Introduced Version
HOUSE BILL No. 1238
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 27-1; IC 27-2-21; IC 27-5.1-2-6; IC 27-6-8-4.
Synopsis: Insurance matters. Reduces, from 1% to 0.15%, the lowest
interest rate that an insurer may use in determining the minimum
nonforfeiture amounts for an annuity contract. Provides that, as a
condition of license renewal for a two-year period, a limited lines
producer with a title insurance qualification must complete at least
seven hours of continuing education in any combination of the
following subjects: (1) Ethical practices in the marketing and selling of
title insurance, including provisions of the Dodd-Frank Wall Street
Reform and Consumer Protection Act. (2) Title insurance underwriting.
(3) Escrow matters. (4) Matters concerning regulation by the
department of insurance. (Under current law, a limited lines producer
with a title insurance qualification is required, in completing at least
seven hours of continuing education, to take at least one hour of
instruction in each of four particular subjects.) Exempts an insurance
producer who is at least 62 years of age from the requirement to
complete continuing education courses as a condition of insurance
producer license renewal. Amends the grounds for cancellation of a
policy of insurance to require a substantial change in the scale of risk
that would cause the policy to fail to meet the eligibility requirements
of the underwriting guidelines. Requires insurers that rely on external
consumer data to provide a consumer, upon the consumer's written
request, with the five most heavily weighed or primary factors the
insurer uses to calculate a premium. Requires an insurer that takes an
adverse action based on external consumer data to provide the
consumer with the five factors that were the primary influence on the
adverse action. Repeals the cap on annual direct written premium to
operate as a farm mutual insurance company.
Effective: July 1, 2022.
Lehman, Carbaugh
January 6, 2022, read first time and referred to Committee on Financial Institutions and
Insurance.
2022 IN 1238—LS 7172/DI 137 Introduced
Second Regular Session of the 122nd General Assembly (2022)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2021 Regular Session of the General Assembly.
HOUSE BILL No. 1238
A BILL FOR AN ACT to amend the Indiana Code concerning
insurance.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 27-1-12.5-3 IS AMENDED TO READ AS
2 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 3. (a) The minimum
3 values as specified in sections 4, 5, 6, 7, and 9 of this chapter of any
4 paid-up annuity, cash surrender or death benefits available under an
5 annuity contract shall be based upon minimum nonforfeiture amounts
6 as defined in this section.
7 (b) With respect to any annuity contract, the minimum nonforfeiture
8 amounts at any time at or prior to the commencement of any annuity
9 payments shall be equal to an accumulation up to such time at an
10 annual rate of interest determined under subsections (d) and (e) of the
11 net considerations as set forth in subsection (c) paid prior to such time,
12 decreased by the sum of the following:
13 (1) Any prior withdrawals from or partial surrenders of the
14 annuity contract accumulated at an annual rate of interest
15 determined under subsections (d) and (e).
16 (2) The amount of any indebtedness to the company on the
17 annuity contract, including interest due and accrued.
2022 IN 1238—LS 7172/DI 137 2
1 (3) An annual contract charge of fifty dollars ($50), accumulated
2 at the annual rate of interest determined under subsections (d) and
3 (e).
4 (c) The net considerations for a given contract year used to define
5 the minimum nonforfeiture amount shall be an amount equal to
6 eighty-seven and one-half percent (87.5%) of the gross considerations
7 credited to the annuity contract during that contract year.
8 (d) Except as provided in subsection (e), the interest rate used in
9 determining minimum nonforfeiture amounts is an annual rate of
10 interest determined under either of the following methods:
11 (1) The five-year constant maturity treasury rate, rounded to the
12 nearest five-hundredths of one percent (0.05%), as reported by the
13 Federal Reserve as of a date specified in the annuity contract.
14 Reduce this amount by one hundred twenty-five (125) basis
15 points.
