Bill Text: IA HF632 | 2015-2016 | 86th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft
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. Effective 7-2-15, with exception of section 3, effective 1-1-16.

Spectrum: Partisan Bill (? 1-0)

Status: (Passed) 2015-07-02 - Signed by Governor. H.J. 1187. [HF632 Detail]

Download: Iowa-2015-HF632-Enrolled.html
House File 632 - Enrolled




                              HOUSE FILE       
                              BY  COMMITTEE ON WAYS AND
                                  MEANS

                              (SUCCESSOR TO HF 454)
                              (SUCCESSOR TO HSB 139)
 \5
                                   A BILL FOR
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                                         House File 632

                             AN ACT
 RELATING TO VARIOUS MATTERS INVOLVING INSURANCE AND THE
    INSURANCE DIVISION OF THE DEPARTMENT OF COMMERCE AND
    INCLUDING EFFECTIVE DATE AND RETROACTIVE APPLICABILITY
    PROVISIONS.

 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    Section 1.  Section 22.7, subsection 58, Code 2015, is
 amended to read as follows:
    58.  Information filed with the commissioner of insurance
 pursuant to sections 523A.204 and, 523A.205, 523A.206,
 523A.207, 523A.401, 523A.502A, and 523A.803.
    Sec. 2.  Section 502.103, Code 2015, is amended to read as
 follows:
    502.103  References to federal statutes.
 "Securities Act of 1933", 15 U.S.C. {77a et seq.; "Securities
 Exchange Act of 1934", 15 U.S.C. {78a et seq.; "Public Utility
 Holding Company Act of 1935", 15 U.S.C. {79 et seq.; "Investment
 Company Act of 1940", 15 U.S.C. {80a=1 et seq.; "Investment
 Advisers Act of 1940", 15 U.S.C. {80b=1 et seq.; "Employee
 Retirement Income Security Act of 1974", 29 U.S.C. {1001 et
 seq.; "National Housing Act", 12 U.S.C. {1701; "Commodity
 Exchange Act", 7 U.S.C. {1 et seq.; "Internal Revenue Code",
 26 U.S.C. {1 et seq.; "Securities Investor Protection Act
 of 1970", 15 U.S.C. {78aaa et seq.; "Securities Litigation
 Uniform Standards Act of 1998", 112 Stat. 3227; "Small Business
 Investment Act of 1958", 15 U.S.C. {661 et seq.; and "Electronic
 Signatures in Global and National Commerce Act", 15 U.S.C. {7001
 et seq.; and "Dodd=Frank Wall Street Reform and Consumer
 Protection Act", Pub. L. No. 111=203 mean those federal statutes
 and the rules and regulations adopted under those federal
 statutes, as in effect on January 1, 2005 2015.
    Sec. 3.  Section 502.202, Code 2015, is amended by adding the
 following new subsection:
    NEW SUBSECTION.  24.  Intrastate crowdfunding.
    a.  Definitions.  As used in this subsection, unless the
 context otherwise requires:
    (1)  "Intermediary" means a broker=dealer that is subject
 to the registration requirements of section 502.401 and that
 facilitates the offer and sale of securities by issuers to
 investors through an internet=based system that is open to
 and accessible by the general public.  "Intermediary" also
 means an entity registered with the administrator as an Iowa
 crowdfunding portal.
    (2)  "Intrastate crowdfunding" means the offer or sale of a
 security by an issuer in a transaction that is available for
 purchase only by Iowa residents and by business organizations
 located in, and organized and registered under the laws of,
 this state.
    (3)  "Iowa crowdfunding portal" means an entity incorporated
 or organized under the laws of this state, authorized to do
 business in this state, and engaged exclusively in intrastate
 crowdfunding offers and sales of exempt securities in this
 state through an internet site and which does not operate or
 facilitate a secondary market in securities.
    b.  Exemption not available.  The exemption in this
 subsection is not available to any of the following:
    (1)  A foreign issuer.
    (2)  An investment company, as defined in section 3 of the
 federal Investment Company Act of 1940.
    (3)  A development stage company that either has no specific
 business plan or purpose or has indicated that the company's
 business plan is to engage in a merger or acquisition with an
 unidentified company or companies, or other entity or person.
    (4)  A company with a class of securities registered under
 the federal Securities Exchange Act of 1934.
    (5)  Any person who is subject to a disqualifying event as
 described in the regulations adopted in accordance with section
 926 of the federal Dodd=Frank Wall Street Reform and Consumer
 Protection Act, Pub. L. No. 111=203, or in rules adopted by the
 administrator pursuant to chapter 17A.
    c.  Aggregate sales limit.  The aggregate amount of
 securities sold to all investors by the issuer during the
 twelve=month period preceding the date of the offer or sale,
 including any amount sold in reliance upon the exemption in
 this subsection, shall not exceed one million dollars other
 than either of the following:
    (1)  Securities sold to Iowa resident institutional
 investors.
