Bills › 88th General Assembly
Relating to the insurance fraud bureau, criminal history checks for licenses granted by the insurance division, and resolving inconsistencies
Sponsored by the Senate Commerce Committee
Topics:Business & economy
Where it is now
- Done: IntroducedFebruary 18, 2019
- Skipped: SubcommitteeSkipped
- Done: Senate committeeFebruary 20, 2019
- Done: Passes the SenateMarch 13, 201932–17
- Skipped: House committeeSkipped
- Done: Passes the HouseMarch 11, 2019
- Done: To the GovernorMarch 11, 2020
- Done: Signed into lawMarch 12, 2020
HF 426 became law → The same legislation passed as HF 426, so this version was set aside. Go to HF 426 What’s a funnel?
What’s in it
This bill relates to the insurance fraud bureau and criminal history checks for licenses granted by the insurance division. The bill clarifies that the insurance fraud bureau has the authority to conduct investigations in all areas under the jurisdiction of the insurance commissioner and also clarifies the law enforcement authority of an insurance fraud bureau investigator. The bill requires the commissioner to dedicate a minimum of two insurance fraud bureau investigators to the investigation of suspected workers’ compensation fraud.
Read the full explanation
The bill authorizes the commissioner to require new applicants licensed under the commissioner’s jurisdiction to submit fingerprints. The bill does not apply to current Iowa producers in good standing. The bill authorizes the commissioner to require a state and national criminal history check on each applicant that applies for an initial license in Iowa as a resident insurance producer, an initial license or an additional line of authority under a nonresident insurance producer license if a state and national criminal history check has not already been completed, an initial license as a viatical settlement provider or a viatical settlement broker in the state, and an initial license as a public adjuster in the state. In addition, the commissioner may require a state and national criminal history check for a producer, a public adjuster, or a viatical settlement provider or viatical settlement broker that applies for a renewal, reinstatement, or reissuance of a license that has been revoked or suspended. The bill provides that by submitting fingerprints an applicant is authorizing the commissioner to submit the fingerprints to the department of public safety for a state criminal history check and for submission to the federal bureau of investigation for a national criminal history check. The applicant is also authorizing the commissioner to receive the results of the state and national criminal history check. The bill authorizes the commissioner to contract with a third-party vendor for the collection and submission of applicants’ fingerprints. The commissioner may agree to reasonable fees to be charged by the vendor and may require the fee to be paid by an applicant directly to the third-party vendor. The bill provides that the results of an applicant’s criminal history check are not a public record under Code chapter 22. An applicant’s fingerprints and criminal history check are only subject to a subpoena issued in a criminal action or investigation, shall be confidential by law and privileged, and are not subject to discovery or admissible in a private civil action. The bill requires any person operating as either a viatical settlement provider or viatical settlement broker to be licensed and no longer allows an exception for a life insurance producer licensed for at least one year as a resident producer in this state, or the producer’s home state, to operate as a viatical settlement broker. The bill no longer permits a license to be issued to a legal entity, as is currently allowed by law, to operate as either a viatical settlement provider or viatical settlement broker.
Changed since by amendments S-3028, S-3027; see Amendments.
Fiscal note
AI summary This bill clarifies the law enforcement authority of Insurance Division Fraud Bureau investigators and requires criminal background checks for certain newly licensed insurance professionals. The bill is not expected to have a fiscal impact on the state because the costs for these background checks will be paid by the applicants through fees.2
Read the fiscal note
Description
House File 426 clarifies the authority of Insurance Division Fraud Bureau investigators to carry out law enforcement activities, such as executing arrest warrants and search warrants, and requires a criminal history check, including fingerprinting and conducting State and federal background checks, for newly licensed producers, public adjusters, viatical settlement providers, and viatical settlement brokers. The Bill authorizes the Insurance Commissioner to contract with a third-party vendor for fingerprinting applicants and to authorize the vendor to collect reasonable fees for associated costs.
Background
The Insurance Division’s Fraud Bureau staff consists of a Bureau Director, three Special Investigators, and a Criminal Intelligence Analyst. In 2018, the Bureau received 1,046 referrals, which was a 27.0% increase compared to 2017. The Bureau presented 27 fraud cases to prosecutors, issued 15 warrants, and had 15 arrests and five convictions. This is consistent with the past three years of available data, as approximately 9.0% of referrals involved workers’ compensation issues during that time period.
The Iowa Insurance Division is a Department of Commerce entity and receives an annual appropriation from the Commerce Revolving Fund. The Division charges fees based on the prior year, at the beginning of each calendar year, to insurance licensees and other entities and deposits these fees into the Commerce Revolving Fund. At the end of each fiscal year, the Insurance Division takes the difference of what has been appropriated to the Division from the Commerce Revolving Fund from the total amount of the fees collected and reverts the remaining revenue to the General Fund. Reversion amounts to the General Fund from the Commerce Revolving Fund for FY 2016 to FY 2018 were as follows:
- FY 2016: $11.9 million
- FY 2017: $12.5 million
- FY 2018: $14.1 million
Assumptions
- The costs of fingerprinting and conducting state and federal background checks will be paid by new licensees at an estimated cost of $50 per licensee. The costs are estimated to be approximately $50 per licensee, and include amounts charged by the Division of Criminal Investigation (DCI) for the State background check, the charges of the Federal Bureau of Investigation for the federal background check, and any potential costs that will need to be paid to the vendor providing State background checks on behalf of the DCI.
- An estimated 20,000 producers, public adjusters, viatical settlement providers and viatical settlement brokers will be subject to the background check requirement annually.
Fiscal Impact
House File 426 is not expected to have a fiscal impact on the State as the Bill does not materially change the duties or functions of the Insurance Division. The costs of fingerprinting and conducting State and federal background checks will be paid through fees assessed to newly licensed producers, public adjusters, viatical settlement providers, and viatical settlement brokers as part of the licensure process.
Sources
- Iowa Insurance Division
- State Accounting System
- Final Fiscal Note – Insurance, Background Checks and Fraud Review · July 31, 2020
- Insurance, Background Checks and Fraud Review · March 21, 2019
- Insurance, Background Checks and Fraud Review · February 25, 2019
Iowa Code it changes
Creates§522B.5A
Lobbying
15 for · 5 against · 30 undecided · Who →