93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB4468

 

Introduced 02/03/04, by Frank J. Mautino

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Interstate Insurance Product Regulation Compact. Provides for the promotion and protection of the interests of consumers of individual and group annuity, life insurance, disability income, and long-term care insurance products. Creates the Interstate Insurance Product Regulation Commission to develop uniform standards for insurance products covered under the Compact, to establish a central clearing house to receive and provide prompt review of insurance products covered under the Compact, to provide appropriate regulatory approval, and to improve coordination of regulatory resources and expertise between state insurance departments. Effective immediately.


LRB093 20788 RAS 46703 b

 

 

A BILL FOR

 

HB4468 LRB093 20788 RAS 46703 b

1     AN ACT concerning insurance.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 1. Short title. This Act may be cited as the
5 Interstate Insurance Product Regulation Compact.
 
6     Section 5. Agreement. Pursuant to terms and conditions of
7 this Act, the State of Illinois seeks to join with other States
8 and establish the Interstate Insurance Product Regulation
9 Compact, and thus become a member of the Interstate Insurance
10 Product Regulation Commission. The representative of this
11 State to the Commission shall be the Director of Insurance.
 
12     Section 10. Ratification. The State of Illinois ratifies,
13 approves, and adopts the following interstate compact:
 
14
Article I. PURPOSES
15     The purposes of this Compact are, through means of joint
16 and cooperative action among the Compacting States:
17         1. To promote and protect the interest of consumers of
18     individual and group annuity, life insurance, disability
19     income and long-term care insurance products;
20         2. To develop uniform standards for insurance products
21     covered under the Compact;
22         3. To establish a central clearinghouse to receive and
23     provide prompt review of insurance products covered under
24     the Compact and, in certain cases, advertisements related
25     thereto, submitted by insurers authorized to do business in
26     one or more Compacting States;
27         4. To give appropriate regulatory approval to those
28     product filings and advertisements satisfying the
29     applicable uniform standard;
30         5. To improve coordination of regulatory resources and

 

 

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1     expertise between state insurance departments regarding
2     the setting of uniform standards and review of insurance
3     products covered under the Compact;
4         6. To create the Interstate Insurance Product
5     Regulation Commission; and
6         7. To perform these and such other related functions as
7     may be consistent with the state regulation of the business
8     of insurance.
 
9
Article II. DEFINITIONS
10     For purposes of this Compact:
11         1. "Advertisement" means any material designed to
12     create public interest in a Product, or induce the public
13     to purchase, increase, modify, reinstate, borrow on,
14     surrender, replace or retain a policy, as more specifically
15     defined in the Rules and Operating Procedures of the
16     Commission.
17         2. "Bylaws" mean those bylaws established by the
18     Commission for its governance, or for directing or
19     controlling the Commission's actions or conduct.
20         3. "Compacting State" means any State which has enacted
21     this Compact legislation and which has not withdrawn
22     pursuant to Article XIV, Section 1, or been terminated
23     pursuant to Article XIV, Section 2.
24         4. "Commission" means the "Interstate Insurance
25     Product Regulation Commission" established by this
26     Compact.
27         5. "Commissioner" means the chief insurance regulatory
28     official of a State including, but not limited to
29     commissioner, superintendent, director or administrator.
30         6. "Domiciliary State" means the state in which an
31     Insurer is incorporated or organized; or, in the case of an
32     alien Insurer, its state of entry.
33         7. "Insurer" means any entity licensed by a State to
34     issue contracts of insurance for any of the lines of
35     insurance covered by this Act.

 

 

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1         8. "Member" means the person chosen by a Compacting
2     State as its representative to the Commission, or his or
3     her designee.
4         9. "Non-compacting State" means any State which is not
5     at the time a Compacting State.
6         10. "Operating Procedures" mean procedures promulgated
7     by the Commission implementing a Rule, Uniform Standard or
8     a provision of this Compact.
9         11. "Product" means the form of a policy or contract,
10     including any application, endorsement, or related form
11     which is attached to and made a part of the policy or
12     contract, and any evidence of coverage or certificate, for
13     an individual or group annuity, life insurance, disability
14     income or long-term care insurance product that an Insurer
15     is authorized to issue.
16         12. "Rule" means a statement of general or particular
17     applicability and future effect promulgated by the
18     Commission, including a Uniform Standard developed
19     pursuant to Article VII of this Compact, designed to
20     implement, interpret, or prescribe law or policy or
21     describing the organization, procedure, or practice
22     requirements of the Commission, which shall have the force
23     and effect of law in the Compacting States.
24         13. "State" means any state, district or territory of
25     the United States of America.
26         14. "Third-Party Filer" means an entity that submits a
27     Product filing to the Commission on behalf of an Insurer.
28         15. "Uniform Standard" means a standard adopted by the
29     Commission for a Product line, pursuant to Article VII of
30     this Compact, and shall include all of the Product
31     requirements in aggregate; provided, that each Uniform
32     Standard shall be construed, whether express or implied, to
33     prohibit the use of any inconsistent, misleading or
34     ambiguous provisions in a Product and the form of the
35     Product made available to the public shall not be unfair,
36     inequitable or against public policy as determined by the

 

 

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1     Commission.
 
