Iowa-2013-HSB537-Introduced

S.F. _____ H.F. _____ DIVISION I 1 MISCELLANEOUS PROVISIONS 2 Section 1. Section 97B.49B, subsection 1, paragraph e, Code 3 2014, is amended by adding the following new subparagraph: 4 NEW SUBPARAGRAPH . (13) An employee of the insurance 5 division of the department of commerce who as a condition 6 of employment is required to be certified by the Iowa law 7 enforcement academy and who is required to perform the duties 8 of a peace officer as provided in section 507E.8. 9 Sec. 2. Section 502.409, subsection 1, Code 2014, is amended 10 to read as follows: 11 1. Withdrawal of registration. Withdrawal of registration 12 by a broker-dealer, agent, investment adviser, or investment 13 adviser representative becomes effective sixty days after the 14 filing of the application to withdraw or within any shorter 15 period as provided by rule adopted or order issued under this 16 chapter unless a revocation or suspension proceeding is pending 17 when the application is filed. If a proceeding is pending, 18 withdrawal becomes effective when and upon such conditions as 19 required by rule adopted or order issued under this chapter . 20 The administrator may institute a disciplinary action under 21 section 502.412 , including an action to revoke, suspend, 22 condition, or limit the registration of a registrant, censure, 23 impose a bar, or impose a civil penalty, within one year two 24 years after the withdrawal became effective automatically 25 and issue a disciplinary order as of the last date on which 26 registration was effective if a proceeding is not pending. 27 Sec. 3. Section 511.8, subsection 8, paragraph d, Code 2014, 28 is amended to read as follows: 29 d. In addition to the restrictions contained in paragraphs 30 “a” and “b” , the investments of any company or association in 31 securities included under subsection 5 , paragraph “c” , are not 32 eligible in excess of two three percent of the legal reserve, 33 but not more than one-eighth one-half of one percent of the 34 legal reserve shall be invested in the securities of any one 35 -1- LSB 5212XD (9) 85 av/nh 1/ 12

S.F. _____ H.F. _____ corporation. 1 Sec. 4. Section 511.8, subsection 22, paragraph i, Code 2 2014, is amended to read as follows: 3 i. Securities held in the legal reserve of a life insurance 4 company or association pledged as collateral for financial 5 instruments used in highly effective hedging transactions as 6 defined in the national association of insurance commissioners’ 7 statement of statutory accounting principles no. 86 shall 8 continue to be eligible for inclusion in the legal reserve of 9 the life insurance company or association subject to all of the 10 following: 11 (1) The life insurance company or association does not 12 include the financial instruments used in highly effective 13 hedging transactions for which the securities are pledged as 14 collateral in the legal reserve of the life insurance company 15 or association, provided, however, that this subparagraph 16 shall not exclude securities pledged to a counterparty, 17 clearing organization, or clearinghouse on an upfront basis 18 in the form of initial margin, independent amount, or other 19 securities pledged as a precondition of entering into financial 20 instruments used in highly effective hedging transactions from 21 inclusion in the legal reserve of the life insurance company 22 or association. 23 (2) Securities pledged as collateral for financial 24 instruments used in highly effective hedging transactions 25 as defined in the national association of insurance 26 commissioners’ statement of statutory accounting principles 27 no. 86, together with securities pledged to a counterparty, 28 clearing organization, or clearinghouse on an upfront basis 29 in the form of initial margin, independent amount, or other 30 securities pledged as a precondition of entering into financial 31 instruments used in highly effective hedging transactions 32 pursuant to subparagraph (1), are not eligible in excess of 33 ten percent of the legal reserve of the life insurance company 34 or association, less any financial instruments used in hedging 35 -2- LSB 5212XD (9) 85 av/nh 2/ 12

