Bill Text: IA SSB3058 | 2021-2022 | 89th General Assembly | Introduced
Bill Title: A bill for an act relating to preneed sellers and purchase agreements for cemetery merchandise, funeral merchandise, and funeral services, providing penalties, and including applicability provisions.(See SF 2194.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2022-02-02 - Committee report approving bill, renumbered as SF 2194. [SSB3058 Detail]
Download: Iowa-2021-SSB3058-Introduced.html
Senate
Study
Bill
3058
-
Introduced
SENATE/HOUSE
FILE
_____
BY
(PROPOSED
DEPARTMENT
OF
COMMERCE/INSURANCE
DIVISION
BILL)
A
BILL
FOR
An
Act
relating
to
preneed
sellers
and
purchase
agreements
1
for
cemetery
merchandise,
funeral
merchandise,
and
funeral
2
services,
providing
penalties,
and
including
applicability
3
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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Section
1.
Section
523A.207,
Code
2022,
is
amended
by
1
striking
the
section
and
inserting
in
lieu
thereof
the
2
following:
3
523A.207
Transfer
of
preneed
purchase
agreements
——
sale
of
4
a
business
or
business
assets.
5
1.
A
purchase
agreement
shall
not
be
sold
or
transferred
as
6
part
of
the
sale
of
a
business,
or
of
the
assets
of
a
business,
7
until
the
seller
of
the
business
has
provided
all
of
the
8
following
to
the
buyer
of
the
business:
9
a.
A
copy
of
the
most
recent
annual
report
filed
with
the
10
commissioner
by
the
seller.
11
b.
The
aggregate
amount
of
any
interest
income
withdrawn
12
to
date
from
trust
accounts
pursuant
to
section
523A.201,
13
subsection
8.
14
c.
Copies
of
all
purchase
agreements
to
be
assumed
by
the
15
buyer.
16
d.
A
list
of
the
purchase
agreements
provided
under
17
paragraph
“c”
that
includes
all
of
the
following:
18
(1)
The
name
of
the
purchaser
and
the
name
of
the
seller
of
19
each
purchase
agreement.
20
(2)
The
total
dollar
amount
of
each
purchase
agreement.
21
(3)
The
date
each
purchase
agreement
was
executed.
22
(4)
Whether
each
purchase
agreement
is
guaranteed,
23
nonguaranteed,
or
mixed,
and
affirm
or
deny
one
hundred
percent
24
trusting
of
any
guaranteed
items
and
specify
the
lesser
amount
25
or
percentage
placed
in
trust,
if
applicable.
26
e.
A
list
of
insurance
policies
that
are
applicable
to
the
27
purchase
agreements
provided
under
paragraph
“c”
.
The
list
28
shall
identify
the
purchase
agreement
to
which
each
insurance
29
policy
applies,
the
named
policyholder
on
each
insurance
30
policy,
and
the
face
amount
of
each
insurance
policy.
31
f.
A
list
of
trust
fund
beneficiaries
and
the
amount
in
32
trust
for
each
beneficiary.
33
g.
A
list
that
identifies
and
describes
any
items
of
presold
34
merchandise
that
are
not
fully
funded
with
insurance
or
trust
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funds
in
compliance
with
this
chapter,
and
the
amount
or
1
percentage
that
is
either
unfunded
or
underfunded.
2
2.
a.
The
seller
of
a
business
shall
file
a
disclosure
3
with
the
commissioner
that
contains
the
information
required
4
under
subsection
1,
paragraphs
“d”
and
“e”
,
at
least
thirty
5
calendar
days
prior
to
the
date
of
the
transfer
of
any
purchase
6
agreements
to
the
buyer.
7
b.
If
the
seller
fails
to
file
the
disclosure
required
under
8
paragraph
“a”
,
the
commissioner
may
suspend
the
buyer’s
preneed
9
seller’s
license,
the
seller’s
preneed
seller’s
license,
and
10
the
license
of
any
sales
agent
authorized
to
sell
for
the
buyer
11
or
seller
until
the
disclosure
is
filed.
In
addition,
the
12
commissioner
may
assess
a
penalty
against
the
buyer
or
seller
13
in
an
amount
up
to
one
hundred
dollars
for
each
calendar
day
14
that
the
disclosure
remains
unfiled.
The
commissioner
shall
15
allow
a
thirty-day
grace
period
after
the
date
that
a
purchase
16
agreement
is
sold
or
transferred
before
the
commissioner
17
suspends
the
preneed
seller’s
license
of
the
buyer,
seller,
or
18
of
a
sales
agent
authorized
to
sell
for
the
buyer
or
seller,
19
or
assesses
a
penalty
against
the
buyer
or
seller.