    (2)  Securities sold to the Iowa resident issuer's
 management.
    d.  Individual sales limit.  The aggregate amount of
 securities sold to an investor by the issuer during the
 twelve=month period preceding the date of the offer or sale,
 including any amount sold in reliance upon the exemption in
 this subsection, shall not exceed five thousand dollars unless
 the investor is an accredited investor who resides in Iowa.
 For purposes of this individual sales limit, the following
 investors shall be treated as one investor:
    (1)  A relative, spouse, or relative of the spouse of an
 investor who has the same principal residence as the investor.
    (2)  A trust or estate in which an investor and any related
 person collectively have more than fifty percent of the
 beneficial interest, excluding contingent interests.
    (3)  A corporation or other organization of which an investor
 and any related person collectively are beneficial owners of
 more than fifty percent of the equity securities, excluding
 directors' qualifying shares, or equity interests.
    e.  Use of an intermediary.  All offers and sales of
 securities made in reliance upon the exemption in this
 subsection shall be made through an intermediary's internet
 site.
    f.  Notice to administrator.  Prior to the offer of any
 security in this state made in reliance upon the exemption
 in this subsection, the issuer shall file a notice with
 the administrator in a form and format approved by the
 administrator, and including the filing fee specified by rule,
 if any.
    g.  Rulemaking.  The administrator shall adopt all rules
 necessary to implement the exemption in this subsection
 including but not limited to all of the following:
    (1)  Mandatory disclosures.
    (2)  Restrictions on advertising and communications.
    (3)  Target amount, offering period, and escrow
 requirements.
    (4)  Use and compensation of promoters.
    (5)  Restrictions on the sale of securities purchased under
 the exemption in this subsection.
    (6)  Sales reports.
    (7)  Limitations on the offering price.
    (8)  Duties of an intermediary which shall include providing
 the administrator with continuous investor=level access to the
 intermediary's internet site.
    (9)  Records maintenance.
    (10)  Duties and registration requirements for internet site
 operators.
    Sec. 4.  Section 502.302, subsection 1, paragraph a,
 subparagraph (1), Code 2015, is amended to read as follows:
    (1)  A person who is the issuer of a federal covered
 security under section 18(b)(2) of the Securities Act of
 1933 shall initially make a notice filing and annually renew
 a notice filing in this state for an indefinite amount or a
 fixed amount. The fixed amount must be for two hundred fifty
 thousand dollars.
    Sec. 5.  Section 502.302, subsection 1, paragraph a,
 subparagraph (2), unnumbered paragraph 1, Code 2015, is amended
 to read as follows:
    A notice filer shall pay a filing fee in the amount of
 four hundred dollars when the notice is filed. If the amount
 covered by the notice is indefinite, the notice filer shall pay
 a filing fee of one thousand dollars. If the amount covered by
 the notice is fixed, the notice filer shall pay a filing fee
 of two hundred fifty dollars, and all of the following shall
 apply:
    Sec. 6.  Section 502.302, subsection 1, paragraph a,
 subparagraph (2), subparagraph divisions (a) and (b), Code
 2015, are amended by striking the subparagraph divisions.
    Sec. 7.  Section 502.302, subsection 2, Code 2015, is amended
 to read as follows:
    2.  Notice filing effectiveness and renewal.  A notice filing
 under subsection 1 is effective for one year commencing on
 the later of the notice filing or the effectiveness of the
 offering filed with the securities and exchange commission.
 On or before expiration, the issuer may renew a notice filing
 by filing a copy of those records filed by the issuer with
 the securities and exchange commission that are required by
 rule or order under this chapter to be filed and by paying
 the a renewal fee required by subsection 1, paragraph "a" of
 four hundred dollars. A previously filed consent to service
 of process complying with section 502.611 may be incorporated
 by reference in a renewal. A renewed notice filing becomes
 effective upon the expiration of the filing being renewed.
    Sec. 8.  Section 502.412, subsection 9, Code 2015, is amended
 to read as follows:
    9.  Limit on investigation or proceeding.  The administrator
 shall not institute a proceeding under subsection 1, 2,
 or 3 based solely on material facts actually known by the
 administrator unless an investigation or the proceeding is
 instituted within one year two years after the administrator
 actually acquires knowledge of the material facts.
    Sec. 9.  Section 505.26, Code 2015, is amended by adding the
 following new subsection:
    NEW SUBSECTION.  7.  The commissioner shall adopt rules
 pursuant to chapter 17A that provide requirements, not to
 exceed seventy=two hours for urgent claims and five calendar
 days for non=urgent claims, for a health carrier or pharmacy
 benefits manager to respond to a health care provider's request
 for prior authorization of prescription drug benefits or to
 request additional information from a health care provider
 concerning such a request.
