31A-39-101 - Interstate Insurance Product Regulation Compact.
31A-39-101. Interstate Insurance Product Regulation Compact.
Pursuant to the terms and conditions of this Act, the State of Utah seeks to join with otherStates and establish the Interstate Insurance Product Regulation Compact, and thus become amember of the Interstate Insurance Product Regulation Commission. Utah's insurancecommissioner is hereby designated to serve as the representative of this State to the Commission.
The purposes of this Compact are, through means of joint and cooperative action among theCompacting States:
1. To promote and protect the interest of consumers of individual and group annuity, lifeinsurance, 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 insuranceproducts 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 advertisementssatisfying the applicable uniform standard;
5. To improve coordination of regulatory resources and expertise between state insurancedepartments regarding the setting of uniform standards and review of insurance products coveredunder 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 stateregulation of the business of insurance.
For purposes of this Compact:
1. "Advertisement" means any material designed to create public interest in a Product, orinduce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retaina 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 fordirecting or controlling the Commission's actions or conduct.
3. "Compacting State" means any State which has enacted this Compact legislation andwhich has not withdrawn pursuant to Article XIV, Section 1, or been terminated pursuant toArticle XIV, Section 2.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, butnot 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 ofthe lines of insurance covered by this Act.
8. "Member" means the person chosen by a Compacting State as its representative to theCommission, 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 Commissionimplementing 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, andany 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 effectpromulgated by the Commission, including a Uniform Standard developed pursuant to ArticleVII of this Compact, designed to implement, interpret, or prescribe law or policy or describingthe organization, procedure, or practice requirements of the Commission, which shall have theforce 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 Commissionon 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 inaggregate; 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 theform of the Product made available to the public shall not be unfair, inequitable or against publicpolicy as determined by the Commission.
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 Commissionwill have the power to develop Uniform Standards for Product lines, receive and provide promptreview of Products filed therewith, and give approval to those Product filings satisfyingapplicable Uniform Standards; provided, it is not intended for the Commission to be theexclusive entity for receipt and review of insurance product filings. Nothing herein shall prohibitany Insurer from filing its product in any State wherein the Insurer is licensed to conduct thebusiness 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 theCompacting States.
3. The Commission is solely responsible for its liabilities except as otherwise specificallyprovided in this Compact.
4. Venue is proper and judicial proceedings by or against the Commission shall bebrought solely and exclusively in a Court of competent jurisdiction where the principal office ofthe Commission is located.
The Commission shall have the following powers:
1. To promulgate Rules, pursuant to Article VII of this Compact, which shall have theforce and effect of law and shall be binding in the Compacting States to the extent and in themanner provided in this Compact;
2. To exercise its rulemaking authority and establish reasonable Uniform Standards forProducts covered under the Compact, and Advertisement related thereto, which shall have theforce and effect of law and shall be binding in the Compacting States, but only for those Productsfiled with the Commission, provided, that a Compacting State shall have the right to opt out ofsuch Uniform Standard pursuant to Article VII, to the extent and in the manner provided in thisCompact, 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 ofInsurance Commissioners' Long-Term Care Insurance Model Act and Long-Term Care InsuranceModel Regulation, respectively, adopted as of 2001. The Commission shall consider whether anysubsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term CareInsurance Model Regulation adopted by the NAIC require amending of the Uniform Standardsestablished 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 ofthose Products and rate filings that satisfy the applicable Uniform Standard, where such approvalshall have the force and effect of law and be binding on the Compacting States to the extent andin the manner provided in the Compact;
4. To receive and review in an expeditious manner Advertisement relating to long-termcare 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 anyproduct covered under this Compact, other than long-term care insurance products, theCommission shall have the authority to require an insurer to submit all or any part of itsAdvertisement with respect to that product for review or approval prior to use, if the Commissiondetermines that the nature of the product is such that an Advertisement of the product could havethe capacity or tendency to mislead the public. The actions of Commission as provided in thissection shall have the force and effect of law and shall be binding in the Compacting States to theextent and in the manner provided in the Compact;
5. To exercise its rulemaking authority and designate Products and Advertisement thatmay be subject to a self-certification process without the need for prior approval by theCommission;
6. To promulgate Operating Procedures, pursuant to Article VII of this Compact, whichshall be binding in the Compacting States to the extent and in the manner provided in thisCompact;
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 applicablelaw shall not be affected;
8. To issue subpoenas requiring the attendance and testimony of witnesses and theproduction 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 tofix their compensation, define their duties and give them appropriate authority to carry out thepurposes of the Compact, and determine their qualifications; and to establish the Commission'spersonnel policies and programs relating to, among other things, conflicts of interest, rates ofcompensation 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 atall 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 theCommission shall strive to avoid any appearance of impropriety;
15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose ofany property, real, personal or mixed;
16. To remit filing fees to Compacting States as may be set forth in the Bylaws, Rules orOperating 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 doingbusiness in Non-compacting jurisdictions, consistent with the purposes of this Compact;
20. To provide advice and training to those personnel in state insurance departmentsresponsible 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, stateinsurance regulators, state legislators or their representatives, insurance industry and consumerrepresentatives, and such other interested persons as may be designated in the Bylaws;
24. To provide and receive information from, and to cooperate with law enforcementagencies;
25. To adopt and use a corporate seal; and
26. To perform such other functions as may be necessary or appropriate to achieve thepurposes of this Compact consistent with the state regulation of the business of insurance.