16 (2) An average of the five-year constant maturity treasury rate as
17 reported by the Federal Reserve, rounded to the nearest
18 five-hundredths of one percent (0.05%), over a specified period
19 as set forth in the annuity contract. Reduce this amount by one
20 hundred twenty-five (125) basis points.
21 The date under subdivision (1) or the average period used under
22 subdivision (2) may not be longer than fifteen (15) months before the
23 annuity contract issue date or the redetermination date as determined
24 under subsection (f).
25 (e) If the rate of interest determined under subsection (d) is:
26 (1) less than one percent (1%), the interest rate used in
27 determining minimum nonforfeiture amounts is fifteen
28 one-hundredths of one percent (1%); (0.15%); or
29 (2) greater than three percent (3%), the interest rate used in
30 determining minimum nonforfeiture amounts is three percent
31 (3%).
32 (f) The interest rate determined under subsections (d) and (e)
33 applies for an initial period and may be redetermined for subsequent
34 periods. The redetermination date, basis, and period, if any, must be
35 specified in the annuity contract. The basis is:
36 (1) the date; or
37 (2) an average calculated over a specified period;
38 that produces the value of the five-year constant maturity treasury rate
39 reported by the Federal Reserve to be used at each redetermination
40 date.
41 (g) During the period or term that an annuity contract provides
42 substantive participation in an equity index benefit, the contract may
2022 IN 1238—LS 7172/DI 137 3
1 increase the basis point reduction described in subsection (d) by not
2 more than an additional one hundred (100) basis points to reflect the
3 value of the equity index benefit. The present value at the annuity
4 contract issue date, and at each redetermination date after the annuity
5 contract issue date, of the additional reduction may not exceed the
6 market value of the benefit. The commissioner may require a
7 demonstration that the present value of the additional reduction does
8 not exceed the market value of the benefit. If the demonstration is not
9 acceptable to the commissioner, the commissioner may disallow or
10 limit the additional reduction.
11 (h) The commissioner may adopt rules under IC 4-22-2 to provide
12 for further adjustments to the calculation of minimum nonforfeiture
13 amounts for:
14 (1) annuity contracts that provide participation in an equity index
15 benefit; and
16 (2) other annuity contracts for which the commissioner
17 determines adjustments are justified.
18 SECTION 2. IC 27-1-15.7-2, AS AMENDED BY P.L.196-2021,
19 SECTION 18, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
20 JULY 1, 2022]: Sec. 2. (a) Except as provided in subsection (b), to
21 renew a license issued under IC 27-1-15.6, a resident insurance
22 producer must complete at least twenty-four (24) hours of credit in
23 continuing education courses, not more than four (4) hours of which
24 may be in courses concerning one (1) or a combination of the
25 following:
26 (1) Sales promotion.
27 (2) Sales technique.
28 (3) Motivation.
29 (4) Psychology.
30 (5) Time management.
31 If the insurance producer has a qualification described in
32 IC 27-1-15.6-7(a)(1), IC 27-1-15.6-7(a)(2), or IC 27-1-15.6-7(a)(5), for
33 a license renewal that occurs after June 30, 2014, at least three (3) of
34 the hours of credit required by this subsection must be related to ethical
35 practices in the marketing and sale of life, health, or annuity insurance
36 products. An attorney in good standing who is admitted to the practice
37 of law in Indiana and holds a license issued under IC 27-1-15.6 may
38 complete all or any number of hours of continuing education required
39 by this subsection by completing an equivalent number of hours in
40 continuing legal education courses that are related to the business of
41 insurance.
42 (b) Except as provided in subsection (c), to renew a license issued
2022 IN 1238—LS 7172/DI 137 4
1 under IC 27-1-15.6, a limited lines producer with a title qualification
2 under IC 27-1-15.6-7(a)(8) must complete at least seven (7) hours of
3 credit in continuing education courses related to the business of title
4 insurance, with at least one (1) hour of instruction in a structured
5 setting or comparable self-study, in each any of the following or any
6 combination of the following:
7 (1) Ethical practices in the marketing and selling of title
8 insurance, including provisions of the Dodd-Frank Wall Street
9 Reform and Consumer Protection Act set forth in 12 U.S.C.
10 2608.
