General Assembly: 80 (2004 Regular GA) - Chapter 1110 - Regulation of insurance and cemetery and funeral merchandise and services


Published: 2004-04-26

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390LAWS OF THE EIGHTIETH G.A., 2004 SESSIONCH. 1110

CH. 1110CH. 1110

CHAPTER 1110

REGULATION OF INSURANCE AND CEMETERY AND FUNERAL MERCHANDISE AND SERVICES

H.F. 2489

AN ACT relating to the regulation of various industries by the insurance division, including modifications related to the interstate insurance product regulation compact; investiga- tions and penalties; procedures and contempt orders; insurance company investments; insurance producer licensing; individual health insurance programs; coverage obliga- tions of the Iowa comprehensive health insurance association; refunds of unearned pre- mium; coverage of federal Trade Adjustment Act recipients; penalties and discipline ap- plicable to holders of establishment and sales permits for cemetery and funeral merchandise and services; and providing and applying penalties.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 272C.1, subsection 6, paragraph z, Code 2003, is amended by striking the paragraph.

Sec. 2. Section 272C.3, subsection 2, paragraph a, Code Supplement 2003, is amended to read as follows: a. Revoke a license, or suspend a license either until further order of the board or for a speci-

fied period, upon any of the grounds specified in section 147.55, 148.6, 148B.7, 152.10, 153.34, 154A.24, 169.13, 455B.219, 542.10, 542B.21, 543B.29, 544A.13, 544B.15, or 602.3203 or chapter 151, or 155, 507B, or 522B, as applicable, or upon any other grounds specifically provided for in this chapter for revocationof the licenseof a licensee subject to the jurisdictionof that board, or upon failure of the licensee to comply with a decision of the board imposing licensee disci- pline;

Sec. 3. Section 272C.4, subsection 6, Code 2003, is amended to read as follows: 6. Define by rule acts or omissions which that are grounds for revocation or suspension of

a license under section 147.55, 148.6, 148B.7, 152.10, 153.34, 154A.24, 169.13, 455B.219, 542.10, 542B.21, 543B.29, 544A.13, 544B.15, or 602.3203 or chapter 151, or 155, 507B or 522B, as applicable, and todefine by rule acts or omissionswhich that constitute negligence, careless acts, or omissions within the meaning of section 272C.3, subsection 2, paragraph “b”, which licensees are required to report to the board pursuant to section 272C.9, subsection 2;

Sec. 4. Section 432.5, Code Supplement 2003, is amended to read as follows: 432.5 RISK RETENTION GROUPS. A risk retention group organized and operating pursuant to Pub. L. No. 99-563, also known

as the risk retention amendments of 1986, shall pay as taxes to the director of revenue an amount equal to two percent the applicable percent, as provided in section 432.1, subsection 4, of the gross amount of the premiums received during the previous calendar year for risks placed in this state. A resident or nonresident agent producer shall report and pay the taxes on the premiums for risks that the agent producer has placed in this state with or on behalf of a risk retention group. The failure of a risk retention group to pay the tax imposed in this sec- tion shall result in the risk retention group being considered an unauthorized insurer under chapter 507A.

Sec. 5. NEW SECTION. 505.7A CIVIL PENALTIES. Unless specifically provided for in this subtitle, penalties imposed under this subtitle by or-

der of the commissioner of insurance after hearing shall not exceed one thousand dollars for each act or violation of this subtitle, up to an aggregate of ten thousand dollars, unless the per- son knew or reasonably should have known the person was in violation of this subtitle, in

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which case the penalty shall not exceed five thousand dollars for each act or violation, up to an aggregate of fifty thousand dollars in any one six-month period.

Sec. 6. Section 505A.1, article III, subsections 1 and 2, Code Supplement 2003, are amended to read as follows: 1. The compacting states hereby create and establish an entity a joint public agency known

as the interstate insuranceproduct regulation commission. Pursuant to article IV, the commis- sion has the power to develop uniform standards for product lines, receive and provide prompt review of products filed therewith, and give approval to those product filings satisfying appli- cable uniform standards, provided it is not intended for the commission to be the exclusive entity for receipt and review of insurance product filings. Nothing herein shall prohibit any insurer from filing its product in any state wherein the insurer is licensed to conduct the busi- ness of insurance, and any such filing shall be subject to the laws of the state where filed. 2. The commission is a body corporate comprising each and politic, and an instrumentality

of the compacting state.

Sec. 7. Section 505A.1, article III, subsection 3, Code Supplement 2003, is amended by striking the subsection.

Sec. 8. Section 505A.1, article V, subsection 1, paragraph c, subparagraphs (3) and (4), Code Supplement 2003, are amended to read as follows: (3) Providing reasonable standards and procedures: (a) For the establishment and meetings of other committees. (b) Governing any general or specific delegation of any authority or function of the commis-

sion. (4) Providing reasonable procedures for calling and conducting meetings of the commis-

sion, and that consists of amajority of commissionmembers ensuring reasonable advance no- tice of each such meeting, and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public’s interest, the privacy of individu- als, and insurers’ proprietary information, including trade secrets. The commissionmaymeet in camera only after a majority of the entire membership votes to close a meeting en toto or in part. As soon as practicable, the commission shall make public: (a) A copy of the vote to close themeeting, revealing the vote of eachmember,with noproxy

votes allowed. (b) Votes taken during such meeting.

Sec. 9. Section 505A.1, article V, subsection 1, paragraph c, Code Supplement 2003, is amended by adding the following new subparagraph: NEWSUBPARAGRAPH. (8) Promulgating a code of ethics to address permissible andpro-

hibited activities of commission members and employees.

Sec. 10. Section 505A.1, article V, subsection 1, Code Supplement 2003, is amended by adding the following new paragraph: NEW PARAGRAPH. d. The commission shall publish its bylaws in a convenient form and

file a copy of the bylaws, along with any amendments, with the appropriate agency or officer in each of the compacting states.

Sec. 11. Section 505A.1, article VII, subsection 2, Code Supplement 2003, is amended to read as follows: 2. RULEMAKING PROCEDURE. Rules and operating procedures shall be made pursuant

to a rulemaking process that conforms to themodel state administrative procedure act of 1981 as amended, as may be appropriate to the operations of the commission. Before the commis- sion adopts a uniform standard, the commission shall give written notice to the relevant state legislative committee or committees in each compacting state responsible for insurance issues of its intention to adopt the uniform standard. The commission, in adopting a uniform

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standard, shall consider fully all submittedmaterials and issue a concise explanation of its de- cision.

