HF 504 – Electronic delivery of insurance notices, documents; producer duties
FLOOR ACTION:
HF 504 relates to the electronic delivery and posting of insurance notices and documents. The legislation requires that a notification of a policy cancellation, non-renewal or termination of insurance be delivered to the customer by mail and not solely by electronic means.
On February 16, the Iowa Insurance Division (IID) began the process of proposing a rule on this subject as a possible alternative to legislation. Both the rule and the bill work toward the goal of protecting consumers. The proposed rule clarifies authorized methods of cancellation, suspension, forfeiture, non-renewal and termination of various life, accident, health, health maintenance, long-term care, annuity, property and casualty insurance delivery notices. Under the Uniform Electronic Transactions Act, such notices must be sent via first class regular mail with prepaid postage. In addition, the rule will also implement various policyholder protections, including acceptable proof of such notices as intended by the Iowa Administrative Code. Addressing the concerns by administrative rule may give the IID better flexibility in this area as technological advances continue.
The Senate Commerce Committee recommended moving HF 504 forward to keep it debate-eligible while stakeholders continue discussions. The Senate unanimously approved amendments to allow the Insurance Commissioner to modify notification language through administrative rules if technology develops ways to provide verifiable confirmations of receipt electronically, and to resolve a concern from last year that specifies that the only duty an insurance producer owes is to a policy owner, the person in privity of contract with the insurance producer or a principal in an agency relationship with the insurance producer. The implication was that an intended beneficiary could not hold an insurance producer accountable for failing to comply with a policy owner’s wishes, and the revision clarifies that the duty includes the intended beneficiary (e.g., surviving spouse, child) named in a properly executed change of beneficiary. [5/5: 50-0]