Iowa's insurance law is spread across the Iowa Code (mainly chapters 505–523) and the Insurance Division's rules in Iowa Administrative Code chapter 191 (191 IAC). The producer licensing law is Iowa Code chapter 522B, unfair practices are in chapter 507B, and fraud is in chapter 507E. The state-law section is roughly a third of each Iowa exam. These notes cover the rules the questions draw on.

About the exam

Iowa's licensing exams are given by Pearson VUE. Each exam has a general section and an Iowa section. The Division does not publish a passing score.

Each exam also includes about 10 unscored pretest questions. Iowa has no combined Life & Health exam and no combined Property & Casualty exam: candidates take the separate exams. A Commercial Lines exam (12-IA-44) also exists. A personal lines producer who passes it can get property and casualty authority, but Personal Lines must be passed first (191 IAC 10.4(6)). Iowa requires no prelicensing course. Applicants must be at least 18 (Iowa Code 522B.5). Exam results are valid for 90 days: if you don't apply for the license within 90 days, the results are void (191 IAC 10.4(4)).

The regulator

• The Insurance Division sits within the Department of Insurance and Financial Services (DIFS). The commissioner of insurance is its chief executive officer (Iowa Code 505.1).
• The commissioner is appointed by the governor, subject to senate confirmation, for a four-year term. The governor may remove the commissioner for malfeasance or unfitness. The commissioner also serves as director of DIFS (Iowa Code 505.2).
• The commissioner has general control, supervision and direction over all insurance business in Iowa and makes rules under chapter 17A (Iowa Code 505.8). The commissioner also serves as receiver and liquidator of failed insurers (Iowa Code 505.9).
• Examinations: every domestic insurer at least once every five years (Iowa Code 507.1–507.2). Refusing examiners access to records is grounds to suspend or revoke a license.
• Responding to inquiries:
  • A response to a commissioner inquiry is untimely after 30 days (Iowa Code 507B.4A).
  • A Division inquiry about a claim must get an adequate answer within 21 days (191 IAC 15.42(2)).

Producer licensing (chapter 522B)

Lines of authority (Iowa Code 522B.6(2)):

• Life (includes annuities, and may include accidental death and disability income);
• accident and health or sickness;
• property;
• casualty;
• variable life and variable annuity;
• personal lines;
• excess and surplus lines.

Special requirements for two lines:

• Variable: an active life line, plus passing the FINRA exams needed for an Iowa securities license (191 IAC 10.4(8)).
• Surplus lines: the surplus lines exam, plus either the property and casualty exams or the personal lines and commercial exams (191 IAC 10.4(7)).

Who needs a license:

• Anyone who sells, solicits or negotiates insurance (Iowa Code 522B.2).
• Anyone who advises the public on policy benefits for a fee (522B.2(2)).
• Anyone who advises an Iowa resident to cancel or change a policy needs a license for that line. Licensed attorneys and CPAs who don't sell insurance are exempt (191 IAC 10.3(3)).
• A license alone gives no authority to bind or represent an insurer. That authority comes from an appointment or contract (Iowa Code 522B.1(8)).

Background check: the commissioner may require fingerprints for state and FBI checks on initial resident licenses (Iowa Code 522B.5A). A person barred by 18 U.S.C. 1033 needs the commissioner's written consent first (Iowa Code 522B.16B).

License term and renewal:

• Licenses run three years, ending on the last day of the producer's birth month (Iowa Code 522B.6; 191 IAC 10.6). The license number is the producer's NPN.
• Renewal is filed during the 90 days before expiration (191 IAC 10.8).
• An expired license can be reinstated within 12 months with proof of CE and the fees. After that, a new license is needed (191 IAC 10.9).

Exam waivers and moves:

• No exam for someone currently licensed in another state, or applying within 90 days after cancelling that license in good standing (Iowa Code 522B.8(1)).
• A producer moving to Iowa applies within 90 days (Iowa Code 522B.8(2)).
• A producer leaving Iowa files a change of address and home-state certification within 30 days (Iowa Code 522B.7(3)).

Nonresidents: licensed on a reciprocal basis (Iowa Code 522B.7). Meeting home-state CE satisfies Iowa's requirement.

