§ 27-2.5-2 - Compact enacted.
SECTION 27-2.5-2
§ 27-2.5-2 Compact enacted. – The interstate compact on insurance product regulation is hereby enacted intolaw and entered into with all other jurisdictions legally joining therein inform substantially as follows:
Preamble
This act intended to help states join together to establishan interstate compact to regulate designated insurance products.
Pursuant to terms and conditions of this act, the state ofRhode Island seeks to join with other states and establish the InterstateInsurance Product Regulation Compact, and thus become a member of theInterstate Insurance Product Regulation Commission. The Rhode Island InsuranceCommissioner is hereby designated to serve as the representative of this stateto the commission.
Interstate Insurance Product Regulation Compact
ARTICLE I.
PURPOSES
The purposes of this compact are, through means of joint andcooperative action among the compacting states:
(1) To promote and protect the interest of consumers ofindividual and group annuity, life insurance, disability income and long-termcare insurance products;
(2) To develop uniform standards for insurance productscovered under the compact;
(3) To establish a central clearinghouse to receive andprovide prompt review of insurance products covered under the compact and, incertain cases, advertisements related thereto, submitted by insurers authorizedto do business in one or more compacting states;
(4) To give appropriate regulatory approval to those productfilings and advertisements satisfying the applicable uniform standard;
(5) To improve coordination of regulatory resources andexpertise between state insurance departments regarding the setting of uniformstandards and review of insurance products covered under the compact;
(6) To create the Interstate insurance product regulationcommission; and
(7) To perform these and such other related functions as maybe consistent with the state regulation of the business of insurance.
ARTICLE II.
DEFINITIONS
For purposes of this compact:
(1) "Advertisement" means any material designed to createpublic interest in a product, or induce the public to purchase, increase,modify, reinstate, borrow on, surrender, replace or retain a policy, as morespecifically defined in the rules and operating procedures of the commission.
(2) "Bylaws" mean those bylaws established by the commissionfor its governance, or for directing or controlling the commissions' actions orconduct.
(3) "Compacting state" means any state which has enacted thiscompact legislation and which has not withdrawn pursuant to Article XIV,Section 1, or been terminated pursuant to Article XIV, Section 2.
(4) "Commission" means the "Interstate Insurance ProductRegulation Commission" established by this compact.
(5) "Commissioner" means the chief insurance regulatoryofficial of a state including, but not limited to, commissioner,superintendent, director or administrator.
(6) "Domiciliary state" means the state in which an insureris incorporated or organized; or, in the case of an alien insurer, its state ofentry.
(7) "Insurer" means any entity licensed by a state to issuecontracts of insurance for any of the lines of insurance covered by this act.
(8) "Member" means the person chosen by a compacting state asits representative to the commission, or his or her designee.
(9) "Noncompacting state" means any state which is not at thetime a compacting state.
(10) "Operating procedures" mean procedures promulgated bythe commission implementing a rule, uniformed standard or a provision of thiscompact.
(11) "Product" means the form of a policy or contract,including any application endorsement, or related from which is attached to andmade a part of the policy or contract, and any evidence of coverage ofcertificate, for an individual or group annuity, life insurance, disabilityincome or long-term care insurance product that an insurer is authorized toissue.
(12) "Rule" means a statement of general or particularapplicability and future effect promulgated by the commission, including auniform standard developed pursuant to Article VII of this compact, designed toimplement, interpret, or prescribe law or policy or describing theorganization, procedure, or practice requirements of the commission, whichshall have the force and effect of law in the compacting states.
(13) "State" means any state, district or territory of theUnited States of America.
(14) "Third-party filer" means an entity that submits aproduct filing to the commission on behalf of an insurer.
(15) "Uniform standard" means a standard adopted by thecommission for a product line, pursuant to Article VII of this compact, andshall include all of the product requirements in aggregate; provided, that eachuniform standard shall be construed, whether express or implied, to prohibitthe use of any inconsistent, misleading or ambiguous provisions in a productand the form of the product made available to the public shall not be unfair,inequitable or against public policy as determined by the commission.
ARTICLE III.
