Bill Text: IA SF346 | 2015-2016 | 86th General Assembly | Amended
Bill Title: A bill for an act relating to various matters involving insurance and the insurance division of the department of commerce and including effective date provisions. (Formerly SSB 1086.)
Spectrum: Committee Bill
Status: (Engrossed - Dead) 2015-04-14 - Amendment H-1225 filed. H.J. 844. [SF346 Detail]
Download: Iowa-2015-SF346-Amended.html
Senate File 346 - Reprinted SENATE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 1086) (As Amended and Passed by the Senate March 25, 2015) A BILL FOR 1 An Act relating to various matters involving insurance and 2 the insurance division of the department of commerce and 3 including effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: SF 346 (4) 86 av/nh/jh PAG LIN 1 1 Section 1. Section 22.7, subsection 58, Code 2015, is 1 2 amended to read as follows: 1 3 58. Information filed with the commissioner of insurance 1 4 pursuant to sections 523A.204and, 523A.205, 523A.206, 1 5 523A.207, 523A.401, 523A.502A, and 523A.803. 1 6 Sec. 2. Section 502.103, Code 2015, is amended to read as 1 7 follows: 1 8 502.103 References to federal statutes. 1 9 "Securities Act of 1933", 15 U.S.C. {77a et seq.; "Securities 1 10 Exchange Act of 1934", 15 U.S.C. {78a et seq.; "Public Utility 1 11 Holding Company Act of 1935", 15 U.S.C. {79 et seq.; "Investment 1 12 Company Act of 1940", 15 U.S.C. {80a=1 et seq.; "Investment 1 13 Advisers Act of 1940", 15 U.S.C. {80b=1 et seq.; "Employee 1 14 Retirement Income Security Act of 1974", 29 U.S.C. {1001 et 1 15 seq.; "National Housing Act", 12 U.S.C. {1701; "Commodity 1 16 Exchange Act", 7 U.S.C. {1 et seq.; "Internal Revenue Code", 1 17 26 U.S.C. {1 et seq.; "Securities Investor Protection Act 1 18 of 1970", 15 U.S.C. {78aaa et seq.; "Securities Litigation 1 19 Uniform Standards Act of 1998", 112 Stat. 3227; "Small Business 1 20 Investment Act of 1958", 15 U.S.C. {661 et seq.; and "Electronic 1 21 Signatures in Global and National Commerce Act", 15 U.S.C. 1 22 {7001 et seq.; and "Dodd=Frank Wall Street Reform and Consumer 1 23 Protection Act", Pub. L. No. 111=203 mean those federal statutes 1 24 and the rules and regulations adopted under those federal 1 25 statutes, as in effect on January 1,20052015. 1 26 Sec. 3. Section 502.202, Code 2015, is amended by adding the 1 27 following new subsection: 1 28 NEW SUBSECTION. 24. Intrastate crowdfunding. 1 29 a. Definitions. As used in this subsection, unless the 1 30 context otherwise requires: 1 31 (1) "Intermediary" means a broker=dealer that is subject 1 32 to the registration requirements of section 502.401 and that 1 33 facilitates the offer and sale of securities by issuers to 1 34 investors through an internet=based system that is open to 1 35 and accessible by the general public. "Intermediary" also 2 1 means an entity registered with the administrator as an Iowa 2 2 crowdfunding portal. 2 3 (2) "Intrastate crowdfunding" means the offer or sale of a 2 4 security by an issuer in a transaction that is available for 2 5 purchase only by Iowa residents and by business organizations 2 6 located in, and organized and registered under the laws of, 2 7 this state. 2 8 (3) "Iowa crowdfunding portal" means an entity incorporated 2 9 or organized under the laws of this state, authorized to do 2 10 business in this state, and engaged exclusively in intrastate 2 11 crowdfunding offers and sales of exempt securities in this 2 12 state through an internet site and which does not operate or 2 13 facilitate a secondary market in securities. 2 14 b. Exemption not available. The exemption in this 2 15 subsection is not available to any of the following: 2 16 (1) A foreign issuer. 2 17 (2) An investment company, as defined in section 3 of the 2 18 federal Investment Company Act of 1940. 2 19 (3) A development stage company that either has no specific 2 20 business plan or purpose or has indicated that the company's 2 21 business plan is to engage in a merger or acquisition with an 2 22 unidentified company or companies, or other entity or person. 2 23 (4) A company with a class of securities registered under 2 24 the federal Securities Exchange Act of 1934. 2 25 (5) Any person who is subject to a disqualifying event as 2 26 described in the regulations adopted in accordance with section 2 27 926 of the federal Dodd=Frank Wall Street Reform and Consumer 2 28 Protection Act, Pub. L. No. 111=203, or in rules adopted by the 2 29 administrator pursuant to chapter 17A. 2 30 c. Aggregate sales limit. The aggregate amount of 2 31 securities sold to all investors by the issuer during the 2 32 twelve=month period preceding the date of the offer or sale, 2 33 including any amount sold in reliance upon the exemption in 2 34 this subsection, shall not exceed one million dollars other 2 35 than either of the following: 3 1 (1) Securities sold to Iowa resident institutional 3 2 investors. 3 3 (2) Securities sold to the Iowa resident issuer's 3 4 management. 3 5 d. Individual sales limit. The aggregate amount of 3 6 securities sold to an investor by the issuer during the 3 7 twelve=month period preceding the date of the offer or sale, 3 8 including any amount sold in reliance upon the exemption in 3 9 this subsection, shall not exceed five thousand dollars unless 3 10 the investor is an accredited investor who resides in Iowa. 3 11 For purposes of this individual sales limit, the following 3 12 investors shall be treated as one investor: 3 13 (1) A relative, spouse, or relative of the spouse of an 3 14 investor who has the same principal residence as the investor. 3 15 (2) A trust or estate in which an investor and any related 3 16 person collectively have more than fifty percent of the 3 17 beneficial interest, excluding contingent interests. 3 18 (3) A corporation or other organization of which an investor 3 19 and any related person collectively are beneficial owners of 3 20 more than fifty percent of the equity securities, excluding 3 21 directors' qualifying shares, or equity interests. 