropriation, or misuse of trust funds. 19 5 Sec. 33. Section 523A.402, subsection 8, Code 2015, is 19 6 amended to read as follows: 19 7 8. An insurance company issuing annuities funding purchase 19 8 agreements subject to this chapter shall file an annual report 19 9 with the commissioner on a form prescribed by the commissioner. 19 10 The report shall list the applicable annuities outstanding for 19 11 each seller.Computer printouts may be submitted so long as 19 12 each legibly provides the same information required in the 19 13 prescribed form.19 14 Sec. 34. Section 523A.405, Code 2015, is amended by striking 19 15 the section and inserting in lieu thereof the following: 19 16 523A.405 Bond in lieu of trust fund. 19 17 The commissioner may, by rule, establish terms and 19 18 conditions under which a seller may, in lieu of trust 19 19 requirements, file with the commissioner a surety bond issued 19 20 by a surety company authorized to do business and doing 19 21 business in this state. 19 22 Sec. 35. Section 523A.501, subsection 2, Code 2015, is 19 23 amended to read as follows: 19 24 2. An application for a preneed seller's license shall be 19 25 filed on a form and in a format prescribed by the commissioner 19 26 and be accompanied by afifty dollarfiling fee in an amount 19 27 set by the commissioner by rule. The application shall include 19 28 the name of the natural person or legal entity to be licensed 19 29 as the preneed seller and, if applicable, any other name 19 30 under which the preneed seller will be transacting business, 19 31 including any names registered with the secretary of state or a 19 32 county clerk. The application shall be updated as necessary 19 33 to ensure that the commissioner has been notified of all names 19 34 under which the preneed seller is operating and doing business. 19 35 Sec. 36. Section 523A.501, subsection 7, Code 2015, is 20 1 amended to read as follows: 20 2 7. A preneed seller's licenseshall be renewed every four 20 3 years by filing the form prescribed by the commissioner under 20 4 subsection 2, accompanied by a renewal fee in an amount set by 20 5 the commissioner by ruleexpires annually on April 15. If the 20 6 preneed seller has filed a complete annual report and paid the 20 7 required fees as required in section 523A.204, the commissioner 20 8 shall renew the preneed seller's license until April 15 of the 20 9 following year. 20 10 Sec. 37. Section 523A.502, subsection 5, Code 2015, is 20 11 amended by striking the subsection and inserting in lieu 20 12 thereof the following: 20 13 5. A sales license shall expire annually on April 15. If 20 14 the sales agent has filed a substantially complete annual 20 15 report as required in section 523A.502A, the commissioner shall 20 16 renew the sales license until April 15 of the following year. 20 17 Sec. 38. Section 523A.502A, subsections 1 and 2, Code 2015, 20 18 are amended to read as follows: 20 19 1. A sales agent shall file with the commissioner not later 20 20 than April 1 of each year an annual report on a form prescribed 20 21 by the commissioner describing each purchase agreement sold 20 22 by the sales agent during the year. An annual report must be 20 23 filed whether or not sales were made during the year and even 20 24 if the sales agent is no longer an agent of a preneed seller or 20 25 licensed by the commissioner. 20 26 2. All records maintained by the commissioner under this 20 27 section shall be confidential pursuant to section 22.7, 20 28 subsection 58, and shall not be made available for inspection 20 29 or copying except upon the approval of the commissioner or the 20 30 attorney general, or except when sought by the sales agent to 20 31 whom the records relate. Such records shall be privileged 20 32 and confidential in any judicial or administrative proceeding 20 33 except any of the following: 20 34 a. An action commenced by the commissioner. 20 35 b. An administrative proceeding brought by the insurance 21 1 division. 21 2 c. An action or proceeding which arises out of the criminal 21 3 provisions of the laws of this state or of the United States. 21 4 d. An action brought by the insurance division or 21 5 the attorney general to recover moneys for embezzlement, 21 6 misappropriation, or misuse of trust funds. 21 7 Sec. 39. Section 523A.502A, subsections 3 and 4, Code 2015, 21 8 are amended by striking the subsections. 21 9 Sec. 40. Section 523A.803, subsection 1, paragraph c, Code 21 10 2015, is amended by striking the paragraph. 21 11 Sec. 41. Section 523A.803, Code 2015, is amended by adding 21 12 the following new subsection: 21 13 NEW SUBSECTION. 