2
Article III. ESTABLISHMENT OF THE COMMISSION AND VENUE
3     1. The Compacting States hereby create and establish a
4 joint public agency known as the "Interstate Insurance Product
5 Regulation Commission." Pursuant to Article IV, the Commission
6 will have the power to develop Uniform Standards for Product
7 lines, receive and provide prompt review of Products filed
8 therewith, and give approval to those Product filings
9 satisfying applicable Uniform Standards; provided, it is not
10 intended for the Commission to be the exclusive entity for
11 receipt and review of insurance product filings. Nothing herein
12 shall prohibit any Insurer from filing its product in any State
13 wherein the Insurer is licensed to conduct the business of
14 insurance; and any such filing shall be subject to the laws of
15 the State where filed.
16     2. The Commission is a body corporate and politic, and an
17 instrumentality of the Compacting States.
18     3. The Commission is solely responsible for its liabilities
19 except as otherwise specifically provided in this Compact.
20     4. Venue is proper and judicial proceedings by or against
21 the Commission shall be brought solely and exclusively in a
22 Court of competent jurisdiction where the principal office of
23 the Commission is located.
 
24
Article IV. POWERS OF THE COMMISSION
25     The Commission shall have the following powers:
26         1. To promulgate Rules, pursuant to Article VII of this
27     Compact, which shall have the force and effect of law and
28     shall be binding in the Compacting States to the extent and
29     in the manner provided in this Compact;
30         2. To exercise its rule-making authority and establish
31     reasonable Uniform Standards for Products covered under
32     the Compact, and Advertisement related thereto, which
33     shall have the force and effect of law and shall be binding
34     in the Compacting States, but only for those Products filed

 

 

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1     with the Commission, provided, that a Compacting State
2     shall have the right to opt out of such Uniform Standard
3     pursuant to Article VII, to the extent and in the manner
4     provided in this Compact, and, provided further, that any
5     Uniform Standard established by the Commission for
6     long-term care insurance products may provide the same or
7     greater protections for consumers as, but shall not provide
8     less than, those protections set forth in the National
9     Association of Insurance Commissioners' Long-Term Care
10     Insurance Model Act and Long-Term Care Insurance Model
11     Regulation, respectively, adopted as of 2001. The
12     Commission shall consider whether any subsequent
13     amendments to the NAIC Long-Term Care Insurance Model Act
14     or Long-Term Care Insurance Model Regulation adopted by the
15     NAIC require amending of the Uniform Standards established
16     by the Commission for long-term care insurance products;
17         3. To receive and review in an expeditious manner
18     Products filed with the Commission, and rate filings for
19     disability income and long-term care insurance Products,
20     and give approval of those Products and rate filings that
21     satisfy the applicable Uniform Standard, where such
22     approval shall have the force and effect of law and be
23     binding on the Compacting States to the extent and in the
24     manner provided in the Compact;
25         4. To receive and review in an expeditious manner
26     Advertisement relating to long-term care insurance
27     products for which Uniform Standards have been adopted by
28     the Commission, and give approval to all Advertisement that
29     satisfies the applicable Uniform Standard. For any product
30     covered under this Compact, other than long-term care
31     insurance products, the Commission shall have the
32     authority to require an insurer to submit all or any part
33     of its Advertisement with respect to that product for
34     review or approval prior to use, if the Commission
35     determines that the nature of the product is such that an
36     Advertisement of the product could have the capacity or

 

 

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1     tendency to mislead the public. The actions of Commission
2     as provided in this section shall have the force and effect
3     of law and shall be binding in the Compacting States to the
4     extent and in the manner provided in the Compact;
5         5. To exercise its rule-making authority and designate
6     Products and Advertisement that may be subject to a
7     self-certification process without the need for prior
8     approval by the Commission.
9         6. To promulgate Operating Procedures, pursuant to
10     Article VII of this Compact, which shall be binding in the
11     Compacting States to the extent and in the manner provided
12     in this Compact;
13         7. To bring and prosecute legal proceedings or actions
14     in its name as the Commission; provided, that the standing
15     of any state insurance department to sue or be sued under
16     applicable law shall not be affected;
17         8. To issue subpoenas requiring the attendance and
18     testimony of witnesses and the production of evidence;
19         9. To establish and maintain offices;
20         10. To purchase and maintain insurance and bonds;
21         11. To borrow, accept or contract for services of
22     personnel, including, but not limited to, employees of a
23     Compacting State;
24         12. To hire employees, professionals or specialists,
25     and elect or appoint officers, and to fix their
26     compensation, define their duties and give them
27     appropriate authority to carry out the purposes of the
28     Compact, and determine their qualifications; and to
29     establish the Commission's personnel policies and programs
30     relating to, among other things, conflicts of interest,
31     rates of compensation and qualifications of personnel;
32         13. To accept any and all appropriate donations and
33     grants of money, equipment, supplies, materials and
34     services, and to receive, utilize and dispose of the same;
35     provided that at all times the Commission shall strive to
36     avoid any appearance of impropriety;

 

 