Sec. 12. Section 505A.1, article VIII, subsection 1, Code Supplement 2003, is amended to read as follows: 1. The commission shall promulgate rules to establish establishing conditions and proce-

dures under which the commission shall make its information and official records available to the public for inspection or copying for public inspection and copying of its information and official records, except such information and records involving the privacy of individuals and insurers’ trade secrets. The commissionmay promulgate additional rules under which it may make available to federal and state agencies, including law enforcement agencies, records, and information otherwise exempt from disclosure, andmay enter into agreements with such agencies to receive or exchange information or records subject tonondisclosure and confiden- tiality provisions.

Sec. 13. Section 505A.1, article VIII, subsection 4, paragraphs a and b, Code Supplement 2003, are amended to read as follows: a. With respect to the commissioner’s market regulation of a product or advertisement that

is approved or certified to the commission, no activity of an insurer the content of the product or advertisement shall not constitute a violation of the provisions, standards, or requirements of this compact except upon a final order of the commission, issued at the request of a commis- sioner after prior notice to the insurer and an opportunity for hearing before the commission. b. Before a commissioner may bring an action for violation of any provision, standard, or

requirement of this compact relating to the use content of an advertisement not approved or certified to the commission, the commission, or an authorized commission officer or employ- ee,must authorize the action. However, authorization pursuant to this paragraph does not re- quire notice to the insurer, opportunity for hearing, or disclosure of requests for authorization or records of the commission’s action on such requests.

Sec. 14. Section 505A.1, article XI, subsection 1, Code Supplement 2003, is amended to read as follows: 1. Not later than thirty days after the commission has given notice of a disapproved product

or advertisement filed with the commission, the insurer or third-party filer whose filing was disapproved may appeal the determination to a review panel appointed by the commission. The commission shall adopt rules to establish procedures for appointing such review panels and provide for notice and hearing. The decision of the review panel shall be the final action of the commission and not subject to review by any court. Notwithstanding the foregoing, an An allegation that the commission, in disapproving a product or advertisement filed with the commission, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with ar- ticle III, section 5.

Sec. 15. Section 505A.1, article XII, subsection 6, Code Supplement 2003, is amended to read as follows: 6. The commission shall keep complete and accurate accounts of all its internal receipts,

including grants and donations, and disbursements of all funds under its control. The internal financial accounts of the commission shall be subject to the accounting procedures estab- lished under its bylaws. The financial accounts and reports, including the system of internal controls and procedures of the commission, shall be audited annually by an independent certi- fied public accountant. Upon thedetermination of the commission, but no less frequently than every three years, the review of the independent auditor shall include amanagement and per- formance audit of the commission. The commission shall make an annual report to the gover- nor and legislature of the compacting states, which shall include a report of the independent audit. The commission’s internal accounts, anywork papers related to any internal audit, and

393 LAWS OF THE EIGHTIETH G.A., 2004 SESSION CH. 1110

any work papers related to the independent audit, shall not be confidential, provided that and suchmaterialsmaybe sharedwith the commissioner of any compacting state and shall remain confidential pursuant to article VII upon request; provided, however, that anywork papers re- lated to any internal or independent audit and any information regarding the privacy of the individuals and insurers’ proprietary information, including trade secrets, shall remain confi- dential.

Sec. 16. Section 505A.1, article XVI, subsection 1, paragraph b, Code Supplement 2003, is amended to read as follows: b. For any product approved or certified to the commission, the rules, uniform standards,

and any other requirements of the commission shall constitute the exclusive provisions appli- cable to the content, approval, and certification of such products. For advertisement that is subject to the commission’s authority, any rule, uniform standard, or other requirement of the commissionwhich governs the content of the advertisement shall constitute the exclusive pro- vision that a commissioner may apply to the content of the advertisement. Notwithstanding the foregoing, action taken by the commission shall not abrogate or restrict: (1) The access of any person, including the attorney general, to state courts. (2) Remedies available under state law related to breach of contract, tort, general consumer

protection laws, or general consumer protection regulations that apply to the sale or advertise- ment of the product or other laws not specifically directed to the content of the product. (3) State law relating to the construction of insurance contracts. (4) The authority of the attorney general of the state, including but not limited to maintain-

ing any actions or proceedings, as authorized by law.

Sec. 17. Section 507.14, Code 2003, is amended by adding the following new unnumbered paragraph: NEWUNNUMBERED PARAGRAPH. Analysis notes, work papers, or other documents re-

lated to the analysis of an insurer are not public records under chapter 22.

Sec. 18. Section 507.16, Code 2003, is amended to read as follows: 507.16 UNLAWFUL SOLICITATION OF BUSINESS. Any It shall be unlawful for any officer, manager, agent, or representative of any insurance

company contemplated by this chapter, who, with knowledge that its certificate of authority has been suspended or revoked, or that it is insolvent, or is doing an unlawful or unauthorized business, solicits to solicit or receive applications for insurance for said the company, or re- ceives applications therefor, or does to do any other act or thing toward receiving or procuring any new business for said the company, shall be deemed guilty of a seriousmisdemeanor, and the. The provisions of sections 511.16 and 511.17 are hereby extended to all companies con- templated by this chapter.

Sec. 19. Section 507A.10, Code 2003, is amended to read as follows: 507A.10 CEASE AND DESIST ORDER ORDERS — CIVIL PENALTY AND CRIMINAL

PENALTIES. 1. Upon a determination by the commissioner, after a hearing conducted pursuant to chap-

ter 17A, that apersonor insurerhas violatedaprovisionof this chapter, the commissioner shall reduce the findings of the hearing to writing and deliver a copy of the findings to the person or insurer, may issue an order requiring the person or insurer to cease and desist from engag- ing in the conduct resulting in the violation, and may assess a civil penalty of not more than fifty thousand dollars against the person or insurer. 2. a. Upon a determination by the commissioner that a person or insurer has engaged, is

engaging, or is about to engage in any act or practice constituting a violation of this chapter or a rule adopted or order issued under this chapter, the commissioner may issue a summary order, including a brief statement of findings of fact, conclusions of law, and policy reasons for the decision, and directing the person or insurer to cease and desist from engaging in the