ESTABLISHMENT OF THE COMMISSION AND VENUE
(1) The compacting states hereby create and establish a jointpublic agency known as the "Interstate Insurance Product RegulationCommission." Pursuant to Article IV, the commission will have the power todevelop uniform standards for product lines, receive and provide prompt reviewof products filed therewith, and give approval to those product filingssatisfying applicable uniform standards; provided, it is not intended for thecommission to be the exclusive entity for receipt and review of insuranceproduct filings. Nothing herein shall prohibit any insurer from filing itsproduct in any state wherein the insurer is licensed to conduct the business ofinsurance; and any such filing shall be subject to the laws of the state wherefiled.
(2) The commission is a body corporate and politic, and aninstrumentality of the compacting states.
(3) The commission is a not-for-profit entity, separate anddistinct from the individual compacting states.
(4) The commission is solely responsible for its liabilitiesexcept as otherwise specifically provided in this compact.
(5) Venue is proper and judicial proceedings by or againstthe commission shall be brought solely and exclusively in a court of competentjurisdiction where the principal office of the commission is located.
ARTICLE IV.
POWERS OF THE COMMISSION
The commission shall have the following powers:
(1) To promulgate rules, pursuant to Article VII of thiscompact, which shall have the force and effect of law and shall be binding inthe compacting states to the extent and in the manner provided in this compact;
(2) To exercise its rule-making authority and establishreasonable uniform standards for products covered under the compact, andadvertisement related thereto, which shall have the force and effect of law andshall be binding in the compacting states, but only for those products filedwith the commission, provided, that a compacting state shall have the right toopt out of such uniform standard pursuant to Article VII, to the extent and inthe manner provided in this compact and, provided, further, that any uniformstandard established by the commission for long-term care insurance productsmay provide the same or greater protections for consumers as, but shall notprovide less than, those protections set forth in the National Association ofInsurance Commissioners' Long-Term Care Insurance Model Act and Long-Term CareInsurance Model Regulation, respectively, adopted as of 2001. The commissionshall consider whether any subsequent amendments to the NAIC Long-Term CareInsurance Model Act or Long-Term Care Insurance Model Regulation adopted by theNAIC require amending of the uniform standards established by the commissionfor long-term care insurance products;
(3) To receive and review in an expeditious manner productsfiled with the commission, and rate filings for disability income and long-termcare insurance products, and give approval of those products and rate filingsthat satisfy the applicable uniform standard, where such approval shall havethe force and effect of law and be binding on the compacting states to theextent and in the manner provided in the compact;
(4) To receive and review in an expeditious manneradvertisement relating to long-term care insurance products for which uniformstandards have been adopted by the commission, and give approval to alladvertisement that satisfies the applicable uniform standard. For any productcovered under this compact, other than long-term care insurance products, thecommission shall have the authority to require an insurer to submit all or anypart of its advertisement with respect to that product for review or approvalprior to use, if the commission determines that the nature of the product issuch that an advertisement of the product could have the capacity or tendencyto mislead the public. The actions of commission as provided in this sectionshall have the force and effect of law and shall be binding in the compactingstates to the extent and in the manner provided in the compact;
(5) To exercise its rule-making authority and designateproducts and advertisement that may be subject to a self-certification processwithout the need for prior approval by the commission;
(6) To promulgate operating procedures, pursuant to ArticleVII of the compact, which shall be binding in the compacting states to theextent and in the manner provided in this compact;
(7) To bring and prosecute legal proceedings or actions inits name as the commission; provided, that the standing of any state insurancedepartment to sue or be sued under applicable law shall not be affected;
(8) To issue subpoenas requiring the attendance and testimonyof witnesses and the production of evidence;
(9) To establish and maintain offices;
(10) To purchase and maintain insurance and bonds;
(11) To borrow, accept or contract for services of personnel,including, but not limited to, employees of a compacting state;
(12) To hire employees, professionals or specialists, andelect or appoint officers, and to fix their compensation, define their dutiesand give them appropriate authority to carry out the purposes of the compact,and determine their qualifications; and to establish the commission's personnelpolicies and programs relating to, among other things, conflicts of interest,rates of compensation and qualifications of personnel;
(13) To accept any and all appropriate donations and grantsof money, equipment, supplies, materials, and services, and to receive, utilizeand dispose of the same; provided, that at all times the commission shallstrive to avoid any appearance of impropriety;
(14) To lease, purchase, accept appropriate gifts ordonations of, or otherwise to own, hold, improve or use, any property, real,personal or mixed; provided, that at all times the commission shall strive toavoid any appearance of impropriety;
(15) To sell, convey, mortgage, pledge, lease, exchange,abandon or otherwise dispose of any property, real, personal or mixed;
(16) To remit filing fees to compacting states as may be setforth in the bylaws, rules or operating procedures;
(17) To enforce compliance by compacting states with rules,uniform standards, operating procedures and bylaws;
(18) To provide for dispute resolution among compactingstates;
(19) To advise compacting states on issues relating toinsurers domiciled or doing business in noncompacting jurisdictions, consistentwith the purposes of the compact;
(20) To provide advice and training to those personnel instate insurance departments responsible for product review, and to be aresource for state insurance departments;
(21) To establish a budget and make expenditures;
(22) To borrow money;
(23) To appoint committees including advisory committeescomprising members, state insurance regulators, state legislators or theirrepresentatives, insurance industry and consumer representatives, and suchother interested persons as may be designated in the bylaws;
(24) To provide and receive information from, and tocooperate with law enforcement agencies;
(25) To adopt and use a corporate seal; and
(26) To perform such other functions as may be necessary orappropriate to achieve the purposes of this compact consistent with the stateregulation of the business of insurance.