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1         14. To lease, purchase, accept appropriate gifts or
2     donations of, or otherwise to own, hold, improve or use,
3     any property, real, personal or mixed; provided that at all
4     times the Commission shall strive to avoid any appearance
5     of impropriety;
6         15. To sell, convey, mortgage, pledge, lease,
7     exchange, abandon or otherwise dispose of any property,
8     real, personal or mixed;
9         16. To remit filing fees to Compacting States as may be
10     set forth in the Bylaws, Rules or Operating Procedures;
11         17. To enforce compliance by Compacting States with
12     Rules, Uniform Standards, Operating Procedures and Bylaws;
13     Drafting Note: It is recognized that the Commission must
14     have authority to enforce compliance by Compacting States
15     with the Bylaws, Rules or Operating Procedures of the
16     Commission.
17         18. To provide for dispute resolution among Compacting
18     States;
19         19. To advise Compacting States on issues relating to
20     Insurers domiciled or doing business in Non-compacting
21     jurisdictions, consistent with the purposes of this
22     Compact;
23         20. To provide advice and training to those personnel
24     in state insurance departments responsible for product
25     review, and to be a resource for state insurance
26     departments;
27         21. To establish a budget and make expenditures;
28         22. To borrow money;
29         23. To appoint committees, including advisory
30     committees comprising Members, state insurance regulators,
31     state legislators or their representatives, insurance
32     industry and consumer representatives, and such other
33     interested persons as may be designated in the Bylaws;
34         24. To provide and receive information from, and to
35     cooperate with law enforcement agencies;
36         25. To adopt and use a corporate seal; and

 

 

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1         26. To perform such other functions as may be necessary
2     or appropriate to achieve the purposes of this Compact
3     consistent with the state regulation of the business of
4     insurance.
 
5
Article V. ORGANIZATION OF THE COMMISSION
6     1. Membership, Voting and Bylaws.
7     a. Each Compacting State shall have and be limited to one
8 Member. Each Member shall be qualified to serve in that
9 capacity pursuant to applicable law of the Compacting State.
10 Any Member may be removed or suspended from office as provided
11 by the law of the State from which he or she shall be
12 appointed. Any vacancy occurring in the Commission shall be
13 filled in accordance with the laws of the Compacting State
14 wherein the vacancy exists. Nothing herein shall be construed
15 to affect the manner in which a Compacting State determines the
16 election or appointment and qualification of its own
17 Commissioner.
18     b. Each Member shall be entitled to one vote and shall have
19 an opportunity to participate in the governance of the
20 Commission in accordance with the Bylaws. Notwithstanding any
21 provision herein to the contrary, no action of the Commission
22 with respect to the promulgation of a Uniform Standard shall be
23 effective unless two-thirds (2/3) of the Members vote in favor
24 thereof.
25     c. The Commission shall, by a majority of the Members,
26 prescribe Bylaws to govern its conduct as may be necessary or
27 appropriate to carry out the purposes, and exercise the powers,
28 of the Compact, including, but not limited to:
29             i. establishing the fiscal year of the Commission;
30             ii. providing reasonable procedures for appointing
31         and electing members, as well as holding meetings, of
32         the Management Committee;
33             iii. providing reasonable standards and
34         procedures:
35             (i) for the establishment and meetings of other

 

 

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1         committees, and
2             (ii) governing any general or specific delegation
3         of any authority or function of the Commission;
4             iv. providing reasonable procedures for calling
5         and conducting meetings of the Commission that
6         consists of a majority of Commission members, ensuring
7         reasonable advance notice of each such meeting, and
8         providing for the right of citizens to attend each such
9         meeting with enumerated exceptions designed to protect
10         the public's interest, the privacy of individuals, and
11         insurers' proprietary information, including trade
12         secrets. The Commission may meet in camera only after a
13         majority of the entire membership votes to close a
14         meeting en toto or in part. As soon as practicable, the
15         Commission must make public (i) a copy of the vote to
16         close the meeting revealing the vote of each Member
17         with no proxy votes allowed, and (ii) votes taken
18         during such meeting;
19             v. establishing the titles, duties and authority
20         and reasonable procedures for the election of the
21         officers of the Commission;
22             vi. providing reasonable standards and procedures
23         for the establishment of the personnel policies and
24         programs of the Commission. Notwithstanding any civil
25         service or other similar laws of any Compacting State,
26         the Bylaws shall exclusively govern the personnel
27         policies and programs of the Commission; vii.
28         promulgating a code of ethics to address permissible
29         and prohibited activities of commission members and
30         employees; and viii. providing a mechanism for winding
31         up the operations of the Commission and the equitable
32         disposition of any surplus funds that may exist after
33         the termination of the Compact after the payment and/or
34         reserving of all of its debts and obligations.
35     d. The Commission shall publish its bylaws in a convenient
36     form and file a copy thereof and a copy of any amendment

 

 

