Bill Text: IA SF2131 | 2013-2014 | 85th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: A bill for an act relating to standard valuation and standard forfeiture provisions for life insurance policies or contracts and including applicability provisions. (Formerly SSB 3089.) Effective 7-1-14.

Spectrum: Committee Bill

Status: (Passed) 2014-03-26 - Signed by Governor. S.J. 650. [SF2131 Detail]

Download: Iowa-2013-SF2131-Enrolled.html

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Senate File 2131
AN ACT
RELATING TO STANDARD VALUATION AND STANDARD FORFEITURE
PROVISIONS FOR LIFE INSURANCE POLICIES OR CONTRACTS AND
INCLUDING APPLICABILITY PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 508.36, Code 2014, is amended by adding
the following new subsection:
NEW SUBSECTION . 01. Definitions.
a. As used in this section, unless the context otherwise
requires:
(1) “Accident and health insurance” means policies
or contracts that incorporate morbidity risk and provide
protection against economic loss resulting from accident,
sickness, or medical conditions and as may be specified in the
valuation manual.
(2) “Appointed actuary” means a qualified actuary who is
appointed in accordance with the valuation manual to prepare
the actuarial opinion required in subsection 2, paragraph “b” .
(3) “Company” means an entity which has done any of the
following:
(a) Written, issued, or reinsured life insurance policies
or contracts, accident and health insurance policies or
contracts, or deposit-type policies or contracts in this state
and has at least one such policy or contract in force or on
claim.
(b) Written, issued, or reinsured life insurance policies
or contracts, accident and health insurance policies or
contracts, or deposit-type policies or contracts in any state
and is required to hold a certificate of authority to write
life insurance, accident and health insurance, or deposit-type

Senate File 2131, p. 2
policies or contracts in any state and is required to hold a
certificate of authority to write life insurance, accident and
health insurance, or deposit-type policies or contracts in this
state.
(4) “Deposit-type policy or contract” means policies or
contracts that do not incorporate mortality or morbidity risks
and such policies or contracts as may be specified in the
valuation manual.
(5) “Life insurance” means policies or contracts that
incorporate mortality risk, including annuity and pure
endowment contracts, and such policies or contracts as may be
specified in the valuation manual.
(6) “NAIC” means the national association of insurance
commissioners.
(7) “Operative date of the valuation manual” means the
operative date of the valuation manual as provided in
subsection 13.
(8) “Policyholder behavior” means any action a policyholder,
contract holder, or any other person with the right to elect
options, such as a certificate holder, may take under a policy
or contract subject to this section including but not limited
to lapse, withdrawal, transfer, deposit, premium payment, loan,
annuitization, or benefit elections prescribed by the policy or
contract, but excluding events of mortality or morbidity that
result in benefits prescribed in their essential aspects by the
terms of the policy or contract.
(9) “Principle-based valuation” means a reserve valuation
that uses one or more methods or one or more assumptions
determined by the insurer and that is required to comply with
subsection 14 as specified in the valuation manual.
(10) “Qualified actuary” means an individual who is
qualified to sign the applicable statement of actuarial
opinion in accordance with the American academy of actuaries
qualification standards for actuaries signing such statements
and who meets the requirements specified in the valuation
manual.
(11) “Tail risk” means a risk that occurs either where the
frequency of low probability events is higher than expected
under a normal probability distribution or where there are
observed events of very significant size or magnitude.
(12) “Valuation manual” means the manual of valuation
instructions adopted by the NAIC as specified in this section
or as subsequently amended.