11 (2) Title insurance underwriting.
12 (3) Escrow issues. matters.
13 (4) Principles of the federal Real Estate Settlement Procedures
14 Act (12 U.S.C. 2608). Matters concerning regulation by the
15 department.
16 An attorney in good standing who is admitted to the practice of law in
17 Indiana and holds a license issued under IC 27-1-15.6 with a title
18 qualification under IC 27-1-15.6-7(a)(8) may complete all or any
19 number of hours of continuing education required by this subsection by
20 completing an equivalent number of hours in continuing legal
21 education courses related to the business of title insurance or any
22 aspect of real property law.
23 (c) The following insurance producers are not required to complete
24 continuing education courses to renew a license under this chapter:
25 (1) A limited lines producer who is licensed without examination
26 under IC 27-1-15.6-18(1).
27 (2) A limited line credit insurance producer.
28 (3) A nonresident limited lines producer with a title qualification:
29 (A) whose home state requires continuing education for a title
30 qualification; and
31 (B) who has met the continuing education requirements
32 described in clause (A).
33 (4) An individual who:
34 (A) holds a license issued under IC 27-1-15.6-7; and
35 (B) is at least sixty-two (62) years of age.
36 (d) Except as provided in section 2.2 of this chapter, to satisfy the
37 requirements of subsection (a) or (b), a licensee may use only those
38 credit hours earned in continuing education courses completed by the
39 licensee:
40 (1) after the effective date of the licensee's last renewal of a
41 license under this chapter; or
42 (2) if the licensee is renewing a license for the first time, after the
2022 IN 1238—LS 7172/DI 137 5
1 date on which the licensee was issued the license under this
2 chapter.
3 (e) If an insurance producer receives qualification for a license in
4 more than one (1) line of authority under IC 27-1-15.6, the insurance
5 producer may not be required to complete a total of more than
6 twenty-four (24) hours of credit in continuing education courses to
7 renew the license.
8 (f) Except as provided in subsection (g), a licensee may receive
9 credit only for completing the following continuing education courses:
10 (1) Continuing education courses that have been approved by the
11 commissioner under section 4 of this chapter.
12 (2) Continuing education courses that are required for the licensee
13 under IC 27-19-4-14.
14 (g) A licensee who teaches a course approved by the commissioner
15 under section 4 of this chapter shall receive continuing education credit
16 for teaching the course.
17 (h) When a licensee renews a license issued under this chapter, the
18 licensee must submit:
19 (1) a continuing education statement that:
20 (A) is in a format authorized by the commissioner;
21 (B) is signed by the licensee under oath; and
22 (C) lists the continuing education courses completed by the
23 licensee to satisfy the continuing education requirements of
24 this section; and
25 (2) any other information required by the commissioner.
26 (i) A continuing education statement submitted under subsection (h)
27 may be reviewed and audited by the department.
28 (j) A licensee shall retain a copy of the original certificate of
29 completion received by the licensee for completion of a continuing
30 education course.
31 (k) A licensee who completes a continuing education course that:
32 (1) is approved by the commissioner under section 4 of this
33 chapter;
34 (2) is held in a classroom setting; and
35 (3) concerns ethics;
36 shall receive continuing education credit not to exceed four (4) hours
37 in a renewal period.
38 SECTION 3. IC 27-1-31-2, AS AMENDED BY P.L.196-2021,
39 SECTION 26, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
40 JULY 1, 2022]: Sec. 2. (a) An insurer may not cancel a policy of
41 insurance that the insurer has written that has been in effect more than
42 ninety (90) days unless:
2022 IN 1238—LS 7172/DI 137 6
1 (1) the insured under the policy has failed to pay the premium;
2 (2) there is a substantial change in the scale of risk covered by the
3 policy that would cause the policy to fail to meet the eligibility
4 requirements of the insurer's underwriting guidelines;
5 (3) the insured has perpetrated a fraud or material
6 misrepresentation upon the insurer;
7 (4) the insured has failed to comply with reasonable safety
8 recommendations; or
9 (5) reinsurance of the risk associated with the policy has been
10 cancelled.
