July 26, 2006, Introduced by Senator SANBORN and referred to the Committee on Banking and Financial Institutions.
A bill entering into the interstate insurance product
regulation compact; and for related purposes.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
ARTICLE I. PURPOSES
The purposes of this compact are, through means of joint and
cooperative action among the compacting states:
1. To promote and protect the interest of consumers of
individual and group annuity, life insurance, disability income,
and long-term care insurance products.
2. To develop uniform standards for insurance products covered
under the compact.
3. To establish a central clearinghouse to receive and provide
prompt review of insurance products covered under the compact and,
in certain cases, advertisements related to those products,
submitted by insurers authorized to do business in 1 or more
compacting states.
4. To give appropriate regulatory approval to those product
filings and advertisements satisfying the applicable uniform
standard.
5. To improve coordination of regulatory resources and
expertise between state insurance departments regarding the setting
of uniform standards and review of insurance products covered under
the compact.
6. To create the interstate insurance product regulation
commission.
7. To perform these and such other related functions as may be
consistent with the state regulation of the business of insurance.
ARTICLE II. DEFINITIONS
For purposes of this compact:
1. "Advertisement" means any material designed to create
public interest in a product, or induce the public to purchase,
increase, modify, reinstate, borrow on, surrender, replace, or
retain a policy, as more specifically defined in the rules and
operating procedures of the commission.
2. "Bylaws" means those bylaws established by the commission
for its governance or for directing or controlling the commission's
actions or conduct.
3. "Compacting state" means any state which has enacted this
compact legislation and which has not withdrawn pursuant to article
XIV, section 1 of this compact, or been terminated pursuant to
article XIV, section 2 of this compact.
4. "Commission" means the "interstate insurance product
regulation commission" established by this compact.
5. "Commissioner" means the chief insurance regulatory
official of a state, including, but not limited to, commissioner,
superintendent, director, or administrator.
6. "Domiciliary state" means the state in which an insurer is
incorporated or organized or, in the case of an alien insurer, its
state of entry.
7. "Insurer" means any entity licensed by a state to issue
contracts of insurance for any of the lines of insurance covered by
this compact.
8. "Member" means the person chosen by a compacting state as
its representative to the commission, or his or her designee.
9. "Non-compacting state" means any state that is not at the
time a compacting state.
10. "Operating procedures" means procedures promulgated by the
commission implementing a rule, uniform standard, or a provision of
this compact.
11. "Product" means the form of a policy or contract,
including any application, endorsement, or related form that is
attached to and made a part of the policy or contract, and any
evidence of coverage or certificate, for an individual or group
annuity, life insurance, disability income, or long-term care
insurance product that an insurer is authorized to issue.
12. "Rule" means a statement of general or particular
applicability and future effect promulgated by the commission,
including a uniform standard developed pursuant to article VII of
this compact, designed to implement, interpret, or prescribe law or
policy or describing the organization, procedure, or practice
requirements of the commission, which shall have the force and
effect of law in the compacting states.
13. "State" means any state, district, or territory of the
United States of America.
14. "Third-party filer" means an entity that submits a product
filing to the commission on behalf of an insurer.
15. "Uniform standard" means a standard adopted by the
commission for a product line, pursuant to article VII of this
compact, and shall include all of the product requirements in
aggregate; provided, that each uniform standard shall be construed,
whether express or implied, to prohibit the use of any
inconsistent, misleading, or ambiguous provisions in a product and
the form of the product made available to the public shall not be
unfair, inequitable, or against public policy as determined by the
commission.
ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE
1. The compacting states hereby create and establish a joint
public agency known as the "interstate insurance product regulation
commission". Pursuant to article IV of this compact, the commission
will have the power to develop uniform standards for product lines,
receive and provide prompt review of filed products, and give
approval to those product filings satisfying applicable uniform
standards; provided, it is not intended for the commission to be
the exclusive entity for receipt and review of insurance product
filings. This compact does not prohibit any insurer from filing its
product in any state wherein the insurer is licensed to conduct the
business of insurance, and any such filing shall be subject to the
laws of the state where filed.
2. The commission is a body corporate and politic and an
instrumentality of the compacting states.
3. The commission is solely responsible for its liabilities
except as otherwise specifically provided in this compact.
