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Funeral home loses 'pre-need' license

BY CHRIS HIGGINS | APRIL 02, 2014 5:00 AM

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A local funeral home owner lost his license to sell and produce pre-need funeral insurance after conducting pre-need business under an inactive license, according to state documents.

Daniel Ciha of Coralville owns Gay and Ciha Funeral and Cremation Service in Iowa City. His wife, Colette, was also listed as a respondent on the March report.

Ciha was licensed as an agent for Homesteaders Life Co. to provide pre-need funeral insurance, which funds funeral services before one’s death. The funeral home was licensed as a pre-need services seller.

From 2008-2012, the business received nearly $150,000 in 18 payments for pre-need services. Customers were told their payments would be covered by insurance proceeds.

“During about a five-year span, we had some times when cash flow was very difficult,” Ciha said. “On a number of occasions, the families just wrote the funeral home a check [for pre-need services], and in those situations when we were having cash-flow issues, I deposited those funds into our business account instead of sending that money to the funeral-insurance company.”

The money was used for the funeral home’s day-to-day business. Ciha kept a record of every transaction but did not include them on annual reports pre-need sellers are required to provide to the Iowa Insurance Division.

“The state would do a routine audit every so often, and when they audited me last October, when the auditors came in, I provided them all of the information and documentation right away so they knew right away what was going on,” Ciha said.

He voluntarily halted his pre-need service licenses. State documents say Ciha accepted eight payments totaling more than $32,000 for pre-need services after the October suspension, which he described as a “misunderstanding.”

Other area funeral homes declined to comment.

“I thought if I didn’t take possession of those funds, then we could go ahead and tell families what to do with those funds,” Ciha said. He said customers were instead sent to a bank.

“The problem is I made note of that on the information we had talked about and that state considered that to be a contract,” he said.

He said the division understood the confusion, but officials considered Ciha’s conduct to be sales activity and suspended the licenses completely.

He gave the money necessary to pay for the 18 policies to Homesteaders, and the company has issued them per remediation. All existing pre-need agreements are fully funded, Ciha said.

The funeral home is required to remove itself as the owner of life-insurance policies and the title holder of financial instruments that fund pre-need contracts. The business will have to pay a $5,000 penalty.

Ciha said he will likely not pursue reinstating licenses.

“… Two and a half years ago, I realized I can’t be doing this,” he said. “I’m very upfront that I made a mistake. I’m very disappointed in myself for doing something like this.”

The Daily Iowan was unable to reach state officials listed on court documents by the time of publication.


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