1A. All records maintained by the 21 14 commissioner under this section, including work papers, notes, 21 15 recorded information, documents, and copies thereof that are 21 16 produced or obtained by or disclosed to the commissioner or 21 17 another person in the course of an investigation, shall be 21 18 confidential pursuant to section 22.7, subsection 58, and shall 21 19 not be made available for inspection and copying except upon 21 20 the approval of the commissioner or the attorney general. Such 21 21 records shall be privileged and confidential in any judicial or 21 22 administrative proceeding except any of the following: 21 23 a. An action commenced by the commissioner. 21 24 b. An administrative proceeding brought by the insurance 21 25 division. 21 26 c. An action or proceeding which arises out of the criminal 21 27 provisions of the laws of this state or of the United States. 21 28 d. An action brought by the insurance division or 21 29 the attorney general to recover moneys for embezzlement, 21 30 misappropriation, or misuse of trust funds. 21 31 Sec. 42. Section 523A.807, subsection 3, unnumbered 21 32 paragraph 1, Code 2015, is amended to read as follows: 21 33 If the commissioner finds that a person has violated section 21 34 523A.201, 523A.202, 523A.203, 523A.207, 523A.401, 523A.402, 21 35 523A.403, 523A.404, 523A.405, 523A.501, 523A.502,or 523A.50422 1 or any rule adopted pursuant thereto, the commissioner may 22 2 order any or all of the following: 22 3 Sec. 43. Section 523I.810, subsection 9, Code 2015, is 22 4 amended to read as follows: 22 5 9. A cemetery may, by resolution adopted by a vote of at 22 6 least two=thirds of the members of its board at any authorized 22 7 meeting of the board, authorize the withdrawal and use of 22 8 not more than twenty percent of the principal of the care 22 9 fund to acquire additional land for cemetery purposes, to 22 10 repair a mausoleum or other building or structure intended for 22 11 cemetery purposes, to build, improve, or repair boundaries, 22 12 roads and walkways in the cemetery, to construct a columbarium, 22 13 mausoleum, or similar structure to create additional interment 22 14 spaces, to purchase equipment for tree, shrub, and lawn care, 22 15 to purchase backhoes or similar equipment used to open and 22 16 close interment spaces, or to purchase recordkeeping software 22 17 used to maintain ownership records or interment records. The 22 18 resolution shall establish a reasonable repayment schedule, not 22 19 to exceed five years, and provide for interest in an amount 22 20 comparable to the care fund's current rate of return on its 22 21 investments. However, the care fund shall not be diminished 22 22 below an amount equal to the greater of twenty=five thousand 22 23 dollars or five thousand dollars per acre of land in the 22 24 cemetery. The resolution, and if the deposit of care fund 22 25 income over five years is unlikely to fund replenishment of the 22 26 principal of the care fund, either a bond or proof of insurance 22 27 to guarantee replenishment of the care fund, shall be filed 22 28 with the commissioner thirty days prior to the withdrawal of 22 29 funds. 22 30 Sec. 44. Section 523I.811, subsection 1, paragraph b, Code 22 31 2015, is amended to read as follows: 22 32 b. Maintaining drains, water lines, roads, buildings, 22 33 boundaries, fences, and other structures. 22 34 Sec. 45. Section 523I.811, subsection 1, Code 2015, is 22 35 amended by adding the following new paragraphs: 23 1 NEW PARAGRAPH. g. To purchase equipment to maintain the 23 2 cemetery. 23 3 NEW PARAGRAPH. h. To purchase backhoes or similar equipment 23 4 used to open and close interment spaces. 23 5 NEW PARAGRAPH. i. To purchase equipment used to construct 23 6 a columbarium, mausoleum, or similar structure to create 23 7 additional interment spaces. 23 8 Sec. 46. NEW SECTION. 523I.811A Emergency use of care 23 9 funds. 23 10 1. Notwithstanding any other provision of this chapter, 23 11 a perpetual care cemetery may apply to the commissioner to 23 12 withdraw funds from the cemetery's care fund for a financial 23 13 emergency. The commissioner shall, by rule, establish 23 14 standards and procedures for such applications and for 23 15 withdrawals from care funds. 23 16 2. Upon application, the commissioner may allow a perpetual 23 17 care cemetery to withdraw funds from the care fund if the 23 18 commissioner finds that the cemetery has an urgent financial 23 19 need and the withdrawal is deemed reasonable and prudent to 23 20 fund a necessary expense of the cemetery. The commissioner 23 21 shall establish conditions for the specific use of the funds 23 22 withdrawn and may require repayment of all or part of the 23 23 amount withdrawn. 