S.F. _____ H.F. _____ transactions held in the legal reserve under this subsection 1 and less any securities included under subparagraph (3) . 2 (3) Securities pledged as collateral for financial 3 instruments used in hedging transactions that the life 4 insurance company or association does not report as highly 5 effective hedging transactions, together with securities 6 pledged to a counterparty, clearing organization, or 7 clearinghouse on an upfront basis in the form of initial 8 margin, independent amount, or other securities pledged as 9 a precondition of entering into hedging transactions that 10 the life insurance company or association does not report as 11 highly effective hedging transactions pursuant to subparagraph 12 (1), are not eligible in excess of three percent of the legal 13 reserve of the life insurance company or association, less any 14 financial instruments used in hedging transactions held in the 15 legal reserve under this subsection. 16 DIVISION II 17 ELECTRONIC POSTING AND TRANSMISSION OF INSURANCE NOTICES AND 18 DOCUMENTS 19 Sec. 5. NEW SECTION . 505B.1 Notices and documents delivered 20 by electronic means. 21 1. As used in this chapter, unless the context otherwise 22 requires: 23 a. “Delivered by electronic means” means any of the 24 following: 25 (1) Delivery to an electronic mail address at which a party 26 has consented to receive notices or documents. 27 (2) Posting on an electronic network or site accessible via 28 the internet, a mobile application, computer, mobile device, 29 tablet, or any other electronic device, together with separate 30 notice of the posting which shall be provided by electronic 31 mail to the address at which the party has consented to receive 32 notice or by any other delivery method that has been consented 33 to by the party. 34 b. “Party” means a recipient of a notice or document 35 -3- LSB 5212XD (9) 85 av/nh 3/ 12

S.F. _____ H.F. _____ required as part of an insurance transaction including but not 1 limited to an applicant, an insured, a policyholder, or an 2 annuity contract holder. 3 2. Subject to subsection 4, any notice to a party or any 4 other document required under applicable law in an insurance 5 transaction or that is to serve as evidence of insurance 6 coverage may be delivered, stored, or presented by electronic 7 means so long as the notice or document meets the requirements 8 of chapter 554D. 9 3. Delivery of a notice or document in accordance with this 10 section shall be considered equivalent to any delivery method 11 required under applicable law, including delivery by first 12 class mail; first class mail, postage prepaid; certified mail; 13 certificate of mail; or certificate of mailing. 14 4. A notice or document may be delivered by electronic 15 means by an insurer to a party under this section if all of the 16 following occur: 17 a. The party has affirmatively consented to such method of 18 delivery and has not withdrawn the consent. 19 b. The party, before giving consent, is provided with a 20 clear and conspicuous statement informing the party of the 21 following: 22 (1) Any right or option of the party to have the notice 23 or document provided or made available in paper or another 24 nonelectronic form. 25 (2) The right of the party to withdraw consent to have a 26 notice or document delivered by electronic means and any fees, 27 conditions, or consequences imposed in the event consent is 28 withdrawn. 29 (3) Whether the party’s consent applies as follows: 30 (a) Only to the particular transaction as to which the 31 notice or document must be provided. 32 (b) To identified categories of notices or documents that 33 may be delivered by electronic means during the course of the 34 parties’ relationship. 35 -4- LSB 5212XD (9) 85 av/nh 4/ 12

S.F. _____ H.F. _____ (4) (a) The means, after consent is given, by which a party 1 may obtain a paper copy of a notice or document delivered by 2 electronic means. 3 (b) The fee, if any, for the paper copy. 4 (5) The procedure a party must follow to withdraw consent to 5 have a notice or document delivered by electronic means and to 6 update information needed to contact the party electronically. 7 c. Both of the following occur: 8 (1) Before giving consent, the party is provided with 9 a statement of the hardware and software requirements for 10 access to and retention of a notice or document delivered by 11 electronic means. 12 (2) The party consents electronically, or confirms consent 13 electronically, in a manner that reasonably demonstrates that 14 the party can access information in the electronic form that 15 will be used for notices or documents delivered by electronic 16 means as to which the party has given consent. 17 d. After consent of the party is given, the insurer, in 18 the event a change in the hardware or software requirements 19 needed to access or retain a notice or document delivered by 20 electronic means creates a material risk that the party will 21 not be able to access or retain a subsequent notice or document 22 to which the consent applies, does the following: 23 (1) Provides the party with a statement of the following: 24 (a) The revised hardware and software requirements for 25 access to and retention of a notice or document delivered by 26 electronic means. 27 (b) The right of the party to withdraw consent without the 28 imposition of any fee, condition, or consequence that was not 29 disclosed under paragraph “b” , subparagraph (2). 30 (2) Complies with paragraph “b” . 31 5. This section does not affect requirements related to 32 content or timing of any notice or document required under 33 applicable law. 34 6. If a provision of this title or applicable law requiring 35 -5- LSB 5212XD (9) 85 av/nh 5/ 12