ARTICLE V.
ORGANIZATION OF THE COMMISSION
(1) Membership, voting and bylaws.
(a) Each compacting state shall have [be] limitedto one member. Each member shall be qualified to serve in that capacitypursuant to applicable law of the compacting state. Any member may be removedor suspended from office as provided by the law of the state from which he orshe shall be appointed. Any vacancy occurring in the commission shall be filledin accordance with the laws of the compacting state wherein the vacancy exists.Nothing herein shall be construed to affect the manner in which a compactingstate determines the election or appointment and qualification of its owncommissioner.
(b) Each member shall be entitled to one vote and shall havean opportunity to participate in the governance of the commission in accordancewith the bylaws. Notwithstanding any provision herein to the contrary, noaction of the commission with respect to the promulgation of a uniform standardshall be effective unless two-thirds (2/3) of the members vote in favor thereof.
(c) The commission shall, by a majority of the members,prescribe bylaws to govern its conduct as may be necessary or appropriate tocarry out the purposes, and exercise the powers, of the compact, including, butnot limited to:
(i) Establishing the fiscal year of the commission;
(ii) Providing reasonable procedures for appointing andelecting members, as well as holding meetings, of the management committee;
(iii) Providing reasonable standards and procedures: (i) forthe establishment and meetings of other committees; and (ii) governing anygeneral or specific delegation of any authority or function of the commission;
(iv) Providing reasonable procedures for calling andconducting meetings of the commission that consists of a majority of commissionmembers, ensuring reasonable advance notice of each such meeting and providingfor the rights of citizens to attend such meeting with enumerated exceptionsdesigned to protect the public's interest, the privacy of individuals, andinsurers' proprietary information, including trade secrets. The commission maymeet in camera only after a majority of the entire membership votes to close ameeting en toto or in part. As soon as practicable, the commission must makepublic: (i) a copy of the vote to close the meeting revealing the vote of eachmember with no proxy votes allowed; and (ii) votes taken during such meeting;
(v) Establishing the titles, duties and authority andreasonable procedures for the election of the officers of the commission;
(vi) Providing reasonable standards and procedures for theestablishment of the personnel policies and programs of the commission.Notwithstanding any civil service or other similar laws of any compactingstate, the bylaws shall exclusively govern the personnel policies and programsof the commission;
(vii) Promulgating a code of ethics to address permissibleand prohibited activities of commission members and employees; and
(viii) Providing a mechanism for winding up the operations ofthe commission and the equitable disposition of any surplus funds that mayexist after the termination of the compact after the payment and/or reservingof all of its debts and obligations.
(d) The commission shall publish its bylaws in a convenientform and file a copy thereof and a copy of any amendment thereto, with theappropriate agency or officer in each of the compacting states.
(2) Management committee, officers and personnel.
(a) A management committee comprising no more than fourteen(14) members shall be established as follows:
(i) One member from each of the six (6) compacting stateswith the largest premium volume for individual and group annuities, life,disability income and long-term care insurance products, determined from therecords of the NAIC for the prior year;
(ii) Four (4) members from those compacting states with atleast two percent (2%) of the market based on the premium volume describedabove, other than the six (6) compacting states with the largest premiumvolume, selected on a rotating basis as provided in the bylaws, and;
(iii) Four (4) members from those compacting states with lessthan two percent (2%) of the market, based on the premium volume describedabove, with one selected form [from] each of the four (4) zoneregions of the NAIC as provided in the bylaws.