1. Membership, Voting and Bylaws
a. Each Compacting State shall have and be limited to one Member. Each Member shallbe qualified to serve in that capacity pursuant to applicable law of the Compacting State. AnyMember may be removed or suspended from office as provided by the law of the State fromwhich he or she shall be appointed. Any vacancy occurring in the Commission shall be filled inaccordance with the laws of the Compacting State wherein the vacancy exists. Nothing hereinshall be construed to affect the manner in which a Compacting State determines the election orappointment and qualification of its own Commissioner.
b. Each Member shall be entitled to one vote and shall have an opportunity to participatein the governance of the Commission in accordance with the Bylaws. Notwithstanding anyprovision herein to the contrary, no action of the Commission with respect to the promulgation ofa Uniform Standard shall be effective unless two-thirds (2/3) of the Members vote in favorthereof.
c. The Commission shall, by a majority of the Members, prescribe Bylaws to govern itsconduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, ofthe 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 asholding 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 orfunction of the Commission;
iv. providing reasonable procedures for calling and conducting meetings of theCommission that consists of a majority of Commission members, ensuring reasonable advancenotice of each such meeting, and providing for the right of citizens to attend each such meetingwith enumerated exceptions designed to protect the public's interest, the privacy of individuals,and insurers' proprietary information, including trade secrets. The Commission may meet incamera 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 themeeting revealing the vote of each Member with no proxy votes allowed, and (ii) votes takenduring such meeting;
v. establishing the titles, duties and authority and reasonable procedures for the electionof the officers of the Commission;
vi. providing reasonable standards and procedures for the establishment of the personnelpolicies and programs of the Commission. Notwithstanding any civil service or other similarlaws of any Compacting State, the Bylaws shall exclusively govern the personnel policies andprograms of the Commission;
vii. promulgating a code of ethics to address permissible and prohibited activities ofcommission members and employees; and
viii. providing a mechanism for winding up the operations of the Commission and theequitable disposition of any surplus funds that may exist after the termination of the Compactafter 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 thereofand a copy of any amendment thereto, with the appropriate agency or officer in each of theCompacting States.
2. Management Committee, Officers and Personnel
a. A Management Committee comprising no more than fourteen (14) members shall beestablished as follows:
(i) One (1) member from each of the six (6) Compacting States with the largest premiumvolume for individual and group annuities, life, disability income and long-term care insuranceproducts, 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%) ofthe market based on the premium volume described above, other than the six (6) CompactingStates 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%) ofthe market, based on the premium volume described above, with one (1) selected from each ofthe 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 forthin the Bylaws, including but not limited to:
i. managing the affairs of the Commission in a manner consistent with the Bylaws andpurposes of the Commission;
ii. establishing and overseeing an organizational structure within, and appropriateprocedures for, the Commission to provide for the creation of Uniform Standards and otherRules, 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 electionsmade by a Compacting State to opt out of a Uniform Standard; provided that a Uniform Standardshall 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 otherstate, federal and local government organizations in order to advance the goals of theCommission.
c. The Commission shall elect annually officers from the Management Committee, witheach having such authority and duties, as may be specified in the Bylaws.