    Sec. 10.  Section 511.8, subsection 5, paragraphs a and b,
 Code 2015, are amended to read as follows:
    a.  (1)  If fixed interest=bearing obligations, the net
 earnings of the issuing, assuming, or guaranteeing corporation
 available for its fixed charges for a period of five fiscal
 years next preceding the date of acquisition of the obligations
 by such insurance company shall have averaged per year not
 less than one and one=half times such average annual fixed
 charges of the issuing, assuming, or guaranteeing corporation
 applicable to such period, and, during at least one of the last
 two years of such period, its net earnings shall have been
 not less than one and one=half times its fixed charges for
 such year; or if, at the date of acquisition, the obligations
 are adequately secured and have investment qualities and
 characteristics wherein the speculative elements are not
 predominant investment grade as defined by the commissioner by
 rule.
    (2)  However, with respect to fixed interest=bearing
 obligations which are issued, assumed, or guaranteed by a
 financial company, the net earnings by the financial company
 available for its fixed charges for the period of five fiscal
 years preceding the date of acquisition of the obligations by
 the insurance company shall have averaged per year not less
 than one and one=fourth times such average annual fixed charges
 of the issuing, assuming, or guaranteeing financial company
 applicable to such period, and, during at least one of the last
 two years of the period, its net earnings shall have been not
 less than one and one=fourth times its fixed charges for such
 year; or if, at the date of acquisition, the obligations are
 adequately secured and speculative elements are not predominant
 in their investment qualities and characteristics investment
 grade as defined by the commissioner by rule. As used in
 this subparagraph (2), "financial company" means a corporation
 which on the average over its last five fiscal years preceding
 the date of acquisition of its obligations by the insurer,
 has had at least fifty percent of its net income, including
 income derived from subsidiaries, derived from the business
 of wholesale, retail, installment, mortgage, commercial,
 industrial or consumer financing, or from banking or factoring,
 or from similar or related lines of business.
    b.  If adjustment, income, or other contingent interest
 obligations, the net earnings of the issuing, assuming, or
 guaranteeing corporation available for its fixed charges
 for a period of five fiscal years next preceding the date
 of acquisition of the obligations by such insurance company
 shall have averaged per year not less than one and one=half
 times such average annual fixed charges of the issuing,
 assuming, or guaranteeing corporation and its average annual
 maximum contingent interest applicable to such period and,
 during at least one of the last two years of such period, its
 net earnings shall have been not less than one and one=half
 times the sum of its fixed charges and maximum contingent
 interest for such year, or if, at the date of acquisition,
 the obligations are adequately secure and have investment
 qualities and characteristics and speculative elements are not
 predominant investment grade as defined by the commissioner by
 rule.
    Sec. 11.  Section 511.8, subsection 6, paragraph a,
 subparagraph (1), subparagraph division (b), unnumbered
 paragraph 1, Code 2015, is amended to read as follows:
    The net earnings available for fixed charges and preferred
 dividends of the issuing corporation shall have been, for
 each of the five fiscal years immediately preceding the date
 of acquisition, not less than one and one=half times the sum
 of the annual fixed charges and contingent interest, if any,
 and the annual preferred dividend requirements as of the date
 of acquisition; or at the date of acquisition the preferred
 stock has is investment qualities and characteristics wherein
 speculative elements are not predominant grade as defined by
 the commissioner by rule.
    Sec. 12.  Section 511.8, subsection 8, unnumbered paragraph
 1, Code 2015, is amended to read as follows:
    Securities included under subsections 5, 6, and 7, and
 subsection 9, paragraph "h", shall not be eligible:
    Sec. 13.  Section 511.8, subsection 8, paragraph b,
 unnumbered paragraph 1, Code 2015, is amended to read as
 follows:
    The investments of any company or association in such the
  securities of a corporation shall not be eligible in excess of
  exceed the following percentages of the legal reserve of such
 company or association:
    Sec. 14.  Section 511.8, subsection 8, paragraph b,
 subparagraphs (1) and (2), Code 2015, are amended to read as
 follows:
    (1)  With the exception of public securities For any one
 corporation other than a public utility company, two percent
 of the legal reserve in the securities of any one corporation.
 Five For any one public utility company, five percent of the
 legal reserve in the securities of any one public utility
 corporation.
    (2)  Seventy=five percent of the legal reserve in the
 securities described in subsection 5 issued by other than
 public utility corporations. Fifty percent of the legal
 reserve in the For securities described in subsection 5 issued
 by public utility corporations companies, fifty percent of the
 legal reserve.
    Sec. 15.  Section 511.8, subsection 9, Code 2015, is amended
 by adding the following new paragraph:
    NEW PARAGRAPH.  h.  Mezzanine real estate loans subject to
 the following conditions:
    (1)  The terms of the mezzanine real estate loan agreement
 shall do all of the following:
    (a)  Require that each pledgor abstain from granting
 additional security interests in the equity interest pledged.
    (b)  Set forth techniques to minimize the likelihood or
 impact of a bankruptcy filing on the part of the real estate
 owner or the mezzanine real estate loan borrower consistent
 with the national association of insurance commissioners'
 accounting practices and procedures manual.
    (c)  Require the real estate owner or mezzanine real estate
 loan borrower to do all of the following:
    (i)  Hold no assets other than, in the case of the real
 estate owner, the real property, and in the case of the
 mezzanine real estate loan borrower, the equity interest of the
 real estate owner.