S.F. _____ H.F. _____ a notice or document to be provided to a party expressly 1 requires verification or acknowledgment of receipt of the 2 notice or document, the notice or document may be delivered 3 by electronic means only if the method used provides for 4 verification or acknowledgment of receipt. 5 7. The legal effectiveness, validity, or enforceability 6 of any contract or policy of insurance executed by a party 7 shall not be denied solely because of the failure to obtain 8 electronic consent or confirmation of consent of the party in 9 accordance with subsection 4, paragraph “c” , subparagraph (2). 10 8. a. A withdrawal of consent by a party does not affect 11 the legal effectiveness, validity, or enforceability of a 12 notice or document delivered by electronic means to the party 13 before the withdrawal of consent is effective. 14 b. A withdrawal of consent by a party is effective within a 15 reasonable period of time after receipt of the withdrawal by 16 the insurer. 17 c. Failure by an insurer to comply with subsection 4, 18 paragraph “d” , may be treated, at the election of the party, as 19 a withdrawal of consent for purposes of this section. 20 9. This section does not apply to a notice or document 21 delivered by an insurer in an electronic form before the 22 effective date of this Act to a party who, before that date, 23 has consented to receive a notice or document in an electronic 24 form otherwise allowed by law. 25 10. If the consent of a party to receive certain notices 26 or documents in an electronic form is on file with an insurer 27 before the effective date of this Act, and pursuant to this 28 section an insurer intends to deliver additional notices or 29 documents to such party in an electronic form, then prior to 30 delivering such additional notices or documents electronically, 31 the insurer shall notify the party of the following: 32 a. The notices or documents that may be delivered by 33 electronic means under this section that were not previously 34 delivered electronically. 35 -6- LSB 5212XD (9) 85 av/nh 6/ 12

S.F. _____ H.F. _____ b. The party’s right to withdraw consent to have notices or 1 documents delivered by electronic means. 2 11. a. Except as otherwise provided by law, if an oral 3 communication or a recording of an oral communication from a 4 party can be reliably stored and reproduced by an insurer, the 5 oral communication or recording may qualify as a notice or 6 document delivered by electronic means for purposes of this 7 section. 8 b. If a provision of this title or applicable law requires a 9 signature or notice or document to be notarized, acknowledged, 10 verified, or made under oath, the requirement is satisfied if 11 the electronic signature of the person authorized to perform 12 those acts, together with all other information required to 13 be included by the provision, is attached to or logically 14 associated with the signature, notice, or document. 15 12. This section shall not be construed to modify, limit, or 16 supersede the provisions of the federal Electronic Signatures 17 in Global and National Commerce Act, Pub. L. No. 106-229, 114 18 Stat. 464 (2000), codified at 15 U.S.C. §7001 et seq., as 19 amended. 20 Sec. 6. NEW SECTION . 505B.2 Posting of policies on the 21 internet. 22 1. Notwithstanding any contrary provision of chapter 23 554D, an insurer may mail, deliver, or post on the insurer’s 24 internet site insurance documents, including policies, riders, 25 endorsements, and annuity contracts that do not contain 26 personally identifiable information. If the insurer elects 27 to post an insurance policy or endorsement on the insurer’s 28 internet site in lieu of mailing or delivering the policy or 29 endorsement to the insured, the insurer must comply with all of 30 the following conditions: 31 a. The policy or endorsement must be accessible and remain 32 accessible for as long as the policy or endorsement is in 33 force. 34 b. After the expiration of the policy or endorsement, the 35 -7- LSB 5212XD (9) 85 av/nh 7/ 12

