Bill Text: IA HSB22 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to provisions applicable to life insurance companies and associations, and credit for reinsurance, and including retroactive applicability provisions.
Spectrum: Committee Bill
Status: (N/A - Dead) 2017-02-08 - Committee report, recommending passage. H.J. 249. [HSB22 Detail]
Download: Iowa-2017-HSB22-Introduced.html
House
Study
Bill
22
-
Introduced
SENATE/HOUSE
FILE
_____
BY
(PROPOSED
DEPARTMENT
OF
COMMERCE/INSURANCE
DIVISION
BILL)
A
BILL
FOR
An
Act
relating
to
provisions
applicable
to
life
insurance
1
companies
and
associations,
and
credit
for
reinsurance,
and
2
including
retroactive
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
511.8,
subsection
22,
paragraph
b,
1
subparagraph
(2),
subparagraph
division
(b),
Code
2017,
is
2
amended
to
read
as
follows:
3
(b)
Financial
instruments
used
in
hedging
transactions
4
between
an
insurer
and
a
conduit
which
are
collateralized
by
5
obligations
eligible
under
subsection
5
or
by
cash
equivalents
6
eligible
under
subsection
24
,
other
than
a
class
one
rule
7
2a-7
money
market
fund,
are
eligible
only
to
the
extent
that
8
such
securities
deposited
as
collateral
are
not
in
excess
9
of
ten
percent
of
the
legal
reserve,
less
any
obligations
10
eligible
under
subsection
5
or
cash
equivalents
eligible
under
11
subsection
24
,
other
than
a
class
one
rule
2a-7
money
market
12
fund,
owned
by
the
insurer
or
which
are
the
subject
of
hedging
13
transactions
by
the
insurer,
that
are
included
in
the
insurer’s
14
legal
reserve.
15
Sec.
2.
Section
511.8,
subsection
23,
paragraph
c,
Code
16
2017,
is
amended
to
read
as
follows:
17
c.
If
the
loan
is
collateralized
by
cash
or
cash
18
equivalents,
the
cash
or
cash
equivalent
collateral
may
be
19
reinvested
by
the
life
insurance
company
or
association
in
20
class
one
rule
2a-7
money
market
funds
as
defined
in
subsection
21
24
,
individual
securities
which
are
eligible
for
inclusion
in
22
the
legal
reserve
of
the
life
insurance
company
or
association,
23
or
in
repurchase
agreements
fully
collateralized
by
such
24
securities
if
the
life
insurance
company
or
association
takes
25
delivery
of
the
collateral
either
directly
or
through
an
26
authorized
custodian
or
pooled
fund
comprised
of
individual
27
securities
which
are
eligible
for
inclusion
in
the
legal
28
reserve
of
the
life
insurance
company
or
association.
If
such
29
reinvestment
is
made
in
individual
securities
or
in
repurchase
30
agreements,
the
individual
securities
or
the
securities
which
31
collateralize
the
repurchase
agreements
shall
mature
in
less
32
than
two
hundred
seventy
days.
If
such
reinvestment
is
made
33
in
a
pooled
fund,
the
average
maturity
of
the
securities
34
comprising
such
pooled
fund
must
be
one
hundred
eighty
days
or
35
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less
and
the
individual
maturities
of
the
securities
comprising
1
such
pooled
fund
must
be
three
hundred
ninety-seven
days
or
2
less.
Individual
securities
and
securities
comprising
the
3
pooled
fund
shall
be
investment
grade.
As
used
in
this
4
paragraph,
“maturity”
means
the
earlier
of
the
fixed
date
on
5
which
the
holder
of
the
security
is
unconditionally
entitled
to
6
receive
principal
and
interest
in
full
or
the
date
on
which
the
7
holder
of
the
security
is
unconditionally
entitled
upon
demand
8
to
receive
principal
and
interest
in
full.
9
Sec.
3.
Section
511.8,
subsection
24,
paragraph
a,
10
subparagraph
(2),
Code
2017,
is
amended
to
read
as
follows:
11
(2)
“Class
one
“Rule
2a-7
money
market
fund”
means
12
investments
in
an
open-end
management
investment
company
13
registered
with
the
federal
securities
and
exchange
commission
14
under
the
federal
Investment
Company
Act
of
1940,
15
U.S.C.
15
§80a-1
et
seq.,
and
operated
in
accordance
with
17
C.F.R.
16
§270.2a-7
,
that
qualifies
for
investment
using
the
bond
class
17
one
reserve
factor
under
the
purposes
and
procedures
of
the
18
national
association
of
insurance
commissioners’
securities
19
valuation
office
.