394LAWS OF THE EIGHTIETH G.A., 2004 SESSIONCH. 1110

act or practice or to take other affirmative action as is in the judgment of the commissioner necessary to comply with the requirements of this chapter. b. A person to whom a summary order has been issued under this subsection may contest

theorder by filinga request for a contested caseproceedingandhearingasprovided in chapter 17A and in accordance with rules adopted by the commissioner. However, the person shall have at least thirty days from the date that the order is issued in order to file the request. Sec- tion 17A.18A is inapplicable to a summary order issued under this subsection. If a hearing is not timely requested, the summary order becomes final by operation of law. The order shall remain effective from the date of issuance until the date the order becomes final by operation of law or is overturned by a presiding officer or court following a request for hearing. c. A person or insurer violating a summary order issued under this subsection shall be

deemed in contempt of that order. The commissionermay petition the district court to enforce the order as certified by the commissioner. The district court shall find the person in contempt of the order if the court finds after hearing that the person or insurer is not in compliance with the order. The court may assess a civil penalty against the person or insurer and may issue further orders as it deems appropriate. 3. A person acting as an insurance producer, as defined in chapter 522B, without proper li-

censure, or an insurer whowillfully violates any provision of this chapter, or any rule adopted or order issued under this chapter, is guilty of a class “D” felony. 4. A person acting as an insurance producer, as defined in chapter 522B, without proper li-

censure, or an insurer whowillfully violates any provision of this chapter, or any rule adopted or order issued under this chapter, and when such violation results in a loss of more than ten thousand dollars, is guilty of a class “C” felony. 5. The commissioner may refer such evidence as is available concerning violations of this

chapter or of any rule adopted or order issued under this chapter, or of the failure of a person to complywith the licensing requirements of chapter 522B, to the attorney general or the prop- er county attorneywhomay,with orwithout such reference, institute the appropriate criminal proceedings under this chapter. 6. This chapter does not limit the power of the state to punish any person for any conduct

that constitutes a crime under any other statute.

Sec. 20. Section 507B.2, subsection 1, Code 2003, is amended to read as follows: 1. “Person” shall mean any individual, corporation, association, partnership, reciprocal ex-

change, interinsurer, fraternal beneficiary association, and any other legal entity engaged in the business of insurance, including agents, brokers insurance producers and adjusters. “Per- son” shall also mean any corporation operating under the provisions of chapter 514 and any benevolent association as defined and operated under chapter 512A. For purposes of this chapter, corporations operating under the provisions of chapter 514 and chapter 512A shall be deemed to be engaged in the business of insurance.

Sec. 21. Section 507B.3, Code Supplement 2003, is amended by adding the following new subsection: NEWSUBSECTION. 3. Information obtained by the commissioner in the course of investi-

gating a consumer complaint may, in the discretion of the commissioner, be provided to the insurance company or insurance producer which is the subject of the complaint or to the con- sumer who filed the complaint or the individual insured who is the subject of the complaint without waiving the confidentiality afforded by this section to the commissioner or other per- sons.

Sec. 22. Section 507B.6, subsection 5, Code 2003, is amended to read as follows: 5. Statements of charges, notices, orders, subpoenas, and other processes of the commis-

sioner under this chapter may be served by anyone duly authorized by the commissioner, ei- ther in the manner provided by law for service of process in civil actions, or by mailing a copy thereof by restricted certified mail to the person affected by such the statement, notice, order,

395 LAWS OF THE EIGHTIETH G.A., 2004 SESSION CH. 1110

subpoena, or other process at the person’s residence or principal office or place of business. The verified return by the person so serving such the statement, notice, order, subpoena, or other process, setting forth themanner of such service, shall be proof of the same service, and the return receipt for such the statement, notice, order, subpoena, or other process, andmailed by restricted certified mail as aforesaid, shall be proof of the service of the same.

Sec. 23. NEW SECTION. 507B.6A SUMMARY CEASE AND DESIST ORDERS. 1. Upon a determination by the commissioner that a person or insurer has engaged, is en-

gaging, or is about to engage in any act or practice constituting a violation of this chapter or a rule adopted or order issued under this chapter, the commissioner may issue a summary or- der, including a brief statement of findings of fact, conclusions of law, and policy reasons for the decision, and directing the person or insurer to cease and desist from engaging in the act or practice or to take other affirmative action as is in the judgment of the commissioner neces- sary to comply with the requirements of this chapter. 2. A person who has been issued a summary order under this section may contest the order

by filing a request for a contested case proceeding and hearing as provided in chapter 17A and in accordance with the rules adopted by the commissioner. However, the person shall have at least thirty days from the date that the order is issued in order to file the request. Section 17A.18A is inapplicable to a summary order issued under this section. The order shall remain effective from the date of issuance unless overturned by a presiding officer or court following a request for hearing. If a hearing is not timely requested, the summary order becomes final by operation of law. 3. A person or insurer violating a summary order issued under this section shall be deemed

in contempt of that order. The commissioner may petition the district court to enforce the or- der as certified by the commissioner. The district court shall adjudge the person in contempt of the order if the court finds after hearing that the person or insurer is not in compliance with the order. The court may assess a civil penalty against the person or insurer and may issue further orders as it deems appropriate.

Sec. 24. Section 507B.7, Code 2003, is amended to read as follows: 507B.7 CEASE AND DESIST ORDERS AND MODIFICATIONS THEREOF PENALTIES. 1. If, after such hearing, the commissioner determines that the a person charged has en-

gaged in anunfairmethodof competition or anunfair or deceptive act or practice, the commis- sioner shall reduce the findings to writing and shall issue and cause to be served upon the per- son chargedwith the violation a copy of such findings, an order requiring such person to cease and desist fromengaging in suchmethod of competition, act, or practice, and if the act or prac- tice is a violation of section 507B.4, 507B.4A, or 507B.5, the commissionermay at the commis- sioner’s discretion order any one or more of the following: a. Payment of a civil penalty of not more than one thousand dollars for each act or violation

of this subtitle, but not to exceed an aggregate of ten thousand dollars, unless the person knew or reasonably should have known the person was in violation of section 507B.4, 507B.4A, or 507B.5 this subtitle, in which case the penalty shall be not more than five thousand dollars for each act or violation, but not to exceed an aggregate penalty of fifty thousand dollars in any one six-month period. If the commissioner finds that a violation of section 507B.4, 507B.4A, or 507B.5 this subtitlewas directed, encouraged, condoned, ignored, or ratified by the employ- er of the person or by an insurer, the commissioner shall also assess a fine to the employer or insurer. b. Suspension or revocation of the license of a person as defined in section 507B.2, subsec-

tion 1, if the person knew or reasonably should have known the personwas in violation of sec- tion 507B.4, 507B.4A, or 507B.5 this subtitle. c. Payment of interest at the rate of ten percent per annum if the commissioner finds that

the insurer failed to pay interest as required under section 507B.4, subsection 12. 2. Until the expiration of the time allowed under section 507B.8 for filing a petition for re-

view if no suchpetitionhas beenduly filedwithin such time, or, if a petition for reviewhasbeen filed within such time, then until the transcript of the record in the proceeding has been filed