d. The Management Committee may, subject to the approval of the Commission, appointor retain an executive director for such period, upon such terms and conditions and for suchcompensation as the Commission may deem appropriate. The executive director shall serve assecretary to the Commission, but shall not be a Member of the Commission. The executivedirector 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 beestablished to monitor the operations of, and make recommendations to, the Commission,including the Management Committee; provided that the manner of selection and term of anylegislative committee member shall be as set forth in the Bylaws. Prior to the adoption by theCommission of any Uniform Standard, revision to the Bylaws, annual budget or other significantmatter as may be provided in the Bylaws, the Management Committee shall consult with andreport to the legislative committee.
b. The Commission shall establish two (2) advisory committees, one of which shallcomprise consumer representatives independent of the insurance industry, and the othercomprising insurance industry representatives.
c. The Commission may establish additional advisory committees as its Bylaws mayprovide 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 theBylaws.
5. Qualified Immunity, Defense and Indemnification
a. The Members, officers, executive director, employees and representatives of theCommission shall be immune from suit and liability, either personally or in their officialcapacity, for any claim for damage to or loss of property or personal injury or other civil liabilitycaused by or arising out of any actual or alleged act, error or omission that occurred, or that theperson against whom the claim is made had a reasonable basis for believing occurred within thescope of Commission employment, duties or responsibilities; provided, that nothing in thisparagraph 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 orrepresentative of the Commission in any civil action seeking to impose liability arising out of anyactual or alleged act, error or omission that occurred within the scope of Commissionemployment, duties or responsibilities, or that the person against whom the claim is made had areasonable basis for believing occurred within the scope of Commission employment, duties or
responsibilities; provided, that nothing herein shall be construed to prohibit that person fromretaining his or her own counsel; and provided further, that the actual or alleged act, error oromission did not result from that person's intentional or willful and wanton misconduct.
c. The Commission shall indemnify and hold harmless any Member, officer, executivedirector, employee or representative of the Commission for the amount of any settlement orjudgment obtained against that person arising out of any actual or alleged act, error or omissionthat occurred within the scope of Commission employment, duties or responsibilities, or thatsuch person had a reasonable basis for believing occurred within the scope of Commissionemployment, duties or responsibilities, provided, that the actual or alleged act, error or omissiondid not result from the intentional or willful and wanton misconduct of that person.
1. The Commission shall meet and take such actions as are consistent with the provisionsof this Compact and the Bylaws.
2. Each Member of the Commission shall have the right and power to cast a vote towhich that Compacting State is entitled and to participate in the business and affairs of theCommission. 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 ofcommunication.
3. The Commission shall meet at least once during each calendar year. Additionalmeetings shall be held as set forth in the Bylaws.
1. Rulemaking Authority. The Commission shall promulgate reasonable Rules,including Uniform Standards, and Operating Procedures in order to effectively and efficientlyachieve the purposes of this Compact. Notwithstanding the foregoing, in the event theCommission exercises its rulemaking authority in a manner that is beyond the scope of thepurposes of this Act, or the powers granted hereunder, then such an action by the Commissionshall be invalid and have no force and effect.
2. Rulemaking Procedure. Rules and Operating Procedures shall be made pursuant to arulemaking process that conforms to the Model State Administrative Procedure Act of 1981 asamended, as may be appropriate to the operations of the Commission. Before the Commissionadopts a Uniform Standard, the Commission shall give written notice to the relevant statelegislative committee(s) in each Compacting State responsible for insurance issues of itsintention to adopt the Uniform Standard. The Commission in adopting a Uniform Standard shallconsider 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 becomeeffective ninety (90) days after its promulgation by the Commission or such later date as theCommission may determine; provided, however, that a Compacting State may opt out of aUniform Standard as provided in this Article. "Opt out" shall be defined as any action by aCompacting State to decline to adopt or participate in a promulgated Uniform Standard. All otherRules and Operating Procedures, and amendments thereto, shall become effective as of the datespecified in each Rule, Operating Procedure or amendment.
4. Opt Out Procedure. A Compacting State may opt out of a Uniform Standard, either bylegislation or regulation duly promulgated by the Insurance Department under the CompactingState'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 aCompacting State and (b) find that the Uniform Standard does not provide reasonable protectionsto the citizens of the State, given the conditions in the State. The Commissioner shall makespecific 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 anddetermining that the Uniform Standard would not reasonably protect the citizens of the State. TheCommissioner must consider and balance the following factors and find that the conditions in theState and needs of the citizens of the State outweigh: (i) the intent of the legislature to participatein, and the benefits of, an interstate agreement to establish national uniform consumer protectionsfor the Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted bythe Commission provides reasonable protections to consumers of the relevant Product.
