|SAME AS||No Same As|
|COSPNSR||Steck, Weprin, Quart, Hevesi, Cook, Kolb|
|Add Art 88 §§8801 - 8817, Ins L|
|Establishes the "interstate insurance product regulation compact" to regulate certain insurance products among member states and to promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long term care insurance products.|
|02/03/2017||referred to insurance|
|01/03/2018||referred to insurance|
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4822 SPONSOR: Titus
TITLE OF BILL: An act to amend the insurance law, in relation to establishing the interstate insurance product regulation compact to regulate certain insurance products; and providing for the repeal of such provisions upon expiration thereof   PURPOSE OR GENERAL IDEA OF BILL: Establishes an interstate insurance product regulation compact. The purposes of this compact are, through means of joint and cooperative action among the compacting states: a. to promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products; b. to develop uniform standards for insurance products covered under the compact; c. to establish a central clearinghouse to receive and provide prompt review of insurance products covered under the compact and, in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more compacting states; d. to give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standards; e. to improve coordination of regulatory resources and expertise among state insurance departments regarding the setting of uniform standards and review of insurance products covered under the compact; f. to create the interstate insurance product regulation commission; and g. to perform such other related functions as may be consistent with the state regulation of the business of insurance.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 of the bill provides legislative findings. Section 2 adds a new Article 88 to the Insurance Law entitled the "Interstate Insurance Product Regulation Compact" (hereinafter referred to. as the 'Compact"). This Article consists of seventeen new bill sections: Sections 8801-8817. The bill creates an Interstate Insurance Product Approval Commission (hereinafter referred to as the "Commission") and provides the statutory framework for states to enter into an interstate insurance product regu- lation compact. The Compact would establish a single point of filing for certain insur- ance products and rate filings which would be subject to uniform national standards. Those states that are members of the Compact would develop the uniform standards that apply to products filed with the Commission. Product standards would be developed through a rulemaking process which would require the approval of two-thirds of the commission management committee and two-thirds of the commission members. Unless a state opts-out as described below, approval of a product by the Compact would be the same as approval by a member state. The bill would, howev- er, allow companies the option to continue to file products' in the individual states through the existing form filing processes. Identifi- cation of genetically modified organisms in consumable commodities and promulgate rules and regulations. The bill also provides that individual states will continue to regulate market activities and allows for coordination among states and the Commission to determine instances of violations of uniform standards subject to the final order of the Commission. If a state disagrees with a product standard developed by the Commis- sion, it may opt-out of the uniform standard either by regulation or legislation. For long-term care insurance, states may opt-out at the time of the joining the Compact ("front-end" opt-out). In order to opt-out by regulation (a state must show that the uniform standard does not provide reasonable protections to the citizens of the state and that the needs of the state outweigh the Legislature's intent to participate in and receive the benefits of the Compact. The Compact would become effective when two states enact compact legis- lation. The Commission becomes operational (that is adopting uniform standards, receiving products and giving approvals/disapprovals) if twenty-six states or states representing forty percent of the premium for life (disability income insurance and long-term care join the Compact. Operations of the Commission would be financed initially through contributions and other Sources of funding and over time through the filing fees paid by insurers. All donations, grants of money, equipment, supplies, materials or services, purchases, gifts, donations, conveyances, mortgages, pledges, leases and exchanges, received by or on behalf of the Commission will be limited to the direct funding of the lawful and authorized operations of the Commission. In addition, the Commission is solely responsible for its liabilities unless otherwise specifically provided in the Compact. However, in no event shall the obligations of the Commission be the debt of the State of New York nor shall any revenues or property of the State of New York be liable therefore. All states joining the Compact would be involved in setting up and over- seeing the activities of the Compact, including developing product stan- dards and the rules and operating procedures of the Commission. The Commission would make an annual report to the legislature and gover- nor of each state joining the Compact. In addition to opting out of particular product standards, each state has the right to withdraw from the Compact, by enacting a statute repealing this bill. Section 3 of the bill provides for a January 1, 2014 effective date, with an expiration date of December 31, 2016.   