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1     thereto, with the appropriate agency or officer in each of the
2     Compacting States.
3     2. Management Committee, Officers and Personnel.
4     a. A Management Committee comprising no more than fourteen
5     (14) members shall be established as follows:
6             (i) One (1) member from each of the six (6)
7         Compacting States with the largest premium volume for
8         individual and group annuities, life, disability
9         income and long-term care insurance products,
10         determined from the records of the NAIC for the prior
11         year;
12             (ii) Four (4) members from those Compacting States
13         with at least two percent (2%) of the market based on
14         the premium volume described above, other than the six
15         (6) Compacting States with the largest premium volume,
16         selected on a rotating basis as provided in the Bylaws,
17         and;
18             (iii) Four (4) members from those Compacting
19         States with less than two percent (2%) of the market,
20         based on the premium volume described above, with one
21         (1) selected from each of the four (4) zone regions of
22         the NAIC as provided in the Bylaws.
23     b. The Management Committee shall have such authority and
24     duties as may be set forth in the Bylaws, including but not
25     limited to: i. managing the affairs of the Commission in a
26     manner consistent with the Bylaws and purposes of the
27     Commission;
28             ii. establishing and overseeing an organizational
29         structure within, and appropriate procedures for, the
30         Commission to provide for the creation of Uniform
31         Standards and other Rules, receipt and review of
32         product filings, administrative and technical support
33         functions, review of decisions regarding the
34         disapproval of a product filing, and the review of
35         elections made by a Compacting State to opt out of a
36         Uniform Standard; provided that a Uniform Standard

 

 

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1         shall not be submitted to the Compacting States for
2         adoption unless approved by two-thirds (2/3) of the
3         members of the Management Committee;
4             iii. overseeing the offices of the Commission; and
5             iv. planning, implementing, and coordinating
6         communications and activities with other state,
7         federal and local government organizations in order to
8         advance the goals of the Commission.
9     c. The Commission shall elect annually officers from the
10     Management Committee, with each having such authority and
11     duties, as may be specified in the Bylaws.
12     d. The Management Committee may, subject to the approval of
13     the Commission, appoint or retain an executive director for
14     such period, upon such terms and conditions and for such
15     compensation as the Commission may deem appropriate. The
16     executive director shall serve as secretary to the Commission,
17     but shall not be a Member of the Commission. The executive
18     director shall hire and supervise such other staff as may be
19     authorized by the Commission.
20     3. Legislative and Advisory Committees.
21     a. A legislative committee comprising state legislators or
22     their designees shall be established to monitor the operations
23     of, and make recommendations to, the Commission, including the
24     Management Committee; provided that the manner of selection and
25     term of any legislative committee member shall be as set forth
26     in the Bylaws. Prior to the adoption by the Commission of any
27     Uniform Standard, revision to the Bylaws, annual budget or
28     other significant matter as may be provided in the Bylaws, the
29     Management Committee shall consult with and report to the
30     legislative committee.
31     b. The Commission shall establish two (2) advisory
32     committees, one of which shall comprise consumer
33     representatives independent of the insurance industry, and the
34     other comprising insurance industry representatives.
35     c. The Commission may establish additional advisory
36     committees as its Bylaws may provide for the carrying out of

 

 

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1     its functions.
2     4. Corporate Records of the Commission The Commission shall
3     maintain its corporate books and records in accordance with the
4     Bylaws.
5     5. Qualified Immunity, Defense and Indemnification.
6     a. The Members, officers, executive director, employees
7     and representatives of the Commission shall be immune from suit
8     and liability, either personally or in their official capacity,
9     for any claim for damage to or loss of property or personal
10     injury or other civil liability caused by or arising out of any
11     actual or alleged act, error or omission that occurred, or that
12     the person against whom the claim is made had a reasonable
13     basis for believing occurred within the scope of Commission
14     employment, duties or responsibilities; provided, that nothing
15     in this paragraph shall be construed to protect any such person
16     from suit and/or liability for any damage, loss, injury or
17     liability caused by the intentional or willful and wanton
18     misconduct of that person.
19     b. The Commission shall defend any Member, officer,
20     executive director, employee or representative of the
21     Commission in any civil action seeking to impose liability
22     arising out of any actual or alleged act, error or omission
23     that occurred within the scope of Commission employment, duties
24     or responsibilities, or that the person against whom the claim
25     is made had a reasonable basis for believing occurred within
26     the scope of Commission employment, duties or
27     responsibilities; provided, that nothing herein shall be
28     construed to prohibit that person from retaining his or her own
29     counsel; and provided further, that the actual or alleged act,
30     error or omission did not result from that person's intentional
31     or willful and wanton misconduct.
32     c. The Commission shall indemnify and hold harmless any
33     Member, officer, executive director, employee or
34     representative of the Commission for the amount of any
35     settlement or judgment obtained against that person arising out
36     of any actual or alleged act, error or omission that occurred

 

 

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1     within the scope of Commission employment, duties or
2     responsibilities, or that such person had a reasonable basis
3     for believing occurred within the scope of Commission
4     employment, duties or responsibilities, provided, that the
5     actual or alleged act, error or omission did not result from
6     the intentional or willful and wanton misconduct of that
7     person.
 
8
Article VI. MEETINGS AND ACTS OF THE COMMISSION
9     1. The Commission shall meet and take such actions as are
10 consistent with the provisions of this Compact and the Bylaws.
11     2. Each Member of the Commission shall have the right and
12 power to cast a vote to which that Compacting State is entitled
13 and to participate in the business and affairs of the
14 Commission. A Member shall vote in person or by such other
15 means as provided in the Bylaws. The Bylaws may provide for
16 Members' participation in meetings by telephone or other means
17 of communication.
18     3. The Commission shall meet at least once during each
19 calendar year. Additional meetings shall be held as set forth
20 in the Bylaws.
 