Notwithstanding the foregoing, a Compacting State may, at the time of its enactment ofthis Compact, prospectively opt out of all Uniform Standards involving long-term care insuranceproducts by expressly providing for such opt out in the enacted Compact, and such an opt outshall not be treated as a material variance in the offer or acceptance of any State to participate inthis Compact. Such an opt out shall be effective at the time of enactment of this Compact by theCompacting State and shall apply to all existing Uniform Standards involving long-term careinsurance products and those subsequently promulgated.
5. Effect of Opt Out. If a Compacting State elects to opt out of a Uniform Standard, theUniform Standard shall remain applicable in the Compacting State electing to opt out until suchtime 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 asprovided under the laws of that State, the Uniform Standard shall have no further force and effectin that State unless and until the legislation or regulation implementing the opt out is repealed orotherwise becomes ineffective under the laws of the State. If a Compacting State opts out of aUniform Standard after the Uniform Standard has been made effective in that State, the opt outshall 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 ofopting out of a Uniform Standard by regulation, and while the regulatory opt out is pending, theCompacting State may petition the Commission, at least fifteen (15) days before the effectivedate of the Uniform Standard, to stay the effectiveness of the Uniform Standard in that State. TheCommission may grant a stay if it determines the regulatory opt out is being pursued in areasonable manner and there is a likelihood of success. If a stay is granted or extended by theCommission, 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 toremain in effect for more than one (1) year unless the Compacting State can show extraordinarycircumstances which warrant a continuance of the stay, including, but not limited to, theexistence of a legal challenge which prevents the Compacting State from opting out. A stay maybe 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, anyperson may file a petition for judicial review of the Rule or Operating Procedure; provided, thatthe filing of such a petition shall not stay or otherwise prevent the Rule or Operating Procedurefrom becoming effective unless the court finds that the petitioner has a substantial likelihood ofsuccess. 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 orOperating Procedure represents a reasonable exercise of the Commission's authority.
1. The Commission shall promulgate Rules establishing conditions and procedures forpublic inspection and copying of its information and official records, except such informationand records involving the privacy of individuals and insurers' trade secrets. The Commissionmay promulgate additional Rules under which it may make available to federal and stateagencies, including law enforcement agencies, records and information otherwise exempt fromdisclosure, and may enter into agreements with such agencies to receive or exchange informationor records subject to nondisclosure and confidentiality provisions.
2. Except as to privileged records, data and information, the laws of any CompactingState pertaining to confidentiality or nondisclosure shall not relieve any Compacting StateCommissioner of the duty to disclose any relevant records, data or information to theCommission; provided, that disclosure to the Commission shall not be deemed to waive orotherwise affect any confidentiality requirement; and further provided, that, except as otherwiseexpressly provided in this Act, the Commission shall not be subject to the Compacting State'slaws pertaining to confidentiality and nondisclosure with respect to records, data and informationin its possession. Confidential information of the Commission shall remain confidential aftersuch information is provided to any Commissioner.
3. The Commission shall monitor Compacting States for compliance with duly adoptedBylaws, Rules, including Uniform Standards, and Operating Procedures. The Commission shallnotify any non-complying Compacting State in writing of its noncompliance with CommissionBylaws, Rules or Operating Procedures. If a non-complying Compacting State fails to remedy itsnoncompliance within the time specified in the notice of noncompliance, the Compacting Stateshall 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 isconducting the business of insurance, shall continue to exercise his or her authority to oversee themarket regulation of the activities of the Insurer in accordance with the provisions of the State'slaw. The Commissioner's enforcement of compliance with the Compact is governed by thefollowing provisions:
a. With respect to the Commissioner's market regulation of a Product or Advertisementthat is approved or certified to the Commission, the content of the Product or Advertisementshall not constitute a violation of the provisions, standards or requirements of the Compactexcept upon a final order of the Commission, issued at the request of a Commissioner after priornotice 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 orrequirement of the Compact relating to the content of an Advertisement not approved or certifiedto the Commission, the Commission, or an authorized Commission officer or employee, mustauthorize the action. However, authorization pursuant to this Paragraph does not require notice tothe Insurer, opportunity for hearing or disclosure of requests for authorization or records of theCommission's action on such requests.