Senate File 2131, p. 3
b. This subsection is applicable on or after the operative
date of the valuation manual.
Sec. 2. Section 508.36, subsection 1, Code 2014, is amended
to read as follows:
1. Reserve valuation.
a. Policies and contracts issued prior to operative date of
valuation manual.
(1) The commissioner shall annually value, or cause to be
valued, the reserve liabilities, referred to in this section
as reserves, for all outstanding life insurance policies and
annuity and pure endowment contracts of every life insurance
company doing business in this state, and may certify the
amount of any such reserves, specifying the mortality table
or tables, rate or rates of interest, and the net level
premium method or other methods used in the calculation of
such reserves issued on or after July 1, 1973, and prior to
the operative date of the valuation manual . In calculating
the reserves, the commissioner may use group methods and
approximate averages for fractions of a year or otherwise. In
lieu of the valuation of the reserves required in this section
of any foreign or alien company, the commissioner may accept
any valuation made, or caused to be made, by the insurance
supervisory official of any state or other jurisdiction when
such valuation complies with the minimum standard provided
for in this section and if the official of such state or
jurisdiction accepts as sufficient and valid for all legal
purposes the certificate of valuation of the commissioner when
such certificate states the valuation to have been made in a
specified manner according to which the aggregate reserves
would be at least as large as if they had been computed in the
manner prescribed by the law of that state or jurisdiction .
(2) The provisions set forth in subsections 3 through 12
shall apply to all policies and contracts, as appropriate,
subject to this section that were issued on or after July 1,
1973, and prior to the operative date of the valuation manual
and the provisions set forth in subsections 13 and 14 shall not
apply to any such policies or contracts.
(3) The minimum standard for the valuation of policies and
contracts issued prior to July 1, 1973, shall be the standard
provided by the laws in effect immediately prior to that date.
b. Policies and contracts issued on or after operative date
of valuation manual.
(1) The commissioner shall annually value, or cause to

Senate File 2131, p. 4
be valued, the reserve liabilities for all outstanding life
insurance policies or contracts, annuity and pure endowment
policies or contracts, accident and health insurance policies
or contracts, and deposit-type policies or contracts of every
company issued on or after the operative date of the valuation
manual. In lieu of the valuation of the reserves required
of a foreign or alien company, the commissioner may accept
a valuation made, or caused to be made, by the insurance
supervisory official of any state or other jurisdiction when
the valuation complies with the minimum standard provided in
this section.
(2) The provisions set forth in subsections 13 and 14 shall
apply to all policies or contracts issued on or after the
operative date of the valuation manual.
Sec. 3. Section 508.36, subsection 2, Code 2014, is amended
to read as follows:
2. Actuarial opinion of reserves. This subsection is
effective January 1, 1996.
a. Actuarial opinion of reserves prior to operative date of
valuation manual. This paragraph “a” applies to an actuarial
opinion of reserves submitted prior to the operative date of
the valuation manual.
a. (1) General. A life insurance company doing business
in this state shall annually submit the written opinion of
a qualified actuary as to whether the reserves and related
actuarial items held in support of the policies and contracts
specified by the commissioner by regulation are computed
appropriately, are based on assumptions which satisfy
contractual provisions, are consistent with prior reported
amounts, and are in compliance with applicable laws of this
state. The commissioner shall define by rule the requirements
and content of this opinion and add any other items deemed to
be necessary.
b. (2) Actuarial analysis of reserves and assets supporting
such reserves.
(1) (a) Unless exempted by rule, a life insurance company
shall also annually include in the opinion required by
paragraph “a” subparagraph (1) , an opinion of the same qualified
actuary as to whether the reserves and related actuarial items
held in support of policies and contracts specified by the
commissioner by rule, when considered with respect to in light
of the assets held by the company associated with respect to
the reserves and related actuarial items, including , but not

Senate File 2131, p. 5
limited to , the investment earnings on the assets and the
considerations anticipated to be received and retained under
the policies and contracts, are sufficient make adequate
provision for the company’s obligations under the policies and
contracts, including but not limited to the benefits under and
expenses associated with the policies and contracts.
(2) (b) The commissioner may provide by rule for a
transition period for establishing any higher reserves which
the qualified actuary may deem necessary in order to render the
opinion required by this section paragraph “a” .
c. (3) Requirements for actuarial analysis opinions subject
to subparagraph (2) . An opinion required by paragraph “b”
subparagraph (2) shall be governed by the following provisions:
(1) (a) A memorandum, in form and substance acceptable to
the commissioner as specified by rule, shall be prepared to
support each actuarial opinion.
(2) (b) If the insurance company fails to provide a
supporting memorandum at the request of the commissioner within
a period specified by rule or the commissioner determines that
the supporting memorandum provided by the insurance company
fails to meet the standards prescribed by the rules or is
otherwise unacceptable to the commissioner, the commissioner
may engage a qualified actuary at the expense of the company to
review the opinion and the basis for the opinion and prepare
such supporting memorandum as is required by the commissioner.
d. (4) Requirement for all opinions subject to this
paragraph . An opinion required under this section paragraph “a”
is governed by the following provisions:
(1) (a) The opinion shall be submitted with the annual
statement reflecting the valuation of such reserve liabilities
for each year ending on or after December 31, 1995.
(2) (b) The opinion shall apply to all business in force,
including individual and group health insurance plans, in form
and substance acceptable to the commissioner as specified by
rule.
(3) (c) The opinion shall be based on standards adopted
from time to time by the actuarial standards board and on such
additional standards as the commissioner may by rule prescribe.
(4) (d) In the case of an opinion required to be submitted
by a foreign or alien company, the commissioner may accept the
opinion filed by that company with the insurance supervisory
official of another state if the commissioner determines that
the opinion reasonably meets the requirements applicable to a

