2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 507B - INSURANCE TRADE PRACTICES
507B.4 - UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES DEFINED.

        507B.4  UNFAIR METHODS OF COMPETITION AND UNFAIR OR
      DECEPTIVE ACTS OR PRACTICES DEFINED.
         The following are hereby defined as unfair methods of competition
      and unfair or deceptive acts or practices in the business of
      insurance:
         1.  Misrepresentations and false advertising of insurance
      policies.  Making, issuing, circulating, or causing to be made,
      issued or circulated, any estimate, illustration, circular,
      statement, sales presentation, omission, or comparison which does any
      of the following:
         a.  Misrepresents the benefits, advantages, conditions, or
      terms of any insurance policy.
         b.  Misrepresents the dividends or share of the surplus to be
      received on any insurance policy.
         c.  Makes any false or misleading statements as to the
      dividends or share of surplus previously paid on any insurance
      policy.
         d.  Is misleading or is a misrepresentation as to the
      financial condition of any person, or as to the legal reserve system
      upon which any life insurer operates.
         e.  Uses any name or title of any insurance policy or class of
      insurance policies misrepresenting the true nature thereof.
         f.  Is a misrepresentation for the purpose of inducing or
      tending to induce the lapse, forfeiture, exchange, conversion, or
      surrender of any insurance policy.
         g.  Is a misrepresentation for the purpose of effecting a
      pledge or assignment of or effecting a loan against any insurance
      policy.
         h.  Misrepresents any insurance policy as being shares of
      stock.
         i.  Misrepresents any insurance policy to consumers by using
      the terms "burial insurance", "funeral insurance", "burial
      plan", or "funeral plan" in its names or titles, unless the
      policy is made with a funeral provider as beneficiary who specifies
      and fixes a price under contract with an insurance company.  This
      paragraph does not prevent insurers from stating or advertising that
      insurance benefits may provide cash for funeral or burial expenses.
         j.  Is a misrepresentation, including any intentional misquote
      of premium rate, for the purpose of inducing or tending to induce the
      purchase of an insurance policy.
         2.  False information and advertising.
         a.  Generally.  Making, publishing, disseminating,
      circulating, or placing before the public, or causing, directly or
      indirectly, to be made, published, disseminated, circulated, or
      placed before the public in a newspaper, magazine, or other
      publication, or in the form of a notice, circular, pamphlet, letter,
      or poster, or over any radio or television station, or in any other
      way, an advertisement, announcement, or statement containing any
      assertion, representation, or statement with respect to the business
      of insurance or with respect to any person in the conduct of the
      person's insurance business, which is untrue, deceptive, or
      misleading.
         b.  False statement of assets.  In the case of a company
      transacting the business of fire insurance within the state, stating
      or representing by advertisement in any newspaper, magazine, or
      periodical, or by any sign, circular, card, policy of insurance, or
      renewal certificate thereof or otherwise, that any funds or assets
      are in its possession and held available for the protection of
      holders of its policies unless so held, except the policy of
      insurance or certificate of renewal thereof may state, as a single
      item, the amount of capital set forth in the charter, or articles of
      incorporation, or association, or deed of settlement under which it
      is authorized to transact business.
         c.  Statement of capital and surplus.  In the case of a
      foreign company transacting the business of casualty insurance in the
      state, or an officer, producer, or representative of such a company,
      issuing or publishing an advertisement, public announcement, sign,
      circular, or card that purports to disclose the company's financial
      standing and fails to exhibit:  the capital actually paid in cash,
      and the amount of net surplus of assets over all the company's
      liabilities actually held and available for the payment of losses by
      fire and for the protection of holders of fire policies; and the
      amount of net surplus of assets over all liabilities in the United
      States actually available for the payment of losses by fire and held
      in the United States for the protection of holders of fire policies
      in the United States, including in such liabilities the fund reserved
      for reinsurance of outstanding risks.  The amounts stated for capital
      and net surplus shall correspond with the latest verified statement
      made by the company or association to the commissioner of insurance.