4. Venue is proper and judicial proceedings by or against the
commission shall be brought solely and exclusively in a court of
competent jurisdiction where the principal office of the commission
is located.
ARTICLE IV. POWERS OF THE COMMISSION
The commission shall have the following powers:
1. To promulgate rules, pursuant to article VII of this
compact, which shall have the force and effect of law and shall be
binding in the compacting states to the extent and in the manner
provided in this compact.
2. To exercise its rule-making authority and establish
reasonable uniform standards for products covered under the
compact, and advertisement related to those products, which shall
have the force and effect of law and shall be binding in the
compacting states, but only for those products filed with the
commission, provided, that a compacting state shall have the right
to opt out of such uniform standard pursuant to article VII of this
compact, to the extent and in the manner provided in this compact,
and, provided further, that any uniform standard established by the
commission for long-term care insurance products may provide the
same or greater protections for consumers as, but shall not provide
less than, those protections set forth in the national association
of insurance commissioners' long-term care insurance model act and
long-term care insurance model regulation, respectively, adopted as
of 2001. The commission shall consider whether any subsequent
amendments to the national association of insurance commissioners'
long-term care insurance model act or long-term care insurance
model regulation adopted by the national association of insurance
commissioners require amending of the uniform standards established
by the commission for long-term care insurance products.
3. To receive and review in an expeditious manner products
filed with the commission, and rate filings for disability income
and long-term care insurance products, and give approval of those
products and rate filings that satisfy the applicable uniform
standard, where such approval shall have the force and effect of
law and be binding on the compacting states to the extent and in
the manner provided in the compact.
4. To receive and review in an expeditious manner
advertisement relating to long-term care insurance products for
which uniform standards have been adopted by the commission, and
give approval to all advertisement that satisfies the applicable
uniform standard. For any product covered under this compact, other
than long-term care insurance products, the commission shall have
the authority to require an insurer to submit all or any part of
its advertisement with respect to that product for review or
approval prior to use, if the commission determines that the nature
of the product is such that an advertisement of the product could
have the capacity or tendency to mislead the public. The actions of
the commission as provided in this section shall have the force and
effect of law and shall be binding in the compacting states to the
extent and in the manner provided in the compact.
5. To exercise its rule-making authority and designate
products and advertisement that may be subject to a self-
certification process without the need for prior approval by the
commission.
6. To promulgate operating procedures, pursuant to article VII
of this compact, which shall be binding in the compacting states to
the extent and in the manner provided in this compact.
7. To bring and prosecute legal proceedings or actions in its
name as the commission; provided, that the standing of any state
insurance department to sue or be sued under applicable law shall
not be affected.
8. To issue subpoenas requiring the attendance and testimony
of witnesses and the production of evidence.
9. To establish and maintain offices.
10. To purchase and maintain insurance and bonds.
11. To borrow, accept, or contract for services of personnel,
including, but not limited to, employees of a compacting state.
12. To hire employees, professionals, or specialists, and
elect or appoint officers, and to fix their compensation, define
their duties, and give them appropriate authority to carry out the
purposes of the compact, and determine their qualifications, and to
establish the commission's personnel policies and programs relating
to, among other things, conflicts of interest, rates of
compensation, and qualifications of personnel.
13. To accept any and all appropriate donations and grants of
money, equipment, supplies, materials, and services, and to
receive, utilize, and dispose of the same; provided that at all
times the commission shall strive to avoid any appearance of
impropriety.
14. To lease, purchase, accept appropriate gifts or donations
of, or otherwise to own, hold, improve, or use, any property, real,
personal, or mixed; provided that at all times the commission shall
strive to avoid any appearance of impropriety.
15. To sell, convey, mortgage, pledge, lease, exchange,
abandon, or otherwise dispose of any property, real, personal, or
mixed.
16. To remit filing fees to compacting states as may be set
forth in the bylaws, rules, or operating procedures.
17. To enforce compliance by compacting states with rules,
uniform standards, operating procedures, and bylaws.
18. To provide for dispute resolution among compacting states.
19. To advise compacting states on issues relating to insurers
domiciled or doing business in non-compacting jurisdictions,
consistent with the purposes of this compact.
20. To provide advice and training to those personnel in state
insurance departments responsible for product review and to be a
resource for state insurance departments.