Senate File 2131, p. 6
company domiciled in this state.
(5) (e) For the purposes of this section paragraph “a” ,
“qualified actuary” means a member in good standing of the
American academy of actuaries who meets the requirements of the
commissioner as specified by rule.
(6) (f) Except in cases of fraud or willful misconduct,
a qualified actuary is not liable for damages to any person,
other than to the insurance company and the commissioner, for
any act, error, omission, decision, or conduct with respect to
the actuary’s opinion.
(7) (g) Disciplinary action which may be taken by the
commissioner against the company or the qualified actuary shall
be defined in rules adopted by the commissioner.
(8) (a) (h) (i) Any memorandum in support of the
opinion, and any other material provided by the company to
the commissioner in connection with the opinion, shall be
kept confidential by the commissioner and shall not be made
public and shall not be subject to subpoena, other than for the
purpose of defending an action seeking damages from any person
by reason of any action required by this section paragraph “a”
or by rules adopted pursuant to this section paragraph “a” .
Notwithstanding this subparagraph division , the memorandum or
other material may be released by the commissioner if either of
the following applies:
(i) (A) The commissioner receives the written consent of
the company with which the opinion is associated.
(ii) (B) The American academy of actuaries requests that
the memorandum or other material is required for the purpose
of professional disciplinary proceedings and setting forth
procedures satisfactory to the commissioner for preserving the
confidentiality of the memorandum or other material.
(b) (ii) Once any portion of the confidential memorandum
is cited by the company in its marketing, is cited before any
governmental agency other than a state insurance department, or
is released by the company to the news media, all portions of
the confidential memorandum are no longer confidential.
b. Actuarial opinion of reserves on or after operative date
of valuation manual. This paragraph “b” applies to an actuarial
opinion of reserves submitted on or after the operative date
of the valuation manual.
(1) General. Every company with outstanding life insurance
policies or contracts, accident and health insurance policies
or contracts, or deposit-type policies or contracts in

Senate File 2131, p. 7
this state and subject to regulation by the commissioner
shall annually submit the opinion of the appointed actuary
as to whether the reserves and related actuarial items
held in support of the policies and contracts are computed
appropriately, are based on assumptions that satisfy
contractual provisions, are consistent with prior reported
amounts, and comply with applicable laws of this state. The
valuation manual shall prescribe the specifics of this opinion
including any items deemed to be necessary to its scope.
(2) Actuarial analysis of reserves and assets supporting
reserves. Every company with outstanding life insurance
policies or contracts, accident and health insurance policies
or contracts, or deposit-type policies or contracts in this
state and subject to regulation by the commissioner, except as
exempted in the valuation manual, shall annually include in
the opinion required by subparagraph (1), an opinion of the
same appointed actuary as to whether the reserves and related
actuarial items held in support of the policies and contracts
specified in the valuation manual, when considered in light of
the assets held by the company with respect to the reserves
and related actuarial items, including but not limited to
the investment earnings on the assets and the considerations
anticipated to be received and retained under the policies
and contracts, make adequate provision for the company’s
obligations under the policies and contracts, including but not
limited to the benefits under and expenses associated with the
policies and contracts.
(3) Requirements for opinions subject to subparagraph
(2). An opinion required by subparagraph (2) shall be governed
by the following provisions:
(a) A memorandum, in form and substance as specified in the
valuation manual, and that is acceptable to the commissioner,
shall be prepared to support each actuarial opinion.
(b) If the company fails to provide a supporting memorandum
at the request of the commissioner within a period specified
in the valuation manual or the commissioner determines that
the supporting memorandum provided by the company fails to
meet the standards prescribed by the valuation manual or is
otherwise unacceptable to the commissioner, the commissioner
may engage a qualified actuary at the expense of the company to
review the opinion and the basis for the opinion and prepare
the supporting memorandum required by the commissioner.
(4) Requirements for all opinions subject to this