3 22 e. Use of an intermediary. All offers and sales of 3 23 securities made in reliance upon the exemption in this 3 24 subsection shall be made through an intermediary's internet 3 25 site. 3 26 f. Notice to administrator. Prior to the offer of any 3 27 security in this state made in reliance upon the exemption 3 28 in this subsection, the issuer shall file a notice with 3 29 the administrator in a form and format approved by the 3 30 administrator, and including the filing fee specified by rule, 3 31 if any. 3 32 g. Rulemaking. The administrator shall adopt all rules 3 33 necessary to implement the exemption in this subsection 3 34 including but not limited to all of the following: 3 35 (1) Mandatory disclosures. 4 1 (2) Restrictions on advertising and communications. 4 2 (3) Target amount, offering period, and escrow 4 3 requirements. 4 4 (4) Use and compensation of promoters. 4 5 (5) Restrictions on the sale of securities purchased under 4 6 the exemption in this subsection. 4 7 (6) Sales reports. 4 8 (7) Limitations on the offering price. 4 9 (8) Duties of an intermediary which shall include providing 4 10 the administrator with continuous investor=level access to the 4 11 intermediary's internet site. 4 12 (9) Records maintenance. 4 13 (10) Duties and registration requirements for internet site 4 14 operators. 4 15 Sec. 4. Section 502.302, subsection 1, paragraph a, 4 16 subparagraph (1), Code 2015, is amended to read as follows: 4 17 (1) A person who is the issuer of a federal covered 4 18 security under section 18(b)(2) of the Securities Act of 4 19 1933 shall initially make a notice filing and annually renew 4 20 a notice filing in this statefor an indefinite amount or a 4 21 fixed amount.The fixed amount must be for two hundred fifty 4 22 thousand dollars.4 23 Sec. 5. Section 502.302, subsection 1, paragraph a, 4 24 subparagraph (2), unnumbered paragraph 1, Code 2015, is amended 4 25 to read as follows: 4 26 A notice filer shall pay a filing fee in the amount of 4 27 four hundred dollars when the notice is filed.If the amount 4 28 covered by the notice is indefinite, the notice filer shall pay 4 29 a filing fee of one thousand dollars. If the amount covered by 4 30 the notice is fixed, the notice filer shall pay a filing fee 4 31 of two hundred fifty dollars, and all of the following shall 4 32 apply:4 33 Sec. 6. Section 502.302, subsection 1, paragraph a, 4 34 subparagraph (2), subparagraph divisions (a) and (b), Code 4 35 2015, are amended by striking the subparagraph divisions. 5 1 Sec. 7. Section 502.302, subsections 2 and 3, Code 2015, are 5 2 amended to read as follows: 5 3 2. Notice filing effectiveness and renewal. A notice filing 5 4 under subsection 1 is effective for one year commencing on 5 5 the later of the notice filing or the effectiveness of the 5 6 offering filed with the securities and exchange commission. 5 7 On or before expiration, the issuer may renew a notice filing 5 8 by filing a copy of those records filed by the issuer with 5 9 the securities and exchange commission that are required by 5 10 rule or order under this chapter to be filed and by paying 5 11thea renewal feerequired by subsection 1, paragraph "a"of 5 12 four hundred dollars. A previously filed consent to service 5 13 of process complying with section 502.611 may be incorporated 5 14 by reference in a renewal. A renewed notice filing becomes 5 15 effective upon the expiration of the filing being renewed. 5 16 3. Notice filings for federal covered securities under 5 17 section 18(b)(4)(D). With respect to a security that is a 5 18 federal covered security under section 18(b)(4)(D) of the 5 19 Securities Act of 1933, 15 U.S.C. {77r(b)(4)(D), a rule under 5 20 this chapter may require a notice filing by or on behalf of an 5 21 issuer to include a copy of form D, including the appendix, as 5 22 promulgated by the securities and exchange commission, and a 5 23 consent to service of process complying with section 502.611 5 24 signed by the issuer not later than fifteen days after the 5 25 first sale of the federal covered security in this state and 5 26 the payment of a fee of one hundred dollars; and the payment of 5 27 a fee of two hundred fifty dollars for any late filing. 5 28 Sec. 8. Section 502.412, subsection 9, Code 2015, is amended 5 29 to read as follows: 5 30 9. Limit on investigation or proceeding. The administrator 5 31 shall not institute a proceeding under subsection 1, 2, 5 32 or 3 based solely on material facts actually known by the 5 33 administrator unless an investigation or the proceeding is 5 34 instituted withinone yeartwo years after the administrator 5 35 actually acquires knowledge of the material facts. 6 1 Sec. 9. Section 505.19, Code 2015, is amended by adding the 6 2 following new subsection: 6 3 NEW SUBSECTION. 4A. Notwithstanding subsection 1, a health 6 4 insurance carrier licensed to do business in this state that 6 5 participates in the health benefits exchange used in this state 6 6 and created pursuant to the federal Patient Protection and 6 7 Affordable Care Act, Pub. L. No. 111=148, as amended by the 6 8 federal Health Care and Education Reconciliation Act of 2010, 6 9 Pub. L. No. 111=152, shall not be subject to the requirements 6 10 of this section for health plans issued by the health insurance 6 11 carrier that are filed and purchased within the exchange or the 6 12 matching health plans issued by the health insurance carrier 6 13 that are purchased outside of the exchange. However, such 6 14 a health insurance carrier shall inform policyholders who 6 15 purchase such health plans of their total premium due and 6 16 any rate increases to their premium for each upcoming policy 6 17 year. Such notice shall be provided thirty days prior to 6 18 the beginning of open enrollment for the health plans and 6 19 shall provide policyholders with information about how the 6 20 policyholder can contact the insurance division to submit a 6 21 comment about a proposed rate increase. A health insurance 6 22 carrier subject to this subsection shall be subject to all 6 23 applicable other state and federal laws. 6 24 Sec. 10. Section 511.8, subsection 