396LAWS OF THE EIGHTIETH G.A., 2004 SESSIONCH. 1110

in the district court, as hereinafter provided, the commissionermay at any time, upon such no- tice and in such manner as the commissioner may deem proper, modify or set aside in whole or in part any order issued by the commissioner under this section. 3. After the expiration of the time allowed for filing such a petition for review if no such peti-

tion has been duly filed within such time, the commissioner may at any time, after notice and opportunity for hearing, reopen and alter, modify, or set aside, in whole or in part, any order issuedby the commissionerunder this section,whenever in thecommissioner’s opinioncondi- tions of fact or of law have so changed as to require such action, or if the public interest shall so require. 4. Any person who violates a cease and desist order of the commissioner, and while such

order is in effect,may, after notice andhearing anduponorder of the commissioner, be subject at the discretion of the commissioner to any one or more of the following: a. Amonetary penalty of notmore than ten thousand dollars for each and every act or viola-

tion. b. Suspension or revocation of such person’s license.

Sec. 25. Section 507C.6, subsection 4, Code 2003, is amended by striking the subsection and inserting in lieu thereof the following: 4. It shall be unlawful for a person as defined in subsection 1 to fail to cooperate with the

commissioner, or to obstruct or interferewith the commissioner in the conduct of a delinquen- cy proceeding or an investigation preliminary or incidental to a delinquency proceeding, or to violate a valid order of the commissioner.

Sec. 26. Section 507C.11, unnumbered paragraph 1, Code 2003, is amended to read as fol- lows: Notwithstanding chapter 22, in all administrative proceedings pursuant to sections 507C.9

and 507C.10 all orders, records, and documents pertaining to or a part of the record of the pro- ceedings are confidential except as is necessary toobtain compliancewith aproceeding. How- ever, the records may be released if either of the following occurs:

Sec. 27. Section 509.18, Code 2003, is amended to read as follows: 509.18 PROHIBITED DEPOSIT IN FINANCIAL INSTITUTION. A company or its agent licensed to sell a policy of credit life or credit accident and health

insurance or certificate under a policy of group credit life or credit accident and health insur- ance shall not deposit or offer todeposit funds in a financial institutionof this state in exchange for the privilege of selling such insurance to or on behalf of the financial institution. Any per- son violating the provisions of this section shall be guilty of a simple misdemeanor.

Sec. 28. Section 511.8, subsection 1,CodeSupplement 2003, is amended to read as follows: 1. UNITED STATES GOVERNMENT OBLIGATIONS. a. Bonds or other evidences of indebtedness issued, assumed, or guaranteed by the United

States ofAmerica, or by any agency or instrumentality thereof of theUnitedStates ofAmerica. b. Bonds or other evidences of indebtedness issued, assumed, or guaranteed by the United

States of America, or by any agency or instrumentality of theUnited States of America include investments in an open-endmanagement investment company registered with the federal se- curities and exchange commission under the federal Investment Company Act of 1940, 15 U.S.C. § 80(a), and operated in accordance with 17 C.F.R. § 270.2a-7, the portfolio of which is limited to theUnited States government obligations described in paragraph “a”, andwhich are included in the national association of insurance commissioners’ securities valuation office’s United States direct obligations-full faith and credit exempt list.

Sec. 29. Section 511.8, subsection 19, unnumbered paragraph 1, Code Supplement 2003, is amended to read as follows: Bonds or other evidences of indebtedness, not to include currency, issued, assumed, or

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guaranteed by a foreign government other than Canada, or by a corporation incorporated un- der the laws of a foreign government other than Canada. Such governmental obligationsmust be valid, legally authorized and issued, and on the date of acquisition have predominantly in- vestment qualities and characteristics as provided by rule. Such corporate obligations must meet the qualifications established in subsection 5 for bonds and other evidences of indebted- ness issued, assumed, or guaranteed by a corporation incorporated under the laws of the United States or Canada. Foreign investments authorized by this subsection are not eligible in excess of ten twenty percent of the legal reserve of the life insurance company or associa- tion. Investments in obligations of a foreign government, other than Canada and the United Kingdom, are not eligible in excess of two percent of the legal reserve in the securities of for- eign governments of any one foreign nation. Investments in obligations of the United King- domare not eligible in excess of four percent of the legal reserve. Investments in a corporation incorporated under the laws of a foreign government other than Canada are not eligible in ex- cess of two percent of the legal reserve in the securities of any one foreign corporation.

Sec. 30. Section 511.8, subsection 22, paragraph e, Code Supplement 2003, is amended to read as follows: e. Investments in financial instruments of foreign governments or foreign corporate obliga-

tions, other than Canada, used in hedging transactions are not eligible in excess of ten twenty percent of the legal reserve, less any foreign investment authorized by subsection 19 owned by the company or association and in which its legal reserve is invested, except insofar as the financial instruments are collateralized by cash or United States government obligations as authorized by subsection 1 deposited with a custodian bank as defined in subsection 21, and held under a written agreement with the custodian bank that complies with subsection 21 and provides for theproceeds of the collateral, subject to the termsand conditions of the applicable collateral or other credit support agreement, to be remitted to the legal reserve deposit of the company or association and to vest in the state in accordance with section 508.18 whenever proceedings under that section are instituted.

Sec. 31. Section 511.8, Code Supplement 2003, is amended by adding the following new subsection: NEW SUBSECTION. 23. SECURITY LOANS. a. A life insurance company or association may loan securities held by it in its legal reserve

to a broker-dealer registered under the Securities Exchange Act of 1934, a national bank, or a state bank, foreign bank, or trust company that is a member of the United States federal re- serve system, and the loaned securities shall continue to be eligible for inclusion in the legal reserve of the life insurance company or association. b. The loan shall be fully collateralized by cash, cash equivalents, or obligations issued or

guaranteed by the United States or an agency or instrumentality of the United States. The life insurance company or association shall take delivery of the collateral either directly or through an authorized custodian. c. If the loan is collateralized by cash or cash equivalents, the cash or cash equivalent collat-

eralmaybe reinvested by the life insurance companyor association in either individual securi- tieswhich are eligible for inclusion in the legal reserve of the life insurance company or associ- ation or in repurchase agreements fully collateralized by such securities if the life insurance companyor association takesdelivery of the collateral either directly or throughanauthorized custodian or pooled fund comprised of individual securities which are eligible for inclusion in the legal reserve of the life insurance company or association. If such reinvestment is made in individual securities or in repurchase agreements, the individual securities or the securities which collateralize the repurchase agreements shall mature in less than two hundred seventy days. If such reinvestment ismade in apooled fund, the averagematurity of the securities com- prising such pooled fund must be less than two hundred seventy days. Individual securities and securities comprising the pooled fund shall be investment grade. d. The loan shall be evidenced by a written agreement which provides all of the following:

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(1) That the loan will be fully collateralized at all times during the term of the loan, and that the collateral will be adjusted as necessary each business day during the term of the loan to maintain the required collateralization in the event of market value changes in the loaned se- curities or collateral. (2) If the loan is fully collateralized by cash or cash equivalents, the cash or cash equivalent

may be reinvested by the life insurance company or association as provided in paragraph “c”. (3) That the loan may be terminated by the life insurance company or association at any

time, and that the borrower shall return the loaned stocks or obligations or equivalent stocks or obligations within five business days after termination. (4) That the life insurance company or association has the right to retain the collateral or

use the collateral to purchase investments equivalent to the loaned securities if the borrower defaults under the terms of the agreement, and that the borrower remains liable for any losses and expenses incurred by the life insurance company or association due to default that are not covered by the collateral. e. Securities loaned pursuant to this subsection are not eligible for inclusion in the legal re-

serve of the life insurance company or association in excess of twenty percent of the legal re- serve.

Sec. 32. Section 511.16, Code 2003, is amended to read as follows: 511.16 ILLEGAL BUSINESS. Any It shall be unlawful for any officer, manager, or agent of any life insurance company or

association who, with knowledge that it is doing business in an unlawful manner or is insol- vent, solicits to solicit or receive applications for insurance with said the company or associa- tion, or receives applications therefor, or does to do any other act or thing towards toward pro- curing or receiving any new business for such the company or association, shall be guilty of an aggravated misdemeanor.

Sec. 33. Section 512A.8, Code 2003, is amended to read as follows: 512A.8 PENALTIES VIOLATION. Except as otherwise provided by law, it shall be unlawful for any person or corporation to

operate a benevolent association in this state except as provided for in this chapter. Any per- son violating the provisions of this chapter shall be guilty of a serious misdemeanor.

Sec. 34. Section 512B.35, Code 2003, is amended to read as follows: 512B.35 PENALTIES FALSE OR FRAUDULENT STATEMENTS. 1. Apersonwho It shall beunlawful for apersonknowinglymakes tomakea false or fraudu-

lent statement or representation in or relating to an application formembership or for the pur- pose of obtaining money from or a benefit in a society, is guilty of a fraudulent practice. 2. A person who willfully makes It shall be unlawful for a person to willfully make a false

or fraudulent statement in a verified report or declaration under oath required or authorized by this chapter, or of a material fact or thing contained in a sworn statement concerning the death or disability of an insured for the purpose of procuring payment of a benefit named in the certificate, is guilty of perjury. 3. A personwho solicits It shall be unlawful for a person to solicit membership for, or in any

manner assists to assist in procuring membership in, a society not licensed to do business in this state, is guilty of a serious misdemeanor. 4. A person guilty of a willful violation of, or neglect or refusal to comply with, a provision

of this chapter forwhichapenalty is not otherwise prescribed, is guilty of a simplemisdemean- or.

Sec. 35. Section 513C.3, subsection 15, Code Supplement 2003, is amended by adding the following new unnumbered paragraph: NEWUNNUMBEREDPARAGRAPH. Forpurposesof this subsection, anassociationpolicy

under chapter 514E is not considered “qualifying existing coverage” or “qualifying previous coverage”.

399 LAWS OF THE EIGHTIETH G.A., 2004 SESSION CH. 1110

Sec. 36. Section 513C.8, Code 2003, is amended to read as follows: 513C.8 HEALTH BENEFIT PLAN STANDARDS. The commissioner board of directors of the Iowa comprehensive health insurance associa-

tion, with the approval of the commissioner, shall adopt by rule the form and level of coverage of the basic health benefit plan and the standard health benefit plan for the individual market which shall provide benefits substantially similar to those as provided for under chapter 513B with respect to small group coverage, but which shall be appropriately adjusted at least every three years to reflect the current state of the individual market.

Sec. 37. Section 513C.10, subsection 1, paragraph a, Code Supplement 2003, is amended to read as follows: a. All persons that provide health benefit plans in this state including insurers providing ac-

cident and sickness insurance under chapter 509, 514, or 514A, whether on an individual or group basis; fraternal benefit societies providing hospital, medical, or nursing benefits under chapter 512B; and healthmaintenance organizations, organized delivery systems, and all oth- er entities providing health insurance or health benefits subject to state insurance regulation, andall other insurers asdesignatedby theboardof directors of the Iowacomprehensivehealth insurance association with the approval of the commissioner shall bemembers of the associa- tion.

Sec. 38. Section 513C.10, subsection 4, Code Supplement 2003, is amended to read as fol- lows: 4. The board shall develop procedures and assessmentmechanisms andmake assessments

and distributions as required to equalize the individual carrier and organized delivery system gains or losses so that each carrier or organized delivery system receives the same ratio of paid claims to ninety percent of earned premiums as the aggregate of all basic and standard plans insured by all carriers and organized delivery systems in the state.

Sec. 39. NEW SECTION. 514A.3A REFUNDOF UNEARNED PREMIUMUPONDEATH OF INSURED. In the event of the death of the insured of any policy covered by this chapter, the insurer,

upon receipt of notice of the insured’s death supported by a certified copy of a valid death cer- tificate and a request for a pro rata refund by a party entitled to claim such a refund, shall re- fund the unearned premium prorated to the month of the insured’s death. Refund of the pre- miumand termination of the coverage shall bewithout prejudice to any claimoriginatingprior to the date of the insured’s death. The commissioner of insurance shall adopt by rule themini- mum amount required for issuance of a refund.

Sec. 40. Section 514E.1, subsection 2, Code Supplement 2003, is amended to read as fol- lows: 2. “Association policy” means an individual or group policy issued by the association that

provides the coverage specified in section 514E.4 as set forth in the benefit plans adopted by the association’s board of directors and approved by the commissioner.

Sec. 41. Section 514E.1, subsections 7, 8, and 12, Code Supplement 2003, are amended by striking the subsections.