    (ii)  Not engage in any business other than, in the case
 of the real estate owner, the ownership and operation of the
 real estate, and in the case of the mezzanine real estate loan
 borrower, holding an ownership interest in the real estate
 owner.
    (iii)  Not incur additional debt, other than limited trade
 payables, a first mortgage loan, or mezzanine real estate
 loans.
    (2)  At the time of purchase, the sum of the first mortgage
 and the mezzanine real estate loans shall not exceed ninety
 percent of the value of the real estate evidenced by a
 current appraisal and the mezzanine real estate loan shall be
 classified as CM4 or better in accordance with the national
 association of insurance commissioners' rating methodology, or
 an equivalent or successor rating.
    (3)  The value of a company's or association's total
 investments qualified under this paragraph "h" shall not exceed
 three percent of the legal reserve subject to the following
 conditions:
    (a)  The value of a company's or association's total
 investments qualified under this paragraph "h" in mezzanine
 real estate loans classified as CM3 in accordance with the
 national association of insurance commissioners' rating
 methodology or an equivalent or successor rating at the time of
 purchase shall not exceed two percent of the legal reserve.
    (b)  The value of a company's or association's total
 investments qualified under this paragraph "h" in mezzanine
 real estate loans classified as CM4 in accordance with the
 national association of insurance commissioners' rating
 methodology or an equivalent or successor rating at the time of
 purchase shall not exceed one percent of the legal reserve.
    (4)  For purposes of this paragraph "h", "mezzanine real
 estate loan" means a loan secured by a pledge of a direct or
 indirect equity interest in an entity that owns real estate.
    Sec. 16.  Section 511.8, subsection 13, Code 2015, is amended
 to read as follows:
    13.  Collateral loans.  Loans secured by collateral
 consisting of any securities assets or investments qualified in
  under this section, provided the amount of the loan is not in
 excess of ninety percent of the value of the securities assets
 or investments. Provided further that subsection 8 shall apply
 to the collateral securities assets or investments pledged
 to the payment of loans authorized in qualified under this
 subsection.
    Sec. 17.  Section 511.8, subsection 18, paragraph a, Code
 2015, is amended to read as follows:
    a.  (1)  Common stocks, or shares, or equity interests issued
 by solvent corporations or institutions are eligible if the
 total investment in the common stocks, or shares in, or equity
 interests of the corporations or institutions does not exceed
 ten percent of legal reserve, provided not more than one=half
 percent of the legal reserve is invested in common stocks,
  or shares, or equity interests of any one corporation or
 institution. However, the not more than four percent of legal
 reserve shall be invested in common stocks, or shares shall be
  , or equity interests which do not meet one of the following
 requirements:
    (a)  Are listed or admitted to trading on an established
 foreign securities exchange or a securities exchange in the
 United States or shall be.
    (b)  Are publicly held and traded in the "over=the=counter
 market" and, provided that market quotations shall be readily
 available, and further, the investment.
    (2)  An investment in common stocks, shares, or equity
 interests shall not create a conflict of interest for an
 officer or director of the company between the insurance
 company and the corporation whose common stocks, or shares, or
 equity interests are purchased.
    Sec. 18.  Section 511.8, subsection 20, paragraph b, Code
 2015, is amended to read as follows:
    b.  For purposes of this subsection, "venture capital
 fund" means a corporation, partnership, proprietorship, or
 other entity formed under the laws of the United States, or
 a state, district, or territory of the United States, whose
 principal business is or will be the making of investments in,
 and the provision of significant managerial assistance to,
 small businesses which meet the small business administration
 definition of small business. "Equity interests" means limited
 partnership interests and other equity interests in which
 liability is limited to the amount of the investment, but does
 not mean general partnership interests or other interests
 involving general liability. "Venture capital fund" includes an
 equity interest in the Iowa fund of funds as defined in section
 15E.62 and an equity interest in an innovation fund as defined
 in section 15E.52.
    Sec. 19.  Section 511.8, subsection 22, paragraphs c and d,
 Code 2015, are amended to read as follows:
    c.  Investments in financial instruments used in hedging
 transactions are not eligible in excess of two percent of
 the legal reserve in the financial instruments of any one
 corporation, less any securities of that corporation owned
 by the company or association and in which its legal reserve
 is invested, except insofar as the financial instruments are
 collateralized by cash, United States government obligations
 as authorized by subsection 1, or obligations of or guaranteed
 by a United States government=sponsored enterprise which on
 the date they are pledged as collateral are adequately secured
 and have investment qualities and characteristics wherein the
 speculative elements are not predominant investment grade as
 defined by the commissioner by rule, which are deposited with a
 custodian bank as defined in subsection 21, and held under a
 written agreement with the custodian bank that complies with
 subsection 21 and provides for the proceeds of the collateral,
 subject to the terms and conditions of the applicable
 collateral or other credit support agreement, to be remitted to
 the legal reserve deposit of the company or association and to
 vest in the state in accordance with section 508.18 whenever
 proceedings under that section are instituted.
