House File 455 - Enrolled
HOUSE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO HSB 140)
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A BILL FOR
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House File 455
AN ACT
REQUIRING THE SUBMISSION OF A CORPORATE GOVERNANCE ANNUAL
DISCLOSURE TO THE COMMISSIONER OF INSURANCE BY CERTAIN
INSURERS OR INSURANCE GROUPS, AND INCLUDING PENALTIES AND
APPLICABILITY DATE PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. NEW SECTION. 521H.1 Purpose and scope.
1. The purpose of this chapter is to do all of the
following:
a. Provide the commissioner with a summary of an insurer's
or insurance group's corporate governance structure, policies,
and practices to permit the commissioner to gain and maintain
an understanding of the insurer's or insurance group's
corporate governance framework.
b. Outline the requirements for an insurer or insurance
group to complete a corporate governance annual disclosure for
submission to the commissioner.
c. Provide for the confidential treatment of the corporate
governance annual disclosure and related information that
contains confidential and sensitive information related to
an insurer's or insurance group's internal operations and
proprietary and trade secret information which, if made
public, could potentially cause the insurer or insurance group
competitive harm or disadvantage.
2. Nothing in this chapter shall be construed to prescribe
or impose corporate governance standards or internal procedures
beyond those which are required under applicable state
corporate law. In addition, nothing in this chapter shall be
construed to limit the commissioner's authority under chapter
507, or the rights or obligations of third parties thereunder.
3. The requirements of this chapter shall apply to all
insurers domiciled in this state.
Sec. 2. NEW SECTION. 521H.2 Definitions.
1. "Commissioner" means the commissioner of insurance.
2. "Corporate governance annual disclosure" or "disclosure"
means a confidential report filed by an insurer or insurance
group pursuant to the requirements of this chapter.
3. "Insurance group" means those insurers and affiliates
included within an insurance holding company system.
4. "Insurance holding company system" means the same as
defined in section 521A.1.
5. "Insurer" means the same as defined in section 521A.1.
Sec. 3. NEW SECTION. 521H.3 Corporate governance annual
disclosure requirement.
1. An insurer, or the insurance group of which the insurer
is a member, shall, no later than June 1 of each calendar
year, submit to the commissioner a corporate governance annual
disclosure that contains the information described in section
521H.5. Notwithstanding any request from the commissioner
made pursuant to subsection 2, if an insurer is a member of
an insurance group, the insurer shall submit the disclosure
required by this section to the commissioner of insurance of
the lead state of the insurance group of which the insurer is
a member, in accordance with the laws of the lead state, as
determined by procedures contained in the financial analysis
handbook adopted by the national association of insurance
commissioners.
2. An insurer or insurance group that is not required to
submit a corporate governance annual disclosure under this
section shall do so upon the commissioner's request.
3. Review of the corporate governance annual disclosure and
any additional requests for information shall be made through
the lead state as determined by procedures contained in the
financial analysis handbook adopted by the national association
of insurance commissioners.
4. Insurers or insurance groups that provide information
substantially similar to the information required by this
chapter in other documents provided to the commissioner,
including proxy statements filed in conjunction with the form B
insurance holding company system annual registration statement
requirements as provided in section 521A.4, or other state or
federal filings provided to the commissioner, are not required
to duplicate that information in the corporate governance
annual disclosure, but shall cross reference the document in
which the information is included.
Sec. 4. NEW SECTION. 521H.4 Rules.
The commissioner shall adopt rules pursuant to chapter 17A
to administer this chapter.
Sec. 5. NEW SECTION. 521H.5 Contents of corporate
governance annual disclosure.
1. An insurer, or the insurance group of which the insurer
is a member, shall have discretion over the responses to
corporate governance annual disclosure inquiries, provided
the corporate governance annual disclosure contains the
material information necessary to permit the commissioner to
gain an understanding of the insurer's or insurance group's
corporate governance structure, policies, and practices. The
commissioner may request additional information that the
commissioner deems material and necessary to provide a clear
understanding of the insurer's or insurance group's corporate
governance policies, reporting or information systems, or the
controls implementing such policies or systems.
2. The corporate governance annual disclosure shall be
prepared consistent with rules adopted by the commissioner
pursuant to chapter 17A. Documentation and supporting
information prepared pursuant to this chapter and related rules
shall be maintained and made available upon examination by or
upon request of the commissioner.
