All bills passed by Legislature & sent to Governor – 2013
SF 91 – Pipeline safety violations
SF 181 – Banking, Professional Licensing omnibus (Sect.29 repealed inSF 452)
SF 182 – Reinsurance provisions for domestic insurers
SF 183 – Credit Union omnibus
SF 189 – Risk Management insurance regulation
HF 484 – Boiler inspections
HF 488 – ABD technical
HF 489 – IID omnibus
SF 91 is a recommendation by the Utilities Division of the Iowa Department of Commerce. It increases the maximum penalties for violations relating to pipelines and underground gas storage so that Iowa stays in compliance with federal requirements. The Iowa Utilities Board (IUB) receives federal funding to administer the state’s pipeline safety program on behalf the Pipeline and Hazardous Materials Safety Administration. The legislation applies only to intrastate pipelines. Interstate lines are under federal jurisdiction. Currently, pipeline safety violations of Iowa law, rule or order pertaining to Chapter 479 are subject to a civil penalty levied by the IUB not to exceed $10,000 per violation per day or $500,000 per series. In response to federal requirements applicable to all states as part of more stringent national focus on public safety, the bill increases the maximum to $100,000 per day and $1 million for a series of violations. While this is an ongoing compliance issue, the IUB has never assessed maximum penalties and, in most instances where violations are found by IUB inspectors, the utility takes corrective action and no penalty is assessed. [2/6: 48-0 (Black, Ernst excused)]
SF 181 incorporates recommendations by the Department of Commerce’s Banking Division and the Division’s Professional Licensing Bureau. Federal law recently changed to allow banks to pay interest on business demand deposit accounts. Currently, Iowa’s public funds law does not allow banks to pay interest on deposits of public funds that are in demand deposit accounts. Banks have historically used N.O.W. accounts as a way to pay interest in these situations, but with the change in federal law, it is appropriate to amend the deposit of public funds law to authorize the payment of interest on traditional demand deposit accounts. The bill amends provisions that currently prohibit a depository, defined as a bank or credit union in which public funds are deposited, from directly or indirectly paying interest to a public officer on a demand deposit of public funds, and prohibit a public officer from taking or receiving interest. The bill provides that a depository may pay interest to a public officer on deposits of public funds, and a public officer may take or receive it. The bill deletes a provision that the previous prohibition did not apply to interest on time certificates of deposit or savings accounts for public funds.
Two years ago, changes were made to the legal lending limit law relating to corporate borrowing groups. After the changes, the same language is used in two different places in the lending limit law. This has created confusion. The bill streamlines the language to provide clarity both to the banks and to the State’s bank examiners. This change is consistent with safe and sound banking practices and in some cases could increase credit availability in the state. The bill also makes several similar modifications throughout Code chapters relating to those engaged in the businesses of debt management, money transmission, currency exchange and delayed deposit services. The Superintendent of Banking may authorize applicants and licensees to be licensed through a nationwide licensing system and to pay the corresponding system processing fees, and the Superintendent may establish by rule or order new requirements, such as requirements that applicants, including officers and directors and those who have control of the applicant, submit to fingerprinting and criminal history checks. The legislation also makes licensure expiration and renewal dates consistent as December 1 for renewal and either December 31 or January 1 (in the case of a delayed deposit services business) for expiration. Licenses that would otherwise have expired on or before the bill’s effective date of July 1, 2013, will remain in effect until the expiration date as modified by the bill.
The bill includes updates to the Real Estate Appraiser Board, clarifies board member qualifications and the quorum requirement, and allows a member to serve for three rather than two consecutive three-year terms. It also authorizes criminal history background checks, through the Iowa Division of Criminal Investigation, as required by the Appraisal Qualifications Board for appraisers certified for federally related transactions as of January 1, 2015. This will not apply to currently licensed appraisers. To comply with federal regulations, the board needs this statutory authority to meet criteria for certification across the nation for federally related transactions. Iowa homebuyers, homeowners wishing to refinance and lenders would suffer substantial harm if Iowa fails to comply with the federal mandate and could no longer certify real estate appraisers eligible to appraise in connection with federally related transactions. Residential real estate lending in Iowa would virtually dry up. The Bureau will absorb the costs of the background checks.