21
Article VII. RULES & OPERATING PROCEDURES: RULEMAKING
22 FUNCTIONS OF THE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS
23     1. Rulemaking Authority. The Commission shall promulgate
24 reasonable Rules, including Uniform Standards, and Operating
25 Procedures in order to effectively and efficiently achieve the
26 purposes of this Compact. Notwithstanding the foregoing, in the
27 event the Commission exercises its rulemaking authority in a
28 manner that is beyond the scope of the purposes of this Act, or
29 the powers granted hereunder, then such an action by the
30 Commission shall be invalid and have no force and effect.
31     2. Rulemaking Procedure. Rules and Operating Procedures
32 shall be made pursuant to a rulemaking process that conforms to
33 the Model State Administrative Procedure Act of 1981 as
34 amended, as may be appropriate to the operations of the

 

 

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1 Commission. Before the Commission adopts a Uniform Standard,
2 the Commission shall give written notice to the relevant state
3 legislative committee(s) in each Compacting State responsible
4 for insurance issues of its intention to adopt the Uniform
5 Standard. The Commission in adopting a Uniform Standard shall
6 consider fully all submitted materials and issue a concise
7 explanation of its decision.
8     3. Effective Date and Opt Out of a Uniform Standard. A
9 Uniform Standard shall become effective ninety (90) days after
10 its promulgation by the Commission or such later date as the
11 Commission may determine; provided, however, that a Compacting
12 State may opt out of a Uniform Standard as provided in this
13 Article. "Opt out" shall be defined as any action by a
14 Compacting State to decline to adopt or participate in a
15 promulgated Uniform Standard. All other Rules and Operating
16 Procedures, and amendments thereto, shall become effective as
17 of the date specified in each Rule, Operating Procedure or
18 amendment.
19     4. Opt Out Procedure. A Compacting State may opt out of a
20 Uniform Standard, either by legislation or regulation duly
21 promulgated by the Insurance Department under the Compacting
22 State's Administrative Procedure Act. If a Compacting State
23 elects to opt out of a Uniform Standard by regulation, it must
24 (a) give written notice to the Commission no later than ten
25 (10) business days after the Uniform Standard is promulgated,
26 or at the time the State becomes a Compacting State and (b)
27 find that the Uniform Standard does not provide reasonable
28 protections to the citizens of the State, given the conditions
29 in the State. The Commissioner shall make specific findings of
30 fact and conclusions of law, based on a preponderance of the
31 evidence, detailing the conditions in the State which warrant a
32 departure from the Uniform Standard and determining that the
33 Uniform Standard would not reasonably protect the citizens of
34 the State. The Commissioner must consider and balance the
35 following factors and find that the conditions in the State and
36 needs of the citizens of the State outweigh:

 

 

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1         (i) the intent of the legislature to participate in,
2     and the benefits of, an interstate agreement to establish
3     national uniform consumer protections for the Products
4     subject to this Act; and
5         (ii) the presumption that a Uniform Standard adopted by
6     the Commission provides reasonable protections to
7     consumers of the relevant Product. Notwithstanding the
8     foregoing, a Compacting State may, at the time of its
9     enactment of this Compact, prospectively opt out of all
10     Uniform Standards involving long-term care insurance
11     products by expressly providing for such opt out in the
12     enacted Compact, and such an opt out shall not be treated
13     as a material variance in the offer or acceptance of any
14     State to participate in this Compact. Such an opt out shall
15     be effective at the time of enactment of this Compact by
16     the Compacting State and shall apply to all existing
17     Uniform Standards involving long-term care insurance
18     products and those subsequently promulgated.
19     5. Effect of Opt Out. If a Compacting State elects to opt
20     out of a Uniform Standard, the Uniform Standard shall remain
21     applicable in the Compacting State electing to opt out until
22     such time the opt out legislation is enacted into law or the
23     regulation opting out becomes effective. Once the opt out of a
24     Uniform Standard by a Compacting State becomes effective as
25     provided under the laws of that State, the Uniform Standard
26     shall have no further force and effect in that State unless and
27     until the legislation or regulation implementing the opt out is
28     repealed or otherwise becomes ineffective under the laws of the
29     State. If a Compacting State opts out of a Uniform Standard
30     after the Uniform Standard has been made effective in that
31     State, the opt out shall have the same prospective effect as
32     provided under Article XIV for withdrawals.
33     6. Stay of Uniform Standard. If a Compacting State has
34     formally initiated the process of opting out of a Uniform
35     Standard by regulation, and while the regulatory opt out is
36     pending, the Compacting State may petition the Commission, at

 

 

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1     least fifteen (15) days before the effective date of the
2     Uniform Standard, to stay the effectiveness of the Uniform
3     Standard in that State. The Commission may grant a stay if it
4     determines the regulatory opt out is being pursued in a
5     reasonable manner and there is a likelihood of success. If a
6     stay is granted or extended by the Commission, the stay or
7     extension thereof may postpone the effective date by up to
8     ninety (90) days, unless affirmatively extended by the
9     Commission; provided, a stay may not be permitted to remain in
10     effect for more than one (1) year unless the Compacting State
11     can show extraordinary circumstances which warrant a
12     continuance of the stay, including, but not limited to, the
13     existence of a legal challenge which prevents the Compacting
14     State from opting out. A stay may be terminated by the
15     Commission upon notice that the rulemaking process has been
16     terminated.
17     7. Not later than thirty (30) days after a Rule or
18     Operating Procedure is promulgated, any person may file a
19     petition for judicial review of the Rule or Operating
20     Procedure; provided, that the filing of such a petition shall
21     not stay or otherwise prevent the Rule or Operating Procedure
22     from becoming effective unless the court finds that the
23     petitioner has a substantial likelihood of success. The court
24     shall give deference to the actions of the Commission
25     consistent with applicable law and shall not find the Rule or
26     Operating Procedure to be unlawful if the Rule or Operating
27     Procedure represents a reasonable exercise of the Commission's
28     authority.
 