21. To establish a budget and make expenditures.
22. To borrow money.
23. To appoint committees, including advisory committees
comprising members, state insurance regulators, state legislators
or their representatives, insurance industry and consumer
representatives, and such other interested persons as may be
designated in the bylaws.
24. To provide and receive information from, and to cooperate
with, law enforcement agencies.
25. To adopt and use a corporate seal.
26. To perform such other functions as may be necessary or
appropriate to achieve the purposes of this compact consistent with
the state regulation of the business of insurance.
ARTICLE V. ORGANIZATION OF THE COMMISSION
1. Membership, Voting, and Bylaws
a. Each compacting state shall have and be limited to 1
member. Each member shall be qualified to serve in that capacity
pursuant to applicable law of the compacting state. Any member may
be removed or suspended from office as provided by the law of the
state from which he or she shall be appointed. Any vacancy
occurring in the commission shall be filled in accordance with the
laws of the compacting state where the vacancy exists. Nothing in
this compact shall be construed to affect the manner in which a
compacting state determines the election or appointment and
qualification of its own commissioner.
b. Each member shall be entitled to 1 vote and shall have an
opportunity to participate in the governance of the commission in
accordance with the bylaws. Notwithstanding any provision in this
compact to the contrary, no action of the commission with respect
to the promulgation of a uniform standard shall be effective unless
2/3 of the members vote in favor of it.
c. The commission shall, by a majority of the members,
prescribe bylaws to govern its conduct as may be necessary or
appropriate to carry out the purposes, and exercise the powers, of
the compact, including, but not limited to, all of the following:
i. Establishing the fiscal year of the commission.
ii. Providing reasonable procedures for appointing and
electing members, as well as holding meetings, of the management
committee.
iii. Providing reasonable standards and procedures: for the
establishment and meetings of other committees, and governing any
general or specific delegation of any authority or function of the
commission.
iv. Providing reasonable procedures for calling and conducting
meetings of the commission that consist of a majority of commission
members, ensuring reasonable advance notice of each such meeting,
and providing for the right of citizens to attend each such meeting
with enumerated exceptions designed to protect the public's
interest, the privacy of individuals, and insurers' proprietary
information, including trade secrets. The commission may meet in
camera only after a majority of the entire membership votes to
close a meeting en toto or in part. As soon as practicable, the
commission must make public a copy of the vote to close the meeting
revealing the vote of each member with no proxy votes allowed and
votes taken during such meeting.
v. Establishing the titles, duties, and authority and
reasonable procedures for the election of the officers of the
commission.
vi. Providing reasonable standards and procedures for the
establishment of the personnel policies and programs of the
commission. Notwithstanding any civil service or other similar laws
of any compacting state, the bylaws shall exclusively govern the
personnel policies and programs of the commission.
vii. Promulgating a code of ethics to address permissible and
prohibited activities of commission members and employees.
viii. Providing a mechanism for winding up the operations of
the commission and the equitable disposition of any surplus funds
that may exist after the termination of the compact after the
payment and/or reserving of all of its debts and obligations.
d. The commission shall publish its bylaws in a convenient
form and file a copy of the bylaws and a copy of any amendment to
the bylaws with the appropriate agency or officer in each of the
compacting states.
2. Management Committee, Officers, and Personnel
a. A management committee comprising no more than 14 members
shall be established as follows:
i. One member from each of the 6 compacting states with the
largest premium volume for individual and group annuities, life,
disability income, and long-term care insurance products,
determined from the records of the national association of
insurance commissioners for the prior year.
ii. Four members from those compacting states with at least 2%
of the market based on the premium volume described above, other
than the 6 compacting states with the largest premium volume,
selected on a rotating basis as provided in the bylaws.
iii. Four members from those compacting states with less than
2% of the market, based on the premium volume described above, with
1 selected from each of the 4 zone regions of the national
association of insurance commissioners as provided in the bylaws.
b. The management committee shall have such authority and
duties as may be set forth in the bylaws, including, but not
limited to:
i. Managing the affairs of the commission in a manner
consistent with the bylaws and purposes of the commission.
ii. Establishing and overseeing an organizational structure
within, and appropriate procedures for, the commission to provide
for the creation of uniform standards and other rules, receipt and
review of product filings, administrative and technical support
functions, review of decisions regarding the disapproval of a
product filing, and the review of elections made by a compacting
state to opt out of a uniform standard; provided that a uniform
standard shall not be submitted to the compacting states for
adoption unless approved by 2/3 of the members of the management
committee.