11 (b) An insurer shall mail a written notice of cancellation to a person
12 insured under a policy issued by the insurer at least:
13 (1) forty-five (45) days before cancelling the policy for any reason
14 set forth in subsection (a)(2), (a)(4), or (a)(5);
15 (2) twenty (20) days before cancelling the policy for the reason set
16 forth in subsection (a)(3); or
17 (3) ten (10) days before cancelling the policy for the reason set
18 forth in subsection (a)(1).
19 SECTION 4. IC 27-2-21-9.5 IS ADDED TO THE INDIANA CODE
20 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
21 1, 2022]: Sec. 9.5. As used in this chapter, "external consumer
22 data" means data or information that is obtained from an external
23 source and used by an insurer to supplement traditional
24 underwriting.
25 SECTION 5. IC 27-2-21-19.5 IS ADDED TO THE INDIANA
26 CODE AS A NEW SECTION TO READ AS FOLLOWS
27 [EFFECTIVE JULY 1, 2022]: Sec. 19.5. (a) If an insurer uses
28 external consumer data to underwrite and rate risks, the insurer,
29 upon a written request by a consumer, must disclose to the
30 consumer the five (5) most heavily weighed or primary factors the
31 insurer uses in calculating a premium.
32 (b) If an insurer takes an adverse action based on external
33 consumer data, the insurer must provide notice to the consumer
34 explaining the reason for the adverse action. The notice must
35 include:
36 (1) sufficiently clear and specific language so the consumer is
37 able to identify the basis for the insurer's decision to take an
38 adverse action; and
39 (2) the five (5) factors that were the primary influences on the
40 adverse action.
41 SECTION 6. IC 27-5.1-2-6 IS REPEALED [EFFECTIVE JULY 1,
42 2022]. Sec. 6. A farm mutual insurance company with an annual direct
2022 IN 1238—LS 7172/DI 137 7
1 written premium of more than ten million dollars ($10,000,000) may
2 not function as a farm mutual insurance company and shall be
3 regulated as a domestic mutual insurance company described in
4 IC 27-1-6-15.
5 SECTION 7. IC 27-6-8-4, AS AMENDED BY P.L.52-2013,
6 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
7 JULY 1, 2022]: Sec. 4. As used in this chapter, unless otherwise
8 provided:
9 (1) The term "account" means any one (1) of the three (3)
10 accounts created by section 5 of this chapter.
11 (2) The term "association" means the Indiana Insurance Guaranty
12 Association created by section 5 of this chapter.
13 (3) The term "commissioner" means the commissioner of
14 insurance of this state.
15 (4) The term "covered claim" means an unpaid claim which arises
16 out of and is within the coverage and not in excess of the
17 applicable limits of an insurance policy to which this chapter
18 applies issued by an insurer, if the insurer becomes an insolvent
19 insurer after the effective date (January 1, 1972) of this chapter
20 and (a) the claimant or insured is a resident of this state at the
21 time of the insured event or (b) the property from which the claim
22 arises is permanently located in this state. "Covered claim" shall
23 be limited as provided in section 7 of this chapter, and shall not
24 include the following:
25 (A) Any amount due any reinsurer, insurer, insurance pool, or
26 underwriting association, as subrogation recoveries or
27 otherwise. However, a claim for any such amount, asserted
28 against a person insured under a policy issued by an insurer
29 which has become an insolvent insurer, which if it were not a
30 claim by or for the benefit of a reinsurer, insurer, insurance
31 pool or underwriting association, would be a "covered claim"
32 may be filed directly with the receiver or liquidator of the
33 insolvent insurer, but in no event may any such claim be
34 asserted in any legal action against the insured of such
35 insolvent insurer.