3. The corporate governance annual disclosure shall include
the signature of the insurer's or insurance group's chief
executive officer or corporate secretary, attesting that to the
best of that individual's belief and knowledge the insurer or
the insurance group has implemented the corporate governance
practices described in the disclosure and that a copy of the
disclosure has been provided to the insurer's or the insurance
group's board of directors or the appropriate committee of the
board.
4. a. For purposes of completing a corporate governance
annual disclosure, an insurer or insurance group may report
information regarding corporate governance at the ultimate
controlling parent level, at an intermediate holding company
level, or at the individual legal entity level, depending upon
how the insurer or insurance group has structured its system
of corporate governance.
b. An insurer or insurance group is encouraged to report
information in the corporate governance annual disclosure at
the level at which the insurer's or insurance group's risk
tolerance is determined; at the level at which the earnings,
capital, liquidity, operations, and reputation of the insurer
or insurance group are overseen collectively and the level
at which the supervision of these factors is coordinated and
exercised; or at the level at which legal liability for failure
of general corporate governance duties would be placed. If an
insurer or insurance group determines the level of reporting
based upon the criteria set forth in this paragraph, the
insurer or insurance group shall indicate which of the three
criteria was used to determine the level of reporting and
explain any subsequent changes that are made in the level of
reporting.
Sec. 6. NEW SECTION. 521H.6 Confidentiality.
1. Documents, materials, or other information, including
a corporate governance annual disclosure, in the possession
or control of the insurance division of the department of
commerce, that is obtained by, created by, or disclosed to the
commissioner or to any other person pursuant to this chapter,
is recognized in this state as being proprietary and containing
trade secrets. All such documents, materials, or other
information, including the disclosure, shall be confidential
and privileged, shall not be subject to chapter 22, shall
be considered confidential under chapter 507, shall not be
subject to subpoena, and shall not be subject to discovery
or admissible in evidence in any private civil action.
However, the commissioner is authorized to use such documents,
materials, or other information, including the disclosure, in
the furtherance of any regulatory or legal action brought as a
part of the commissioner's official duties. The commissioner
shall not otherwise make the documents, materials, or other
information, including the disclosure, public without the
prior written consent of the insurer or insurance group that
provided the documents, materials, or other information,
including the disclosure. Nothing in this section shall
be construed to require written consent of the insurer or
insurance group before the commissioner may share or receive
confidential documents, materials, or other information related
to governance of an insurer or insurance group pursuant to
subsection 3 to assist in the performance of the commissioner's
regular duties.
2. The commissioner or any other person who received
documents, materials, or other information related to corporate
governance, through examination or otherwise, while acting
under the authority of the commissioner or with whom such
documents, materials, or other information is shared pursuant
to this chapter, shall not be permitted or required to testify
in any private civil action concerning any confidential
documents, materials, or information, including disclosures,
subject to subsection 1.
3. In order to assist in the performance of the
commissioner's regulatory duties, the commissioner may do any
of the following:
a. Upon request, share documents, materials, or corporate
governance annual disclosure=related information, including
the confidential and privileged documents, materials, or
information subject to subsection 1, and including proprietary
and trade secret documents, materials, or information,
with other state, federal, or international financial
regulatory agencies, including members of any supervisory
college as defined in section 521A.1, with the national
association of insurance commissioners, or with any third=party
consultants designated by the commissioner pursuant to
subsection 4, provided that the recipient agrees in writing
to maintain the confidentiality and privileged status of the
documents, materials, or other corporate governance annual
disclosure=related information and verifies in writing the
legal authority to maintain such confidentiality and privilege.
b. Receive documents, materials, or other corporate
governance annual disclosure=related information, including
otherwise confidential and privileged documents, materials,
or information, and proprietary and trade secret documents,
materials, and information, from regulatory officials of
other state, federal, or international regulatory agencies,
including members of any supervisory college as defined in
section 521A.1, and from the national association of insurance
commissioners, and shall maintain as confidential or privileged
any documents, materials, or information received with notice
or the understanding that the documents, materials, or other
information received is confidential and privileged under the
laws of the jurisdiction that is the source of the documents,
materials, or information.
4. In order to assist in the performance of the
commissioner's regulatory duties under this chapter the
commissioner may retain, at the insurer's or insurance
group's expense, third=party consultants, including attorneys,
actuaries, accountants, and other experts not otherwise a part
of the commissioner's staff, as may be reasonably necessary to
assist the commissioner in reviewing a disclosure and related
information submitted under this chapter or ensuring compliance
of an insurer or insurance group with the requirements of this
chapter.
a. Any persons retained under this subsection shall be under
the direction and control of the commissioner and shall act in
a purely advisory capacity.
b. As part of the retention process, a third=party
consultant shall verify to the commissioner, with notice to
the insurer, that the third=party consultant is free of any
conflict of interest and that the third=party consultant
has internal procedures in place to monitor compliance
if a conflict arises and to ensure compliance with the
confidentiality standards and requirements of this chapter.
