Fiscal Note
Fiscal Services Division
HF 838 – Insurance Omnibus (LSB1333HZV.1)
Staff Contact: Maria Wagenhofer (515.281.5270) maria.wagenhofer@legis.iowa.gov
Fiscal Note Version – Final Action
Description
House File 838 provides for the following significant fiscal changes:
• Imposes a monetary penalty on and provides for the suspension or revocation of the license
of a person who violates any order of the Insurance Commissioner, rather than limiting the
penalty and suspension or revocation to those violating cease and desist orders.
• Allows the Insurance Commissioner to deposit fine revenue from penalties that have been
collected due to insurers’ failure to file a timely own risk and solvency assessment summary
report into the Department of Commerce Revolving Fund and into the Insurance Division
Regulatory Fund. Under current law, these penalties are to be transferred to the State
General Fund.
• Clarifies that the licenses for advisory organizations are for three years and sets the fee at
$100.
• Adds a new late fee of $5 (not to exceed $500) for each day after April 15 that a preneed
seller and preneed sales agent fails to file the preneed seller’s or preneed sales agent’s
annual report, and establishes a late fee of $5 for each day after April 30 that a perpetual
care cemetery fails to file its annual preneed sales report.
• Eliminates the $500,000 cap for funds that may be retained in the Insurance Division
Regulatory Fund.
• Eliminates the $50,000 cap for funds that may be retained in the Insurance Division
Enforcement Fund.
• Changes the examination fee that is deposited into the Insurance Division Enforcement Fund
from $5 to $10.
• Lowers the application fee for each motor vehicle service contract form and renewal
application from $50 to $35.
• Requests the Legislative Council establish a study committee during the 2021 Legislative
Interim to identify and analyze health insurance mandates.
Background
The monetary penalty of individuals violating cease and desist orders is a maximum of $1,000
for each offense and an aggregate penalty of no more than $10,000 per individual, or, if the
individual committed the offense knowingly, $5,000 for each offense and an aggregate penalty
of no more than $50,000. Under the Bill, the same penalty will be imposed for an individual’s
violation of any order issued by the Insurance Division. To date, this penalty has not been
assessed. The Bill allows the Insurance Commissioner to deposit penalties that have been
collected due to insurers’ failure to file a timely own risk and solvency assessment summary
report into the Commerce Revolving Fund instead of transferring collected funds to the General
Fund. To date, this penalty has not been assessed.
Beginning in 2005, the Insurance Division Regulatory Fund has used industry fees to cover the
expenses of receiverships, or arrangements for managing the finances and groundskeeping of
cemeteries that have become insolvent. In 2007, the amount that could be retained in the
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Regulatory Fund was increased from $200,000 to $500,000. Approximately $160,000 is
deposited into the Regulatory Fund annually. The Division currently operates three
receiverships: Springdale Cemetery in Clinton, Linwood Cemetery in Dubuque, and Joyce
Funeral Home in Emmetsburg.
Cemeteries that do not sell preneed products cannot receive transfers from the Regulatory Fund
and are limited to funds from the Enforcement Fund, which includes fees collected from the
purchase of burial plots, to cover costs. The Enforcement Fund receives approximately $23,000
annually in revenues.
The Insurance Division has indicated that imposing the new assessment of late filing fees
specified in the Bill on preneed sellers, preneed sales agents, and perpetual care cemeteries
that are at least 15 days late in filing preneed sales reports could have resulted in an increase in
Enforcement Fund revenue of approximately $5,000 to $20,000 in fiscal years 2017 to 2019 if
the maximum late fee of $500 had been assessed on the late filers for those fiscal years.
Assumptions
• The number of late filers of annual preneed sales reports has increased in recent years with
40 late filers in FY 2019, compared to 10 late filers in FY 2017. It is assumed that between
28 to 40 filers will be annually charged a late fee established by the Commissioner of $5 per
day for 100 days beginning in FY 2022. These revenues will be deposited into the
Commerce Revolving Fund.
• The number of receiverships being operated by the Division has increased as more
cemeteries across the State have become insolvent due to an increase in cremations. The
Insurance Division will increase the examination fees from $5 to $10, generating an
additional $23,000 annually in revenue for deposit in the Enforcement Fund. Cemeteries that
do not sell preneed products would use the additional fee revenue.
• There are 18 advisory organizations that will be annually assessed a new license fee of $100
to receive and renew their licenses. These revenues will be deposited into the Commerce
Revolving Fund.
• There are approximately 1,800 motor vehicle service contract forms submitted annually. The
revenues from the application and renewal fees are deposited into the Service Company
Oversight Fund.
Fiscal Impact
The overall identifiable fiscal impact of HF 838 will be as follows:
• The revenue increase of the late filing fee on preneed sellers, preneed sales agents, and
perpetual care cemeteries is estimated to range between $14,000 and $20,000 annually, if
late filers are assessed the maximum late fee of $500. These revenues will be deposited into
the Commerce Revolving Fund.
• The revenue increase associated with eliminating the $50,000 cap for receivership
examination fees and increasing the fee from $5 to $10 is estimated at $23,000 annually and
will be deposited into the Insurance Division Enforcement Fund.
• The revenue increase of setting license fees for advisory organizations is estimated to be
$1,800 annually.
• The revenue decrease associated with lowering the application fee for each motor vehicle
service contract form and renewal application is estimated to be approximately $27,000
annually.
The fiscal impact cannot be determined for the assessment of a monetary penalty on an
individual violating any order from the Division, or for the deposit of penalties into the
Department of Commerce Revolving Fund instead of the General Fund. These would include
penalties assessed on insurers for failure to file a timely risk and solvency assessment report.
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Sources
Insurance Division
/s/ Holly M. Lyons
June 10, 2021
Doc ID 1219829
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 502.304A, 502.410, 502.601, 507A.4, 507B.7, 507B.2, 507E.8, 80B.3, 513D.1, 510.21, 511.24, 512B.24, 512B.25, 505.7, 513C.10, 514G.103, 515A.6, 515A.10, 515D.4, 515D.5, 515.129A, 515D.7, 515.125, 505.8, 515F.2, 515F.8, 515F.32, 520.12, 522.9, 522.5, 522B.5, 522E.4, 523A.204, 523A.501, 523A.601, 523A.812, 523C.3, 523C.4, 523I.102, 523I.301, 523I.813, 502.321G, 507E.2A, 508E.3, 515F.36, 521.18, 522A.5, 508E.2, 523A.502, 523A.807, 523C.24, 523I.213, 523I.309
Reprinted: 502.304A, 502.410, 502.601, 507A.4, 507B.7, 507B.2, 507E.8, 80B.3, 513D.1, 510.21, 511.24, 512B.24, 512B.25, 505.7, 513C.10, 514G.103, 515A.6, 515A.10, 515D.4, 515D.5, 515.129A, 515D.7, 515.125, 505.8, 515F.2, 515F.8, 515F.32, 520.12, 522.9, 522.5, 522B.5, 522E.4, 523A.204, 523A.501, 523A.601, 523A.812, 523C.3, 523C.4, 523I.102, 523I.301
Enrolled: 507A.4, 507B.2, 507E.8, 80B.3, 508E.3, 513D.1, 507B.7, 513C.10, 514G.103, 515A.6, 515A.10, 515D.4, 515D.5, 515.129A, 515D.7, 515.125, 505.8, 515F.2, 515F.8, 515F.32, 522.9, 522.5, 523A.501, 523A.601, 523A.812, 523A.204, 523C.4, 523C.3, 523I.301