5, paragraphs a and b, 6 25 Code 2015, are amended to read as follows: 6 26 a. (1) If fixed interest=bearing obligations, the net 6 27 earnings of the issuing, assuming, or guaranteeing corporation 6 28 available for its fixed charges for a period of five fiscal 6 29 years next preceding the date of acquisition of the obligations 6 30 by such insurance company shall have averaged per year not 6 31 less than one and one=half times such average annual fixed 6 32 charges of the issuing, assuming, or guaranteeing corporation 6 33 applicable to such period, and, during at least one of the last 6 34 two years of such period, its net earnings shall have been 6 35 not less than one and one=half times its fixed charges for 7 1 such year; or if, at the date of acquisition, the obligations 7 2 areadequately secured and have investment qualities and 7 3 characteristics wherein the speculative elements are not 7 4 predominantinvestment grade as defined by the commissioner by 7 5 rule. 7 6 (2) However, with respect to fixed interest=bearing 7 7 obligations which are issued, assumed, or guaranteed by a 7 8 financial company, the net earnings by the financial company 7 9 available for its fixed charges for the period of five fiscal 7 10 years preceding the date of acquisition of the obligations by 7 11 the insurance company shall have averaged per year not less 7 12 than one and one=fourth times such average annual fixed charges 7 13 of the issuing, assuming, or guaranteeing financial company 7 14 applicable to such period, and, during at least one of the last 7 15 two years of the period, its net earnings shall have been not 7 16 less than one and one=fourth times its fixed charges for such 7 17 year; or if, at the date of acquisition, the obligations are 7 18adequately secured and speculative elements are not predominant 7 19 in their investment qualities and characteristicsinvestment 7 20 grade as defined by the commissioner by rule. As used in 7 21 this subparagraph (2), "financial company" means a corporation 7 22 which on the average over its last five fiscal years preceding 7 23 the date of acquisition of its obligations by the insurer, 7 24 has had at least fifty percent of its net income, including 7 25 income derived from subsidiaries, derived from the business 7 26 of wholesale, retail, installment, mortgage, commercial, 7 27 industrial or consumer financing, or from banking or factoring, 7 28 or from similar or related lines of business. 7 29 b. If adjustment, income, or other contingent interest 7 30 obligations, the net earnings of the issuing, assuming, or 7 31 guaranteeing corporation available for its fixed charges 7 32 for a period of five fiscal years next preceding the date 7 33 of acquisition of the obligations by such insurance company 7 34 shall have averaged per year not less than one and one=half 7 35 times such average annual fixed charges of the issuing, 8 1 assuming, or guaranteeing corporation and its average annual 8 2 maximum contingent interest applicable to such period and, 8 3 during at least one of the last two years of such period, its 8 4 net earnings shall have been not less than one and one=half 8 5 times the sum of its fixed charges and maximum contingent 8 6 interest for such year, or if, at the date of acquisition, 8 7 the obligations areadequately secure and have investment 8 8 qualities and characteristics and speculative elements are not 8 9 predominantinvestment grade as defined by the commissioner by 8 10 rule. 8 11 Sec. 11. Section 511.8, subsection 6, paragraph a, 8 12 subparagraph (1), subparagraph division (b), unnumbered 8 13 paragraph 1, Code 2015, is amended to read as follows: 8 14 The net earnings available for fixed charges and preferred 8 15 dividends of the issuing corporation shall have been, for 8 16 each of the five fiscal years immediately preceding the date 8 17 of acquisition, not less than one and one=half times the sum 8 18 of the annual fixed charges and contingent interest, if any, 8 19 and the annual preferred dividend requirements as of the date 8 20 of acquisition; or at the date of acquisition the preferred 8 21 stockhasis investmentqualities and characteristics wherein 8 22 speculative elements are not predominantgrade as defined by 8 23 the commissioner by rule. 8 24 Sec. 12. Section 511.8, subsection 8, unnumbered paragraph 8 25 1, Code 2015, is amended to read as follows: 8 26 Securities included under subsections 5, 6, and 7, and 8 27 subsection 9, paragraph "h", shall not be eligible: 8 28 Sec. 13. Section 511.8, subsection 8, paragraph b, 8 29 unnumbered paragraph 1, Code 2015, is amended to read as 8 30 follows: 8 31 The investments of any company or association insuchthe 8 32 securities of a corporation shall notbe eligible in excess of 8 33exceed the following percentages of the legal reserve of such 8 34 company or association: 8 35 Sec. 14. Section 511.8, subsection 8, paragraph b, 9 1 subparagraphs (1) and (2), Code 2015, are amended to read as 9 2 follows: 9 3 (1)With the exception of public securitiesFor any one 9 4 corporation other than a public utility company, two percent 9 5 of the legal reservein the securities of any one corporation. 9 6FiveFor any one public utility company, five percent of the 9 7 legal reservein the securities of any one public utility 9 8 corporation. 9 9 (2)Seventy=five percent of the legal reserve in the 9 10 securities described in subsection 5 issued by other than 9 11 public utility corporations. Fifty percent of the legal 9 12 reserve in theFor securities described in subsection 5 issued 9 13 by public utilitycorporationscompanies, fifty percent of the 9 14 legal reserve. 9 15 Sec. 15. Section 511.8, subsection 9, Code 2015, is amended 9 16 by adding the following new paragraph: 9 17 NEW PARAGRAPH. h. Mezzanine real estate loans subject to 9 18 the following conditions: 9 19 (1) The terms of the mezzanine real estate loan agreement 9 20 shall do all of the following: 9 21 (a) Require that each pledgor abstain from granting 9 22 additional security interests in the equity interest pledged. 