Notices to the Division:

• Change of legal name or address within 30 days. Each late notice costs a $100 fee (Iowa Code 522B.6(7); 191 IAC 10.12, 10.20(5)).
• An assumed name must be reported before it is used (Iowa Code 522B.9).
• A business entity must replace its designated responsible producer within 10 days (191 IAC 10.18).

Reporting:

• An administrative action in another jurisdiction within 30 days of final disposition.
• A criminal prosecution within 30 days of the initial pretrial hearing (Iowa Code 522B.16).

Records: producers keep records for at least three years after the transaction (Iowa Code 522B.16A).

Continuing education (191 IAC chapter 11)

• 36 credits per three-year CE term, including 3 in ethics. A credit is 50 minutes.
• No carryover. No credit for courses taken before the first license. No credit for repeating a course in the same term.
• Self-study requires a proctored exam with a score of 70% or better.
• Sales, motivation and prospecting courses don't qualify.
• Exempt:
  • residents holding only surety or credit lines;
  • attorneys who complete continuing legal education;
  • producers on full-time active military duty for much of the term;
  • nonresidents whose home state has CE.
• Long licensure is not an exemption. Passing the licensing exam again is an alternative way to comply.
• Keep certificates for four years after the year of attendance.
• Product training:
  • Long-term care: an 8-credit one-time course, then 4 credits each CE term (191 IAC 39.15).
  • Annuities: a one-time 4-credit course (191 IAC 15.76).
  • Indexed products: a 4-credit course before selling indexed life or annuities. Those credits count toward CE (191 IAC 15.82–15.83).

Appointments, terminations and commissions

• Appointments:
  • An individual producer who acts as an insurer's agent must be appointed; a business entity need not be (Iowa Code 522B.13).
  • Appointments are filed within 30 days through the NIPR Gateway.
  • Insurers renew appointments by March 1. Appointments not paid by March 15 terminate (191 IAC 10.16).
• Terminations (Iowa Code 522B.14):
  • The insurer notifies the commissioner within 30 days, for any reason. For-cause documents follow within 10 days.
  • The insurer mails the producer a copy within 15 days.
  • The producer may file comments within 30 days.
  • Reporters are immune from liability absent actual malice. There is no fee to file a termination.
• Commissions (Iowa Code 522B.12):
  • None may be paid to or accepted by someone who needs a license and lacks one.
  • Renewal commissions may be paid to someone who was licensed at the time of sale, even without a current license.
  • A nominal referral fee is allowed if the same fee is paid for every referral, whether or not it leads to a sale (191 IAC 10.14(3)).
• Service fees:
  • Extra fees for normal selling and servicing are banned, except on assigned risk and commercial property-casualty policies, where the fee must be disclosed (191 IAC 10.14(4)).
  • Any other fee requires a written agreement signed in advance, which the producer keeps for three years (191 IAC 15.8(3)(c)).

Producer conduct rules (191 IAC 15.8)

• Identify yourself as a producer and name the insurer you represent.
• No high-pressure tactics. No transactions without the customer's authorization. No duplicate coverage without good cause.
• Gifts and loans from a customer (other than immediate family) may not exceed $250 in total. Loans from a recognized lender are fine.
• Don't solicit or accept being named beneficiary, executor or trustee of a customer who is not immediate family.
• Don't call yourself a financial planner or similar unless you hold a recognized certification. Misleading senior designations are banned too (191 IAC 10.19(4)).

Discipline and penalties

Grounds for discipline (Iowa Code 522B.11) include:

• a felony conviction;
• misappropriating money;
• forgery;
• using notes on the licensing exam;
• accepting business from unlicensed persons;
• failing to obey child support, state tax or student-loan orders;
• using a license principally to insure the licensee's own, relatives', employer's or employees' property (Iowa's controlled-business rule).

Procedure:

• An applicant who is denied may request a hearing within 30 days (191 IAC 10.20(6)).
• After revocation, no new application for at least one year unless the order says otherwise.
• Summary orders take effect immediately. The person has at least 30 days to request a hearing (Iowa Code 507B.6A).