    d.  Investments in financial instruments used in hedging
 transactions are not eligible in excess of ten percent of the
 legal reserve, except insofar as the financial instruments are
 collateralized by cash, United States government obligations
 as authorized by subsection 1, or obligations of or guaranteed
 by a United States government=sponsored enterprise which on
 the date they are pledged as collateral are adequately secured
 and have investment qualities and characteristics wherein the
 speculative elements are not predominant investment grade as
 defined by the commissioner by rule, which are deposited with a
 custodian bank as defined in subsection 21, and held under a
 written agreement with the custodian bank that complies with
 subsection 21 and provides for the proceeds of the collateral,
 subject to the terms and conditions of the applicable
 collateral or other credit support agreement, to be remitted to
 the legal reserve deposit of the company or association and to
 vest in the state in accordance with section 508.18 whenever
 proceedings under that section are instituted.
    Sec. 20.  Section 511.8, subsection 22, paragraph e,
 subparagraph (1), Code 2015, is amended to read as follows:
    (1)  Investments in financial instruments of foreign
 governments or foreign corporate obligations, other than
 Canada, used in hedging transactions shall be included
 in the limitation contained in subsection 19 that allows
 only twenty percent of the legal reserve of the company or
 association to be invested in such foreign investments, except
 insofar as the financial instruments are collateralized by
 cash, United States government obligations as authorized by
 subsection 1, or obligations of or guaranteed by a United
 States government=sponsored enterprise which on the date
 they are pledged as collateral are adequately secured and
 have investment qualities and characteristics wherein the
 speculative elements are not predominant investment grade as
 defined by the commissioner by rule, which are deposited with a
 custodian bank as defined in subsection 21, and held under a
 written agreement with the custodian bank that complies with
 subsection 21 and provides for the proceeds of the collateral,
 subject to the terms and conditions of the applicable
 collateral or other credit support agreement, to be remitted to
 the legal reserve deposit of the company or association and to
 vest in the state in accordance with section 508.18 whenever
 proceedings under that section are instituted.
    Sec. 21.  Section 514G.102, Code 2015, is amended to read as
 follows:
    514G.102  Scope.
    The requirements of this chapter apply to policies delivered
 or issued for delivery in this state on or after July 1, 2008.
 The requirements of this chapter related to independent review
 of benefit trigger determinations apply to all claims made on
 or after January 1, 2009.  The requirements of this chapter
 related to prompt payment of claims and the payment of interest
 apply to all long=term care insurance policies. This chapter
 is not intended to supersede the obligations of entities
 subject to this chapter to comply with the substance of other
 applicable insurance laws not in conflict with this chapter,
 except that laws and regulations designed and intended to apply
 to Medicare supplement insurance policies shall not be applied
 to long=term care insurance.
    Sec. 22.  Section 515.35, subsection 4, paragraph m, Code
 2015, is amended to read as follows:
    m.  Venture capital funds.  Shares or equity interests in
 venture capital funds which agree to invest an amount equal to
 at least fifty percent of the investments by a company in small
 businesses having their principal offices within this state and
 having either more than one=half of their assets within this
 state or more than one=half of their employees employed within
 this state. A company shall not invest more than five percent
 of its capital and surplus under this paragraph. For purposes
 of this paragraph, "venture capital fund" means a corporation,
 partnership, proprietorship, or other entity formed under the
 laws of the United States, or a state, district, or territory
 of the United States, whose principal business is or will be
 the making of investments in, and the provision of significant
 managerial assistance to, small businesses which meet the small
 business administration definition of small business. "Equity
 interests" means limited partnership interests and other equity
 interests in which liability is limited to the amount of the
 investment, but does not mean general partnership interests or
 other interests involving general liability. "Venture capital
 fund" includes an equity interest in the Iowa fund of funds
 as defined in section 15E.62 and an equity interest in an
 innovation fund as defined in section 15E.52.
    Sec. 23.  Section 515.125, subsection 2, Code 2015, is
 amended to read as follows:
    2.  An insurer shall not fail to renew a policy except by
 notice to the insured as provided in this chapter. A notice
 of intention not to renew is not effective unless mailed or
 delivered by the insurer to the named insured at least thirty
 days prior to the expiration date of the policy. A notice
 of intention not to renew is not required if the insured is
 transferred from an insurer to an affiliate for future coverage
 as a result of a merger, acquisition, or company restructuring
 and if the transfer results in the same or broader coverage
  insurance company admitted in Iowa which is an affiliate of, as
 defined in section 521A.1, the transferring insurer and all of
 the following conditions are met:
    a.  The transfer does not result in an interruption in
 coverage.
    b.  The rating of the affiliate from the A.M. Best company or
 a substitute rating service acceptable to the commissioner, is
 the same or better than the rating of the transferring insurer.
    c.  The transfer results in the same or broader coverage.
    d.  Notice of the transfer is delivered to the insured or
 sent by first class mail to the insured's last known address
 not less than thirty days prior to the transfer.  The notice
 required by this paragraph is not required in the event that
 the insured requests or consents to the transfer.
    e.  The notice of transfer provides the name and telephone
 number of the insured's insurance producer, agent, or agency,
 if any.