20
Sec.
4.
Section
511.8,
subsection
24,
paragraphs
b
and
c,
21
Code
2017,
are
amended
to
read
as
follows:
22
b.
Cash
equivalents
include
a
class
one
rule
2a-7
money
23
market
fund.
24
c.
Cash
equivalents,
other
than
a
class
one
rule
2a-7
money
25
market
fund,
are
not
eligible
in
excess
of
two
percent
of
the
26
legal
reserve
in
the
obligations
of
any
one
corporation,
and
27
are
not
eligible
in
excess
of
ten
percent
of
the
legal
reserve.
28
Sec.
5.
Section
521B.102,
unnumbered
paragraph
1,
Code
29
2017,
is
amended
to
read
as
follows:
30
Credit
for
reinsurance
shall
be
allowed
a
domestic
ceding
31
insurer
as
either
an
asset
or
a
reduction
from
liability
on
32
account
of
reinsurance
ceded
only
when
the
reinsurer
meets
33
the
requirements
of
subsection
1
,
2
,
3
,
4
,
5
,
or
6
.
The
34
commissioner
may
adopt
rules
pursuant
to
section
521B.105
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specifying
additional
requirements
related
to
the
valuation
of
1
assets
or
reserve
credits,
the
amount
and
forms
of
security
2
supporting
reinsurance
arrangements
described
in
section
3
521B.105,
and
the
circumstances
pursuant
to
which
credit
shall
4
be
reduced
or
eliminated.
Credit
shall
be
allowed
under
5
subsection
1
,
2
,
or
3
only
respecting
cessions
of
those
kinds
6
or
classes
of
business
which
the
assuming
insurer
is
licensed
7
or
otherwise
permitted
to
write
or
assume
in
the
insurer’s
8
state
of
domicile
or,
in
the
case
of
a
United
States
branch
9
of
an
alien
assuming
insurer,
in
the
state
through
which
the
10
insurer
is
entered
and
licensed
to
transact
insurance
or
11
reinsurance.
Credit
shall
be
allowed
under
subsection
3
or
4
12
only
if
the
applicable
requirements
of
subsection
7
have
been
13
satisfied.
14
Sec.
6.
Section
521B.103,
subsection
1,
Code
2017,
is
15
amended
to
read
as
follows:
16
1.
An
asset
or
a
reduction
from
liability
for
reinsurance
17
ceded
by
a
domestic
insurer
to
an
assuming
insurer
not
meeting
18
the
requirements
of
section
521B.102
,
shall
be
allowed
in
an
19
amount
not
exceeding
the
liabilities
carried
by
the
ceding
20
insurer.
The
commissioner
may
adopt
rules
pursuant
to
section
21
521B.105
specifying
requirements
related
to
the
valuation
of
22
assets
or
reserve
credits,
the
amount
and
forms
of
security
23
supporting
reinsurance
arrangements
described
in
section
24
521B.105,
and
the
circumstances
pursuant
to
which
credit
shall
25
be
reduced
or
eliminated.
The
reduction
shall
be
in
the
amount
26
of
funds
held
by
or
on
behalf
of
the
ceding
insurer,
including
27
funds
held
in
trust
for
the
ceding
insurer,
under
a
reinsurance
28
contract
with
the
assuming
insurer
as
security
for
the
payment
29
of
obligations
under
the
contract,
if
the
security
is
held
30
in
the
United
States
subject
to
withdrawal
solely
by,
and
31
under
the
exclusive
control
of,
the
ceding
insurer,
or
in
the
32
case
of
a
trust,
held
in
a
qualified
United
States
financial
33
institution
as
defined
in
section
521B.104,
subsection
2
.
34
Sec.
7.
Section
521B.105,
Code
2017,
is
amended
to
read
as
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follows:
1
521B.105
Rules.
2
1.
The
commissioner
may
adopt
rules,
pursuant
to
chapter
3
17A
,
as
necessary
or
convenient
to
administer
this
chapter
.
4
2.
The
commissioner
is
further
authorized
to
adopt
rules
5
pursuant
to
chapter
17A
that
are
applicable
to
reinsurance
6
arrangements
as
follows:
7
a.
A
rule
adopted
pursuant
to
this
subsection
is
applicable
8
only
to
reinsurance
arrangements
relating
to
the
following:
9
(1)
Life
insurance
policies
with
guaranteed
nonlevel
gross
10
premiums
or
guaranteed
nonlevel
benefits.
