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HF 986

A bill for an act relating to matters under the purview of the department of insurance and financial services, the utilities commission, and the department of transportation, including financial literacy and exploitation, tax confidentiality, health insurance rates, health savings accounts, insurer withdrawals, property insurance, service contracts, the Iowa individual health benefit reinsurance association, and the Iowa cemetery Act, motor vehicle financial liability coverage, and including penalties and effective date provisions.

2025-2026 Regular Session

HF 986 reallocates DIFS nonexamination revenue to the Commerce Revolving Fund and creates Financial Literacy and Financial Exploitation Prevention Funds, funded by agent fees.

Subcommittee recommends amendment and passage.
#confidentiality #exploitation #financialliteracy #insurance #insuranceandfinancialservicesdepartment #servicecontracts #utilities #utilitiescommission
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Bill Summary · HF 986

Summary — HF 986 (Department of Insurance and Financial Services Omnibus)

Status: Subcommittee recommends amendment and passage. Introduced: April 7, 2025. Passed House with amendments (H-1233, H-1234, others) April 24, 2025 (84–5).

Main purpose

HF 986 is an omnibus bill addressing multiple subjects under the Department of Insurance and Financial Services (DIFS), the Iowa Utilities Commission, and the Department of Transportation. Major themes include: reorganizing fee and nonexamination revenue flows; creating and funding financial literacy and financial exploitation prevention programs; changes to insurer withdrawal reporting; definitions for property claim valuation; regulation of service companies/service contracts; amendments to the Iowa Individual Health Benefit Reinsurance Association and Iowa Cemetery Act; and new motor vehicle financial liability verification and penalties.

Key provisions (selected)

  • Financial literacy & exploitation (Division I)

    • Redirects 100% of DIFS nonexamination revenues to the Commerce Revolving Fund (CMRF) (removing current requirement that 60% go to the General Fund).
    • Creates two new funds: Financial Literacy and Investor Education Fund and Financial Exploitation Prevention Fund.
    • Requires that for every $40 agent-related fee (registration, renewal, change), $10 be deposited to each new fund (i.e., $10 each to the two funds).
    • Authorizes transfers (up to $250,000 each) from the CMRF, deposits of civil penalties (Iowa Code ch. 502), grants/donations, and exempts the funds from annual reversion.
    • Transfers unobligated balances from the existing Securities Investor Education and Financial Literacy Training Fund into the new Financial Literacy Fund on effective date (July 1, 2025).

  • Insurer withdrawal requirements (amendment)

    • Requires insurers to file a withdrawal plan with the commissioner if they intend large premium reductions in-state (examples: 50%+ overall reduction; 75%+ for insurers exceeding a market-size threshold; 50%+ for specified lines over $20,000 annual premium).

  • Property claims valuation (replacement cost / actual cash value)

    • Clarifies that actual cash value calculations may consider all repair/replacement components (materials, labor, taxes, overhead, profit) and depreciation can reflect age, condition, pre-loss damage, wear and tear.

  • Service companies / service contracts (Division VI)

    • Expands licensing and disciplinary grounds for service companies and service contract providers (including fraud, misrepresentation, criminal convictions related to finance/securities, failure to maintain good standing, misuse of funds).

  • Iowa Individual Health Benefit Reinsurance Association

    • Clarifies membership scope; explicitly excludes the State of Iowa, Board of Regents, and institutions governed by it from membership.

  • Iowa Cemetery Act

    • Requires commissioner examinations of cemeteries with trust arrangements at least once every five years (except governmental subdivisions). Government-owned/operated cemeteries are exempted from certain annual report and repayment schedule requirements.

  • Motor vehicle financial liability coverage (H-1234)

    • Requires owners certifying registration to attest to financial liability coverage and provide proof (coverage card or acceptable documentation).
    • Courts must dismiss a citation for lack of proof if the defendant produces proof before the court date; certain violations are scheduled fines (tiered: $325 or $645 depending on accident involvement; higher for repeat offenses).
    • Department or county treasurer may refuse registration/renewal without proof of coverage.
    • Some registration/verification provisions take effect December 1, 2028.

Fiscal impacts (from fiscal notes)

  • Major fiscal effects tied to Division I (revenue reallocation), Division II (tax on gross premiums — confidentiality), Division VI (service companies/service contracts), Division VIII/IX (cemetery and motor vehicle provisions).
  • Redirecting nonexamination revenues to CMRF reduces General Fund receipts relative to current law and changes how revolving funds are used/appropriated to DIFS operations. Historical figures cited in fiscal note: nonexamination revenues averaged ≈ $20.5M annually (FY22–FY24); CMRF transfers to General Fund have varied (e.g., $33M in FY24).
  • Existing Securities Investor Education Fund had ~ $3.8M (as of April 18, 2025) to be transferred to the new Financial Literacy Fund.
  • Some divisions (health savings account cost-sharing, insurer withdrawal rules, certain hearings) are expected to have minimal or indeterminate fiscal impacts.

Who is affected

  • Insurance agents (fee allocation change), DIFS operations and budgeting, insurers (withdrawal and reporting requirements), service contract providers/service companies (licensing/discipline), cemetery operators, consumers (property claims valuation and senior consumer education), vehicle owners (registration proof of insurance), and courts/counties (citation processing and fine distribution).

Effective dates and procedural notes

  • Division I effective July 1, 2025 (explicit in fiscal note). Motor vehicle registration/verification provisions in H-1234 take effect December 1, 2028.
  • The bill was amended (H‑1233, H‑1234, H‑1257, H‑1273) in the House; H‑1233 contains many substantive insertions (senior fund, withdrawal plan thresholds, cemetery changes). H‑1234 contains the motor vehicle coverage verification package.
  • Next procedural steps: referred to further committee/action in the Senate following House passage and amendment (current listed status: subcommittee recommends amendment and passage).

Compiled from official sources — confirm details with the bill’s official record.

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