(b) The management committee shall have such authority andduties as may be set forth in the bylaws, including, but not limited to:
(i) Managing the affairs of the commission in a mannerconsistent with the bylaws and purposes of the commission;
(ii) Establishing and overseeing an organizational structurewithin, and appropriate procedures for, the commission to provide for thecreation of uniform standards and other rules, receipt and review of productfilings, administrative and technical support functions, review of decisionsregarding the disapproval of a product filing, and the review of elections madeby a compacting state to opt out of a uniform standard; provided, that auniform standard shall not be submitted to the compacting states for adoptionunless 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 communicationsand activities with other state, federal and local government organizations inorder to advance the goals of the commission.
(c) The commission shall elect annually officers from themanagement committee, with each having such authority and duties, as may bespecified in the bylaws.
(d) The management committee may, subject to the approval ofthe commission, appoint or retain an executive director for such period, uponsuch terms and conditions and for such compensation as the commission may deemappropriate. The executive director shall serve as secretary to the commission,but shall not be a member of the commission. The executive director shall hireand supervise such other staff as may be authorized by the commission.
(3) Legislative and advisory committees.
(a) A legislative committee comprising state legislators ortheir designees shall be established to monitor the operations of, and makerecommendations to, the commission, including the management committee;provided, that the manner of selection and term of any legislative committeemember shall be as set forth in the bylaws. Prior to the adoption by thecommission of any uniform standard, revision to the bylaws, annual budget orother significant matter as may be provided in the bylaws, the managementcommittee shall consult with and report to the legislative committee.
(b) The commission shall establish two (2) advisorycommittees, one of which shall comprise consume [consumer]representatives independent of the insurance industry, and the other comprisinginsurance industry representatives.
(c) The commission may establish additional advisorycommittees as its bylaws may provide for the carrying out of its functions.
(4) Corporate records of the commission.
The commission shall maintain its corporate books and recordsin accordance with the bylaws.
(5) Qualified immunity, defense and indemnification.
(a) The members, officers, executive director, employees andrepresentatives of the commission shall be immune from suit and liability,either personally or in their official capacity, for any claim for damage to orloss of property or personal injury or other civil liability caused by orarising out of any actual or alleged act, error or omission that occurred, orthat the person against whom the claim is made had a reasonable basis forbelieving occurred within the scope of commission employment, duties orresponsibilities; provided, that nothing in this paragraph shall be construedto protect any such person from suit and/or liability for any damage, loss,injury or liability caused by the intentional or willful and wanton misconductof that person.
(b) The commission shall defend any member, officer,executive director, employee or representative of the commission in any civilaction seeking to impose liability arising out of any actual or alleged act,error or omission that occurred within the scope of commission employment,duties or responsibilities, or that the person against whom the claim is madehad a reasonable basis for believing occurred within the scope of commissionemployment, duties or responsibilities; provided, that nothing herein shall beconstrued to prohibit that person from retaining his or her own counsel; andprovided, further, that the actual or alleged act, error or omission did notresult form [from] that person's intentional or willful and wantonmisconduct.
(c) The commission shall indemnify and hold harmless anymember, officer, executive director, employee or representative of thecommission for the amount of any settlement or judgment obtained against thatperson arising out of any actual or alleged act, error or omission thatoccurred within the scope of commission employment, duties or responsibilities,or that such person had a reasonable basis for believing occurred within thescope of commission employment, duties or responsibilities, provided, that theactual or alleged act, error or omission did not result from the intentional orwillful and wanton misconduct of that person.
ARTICLE VI.
MEETINGS AND ACTS OF THE COMMISSION
(1) The commission shall meet and take such actions as areconsistent with the provisions of this compact and the bylaws.
(2) Each member of the commission shall have the right andpower to cast a vote to which that compacting state is entitle[entitled] and to participate in the business and affairs of thecommission. A member shall vote in person or by such other means as provided inthe bylaws. The bylaws may provide for members' participation in meetings bytelephone or other means of communication.
(3) The commission shall meet at least once during eachcalendar year. Additional meetings shall be held as set forth in the bylaws.
ARTICLED VII.
RULES AND OPERATING PROCEDURES: RULEMAKING FUNCTIONS OFTHE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS
(1) Rulemaking authority. The commission shallpromulgate reasonable rules, including uniform standards, and operatingprocedures in order to effectively and efficiently achieve the purposes of thiscompact. Notwithstanding the foregoing, in the event the commission exercisesits rulemaking authority in a manner that is beyond the scope of the purposesof this act, or the powers granted hereunder, then such an action by thecommission shall be invalid and have no force and effect.