         3.  Defamation.  Making, publishing, disseminating, or
      circulating, directly or indirectly, or aiding, abetting or
      encouraging the making, publishing, disseminating, or circulating of
      any oral or written statement or any pamphlet, circular, article or
      literature which is false, or maliciously critical of or derogatory
      to the financial condition of any person, and which is calculated to
      injure such person.
         4.  Boycott, coercion and intimidation.  Entering into any
      agreement to commit, or by any concerted action committing, any act
      of boycott, coercion or intimidation resulting in or tending to
      result in unreasonable restraint of, or monopoly in, the business of
      insurance.
         5.  False statements and entries.
         a.  Knowingly filing with any supervisory or other public
      official, or knowingly making, publishing, disseminating, circulating
      or delivering to any person, or placing before the public, or
      knowingly causing directly or indirectly, to be made, published,
      disseminated, circulated, delivered to any person, or placed before
      the public, any false material statement of fact as to the financial
      condition of a person.
         b.  Knowingly making any false entry of a material fact in any
      book, report or statement of any person or knowingly omitting to make
      a true entry of any material fact pertaining to the business of such
      person in any book, report or statement of such person.
         6.  Stock operations and advisory board contracts.  Issuing or
      delivering or permitting agents, officers or employees to issue or
      deliver, agency company stock or other capital stock, or benefit
      certificates or shares in any common law corporation, or securities
      or any special or advisory board contracts or other contracts of any
      kind promising returns and profits as an inducement to insurance.
         7.  Unfair discrimination.
         a.  Making or permitting any unfair discrimination between
      individuals of the same class and equal expectation of life in the
      rates charged for any contract of life insurance or of life annuity
      or in the dividends or other benefits payable thereon, or in any
      other of the terms and conditions of such contract.
         b.  Making or permitting any unfair discrimination between
      insureds of the same class for essentially the same hazard in the
      amount of premium, policy fees, or rates charged for any policy or
      contract of insurance other than life or in the benefits payable
      thereunder, or in any of the terms or conditions of such contract, or
      in any other manner whatever.
         c.  Making or permitting any discrimination in the sale of
      insurance solely on the basis of domestic abuse as defined in section
      236.2.
         8.  Rebates.
         a.  Except as otherwise expressly provided by law, knowingly
      permitting or offering to make or making any contract of life
      insurance, life annuity or accident and health insurance, or
      agreement as to such contract other than as plainly expressed in the
      contract issued thereon, or paying or allowing, or giving or offering
      to pay, allow, or give, directly or indirectly, as inducement to such
      insurance, or annuity, any rebate of premiums payable on the
      contract, or any special favor or advantage in the dividends or other
      benefits thereon, or any valuable consideration or inducement
      whatever not specified in the contract; or giving, or selling, or
      purchasing or offering to give, sell, or purchase as inducement to
      such insurance or annuity or in connection therewith, any stocks,
      bonds, or other securities of any insurance company or other
      corporation, association, or partnership, or any dividends or profits
      accrued thereon, or any thing of value whatsoever not specified in
      the contract.
         b.  Nothing in subsection 7 or paragraph "a" of this
      subsection shall be construed as including within the definition of
      discrimination or rebates any of the following practices:
         (1)  In the case of any contract of life insurance or life
      annuity, paying bonuses to policyholders or otherwise rebating their
      premiums in whole or in part out of surplus accumulated from
      nonparticipating insurance, provided that any such bonuses or
      rebatement of premiums shall be fair and equitable to policyholders
      and for the best interests of the company and its policyholders.
         (2)  In the case of life insurance policies issued on the
      industrial debit plan, making allowance to policyholders who have
      continuously for a specified period made premium payments directly to
      an office of the insurer in an amount which fairly represents the
      saving in collection expenses.
         (3)  Readjustment of the rate of premium for a group insurance
      policy based on the loss or expense experienced thereunder, at the
      end of the first or any subsequent policy year of insurance
      thereunder, which may be made retroactive only for such policy year.