11
(2)
Universal
life
insurance
policies
with
provisions
12
allowing
a
policyholder
to
keep
a
policy
in
force
over
a
13
secondary
guarantee
period.
14
(3)
Variable
annuities
with
guaranteed
death
or
living
15
benefits.
16
(4)
Long-term
care
insurance
policies.
17
(5)
Other
life
and
health
insurance
and
annuity
products
as
18
to
which
the
national
association
of
insurance
commissioners
19
adopts
model
regulatory
requirements
with
respect
to
credit
for
20
reinsurance.
21
b.
A
rule
adopted
pursuant
to
paragraph
“a”
,
and
applicable
22
to
policies
described
in
paragraph
“a”
,
subparagraph
(1)
or
(2),
23
is
applicable
to
any
reinsurance
contract
containing
either
of
24
the
following:
25
(1)
Policies
issued
on
or
after
January
1,
2015.
26
(2)
Policies
issued
prior
to
January
1,
2015,
if
risk
27
pertaining
to
such
policies
is
ceded
in
connection
with
the
28
reinsurance
contract,
in
whole
or
in
part,
on
or
after
January
29
1,
2015.
30
c.
A
rule
adopted
pursuant
to
this
subsection
may
require
31
the
ceding
insurer,
in
calculating
the
amounts
or
forms
of
32
security
required
to
be
held
under
rules
adopted
under
this
33
subsection,
to
use
the
valuation
manual
as
defined
in
section
34
508.36,
including
all
amendments
adopted
by
the
national
35
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association
of
insurance
commissioners
and
in
effect
on
1
the
date
as
of
which
the
calculation
is
made,
to
the
extent
2
applicable.
3
3.
A
rule
adopted
pursuant
to
this
section
is
not
applicable
4
to
cessions
to
an
assuming
insurer
that
meets
either
of
the
5
following
requirements:
6
a.
Is
certified
in
Iowa.
7
b.
Maintains
at
least
two
hundred
fifty
million
dollars
8
in
capital
and
surplus
when
determined
in
accordance
with
the
9
accounting
practices
and
procedures
manual
of
the
national
10
association
of
insurance
commissioners,
including
all
11
amendments
adopted
by
the
national
association
of
insurance
12
commissioners,
but
excluding
the
impact
of
any
permitted
13
or
prescribed
practices;
and
meets
either
of
the
following
14
requirements:
15
(1)
Is
licensed
in
at
least
twenty-six
states.
16
(2)
Is
licensed
in
at
least
ten
states,
and
is
licensed
or
17
accredited
in
a
total
of
at
least
thirty-five
states.
18
4.
The
commissioner’s
authority
to
adopt
rules
pursuant
19
to
subsection
2
does
not
limit
the
commissioner’s
general
20
authority
to
adopt
rules
pursuant
to
subsection
1.
21
Sec.
8.
RETROACTIVE
APPLICABILITY.
The
following
provision
22
of
this
Act
applies
retroactively
to
January
1,
2015,
as
to
23
specified
reinsurance
contracts
described
in
section
521B.105,
24
subsection
2,
paragraph
“b”,
as
enacted
in
this
Act:
25
1.
The
section
of
this
Act
amending
section
521B.105.
26
EXPLANATION
27
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
28
the
explanation’s
substance
by
the
members
of
the
general
assembly.
29
This
bill
relates
to
provisions
applicable
to
life
insurance
30
companies
and
associations
and
credit
for
reinsurance,
and
31
contains
a
retroactive
applicability
provision.
32
The
bill
makes
changes
in
Code
section
511.8
by
renaming
a
33
money
market
fund
that
is
referred
to
in
the
provision.
34
The
bill
makes
changes
in
several
provisions
of
Code
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chapter
521B,
giving
the
commissioner
of
insurance
specific
1
authorization
to
adopt
rules
applicable
to
reinsurance
2
arrangements,
in
addition
to
the
commissioner’s
existing
3
authorization
to
adopt
rules
to
administer
the
Code
chapter.
4
The
amendments
to
Code
section
521B.105
are
made
5
retroactively
applicable
to
January
1,
2015,
as
to
rules
that
6
are
adopted
and
are
applicable
to
certain
specified
life
7
insurance
policies
with
reinsurance
contracts
containing
8
policies
issued
on
or
after
January
1,
2015,
or
policies
issued
9
prior
to
January
1,
2015,
if
risk
pertaining
to
the
policies
is
10
ceded
in
connection
with
the
reinsurance
contract
on
or
after
11
January
1,
2015.
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