Upon
20
good
cause,
the
commissioner
may
issue
an
order
waiving
the
21
disclosure
requirement.
22
3.
All
records
maintained
by
the
commissioner
under
this
23
section
shall
be
confidential
pursuant
to
section
22.7,
24
subsection
58,
and
shall
not
be
made
available
for
inspection
25
or
copying
except
upon
prior
written
approval
of
either
the
26
commissioner
or
the
attorney
general,
or
if
sought
by
the
27
preneed
seller
to
whom
the
records
relate.
Such
records
shall
28
be
privileged
and
confidential
in
a
judicial
or
administrative
29
proceeding
except
for
any
of
the
following:
30
a.
An
action
commenced
by
the
commissioner.
31
b.
An
administrative
proceeding
brought
by
the
division.
32
c.
An
action
or
proceeding
which
arises
out
of
the
criminal
33
provisions
of
the
laws
of
this
state
or
of
the
United
States.
34
d.
An
action
brought
by
the
division
or
the
attorney
general
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to
recover
moneys
from
embezzlement,
misappropriation,
or
1
misuse
of
trust
funds.
2
Sec.
2.
Section
523A.401,
subsection
4,
Code
2022,
is
3
amended
to
read
as
follows:
4
4.
The
premiums
of
any
new
insurance
policy
shall
be
5
fully
paid
If
a
preneed
funeral
purchase
agreement
contains
6
a
provision
stating
that
the
agreement
will
be
funded
by
the
7
purchase
of
a
new
insurance
policy,
the
insurance
producer
8
who
sells
the
insurance
policy
that
will
fund
the
purchase
9
agreement
shall
require
that
any
payment
made
by
the
purchaser
10
shall
be
made
payable
only
to
the
insurance
company
designated
11
in
the
purchase
agreement.
The
insurance
producer
shall
12
remit
the
insurance
policy
application
and
the
premium
made
13
payable
to
the
insurance
company
designated
in
the
purchase
14
agreement
to
the
insurance
company
within
thirty
calendar
days
15
after
execution
of
the
purchase
agreement
or,
with
respect
16
to
a
purchase
agreement
that
provides
for
periodic
payments,
17
the
premiums
shall
be
paid
directly
by
the
purchaser
to
the
18
insurance
company
issuing
that
issues
the
insurance
policy.
19
Sec.
3.
Section
523A.402,
subsection
4,
Code
2022,
is
20
amended
to
read
as
follows:
21
4.
The
premiums
of
any
new
annuity
shall
be
fully
paid
22
If
a
preneed
funeral
purchase
agreement
contains
a
provision
23
stating
that
the
agreement
will
be
funded
by
the
purchase
of
24
a
new
annuity,
the
insurance
producer
who
sells
the
annuity
25
that
will
fund
the
purchase
agreement
shall
require
that
any
26
payment
made
by
the
purchaser
shall
be
made
payable
only
to
the
27
insurance
company
designated
in
the
purchase
agreement.
The
28
insurance
producer
shall
remit
the
annuity
application
and
the
29
premium
made
payable
to
the
insurance
company
designated
in
30
the
purchase
agreement
to
the
insurance
company
within
thirty
31
calendar
days
after
execution
of
the
purchase
agreement
or,
32
with
respect
to
a
purchase
agreement
that
provides
for
periodic
33
payments,
the
premiums
shall
be
paid
directly
by
the
purchaser
34
to
the
insurance
company
issuing
that
issues
the
annuity.
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Sec.
4.
NEW
SECTION
.
523A.505
Duty
to
disclose.
1
1.
A
sales
agent,
and
any
person
who
owns
at
least
five
2
percent
of
a
preneed
seller
business,
shall
have
an
ongoing
3
duty
to
disclose
to
the
commissioner
all
felony
crimes
and
4
those
misdemeanor-level
crimes
involving
dishonesty
or
false
5
statement
for
which
the
sales
agent
or
person
has
been
found
6
guilty,
or
for
which
the
sales
agent
or
person
has
pled
7
guilty
or
no
contest.
Such
disclosure
shall
be
made
to
the
8
commissioner
within
thirty
calendar
days
of
the
date
that
9
the
sales
agent
or
person
has
been
found
guilty
by
a
court
10
of
competent
jurisdiction,
or
of
the
date
the
sales
agent
or
11
person
pleads
not
guilty
or
no
contest.