23 24 Sec. 47. EFFECTIVE DATE. The following provision or 23 25 provisions of this Act take effect January 1, 2016: 23 26 1. The section of this Act adding section 502.202, 23 27 subsection 24. 23 28 Sec. 48. DIRECTIONS TO CODE EDITOR. The Iowa code editor is 23 29 directed to transfer section 515.11 to new section 515.23. 23 30 Sec. 49. REPEAL. Section 523A.504, Code 2015, is repealed. 23 31 EXPLANATION 23 32 The inclusion of this explanation does not constitute agreement with 23 33 the explanation's substance by the members of the general assembly. 23 34 This bill relates to various matters involving insurance 23 35 and the insurance division of the department of commerce and 24 1 includes effective date provisions. 24 2 UNIFORM SECURITIES ACT. Code section 502.103 is amended 24 3 to update references in Code chapter 502 to include current 24 4 federal statutes. New Code section 502.202(24) provides an 24 5 exemption from certain securities registration and filing 24 6 requirements for offers and sales of securities known as 24 7 intrastate crowdfunding and provides limitations and conditions 24 8 on such offers and sales of securities in the state. All 24 9 offers and sales of securities made pursuant to the exemption 24 10 must be made through a broker=dealer's internet site. 24 11 "Intrastate crowdfunding" is defined as the offer or sale of a 24 12 security by an issuer in a transaction that is available for 24 13 purchase only by Iowa residents and by business organizations 24 14 located in Iowa and organized and registered under Iowa law. 24 15 This provision takes effect January 1, 2016. 24 16 Code section 502.302(1)(a)(1) and (2), concerning specified 24 17 federal covered securities, are amended to eliminate an option 24 18 that allows filing fees accompanying notice filings of offers 24 19 of such securities to be based on a definite or indefinite 24 20 amount, instead requiring all notice filers to pay a fixed fee 24 21 of $400. Code section 502.302(1)(a)(2)(a) and (b) are stricken 24 22 to eliminate the need to file a sales report. Code section 24 23 502.302(2) is amended to establish a flat fee of $400 for 24 24 renewals of such filings. 24 25 Code section 502.412(9) is amended to provide that the 24 26 administrator of the securities and regulated industries bureau 24 27 of the insurance division of the department of commerce has two 24 28 years instead of one year after acquiring material facts to 24 29 institute a disciplinary proceeding concerning a broker=dealer 24 30 or investment adviser. 24 31 LIFE INSURANCE COMPANIES AND ASSOCIATIONS. Code section 24 32 511.8(5)(a) and (b) are amended to provide that investments 24 33 in certain corporate obligations made by life insurance 24 34 companies and associations are allowed if, at the date of 24 35 acquisition, the obligations are investment grade as defined 25 1 by the commissioner by rule. Similar changes are made as to 25 2 investments in preferred and guaranteed stocks (Code section 25 3 511.8(6)(a)(1)(b)), and financial instruments used in hedging 25 4 transactions (Code section 511.8(22)(c),(d), and (e)(1)). 25 5 Code section 511.8(8) is amended to provide that specified 25 6 further restrictions on investments of a life insurance 25 7 company or association in securities apply to mezzanine real 25 8 estate loans. Code section 511.8(8)(b) is amended to provide 25 9 that investments of a life insurance company or association 25 10 in securities of a corporation shall not exceed specified 25 11 percentages of the legal reserve. 25 12 Code section 511.8(8)(b)(1) and (2) are amended to provide 25 13 that investments in corporate obligations, preferred and 25 14 guaranteed stocks, equipment trust obligations, or mezzanine 25 15 real estate loans are limited to 2 percent of legal reserve 25 16 for any one corporation other than a public utility company, 25 17 5 percent of the legal reserve for any one public utility 25 18 company, and 50 percent of the legal reserve for corporate 25 19 obligations issued by public utility companies. 25 20 New Code section 511.8(9)(h) provides that a life insurance 25 21 company or association may invest in mezzanine real estate 25 22 loans subject to specified conditions. The provision specifies 25 23 what terms a mezzanine loan agreement must include and limits 25 24 the value of a life insurance company's or association's total 25 25 investments in mezzanine real estate loans. For purposes of 25 26 the new provision, "mezzanine real estate loan" means a loan 25 27 secured by a pledge of a direct or indirect equity interest in 25 28 an entity that owns real estate. 