(2) Rulemaking procedure. Rules and operatingprocedures shall be made pursuant to a rulemaking process that conforms to theModel State Administrative Procedure Act of 1981 as amended, as may beappropriate to the operations of the commission. Before the commission adopts auniform standard, the commission shall give written notice to the relevantstate legislative committee(s) in each compacting state responsible forinsurance issues of its intention to adopt the uniform standard. The commissionin adopting a uniform standard shall consider fully all submitted materials andissue a concise explanation of its decision.
(3) Effective date and opt out of a uniform standard.A uniform standard shall become effective ninety (90) days after itspromulgation by the commission or such later date as the commission maydetermine; provided, however, that a compacting state may opt out of a uniformstandard as provided in this Article. "Opt out" shall be defined as any actionby a compacting state to decline to adopt or participate in a promulgateduniform standard. All other rules and operating procedures, and amendmentsthereto, shall become effective as of the date specified in each rule,operating procedure or amendment.
(4) Opt out procedure. A compacting state may opt outof a uniform standard, either by legislation or regulation duly promulgated bythe insurance department under the Compacting State's Administrative ProcedureAct. If a compacting state elects to opt out of a uniform standard byregulation, it must: (a) give written notice to the commission no later thanten (10) business days after the uniform standard is promulgated, or at thetime the state becomes a compacting state; and (b) find that the uniformstandard does not provide reasonable protections to the citizens of the state,given the conditions in the state. The commissioner shall make specificfindings of fact and conclusions of law, based on a preponderance of theevidence, detailing the conditions in the state which warrant a departure fromthe uniform standard and determining that the uniform standard would notreasonably protect the citizens of the state. The commissioner must considerand balance the following factors and find that the conditions in the state andneeds of the citizens of the state outweigh: (i) the intent of the legislatureto participate in, and the benefits of, an interstate agreement to establishnational uniform consumer protections for the products subject to this act; and(ii) the presumption that a uniform standard adopted by the commission providesreasonable protections to consumers of the relevant product.
Notwithstanding the foregoing, a compacting state, may, atthe time of its enactment of this compact, prospectively opt out of all uniformstandards involving long-term care insurance products by expressly providingfor such opt out in the enacted compact, and such an opt out shall not betreated as a material variance in the offer or acceptance of any state toparticipate in this compact. Such an opt out shall be effective at the time ofenactment of this compact by the compacting state and shall apply to allexisting uniform standards involving long-term care insurance products andthose subsequently promulgated.
(5) Effect of opt out. If a compacting state elects toopt out of a uniform standard, the uniform standard shall remain applicable inthe compacting state electing to opt out until such time the opt outlegislation is enacted into law or the regulation opting out becomes effective.
Once the opt out of a uniform standard by a compacting statebecomes effective as provided under the laws of that state, the uniformstandard shall have no further force and effect in that state unless and untilthe legislation or regulation implementing the opt out is repealed or otherwisebecomes ineffective under the laws of the state. If a compacting state opts outof a uniform standard after the uniform standard has been made effective inthat state, the opt out shall have the same prospective effect as providedunder Article XIV for withdrawals.
(6) Stay of uniform standard. If a compacting statehas formally initiated the process of opting out of a uniform standard byregulation, and while the regulatory opt out is pending, the compacting statemay petition the commission, at least fifteen (15) days before the effectivedate of the uniform standard, to stay the effectiveness of the uniform standardin that state. The commission may grant a stay if it determines the regulatoryopt out is being pursued in a reasonable manner and there is a likelihood ofsuccess. If a stay is granted or extended by the commission, the stay orextension thereof may postpone the effective date by up to ninety (90) days,unless affirmatively extended by the commission; provided, a stay may not bepermitted to remain in effect for more than one (1) year unless the compactingstate can show extraordinary circumstances which warrant a continuance of thestay, including, but not limited to, the existence of a legal challenge whichprevents the compacting state from opting out. A stay may be terminated by thecommission upon notice that the rulemaking process has been terminated.