Section 29 removes business entity registration with the Architectural Board. Current law requires authorization from the board before a business entity can offer or perform architectural services in Iowa, which is burdensome, ineffective and unfair. This “red tape” requirement is replaced with rulemaking authority so that the board can address public safety concerns more effectively and in a more flexible manner. Stakeholder groups have participated in developing proposed rules for this purpose and additional stakeholders will be consulted before formal rulemaking is begun. The new approach will be more fluid, will focus more responsibility on the architect, and will include a less regulatory approach to business entities that hire or otherwise retain or associate with architects. Note: Section 29 [The board shall adopt rules to govern the practice of architecture through business entities to protect the public from misleading and deceptive advertising and to guard against the unlicensed practice of architecture] was repealed in Standings (SF 452) Division XXII on May 23, 2013. [3/11: 46-0 (Anderson, Bertrand, Courtney, Houser excused)]
SF 182, a recommendation by the Iowa Insurance Division (IID) of the Department of Commerce, updates Iowa’s antiquated law covering reinsurance, based on a model act by the National Association of Insurance Commissioners (NAIC). It includes provisions that allow a domestic insurer to cede reinsurance to an assuming insurer and receive credit for the cession as either an asset or a reduction from liability on account of the reinsurance ceded if certain requirements are met. Provisions take effect January 1, 2014. [3/11: 46-0 (Anderson, Bertrand, Courtney, Houser excused)]
SF 183 is a recommendation by the Division of Credit Unions, Iowa Department of Commerce. It makes technical corrections and updates, condenses the dissolution process and adds “branch acquisition” as a type of permitted merger activity. It allows a CUSO (credit union service organization) to form as a limited liability company, in addition to the currently allowed limited partnerships or corporations. The statute governing limited liability companies did not exist when CUSOs were defined in Iowa law many years ago. The bill changes Code references to the “chief financial officer,” now defined as an elected member of the board, to “financial officer whose title is designated by the board.” This reflects current practice that the chief financial officer is typically an executive position serving in management of the credit union. [3/11: 46-0 (Anderson, Bertrand, Courtney, Houser excused)]
SF 189, a recommendation by the Iowa Insurance Division (IID) of the Department of Commerce, creates a new Code chapter that requires specified insurers domiciled in Iowa to maintain a risk management framework, complete an internal risk and solvency assessment, and file a summary report of the assessment with the Insurance Commissioner. The reports will be kept confidential. The provisions will apply to an estimated 17 “big player” companies in Iowa (insurers with annual premiums of $500 million or more and insurance groups of which domiciled insurers are members, with annual premiums of $1 billion or more). Most companies are eligible for exemption because their annual direct written premiums are less than $500 million. The proposal is based on a model act by the National Association of Insurance Commissioners, which will also provide a guidance manual. The bill will likely reduce the workload of State insurance examiners by allowing them to focus on specific areas of risk assessment identified through the confidential reports. The new Code chapter is applicable beginning January 1, 2015. [3/12: 48-0 (Courtney, Ernst excused)]
HF 484 adjusts certain boiler inspection requirements to enhance safety and energy efficiency. The bill, which takes effect upon enactment:
• Requires unfired steam pressure vessels operating in excess of 15 pounds per square inch to have one internal and one external inspection within a two-year period with no two inspections to occur within a six-month period (rather than internal once every two years and external once a year).
• Requires low-pressure steam boilers to have one internal inspection and one external inspection within a two-year period with no two inspections to occur within a six-month period.
• Adds two new classes that are exempt from inspection requirements: 1) espresso coffee machines, cappuccino coffee machines or cleaning machines if the water capacity of the electric boiler is six gallons or less, and 2) continuous coil‐type hot water boilers used only for steam vapor cleaning.
• Codifies Iowa Workforce Development’s boiler inspection rules to reflect current practice regarding no inspection requirements for an object for which there is clear evidence that the manufacturer did not intend it to be operated at more than three pounds per square inch and the object is operating within that limit.
• Allows the State’s Boiler and Pressure Vessel Board to adopt rules establishing an internal inspection interval of up to four years for electric public utilities. [4/10: 50-0]
HF 488 is a recommendation by the Alcoholic Beverages Division of the Department of Commerce. It makes non-substantive changes to pave the way for electronic delivery of services. For example, it allows electronic reporting of beer sales and wine gallons sold, and electronic remittance of beer taxes and wine gallonage taxes. It makes minor technical changes to streamline and clarify current Code language and enhance readability. It also modifies current law allowing anyone of legal age to make beer for personal use if not taken off-site and not sold or offered in exchange for any type of consideration. Home brewers may now take the beer from the premises where it was bottled but no sales/no exchange provisions apply. [3/20: 50-0]
HF 489 is based on recommendations by the Iowa Insurance Division (IID) of the Department of Commerce. In addition to technical Code changes, including providing consistent terminology and definitions within insurance policy language, the bill:
• Specifically allows a dram shop liability insurance policy to be written on an aggregate limit basis, and adds a purpose statement that dram shop liability insurance is to provide protection for members of the public who experience damages as a result of licensees or permittees serving patrons beer, wine or intoxicating liquor to a point that reaches or exceeds the standard set forth in law for liability, and minimum coverage requirements for dram shop are not for the purpose of making the insurance affordable regardless of claims experience. The Alcoholic Beverage Division will continue to determine the minimum liability insurance policy requirements that must be obtained and is a mandatory condition for holding a license or permit for on-premise consumption.