iii. Overseeing the offices of the commission.
iv. Planning, implementing, and coordinating communications
and activities with other state, federal, and local government
organizations in order to advance the goals of the commission.
c. The commission shall elect annually officers from the
management committee, with each having such authority and duties,
as may be specified in the bylaws.
d. The management committee may, subject to the approval of
the commission, appoint or retain an executive director for such
period, upon such terms and conditions, and for such compensation
as the commission may deem appropriate. The executive director
shall serve as secretary to the commission, but shall not be a
member of the commission. The executive director shall hire and
supervise such other staff as may be authorized by the commission.
3. Legislative and Advisory Committees
a. A legislative committee comprising state legislators or
their designees shall be established to monitor the operations of,
and make recommendations to, the commission, including the
management committee; provided that the manner of selection and
term of any legislative committee member shall be as set forth in
the bylaws. Prior to the adoption by the commission of any uniform
standard, revision to the bylaws, annual budget, or other
significant matter as may be provided in the bylaws, the management
committee shall consult with and report to the legislative
committee.
b. The commission shall establish 2 advisory committees, 1 of
which shall comprise consumer representatives independent of the
insurance industry and the other comprising insurance industry
representatives.
c. The commission may establish additional advisory committees
as its bylaws may provide for the carrying out of its functions.
4. Corporate Records of the Commission
The commission shall maintain its corporate books and records
in accordance with the bylaws.
5. Qualified Immunity, Defense, and Indemnification
a. The members, officers, executive director, employees, and
representatives of the commission shall be immune from suit and
liability, either personally or in their official capacity, for any
claim for damage to or loss of property or personal injury or other
civil liability caused by or arising out of any actual or alleged
act, error, or omission that occurred, or that the person against
whom the claim is made had a reasonable basis for believing
occurred within the scope of commission employment, duties, or
responsibilities; provided, that nothing in this paragraph shall be
construed to protect any such person from suit and/or liability for
any damage, loss, injury, or liability caused by the intentional or
willful and wanton misconduct of that person.
b. The commission shall defend any member, officer, executive
director, employee, or representative of the commission in any
civil action seeking to impose liability arising out of any actual
or alleged act, error, or omission that occurred within the scope
of commission employment, duties, or responsibilities, or that the
person against whom the claim is made had a reasonable basis for
believing occurred within the scope of commission employment,
duties, or responsibilities; provided, that nothing in this compact
shall be construed to prohibit that person from retaining his or
her own counsel; and provided further, that the actual or alleged
act, error, or omission did not result from that person's
intentional or willful and wanton misconduct.
c. The commission shall indemnify and hold harmless any
member, officer, executive director, employee, or representative of
the commission for the amount of any settlement or judgment
obtained against that person arising out of any actual or alleged
act, error, or omission that occurred within the scope of
commission employment, duties, or responsibilities, or that such
person had a reasonable basis for believing occurred within the
scope of commission employment, duties, or responsibilities,
provided, that the actual or alleged act, error, or omission did
not result from the intentional or willful and wanton misconduct of
that person.
ARTICLE VI. MEETINGS AND ACTS OF THE COMMISSION
1. The commission shall meet and take such actions as are
consistent with the provisions of this compact and the bylaws.
2. Each member of the commission shall have the right and
power to cast a vote to which that compacting state is entitled and
to participate in the business and affairs of the commission. A
member shall vote in person or by such other means as provided in
the bylaws. The bylaws may provide for members' participation in
meetings by telephone or other means of communication.
3. The commission shall meet at least once during each
calendar year. Additional meetings shall be held as set forth in
the bylaws.
ARTICLE VII. RULES & OPERATING PROCEDURES: RULEMAKING FUNCTIONS OF
THE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS
1. Rulemaking authority. The commission shall promulgate
reasonable rules, including uniform standards, and operating
procedures in order to effectively and efficiently achieve the
purposes of this compact. Notwithstanding the foregoing, in the
event the commission exercises its rulemaking authority in a manner
that is beyond the scope of the purposes of this compact, or the
powers granted under this compact, then such an action by the
commission shall be invalid and have no force and effect.