9 23 (b) Set forth techniques to minimize the likelihood or 9 24 impact of a bankruptcy filing on the part of the real estate 9 25 owner or the mezzanine real estate loan borrower consistent 9 26 with the national association of insurance commissioners' 9 27 accounting practices and procedures manual. 9 28 (c) Require the real estate owner or mezzanine real estate 9 29 loan borrower to do all of the following: 9 30 (i) Hold no assets other than, in the case of the real 9 31 estate owner, the real property, and in the case of the 9 32 mezzanine real estate loan borrower, the equity interest of the 9 33 real estate owner. 9 34 (ii) Not engage in any business other than, in the case 9 35 of the real estate owner, the ownership and operation of the 10 1 real estate, and in the case of the mezzanine real estate loan 10 2 borrower, holding an ownership interest in the real estate 10 3 owner. 10 4 (iii) Not incur additional debt, other than limited trade 10 5 payables, a first mortgage loan, or mezzanine real estate 10 6 loans. 10 7 (2) At the time of purchase, the sum of the first mortgage 10 8 and the mezzanine real estate loans shall not exceed ninety 10 9 percent of the value of the real estate evidenced by a 10 10 current appraisal and the mezzanine real estate loan shall be 10 11 classified as CM4 or better in accordance with the national 10 12 association of insurance commissioners' rating methodology, or 10 13 an equivalent or successor rating. 10 14 (3) The value of a company's or association's total 10 15 investments qualified under this paragraph "h" shall not exceed 10 16 three percent of the legal reserve subject to the following 10 17 conditions: 10 18 (a) The value of a company's or association's total 10 19 investments qualified under this paragraph "h" in mezzanine 10 20 real estate loans classified as CM3 in accordance with the 10 21 national association of insurance commissioners' rating 10 22 methodology or an equivalent or successor rating at the time of 10 23 purchase shall not exceed two percent of the legal reserve. 10 24 (b) The value of a company's or association's total 10 25 investments qualified under this paragraph "h" in mezzanine 10 26 real estate loans classified as CM4 in accordance with the 10 27 national association of insurance commissioners' rating 10 28 methodology or an equivalent or successor rating at the time of 10 29 purchase shall not exceed one percent of the legal reserve. 10 30 (4) For purposes of this paragraph "h", "mezzanine real 10 31 estate loan" means a loan secured by a pledge of a direct or 10 32 indirect equity interest in an entity that owns real estate. 10 33 Sec. 16. Section 511.8, subsection 13, Code 2015, is amended 10 34 to read as follows: 10 35 13. Collateral loans. Loans secured by collateral 11 1 consisting of anysecuritiesassets or investments qualifiedin 11 2under this section, provided the amount of the loan is not in 11 3 excess of ninety percent of the value of thesecuritiesassets 11 4 or investments. Provided further that subsection 8 shall apply 11 5 to the collateralsecuritiesassets or investments pledged 11 6 to the payment of loansauthorized inqualified under this 11 7 subsection. 11 8 Sec. 17. Section 511.8, subsection 18, paragraph a, Code 11 9 2015, is amended to read as follows: 11 10 a. (1) Common stocks,orshares, or equity interests issued 11 11 by solvent corporations or institutions are eligible if the 11 12 total investment in the common stocks,orsharesin, or equity 11 13 interests of the corporations or institutions does not exceed 11 14 ten percent of legal reserve, provided not more than one=half 11 15 percent of the legal reserve is invested in common stocks, 11 16orshares, or equity interests of any one corporation or 11 17 institution. However,thenot more than four percent of legal 11 18 reserve shall be invested in common stocks,orsharesshall be 11 19, or equity interests which do not meet one of the following 11 20 requirements: 11 21 (a) Are listed or admitted to trading on an established 11 22 foreign securities exchange or a securities exchange in the 11 23 United Statesor shall be. 11 24 (b) Are publicly held and traded in the "over=the=counter 11 25 market"and, provided that market quotations shall be readily 11 26 available, and further, the investment. 11 27 (2) An investment in common stocks, shares, or equity 11 28 interests shall not create a conflict of interest for an 11 29 officer or director of the company between the insurance 11 30 company and the corporation whose common stocks,orshares, or 11 31 equity interests are purchased. 11 32 Sec. 18. Section 511.8, subsection 20, paragraph b, Code 11 33 2015, is amended to read as follows: 11 34 b. For purposes of this subsection, "venture capital 11 35 fund" means a corporation, partnership, proprietorship, or 12 1 other entity formed under the laws of the United States, or 12 2 a state, district, or territory of the United States, whose 12 3 principal business is or will be the making of investments in, 12 4 and the provision of significant managerial assistance to, 12 5 small businesses which meet the small business administration 12 6 definition of small business. "Equity interests" means limited 12 7 partnership interests and other equity interests in which 12 8 liability is limited to the amount of the investment, but does 12 9 not mean general partnership interests or other interests 12 10 involving general liability. "Venture capital fund" includes an 12 11 equity interest in the Iowa fund of funds as defined in section 12 12 15E.62 and an equity interest in an innovation fund as defined 12 13 in section 15E.52. 