Civil penalties (Iowa Code 507B.7, 505.7A):

• up to $1,000 per act, max $10,000;
• up to $5,000 per act, max $50,000 in six months, if the person knew or should have known;
• up to $10,000 per violation of an order;
• for unlicensed activity, a court can add contempt penalties of $3,000–$10,000 per violation.

Unfair trade practices (Iowa Code 507B.4)

• Misrepresentation, including intentional misquotes of premium. Twisting is also banned by 191 IAC 15.7.
• Using "burial insurance" or "funeral plan" titles without a qualifying funeral contract.
• False advertising, defamation, boycott, coercion and intimidation, false entries.
• Rebating. Allowed: value-added products and services tied to the policy and offered on documented, nondiscriminatory terms. A pilot program may run up to a year if the commissioner doesn't object within 21 days.
• Unfair discrimination, including against domestic abuse victims.
• Coverage inquiries: an inquiry with no claim filed can't be used to surcharge, decline, cancel or nonrenew personal lines coverage.
• Prior owner's losses: a property can't be declined solely because of a previous owner's losses, unless the damage was never repaired.
• Claims history: the applicant must be told that it will be considered and reported.
• Applications: false statements on an application, and failing to name the soliciting licensee, are violations.
• Lenders may not require that insurance be placed through a particular insurer or agent (Iowa Code 507B.5).

Claims handling

• Acknowledge a claim within 15 days (191 IAC 15.42).
• Accept or deny within 30 days of proof of loss. While the investigation continues, send a status letter every 45 days (191 IAC 15.41).
• Pay within 30 days after accepting liability for an undisputed amount.
• Health clean claims are paid or denied within 30 days. Interest of 10% a year starts on day 31 (Iowa Code 507B.4(3)(p); 191 IAC 15.32).
• Unfair claim settlement practices are listed acts done often enough to be a general business practice (Iowa Code 507B.4(3)(j)).

Credit information in personal lines (Iowa Code 515.103)

• No denial, cancellation or nonrenewal based solely on credit.
• Scores may not use income, gender, address or zip code, ethnic group, religion, marital status, race or nationality.
• Credit reports must be no more than 90 days old when the policy is written or renewed, and updated at least every 36 months.
• Disputes: re-underwrite and re-rate within 30 days of a corrected report.
• Adverse action notices list up to four specific reasons.
• Medical collections may not count against the consumer. Reasonable exceptions are made for extraordinary life circumstances.

Fraud (chapter 507E)

• The insurance fraud bureau is part of the Insurance Division. Its designated investigators have law enforcement powers (Iowa Code 507E.2, 507E.8).
• Presenting false material information on a claim or application with intent to defraud is a class D felony (Iowa Code 507E.3).
• Fraudulent sales practices are a class D felony, or a class C felony when the loss exceeds $10,000 (Iowa Code 507E.3A).
• Insurers report suspected fraud to the bureau within 60 days (Iowa Code 507E.6). Good-faith reporters are immune from civil liability (Iowa Code 507E.7).

Guaranty associations

Neither association may be used in advertising or as a sales inducement (Iowa Code 515B.18; 508C).

Surplus lines (chapter 515I)

• Placed through a licensed surplus lines producer with an eligible nonadmitted insurer, after a diligent search of the admitted market. An exempt commercial purchaser can waive the search.
• Eligible insurers need capital and surplus of at least the greatest of Iowa's minimum, $15 million or the risk-based capital level (Iowa Code 515I.4).
• The insured must be told within 30 days that the policy isn't covered by the Iowa Insurance Guaranty Association (191 IAC 21.4).
• Annual reports and tax are filed by March 1 (191 IAC 21.3).

Common exam traps

• CE is 36 credits every three years, with 3 in ethics and no carryover. It is not 24 hours every two years.
• Exam results expire in 90 days. Appointments are filed within 30 days. Terminations are reported within 30 days, with the producer's copy sent within 15.
• Producer records are kept three years, but annuity best interest records are kept ten.
• The commissioner is appointed by the governor with senate confirmation and also heads DIFS.
• Gifts or loans from non-family customers are capped at $250.
• Health claims paid late earn 10% interest starting on day 31.