         c.  Paying, allowing, or giving, or offering to pay, allow, or
      give, directly or indirectly, as an inducement to purchase or acquire
      insurance other than life insurance, life annuity, or accident and
      health insurance, or after insurance has been effected, any rebate,
      discount, abatement, credit, or reduction of the premium named in a
      policy of insurance, or any special favor or advantage in the
      dividends or other benefits to accrue on the policy, or any valuable
      consideration or inducement, not specified in the policy, except to
      the extent provided for in an applicable filing.  An insured named in
      a policy, or an employee of the insured, shall not knowingly receive
      or accept, directly or indirectly, any rebate, discount, abatement,
      credit, or reduction of premium, or any such special favor or
      advantage or valuable consideration or inducement.
         This paragraph "c" shall not be construed to prohibit the
      payment of commissions or other compensation to duly licensed
      producers, or to prohibit any insurer from allowing or returning to
      its participating policyholders, members, or subscribers, dividends,
      savings, or unabsorbed premium deposits.  As used in this paragraph
      "c", "insurance" includes suretyship and "policy"
      includes bond.
         9.  Unfair claim settlement practices.  Committing or
      performing with such frequency as to indicate a general business
      practice any of the following:
         a.  Misrepresenting pertinent facts or insurance policy
      provisions relating to coverages of issue.
         b.  Failing to acknowledge and act reasonably promptly upon
      communications with respect to claims arising under insurance
      policies.
         c.  Failing to adopt and implement reasonable standards for
      the prompt investigation of claims arising under insurance policies.

         d.  Refusing to pay claims without conducting a reasonable
      investigation based upon all available information.
         e.  Failing to affirm or deny coverage of claims within a
      reasonable time after proof of loss statements have been completed.
         f.  Not attempting in good faith to effectuate prompt, fair,
      and equitable settlements of claims in which liability has become
      reasonably clear, or failing to include interest on the payment of
      claims when required under subsection 15 or section 511.38.
         g.  Compelling insureds to institute litigation to recover
      amounts due under an insurance policy by offering substantially less
      than the amounts ultimately recovered in actions brought by such
      insureds.
         h.  Attempting to settle a claim for less than the amount to
      which a reasonable person would have believed the person was entitled
      by reference to written or printed advertising material accompanying
      or made part of an application.
         i.  Attempting to settle claims on the basis of an application
      which was altered without notice to, or knowledge or consent of the
      insured.
         j.  Making claims payments to insureds or beneficiaries not
      accompanied by a statement setting forth the coverage under which
      payments are being made.
         k.  Making known to insureds or claimants a policy of
      appealing from arbitration awards in favor of insureds or claimants
      for the purpose of compelling them to accept settlements or
      compromises less than the amount awarded in arbitration.
         l.  Delaying the investigation or payment of claims by
      requiring an insured, claimant, or the physician of either to submit
      a preliminary claim report and then requiring the subsequent
      submission of formal proof of loss forms, both of which submissions
      contain substantially the same information.
         m.  Failing to promptly settle claims, where liability has
      become reasonably clear, under one portion of the insurance policy
      coverage in order to influence settlements under other portions of
      the insurance policy coverage.
         n.  Failing to promptly provide a reasonable explanation of
      the basis in the insurance policy in relation to the facts or
      applicable law for denial of a claim or for the offer of a compromise
      settlement.
         o.  Failing to comply with the procedures for auditing claims
      submitted by health care providers as set forth by rule of the
      commissioner.  However, this paragraph shall have no applicability to
      liability insurance, workers' compensation or similar insurance,
      automobile or homeowners' medical payment insurance, disability
      income, or long-term care insurance.
         10.  Use of inquiries.  Considering either of the following
      events for purposes of surcharging, declining, nonrenewing, or
      canceling personal lines property and casualty insurance coverage or
      a binder for personal lines property and casualty insurance coverage:

         a.  An applicant's or insured's inquiry into the type or level
      of coverage of a policy, or an inquiry into whether a policy will
      cover a loss.
         b.  An insured's inquiry regarding coverage of a policy for a
      loss if the insured does not file a claim.
         11.  History of a property.  Declining to insure a property
      not previously owned by an applicant for personal lines property and
      casualty insurance, based solely on the loss history of a previous
      owner of the property, unless the insurer can provide evidence that
      the previous owner did not repair damage to the property.
         12.  Disclosure of use of claims history.  Failing to inform
      an applicant at the time that an application for personal lines
      property and casualty insurance is made, in writing or in the same
      medium as the application is made, that the insurer will consider the
      applicant's or insured's claims history in determining whether to
      decline, cancel, nonrenew, or surcharge such a policy, and that a
      claim made by an insured will be reported to an insurance support
      organization.
         13.  Misrepresentation in insurance applications.  Making
      false or fraudulent statements or representations on or relative to
      an application for an insurance policy, for the purpose of obtaining
      a fee, commission, money, or other benefit from any insurer, agent,
      broker, or individual.
         14.  Omission from insurance application.  Failing to
      designate on an insurance policy application the licensee who has
      solicited and written the policy.
         15.  Payment of interest.  Failure of an insurer to pay
      interest at the rate of ten percent per annum on all health insurance
      claims that the insurer fails to timely accept and pay pursuant to
      section 507B.4A, subsection 2, paragraph "d".  Interest shall
      accrue commencing on the thirty-first day after receipt of all
      properly completed proof of loss forms.
         For purposes of this subsection, "insurer" means an entity
      providing a plan of health insurance, health care benefits, or health
      care services, or an entity subject to the jurisdiction of the
      commissioner performing utilization review, including an insurance
      company offering sickness and accident plans, a health maintenance
      organization, an organized delivery system authorized under 1993 Iowa
      Acts, ch. 158, and licensed by the department of public health, a
      nonprofit health service corporation, a plan established pursuant to
      chapter 509A for public employees, or any other entity providing a
      plan of health insurance, health care benefits, or health care
      services.  However, "insurer" does not include an entity that
      sells disability income or long-term care insurance.
         16.  Rating organizations.  Any violation of section 515F.16.

         17.  Minor traffic violations.  Failure of a person to comply
      with section 516B.3.
         18.  Information.  Failing or refusing to furnish any
      policyholder or applicant, upon reasonable request, information to
      which that individual is entitled.
         For purposes of subsections 10, 11, and 12, "personal lines
      property and casualty insurance" means insurance sold to
      individuals and families primarily for noncommercial purposes as
      provided in chapter 522B.  

         Section History: Early Form

         [C97, § 1782; S13, § 1782, 1820-b; SS15, § 1758-f; C24, 27, 31,
      35, 39, § 8666, 8759, 9022; C46, 50, 54, § 508.23, 511.20,
      515.144; C58, 62, 66, 71, 73, 75, 77, 79, 81, § 507B.4] 

         Section History: Recent Form

         85 Acts, ch 229, § 1; 87 Acts, ch 65, § 2; 87 Acts, ch 120, § 7;
      89 Acts, ch 321, § 32; 90 Acts, ch 1234, § 64; 92 Acts, ch 1162, § 3;
      93 Acts, ch 88, § 4; 95 Acts, ch 185, §6; 2001 Acts, ch 69, §5--7,
      39; 2001 Acts, ch 118, §15, 56; 2006 Acts, ch 1117, §23, 24; 2007
      Acts, ch 152, §53, 54; 2008 Acts, ch 1074, §1
         Referred to in § 225C.28B, 225C.29, 507B.6, 507B.7, 507B.12,
      515E.4
         See §513C.9 for additional unfair practices