12 14 Sec. 19. Section 511.8, subsection 22, paragraphs c and d, 12 15 Code 2015, are amended to read as follows: 12 16 c. Investments in financial instruments used in hedging 12 17 transactions are not eligible in excess of two percent of 12 18 the legal reserve in the financial instruments of any one 12 19 corporation, less any securities of that corporation owned 12 20 by the company or association and in which its legal reserve 12 21 is invested, except insofar as the financial instruments are 12 22 collateralized by cash, United States government obligations 12 23 as authorized by subsection 1, or obligations of or guaranteed 12 24 by a United States government=sponsored enterprise which on 12 25 the date they are pledged as collateral areadequately secured 12 26 and have investment qualities and characteristics wherein the 12 27 speculative elements are not predominantinvestment grade as 12 28 defined by the commissioner by rule, which are deposited with a 12 29 custodian bank as defined in subsection 21, and held under a 12 30 written agreement with the custodian bank that complies with 12 31 subsection 21 and provides for the proceeds of the collateral, 12 32 subject to the terms and conditions of the applicable 12 33 collateral or other credit support agreement, to be remitted to 12 34 the legal reserve deposit of the company or association and to 12 35 vest in the state in accordance with section 508.18 whenever 13 1 proceedings under that section are instituted. 13 2 d. Investments in financial instruments used in hedging 13 3 transactions are not eligible in excess of ten percent of the 13 4 legal reserve, except insofar as the financial instruments are 13 5 collateralized by cash, United States government obligations 13 6 as authorized by subsection 1, or obligations of or guaranteed 13 7 by a United States government=sponsored enterprise which on 13 8 the date they are pledged as collateral areadequately secured 13 9 and have investment qualities and characteristics wherein the 13 10 speculative elements are not predominantinvestment grade as 13 11 defined by the commissioner by rule, which are deposited with a 13 12 custodian bank as defined in subsection 21, and held under a 13 13 written agreement with the custodian bank that complies with 13 14 subsection 21 and provides for the proceeds of the collateral, 13 15 subject to the terms and conditions of the applicable 13 16 collateral or other credit support agreement, to be remitted to 13 17 the legal reserve deposit of the company or association and to 13 18 vest in the state in accordance with section 508.18 whenever 13 19 proceedings under that section are instituted. 13 20 Sec. 20. Section 511.8, subsection 22, paragraph e, 13 21 subparagraph (1), Code 2015, is amended to read as follows: 13 22 (1) Investments in financial instruments of foreign 13 23 governments or foreign corporate obligations, other than 13 24 Canada, used in hedging transactions shall be included 13 25 in the limitation contained in subsection 19 that allows 13 26 only twenty percent of the legal reserve of the company or 13 27 association to be invested in such foreign investments, except 13 28 insofar as the financial instruments are collateralized by 13 29 cash, United States government obligations as authorized by 13 30 subsection 1, or obligations of or guaranteed by a United 13 31 States government=sponsored enterprise which on the date 13 32 they are pledged as collateral areadequately secured and 13 33 have investment qualities and characteristics wherein the 13 34 speculative elements are not predominantinvestment grade as 13 35 defined by the commissioner by rule, which are deposited with a 14 1 custodian bank as defined in subsection 21, and held under a 14 2 written agreement with the custodian bank that complies with 14 3 subsection 21 and provides for the proceeds of the collateral, 14 4 subject to the terms and conditions of the applicable 14 5 collateral or other credit support agreement, to be remitted to 14 6 the legal reserve deposit of the company or association and to 14 7 vest in the state in accordance with section 508.18 whenever 14 8 proceedings under that section are instituted. 14 9 Sec. 21. Section 514G.102, Code 2015, is amended to read as 14 10 follows: 14 11 514G.102 Scope. 14 12 The requirements of this chapter apply to policies delivered 14 13 or issued for delivery in this state on or after July 1, 2008. 14 14 The requirements of this chapter related to independent review 14 15 of benefit trigger determinations apply to all claims made on 14 16 or after January 1, 2009. The requirements of this chapter 14 17 related to prompt payment of claims and the payment of interest 14 18 apply to all long=term care insurance policies. This chapter 14 19 is not intended to supersede the obligations of entities 14 20 subject to this chapter to comply with the substance of other 14 21 applicable insurance laws not in conflict with this chapter, 14 22 except that laws and regulations designed and intended to apply 14 23 to Medicare supplement insurance policies shall not be applied 14 24 to long=term care insurance. 14 25 Sec. 22. Section 515.35, subsection 4, paragraph m, Code 14 26 2015, is amended to read as follows: 14 27 m. Venture capital funds. Shares or equity interests in 14 28 venture capital funds which agree to invest an amount equal to 14 29 at least fifty percent of the investments by a company in small 14 30 businesses having their principal offices within this state and 14 31 having either more than one=half of their assets within this 14 32 state or more than one=half of their employees employed within 14 33 this state. A company shall not invest more than five percent 14 34 of its capital and surplus under this paragraph. For purposes 14 35 of this paragraph, "venture capital fund" means a corporation, 15 1 partnership, proprietorship, or other entity formed under the 15 2 laws of the United States, or a state, district, or territory 15 3 of the United States, whose principal business is or will be 15 4 the making of investments in, and the provision of significant 15 5 managerial assistance to, small businesses which meet the small 15 6 business administration definition of small business. "Equity 15 7 interests" means limited partnership interests and other equity 15 8 interests in which liability is limited to the amount of the 15 9 investment, but does not mean general partnership interests or 15 10 other interests involving general liability. "Venture capital 15 11 fund" includes an equity interest in the Iowa fund of funds 15 12 as defined in section 15E.62 and an equity interest in an 15 13 innovation fund as defined in section 15E.52. 