2. Rulemaking procedure. Rules and operating procedures shall
be made pursuant to a rulemaking process that conforms to the model
state administrative procedure act of 1981 as amended, as may be
appropriate to the operations of the commission. Before the
commission adopts a uniform standard, the commission shall give
written notice to the relevant state legislative committees in each
compacting state responsible for insurance issues of its intention
to adopt the uniform standard. The commission in adopting a uniform
standard shall consider fully all submitted materials and issue a
concise explanation of its decision.
3. Effective date and opt out of a uniform standard. A uniform
standard shall become effective 90 days after its promulgation by
the commission or such later date as the commission may determine;
provided, however, that a compacting state may opt out of a uniform
standard as provided in this article. "Opt out" shall be defined as
any action by a compacting state to decline to adopt or participate
in a promulgated uniform standard. All other rules and operating
procedures, and amendments to those rules and operating procedures,
shall become effective as of the date specified in each rule,
operating procedure, or amendment.
4. Opt out procedure. A compacting state may opt out of a
uniform standard, either by legislation or regulation duly
promulgated by the insurance department under the compacting
state's administrative procedure act. If a compacting state elects
to opt out of a uniform standard by regulation, it must give
written notice to the commission no later than 10 business days
after the uniform standard is promulgated, or at the time the state
becomes a compacting state, and find that the uniform standard does
not provide reasonable protections to the citizens of the state,
given the conditions in the state. The commissioner shall make
specific findings of fact and conclusions of law, based on a
preponderance of the evidence, detailing the conditions in the
state that warrant a departure from the uniform standard and
determining that the uniform standard would not reasonably protect
the citizens of the state. The commissioner must consider and
balance the following factors and find that the conditions in the
state and needs of the citizens of the state outweigh the intent of
the legislature to participate in, and the benefits of, an
interstate agreement to establish national uniform consumer
protections for the products subject to this compact and the
presumption that a uniform standard adopted by the commission
provides reasonable protections to consumers of the relevant
product.
Notwithstanding the foregoing, a compacting state may, at the
time of its enactment of this compact, prospectively opt out of all
uniform standards involving long-term care insurance products by
expressly providing for such opt out in the enacted compact, and
such an opt out shall not be treated as a material variance in the
offer or acceptance of any state to participate in this compact.
Such an opt out shall be effective at the time of enactment of this
compact by the compacting state and shall apply to all existing
uniform standards involving long-term care insurance products and
those subsequently promulgated.
5. Effect of opt out. If a compacting state elects to opt out
of a uniform standard, the uniform standard shall remain applicable
in the compacting state electing to opt out until such time the opt
out legislation is enacted into law or the regulation opting out
becomes effective.
Once the opt out of a uniform standard by a compacting state
becomes effective as provided under the laws of that state, the
uniform standard shall have no further force and effect in that
state unless and until the legislation or regulation implementing
the opt out is repealed or otherwise becomes ineffective under the
laws of the state. If a compacting state opts out of a uniform
standard after the uniform standard has been made effective in that
state, the opt out shall have the same prospective effect as
provided under article XIV of this compact for withdrawals.
6. Stay of uniform standard. If a compacting state has
formally initiated the process of opting out of a uniform standard
by regulation, and while the regulatory opt out is pending, the
compacting state may petition the commission, at least 15 days
before the effective date of the uniform standard, to stay the
effectiveness of the uniform standard in that state. The commission
may grant a stay if it determines the regulatory opt out is being
pursued in a reasonable manner and there is a likelihood of
success. If a stay is granted or extended by the commission, the
stay or extension may postpone the effective date by up to 90 days,
unless affirmatively extended by the commission; provided, a stay
may not be permitted to remain in effect for more than 1 year
unless the compacting state can show extraordinary circumstances
that warrant a continuance of the stay, including, but not limited
to, the existence of a legal challenge that prevents the compacting
state from opting out. A stay may be terminated by the commission
upon notice that the rulemaking process has been terminated.
7. Not later than 30 days after a rule or operating procedure
is promulgated, any person may file a petition for judicial review
of the rule or operating procedure; provided, that the filing of
such a petition shall not stay or otherwise prevent the rule or
operating procedure from becoming effective unless the court finds
that the petitioner has a substantial likelihood of success. The
court shall give deference to the actions of the commission
consistent with applicable law and shall not find the rule or
operating procedure to be unlawful if the rule or operating
procedure represents a reasonable exercise of the commission's
authority.