29
Article VIII. COMMISSION RECORDS AND ENFORCEMENT
30     1. The Commission shall promulgate Rules establishing
31 conditions and procedures for public inspection and copying of
32 its information and official records, except such information
33 and records involving the privacy of individuals and insurers'
34 trade secrets. The Commission may promulgate additional Rules
35 under which it may make available to federal and state

 

 

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1 agencies, including law enforcement agencies, records and
2 information otherwise exempt from disclosure, and may enter
3 into agreements with such agencies to receive or exchange
4 information or records subject to nondisclosure and
5 confidentiality provisions.
6     2. Except as to privileged records, data and information,
7 the laws of any Compacting State pertaining to confidentiality
8 or nondisclosure shall not relieve any Compacting State
9 Commissioner of the duty to disclose any relevant records, data
10 or information to the Commission; provided, that disclosure to
11 the Commission shall not be deemed to waive or otherwise affect
12 any confidentiality requirement; and further provided, that,
13 except as otherwise expressly provided in this Act, the
14 Commission shall not be subject to the Compacting State's laws
15 pertaining to confidentiality and nondisclosure with respect
16 to records, data and information in its possession.
17 Confidential information of the Commission shall remain
18 confidential after such information is provided to any
19 Commissioner.
20     3. The Commission shall monitor Compacting States for
21 compliance with duly adopted Bylaws, Rules, including Uniform
22 Standards, and Operating Procedures. The Commission shall
23 notify any non-complying Compacting State in writing of its
24 noncompliance with Commission Bylaws, Rules or Operating
25 Procedures. If a non-complying Compacting State fails to remedy
26 its noncompliance within the time specified in the notice of
27 noncompliance, the Compacting State shall be deemed to be in
28 default as set forth in Article XIV.
29     4. The Commissioner of any State in which an Insurer is
30 authorized to do business, or is conducting the business of
31 insurance, shall continue to exercise his or her authority to
32 oversee the market regulation of the activities of the Insurer
33 in accordance with the provisions of the State's law. The
34 Commissioner's enforcement of compliance with the Compact is
35 governed by the following provisions:
36         a. With respect to the Commissioner's market

 

 

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1     regulation of a Product or Advertisement that is approved
2     or certified to the Commission, the content of the Product
3     or Advertisement shall not constitute a violation of the
4     provisions, standards or requirements of the Compact
5     except upon a final order of the Commission, issued at the
6     request of a Commissioner after prior notice to the Insurer
7     and an opportunity for hearing before the Commission.
8         b. Before a Commissioner may bring an action for
9     violation of any provision, standard or requirement of the
10     Compact relating to the content of an Advertisement not
11     approved or certified to the Commission, the Commission, or
12     an authorized Commission officer or employee, must
13     authorize the action. However, authorization pursuant to
14     this Paragraph does not require notice to the Insurer,
15     opportunity for hearing or disclosure of requests for
16     authorization or records of the Commission's action on such
17     requests.
 
18
Article IX. DISPUTE RESOLUTION
19     The Commission shall attempt, upon the request of a Member,
20 to resolve any disputes or other issues that are subject to
21 this Compact and which may arise between two or more Compacting
22 States, or between Compacting States and Non-compacting
23 States, and the Commission shall promulgate an Operating
24 Procedure providing for resolution of such disputes.
 
25
Article X. PRODUCT FILING AND APPROVAL
26     1. Insurers and Third-Party Filers seeking to have a
27 Product approved by the Commission shall file the Product with,
28 and pay applicable filing fees to, the Commission. Nothing in
29 this Act shall be construed to restrict or otherwise prevent an
30 insurer from filing its Product with the insurance department
31 in any State wherein the insurer is licensed to conduct the
32 business of insurance, and such filing shall be subject to the
33 laws of the States where filed.
34     2. The Commission shall establish appropriate filing and

 

 

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1 review processes and procedures pursuant to Commission Rules
2 and Operating Procedures. Notwithstanding any provision herein
3 to the contrary, the Commission shall promulgate Rules to
4 establish conditions and procedures under which the Commission
5 will provide public access to Product filing information. In
6 establishing such Rules, the Commission shall consider the
7 interests of the public in having access to such information,
8 as well as protection of personal medical and financial
9 information and trade secrets, that may be contained in a
10 Product filing or supporting information.
11     3. Any Product approved by the Commission may be sold or
12 otherwise issued in those Compacting States for which the
13 Insurer is legally authorized to do business.
 