Sec. 42. Section 514E.1, subsection 9, Code Supplement 2003, is amended by adding the following new paragraph: NEW PARAGRAPH. f. Who has been confirmed eligible under the federal Trade Adjust-

mentAct of 2002, Pub. L.No. 107-210, as a recipient under thatAct, by thedepartment ofwork- force development and the federal internal revenue service.

Sec. 43. Section 514E.1, subsection 13, Code Supplement 2003, is amended to read as fol- lows: 13. “Health care services” means services, the coverage of which is authorized under

400LAWS OF THE EIGHTIETH G.A., 2004 SESSIONCH. 1110

chapter 509, chapter 514, chapter 514A, or chapter 514B as limited by sections 514E.4 and 514E.5 benefit plans established by the association’s board of directors, with the approval of the commissioner and includes services for the purposes of preventing, alleviating, curing, or healing human illness, injury or physical disability.

Sec. 44. Section 514E.2, subsection 1, unnumbered paragraph 1, Code Supplement 2003, is amended to read as follows: The Iowa comprehensive health insurance association is established as a nonprofit corpora-

tion. The association shall assure that health insurance, as limited by sections 514E.4 and 514E.5, is benefit plans as authorized in section 514E.1, subsection 2, for an association policy, are made available to each eligible Iowa resident and each federally eligible individual apply- ing to the association for coverage. The association shall also be responsible for administering the Iowa individual health benefit reinsurance association pursuant to all of the terms and con- ditions contained in chapter 513C.

Sec. 45. Section 514E.2, subsection 1, paragraph a, Code Supplement 2003, is amended to read as follows: a. All carriers as defined in section 514E.1, subsection 3, and all organized delivery systems

licensed by the director of public health providing health insurance or health care services in Iowa and all other insurers designated by the association’s board of directors and approved by the commissioner shall be members of the association.

Sec. 46. Section 514E.2, subsection 6, Code Supplement 2003, is amended by striking the subsection and inserting in lieu thereof the following: 6. Rates for coverages issued by the association shall reflect rating characteristics used in

the individual insurance market. The rates for a given classification shall not be more than one hundred fifty percent of the average premium or payment rate for the classification charged by the five carriers with the largest health insurance premium or payment volume in the stateduring theprecedingcalendar year. In determining the average rate of the five largest carriers, the rates or payments charged by the carriers shall be actuarially adjusted to deter- mine the rate or payment that would have been charged for benefits similar to those issued by the association.

Sec. 47. Section 514E.4, Code 2003, is amended by striking the section and inserting in lieu thereof the following: 514E.4 ASSOCIATION POLICY — COVERAGE AND BENEFIT REQUIREMENTS — DE-

DUCTIBLES — COINSURANCE. The association policy shall pay for medically necessary eligible health care services as es-

tablished in the benefit plans adopted by the association’s board of directors and approved by the commissioner. The plans shall provide benefits, deductibles, and coinsurance that reflect the current state of the individual insurance market. The board may modify the benefits pro- vided under the plans to reflect the current state of the individual insurance market with the approval of the commissioner.

Sec. 48. Section 514E.7, subsection 1, Code 2003, is amended by adding the following new unnumbered paragraph: NEWUNNUMBEREDPARAGRAPH. Theassociation shall rescind coverage for an individ-

ual who no longer resides in the state.

Sec. 49. Section 514E.7, subsection 5, Code 2003, is amended by adding the following new paragraph: NEW PARAGRAPH. f. The individual is eligible for Medicare based upon age.

Sec. 50. Section 514E.8, subsection 1, Code 2003, is amended to read as follows: 1. An association policy shall contain provisions under which the association is obligated

401 LAWS OF THE EIGHTIETH G.A., 2004 SESSION CH. 1110

to renew the contract coverage for an individual until the day onwhich the individual inwhose name the contract is issued first becomes eligible forMedicare coverage, except that in a fami- ly policy covering both husband and wife, the age of the younger spouse shall be used as the basis formeeting the durational requirements of this subsection. However,when the individu- al in whose name the contract is issued becomes eligible for Medicare coverage, the person shall be eligible for the Medicare supplement plan offered by the association based on age.

Sec. 51. Section 514E.11, Code 2003, is amended to read as follows: 514E.11 NOTICE OF ASSOCIATION POLICY. Every carrier, including a health maintenance organization subject to chapter 514B and an

organized delivery system, authorized to provide health care insurance or coverage for health care services in Iowa, shall provide a notice of the availability of coverage by the association to any personwho receives a rejection of coverage for health insurance or health care services, or anotice to anypersonwho is informed that a rate for health insurance or coverage for health care services that will exceed the rate of an association policy, and that person is eligible to apply for health insurance provided by the association. Application for the health insurance shall be on forms prescribed by the association’s board of directors and made available to the carriers and organized delivery systems and other entities providing health care insurance or coverage for health care services regulated by the commissioner.

Sec. 52. Section 515.35, subsection 3, paragraph a, subparagraph (2), Code Supplement 2003, is amended by striking the subparagraph and inserting in lieu thereof the following: (2) A companymay loan securities held by it to a broker-dealer registered under the Securi-

ties ExchangeAct of 1934, a national bank, or a state bank, foreign bank, or trust company that is amember of theUnited States federal reserve system, and the loaned securities shall contin- ue to be allowable investments of the company. (a) The loan shall be fully collateralized by cash, cash equivalents, or obligations issued or

guaranteed by the United States or an agency or instrumentality of the United States. The company shall take delivery of the collateral either directly or through an authorized custo- dian. (b) If the loan is collateralized by cash or cash equivalents, the cash or cash equivalent col-

lateral may be reinvested by the company in either individual securities which are allowable investments of the company or in repurchase agreements fully collateralized by such securi- ties if the company takes delivery of the collateral either directly or through an authorized cus- todian or a pooled fund comprised of individual securities which are allowable investments of the company. If such reinvestment is made in individual securities or in repurchase agree- ments, the individual securities or the securities which collateralize the repurchase agree- ments shall mature in less than two hundred seventy days. If such reinvestment is made in a pooled fund, the average maturity of the securities comprising such pooled fund must be less than two hundred seventy days. Individual securities and securities comprising the pooled fund shall be investment grade. (c) The loan shall be evidenced by a written agreement which provides all of the following: (i) That the loan will be fully collateralized at all times during the term of the loan, and that

the collateral will be adjusted as necessary each business day during the term of the loan to maintain the required collateralization in the event of market value changes in the loaned se- curities or collateral. (ii) If the loan is fully collateralized by cash or cash equivalents, the cash or cash equivalent

collateral may be reinvested by the company as provided in subparagraph subdivision (b). (iii) That the loan may be terminated by the company at any time, and that the borrower

shall return the loaned stocks and obligations or equivalent stocks or obligations within five business days after termination. (iv) That the company has the right to retain the collateral or use the collateral to purchase

investments equivalent to the loaned securities if the borrower defaults under the terms of the agreement, and that the borrower remains liable for any losses and expenses incurred by the company due to default that are not covered by the collateral.

