Iowa Insurance Division Conducts 2010 Legislative Planning Meeting

NAMIC attended a meeting on Sept. 4 where the Iowa Insurance Division announced the issues it was considering for the 2010 omnibus insurance bill.

At the meeting, the division distributed two documents. The first summarizes the IID’s preliminary ideas on legislation for all lines of insurance. Among the issues identified are:

The IID provided details on some of the issues while, with others, the information will be forthcoming.

The document points out that other issues not seen as technical and non-controversial, such as guaranty fund legislation and proposals to be brought forward by the Consumer Advocate, are not part of the omnibus package. Observers of the legislative scene in Iowa speculate that this could include a bill that addresses credit-based insurance scoring.

The second document provides further details on parts of the P&C agenda for the omnibus bill, with most of it dedicated to changing the law on "innocent co-insureds." As the IID notes, in 2004 the Iowa Supreme Court in the Sager case established this doctrine that requires carriers to pay claims to certain co-insureds when other insureds destroy the property. After the ruling, the General Assembly amended the insurance code to return it to the pre-Sager rule. The IID wants to reverse that legislation. According to the IID, this change would also affect farm mutuals.

Another provision in the P&C document addresses the law governing the requirement to provide a copy of the application to the insured. That application is then made part of the policy. The IID proposes adding a new subsection so that in cases where the application was not provided as required, the insurer would be “forever” precluded from being able to use information in the application in its defense of a lawsuit.

By and large, the ideas brought forth by the IID are technical. Among the exceptions are the “innocent co-insured” and the “copy of the application” proposals. Both of these could weaken efforts to reduce fraud. NAMIC will seek feedback from its members and then work with its state trade association partners on the legislation as it is debated.

Direct questions to NAMIC State Affairs Manager Mark Johnston.