(7) Not later than thirty (30) days after a rule or operatingprocedure is promulgated any person may file a petition for judicial review ofthe rule or operating procedure; provided, that the filing of such a petitionshall not stay or otherwise prevent the rule or operating procedure frombecoming effective unless the court finds that the petitioner has a substantiallikelihood of success. The court shall give deference to the actions of thecommission consistent with applicable law and shall not find the rule oroperating procedure to be unlawful if the rule or operating procedurerepresents a reasonable exercise of the commission's authority.
ARTICLE VIII.
COMMISSION RECORDS AND ENFORCEMENT
(1) The commission shall promulgate rules establishingconditions and procedures for public inspection and copying of its informationand official records, except such information and records involving the privacyof individuals and insurers' trade secrets. The commission may promulgateadditional rules under which it may make available to federal and stateagencies including law enforcement agencies, records and information otherwiseexempt from disclosure and may enter into agreements with such agencies toreceive or exchange information or records subject to nondisclosure andconfidentiality provisions.
(2) Except as to privileged records, data and information,the laws of any compacting state pertaining to confidentiality or nondisclosureshall not relieve any compacting state commissioner of the duty to disclose anyrelevant records, data or information to the commission; provided, thatdisclosure to the commission shall not be deemed to waive or otherwise affectany confidentiality requirement; and further provided, that, except asotherwise expressly provided in this act, the commission shall not be subjectto the compacting state's laws pertaining to confidentiality and nondisclosurewith respect to records, data and information in its possession. Confidentialinformation of the commission shall remain confidential after such informationis provided to any commissioner.
(3) The commission shall monitor compacting states forcompliance with duly adopted bylaws, rules, including uniform standards, andoperating procedures. The commission shall notify any noncomplying compactingstate in writing of its noncompliance with commission bylaws, rules oroperating procedures. If a noncomplying compacting state fails to remedy itsnoncompliance within the time specified in the notice of noncompliance, thecompacting state shall be deemed to be in default as set forth in Article XIV.
(4) The commissioner of any state in which an insurer isauthorized to do business, or is conducting the business of insurance, shallcontinue to exercise his or her authority to oversee the market regulation ofthe activities of the insurer in accordance with the provisions of the state'slaw. The commissioner's enforcement of compliance with the compact is governedby the state following provisions:
(a) With respect to the commissioner's market regulation of aproduct or advertisement that is approved or certified to the commission, thecontent of the product or advertisement shall not constitute a violation of theprovisions, standards or requirements of the compact except upon a final orderof the commission, issued at the request of a commissioner after prior noticeto the insurer and an opportunity for hearing before the commission.
(b) Before a commissioner may bring an action for violationof any provision, standard or requirement of the compact relating to thecontent of an advertisement not approved or certified to the commission, thecommission, or an authorized commission officer or employee, must authorize thesection. However, authorization pursuant to this paragraph does not requirenotice to the insurer, opportunity for hearing or disclosure of requests forauthorization or records of the commission's action on such requests.
ARTICLE IX.
DISPUTE RESOLUTION
The commission shall attempt, upon the request of a member,to resolve any disputes or other issues that are subject to this compact andwhich may arise between two (2) or more compacting states, or betweencompacting states and noncompacting states, and the commission shall promulgatean operating procedure providing for resolution of such disputes.
ARTICLE X.
PRODUCT FILING AND APPROVAL
(1) Insurers and third-party filers seeking to have a productapproved by the commission shall file the product with, and pay applicablefiling fees to, the commission. Nothing in this act shall be construed torestrict or otherwise prevent an insurer from filing its product with theinsurance department in any state wherein the insurer is licensed to conductthe business of insurance, and such filing shall be subject to the laws of thestates where filed.
(2) The commission shall establish appropriate filing andreview processes and procedures pursuant to commission rules and operatingprocedures. Notwithstanding any provision herein to the contrary, thecommission shall promulgate rules to establish conditions and procedures underwhich the commission will provide public access to product filing information.In establishing such rules, the commission shall consider the interests of thepublic in having access to such information, as well as protection of personalmedical and financial information and trade secrets, that may be contained in aproduct filing or supporting information.
(3) Any product approved by the commission may be sold orotherwise issued in those compacting states for which the insurer is legallyauthorized to do business.
ARTICLE XI.