Senate File 2131, p. 8
paragraph. Every opinion subject to this paragraph “b” shall be
governed by the following provisions:
(a) The opinion shall be in form and substance as specified
in the valuation manual and acceptable to the commissioner.
(b) The opinion shall be submitted with the annual statement
reflecting the valuation of such reserve liabilities for each
year ending on or after the operative date of the valuation
manual.
(c) The opinion shall apply to all policies and contracts
subject to subparagraph (2) plus other actuarial liabilities as
may be specified in the valuation manual.
(d) The opinion shall be based on standards adopted from
time to time by the actuarial standards board or its successor,
and on such additional standards as may be prescribed in the
valuation manual.
(e) In the case of an opinion required to be submitted by
a foreign or alien company, the commissioner may accept the
opinion filed by that company with the insurance supervisory
official of another state if the commissioner determines that
the opinion reasonably meets the requirements applicable to a
company domiciled in this state.
(f) Except in cases of fraud or willful misconduct, the
appointed actuary shall not be liable for damages to any
person, other than the company and the commissioner, for any
act, error, omission, decision, or conduct with respect to the
appointed actuary’s opinion.
(g) Disciplinary action by the commissioner against the
company or the appointed actuary shall be defined in rules
adopted by the commissioner pursuant to chapter 17A.
Sec. 4. Section 508.36, subsection 3, paragraph a,
unnumbered paragraph 1, Code 2014, is amended to read as
follows:
For all ordinary policies of life insurance issued on the
standard basis, excluding any disability and accidental death
benefits in the policies, the following:
Sec. 5. Section 508.36, subsection 3, paragraph a,
subparagraph (2), Code 2014, is amended to read as follows:
(2) The commissioners 1958 standard ordinary mortality
table for such policies issued on or after the operative date
of section 508.37, subsection 5 , paragraph “c” “a” , and prior to
the operative date of section 508.37, subsection 5, paragraph
“c” , provided that for any category of policies issued on female
risks, all modified net premiums and present values referred to

Senate File 2131, p. 9
in this section may be calculated according to an age not more
than six years younger than the actual age of the insured.
Sec. 6. Section 508.36, subsection 6, paragraph a,
unnumbered paragraph 1, Code 2014, is amended to read as
follows:
Except as otherwise provided in subsections 7, 10, and 12
11 , reserves calculated according to the commissioner’s reserve
valuation method, for the life insurance and endowment benefits
of policies providing for a uniform amount of insurance and
requiring the payment of uniform premiums, shall be the excess,
if any, of the present value, at the date of valuation, of
future guaranteed benefits provided for by such policies, over
the present value, at the date of valuation, of any future
modified net premiums for such policies. The modified net
premiums for such policy is the uniform percentage of the
respective contract premiums for the benefits such that the
present value, at the date of issue of the policy, of all
modified net premiums shall be equal to the sum of the present
value, at the date of valuation, of such benefits provided
for by the policy and the excess of the amount determined in
subparagraph (1) over the amount determined in subparagraph
(2), as follows:
Sec. 7. Section 508.36, subsection 10, paragraph a, Code
2014, is amended to read as follows:
a. If in any contract year the gross premium charged by a
life insurance company on a policy or contract is less than the
valuation net premium for the policy or contract, as calculated
by the method used in calculating the reserve for such policy
or contract but using the minimum valuation standards of
mortality and rate of interest, the minimum reserve required
for such policy or contract is the greater of either the
reserve calculated according to the mortality table, rate of
interest, and method actually used for such policy or contract,
or the reserve calculated by the method actually used for such
policy or contract but using the minimum valuation standards
of mortality and rate of interest and replacing the valuation
net premium by the actual gross premium in each contract year
for which the valuation net premium exceeds the actual gross
premium. The minimum valuation standards of mortality and rate
of interest referred to in this section are those standards
established in subsections 4 and 5 .
Sec. 8. Section 508.36, subsection 12, Code 2014, is amended
to read as follows:

Senate File 2131, p. 10
12. Minimum standards for accident and health (disability,
accident, and sickness) plans insurance policies or
contracts . The commissioner shall adopt rules containing
the minimum standards applicable to the valuation of health,
disability, and sickness and accident plans. For accident and
health insurance policies or contracts issued on or after the
operative date of the valuation manual, the standard prescribed
in the valuation manual is the minimum standard of valuation
required under subsection 1, paragraph “b” . For health,
disability, and sickness and accident insurance policies or
contracts issued on or after July 1, 1973, and prior to the
operative date of the valuation manual, the minimum standard of
valuation is the standard adopted by the commissioner by rule.
Sec. 9. Section 508.36, Code 2014, is amended by adding the
following new subsections:
NEW SUBSECTION . 13. Valuation manual for policies or
contracts issued on or after operative date of valuation manual.
a. For policies or contracts issued on or after the
operative date of the valuation manual, the standard prescribed
in the valuation manual is the minimum standard of valuation
required under subsection 1, paragraph “b” , except as provided
under paragraph “e” or “g” of this subsection.
b. The operative date of the valuation manual is January
1 of the first calendar year following the first July 1 as of
which all of the following have occurred:
(1) The valuation manual has been adopted by the NAIC
by an affirmative vote of at least forty-two members, or
three-fourths of the members voting, whichever is greater.
(2) The standard valuation law, as amended by the NAIC in
2009, or legislation including substantially similar terms and
provisions, has been enacted by states representing greater
than seventy-five percent of the direct premiums written as
reported in the following annual statements submitted for 2008:
(a) Life, accident, and health insurance annual statements.
(b) Health insurance annual statements.
(c) Fraternal benefit society annual statements.
(3) The standard valuation law, as amended by the NAIC in
2009, or legislation including substantially similar terms
and provisions, has been enacted by at least forty-two of the
following fifty-five jurisdictions: the fifty states of the
United States, American Samoa, the American Virgin Islands, the
District of Columbia, Guam, and Puerto Rico.
c. Unless a change in the valuation manual specifies a

Senate File 2131, p. 11
later effective date, changes to the valuation manual shall
be effective on January 1 following the date when all of the
following have occurred:
(1) The changes to the valuation manual have been adopted by
the NAIC by an affirmative vote representing:
(a) At least three-fourths of the members of the NAIC
voting, but not less than a majority of the total membership.
(b) Members of the NAIC representing jurisdictions totaling
greater than seventy-five percent of the direct premiums
written as reported in the following annual statements most
recently available prior to the vote in subparagraph division
(a):
(i) Life, accident, and health insurance annual statements.
(ii) Health insurance annual statements.
(iii) Fraternal benefit society annual statements.
d. The valuation manual shall specify all of the following:
(1) Minimum valuation standards for and definitions of
the policies or contracts subject to subsection 1, paragraph
“b” . Such minimum valuation standards shall include all of the
following:
(a) The commissioner’s reserve valuation method for life
insurance contracts, other than annuity contracts, subject to
subsection 1, paragraph “b” .
(b) The commissioner’s annuity reserve valuation method for
annuity contracts subject to subsection 1, paragraph “b” .
(c) Minimum reserves for all other policies of contracts
subject to subsection 1, paragraph “b” .
(2) Which policies or contracts or types of policies or
contracts are subject to the requirements of a principle-based
valuation in subsection 14, paragraph “a” , and the minimum
valuation standards consistent with those requirements.
(3) For policies and contracts subject to a principle-based
valuation under subsection 14, specify all of the following:
(a) Requirements for the format of reports to the
commissioner under subsection 14 which shall include
information necessary to determine if the valuation is
appropriate and in compliance with this section.
(b) Assumptions that are prescribed for risks over which the
company does not have significant control or influence.
(c) Procedures for corporate governance and oversight of
the actuarial function, and a process for appropriate waiver or
modification of such procedures.
(4) For policies or contracts not subject to a

Senate File 2131, p. 12
principle-based valuation under subsection 14, the minimum
valuation standard shall do either of the following:
(a) Be consistent with the minimum standard of valuation
prior to the operative date of the valuation manual.
(b) Develop reserves that quantify the benefits and
guarantees, and the funding, associated with the policies or
contracts and their risks at a level of conservatism that
reflects conditions that include unfavorable events that have a
reasonable probability of occurring.
(5) Other requirements, including but not limited to
those relating to reserve methods, models for measuring
risk, generation of economic scenarios, assumptions, margins,
use of company experience, risk measurement, disclosure,
certifications, reports, actuarial opinions and memorandums,
transition rules, and internal controls.
(6) The data and form of the data required under subsection
15, to whom the data must be submitted, and other specified
requirements, including data analyses and reporting of
analyses.
e. In the absence of a specific valuation requirement or
if a specific valuation requirement in the valuation manual
is not, in the opinion of the commissioner, in compliance
with this subsection, then the company shall, with respect to
such requirements, comply with minimum valuation standards
prescribed by the commissioner by rule.
f. The commissioner may engage a qualified actuary, at the
expense of the company, to perform an actuarial examination of
the company and opine on the appropriateness of any reserve
assumption or method used by the company, or to review and
opine on a company’s compliance with any requirements set forth
in this section. The commissioner may rely upon the opinion,
regarding provisions contained in this section, of a qualified
actuary engaged by the commissioner of another state, district,
or territory of the United States. As used in this paragraph,
“engage” includes employment of and contracting with a qualified
actuary.
g. The commissioner may require a company to change any
assumption or method that in the opinion of the commissioner
is necessary in order to comply with the requirements of the
valuation manual or this section and the company shall adjust
the reserves as required by the commissioner. The commissioner
may take other disciplinary action as authorized pursuant to
section 505.8.