The Commission shall attempt, upon the request of a Member, to resolve any disputes orother issues that are subject to this Compact and which may arise between two or moreCompacting States, or between Compacting States and Non-compacting States, and the
Commission shall promulgate an Operating Procedure providing for resolution of such disputes.
1. Insurers and Third-Party Filers seeking to have a Product approved by the Commissionshall file the Product with, and pay applicable filing fees to, the Commission. Nothing in this Actshall be construed to restrict or otherwise prevent an insurer from filing its Product with theinsurance department in any State wherein the insurer is licensed to conduct the business ofinsurance, and such filing shall be subject to the laws of the States where filed.
2. The Commission shall establish appropriate filing and review processes andprocedures pursuant to Commission Rules and Operating Procedures. Notwithstanding anyprovision herein to the contrary, the Commission shall promulgate Rules to establish conditionsand procedures under which the Commission will provide public access to Product filinginformation. In establishing such Rules, the Commission shall consider the interests of the publicin having access to such information, as well as protection of personal medical and financialinformation and trade secrets, that may be contained in a Product filing or supportinginformation.
3. Any Product approved by the Commission may be sold or otherwise issued in thoseCompacting States for which the Insurer is legally authorized to do business.
1. Not later than thirty (30) days after the Commission has given notice of a disapprovedProduct or Advertisement filed with the Commission, the Insurer or Third-Party Filer whosefiling was disapproved may appeal the determination to a review panel appointed by theCommission. The Commission shall promulgate Rules to establish procedures for appointingsuch review panels and provide for notice and hearing. An allegation that the Commission, indisapproving 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 thelaw, is subject to judicial review in accordance with Article III, Section 4.
2. The Commission shall have authority to monitor, review and reconsider Products andAdvertisement subsequent to their filing or approval upon a finding that the product does notmeet the relevant Uniform Standard. Where appropriate, the Commission may withdraw ormodify its approval after proper notice and hearing, subject to the appeal process in Section 1above.
1. The Commission shall pay or provide for the payment of the reasonable expenses ofits establishment and organization. To fund the cost of its initial operations, the Commission mayaccept contributions and other forms of funding from the National Association of InsuranceCommissioners, Compacting States and other sources. Contributions and other forms of fundingfrom other sources shall be of such a nature that the independence of the Commission concerningthe performance of its duties shall not be compromised.
2. The Commission shall collect a filing fee from each Insurer and Third-Party Filerfiling a product with the Commission to cover the cost of the operations and activities of theCommission 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 beensubject 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 internalfinancial accounts of the Commission shall be subject to the accounting procedures establishedunder its Bylaws. The financial accounts and reports including the system of internal controls andprocedures of the Commission shall be audited annually by an independent certified publicaccountant. 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 performanceaudit of the Commission. The Commission shall make an Annual Report to the Governor andlegislature of the Compacting States, which shall include a report of the independent audit. TheCommission's internal accounts shall not be confidential and such materials may be shared withthe Commissioner of any Compacting State upon request, provided, however, that any workpapers related to any internal or independent audit and any information regarding the privacy ofindividuals and insurers' proprietary information, including trade secrets, shall remainconfidential.
7. No Compacting State shall have any claim to or ownership of any property held by orvested in the Commission or to any Commission funds held pursuant to the provisions of thisCompact.
1. Any State is eligible to become a Compacting State.
2. The Compact shall become effective and binding upon legislative enactment of theCompact into law by two Compacting States; provided, the Commission shall become effectivefor purposes of adopting Uniform Standards for, reviewing, and giving approval or disapprovalof, Products filed with the Commission that satisfy applicable Uniform Standards only aftertwenty-six (26) States are Compacting States or, alternatively, by States representing greater thanforty percent (40%) of the premium volume for life insurance, annuity, disability income andlong-term care insurance products, based on records of the NAIC for the prior year. Thereafter, itshall become effective and binding as to any other Compacting State upon enactment of theCompact into law by that State.
3. Amendments to the Compact may be proposed by the Commission for enactment bythe Compacting States. No amendment shall become effective and binding upon the Commissionand the Compacting States unless and until all Compacting States enact the amendment into law.