12
2.
A
sales
agent,
and
any
person
who
owns
at
least
five
13
percent
of
a
preneed
seller
business,
shall
have
an
ongoing
14
duty
to
disclose
to
the
commissioner
all
liens
and
judgments
15
over
twenty
thousand
dollars
that
have
been
entered
against
16
the
sales
agent
or
person,
and
all
bankruptcy
petitions
that
17
have
been
filed
by
the
sales
agent
or
person.
Such
disclosure
18
shall
be
made
to
the
commissioner
within
thirty
calendar
days
19
of
the
date
on
which
the
lien
or
judgment
is
entered,
or
of
the
20
date
on
which
the
sales
agent
or
person
files
a
petition
for
21
bankruptcy.
22
Sec.
5.
NEW
SECTION
.
523A.506
Business
continuity
planning.
23
A
preneed
seller
shall
establish,
implement,
and
maintain
24
written
procedures
relating
to
business
continuity
and
25
succession
planning.
The
business
continuity
and
succession
26
plan
shall
be
based
upon
the
specific
facts
and
circumstances
27
of
the
preneed
seller’s
business
model
including
the
size
of
28
the
preneed
seller’s
business,
the
types
of
services
provided,
29
and
the
number
of
physical
locations
established
and
maintained
30
by
the
preneed
seller.
The
plan
must
provide
for
all
of
the
31
following:
32
1.
The
protection,
secure
backup,
and
recovery
of
the
33
preneed
seller’s
business
records.
34
2.
Alternative
forms
of
communication
to
ensure
timely
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notice
of
all
of
the
following
to
customers,
key
personnel,
1
employees,
vendors,
and
service
providers:
2
a.
A
significant
business
interruption.
3
b.
The
death
or
unavailability
of
key
personnel.
4
c.
A
disruption
of
service.
5
d.
The
cessation
of
business
activities.
6
3.
Reassignment
of
key
duties
to
qualified
individuals
in
7
the
event
of
the
death
or
unavailability
of
key
personnel.
8
4.
Minimization
and
mitigation
of
service
disruptions
and
9
negative
impacts
to
clients
that
may
result
from
a
significant
10
business
interruption.
11
Sec.
6.
NEW
SECTION
.
523A.605
Allocation
of
growth
or
12
interest.
13
If
a
purchase
agreement
funded
by
insurance
proceeds
under
14
section
523A.401
or
by
annuity
proceeds
under
section
523A.402
15
includes
nonguaranteed
merchandise
or
services,
the
purchaser,
16
beneficiary,
or
the
beneficiary’s
estate
shall
receive
a
credit
17
for,
and
the
benefit
of,
any
growth
in
death
benefits
that
is
18
at
least
equal
to
the
percentage
of
the
total
price
under
the
19
purchase
agreement
that
is
attributable
to
the
nonguaranteed
20
merchandise
or
services.
21
Sec.
7.
Section
523A.807,
subsection
3,
unnumbered
22
paragraph
1,
Code
2022,
is
amended
to
read
as
follows:
23
If
the
commissioner
finds
that
a
person
has
violated
section
24
523A.201
,
523A.202
,
523A.203
,
523A.204
,
523A.207
,
523A.401
,
25
523A.402
,
523A.403
,
523A.404
,
523A.405
,
523A.501
,
523A.502
,
26
or
523A.502A
,
523A.505,
or
523A.605,
or
any
rule
adopted
27
pursuant
thereto,
the
commissioner
may
order
any
or
all
of
the
28
following:
29
Sec.
8.
APPLICABILITY.
The
following
applies
to
purchase
30
agreements
sold
or
transferred
as
part
of
the
sale
of
a
31
business,
or
the
assets
of
a
business,
on
or
after
July
1,
32
2022:
33
The
section
of
this
Act
striking
section
523A.207.
34
EXPLANATION
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The
inclusion
of
this
explanation
does
not
constitute
agreement
with
1
the
explanation’s
substance
by
the
members
of
the
general
assembly.
2
This
bill
relates
to
preneed
sellers
and
purchase
agreements
3
(agreement)
for
cemetery
merchandise,
funeral
merchandise,
and
4
funeral
services.
5
The
bill
provides
that
an
agreement
shall
not
be
sold
or
6
transferred
as
part
of
the
sale
of
a
business,
or
the
assets
7
of
a
business,
until
the
seller
of
the
business
(seller)
has
8
provided
the
buyer
of
the
business
(buyer)
with
copies
of
9
all
agreements
to
be
assumed
by
the
buyer,
as
well
as
the
10
additional
information
detailed
in
the
bill.