REVIEW OF COMMISSION DECISIONS REGARDING FILINGS
(1) Not later than thirty (30) days after the commission hasgiven notice of a disapproved product or advertisement filed with thecommission, the insurer or third party filer whose filing was disapproved mayappeal the determination to a review panel appointed by the commission. Thecommission shall promulgate rules to establish procedures for appointing suchreview panels and provide for notice and hearing. An allegation that thecommission, in disapproving a product or advertisement filed with thecommission, acted arbitrarily, capriciously, or in a manner that is an abuse ofdiscretion or otherwise not in accordance with the law, is subject to judicialreview in accordance with Article III, Section 5.
(2) The commission shall have authority to monitor review andreconsider products and advertisement subsequent to their filing or approvalupon a finding that the product does not meet the relevant uniform standard.Where appropriate, the commission may withdraw or modify its approval afterproper notice and hearing, subject to the appeal process in section 1 above.
ARTICLE XII.
FINANCE
(1) The commission shall pay or provide for the payment ofthe reasonable expenses of its establishment and organization. To fund the costof its initial operations, the commission may accept contributions and otherforms of funding from the National Association of Insurance Commissioners,compacting states and other sources. Contributions and other forms of fundingfrom other sources shall be of such a nature that the independence of thecommission concerning the performance of its duties shall not be compromised.
(2) The commission shall collect a filing fee from eachinsurer and third party filer filing a product with the commission to cover thecost of the operations and activities of the commission and its staff in atotal amount sufficient to cover the commission's annual budget.
(3) The commission's budget for a fiscal year shall not beapproved until it has been subject to notice and comment as set forth inArticle VII of this compact.
(4) The commission shall be exempt from all taxation in andby the compacting states.
(5) The commission shall not pledge the credit of anycompacting state, except by and with the appropriate legal authority of thatcompacting state.
(6) The commission shall keep complete and accurate accountsof all its internal receipts, including grants and donations, and disbursementsof all funds under its control. The internal financial accounts of thecommission shall be subject to the accounting procedures established under itsbylaws. The financial accounts and reports including the system of internalcontrols and procedures of the commission shall be audited annually by anindependent certified public accountant. Upon the determination of thecommission, but no less frequently than every three (3) years, the review ofthe independent auditor shall include a management and performance audit of thecommission. The commission shall make an annual report to the governor andlegislature of the compacting states, which shall include a report of theindependent audit. The commission's internal accounts shall not be confidentialand such materials may be shared with the commissioner of any compacting stateupon request; provided, however, that any work papers related to any internalor independent audit and any information regarding the privacy of individualsand insurers' proprietary information, including trade secrets, shall remainconfidential.
(7) No compacting state shall have any claim to or ownershipof any property held by or vested in the commission or to any commission fundsheld pursuant to the provisions of this compact.
ARTICLE XIII.
COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT
(1) Any state is eligible to become a compacting state.
(2) The compact shall become effective and binding uponlegislative enactment of the compact into law by two compacting states;provided, the commission shall become effective for purposes of adoptinguniform standards for, reviewing, and giving approval or disapproval of,products filed with the commission that satisfy applicable uniform standardsonly after twenty-six (26) states are compacting states, or, alternatively, bystates representing greater than forty percent (40%) of the premium volume forlife insurance, annuity, disability income and long-term care insuranceproducts, based on records of the NAIC for the prior year. Thereafter, it shallbecome effective and binding as to any other compacting state upon enactment ofthe compact into law by that state.
(3) Amendments to the compact may be proposed by thecommission for enactment by the compacting states. No amendment shall becomeeffective and binding upon the commission and the compacting states unless anduntil all compacting states enact the amendment into law.
ARTICLE XIV.
WITHDRAWAL, DEFAULT AND TERMINATION
(1) Withdrawal;
(a) Once effective, the compact shall continue in force andremain binding upon each and every compacting state; provided, that acompacting state may withdraw from the compact ("Withdrawing State") byenacting a statute specifically repealing the statute which enacted the compactinto law.
(b) The effective date of withdrawal is the effective date ofthe repealing statute. However, the withdrawal shall not apply to any productfilings approved or self-certified, or any advertisement of such products, onthe date the repealing statute becomes effective, except by mutual agreement ofthe commission and the withdrawing state unless the approval is rescinded bythe withdrawing state as provided in subsection (e) of the this section.
(c) The commissioner of the withdrawing state shallimmediately notify the management committee in writing upon the introduction oflegislation repealing this compact in the withdrawing state.
(d) The commission shall notify the other compacting statesof the introduction of such legislation within ten (10) days after its receiptof notice thereof.