• Removes the Insurance Commissioner from the Advisory Council on Brain Injuries.
• Allows the Commissioner to adopt rules to provide for a definition of “place of business’’ and ‘‘supervised person’’ rather than the current method, which is determined by the Securities and Exchange Commission.
• Updates maximum fines that can be levied for securities violations.
• Specifies that failure to comply with a cease and desist order issued by the IID Securities Bureau can result in certain monetary and other penalties.
• Allows the IID to assess the costs of examining a regulated entity to ensure compliance with Iowa insurance laws.
• Provides that a plan for voluntary dissolution of an Iowa-licensed domestic mutual insurance company must be submitted to the Insurance Commissioner for approval at least 90 days before notice is provided to the company’s policyholders. Approval of the plan requires compliance with applicable laws and a determination by the Commissioner that it is fair and equitable to policyholders and the company.
• Allows for the board of directors of an insurance company to signal its review of an examination report by a notation in the meeting minutes, instead of requiring the filing of affidavits saying each member has received the report.
• Creates Code section to address liquidation of a domestic insurer that is covered under the federal Dodd-Frank Wall Street Reform and Consumer Protection Act. The new section keeps the regulatory authority with the state instead of a federal regulator in these cases. This section would go into effect immediately.
• Revises the types of real property that a life insurance company can include in its legal reserves.
• Allows companies to allocate premiums to Iowa for employer-owned life insurance when that premium is not specifically allocated to another state. This will create the ability to count among assets when doing financial exams.
• Removes a provision that requires directors of mutual insurance companies be policyholders of the company, to allow non-members to serve as directors.
• Allows non-life insurance companies to invest in limited partnerships and limited liability companies. Requires that the interest shall not be acquired if the investment exceeds two percent of the capital and surplus of the company, OR if the investment plus the book value on the date of the investment of all limited partnership or limited liability company interests then held by the company exceeds ten percent of the capital and surplus of the company. For an investment to be allowed, the limited partnership or limited liability company must be audited annually by an independent auditor.
• Changes language to conform to foreign insurance entities.
• Clarifies confusing Code language specifically regarding the process of notification for a non-renewal of commercial lines policies or contracts. Currently, an insured receives a non-renewal letter in cases where a ‘non-renewal’ is not occurring.
• Creates a separate, clearer provision of notification in the event that the insurer has an increase in premium rates of 25 per cent or more, an increase in the deductible of 25 percent or more, or a material reduction in the limits of coverage of the policy or contract. The notification must come in the form of a letter of explanation at least 45 days prior to the expiration date. As is the case for a non-renewal, if an insurer fails to meet the notice requirements, the named insured has the option of continuing the policy or contract for the remainder of the notice period plus an additional 30 days at the premium rate of the existing policy contract.
• Amends provisions for both county and state mutual insurance companies to allow them to include limited liability partnerships in their asset holdings.
• Includes fraternal insurance companies among entities using risk-based capital assessments.
• Revises the trend test used in insurance risk calculations to conform to National Association of Insurance Commissioners model.
• Adds language regarding the licensing of Public Adjusters to provide for enforcement authority in the use of cease and desist orders in cases where a public adjuster has been found to have violated the law. This language was inadvertently omitted when the licensing was created to clamp down on adjusters taking advantage of people who needed assistance from insurance companies after natural disasters.
• Corrects problematic language that currently lists the insured party as the person controlling an insurance contract under the dissolution of marriage portion of Code. The standard of insurance policies maintains that the owner of the policy actually possesses control. It corrects this inconsistency, ensuring the owner of the insurance policy maintains control over the policy through a marriage or dissolution rather than the insured. [5/16: 48-0 (Behn, Houser excused)]
See Also:
• SF 438 by Appropriations: Real estate licensing fees, education fund (SF 426 Commerce)
• HF 644 by Ways & Means: Enhanced E911 wireless, wire-line surcharges (HF 510 Commerce)