    Sec. 24.  Section 515.128, subsection 3, Code 2015, is
 amended to read as follows:
    3.  This section applies to all forms of commercial property
 and casualty insurance written pursuant to this chapter. It
 does not apply if the insurer has offered to renew or if the
 insured fails to pay a premium due or any advance premium
 required by the insurer for renewal. A notice of nonrenewal
 is not required if the insured is transferred from an insurer
 to an affiliate for future coverage as a result of a merger,
 acquisition, or company restructuring and if the transfer
 results in the same or broader coverage insurance company
 admitted in Iowa which is an affiliate of, as defined in
 section 521A.1, the transferring insurer and all of the
 following conditions are met:
    a.  The transfer does not result in an interruption in
 coverage.
    b.  The rating of the affiliate from the A.M. Best company or
 a substitute rating service acceptable to the commissioner, is
 the same or better than the rating of the transferring insurer.
    c.  The transfer results in the same or broader coverage.
    d.  Notice of the transfer is delivered to the insured or
 sent by first class mail to the insured's last known address
 not less than forty=five days prior to the transfer.  The
 notice required by this paragraph is not required in the event
 that the insured requests or consents to the transfer.
    e.  The notice of transfer provides the name and telephone
 number of the insured's insurance producer, agent, or agency,
 if any.
    Sec. 25.  Section 521A.5, subsection 4, paragraph d, Code
 2015, is amended to read as follows:
    d.  The board of directors of a domestic insurer shall
 establish one or more committees comprised solely of directors
 who or other persons appointed by the board, the majority of
 whom are not officers or employees of the insurer or of any
 entity controlling, controlled by, or under common control with
 the insurer and who are not beneficial owners of a controlling
 interest in the voting stock of the insurer or any such entity.
 The committee or committees shall have responsibility for
 recommending or nominating candidates for director for election
 by shareholders or policyholders, evaluating the performance
 of officers deemed to be principal officers of the insurer,
 and recommending to the board of directors the selection and
 compensation of the principal officers.
    Sec. 26.  Section 523A.102, subsection 8, Code 2015, is
 amended by striking the subsection.
    Sec. 27.  Section 523A.204, subsection 3, Code 2015, is
 amended to read as follows:
    3.  All records maintained by the commissioner under this
 section shall be confidential pursuant to section 22.7,
 subsection 58, and shall not be made available for inspection
 or copying except upon the approval of the commissioner or the
 attorney general, or except when sought by the preneed seller
 to whom the records relate.  Such records shall be privileged
 and confidential in any judicial or administrative proceeding
 except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 28.  Section 523A.204, subsections 4 and 5, Code 2015,
 are amended by striking the subsections.
    Sec. 29.  Section 523A.205, subsection 2, Code 2015, is
 amended by striking the subsection.
    Sec. 30.  Section 523A.205, subsection 3, Code 2015, is
 amended to read as follows:
    3.  Notwithstanding chapter 22, all All records maintained
 by the commissioner under this section shall be confidential
 pursuant to section 22.7, subsection 58, and shall not be made
 available for inspection or copying except upon approval of the
 commissioner or the attorney general, or except when sought by
 the financial institution to whom the records relate.  Such
 records shall be privileged and confidential in any judicial or
 administrative proceeding except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 31.  Section 523A.206, subsection 6, Code 2015, is
 amended by striking the subsection and inserting in lieu
 thereof the following:
    6.  All records maintained by the commissioner under this
 section, including work papers, notes, recorded information,
 documents, and copies thereof that are produced or obtained
 by or disclosed to the commissioner or another person in the
 course of a compliance examination, shall be confidential
 pursuant to section 22.7, subsection 58, and shall not be
 made available for inspection and copying except upon the
 approval of the commissioner or the attorney general. Such
 records shall be privileged and confidential in any judicial or
 administrative proceeding except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 32.  Section 523A.207, Code 2015, is amended to read as
 follows:
    523A.207  Audits by certified public accountants == penalty.
    1.  A purchase agreement shall not be sold or transferred,
 as part of the sale of a business or the assets of a business,
 until an audit has been performed by a certified public
 accountant and filed with the commissioner that expresses the
 auditor's opinion of the adequacy of funding related to the
 purchase agreements to be sold or transferred. If the buyer
 of a purchase agreement sold or transferred as part of the
 sale of a business or the assets of a business, fails to file
 such an audit, the commissioner shall suspend the preneed
 seller's license of the buyer and the preneed sales license of
 any sales agent in the employ of the buyer until the audit is
 filed. In addition, the commissioner shall assess a penalty
 against the buyer in an amount up to one hundred dollars for
 each day that the audit remains unfiled. The commissioner
 shall allow a thirty=day grace period after the date that a
 purchase agreement is sold or transferred before suspension of
 a license or assessment of a penalty for failure to file an
 audit pursuant to this section.