S.F. _____ H.F. _____ insurer must archive the expired policy or endorsement for 1 a period of five years, and make the policy or endorsement 2 available upon request. 3 c. The policy or endorsement must be posted in a manner that 4 enables the insured to print and save the policy or endorsement 5 using programs and applications that are widely available on 6 the internet and free to use. 7 d. The insurer must provide the following information in, 8 or simultaneously with, each declarations page provided at the 9 time of issuance of the initial policy and any renewal of that 10 policy: 11 (1) A description of the exact policy or endorsement 12 purchased by the insured. 13 (2) A method by which the insured may obtain, upon request 14 and without charge, a paper copy of the insured’s policy or 15 endorsement. 16 (3) An internet address where the insured’s policy or 17 endorsement is posted. 18 e. The insurer must provide notice, in the format preferred 19 by the insured, of any changes to the policy or endorsement, 20 the insured’s right to obtain, upon request and without charge, 21 a paper copy of such policy or endorsement, and the internet 22 address where such policy or endorsement is posted. 23 Sec. 7. NEW SECTION . 505B.3 Applicability. 24 The provisions of this chapter shall apply to the insurance 25 products and documents, including insurance policies, insurance 26 riders, insurance endorsements, and annuity contracts filed 27 with and regulated by the commissioner of insurance under the 28 authority provided to the commissioner by Title XIII, subtitle 29 1. 30 EXPLANATION 31 The inclusion of this explanation does not constitute agreement with 32 the explanation’s substance by the members of the general assembly. 33 This bill relates to various matters involving insurance 34 and the insurance division of the department of commerce and 35 -8- LSB 5212XD (9) 85 av/nh 8/ 12

S.F. _____ H.F. _____ includes applicability provisions. 1 DIVISION I —— MISCELLANEOUS PROVISIONS. 2 IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (IPERS). New 3 Code section 97B.49B(1)(e)(13) provides that employees of 4 the insurance division who as a condition of employment are 5 required to be certified by the Iowa law enforcement academy 6 and who are required to perform the duties of a peace officer, 7 are defined as being in a “protection occupation” for purposes 8 of calculation of their retirement benefits under IPERS. 9 UNIFORM SECURITIES ACT. Code section 502.409(1) is amended 10 to provide that when a broker-dealer, agent, investment 11 adviser, or investment adviser representative withdraws its 12 registration in this state, the commissioner of insurance 13 or a deputy may institute a disciplinary action against 14 such a person within two years, instead of one year, of the 15 withdrawal. 16 LIFE INSURANCE COMPANIES AND ASSOCIATIONS. Code section 17 511.8(8)(d) is amended to provide that certain corporate 18 obligations held in the legal reserve of a life insurance 19 company or association cannot exceed 3 percent, instead of 20 2 percent, of the legal reserve and not more than one-half, 21 instead of one-eighth, of 1 percent of the legal reserve can be 22 invested in the securities of any one corporation. 23 Code section 511.8(22)(i) is amended to provide that certain 24 securities pledged as collateral for financial instruments used 25 in hedging transactions, instead of highly effective hedging 26 transactions, are eligible to be held in the legal reserve of 27 a life insurance company or association subject to certain 28 restrictions. Those restrictions are: 29 1) Financial instruments used in hedging transactions for 30 which the securities are pledged as collateral cannot be 31 included in the reserve, except in specified cases. 32 2) Securities pledged as collateral for financial 33 instruments used in highly effective hedging transactions, as 34 defined by the national association of insurance commissioners, 35 -9- LSB 5212XD (9) 85 av/nh 9/ 12