ARTICLE VIII. COMMISSION RECORDS AND ENFORCEMENT
1. The commission shall promulgate rules establishing
conditions and procedures for public inspection and copying of its
information and official records, except such information and
records involving the privacy of individuals and insurers' trade
secrets. The commission may promulgate additional rules under which
it may make available to federal and state agencies, including law
enforcement agencies, records and information otherwise exempt from
disclosure, and may enter into agreements with such agencies to
receive or exchange information or records subject to nondisclosure
and confidentiality provisions.
2. Except as to privileged records, data, and information, the
laws of any compacting state pertaining to confidentiality or
nondisclosure shall not relieve any compacting state commissioner
of the duty to disclose any relevant records, data, or information
to the commission; provided, that disclosure to the commission
shall not be deemed to waive or otherwise affect any
confidentiality requirement; and further provided, that, except as
otherwise expressly provided in this compact, the commission shall
not be subject to the compacting state's laws pertaining to
confidentiality and nondisclosure with respect to records, data,
and information in its possession. Confidential information of the
commission shall remain confidential after such information is
provided to any commissioner.
3. The commission shall monitor compacting states for
compliance with duly adopted bylaws, rules, including uniform
standards, and operating procedures. The commission shall notify
any non-complying compacting state in writing of its noncompliance
with commission bylaws, rules, or operating procedures. If a non-
complying compacting state fails to remedy its noncompliance within
the time specified in the notice of noncompliance, the compacting
state shall be deemed to be in default as set forth in article XIV
of this compact.
4. The commissioner of any state in which an insurer is
authorized to do business, or is conducting the business of
insurance, shall continue to exercise his or her authority to
oversee the market regulation of the activities of the insurer in
accordance with the provisions of the state's law. The
commissioner's enforcement of compliance with the compact is
governed by the following provisions:
a. With respect to the commissioner's market regulation of a
product or advertisement that is approved or certified to the
commission, the content of the product or advertisement shall not
constitute a violation of the provisions, standards, or
requirements of the compact except upon a final order of the
commission, issued at the request of a commissioner after prior
notice to the insurer and an opportunity for hearing before the
commission.
b. Before a commissioner may bring an action for violation of
any provision, standard, or requirement of the compact relating to
the content of an advertisement not approved or certified to the
commission, the commission, or an authorized commission officer or
employee, must authorize the action. However, authorization
pursuant to this paragraph does not require notice to the insurer,
opportunity for hearing, or disclosure of requests for
authorization or records of the commission's action on such
requests.
ARTICLE IX. DISPUTE RESOLUTION
The commission shall attempt, upon the request of a member, to
resolve any disputes or other issues that are subject to this
compact and that may arise between 2 or more compacting states, or
between compacting states and non-compacting states, and the
commission shall promulgate an operating procedure providing for
resolution of such disputes.
ARTICLE X. PRODUCT FILING AND APPROVAL
1. Insurers and third-party filers seeking to have a product
approved by the commission shall file the product with, and pay
applicable filing fees to, the commission. Nothing in this compact
shall be construed to restrict or otherwise prevent an insurer from
filing its product with the insurance department in any state where
the insurer is licensed to conduct the business of insurance, and
such filing shall be subject to the laws of the states where filed.
2. The commission shall establish appropriate filing and
review processes and procedures pursuant to commission rules and
operating procedures. Notwithstanding any provision in this compact
to the contrary, the commission shall promulgate rules to establish
conditions and procedures under which the commission will provide
public access to product filing information. In establishing such
rules, the commission shall consider the interests of the public in
having access to such information, as well as protection of
personal medical and financial information and trade secrets, that
may be contained in a product filing or supporting information.
3. Any product approved by the commission may be sold or
otherwise issued in those compacting states for which the insurer
is legally authorized to do business.
ARTICLE XI. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS
1. Not later than 30 days after the commission has given
notice of a disapproved product or advertisement filed with the
commission, the insurer or third party filer whose filing was
disapproved may appeal the determination to a review panel
appointed by the commission. The commission shall promulgate rules
to establish procedures for appointing such review panels and
provide for notice and hearing. An allegation that the commission,
in disapproving a product or advertisement filed with the
commission, acted arbitrarily, capriciously, or in a manner that is
an abuse of discretion or otherwise not in accordance with the law,
is subject to judicial review in accordance with article III,
section 4.