    2.  All records maintained by the commissioner under this
 section shall be confidential pursuant to section 22.7,
 subsection 58, and shall not be made available for inspection
 or copying except upon approval of the commissioner or the
 attorney general, or except when sought by the preneed seller
 to whom the records relate. Such records shall be privileged
 and confidential in any judicial or administrative proceeding
 except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 33.  Section 523A.401, subsection 8, Code 2015, is
 amended to read as follows:
    8.  An insurance company issuing policies funding purchase
 agreements subject to this chapter shall file an annual report
 with the commissioner on a form prescribed by the commissioner.
 The report shall list the applicable insurance policies
 outstanding for each seller. Computer printouts may be
 submitted so long as each legibly provides the same information
 required in the prescribed form.
    Sec. 34.  Section 523A.401, Code 2015, is amended by adding
 the following new subsection:
    NEW SUBSECTION.  10.  All records maintained by the
 commissioner under this section shall be confidential
 pursuant to section 22.7, subsection 58, and shall not be made
 available for inspection or copying except upon approval of the
 commissioner or the attorney general, or except when sought
 by the insurance company to whom the records relate. Such
 records shall be privileged and confidential in any judicial or
 administrative proceeding except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 35.  Section 523A.402, subsection 8, Code 2015, is
 amended to read as follows:
    8.  An insurance company issuing annuities funding purchase
 agreements subject to this chapter shall file an annual report
 with the commissioner on a form prescribed by the commissioner.
 The report shall list the applicable annuities outstanding for
 each seller. Computer printouts may be submitted so long as
 each legibly provides the same information required in the
 prescribed form.
    Sec. 36.  Section 523A.405, Code 2015, is amended by striking
 the section and inserting in lieu thereof the following:
    523A.405  Bond in lieu of trust fund.
    The commissioner shall, by rule, establish terms and
 conditions under which a seller may, in lieu of trust
 requirements, file with the commissioner a surety bond issued
 by a surety company authorized to do business and doing
 business in this state.
    Sec. 37.  Section 523A.501, subsection 2, Code 2015, is
 amended to read as follows:
    2.  An application for a preneed seller's license shall be
 filed on a form and in a format prescribed by the commissioner
 and be accompanied by a fifty dollar filing fee in an amount
 set by the commissioner by rule.  The application shall include
 the name of the natural person or legal entity to be licensed
 as the preneed seller and, if applicable, any other name
 under which the preneed seller will be transacting business,
 including any names registered with the secretary of state or a
 county clerk.  The application shall be updated as necessary
 to ensure that the commissioner has been notified of all names
 under which the preneed seller is operating and doing business.
    Sec. 38.  Section 523A.501, subsection 7, Code 2015, is
 amended to read as follows:
    7.  A preneed seller's license shall be renewed every four
 years by filing the form prescribed by the commissioner under
 subsection 2, accompanied by a renewal fee in an amount set by
 the commissioner by rule expires annually on April 15.  If the
 preneed seller has filed a complete annual report and paid the
 required fees as required in section 523A.204, the commissioner
 shall renew the preneed seller's license until April 15 of the
 following year.
    Sec. 39.  Section 523A.502, subsection 5, Code 2015, is
 amended by striking the subsection and inserting in lieu
 thereof the following:
    5.  A sales license shall expire annually on April 15.  If
 the sales agent has filed a substantially complete annual
 report as required in section 523A.502A, the commissioner shall
 renew the sales license until April 15 of the following year.
    Sec. 40.  Section 523A.502A, subsections 1 and 2, Code 2015,
 are amended to read as follows:
    1.  A sales agent shall file with the commissioner not later
 than April 1 of each year an annual report on a form prescribed
 by the commissioner describing each purchase agreement sold
 by the sales agent during the year.  An annual report must be
 filed whether or not sales were made during the year and even
 if the sales agent is no longer an agent of a preneed seller or
 licensed by the commissioner.
    2.  All records maintained by the commissioner under this
 section shall be confidential pursuant to section 22.7,
 subsection 58, and shall not be made available for inspection
 or copying except upon the approval of the commissioner or the
 attorney general, or except when sought by the sales agent to
 whom the records relate.  Such records shall be privileged
 and confidential in any judicial or administrative proceeding
 except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 41.  Section 523A.502A, subsections 3 and 4, Code 2015,
 are amended by striking the subsections.
    Sec. 42.  Section 523A.803, subsection 1, paragraph c, Code
 2015, is amended by striking the paragraph.
    Sec. 43.  Section 523A.803, Code 2015, is amended by adding
 the following new subsection:
    NEW SUBSECTION.  1A.  All records maintained by the
 commissioner under this section, including work papers, notes,
 recorded information, documents, and copies thereof that are
 produced or obtained by or disclosed to the commissioner or
 another person in the course of an investigation, shall be
 confidential pursuant to section 22.7, subsection 58, and shall
 not be made available for inspection and copying except upon
 the approval of the commissioner or the attorney general. Such
 records shall be privileged and confidential in any judicial or
 administrative proceeding except any of the following:
    a.  An action commenced by the commissioner.
    b.  An administrative proceeding brought by the insurance
 division.
    c.  An action or proceeding which arises out of the criminal
 provisions of the laws of this state or of the United States.
    d.  An action brought by the insurance division or
 the attorney general to recover moneys for embezzlement,
 misappropriation, or misuse of trust funds.