36 (B) Any supplementary obligation including but not limited to
37 adjustment fees and expenses, attorney fees and expenses,
38 court costs, interest and bond premiums, whether arising as a
39 policy benefit or otherwise, prior to the appointment of a
40 liquidator.
41 (C) Any unpaid claim that is filed with the association after the
42 final date set by the court for the filing of claims against the
2022 IN 1238—LS 7172/DI 137 8
1 liquidator or receiver of an insolvent insurer. For the purpose
2 of filing a claim under this clause, notice of a claim to the
3 liquidator of the insolvent insurer is considered to be notice to
4 the association or the agent of the association and a list of
5 claims must be periodically submitted to the association (or
6 another state's association that is similar to the association) by
7 the liquidator.
8 (D) A claim that is excluded under section 11.5 of this chapter
9 due to the high net worth of an insured.
10 (E) Any claim by a person who directly or indirectly controls,
11 is controlled, or is under common control with an insolvent
12 insurer on December 31 of the year before the order of
13 liquidation.
14 All covered claims filed in the liquidation proceedings shall be
15 referred immediately to the association by the liquidator for
16 processing as provided in this chapter.
17 (5) The term "high net worth insured" means the following:
18 (A) For purposes of section 11.5(a) of this chapter, an insured
19 that has a net worth (including the aggregate net worth of the
20 insured and all subsidiaries and affiliates of the insured,
21 calculated on a consolidated basis) that exceeds twenty-five
22 million dollars ($25,000,000) on December 31 of the year
23 immediately preceding the year in which the insurer becomes
24 an insolvent insurer.
25 (B) For purposes of section 11.5(b) of this chapter, an insured
26 that has a net worth (including the aggregate net worth of the
27 insured and all subsidiaries and affiliates of the insured,
28 calculated on a consolidated basis) that exceeds fifty million
29 dollars ($50,000,000) on December 31 of the year immediately
30 preceding the year in which the insurer becomes an insolvent
31 insurer.
32 (6) The term "insolvent insurer" means (a) a member insurer
33 holding a valid certificate of authority to transact insurance in this
34 state either at the time the policy was issued or when the insured
35 event occurred and (b) against whom a final order of liquidation,
36 with a finding of insolvency, to which there is no further right of
37 appeal, has been entered by a court of competent jurisdiction in
38 the company's state of domicile. "Insolvent insurer" shall not be
39 construed to mean an insurer with respect to which an order,
40 decree, judgment or finding of insolvency whether preliminary or
41 temporary in nature or order to rehabilitation or conservation has
42 been issued by any court of competent jurisdiction prior to
2022 IN 1238—LS 7172/DI 137 9
1 January 1, 1972 or which is adjudicated to have been insolvent
2 prior to that date.
3 (7) The term "member insurer" means any person who is licensed
4 or holds a certificate of authority under IC 27-1-6-18 or
5 IC 27-1-17-1 to transact in Indiana any kind of insurance for
6 which coverage is provided under section 3 of this chapter,
7 including the exchange of reciprocal or inter-insurance contracts.
8 The term includes any insurer whose license or certificate of
9 authority to transact such insurance in Indiana may have been
10 suspended, revoked, not renewed, or voluntarily surrendered. A
11 "member insurer" does not include farm mutual insurance
12 companies organized and operating pursuant to IC 27-5.1. other
13 than a company to which IC 27-5.1-2-6 applies.
14 (8) The term "net direct written premiums" means direct gross
15 premiums written in this state on insurance policies to which this
16 chapter applies, less return premiums thereon and dividends paid
17 or credited to policyholders on such direct business. "Net direct
18 premiums written" does not include premiums on contracts
19 between insurers or reinsurers.
20 (9) The term "person" means an individual, an aggregation of
21 individuals, a corporation, a partnership, or another entity.
2022 IN 1238—LS 7172/DI 137