S.F. _____ H.F. _____ together with securities pledged to certain entities or other 1 securities pledged as a precondition of entering into highly 2 effective hedging transactions, cannot be held in excess of 3 10 percent of the legal reserve less any instruments used 4 in hedging transactions held in the reserve and less any 5 securities pledged as collateral for financial instruments used 6 in hedging transactions. 7 3) Securities pledged as collateral for financial 8 instruments used in hedging transactions together with 9 securities pledged to specified entities or other securities 10 pledged as a condition of entering into hedging transactions 11 that are not highly effective hedging transactions, cannot 12 exceed 3 percent of the legal reserve less any financial 13 instruments used in hedging transactions that are held in the 14 reserve under Code section 511.8(22)(i). 15 DIVISION II —— ELECTRONIC POSTING AND TRANSMISSION OF 16 INSURANCE NOTICES AND DOCUMENTS. New Code chapter 505B 17 regulates the electronic delivery and posting on an electronic 18 network, of certain insurance notices and documents required to 19 be sent to a person including but not limited to an applicant, 20 an insured, a policyholder, or an annuity contract holder as 21 part of an insurance transaction. 22 New Code section 505B.1 provides that any such notice or 23 document required to be sent to such a person under applicable 24 law may be delivered, stored, or presented by electronic means 25 so long as the notice or document meets the requirements of 26 the Uniform Electronic Transactions Act (Code chapter 554D) 27 and the requirements of this new Code section. Electronic 28 delivery that meets these requirements is considered equivalent 29 to delivery under other methods required by law such as first 30 class mail, certified mail, or certificate of mail. 31 In order to meet the requirements of new Code section 505B.1, 32 the recipient must affirmatively consent to electronic delivery 33 or posting and must be provided with a clear and conspicuous 34 statement informing the recipient of their rights, including 35 -10- LSB 5212XD (9) 85 av/nh 10/ 12

S.F. _____ H.F. _____ the right to withdraw consent and any fees imposed for doing 1 so. The recipient must also be provided with the hardware and 2 software requirements for accessing information in electronic 3 form and notified if those requirements change. 4 New Code section 505B.1 does not affect legal requirements 5 related to the content or timing of any notice or document. 6 If the legal requirements expressly require verification or 7 acknowledgment of receipt of the notice or document, the 8 electronic delivery must provide for such verification or 9 acknowledgment of receipt. The legal effectiveness, validity, 10 or enforceability of any contract or policy of insurance cannot 11 be denied solely because of the failure to obtain electronic 12 consent or confirmation of the consent pursuant to the new 13 Code section. A withdrawal of consent does not affect the 14 legal effectiveness, validity, or enforceability of a notice or 15 document delivered by electronic means prior to the effective 16 date of the withdrawal of consent. 17 If a party had consented to receive certain notices or 18 documents electronically prior to the effective date of new 19 Code chapter 505B, an insurer who intends to deliver additional 20 notices or documents to the party pursuant to the new Code 21 chapter must provide notice of that fact and inform the party 22 of the right to withdraw consent to such delivery. 23 Except as otherwise prohibited by law, if an oral 24 communication or recording of an oral communication from a 25 party can be reliably stored and reproduced by an insurer, the 26 oral communication or recording may qualify as a notice or 27 document delivered by electronic means. Also, the electronic 28 signature of a person is satisfactory to meet requirements to 29 notarize, acknowledge, verify, or make under oath a signature, 30 notice, or document. 31 New Code section 505B.1 shall not be construed to modify, 32 limit, or supersede the provisions of the federal Electronic 33 Signatures in Global and National Commerce Act. 34 New Code section 505B.2 provides that insurance documents, 35 -11- LSB 5212XD (9) 85 av/nh 11/ 12

S.F. _____ H.F. _____ including policies, riders, endorsements, and annuity contracts 1 that do not contain personally identifiable information may be 2 mailed, delivered, or posted on the insurer’s internet site. 3 If the insurer elects to post the items in lieu of mailing or 4 delivering them to the insured, the items must be accessible 5 as long as they are in force; must be archived for a period of 6 five years after expiration and be available upon request; and 7 must be posted in a manner that allows the insured to print and 8 save the items using programs and applications that are widely 9 available on the internet at no charge. The insurer must also 10 provide information to the insured in, or simultaneously with, 11 each declarations page provided at the time of issuance of the 12 initial policy and any renewal of that policy, describing the 13 policy or endorsement; providing a method to obtain without 14 charge a paper copy of the policy or endorsement; and providing 15 the internet address where the items are posted. 16 New Code chapter 505B applies to insurance products and 17 documents, including insurance policies, insurance riders, 18 insurance endorsements, and annuity contracts filed with and 19 regulated by the commissioner of insurance under the authority 20 of Title XIII, subtitle 1 of the Code. 21 -12- LSB 5212XD (9) 85 av/nh 12/ 12