402LAWS OF THE EIGHTIETH G.A., 2004 SESSIONCH. 1110

(d) Securities loaned pursuant to this subparagraph (2) are not eligible for investment of the company in excess of twenty percent of admitted assets.

Sec. 53. Section 515.35, subsection 4, paragraph a, Code Supplement 2003, is amended by adding the following new unnumbered paragraph: NEWUNNUMBEREDPARAGRAPH. Bonds or other evidences of indebtedness issued, as-

sumed, or guaranteed by the United States of America, or by any agency or instrumentality of the United States of America include investments in an open-end management investment company registered with the federal securities and exchange commission under the federal Investment CompanyAct of 1940, 15U.S.C. § 80(a) and operated in accordancewith 17C.F.R. § 270.2a-7, the portfolio of which is limited to the United States government obligations de- scribed in this paragraph “a”, and which are included in the national association of insurance commissioners’ securities valuation office’sUnited States direct obligation-full faith and cred- it list.

Sec. 54. Section 515.35, subsection 4, paragraph i, subparagraphs (3) and (4), Code Sup- plement 2003, are amended to read as follows: (3) A company may invest in the obligations of a foreign government other than Canada or

of a corporation incorporated under the laws of a foreign government other thanCanada. Any such governmental obligation must be valid, legally authorized and issued, and on the date of acquisition have predominantly investment qualities and characteristics as provided by rule. Any such corporate obligation must on the date of acquisition have investment qualities and characteristics, and must not have speculative elements which are predominant, as provided by rule. A company shall not invest more than two percent of its admitted assets in the obliga- tions of a foreign government other thanCanada and theUnited Kingdom. Investments in ob- ligations of the United Kingdom are not eligible in excess of four percent of admitted assets. A company shall not invest more than two percent of its admitted assets in the obligations of a corporation incorporated under the laws of a foreign government other than a corporation incorporated under the laws of Canada. (4) A company shall not investmore than ten twentypercent of its admitted assets in foreign

investments pursuant to this paragraph.

Sec. 55. Section 515.120, Code 2003, is amended to read as follows: 515.120 VIOLATIONS. Any It shall beunlawful for anyofficer,manager, or agent of any insurance companyorasso-

ciation who, with knowledge that it is doing business in an unlawful manner, or is insolvent, solicits to solicit or receive applications for insurance with said the company or association, or receives applications therefor, or does todoanyother act or thing towards towardprocuring or receiving anynewbusiness for such companyor association, shall be guilty of a seriousmis- demeanor.

Sec. 56. Section 515.121, Code 2003, is amended to read as follows: 515.121 OFFICERS PUNISHED. Any It shall be unlawful for any of the following to fail to comply with or to violate any of

the requirements of this chapter: 1. Thepresident, secretary, or other officer of any company organized under the laws of this

state, or any. 2. Any officer or person doing or attempting to do business in this state for any insurance

company organized either within or without this state, failing to comply with any of the re- quirements of this chapter, or violating any of the provisions thereof, shall be guilty of a simple misdemeanor.

Sec. 57. Section 515.140, Code 2003, is amended to read as follows: 515.140 VIOLATIONS — STATUS OF POLICY. Any It shall be unlawful for any insurance company, its officers or agents, or either of them,

403 LAWS OF THE EIGHTIETH G.A., 2004 SESSION CH. 1110

violating to violate any of the provisions of section 515.138, by issuing, delivering, or offering to issue or deliver any policy of fire insurance on property in this state other or different from than the standard form, herein as provided for, shall be guilty of a simplemisdemeanor in stat- ute, but any policy so issued or delivered shall, nevertheless, be binding upon the company issuing or delivering the same, and such policy. The company shall, until the payment of such fine a penalty assessed by order after hearing, be disqualified from doing any insurance busi- ness in this state; but any policy so issued or delivered shall, nevertheless, be binding upon the company issuing or delivering the same.

Sec. 58. Section 518A.41, Code 2003, is amended to read as follows: 518A.41 INSURANCE PRODUCERS TO BE LICENSED. NoAperson or corporation shall not solicit any an application for insurance for any associa-

tion in this statewithout having procured from the commissioner of insurance a license autho- rizing the person or corporation to act as an insurance producer. Violation of this provision shall constitute a serious misdemeanor.

Sec. 59. Section 520.14, Code 2003, is amended to read as follows: 520.14 VIOLATIONS — EXCEPTIONS. Any It shall be unlawful for an attorney who shall to exchange any contracts of insurance

of the kind and character specified in this chapter, or any for an attorney or representative of such the attorney, who shall to solicit or negotiate any applications for the same without the attorney having first complied with the foregoing provisions, shall be deemed guilty of a sim- ple misdemeanor. For the purpose of organization and upon issuance of permit by the com- missioner of insurance, powers of attorney and applications for such contracts may be solic- itedwithout compliancewith the provisions of this chapter, but no an attorney, agent, or other person shall notmake any such contracts of indemnity until all of the provisions of this chapter shall have been complied with.

Sec. 60. Section 522B.11, subsection 1,Code2003, is amendedbyadding the followingnew paragraph: NEWPARAGRAPH. q. Is the subject of an order of the securities administrator of this state

or any other state, province, district, or territory, denying, suspending, revoking, or otherwise taking action against a registration as a broker-dealer, agent, investment adviser, or invest- ment adviser representative.

Sec. 61. Section 522B.11, subsection 5, Code 2003, is amended to read as follows: 5. The commissioner may conduct an investigation of any suspected violation of this chap-

ter pursuant to section 507B.6 andmayenforce theprovisions and imposeanypenalty or reme- dy authorized by this chapter and chapter 507B against any personwho is under investigation for, or charged with, a violation of either chapter even if the person’s license has been surren- dered or has lapsed by operation of law.