1. Withdrawal
a. Once effective, the Compact shall continue in force and remain binding upon each andevery Compacting State; provided, that a Compacting State may withdraw from the Compact("Withdrawing State") by enacting a statute specifically repealing the statute which enacted theCompact 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 anyAdvertisement of such products, on the date the repealing statute becomes effective, except bymutual agreement of the Commission and the Withdrawing State unless the approval is rescindedby the Withdrawing State as provided in Paragraph e of this section.
c. The Commissioner of the Withdrawing State shall immediately notify theManagement 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 suchlegislation within ten (10) days after its receipt of notice thereof.
e. The Withdrawing State is responsible for all obligations, duties and liabilities incurredthrough the effective date of withdrawal, including any obligations, the performance of whichextend beyond the effective date of withdrawal, except to the extent those obligations may havebeen released or relinquished by mutual agreement of the Commission and the WithdrawingState. The Commission's approval of Products and Advertisement prior to the effective date ofwithdrawal shall continue to be effective and be given full force and effect in the WithdrawingState, unless formally rescinded by the Withdrawing State in the same manner as provided by thelaws of the Withdrawing State for the prospective disapproval of products or advertisementpreviously approved under state law.
f. Reinstatement following withdrawal of any Compacting State shall occur upon theeffective 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 thisCompact, the Bylaws or duly promulgated Rules or Operating Procedures, then, after notice andhearing as set forth in the Bylaws, all rights, privileges and benefits conferred by this Compact onthe Defaulting State shall be suspended from the effective date of default as fixed by theCommission. The grounds for default include, but are not limited to, failure of a CompactingState to perform its obligations or responsibilities, and any other grounds designated inCommission Rules. The Commission shall immediately notify the Defaulting State in writing ofthe Defaulting State's suspension pending a cure of the default. The Commission shall stipulatethe conditions and the time period within which the Defaulting State must cure its default. If theDefaulting State fails to cure the default within the time period specified by the Commission, theDefaulting State shall be terminated from the Compact and all rights, privileges and benefitsconferred by this Compact shall be terminated from the effective date of termination.
b. Product approvals by the Commission or product self-certifications, or anyAdvertisement in connection with such product, that are in force on the effective date oftermination shall remain in force in the Defaulting State in the same manner as if the DefaultingState had withdrawn voluntarily pursuant to Section 1 of this article.
c. Reinstatement following termination of any Compacting State requires a reenactmentof the Compact.
3. Dissolution of Compact
a. The Compact dissolves effective upon the date of the withdrawal or default of theCompacting 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 shallbe of no further force or effect, and the business and affairs of the Commission shall be woundup and any surplus funds shall be distributed in accordance with the Bylaws.
1. The provisions of this Compact shall be severable; and if any phrase, clause, sentenceor provision is deemed unenforceable, the remaining provisions of the Compact shall beenforceable.
2. The provisions of this Compact shall be liberally construed to effectuate its purposes.
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, UniformStandards and any other requirements of the Commission shall constitute the exclusiveprovisions applicable to the content, approval and certification of such Products. ForAdvertisement that is subject to the Commission's authority, any Rule, Uniform Standard orother requirement of the Commission which governs the content of the Advertisement shallconstitute the exclusive provision that a Commissioner may apply to the content of theAdvertisement. Notwithstanding the foregoing, no action taken by the Commission shallabrogate or restrict: (i) the access of any person to state courts; (ii) remedies available under statelaw related to breach of contract, tort, or other laws not specifically directed to the content of theProduct; (iii) state law relating to the construction of insurance contracts; or (iv) the authority ofthe attorney general of the state, including but not limited to maintaining any actions orproceedings, as authorized by law.
c. All insurance products filed with individual States shall be subject to the laws of thoseStates.
2. Binding Effect of this Compact
a. All lawful actions of the Commission, including all Rules and Operating Procedurespromulgated by the Commission, are binding upon the Compacting States.
b. All agreements between the Commission and the Compacting States are binding inaccordance with their terms.
c. Upon the request of a party to a conflict over the meaning or interpretation ofCommission actions, and upon a majority vote of the Compacting States, the Commission mayissue advisory opinions regarding the meaning or interpretation in dispute.
d. In the event any provision of this Compact exceeds the constitutional limits imposedon the legislature of any Compacting State, the obligations, duties, powers or jurisdiction soughtto be conferred by that provision upon the Commission shall be ineffective as to that CompactingState, and those obligations, duties, powers or jurisdiction shall remain in the Compacting Stateand shall be exercised by the agency thereof to which those obligations, duties, powers orjurisdiction are delegated by law in effect at the time this Compact becomes effective.
Enacted by Chapter 242, 2004 General Session