2. The commission shall have authority to monitor, review, and
reconsider products and advertisement subsequent to their filing or
approval upon a finding that the product does not meet the relevant
uniform standard. Where appropriate, the commission may withdraw or
modify its approval after proper notice and hearing, subject to the
appeal process in section 1 above.
ARTICLE XII. FINANCE
1. The commission shall pay or provide for the payment of the
reasonable expenses of its establishment and organization. To fund
the cost of its initial operations, the commission may accept
contributions and other forms of funding from the national
association of insurance commissioners, compacting states, and
other sources. Contributions and other forms of funding from other
sources shall be of such a nature that the independence of the
commission concerning the performance of its duties shall not be
compromised.
2. The commission shall collect a filing fee from each insurer
and third party filer filing a product with the commission to cover
the cost of the operations and activities of the commission and its
staff in a total amount sufficient to cover the commission's annual
budget.
3. The commission's budget for a fiscal year shall not be
approved until it has been subject to notice and comment as set
forth in article VII of this compact.
4. The commission shall be exempt from all taxation in and by
the compacting states.
5. The commission shall not pledge the credit of any
compacting state, except by and with the appropriate legal
authority of that compacting state.
6. The commission shall keep complete and accurate accounts of
all its internal receipts, including grants and donations, and
disbursements of all funds under its control. The internal
financial accounts of the commission shall be subject to the
accounting procedures established under its bylaws. The financial
accounts and reports, including the system of internal controls and
procedures of the commission, shall be audited annually by an
independent certified public accountant. Upon the determination of
the commission, but no less frequently than every 3 years, the
review of the independent auditor shall include a management and
performance audit of the commission. The commission shall make an
annual report to the governor and legislature of the compacting
states, which shall include a report of the independent audit. The
commission's internal accounts shall not be confidential and such
materials may be shared with the commissioner of any compacting
state upon request, provided, however, that any work papers related
to any internal or independent audit and any information regarding
the privacy of individuals and insurers' proprietary information,
including trade secrets, shall remain confidential.
7. No compacting state shall have any claim to or ownership of
any property held by or vested in the commission or to any
commission funds held pursuant to the provisions of this compact.
ARTICLE XIII. COMPACTING STATES, EFFECTIVE DATE, AND AMENDMENT
1. Any state is eligible to become a compacting state.
2. The compact shall become effective and binding upon
legislative enactment of the compact into law by 2 compacting
states; provided, the commission shall become effective for
purposes of adopting uniform standards for, reviewing, and giving
approval or disapproval of, products filed with the commission that
satisfy applicable uniform standards only after 26 states are
compacting states or, alternatively, by states representing greater
than 40% of the premium volume for life insurance, annuity,
disability income, and long-term care insurance products, based on
records of the national association of insurance commissioners for
the prior year. Thereafter, it shall become effective and binding
as to any other compacting state upon enactment of the compact into
law by that state.
3. Amendments to the compact may be proposed by the commission
for enactment by the compacting states. No amendment shall become
effective and binding upon the commission and the compacting states
unless and until all compacting states enact the amendment into
law.
ARTICLE XIV. WITHDRAWAL, DEFAULT, AND TERMINATION
1. Withdrawal
a. Once effective, the compact shall continue in force and
remain binding upon each and every compacting state; provided, that
a compacting state may withdraw from the compact ("withdrawing
state") by enacting a statute specifically repealing the statute
that enacted the compact into law.
b. The effective date of withdrawal is the effective date of
the repealing statute. However, the withdrawal shall not apply to
any product filings approved or self-certified, or any
advertisement of those products, on the date the repealing statute
becomes effective, except by mutual agreement of the commission and
the withdrawing state unless the approval is rescinded by the
withdrawing state as provided in paragraph e. of this section.
c. The commissioner of the withdrawing state shall immediately
notify the management committee in writing upon the introduction of
legislation repealing this compact in the withdrawing state.
d. The commission shall notify the other compacting states of
the introduction of such legislation within 10 days after its
receipt of notice of the introduction of withdrawing legislation.
e. The withdrawing state is responsible for all obligations,
duties, and liabilities incurred through the effective date of
withdrawal, including any obligations, the performance of which
extend beyond the effective date of withdrawal, except to the
extent those obligations may have been released or relinquished by
mutual agreement of the commission and the withdrawing state. The
commission's approval of products and advertisement prior to the
effective date of withdrawal shall continue to be effective and be
given full force and effect in the withdrawing state, unless
formally rescinded by the withdrawing state in the same manner as
provided by the laws of the withdrawing state for the prospective
disapproval of products or advertisement previously approved under
state law.
f. Reinstatement following withdrawal of any compacting state
shall occur upon the effective date of the withdrawing state
reenacting the compact.