Sec. 62. Section 522B.11, Code 2003, is amended by adding the following new subsection: NEW SUBSECTION. 6. a. In order to assure a free flow of information for accomplishing

the purposes of this section, all complaint files, investigation files, other investigation reports, and other investigative information in the possession of the commissioner or the commission- er’s employees or agents that relates to licensee discipline are privileged and confidential, and are not subject to discovery, subpoena, or other means of legal compulsion for their release to a person other than the licensee, and are not admissible in evidence in a judicial or adminis- trative proceeding other than the proceeding involving licensee discipline. A final written de- cision of the commissioner in a disciplinary proceeding is a public record. b. Investigative information in the possession of the commissioner or the commissioner’s

employees or agents that relates to licensee disciplinemaybe disclosed, in the commissioner’s discretion, to appropriate licensing authorities within this state, the appropriate licensing

404LAWS OF THE EIGHTIETH G.A., 2004 SESSIONCH. 1110

authority in another state, theDistrict ofColumbia, or a territory or country inwhich the licens- ee is licensed or has applied for a license. c. If the investigative information in the possession of the commissioner or the commission-

er’s employees or agents indicates a crime has been committed, the information shall be re- ported to the proper law enforcement agency. d. Pursuant to the provisions of section 17A.19, subsection 6, upon an appeal by the licens-

ee, the commissioner shall transmit the entire record of the contested case to the reviewing court. e. Notwithstanding the provisions of section 17A.19, subsection 6, if a waiver of privilege

has been involuntary and evidence has been received at a disciplinary hearing, the court shall issue an order to withhold the identity of the individual whose privilege was waived.

Sec. 63. NEW SECTION. 522B.16A DUTIES OF LICENSEES. 1. An insuranceproducer has a continuingduty andobligation tokeep, at the insurancepro-

ducer’s place of business, usual and customary records pertaining to transactions undertaken by the insurance producer. All such records shall be kept available and open for inspection by the commissioner or the commissioner’s representative at any timeduring regular business hours, provided that the commissioner or the commissioner’s representative is not entitled to inspect any records prepared in anticipation of litigation or that are subject to any privilege recognized in chapter 622. Such records shall be maintained for a minimum of three years following the completion of an insurance transaction. 2. An insurance producer whowillfully fails to complywith this section commits a violation

of this chapter and is subject to sanctions under section 522B.11.

Sec. 64. Section 523A.401, subsection 6, paragraph c, Code 2003, is amended to read as fol- lows: c. The insurance policy shall not allow for contesting coverage, be contestable, or limit

death benefits in the case of suicide, with respect to that portion of the face amount of the policy that is required by paragraph “b”. The policy shall not refer to physical examination, or otherwise operate as an exclusion, limitation, or condition other than requiring submission of proof of death or surrender of policy at the time the prepaid purchase agreement is funded, matures, or is canceled, as the case may be.

Sec. 65. Section 523A.402, subsection 6, paragraph c, Code 2003, is amended to read as fol- lows: c. Theannuity shall not allow for contesting coverage, be contestable, or limit deathbenefits

in the case of suicide, with respect to that portion of the face amount of the annuity which is required by paragraph “b”. The annuity shall1 refer to physical examination, or otherwise op- erate as an exclusion, limitation, or condition other than requiring submission of proof of death or surrender of the annuity at the time the prepaid purchase agreement is funded, ma- tures, or is canceled, as the case may be.

Sec. 66. Section 523A.501, subsection 6, Code 2003, is amended to read as follows: 6. If no denial order is in effect and no proceeding is pending under section 523A.503, the

application becomes effective at noon of the thirtieth day after a completed application or an amendment completing the application is filed, unless waived by the applicant. The commis- sioner may specify an earlier effective date. Automatic effectiveness under this subsection shall not bedeemedapproval of theapplication. If the commissionerdoesnot grant thepermit, the commissioner shall notify the person in writing of the reasons for the denial. The permit shall disclose on its face the permit holder’s employer or the establishment on whose behalf the applicant will be making or attempting to make sales, the permit number, and the expira- tion date.

Sec. 67. Section 523A.502, subsection 7, Code 2003, is amended to read as follows:2

7. A sales permit is not assignable or transferable. A permit holder selling all or part of a

___________________

1 The word “not” probably also intended 2 See chapter 1175, §398 herein

405 LAWS OF THE EIGHTIETH G.A., 2004 SESSION CH. 1111

business shall cancel the permit establishment’s sales permits and the purchaser shall apply for a new permit sales permits in the purchaser’s name within thirty days of the sale.

Sec. 68. Section 523A.503, subsection 1, unnumbered paragraph 1, Code 2003, is amended to read as follows: The commissioner may, pursuant to chapter 17A, deny any permit application, or immedi-

ately suspend, or revoke, or otherwise impose disciplinary action related to any permit issued under this chapter for several reasons, including but not limited to:

Sec. 69. Section 523A.503, subsection 3, Code 2003, is amended to read as follows: 3. Except as provided in subsection 2, a permit shall not be revoked, or suspended, or other-

wise be the subject of disciplinary action except after notice and hearing under chapter 17A.

Sec. 70. Section 523A.503,Code 2003, is amendedbyadding the followingnewsubsection: NEWSUBSECTION. 6. The commissionermay impose a civil penalty in an amount not ex-

ceeding ten thousand dollars per violation against any person violating this chapter. Each day of a continuing violation constitutes a separate offense.

Sec. 71. Sections 506.7, 507B.11, 508.27, 511.18, 514.6, 514A.9, 514B.29, 515.132, 515.145, and 521.15, Code 2003, are repealed.

Sec. 72. Sections 514.6, 514E.5, and 514E.6, Code 2003, are repealed.

Approved April 26, 2004

_________________________

CH. 1111CH. 1111

CHAPTER 1111

CRIMINAL PENALTY SURCHARGES

H.F. 2530

AN ACT relating to the assessment of surcharges in criminal proceedings.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 331.302, subsection 2,CodeSupplement 2003, is amended to read as fol- lows: 2. A county shall not provide a penalty in excess of a five hundred dollar fine or in excess

of thirty days imprisonment for the violation of an ordinance. The criminal penalty surcharge required by section 911.2 911.1 shall be added to a county fine and is not a part of the county’s penalty.

Sec. 2. Section 364.3, subsection 2, Code Supplement 2003, is amended to read as follows: 2. A city shall not provide a penalty in excess of a five hundred dollar fine or in excess of

thirty days imprisonment for the violation of an ordinance. An amount equal to ten percent of all fines collected by cities shall be deposited in the account established in section 602.8108. However, one hundred percent of all fines collected by a city pursuant to section 321.236, sub- section 1, shall be retained by the city. The criminal penalty surcharge required by section 911.2 911.1 shall be added to a city fine and is not a part of the city’s penalty.