15 14 Sec. 23. Section 521A.5, subsection 4, paragraph d, Code 15 15 2015, is amended to read as follows: 15 16 d. The board of directors of a domestic insurer shall 15 17 establish one or more committees comprised solely of directors 15 18whoor other persons appointed by the board, the majority of 15 19 whom are not officers or employees of the insurer or of any 15 20 entity controlling, controlled by, or under common control with 15 21 the insurer and who are not beneficial owners of a controlling 15 22 interest in the voting stock of the insurer or any such entity. 15 23 The committee or committees shall have responsibility for 15 24 recommending or nominating candidates for director for election 15 25 by shareholders or policyholders, evaluating the performance 15 26 of officers deemed to be principal officers of the insurer, 15 27 and recommending to the board of directors the selection and 15 28 compensation of the principal officers. 15 29 Sec. 24. Section 523A.102, subsection 8, Code 2015, is 15 30 amended by striking the subsection. 15 31 Sec. 25. Section 523A.204, subsection 3, Code 2015, is 15 32 amended to read as follows: 15 33 3. All records maintained by the commissioner under this 15 34 section shall be confidential pursuant to section 22.7, 15 35 subsection 58, and shall not be made available for inspection 16 1 or copying except upon the approval of the commissioner or the 16 2 attorney general, or except when sought by the preneed seller 16 3 to whom the records relate. Such records shall be privileged 16 4 and confidential in any judicial or administrative proceeding 16 5 except any of the following: 16 6 a. An action commenced by the commissioner. 16 7 b. An administrative proceeding brought by the insurance 16 8 division. 16 9 c. An action or proceeding which arises out of the criminal 16 10 provisions of the laws of this state or of the United States. 16 11 d. An action brought by the insurance division or 16 12 the attorney general to recover moneys for embezzlement, 16 13 misappropriation, or misuse of trust funds. 16 14 Sec. 26. Section 523A.204, subsections 4 and 5, Code 2015, 16 15 are amended by striking the subsections. 16 16 Sec. 27. Section 523A.205, subsection 2, Code 2015, is 16 17 amended by striking the subsection. 16 18 Sec. 28. Section 523A.205, subsection 3, Code 2015, is 16 19 amended to read as follows: 16 20 3.Notwithstanding chapter 22, allAll records maintained 16 21 by the commissioner under this section shall be confidential 16 22 pursuant to section 22.7, subsection 58, and shall not be made 16 23 available for inspection or copying except upon approval of the 16 24 commissioner or the attorney general, or except when sought by 16 25 the financial institution to whom the records relate. Such 16 26 records shall be privileged and confidential in any judicial or 16 27 administrative proceeding except any of the following: 16 28 a. An action commenced by the commissioner. 16 29 b. An administrative proceeding brought by the insurance 16 30 division. 16 31 c. An action or proceeding which arises out of the criminal 16 32 provisions of the laws of this state or of the United States. 16 33 d. An action brought by the insurance division or 16 34 the attorney general to recover moneys for embezzlement, 16 35 misappropriation, or misuse of trust funds. 17 1 Sec. 29. Section 523A.206, subsection 6, Code 2015, is 17 2 amended by striking the subsection and inserting in lieu 17 3 thereof the following: 17 4 6. All records maintained by the commissioner under this 17 5 section, including work papers, notes, recorded information, 17 6 documents, and copies thereof that are produced or obtained 17 7 by or disclosed to the commissioner or another person in the 17 8 course of a compliance examination, shall be confidential 17 9 pursuant to section 22.7, subsection 58, and shall not be 17 10 made available for inspection and copying except upon the 17 11 approval of the commissioner or the attorney general. Such 17 12 records shall be privileged and confidential in any judicial or 17 13 administrative proceeding except any of the following: 17 14 a. An action commenced by the commissioner. 17 15 b. An administrative proceeding brought by the insurance 17 16 division. 17 17 c. An action or proceeding which arises out of the criminal 17 18 provisions of the laws of this state or of the United States. 17 19 d. An action brought by the insurance division or 17 20 the attorney general to recover moneys for embezzlement, 17 21 misappropriation, or misuse of trust funds. 17 22 Sec. 30. Section 523A.207, Code 2015, is amended to read as 17 23 follows: 17 24 523A.207 Audits by certified public accountants ==== penalty. 17 25 1. A purchase agreement shall not be sold or transferred, 17 26 as part of the sale of a business or the assets of a business, 17 27 until an audit has been performed by a certified public 17 28 accountant and filed with the commissioner that expresses the 17 29 auditor's opinion of the adequacy of funding related to the 17 30 purchase agreements to be sold or transferred. If the buyer 17 31 of a purchase agreement sold or transferred as part of the 17 32 sale of a business or the assets of a business, fails to file 17 33 such an audit, the commissioner shall suspend the preneed 17 34 seller's license of the buyer and the preneed sales license of 17 35 any sales agent in the employ of the buyer until the audit is 18 1 filed. In addition, the commissioner shall assess a penalty 18 2 against the buyer in an amount up to one hundred dollars for 18 3 each day that the audit remains unfiled. The commissioner 18 4 shall allow a thirty=day grace period after the date that a 18 5 purchase agreement is sold or transferred before suspension of 18 6 a license or assessment of a penalty for failure to file an 18 7 audit pursuant to this section. 