5. A written agreement entered into by the commissioner
with the national association of insurance commissioners or
with a third=party consultant governing the sharing and use of
information provided pursuant to this chapter shall expressly
require the written consent of the insurer prior to making
public information provided under this chapter and shall
contain a provision that does each of the following:
a. Expressly provides that the national association of
insurance commissioners and any third=party consultants
retained are subject to the same confidentiality standards
and requirements governing the sharing and use of information
provided pursuant to this chapter as the commissioner.
b. Specifies procedures and protocols regarding the
confidentiality and security of information related to a
corporate governance annual disclosure that is shared with
the national association of insurance commissioners or with a
third=party consultant pursuant to this chapter and specifies
procedures and protocols for sharing information by the
national association of insurance commissioners only with other
state insurance regulators from states in which an insurance
group has domiciled insurers. The agreement shall require
that the recipient of such information must agree in writing
to maintain the confidentiality and privileged status of the
documents, materials, or other information related to the
corporate governance annual disclosure and verify in writing
the legal authority to maintain confidentiality and privilege.
c. Specifies that ownership of information shared with
the national association of insurance commissioners or with
a third=party consultant pursuant to this chapter remains
with the commissioner and that use of the information by
the national association of insurance commissioners or by a
third=party consultant is subject to the direction of the
commissioner.
d. Prohibits the national association of insurance
commissioners or a third=party consultant from storing the
information shared pursuant to this chapter in a permanent
database after the underlying analysis is completed.
e. Requires the national association of insurance
commissioners or a third=party consultant to give prompt notice
to the commissioner and to an insurer or insurance group whose
confidential information is in the possession of the national
association of insurance commissioners or a third=party
consultant pursuant to this chapter, that the information is
subject to a request or subpoena to the national association
of insurance commissioners or the third=party consultant for
disclosure or production.
f. Requires the national association of insurance
commissioners or a third=party consultant to consent to
intervention by an insurer or insurance group in any judicial
or administrative action in which the national association of
insurance commissioners or the third=party consultant may be
required to disclose confidential information about the insurer
or insurance group that was shared with the association or
consultant pursuant to this chapter.
6. The sharing of documents, materials, or information by
the commissioner pursuant to this chapter shall not constitute
a delegation of regulatory authority or rulemaking, and the
commissioner is solely responsible for the administration,
execution, and enforcement of the provisions of this chapter.
7. No waiver of any applicable privilege or claim of
confidentiality in the documents, proprietary and trade
secret materials, or other corporate governance annual
disclosure=related information shall occur as a result of the
disclosure of such documents, materials, or information to the
commissioner under this section or as a result of sharing those
documents, materials, or information as authorized in this
chapter.
Sec. 7. NEW SECTION. 521H.7 Penalties.
1. If an insurer or insurance group fails, without just
cause, to timely file a corporate governance annual disclosure
as required in this chapter, the commissioner shall, after
notice and hearing, impose a penalty of five hundred dollars
for each day's delay. The penalty shall be collected by the
commissioner and paid to the treasurer of state for deposit
as provided in section 505.7. The maximum penalty which may
be imposed under this section for any single failure is five
thousand dollars.
2. The commissioner may reduce the penalty to be imposed if
the insurer or insurance group demonstrates to the commissioner
that imposition of the penalty would constitute a financial
hardship to the insurer or insurance group.
Sec. 8. NEW SECTION. 521H.8 Severability.
If any provision of this chapter other than section
521H.6, or the application of this chapter to any person or
circumstance, is held invalid, such holding shall not affect
the provisions or applications of this chapter which can be
given effect without the invalid provision or application, and
to that end the provisions of this chapter, with the exception
of section 521H.6, are severable.
Sec. 9. APPLICABILITY. The provisions of this Act are
applicable beginning January 1, 2016, and the first filings of
corporate governance annual disclosures shall be made pursuant
to chapter 521H, as enacted in this Act, in 2016.
KRAIG PAULSEN
Speaker of the House
PAM JOCHUM
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 455, Eighty=sixth General Assembly.
CARMINE BOAL
Chief Clerk of the House
Approved , 2015
TERRY E. BRANSTAD
Governor
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