25 29 Code section 511.8(13) is amended to provide that life 25 30 insurance companies and associations can invest in loans 25 31 secured by collateral consisting of qualified assets or 25 32 investments instead of securities. 25 33 Code section 511.8(18)(a) is amended to provide that life 25 34 insurance companies and associations can invest in certain 25 35 specified equity interests as well as common stocks and shares 26 1 issued by corporations or institutions. The provision provides 26 2 limitations on the percentage of legal reserve that can be 26 3 invested in specified types of common stocks, shares, or equity 26 4 interests. 26 5 Code section 511.8(20)(b) is amended to provide that for 26 6 purposes of investments made by a life insurance company a 26 7 "venture capital fund" includes an equity interest in an 26 8 innovation fund as defined in Code section 15E.52. 26 9 LONG=TERM CARE INSURANCE. Code section 514G.102 is amended 26 10 to provide that the requirements of Code chapter 514G related 26 11 to prompt payment of claims and the payment of interest apply 26 12 to all long=term care insurance policies. 26 13 INSURANCE OTHER THAN LIFE. The Code editor is directed to 26 14 transfer Code section 515.11, pertaining to prohibited loans to 26 15 an officer, director, stockholder, or employee of a company or 26 16 to a relative of an officer or relative of a company, to Code 26 17 section 515.23. 26 18 Code section 515.35(4)(m) is amended to provide that for 26 19 purposes of investments made by a non=life insurance company, 26 20 a "venture capital fund" includes an equity interest in an 26 21 innovation fund as defined in Code section 15E.52. 26 22 INSURANCE HOLDING COMPANY SYSTEMS. Code section 26 23 521A.5(4)(d) is amended to require that when a domestic 26 24 insurer is required to establish a committee or committees of 26 25 directors or other persons appointed by the board, that are 26 26 responsible for nominating candidates for director, evaluating 26 27 the performance of officers, and recommending the selection 26 28 and compensation of principal officers, the majority of such 26 29 committee members shall not be officers or employers of any 26 30 entity controlling, controlled by, or under common control with 26 31 the insurer. 26 32 CEMETERY AND FUNERAL MERCHANDISE AND FUNERAL SERVICES. Code 26 33 section 523A.102(8) is stricken, eliminating the definition of 26 34 "credit sale". 26 35 New Code section 523A.102(13A) provides that for purposes 27 1 of Code chapter 523A, "guaranteed" means that a preneed seller 27 2 has agreed to accept the funds available from contractual 27 3 payments made by a purchaser and the allocable portion of 27 4 accumulated income on those payments as payment in full for the 27 5 applicable items of cemetery merchandise and services selected 27 6 and identified in a purchase agreement for the merchandise and 27 7 services. A purchaser, beneficiary, or beneficiary's estate 27 8 is not obligated to pay any additional costs related to price 27 9 increases on the merchandise and services selected even if the 27 10 additional costs exceed the funds available. This provision 27 11 does not prevent the inclusion of nonguaranteed items in an 27 12 otherwise guaranteed purchase agreement. 27 13 Code section 523A.204(3) is amended to provide that 27 14 information in annual reports provided to the commissioner 27 15 by preneed sellers is confidential pursuant to the Iowa 27 16 open records law (Code chapter 22) and shall not be made 27 17 available for inspection or copying except upon the approval 27 18 of the commissioner or the attorney general or when sought 27 19 by the preneed seller to whom the records relate. Such 27 20 information is also privileged and confidential in any judicial 27 21 or administrative proceeding except as specified. Similar 27 22 requirements concerning confidentiality of information provided 27 23 to the commissioner are added in Code section 523A.205(3) 27 24 concerning annual reports by financial institutions, Code 27 25 section 523A.206(6) concerning information obtained in 27 26 the course of an examination, new Code section 523A.207(2) 27 27 concerning records obtained during an audit performed by a 27 28 certified public accountant, new Code section 523A.401(10) 27 29 concerning information maintained about purchase agreements 27 30 funded by insurance proceeds, Code section 523A.502A(2) 27 31 concerning licensure of sales agents, and Code section 27 32 523A.803(1)(c) concerning investigations into violations of the 27 33 Code chapter. Code section 22.7, subsection 58, is amended to 27 34 specify that information provided to the commissioner pursuant 27 35 to Code sections 523A.205, 523A.206, 523A.207, 523A.401, and 28 1 523A.803 is confidential. 