18 8 2. All records maintained by the commissioner under this 18 9 section shall be confidential pursuant to section 22.7, 18 10 subsection 58, and shall not be made available for inspection 18 11 or copying except upon approval of the commissioner or the 18 12 attorney general, or except when sought by the preneed seller 18 13 to whom the records relate. Such records shall be privileged 18 14 and confidential in any judicial or administrative proceeding 18 15 except any of the following: 18 16 a. An action commenced by the commissioner. 18 17 b. An administrative proceeding brought by the insurance 18 18 division. 18 19 c. An action or proceeding which arises out of the criminal 18 20 provisions of the laws of this state or of the United States. 18 21 d. An action brought by the insurance division or 18 22 the attorney general to recover moneys for embezzlement, 18 23 misappropriation, or misuse of trust funds. 18 24 Sec. 31. Section 523A.401, subsection 8, Code 2015, is 18 25 amended to read as follows: 18 26 8. An insurance company issuing policies funding purchase 18 27 agreements subject to this chapter shall file an annual report 18 28 with the commissioner on a form prescribed by the commissioner. 18 29 The report shall list the applicable insurance policies 18 30 outstanding for each seller.Computer printouts may be 18 31 submitted so long as each legibly provides the same information 18 32 required in the prescribed form.18 33 Sec. 32. Section 523A.401, Code 2015, is amended by adding 18 34 the following new subsection: 18 35 NEW SUBSECTION. 10. All records maintained by the 19 1 commissioner under this section shall be confidential 19 2 pursuant to section 22.7, subsection 58, and shall not be made 19 3 available for inspection or copying except upon approval of the 19 4 commissioner or the attorney general, or except when sought 19 5 by the insurance company to whom the records relate. Such 19 6 records shall be privileged and confidential in any judicial or 19 7 administrative proceeding except any of the following: 19 8 a. An action commenced by the commissioner. 19 9 b. An administrative proceeding brought by the insurance 19 10 division. 19 11 c. An action or proceeding which arises out of the criminal 19 12 provisions of the laws of this state or of the United States. 19 13 d. An action brought by the insurance division or 19 14 the attorney general to recover moneys for embezzlement, 19 15 misappropriation, or misuse of trust funds. 19 16 Sec. 33. Section 523A.402, subsection 8, Code 2015, is 19 17 amended to read as follows: 19 18 8. An insurance company issuing annuities funding purchase 19 19 agreements subject to this chapter shall file an annual report 19 20 with the commissioner on a form prescribed by the commissioner. 19 21 The report shall list the applicable annuities outstanding for 19 22 each seller.Computer printouts may be submitted so long as 19 23 each legibly provides the same information required in the 19 24 prescribed form.19 25 Sec. 34. Section 523A.405, Code 2015, is amended by striking 19 26 the section and inserting in lieu thereof the following: 19 27 523A.405 Bond in lieu of trust fund. 19 28 The commissioner shall, by rule, establish terms and 19 29 conditions under which a seller may, in lieu of trust 19 30 requirements, file with the commissioner a surety bond issued 19 31 by a surety company authorized to do business and doing 19 32 business in this state. 19 33 Sec. 35. Section 523A.501, subsection 2, Code 2015, is 19 34 amended to read as follows: 19 35 2. An application for a preneed seller's license shall be 20 1 filed on a form and in a format prescribed by the commissioner 20 2 and be accompanied by afifty dollarfiling fee in an amount 20 3 set by the commissioner by rule. The application shall include 20 4 the name of the natural person or legal entity to be licensed 20 5 as the preneed seller and, if applicable, any other name 20 6 under which the preneed seller will be transacting business, 20 7 including any names registered with the secretary of state or a 20 8 county clerk. The application shall be updated as necessary 20 9 to ensure that the commissioner has been notified of all names 20 10 under which the preneed seller is operating and doing business. 20 11 Sec. 36. Section 523A.501, subsection 7, Code 2015, is 20 12 amended to read as follows: 20 13 7. A preneed seller's licenseshall be renewed every four 20 14 years by filing the form prescribed by the commissioner under 20 15 subsection 2, accompanied by a renewal fee in an amount set by 20 16 the commissioner by ruleexpires annually on April 15. If the 20 17 preneed seller has filed a complete annual report and paid the 20 18 required fees as required in section 523A.204, the commissioner 20 19 shall renew the preneed seller's license until April 15 of the 20 20 following year. 20 21 Sec. 37. Section 523A.502, subsection 5, Code 2015, is 20 22 amended by striking the subsection and inserting in lieu 20 23 thereof the following: 20 24 5. A sales license shall expire annually on April 15. If 20 25 the sales agent has filed a substantially complete annual 20 26 report as required in section 523A.502A, the commissioner shall 20 27 renew the sales license until April 15 of the following year. 20 28 Sec. 38. Section 523A.502A, subsections 1 and 2, Code 2015, 20 29 are amended to read as follows: 20 30 1. A sales agent shall file with the commissioner not later 20 31 than April 1 of each year an annual report on a form prescribed 20 32 by the commissioner describing each purchase agreement sold 20 33 by the sales agent during the year. An annual report must be 20 34 filed whether or not sales were made during the year and even 20 35 if the sales agent is no longer an agent of a preneed seller or 21 1 licensed by the commissioner. 21 2 2. All records maintained by the commissioner under this 21 3 section shall be confidential pursuant to section 22.7, 21 4 subsection 58, and shall not be made available for inspection 21 5 or copying except upon the approval of the commissioner or the 21 6 attorney general, or except when sought by the sales agent to 21 7 whom the records relate. Such records shall be privileged 21 8 and confidential in any judicial or administrative proceeding 21 9 except any of the following: 21 10 a. An action commenced by the commissioner. 