14
Article XI. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS
15     1. Not later than thirty (30) days after the Commission has
16 given notice of a disapproved Product or Advertisement filed
17 with the Commission, the Insurer or Third Party Filer whose
18 filing was disapproved may appeal the determination to a review
19 panel appointed by the Commission. The Commission shall
20 promulgate Rules to establish procedures for appointing such
21 review panels and provide for notice and hearing. An allegation
22 that the Commission, in disapproving a Product or Advertisement
23 filed with the Commission, acted arbitrarily, capriciously, or
24 in a manner that is an abuse of discretion or otherwise not in
25 accordance with the law, is subject to judicial review in
26 accordance with Article III, section 5.
27     2. The Commission shall have authority to monitor, review
28 and reconsider Products and Advertisement subsequent to their
29 filing or approval upon a finding that the product does not
30 meet the relevant Uniform Standard. Where appropriate, the
31 Commission may withdraw or modify its approval after proper
32 notice and hearing, subject to the appeal process in section 1
33 above.
 
34
Article XII. FINANCE

 

 

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1     1. The Commission shall pay or provide for the payment of
2 the reasonable expenses of its establishment and organization.
3 To fund the cost of its initial operations, the Commission may
4 accept contributions and other forms of funding from the
5 National Association of Insurance Commissioners, Compacting
6 States and other sources. Contributions and other forms of
7 funding from other sources shall be of such a nature that the
8 independence of the Commission concerning the performance of
9 its duties shall not be compromised.
10     2. The Commission shall collect a filing fee from each
11 Insurer and Third Party Filer filing a product with the
12 Commission to cover the cost of the operations and activities
13 of the Commission and its staff in a total amount sufficient to
14 cover the Commission's annual budget.
15     3. The Commission's budget for a fiscal year shall not be
16 approved until it has been subject to notice and comment as set
17 forth in Article VII of this Compact.
18     4. The Commission shall be exempt from all taxation in and
19 by the Compacting States.
20     5. The Commission shall not pledge the credit of any
21 Compacting State, except by and with the appropriate legal
22 authority of that Compacting State.
23     6. The Commission shall keep complete and accurate accounts
24 of all its internal receipts, including grants and donations,
25 and disbursements of all funds under its control. The internal
26 financial accounts of the Commission shall be subject to the
27 accounting procedures established under its Bylaws. The
28 financial accounts and reports including the system of internal
29 controls and procedures of the Commission shall be audited
30 annually by an independent certified public accountant. Upon
31 the determination of the Commission, but no less frequently
32 than every three (3) years, the review of the independent
33 auditor shall include a management and performance audit of the
34 Commission. The Commission shall make an Annual Report to the
35 Governor and legislature of the Compacting States, which shall
36 include a report of the independent audit. The Commission's

 

 

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1 internal accounts shall not be confidential and such materials
2 may be shared with the Commissioner of any Compacting State
3 upon request, provided, however, that any work papers related
4 to any internal or independent audit and any information
5 regarding the privacy of individuals and insurers' proprietary
6 information, including trade secrets, shall remain
7 confidential.
8     7. No Compacting State shall have any claim to or ownership
9 of any property held by or vested in the Commission or to any
10 Commission funds held pursuant to the provisions of this
11 Compact.
 
12
Article XIII. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT
13     1. Any State is eligible to become a Compacting State.
14     2. The Compact shall become effective and binding upon
15 legislative enactment of the Compact into law by two Compacting
16 States; provided, the Commission shall become effective for
17 purposes of adopting Uniform Standards for, reviewing, and
18 giving approval or disapproval of, Products filed with the
19 Commission that satisfy applicable Uniform Standards only
20 after twenty-six (26) States are Compacting States or,
21 alternatively, by States representing greater than forty
22 percent (40%) of the premium volume for life insurance,
23 annuity, disability income and long-term care insurance
24 products, based on records of the NAIC for the prior year.
25 Thereafter, it shall become effective and binding as to any
26 other Compacting State upon enactment of the Compact into law
27 by that State.
28     3. Amendments to the Compact may be proposed by the
29 Commission for enactment by the Compacting States. No amendment
30 shall become effective and binding upon the Commission and the
31 Compacting States unless and until all Compacting States enact
32 the amendment into law.
 
33
Article XIV. WITHDRAWAL, DEFAULT AND TERMINATION
34     1. Withdrawal.

 

 

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1     a. Once effective, the Compact shall continue in force and
2 remain binding upon each and every Compacting State; provided,
3 that a Compacting State may withdraw from the Compact
4 ("Withdrawing State") by enacting a statute specifically
5 repealing the statute which enacted the Compact into law.
6     b. The effective date of withdrawal is the effective date
7 of the repealing statute. However, the withdrawal shall not
8 apply to any product filings approved or self-certified, or any
9 Advertisement of such products, on the date the repealing
10 statute becomes effective, except by mutual agreement of the
11 Commission and the Withdrawing State unless the approval is
12 rescinded by the Withdrawing State as provided in subsection e.
13 of this section.
14     c. The Commissioner of the Withdrawing State shall
15 immediately notify the Management Committee in writing upon the
16 introduction of legislation repealing this Compact in the
17 Withdrawing State.
18     d. The Commission shall notify the other Compacting States
19 of the introduction of such legislation within ten (10) days
20 after its receipt of notice thereof.
21     e. The Withdrawing State is responsible for all
22 obligations, duties and liabilities incurred through the
23 effective date of withdrawal, including any obligations, the
24 performance of which extend beyond the effective date of
25 withdrawal, except to the extent those obligations may have
26 been released or relinquished by mutual agreement of the
27 Commission and the Withdrawing State. The Commission's
28 approval of Products and Advertisement prior to the effective
29 date of withdrawal shall continue to be effective and be given
30 full force and effect in the Withdrawing State, unless formally
31 rescinded by the Withdrawing State in the same manner as
32 provided by the laws of the Withdrawing State for the
33 prospective disapproval of products or advertisement
34 previously approved under state law.
35     f. Reinstatement following withdrawal of any Compacting
36 State shall occur upon the effective date of the Withdrawing