Current
law
11
requires
a
certified
public
accountant
to
complete
a
procedures
12
engagement
in
accordance
with
the
attestation
standards
13
established
by
the
American
institute
of
certified
public
14
accountants
that
verifies
the
adequacy
or
inadequacy
of
funding
15
related
to
the
agreements
to
be
sold
or
transferred.
The
16
buyer
must
file
a
copy
of
the
report
with
the
commissioner
of
17
insurance
(commissioner).
18
The
bill
requires
that
the
seller
file
a
disclosure
with
the
19
commissioner
at
least
30
calendar
days
prior
to
the
date
of
the
20
transfer
of
any
agreements
that
lists
all
of
the
agreements
21
that
are
to
be
transferred
to
the
buyer,
and
provides
22
additional
information
as
detailed
in
the
bill.
If
the
seller
23
fails
to
file
the
disclosure,
the
commissioner
may
suspend
24
certain
licenses
or
assess
penalties
as
detailed
in
the
bill.
25
The
bill
requires
that
if
an
agreement
contains
a
provision
26
stating
that
it
will
be
funded
by
either
the
purchase
of
a
27
new
insurance
policy
or
a
new
annuity,
the
insurance
producer
28
(producer)
who
sells
the
policy
or
annuity
that
will
fund
the
29
agreement
must
require
that
any
payment
made
by
the
purchaser
30
be
made
payable
only
to
the
insurance
company
(company)
31
designated
in
the
agreement.
The
producer
must
remit
the
32
insurance
or
annuity
application
and
the
premium
to
the
company
33
designated
in
the
agreement
within
30
calendar
days
after
the
34
date
of
execution
of
the
agreement.
Current
law
requires
that
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the
premiums
for
any
new
insurance
policy
be
fully
paid
within
1
30
days
after
execution
of
the
agreement.
2
The
bill
requires
sales
agents
(agents),
and
any
persons
3
who
own
at
least
five
percent
of
a
preneed
seller
business,
to
4
disclose
to
the
commissioner
all
felony
crimes
and
misdemeanors
5
that
involve
dishonesty
or
false
statement
to
which
the
agent
6
or
person
has
been
found
guilty,
or
to
which
the
agent
or
7
person
has
pled
guilty
or
no
contest.
The
disclosure
must
be
8
made
within
30
days
of
the
date
that
the
agent
or
person
is
9
found
guilty,
or
of
the
date
the
agent
or
person
pleads
not
10
guilty
or
no
contest.
The
agent
or
person
must
also
disclose
11
all
liens
and
judgments
over
$20,000
that
are
entered
against
12
them,
and
all
bankruptcy
petitions
filed
by
the
agent
or
13
person.
Disclosure
must
occur
within
30
calendar
days
of
the
14
date
that
the
lien
or
judgment
is
entered,
or
that
a
petition
15
for
bankruptcy
is
filed.
16
Preneed
sellers
are
required
by
the
bill
to
establish,
17
implement,
and
maintain
written
procedures
relating
to
business
18
continuity
and
succession
planning
(plan).
The
plan
must
19
be
based
upon
the
specific
facts
and
circumstances
of
the
20
seller’s
business
model,
and
must
also
address
the
additional
21
circumstances
detailed
in
the
bill.
22
Under
the
bill,
if
a
purchase
agreement
funded
by
insurance
23
or
annuity
proceeds
includes
nonguaranteed
merchandise
or
24
services,
the
purchaser,
beneficiary,
or
the
beneficiary’s
25
estate
shall
receive
a
credit
for,
and
the
benefit
of,
26
any
growth
in
death
benefits
that
is
at
least
equal
to
the
27
percentage
of
the
total
price
under
the
purchase
agreement
that
28
is
attributable
to
the
nonguaranteed
merchandise
or
services.
29
The
bill
provides
that
if
the
commissioner
finds
that
a
30
person
has
violated
the
duty
to
disclose
a
felony,
misdemeanor,
31
judgment,
or
lien;
or
failed
to
credit
a
purchaser,
32
beneficiary,
or
the
beneficiary’s
estate
for
any
growth
in
33
death
benefits,
the
person
is
subject
to
the
remedies
and
34
penalties
under
Code
section
523A.807(3).
35
-7-
LSB
5167XD
(6)
89
ko/rn
7/
8