Senate File 2131, p. 13
NEW SUBSECTION . 14. Requirements of principle-based
valuation.
a. A company shall establish reserves using a
principle-based valuation that meets all of the following
conditions for policies or contracts as specified in the
valuation manual:
(1) Quantifies the benefits and guarantees, and the
funding, associated with the policies or contracts and the
risks of the policies or contracts at a level of conservatism
that reflects conditions that include unfavorable events that
have a reasonable probability of occurring during the lifetime
of the policies or contracts. For policies or contracts with
a significant tail risk, the valuation reflects conditions
appropriately adverse to quantify the tail risk.
(2) Incorporates assumptions, risk analysis methods, and
financial models and management techniques that are consistent
with, but not necessarily identical to, those utilized
within the company’s overall risk assessment process, while
recognizing potential differences in financial reporting
structures and any prescribed assumptions or methods.
(3) Incorporates assumptions that are derived in one of the
following manners:
(a) The assumption is prescribed in the valuation manual.
(b) For assumptions that are not prescribed in the valuation
manual, the assumptions shall meet either of the following
requirements:
(i) Be established utilizing the company’s available
experience, to the extent that the experience is relevant and
statistically credible.
(ii) To the extent that company data is not available,
relevant, or statistically credible, be established utilizing
other relevant, statistically credible experience.
(4) Provides margins for uncertainty including adverse
deviation and estimation error, such that the greater the
uncertainty the larger the margin and resulting reserve.
b. A company using a principle-based valuation for one
or more policies or contracts subject to this subsection
as specified in the valuation manual shall do all of the
following:
(1) Establish procedures for corporate governance and
oversight of the actuarial valuation function consistent with
those described in the valuation manual.
(2) Provide to the commissioner and the board of directors

Senate File 2131, p. 14
an annual certification of the effectiveness of the company’s
internal controls with respect to the principle-based
valuation. Such controls shall be designed to assure that
all material risks inherent in the liabilities and associated
assets subject to such valuation are included in the valuation,
and that the valuation is made in accordance with the valuation
manual. The certification shall be based on the internal
controls in place as of the end of the preceding calendar year.
(3) Develop, and file with the commissioner upon request, a
principle-based valuation report that complies with standards
prescribed in the valuation manual.
c. A principle-based valuation may include a prescribed
formulaic reserve component.
NEW SUBSECTION . 15. Experience reporting for policies
or contracts in force on or after operative date of valuation
manual. A company shall submit mortality, morbidity,
policyholder behavior, or expense experience and other data as
prescribed in the valuation manual.
NEW SUBSECTION . 16. Confidentiality.
a. Definition. For purposes of this subsection,
“confidential information” means all of the following:
(1) A memorandum in support of an opinion submitted
under subsection 2 and any other documents, materials, or
other information, including but not limited to all working
papers, and copies thereof, created, produced, obtained by, or
disclosed to the commissioner or any other person in connection
with the memorandum.
(2) All documents, materials, or other information,
including but not limited to all working papers, and copies
thereof, created, produced, obtained by, or disclosed
to the commissioner or any other person in the course of
an examination made under subsection 13, paragraph “f” ;
provided, however, that if an examination report or other
materials prepared in connection with an examination made
under chapter 507 is not held as private and confidential
information under section 507.14, an examination report or
other material prepared in connection with an examination made
under subsection 13, paragraph “f” , shall not be “confidential
information” to the same extent as if such examination report or
other material had been prepared under chapter 507.
(3) Any reports, documents, materials, or other information
developed by a company in support of, or in connection with,
an annual certification by the company under subsection 14,

