With No Major Surprises, Iowa Legislature Ends on Positive Note

Pleased with no last minute surprises to insurers, the Property Casualty Insurers Association of America (PCI) has commended the Iowa Legislature and Gov. Thomas Vilsack for taking positive and progressive steps on this year’s insurance-related bills.

“During this year’s legislative session, Iowa state leaders did their part to pass legislation that will increase the availability of insurance and marketplace competition, while at the same time rejecting several proposed obstacles that would impede those efforts,” said Don Cleasby, regional manager and counsel for PCI.

Shortly past 11 p.m., May 20, the Iowa Legislature wrapped the 2005 legislative session. While much of the legislation is technical in nature, the following is a summary of some of the key insurance-related bills.

Workers’ Compensation

In the closing hours of the session, the Iowa Legislature enacted Senate File 342.

The final version of the bill focuses on a variety of workers’ compensation topics including the payment of weekly workers’ comp benefits, workers’ comp settlements and claims of out-of-state employees. Regarding the provision that allows paid time off for treatment, the legislation requires the aggregation of partial days off. The legislation also increases flexibility in claim settlement and provides for a contingent settlement, which is intended to address issues created by the Medicare Secondary Payer Act. The legislation also asserts that out of state employees can collect in Iowa when the employer has a place of business in the state and the contract of hire provides that workers’ comp claims will be governed by Iowa law. If signed by the governor, these provisions will take effect on July 1, 2005.

Department Omnibus Legislation

Gov. Vilsack signed into law on April 28 Senate File 360, the department’s omnibus legislation. Provisions in this bill include strengthening eligibility standards for the guaranty fund, changing the membership of the governing board of the FAIR Plan to reflect the merger between the Alliance of American Insurers and National Association of Independent Insurers and revising existing statutes on service contracts for the repair or replacement of certain motor vehicles, investments of county or state mutual associations. The provisions in the bill that apply to the property and casualty insurers take effect on July 1.

Identity Theft

Senate File 270, relating to identity theft, was signed by the governor on April 6. This legislation provides that any property obtained as a result of identity theft is subject to seizure. It authorizes a financial institution, including insurance companies, that has paid the victim, to act as an interest holder and file a claim for forfeited property. The new law provides that a financial institution can file a complaint of identity theft on behalf of a victim. These institutions may also file a civil action on behalf of an account holder who has suffered a loss of money due to identity theft.

While several consumer-friendly insurance bills passed the legislature, several bills that could have hurt the industry failed to pass including:

· House File 148, mandating underwriting or rating of coverage based on gender for any line of insurance as an unfair trade practice.

· House File 225, instructing personal auto insurers to provide a premium discount to senior drivers based on completion of a driver safety course.

· House File 665, prohibiting the use of credit information in personal lines underwriting and rating.

“We are pleased with the Legislature and the governor for continuing to positively reform the state’s insurance laws,” added Cleasby. “With our sustained efforts, Iowa will become an even stronger, more competitive marketplace for consumers, companies and regulators alike.”