(e) The withdrawing state is responsible for all obligations,duties and liabilities incurred through the effective date of withdrawal,including any obligations, the performance of which extend beyond the effectivedate of withdrawal, except to the extent those obligations may have beenreleased or relinquished by mutual agreement of the commission and thewithdrawing state. The commission's approval of products and advertisementprior to the effect date of withdrawal shall continue to be effective and begiven full force and effect in the withdrawing state, unless formally rescindedby the withdrawing state in the same manner as provided by the laws of thewithdrawing state for the prospective disapproval of products or advertisementpreviously approved under state law.
(f) Reinstatement following withdrawal of any compactingstate shall occur upon the effective date of the withdrawing state reenactingthe compact.
(a) If the commission determines that any compacting statehas at any time defaulted ("defaulting state") in the performance of any of itsobligations or responsibilities under this compact, the bylaws or dulypromulgated rules or operating procedures, then, after notice and hearing asset forth in the bylaws, all rights, privileges and benefits conferred by thiscompact on the defaulting state shall be suspended from the effective date ofdefault as fixed by the commission. The grounds for default include, but arenot limited to, failure of compacting state to perform its obligations orresponsibilities, and any other grounds designated in commission rules. Thecommission shall immediately notify the defaulting state in writing of thedefaulting state's suspension pending a cure of the default. The commissionshall stipulate the conditions and the time period within which the defaultingstate must cure its default. If the defaulting state fails to cure the defaultwithin the time period specified by the commission, the defaulting state shallbe terminated from the compact and all rights, privileges and benefitsconferred by this compact shall be terminated from the effective date oftermination.
(b) Product approvals by the commission or productself-certifications, or any advertisement in connection with such product, thatare in force on the effective date of termination shall remain in force in thedefaulting state in the same manner as if the defaulting state had withdrawnvoluntarily pursuant to paragraph (1) of the article.
(c) Reinstatement following termination of any compactingstate requires a reenactment of the compact.
(a) The compact dissolves effective upon the date of thewithdrawal or default of the compacting state which reduces membership in thecompact to one compacting state.
(b) Upon the dissolution of this compact, the compact becomesnull and void and shall be of no further force or effect, and the business andaffairs of the commission shall be wound up and any surplus funds shall bedistributed in accordance with the bylaws.
ARTICLE XV.
SEVERABILITY AND CONSTRUCTION
(1) The provisions of this compact shall be severable; and ifany phrase, clause, sentence or provision is deemed unenforceable, theremaining provisions of the compact shall be enforceable.
(2) The provisions of this compact shall be liberallyconstrued to effectuate it purposes.
ARTICLE XVI.
BINDING EFFECT OF COMPACT AND OTHER LAWS
(a) Nothing herein prevents the enforcement of any other lawof a compacting state, except as provided in paragraph (b) of the article.
(b) For any product approved or certified to the commission,the rules, uniform standards and any other requirements of the commission shallconstitute the exclusive provisions applicable to the content, approval andcertification of such products. For advertisement that is subject to thecommission's authority, any rule, uniform standard or other requirement of thecommission which governs the content of the advertisement shall constitute theexclusive provision that a commissioner may apply to the content of theadvertisement. Notwithstanding the foregoing, no action taken by the commissionshall abrogate or restrict: (i) the access of any person to state courts; (ii)remedies available under state law related to breach of contract, tort, orother laws not specifically directed to the content of the product; (iii) statelaw relating to the construction of insurance contracts; or (iv) the authorityof the attorney general of the state, including, but not limited to,maintaining any actions or proceedings, as authorized by law.
(c) All insurance products filed with individual states shallbe subject to the laws of those states.
(a) All lawful actions of the commission, including all rulesand operating procedures promulgated by the commission, are binding upon thecompacting states.
(b) All agreements between the commission and the compactingstates are binding in accordance with their terms.
(c) Upon the request of a party to a conflict over themeaning or interpretation of commission actions, and upon a majority vote ofthe compacting states, the commission may issue advisory opinions regarding themeaning or interpretation in dispute.
(d) In the event any provision of this compact exceeds theconstitutional limits imposed on the legislature of any compacting state, theobligations, duties, powers or jurisdiction sought to be conferred by thatprovision upon the commission shall be ineffective as to that compacting state,and those obligations, duties, powers or jurisdiction shall remain in thecompacting state and shall be exercised by the agency thereof to which thoseobligations, duties, powers or jurisdiction are delegated by law in effect atthe time this compact becomes effective.