 

 

HB4468 - 23 - LRB093 20788 RAS 46703 b

1 State reenacting the Compact.
2     2. Default.
3     a. If the Commission determines that any Compacting State
4     has at any time defaulted ("Defaulting State") in the
5     performance of any of its obligations or responsibilities under
6     this Compact, the Bylaws or duly promulgated Rules or Operating
7     Procedures, then, after notice and hearing as set forth in the
8     Bylaws, all rights, privileges and benefits conferred by this
9     Compact on the Defaulting State shall be suspended from the
10     effective date of default as fixed by the Commission. The
11     grounds for default include, but are not limited to, failure of
12     a Compacting State to perform its obligations or
13     responsibilities, and any other grounds designated in
14     Commission Rules. The Commission shall immediately notify the
15     Defaulting State in writing of the Defaulting State's
16     suspension pending a cure of the default. The Commission shall
17     stipulate the conditions and the time period within which the
18     Defaulting State must cure its default. If the Defaulting State
19     fails to cure the default within the time period specified by
20     the Commission, the Defaulting State shall be terminated from
21     the Compact and all rights, privileges and benefits conferred
22     by this Compact shall be terminated from the effective date of
23     termination.
24     b. Product approvals by the Commission or product
25     self-certifications, or any Advertisement in connection with
26     such product, that are in force on the effective date of
27     termination shall remain in force in the Defaulting State in
28     the same manner as if the Defaulting State had withdrawn
29     voluntarily pursuant to paragraph 1 of this Article.
30     c. Reinstatement following termination of any Compacting
31     State requires a reenactment of the Compact.
32         3. Dissolution of Compact.
33     a. The Compact dissolves effective upon the date of the
34     withdrawal or default of the Compacting State which reduces
35     membership in the Compact to one Compacting State.
36     b. Upon the dissolution of this Compact, the Compact

 

 

HB4468 - 24 - LRB093 20788 RAS 46703 b

1     becomes null and void and shall be of no further force or
2     effect, and the business and affairs of the Commission shall be
3     wound up and any surplus funds shall be distributed in
4     accordance with the Bylaws.
 
5
Article XV. SEVERABILITY AND CONSTRUCTION
6     1. The provisions of this Compact shall be severable; and
7 if any phrase, clause, sentence or provision is deemed
8 unenforceable, the remaining provisions of the Compact shall be
9 enforceable.
10     2. The provisions of this Compact shall be liberally
11 construed to effectuate its purposes.
 
12
Article XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS
13     1. Other Laws.
14     a. Nothing herein prevents the enforcement of any other law
15 of a Compacting State, except as provided in paragraph b of
16 this Article.
17     b. For any Product approved or certified to the Commission,
18 the Rules, Uniform Standards and any other requirements of the
19 Commission shall constitute the exclusive provisions
20 applicable to the content, approval and certification of such
21 Products. For Advertisement that is subject to the Commission's
22 authority, any Rule, Uniform Standard or other requirement of
23 the Commission which governs the content of the Advertisement
24 shall constitute the exclusive provision that a Commissioner
25 may apply to the content of the Advertisement. Notwithstanding
26 the foregoing, no action taken by the Commission shall abrogate
27 or restrict:
28         (i) the access of any person to state courts;
29         (ii) remedies available under state law related to
30     breach of contract, tort, or other laws not specifically
31     directed to the content of the Product;
32         (iii) state law relating to the construction of
33     insurance contracts; or
34         (iv) the authority of the attorney general of the

 

 

HB4468 - 25 - LRB093 20788 RAS 46703 b

1     state, including but not limited to maintaining any actions
2     or proceedings, as authorized by law.
3     c. All insurance products filed with individual States
4     shall be subject to the laws of those States.
5     2. Binding Effect of this Compact.
6     a. All lawful actions of the Commission, including all
7     Rules and Operating Procedures promulgated by the Commission,
8     are binding upon the Compacting States.
9     b. All agreements between the Commission and the Compacting
10     States are binding in accordance with their terms.
11     c. Upon the request of a party to a conflict over the
12     meaning or interpretation of Commission actions, and upon a
13     majority vote of the Compacting States, the Commission may
14     issue advisory opinions regarding the meaning or
15     interpretation in dispute.
16     d. In the event any provision of this Compact exceeds the
17     constitutional limits imposed on the legislature of any
18     Compacting State, the obligations, duties, powers or
19     jurisdiction sought to be conferred by that provision upon the
20     Commission shall be ineffective as to that Compacting State,
21     and those obligations, duties, powers or jurisdiction shall
22     remain in the Compacting State and shall be exercised by the
23     agency thereof to which those obligations, duties, powers or
24     jurisdiction are delegated by law in effect at the time this
25     Compact becomes effective.
 
26     Section 99. Effective date. This Act takes effect upon
27 becoming law.