General Assembly: 78 (1999 Regular GA) - Chapter 166 - Entities and subject matter regulated by insurance division


Published: 1999-05-24

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CH. 165 LAWS OF THE SEVENTY-EIGHTH G.A., 1999 SESSION 402

a18A.10, and 518A.14, and a18A28, shall apply to all mutual insurance corporations orga- nized under the provisions of this chapter.

Sec. 23. Sections 518A.10, 518A.13, 518A.17, and 518A.28, Code 1999, are repealed.

Approved May 24, 1999

CHAPTER 166 ENTITIES AND SUBJECT MATTER REGULATED BY INSURANCE DIVISION

S.F. 406

AN ACT relating to entities and subject matter under the regulatory authority of the insurance division, including securities, business opportunities, funeral merchandise, funeral services, cemeteries, cemetery merchandise and residential service contracts, providing for fees, and establishing penalties.

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

Section 1. Section 502.202, subsection 12, paragraph b, unnumbered paragraph 1, Code 1999, is amended to read as follows:

A mutual or cooperative organization, including a cooperative association organized in good faith under and for any of the purposes enumerated in chapters 497, 498, aru:l499, and 5.Q1 that deals in commodities or supplies goods or services in transactions primarily with and for the benefit of its members, if:

Sec. 2. Section 502.302, subsection 3, Code 1999, is amended to read as follows: 3. Every applicant for initial or renewal registration as a broker-dealer or investment

adviser shall pay a filing fee of two hundred dollars. Every applicant for initial or renewal registration as an agent or investment adviser representative shall pay a filing fee of thirty dollars. However, an investment adviser reQresentative is not required to Qay a filing fee. if the investment adviser is a sole QrOQrietorshiQ or the substantial equivalent and the invest- ment adviser reQresentative is the same individual as the investment adviser. A filing fee is not refundable. Every person acting as a federal covered adviser in this state, except with respect to federal covered advisers whose only clients are those described in section 502.301, subsection 3, paragraph "b", shall pay an initial and renewal notice filing fee of one hundred dollars.

Sec. 3. Section 502.304, subsection 5, Code 1999, is amended to read as follows: 5. Withdrawal from registration as a broker-dealer, agent, investment adviser, or invest-

ment adviser representative becomes effective thirty days after receipt of an application to withdraw or within such shorter period of time as the administrator may by order deter- mine, unless a proceeding to deny, suspend, or revoke a registration is pending when the application is filed or a proceeding to deny, suspend, or revoke a registration, or to impose conditions upon the withdrawal is instituted within thirty days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the administrator by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the administrator may never- theless institute a revocation or suspension proceeding under subsection 1, paragraph "b", within one year after withdrawal became effective and enter a revocation or suspension order as of the last date on which registration was effective.

403 LAWS OF THE SEVENTY-EIGHTH G.A., 1999 SESSION CH. 166 --------------------------------------------~---------------------

Sec. 4. Section 502.304, Code 1999, is amended by adding the following new subsection: NEW SUBSECTION. 5A. A person who directly or indirectly controls a broker-dealer or

agent is subject to the same sanctions applicable to an applicant or registrant under this section, unless the person proves that the person did not know, and was not grossly negli- gent in failing to know, of the existence of facts by reason of which the liability is alleged to exist.

Sec. 5. Section 502.305, Code 1999, is amended to read as follows: 502.305 EXAMINATION OF INVESTMENT ADVISER REPRESENTATNE AND EXEMP-

TION FROM EXAMINATION. The administrator may adopt rules requiring the passage of an examination by an indi-

vidual who is required to be registered under this chapter as an investment adviser represen- tative. However, a person who is registered as an investment adviser representative between January 1, 1999, and December 31, ;woo 19.9.9., shall not be required to pass an examination for as long as the person maintains a continuous registration.