28 2 Code section 523A.204(4) and (5) are stricken, eliminating 28 3 provisions related to levying an administrative penalty 28 4 against a preneed seller for violations of the annual reporting 28 5 requirement. 28 6 Code section 523A.205(2) is stricken, eliminating a 28 7 requirement that the commissioner accept annual reports of 28 8 preneed sellers in electronic format, including computer 28 9 diskettes. 28 10 Code section 523A.401(8) is amended by eliminating the 28 11 provision that allows computer printouts to be submitted with 28 12 annual reports filed by insurance companies issuing policies 28 13 to fund preneed purchase agreements. Code section 523A.402(8) 28 14 is similarly amended to eliminate the provision that such 28 15 printouts may be submitted with annual reports pertaining to 28 16 purchase agreements funded by annuity proceeds. 28 17 Code section 523A.405 is amended to eliminate specific 28 18 requirements concerning the use of a surety bond in lieu of 28 19 trust requirements and instead allows the commissioner, by 28 20 rule, to establish the terms and conditions under which a 28 21 seller may file a surety bond. 28 22 Code section 523A.501(2) is amended to provide that the 28 23 commissioner may establish the format for applications for a 28 24 preneed seller's license. The application is also required to 28 25 include the name of the natural person or legal entity to be 28 26 licensed and any other name under which the preneed seller will 28 27 be transacting business. The application must be updated as 28 28 necessary to ensure that the commissioner is notified of all 28 29 names under which the preneed seller is operating and doing 28 30 business. The application must be accompanied by a filing fee 28 31 set by rule. The current filing fee is $50. 28 32 Code section 523A.501(7) is amended to require that a 28 33 preneed seller's license be renewed annually instead of every 28 34 four years. The license shall be renewed April 15 of each 28 35 year so long as the preneed seller has filed a complete annual 29 1 report and paid the required fees. Code section 523A.502(5) 29 2 is similarly amended to require annual renewal of the licenses 29 3 of preneed sales agents. 29 4 Code section 523A.502A(1) is amended to provide that a sales 29 5 agent must file an annual report whether or not the sales agent 29 6 made any sales during the year, is no longer an agent of a 29 7 preneed seller, or is no longer licensed as a sales agent. 29 8 Code section 523A.502A(3) and (4) are stricken, eliminating 29 9 provisions related to levying an administrative penalty against 29 10 a preneed sales agent for violations of the annual reporting 29 11 requirement. 29 12 Code section 523A.504 requiring a preneed seller to file a 29 13 notice and pay a fee to appoint a person to act as a sales agent 29 14 of the preneed seller is repealed. Code section 523A.807(3) is 29 15 amended to remove a cross=reference to the repealed section. 29 16 CEMETERIES. Code section 523I.810(9) is amended to provide 29 17 that a cemetery may adopt a resolution to authorize the 29 18 withdrawal and expenditure of the principal of a cemetery 29 19 care fund to repair boundaries; to construct a columbarium, 29 20 mausoleum, or similar structure to create additional interment 29 21 spaces; and to purchase equipment for tree, shrub, and lawn 29 22 care; or to purchase backhoes or similar equipment used to open 29 23 and close interment spaces. The bill eliminates a requirement 29 24 that the repayment schedule provide for interest on the amount 29 25 withdrawn from the care fund but if the deposit of care fund 29 26 income over five years is unlikely to fund replenishment of the 29 27 principal of the care fund, the resolution must be accompanied 29 28 by a bond or proof of insurance. 29 29 Code section 523I.811(1) is amended to provide that 29 30 distributions from the care fund can be used for the new 29 31 purposes described in Code section 523I.810(9). 29 32 New Code section 523I.811A provides that a perpetual care 29 33 cemetery may make application to the commissioner to withdraw 29 34 funds from the cemetery's care fund for a financial emergency. 29 35 The commissioner may allow such a withdrawal upon finding that 30 1 the cemetery has an urgent financial need and it is reasonable 30 2 and prudent to fund a necessary expense of the cemetery. The 30 3 commissioner shall establish conditions for the specific use 30 4 of the funds and may require repayment of all or part of the 30 5 amount withdrawn. LSB 1287HV (2) 86 av/nh
