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Iowa Still Requires Mailed Notice of Policy Termination

Feb. 20, 2015 AAIS Advisory notice UPDATED 5/14/2015

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May 14 UPDATE: The proposed rule has been adopted and the adopted version is available online.

May 6 UPDATE: The Iowa Division of Insurance has proposed rules intended to clarify authorized methods of delivery for notices of cancellation, suspension, nonrenewal, and termination of policies.

A recent bulletin from the Iowa Insurance Division effectively states that insurers must still mail notices of policy cancellations, non-renewals, and terminations, even though the state allows electronic transmission of such notices.

While acknowledging a 2014 statute that allows policyholders the right to consent to electronic communications, the bulletin states that the division is unaware of any electronic verification software that would meet the state's requirement for proof of receipt of notices regarding policy termination.

Until such time as the division is able to authorize acceptable means of electronic verification, postal service certificates of mailing will continue to be regarded as the proof of receipt for termination notices. Insurers can also send electronic notices of policy termination, but the notice would not be effective without proof of receipt.

Iowa requires that notices of cancellation be delivered at least 30 days prior to the cancellation (10 days if the cancellation is for non-payment of premium). The reason for the cancellation must be provided in that notice or the policyholder must be notified of his/her right to request the reason and right to a hearing before the Iowa insurance commissioner.

AAIS Advisory notices are posted periodically to announce AAIS product developments, and to provide news items that are relevant to our program users. Advisory notices are news summaries that paraphrase documents which should be consulted directly for complete, authoritative information. 

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