Senate File 2131, p. 15
paragraph “b” , subparagraph (2), evaluating the effectiveness
of the company’s internal controls with respect to a
principle-based valuation and any other documents, materials,
or other information, including but not limited to all working
papers, and copies thereof, created, produced, obtained by, or
disclosed to the commissioner or any other person in connection
with such reports, documents, materials, or other information.
(4) Any principle-based valuation report developed under
subsection 14, paragraph “b” , subparagraph (3), and any other
documents, materials, or other information, including but not
limited to all working papers, and copies thereof, created,
produced, obtained by, or disclosed to the commissioner or any
other person in connection with such report.
(5) Any documents, materials, data, or other information
submitted by a company under subsection 15, collectively known
as “experience data” or “experience materials” , and any other
documents, materials, data, or other information, including
but not limited to all working papers, and copies thereof,
created or produced in connection with such experience data,
in each case that includes any potentially company-identifying
or personally identifiable information, that is provided to or
obtained by the commissioner, together with any “experience
data” or “experience materials” , and any other documents,
materials, data, or other information, including but not
limited to all working papers, and copies thereof, created,
produced, obtained by, or disclosed to the commissioner or
any other person in connection with such experience data or
experience materials.
b. Privilege for, and confidentiality of, confidential
information.
(1) Except as provided in this subsection, a company’s
confidential information is confidential by law and privileged,
and shall not be subject to chapter 22, shall not be subject
to subpoena, and shall not be subject to discovery or
admissible in evidence in any private civil action; provided,
however, that the commissioner is authorized to use the
confidential information in the furtherance of any regulatory
or legal action brought against the company as a part of the
commissioner’s official duties.
(2) Neither the commissioner nor any person who received
confidential information while acting under the authority of
the commissioner shall be permitted or required to testify
in any private civil action concerning any confidential

Senate File 2131, p. 16
information.
(3) In order to assist in the performance of the
commissioner’s duties, the commissioner may share confidential
information as follows:
(a) With other state, federal, or international regulatory
agencies and with the NAIC and its affiliates and subsidiaries.
(b) In the case of confidential information specified
in paragraph “a” , subparagraphs (1) and (4) only, with the
actuarial board for counseling and discipline or its successor
upon request stating that the confidential information
is required for the purpose of professional disciplinary
proceedings, and with state, federal, and international law
enforcement officials.
(c) The sharing of confidential information under
subparagraph division (a) or (b) requires that the recipient
of the confidential information agrees, and has the legal
authority to agree to maintain the confidentiality and
privileged status of such documents, materials, data, and
other information in the same manner and to the same extent as
required for the commissioner.
(4) The commissioner may receive documents, materials,
data, and other information, including otherwise confidential
and privileged documents, materials, data, or information, from
the NAIC and its affiliates and subsidiaries, from regulatory
or law enforcement officials of other foreign or domestic
jurisdictions, and from the actuarial board for counseling
and discipline, or its successor, and shall maintain as
confidential or privileged any documents, materials, data, or
other information received with notice or the understanding
that it is confidential or privileged under the laws of the
jurisdiction that is the source of the documents, materials,
data, or other information.
(5) The commissioner may enter into agreements governing
the sharing and use of information consistent with this
paragraph “b” .
(6) No waiver of any applicable privilege or claim
of confidentiality in the confidential information shall
occur as a result of disclosure to the commissioner under
this subsection or as a result of sharing as authorized in
subparagraph (3).
(7) A privilege established under the law of any state or
jurisdiction that is substantially similar to the privilege
established in this paragraph “b” shall be available and

Senate File 2131, p. 17
enforced in any proceeding in, and in any court of, this state.
(8) For the purposes of this subsection, “regulatory
agency” , “law enforcement agency” , and the “NAIC” , include but
are not limited to their employees, agents, consultants, and
contractors.
c. Sharing of confidential information. Notwithstanding
paragraph “b” , any confidential information specified in
paragraph “b” may be shared as follows:
(1) May be subject to subpoena for the purpose of defending
an action seeking damages from the appointed actuary submitting
the related memorandum in support of an opinion submitted under
subsection 2 or a principle-based valuation report developed
under subsection 14, paragraph “b” , subparagraph (3), by reason
of an action required by this section or by rules promulgated
under this section.
(2) May otherwise be released by the commissioner with the
written consent of the company.
(3) Once any portion of a memorandum in support of an
opinion submitted under subsection 2 or a principle-based
valuation report developed under subsection 14, paragraph “b” ,
subparagraph (3), is cited by a company in its marketing or is
publicly volunteered to or before a governmental agency other
than a state insurance department or is released by the company
to the news media, all portions or such memorandum or report
shall no longer be confidential information.
NEW SUBSECTION . 17. Single state exemption.
a. The commissioner may exempt specific product forms or
product lines of a domestic company that is licensed and doing
business only in this state from the requirements of subsection
13 provided that all of the following have occurred:
(1) The commissioner has issued an exemption in writing to
the company and has not subsequently revoked the exemption in
writing.
(2) The company computes reserves using assumptions and
methods used prior to the operative date of the valuation
manual in addition to any requirements established by the
commissioner and promulgated by rule.
b. For any company granted an exemption under this
subsection, subsections 2 through 12 shall be applicable. With
respect to any company applying this exemption, any reference
to subsection 13 found in subsections 2 through 12 shall not
be applicable.
Sec. 10. Section 508.37, Code 2014, is amended by adding the