2. Default
a. If the commission determines that any compacting state has
at any time defaulted ("defaulting state") in the performance of
any of its obligations or responsibilities under this compact, the
bylaws, or duly promulgated rules or operating procedures, then,
after notice and hearing as set forth in the bylaws, all rights,
privileges, and benefits conferred by this compact on the
defaulting state shall be suspended from the effective date of
default as fixed by the commission. The grounds for default
include, but are not limited to, failure of a compacting state to
perform its obligations or responsibilities, and any other grounds
designated in commission rules. The commission shall immediately
notify the defaulting state in writing of the defaulting state's
suspension pending a cure of the default. The commission shall
stipulate the conditions and the time period within which the
defaulting state must cure its default. If the defaulting state
fails to cure the default within the time period specified by the
commission, the defaulting state shall be terminated from the
compact and all rights, privileges, and benefits conferred by this
compact shall be terminated from the effective date of termination.
b. Product approvals by the commission or product self-
certifications, or any advertisement in connection with that
product, that are in force on the effective date of termination
shall remain in force in the defaulting state in the same manner as
if the defaulting state had withdrawn voluntarily pursuant to
section 1 of this article.
c. Reinstatement following termination of any compacting state
requires a reenactment of the compact.
3. Dissolution of Compact
a. The compact dissolves effective upon the date of the
withdrawal or default of the compacting state that reduces
membership in the compact to 1 compacting state.
b. Upon the dissolution of this compact, the compact becomes
null and void and shall be of no further force or effect, and the
business and affairs of the commission shall be wound up and any
surplus funds shall be distributed in accordance with the bylaws.
ARTICLE XV. SEVERABILITY AND CONSTRUCTION
1. The provisions of this compact shall be severable; and if
any phrase, clause, sentence, or provision is deemed unenforceable,
the remaining provisions of the compact shall be enforceable.
2. The provisions of this compact shall be liberally construed
to effectuate its purposes.
ARTICLE XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS
1. Other Laws
a. Nothing herein prevents the enforcement of any other law of
a compacting state, except as provided in paragraph b. of this
section.
b. For any product approved or certified to the commission,
the rules, uniform standards, and any other requirements of the
commission shall constitute the exclusive provisions applicable to
the content, approval, and certification of such products. For
advertisement that is subject to the commission's authority, any
rule, uniform standard, or other requirement of the commission that
governs the content of the advertisement shall constitute the
exclusive provision that a commissioner may apply to the content of
the advertisement. Notwithstanding the foregoing, no action taken
by the commission shall abrogate or restrict the access of any
person to state courts, remedies available under state law related
to breach of contract, tort, or other laws not specifically
directed to the content of the product, state law relating to the
construction of insurance contracts, or the authority of the
attorney general of the state, including, but not limited to,
maintaining any actions or proceedings, as authorized by law.
c. All insurance products filed with individual states shall
be subject to the laws of those states.
2. Binding Effect of This Compact
a. All lawful actions of the commission, including all rules
and operating procedures promulgated by the commission, are binding
upon the compacting states.
b. All agreements between the commission and the compacting
states are binding in accordance with their terms.
c. Upon the request of a party to a conflict over the meaning
or interpretation of commission actions, and upon a majority vote
of the compacting states, the commission may issue advisory
opinions regarding the meaning or interpretation in dispute.
d. In the event any provision of this compact exceeds the
constitutional limits imposed on the legislature of any compacting
state, the obligations, duties, powers, or jurisdiction sought to
be conferred by that provision upon the commission shall be
ineffective as to that compacting state, and those obligations,
duties, powers, or jurisdiction shall remain in the compacting
state and shall be exercised by the agency to which those
obligations, duties, powers, or jurisdiction is delegated by law in
effect at the time this compact becomes effective.