21 11 b. An administrative proceeding brought by the insurance 21 12 division. 21 13 c. An action or proceeding which arises out of the criminal 21 14 provisions of the laws of this state or of the United States. 21 15 d. An action brought by the insurance division or 21 16 the attorney general to recover moneys for embezzlement, 21 17 misappropriation, or misuse of trust funds. 21 18 Sec. 39. Section 523A.502A, subsections 3 and 4, Code 2015, 21 19 are amended by striking the subsections. 21 20 Sec. 40. Section 523A.803, subsection 1, paragraph c, Code 21 21 2015, is amended by striking the paragraph. 21 22 Sec. 41. Section 523A.803, Code 2015, is amended by adding 21 23 the following new subsection: 21 24 NEW SUBSECTION. 1A. All records maintained by the 21 25 commissioner under this section, including work papers, notes, 21 26 recorded information, documents, and copies thereof that are 21 27 produced or obtained by or disclosed to the commissioner or 21 28 another person in the course of an investigation, shall be 21 29 confidential pursuant to section 22.7, subsection 58, and shall 21 30 not be made available for inspection and copying except upon 21 31 the approval of the commissioner or the attorney general. Such 21 32 records shall be privileged and confidential in any judicial or 21 33 administrative proceeding except any of the following: 21 34 a. An action commenced by the commissioner. 21 35 b. An administrative proceeding brought by the insurance 22 1 division. 22 2 c. An action or proceeding which arises out of the criminal 22 3 provisions of the laws of this state or of the United States. 22 4 d. An action brought by the insurance division or 22 5 the attorney general to recover moneys for embezzlement, 22 6 misappropriation, or misuse of trust funds. 22 7 Sec. 42. Section 523A.807, subsection 3, unnumbered 22 8 paragraph 1, Code 2015, is amended to read as follows: 22 9 If the commissioner finds that a person has violated section 22 10 523A.201, 523A.202, 523A.203, 523A.207, 523A.401, 523A.402, 22 11 523A.403, 523A.404, 523A.405, 523A.501, 523A.502,or 523A.50422 12 or any rule adopted pursuant thereto, the commissioner may 22 13 order any or all of the following: 22 14 Sec. 43. Section 523I.810, subsection 9, Code 2015, is 22 15 amended to read as follows: 22 16 9. A cemetery may, by resolution adopted by a vote of at 22 17 least two=thirds of the members of its board at any authorized 22 18 meeting of the board, authorize the withdrawal and use of 22 19 not more than twenty percent of the principal of the care 22 20 fund to acquire additional land for cemetery purposes, to 22 21 repair a mausoleum or other building or structure intended for 22 22 cemetery purposes, to build, improve, or repair boundaries, 22 23 roads and walkways in the cemetery, to construct a columbarium, 22 24 mausoleum, or similar structure to create additional interment 22 25 spaces, to purchase equipment for tree, shrub, and lawn care, 22 26 to purchase backhoes or similar equipment used to open and 22 27 close interment spaces, or to purchase recordkeeping software 22 28 used to maintain ownership records or interment records. The 22 29 resolution shall establish a reasonable repayment schedule, not 22 30 to exceed five years, and provide for interest in an amount 22 31 comparable to the care fund's current rate of return on its 22 32 investments. However, the care fund shall not be diminished 22 33 below an amount equal to the greater of twenty=five thousand 22 34 dollars or five thousand dollars per acre of land in the 22 35 cemetery. The resolution, and if the deposit of care fund 23 1 income over five years is unlikely to fund replenishment of the 23 2 principal of the care fund, either a bond or proof of insurance 23 3 to guarantee replenishment of the care fund, shall be filed 23 4 with the commissioner thirty days prior to the withdrawal of 23 5 funds. 23 6 Sec. 44. Section 523I.811, subsection 1, paragraph b, Code 23 7 2015, is amended to read as follows: 23 8 b. Maintaining drains, water lines, roads, buildings, 23 9 boundaries, fences, and other structures. 23 10 Sec. 45. Section 523I.811, subsection 1, Code 2015, is 23 11 amended by adding the following new paragraphs: 23 12 NEW PARAGRAPH. g. To purchase equipment to maintain the 23 13 cemetery. 23 14 NEW PARAGRAPH. h. To purchase backhoes or similar equipment 23 15 used to open and close interment spaces. 23 16 NEW PARAGRAPH. i. To purchase equipment used to construct 23 17 a columbarium, mausoleum, or similar structure to create 23 18 additional interment spaces. 23 19 Sec. 46. NEW SECTION. 523I.811A Emergency use of care 23 20 funds. 23 21 1. Notwithstanding any other provision of this chapter, 23 22 a perpetual care cemetery may apply to the commissioner to 23 23 withdraw funds from the cemetery's care fund for a financial 23 24 emergency. The commissioner shall, by rule, establish 23 25 standards and procedures for such applications and for 23 26 withdrawals from care funds. 23 27 2. Upon application, the commissioner may allow a perpetual 23 28 care cemetery to withdraw funds from the care fund if the 23 29 commissioner finds that the cemetery has an urgent financial 23 30 need and the withdrawal is deemed reasonable and prudent to 23 31 fund a necessary expense of the cemetery. The commissioner 23 32 shall establish conditions for the specific use of the funds 23 33 withdrawn and may require repayment of all or part of the 23 34 amount withdrawn. 23 35 Sec. 47. EFFECTIVE DATE. The following provision or 24 1 provisions of this Act take effect January 1, 2016: 24 2 1. The section of this Act adding section 502.202, 24 3 subsection 24. 24 4 Sec. 48. DIRECTIONS TO CODE EDITOR. The Iowa code editor is 24 5 directed to transfer section 515.11 to new section 515.23. 24 6 Sec. 49. REPEAL. Section 523A.504, Code 2015, is repealed. SF 346 (4) 86 av/nh/jh