Sec. 6. Section 502.503, subsection 1, Code 1999, is amended to read as follows: 1. Affiliates of a person liable under section 502.401. 502.501, 502.502, eF 502.502A, or

502.604. partners, principal executive officers or directors of such person, persons occupy- ing a similar status or performing similar functions for such person, persons (whether employees of such person or otherwise) who materially aid and abet in the act or transac- tion constituting the violation, and broker-dealers or agents who materially aid and abet in the act or transaction constituting the violation, are also liable jointly and severally with and to the same extent as such person, unless one of the following applies:

a. With respect to section 502.501, section 502.502, subsections 1 and 5, or section 502.502A, aey a person liable fieretmder under this subsection proves that the person did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist~.

b. With respect to section 502.401. section 502.502, subsections 2 and 3, and section 502.604 aey a person liable fieretmder under this subsection proves that th~ person did not know, and was not grossly negligent in failing to know, of the existence of the facts by reason of which the liability is alleged to exist.

Sec. 7. Section 502.504, Code 1999, is amended by adding the following new subsection: NEW SUBSECTION. 7. This section shall not apply to actions filed by the administrator

pursuant to section 502.604.

Sec. 8. Section 502.604, subsection 2, Code 1999, is amended to read as follows: 2. Bring an action in the district court to enjoin the act or practice and to enforce compli-

ance with this chapter or a rule or order adopted or issued pursuant to this chapter. Upon a proper showing. the court may do all of the following:

a, Grant a permanent or temporary injunction, restraining order, eF asset freeze. account- ing. writ of attachment. writ of general or special execution. writ of mandamus sfiall be granted and a. or other equitable or ancillary relief.

b. Appoint a receiver or conservator ffiay be appointed for the defendant or the defendant's assets. In addition, upon a proper sfiowing by tfie adffiinistrator, tfie court ffiay enter an order of

h Order the administrator to take charge and control of a party's property. including but not limited to managing rents and profits. collecting debts. and acquiring and disposing of property.

d. Order the rescission, restitution, or disgorgement directed at any person who has en- gaged in an act constituting a violation of this chapter, or a rule or order adopted or issued pursuant to this chapter, and ffiay order, ~ Order the payment of prejudgment and postjudgment interest. PARAGRAPH DIVIDED. The administrator shall not be required to post a bond.

CH. 166 lAWS OF THE SEVENTY-EIGHTH G.A., 1999 SESSION 404

Sec. 9. Section 523A.5, subsection 2, Code 1999, is amended by adding the following new paragraph:

NEW PARAGRAPH. e. "Prepaid contract" means a written contract or other agreement executed by a seller in which the seller promises to deliver merchandise or services upon the future death of a person named or implied in the agreement.

Sec. 10. Section 523A.6, Code 1999, is amended to read as follows: 523A.6 COMPLIANCE WITH OTHER lAWS. The seller of a prepaid contract for the purchase of funeral services or funeral merchandise

shall comply with chapter 555A with respect to all contracts that are subject to regulation uRder this chapter. A failtH:e person failin~ to comply with chapter 555A is subject to the remedies and penalties provided in that chapter.

Sec. 11. Section 523B.2, subsection 10, paragraph a, subparagraph (9), Code 1999, is amended to read as follows:

(9) The seller does not have a minimum net worth of twenty five~ thousand dollars, as determined in accordance with generally accepted accounting principles. A seller may submit a surety bond in lieu of the net worth requirement. The administrator may by rule or order increase the amount of the net worth or bond for the protection of purchasers and may require the seller to file reports of all sales in this state to determine the appropriate amount of the net worth requirement. The surety bond shall be for the period of the registration, issued by a surety company authorized to do business in this state and for the benefit of any purchaser.

Sec. 12. Section 523C.6, Code 1999, is amended to read as follows: 523C.6 NET WORTH REQUIREMENT. A service company that has issued or renewed in the aggregate one thousand or less

residential service contracts during the preceding calendar year shall maintain a minimum net worth of forty thousand dollars, and the minimum net worth to be maintained shall be increased by an additional twenty thousand dollars for each additional five hundred con- tracts or fraction thereof issued or renewed, up to a maximum required net worth of four hundred thousand dollars. At least twenty thousand dollars of net worth shall consist of paid-in capital.