Senate File 2131, p. 18
following new subsection:
NEW SUBSECTION . 01. As used in this section, “operative
date of the valuation manual” means the same as provided in
section 508.36, subsection 13.
Sec. 11. Section 508.37, subsection 6, paragraph h,
subparagraph (6), Code 2014, is amended to read as follows:
(6) Any For policies issued prior to the operative date
of the valuation manual, any commissioners’ standard ordinary
mortality tables adopted after 1980 by the national association
of insurance commissioners and approved by rule adopted by the
commissioner for use in determining the minimum nonforfeiture
standard may be substituted for the Commissioners 1980 Standard
Ordinary Mortality Table with or without Ten-Year Select
Mortality Factors or for the Commissioners 1980 Extended Term
Insurance Table.
Sec. 12. Section 508.37, subsection 6, paragraph h, Code
2014, is amended by adding the following new subparagraph:
NEW SUBPARAGRAPH . (07) For policies issued on or after the
operative date of the valuation manual, the valuation manual
shall provide the commissioners’ standard mortality table for
use in determining the minimum forfeiture standard that may
be substituted for the Commissioners’ 1980 Standard Ordinary
Mortality Table with or without Ten-Year Select Mortality
Factors or for the Commissioners’ 1980 Extended Term Insurance
Table. If the commissioner approves by rule the Commissioners’
Standard Ordinary Mortality Table adopted by the national
association of insurance commissioners for use in determining
the minimum nonforfeiture standard for policies or contracts
issued on or after the operative date of the valuation manual,
then that minimum nonforfeiture standard supersedes the minimum
nonforfeiture standard provided by the valuation manual.
Sec. 13. Section 508.37, subsection 6, paragraph h, Code
2014, is amended by adding the following new subparagraph:
NEW SUBPARAGRAPH . (8) For policies issued on or after
the operative date of the valuation manual, the valuation
manual shall provide the Commissioners Standard Mortality Table
for use in determining the minimum nonforfeiture standard
that may be substituted for the Commissioners 1961 Standard
Industrial Mortality Table or the Commissioners 1961 Industrial
Extended Term Insurance Table. If the commissioner approves
by regulation any Commissioners Standard Industrial Mortality
Table adopted by the national association of insurance
commissioners for use in determining the minimum nonforfeiture

Senate File 2131, p. 19
standard for policies issued on or after the operative date of
the valuation manual, then that minimum nonforfeiture standard
supersedes the minimum nonforfeiture standard provided by the
valuation manual.
Sec. 14. Section 508.37, subsection 6, paragraph i, Code
2014, is amended to read as follows:
i. The nonforfeiture interest rate is defined as follows:
(1) The For policies issued prior to the operative date of
the valuation manual, the nonforfeiture interest rate per annum
for any policy issued in a particular calendar year shall be
equal to one hundred twenty-five percent of the calendar year
statutory valuation interest rate for the policy as defined
in section 508.36 , rounded to the nearest one quarter of one
percent , provided, however, that the nonforfeiture interest
rate shall not be less than four percent .
(2) For policies issued on or after the operative date of
the valuation manual, the nonforfeiture interest rate per annum
for any policy issued in a particular calendar year shall be
provided by the valuation manual.
Sec. 15. APPLICABILITY. This Act applies on and after the
operative date of the valuation manual as provided in section
508.36, as amended in this Act.
______________________________
PAM JOCHUM
President of the Senate
______________________________
KRAIG PAULSEN
Speaker of the House
I hereby certify that this bill originated in the Senate and
is known as Senate File 2131, Eighty-fifth General Assembly.
______________________________
MICHAEL E. MARSHALL
Secretary of the Senate
Approved _______________, 2014
______________________________
TERRY E. BRANSTAD
Governor