CHAPTER 5001. INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
INSURANCE CODE
TITLE 15. INTERSTATE INSURANCE COMPACTS
CHAPTER 5001. INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
Sec. 5001.001. ADOPTION OF COMPACT; REPRESENTATIVE TO
COMMISSION. Pursuant to the terms and conditions of this
chapter, the state joins with other states that have adopted the
Interstate Insurance Product Regulation Compact to establish and
become a member of the Interstate Insurance Product Regulation
Commission. The commissioner is the state's representative to
that commission.
Added by Acts 2005, 79th Leg., Ch.
1132, Sec. 1, eff. September 1, 2005.
Sec. 5001.002. TERMS OF 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 thereto, submitted by
insurers authorized to do business in one 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; and
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" mean 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Compact legislation and which has not withdrawn pursuant to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, or been terminated pursuant to Article
XIV, Section 2.
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 Act.
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 which is not at the
time a Compacting State.
10. "Operating Procedures" mean 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 which 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, the Commission
will have the power to develop Uniform Standards for Product
lines, receive and provide prompt review of Products filed
therewith, 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. Nothing herein shall 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 thereto, 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, 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 NAIC Long-Term Care Insurance Model Act or
Long-Term Care Insurance Model Regulation adopted by the NAIC
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
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; and
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 one
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 wherein the vacancy exists.
Nothing herein 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 one vote and shall have an
opportunity to participate in the governance of the Commission in
accordance with the Bylaws. Notwithstanding any provision herein
to the contrary, no action of the Commission with respect to the
promulgation of a Uniform Standard shall be effective unless
two-thirds (2/3) of the Members vote in favor thereof.
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:
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: (i) for the
establishment and meetings of other committees, and (ii)
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 (i) a copy of the
vote to close the meeting revealing the vote of each Member with
no proxy votes allowed, and (ii) 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; and
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 thereof and a copy of any amendment thereto, 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 fourteen (14)
members shall be established as follows:
i. One (1) member from each of the six (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 NAIC for the prior
year;
ii. Four (4) members from those Compacting States with at least
two percent (2%) of the market based on the premium volume
described above, other than the six (6) Compacting States with
the largest premium volume, selected on a rotating basis as
provided in the Bylaws; and
iii. Four (4) members from those Compacting States with less
than two percent (2%) of the market, based on the premium volume
described above, with one (1) selected from each of the four (4)
zone regions of the NAIC 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 two-thirds (2/3) of the
members of the Management Committee;
iii. Overseeing the offices of the Commission; and
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 two (2) advisory committees,
one 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
herein 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 AND 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 Act, or
the powers granted hereunder, 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
committee(s) 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 ninety (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 thereto, 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
(a) give written notice to the Commission no later than ten (10)
business days after the Uniform Standard is promulgated, or at
the time the State becomes a Compacting State and (b) 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 which 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: (i) 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 Act; and (ii) 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 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 fifteen
(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 thereof may postpone the
effective date by up to ninety (90) days, unless affirmatively
extended by the Commission; provided, a stay may not be permitted
to remain in effect for more than one (1) year unless the
Compacting State can show extraordinary circumstances which
warrant a continuance of the stay, including, but not limited to,
the existence of a legal challenge which 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 thirty (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 Act, 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.
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 which may arise between two 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 Act
shall be construed to restrict or otherwise prevent an insurer
from filing its Product with the insurance department in any
State wherein 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 herein 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 thirty (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 three (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 two 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 twenty-six
(26) States are Compacting States or, alternatively, by States
representing greater than forty percent (40%) of the premium
volume for life insurance, annuity, disability income and
long-term care insurance products, based on records of the NAIC
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 which 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 such 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 ten (10) days after
its receipt of notice thereof.
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 such
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 which reduces
membership in the Compact to one 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
which 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: (i)
the access of any person to state courts; (ii) remedies available
under state law related to breach of contract, tort, or other
laws not specifically directed to the content of the Product;
(iii) state law relating to the construction of insurance
contracts; or (iv) 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 thereof to
which those obligations, duties, powers or jurisdiction are
delegated by law in effect at the time this Compact becomes
effective.
Added by Acts 2005, 79th Leg., Ch.
1132, Sec. 1, eff. September 1, 2005.