    Sec. 44.  Section 523A.807, subsection 3, unnumbered
 paragraph 1, Code 2015, is amended to read as follows:
    If the commissioner finds that a person has violated section
 523A.201, 523A.202, 523A.203, 523A.207, 523A.401, 523A.402,
 523A.403, 523A.404, 523A.405, 523A.501, 523A.502, or 523A.504
  or any rule adopted pursuant thereto, the commissioner may
 order any or all of the following:
    Sec. 45.  Section 523I.810, subsection 9, Code 2015, is
 amended to read as follows:
    9.  A cemetery may, by resolution adopted by a vote of at
 least two=thirds of the members of its board at any authorized
 meeting of the board, authorize the withdrawal and use of
 not more than twenty percent of the principal of the care
 fund to acquire additional land for cemetery purposes, to
 repair a mausoleum or other building or structure intended for
 cemetery purposes, to build, improve, or repair boundaries,
  roads and walkways in the cemetery, to construct a columbarium,
 mausoleum, or similar structure to create additional interment
 spaces, to purchase equipment for tree, shrub, and lawn care,
 to purchase backhoes or similar equipment used to open and
 close interment spaces, or to purchase recordkeeping software
 used to maintain ownership records or interment records. The
 resolution shall establish a reasonable repayment schedule, not
 to exceed five years, and provide for interest in an amount
 comparable to the care fund's current rate of return on its
 investments. However, the care fund shall not be diminished
 below an amount equal to the greater of twenty=five thousand
 dollars or five thousand dollars per acre of land in the
 cemetery. The resolution, and if the deposit of care fund
 income over five years is unlikely to fund replenishment of the
 principal of the care fund, either a bond or proof of insurance
 to guarantee replenishment of the care fund, shall be filed
 with the commissioner thirty days prior to the withdrawal of
 funds.
    Sec. 46.  Section 523I.811, subsection 1, paragraph b, Code
 2015, is amended to read as follows:
    b.  Maintaining drains, water lines, roads, buildings,
 boundaries, fences, and other structures.
    Sec. 47.  Section 523I.811, subsection 1, Code 2015, is
 amended by adding the following new paragraphs:
    NEW PARAGRAPH.  g.  To purchase equipment to maintain the
 cemetery.
    NEW PARAGRAPH.  h.  To purchase backhoes or similar equipment
 used to open and close interment spaces.
    NEW PARAGRAPH.  i.  To purchase equipment used to construct
 a columbarium, mausoleum, or similar structure to create
 additional interment spaces.
    Sec. 48.  NEW SECTION.  523I.811A  Emergency use of care
 funds.
    1.  Notwithstanding any other provision of this chapter,
 a perpetual care cemetery may apply to the commissioner to
 withdraw funds from the cemetery's care fund for a financial
 emergency.  The commissioner shall, by rule, establish
 standards and procedures for such applications and for
 withdrawals from care funds.
    2.  Upon application, the commissioner may allow a perpetual
 care cemetery to withdraw funds from the care fund if the
 commissioner finds that the cemetery has an urgent financial
 need and the withdrawal is deemed reasonable and prudent to
 fund a necessary expense of the cemetery.  The commissioner
 shall establish conditions for the specific use of the funds
 withdrawn and may require repayment of all or part of the
 amount withdrawn.
    Sec. 49.  EFFECTIVE DATE.  The following provision or
 provisions of this Act take effect January 1, 2016:
    1.  The section of this Act adding section 502.202,
 subsection 24.
    Sec. 50.  EFFECTIVE UPON ENACTMENT.  Unless otherwise
 provided, this Act, if approved by the governor on or after
 July 1, 2015, takes effect upon enactment.
    Sec. 51.  RETROACTIVE APPLICABILITY.  Unless otherwise
 provided, this Act, with the exception of the section of this
 Act adding section 502.202, subsection 24, if approved by the
 governor on or after July 1, 2015, applies retroactively to
 July 1, 2015.
    Sec. 52.  DIRECTIONS TO CODE EDITOR.  The Iowa code editor is
 directed to transfer section 515.11 to new section 515.23.
    Sec. 53.  REPEAL.  Section 523A.504, Code 2015, is repealed.


                                                             
                               KRAIG PAULSEN
                               Speaker of the House


                                                             
                               PAM JOCHUM
                               President of the Senate
    I hereby certify that this bill originated in the House and
 is known as House File 632, Eighty=sixth General Assembly.


                                                             
                               CARMINE BOAL
                               Chief Clerk of the House
 Approved                , 2015


                                                             
                               TERRY E. BRANSTAD
                               Governor

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