For purposes of this chapter, "act worth" means the eneess of all assets over all liabilities including ref!uired resCF\'CS computed in accordance with generally accepted accounting principles .• "<t least twenty thousand dollars of act worth shall consist of paid in capital.

Sec. 13. Section 523C.8, Code 1999, is amended to read as follows: 523C.8 REBATES AND COMMISSIONS. 1.. A Except as provided in subsection 2. a service company shall not pay a commission or

any other consideration to any person as an inducement or compensation for the issuance, purchase, or acquisition of a residential service contract. Ho'uever, this

2... This section does not prohibit any of the followin~: a.. The payment of an override commission or marketing fee to an employee or commis-

sion sales agent who is a marketing or sales representative of the service company or its parent company, subsidiary, or affiliate on the sale or marketing of a residential service contract, provided the employee or commission sales agent is not a real estate licensee sharing in or entitled to share in, or affiliated with, a company or organization which is entitled to share in any real estate commission generated by the underlying real property transaction. This section also does not prohibit fees,

b. ~payments, or reimbursements for a bona fide inspections inspection, if an inspec- tion of the property to be the subject of a residential service contract is required by a service company and if the inspection fee is reasonably related to the services performed .

.3... The division may adopt rules identifyin~ types of fees. payments. or reimbursements that do not constitute an inducement or compensation for the issuance. purchase. or acqui- sition of a residential service contract.

405 LAWS OF THE SEVENTY-EIGHTH G.A., 1999 SESSION CH. 167

Sec. 14. Section 523E.1, subsection 6, Code 1999, is amended to read as follows: 6. This section does not apply to payments for merchandise delivered to the purchaser.

Delivery includes storage in a warehouse under the eentrol ef the seller or any other ·.vare Reuse or storage facility approved by the commissioner when a reeeipt of e'+vnersbip in the name ef the purebaser is eeli•;eree te the purebaser, the merebaneise is insures against loss, the merebanaise is preteetea against damage, title bas been transferred te the purebaser, the merebaneise is appropriately identifies ana eeseribee in a manner that it ean be eistin guisbee from other similar items ef merebaneise unless this ieentifieatien requirement ·.vita respeet to bronze merebaneise is waives by the eemmissiener by rule, the metbee ef storage allows fer •;isual audits ef the merebaneise, ana the annual reporting requirements ef seetien a26E.2, subseetien 1, are satisfies.

Sec. 15. Section 523!.6, Code 1999, is amended by adding the following new subsection: NEW SUBSECTION. 4. A cemetery shall provide services necessary for the installation

or burial of vaults or other similar merchandise sold by the cemetery. This subsection shall not require the cemetery to provide for opening or closing interment or entombment space, unless an agreement executed by the cemetery expressly provides otherwise.

Approved May 24, 1999

CHAPTER 167 PROPERTY TAX STATEMENT AND EQUALIZATION ORDER INFORMATION

S.F. 458

AN ACT relating to information required to be placed on property tax statements.

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

Section 1. Section 441.49, unnumbered paragraph 3, Code 1999, is amended to read as follows:

On or before October 15 the county auditor shall cause to be published in official newspa- pers of general circulation the final equalization order. The publication shall include. in type larger than the remainder of the publication. the following statement: "Assessed values are equalized by the department of revenue and finance evezy two years. Local taxing authorities determine the final tax levies and may reduce property tax rates to compensate for any increase in valuation due to equalization." Failure to publish the equalization order has no effect upon the validity of the orders.

Sec. 2. Section 445.5, subsection 1, paragraph i, Code 1999, is amended to read as follows:

i. The total amount of taxes levied by each taxing authority in the previous fiscal year and the current fiscal year, and the sellar amount difference between the two amounts, ana that same eifferenee expressed as a percentage increase or decrease.

Approved May 24, 1999