SF 125 – ABD omnibus
SF 346 – IID omnibus
HF 395 – Regulation of PBMs
HF 455 – IID corporate governance annual disclosure
FLOOR ACTION:
SF 125 is the Alcoholic Beverages Division’s non-substantive “clean-up” bill. It improves readability by establishing consistent wording and streamlines language to reflect the current practices of the Division. The legislation: 1) changes the words used to describe a free product that is given to individuals after a tour of a micro-distillery or winery to be consistent with the Division’s administrative rules and with federal regulations (i.e., from “sampling” to “tasting”); 2) clarifies that brandy obtained by native wineries for use as an ingredient is not subject to the mandatory mark-up that is applied to alcoholic liquor sold by the Division; 3) updates various Code sections related to the manufacture, wholesale and retail sale of high-alcoholic-content beer that were changed by previous legislation; and 4) strikes obsolete language related to the wholesale and retail sale of wine. The bill was amended to clarify the sale of beer products manufactured by Iowa companies to out-of-state licensed wholesalers. [3/25: 50-0]
SF 346 is a recommendation by the Iowa Insurance Division (IID) of the Department of Commerce. The proposal includes technical updates, clarifying and conforming language, and non-controversial changes dealing with regulation of insurance, securities, pre-need contracts for cemetery and funeral home goods and services, and cemeteries. The provisions of this omnibus bill were widely circulated last year, with comments received from interested parties and stakeholders and changes made. The legislation provides clarifying language recommended by IID and the Iowa Economic Development Authority (IEDA) applicable to investment of funds provisions for life companies and for property and casualty companies by adding “an equity interest in any Innovation Fund as defined in section 15E.52.” There is confusion within the insurance industry over whether an investment in the Innovation Fund is legal under current Iowa law, and IEDA believes this could be a contributing issue in getting commitments from some in the industry. This modification is similar to that used to authorize investments in the Fund of Funds several years ago. As amended, the legislation also: 1) adds to the definition of “intermediary” an entity registered with the Administrator as an Iowa Crowdfunding Portal; 2) modifies the definition of “intermediary”, which limits the role of a website operator to a registered broker dealer (it was more restrictive than intended. Most states allow an entity to be a website operator under specified conditions and registration, and list of rules to be adopted includes specifying the duties of operator); 3) strikes a proposed new subsection on pre-need sellers’ guaranteed funds, which will be further considered over the interim; 4) requires the Commissioner to adopt rules providing for surety bonds as an alternative to trusting; and 5) adds language to create more uniformity with qualified health plans filed in the exchange and to existing Iowa law as it relates to rate review, and to help ensure a fair competitive market by setting a different notice period for qualified health plans and lining up with the federal rate review standards. All qualified health plans will be reviewed by IID and Centers for Medicare and Medicaid Services. [3/25: 50-0]
HF 395/SF 235 gives the Iowa Insurance Commissioner specific authority to examine, investigate, inspect and audit Pharmacy Benefits Managers (PBMs). It strengthens last year’s legislation by offering more transparency and clarifying the Commissioner’s authority to review records to determine PBM compliance with Iowa law. After notice and hearing, the Commissioner may impose sanctions (set out in Code section 507B.7) and may suspend or revoke a PBM’s certificate of registration as a third-party administrator, if it is found that the PBM violated any of the regulatory requirements of pharmacy benefits managers (510B), third-party administrators (510) or insurance trade practices (507B). It also explicitly states that all records and information given to the Commissioner are confidential records consistent with current practice regarding confidential information provided to the Iowa Insurance Division. The bill passed the House on a 95-0 vote. [3/23: 47-0 (Bertrand, Chelgren, Schoenjahn absent)]
HF 455/SF 349 is an Iowa Insurance Division (IID) recommendation based on the National Association of Insurance Commissioners (NAIC) Model Act for Corporate Governance that requires insurers residing in Iowa to file annual disclosures. The disclosure will allow the IID to get a comprehensive understanding of the insurer’s governance structure, policies and practices.
The bill creates a new Code chapter, 521H, which requires certain insurers domiciled in the state, or the insurance group of which such an insurer is a member, to file a corporate governance annual disclosure by June 1 with the Insurance Commissioner, beginning in 2016. The disclosure must be signed by the insurer’s or insurance group’s chief executive officer or secretary attesting that the corporate practices described in the disclosure have been implemented and that a copy of the disclosure has been provided to the insurer’s or insurance group’s board of directors or the appropriate committee of the board. If an insurer is a member of an insurance group, the insurer must submit the disclosure to the insurance commissioner of the lead state of the insurance group as determined by procedures contained in NAIC’s financial analysis handbook. The bill passed the House 98-0. [3/25: 50-0]