JUSTIFICATION: In general, interstate compacts are used to establish the framework for cooperative solutions to multi-state challenges. There are over two hundred interstate compacts currently in existence covering a wide vari- ety of subjects. Every state belongs to at least fourteen such compacts. This bill is based on the NAIC Model Act. The bill provides for a single point of product and rate filings subject to uniform national standards, which provides the following benefits: a. Regulatory efficiency/effectiveness: more effective use of limited regulatory resources. b. Single high-quality review of increasingly complex products. c. Leverage collective expertise of states in setting uniform standards. d. opportunity to redirect resources to other areas of consumer protection. e. Meet industry's need for single point of filing. f. Meet industry's need to get products to market in a timelier manner. g. Permit industry to compete more effectively With financial insti- tutions such as banks and security firms. h. Provide consumers with a broader choice of products in a timelier manner. States would still retain control over the insurance regulatory process even if a state elects to join the compact. If a state disagrees with a product standard developed by the Commission, it may opt-out of the uniform standard either by regulation or legislation. The bill would also allow companies to continue to file products in the individual states through the existing form filing process.   PRIOR LEGISLATIVE HISTORY: A1262 (2015-2016) Referred to Insurance 1/06/16 06/09/14 PASSED SENATE; referred to insurance 05/02/14 amend and recommit to insurance 01/08/14 referred to insurance 01/09/13 referred to insurance   FISCAL IMPLICATIONS: Establishment of a Commission would be of minimal cost to New York State. The Commission would be funded by the insurance companies who are utilizing the services of the Commission.   EFFECTIVE DATE: The act shall take effect January 1, 2016 and shall expire and be deemed repealed December 31, 2018; provided, however, that any policy or contract issued during the period that the law is in effect that has been approved in accordance with this law shall continue in full force and effect.
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STATE OF NEW YORK ________________________________________________________________________ 4822 2017-2018 Regular Sessions IN ASSEMBLY February 3, 2017 ___________ Introduced by M. of A. TITUS, STECK, WEPRIN, QUART, HEVESI, COOK -- read once and referred to the Committee on Insurance AN ACT to amend the insurance law, in relation to establishing the interstate insurance product regulation compact to regulate certain insurance products; and providing for the repeal of such provisions upon expiration thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Legislative findings and intent. An interstate compact is 2 an agreement between states that permits states to cooperate on multi- 3 state or national issues while retaining state control. There are over 4 two hundred interstate compacts currently in existence and every state 5 belongs to at least fourteen such compacts. The interstate insurance 6 product regulation compact is designed to streamline state product regu- 7 lation systems to allow insurers to more quickly market certain types of 8 insurance products nationally and to reduce the number of variations of 9 the same product that a company must produce to meet specific product 10 standards. The compact would cover individual and group products for 11 life insurance, annuities, disability income and long-term care insur- 12 ance. The state of New York seeks to join with other states and estab- 13 lish the interstate insurance product regulation compact and become a 14 member of the interstate insurance product regulation commission. 15 § 2. The insurance law is amended by adding a new article 88 to read 16 as follows: 17 ARTICLE 88 18 INTERSTATE INSURANCE PRODUCT REGULATION COMPACT 19 Section 8801. Short title. 20 8802. Purpose. 21 8803. Definitions. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02625-01-7A. 4822 2 1 8804. Establishment of the commission and venue. 2 8805. Powers of the commission. 3 8806. Organization of the commission. 4 8807. Meetings and acts of the commission. 5 8808. Rules and operating procedures; rule making functions of 6 the commission and opting out of uniform standards. 7 8809. Commission records and enforcement. 8 8810. Dispute resolution. 9 8811. Product filing and approval. 10 8812. Review of commission decisions regarding filings. 11 8813. Finance. 12 8814. Compacting states, effective date and amendment. 13 8815. Withdrawal, default and termination. 14 8816. Severability and construction. 15 8817. Binding effect of compact and other laws. 16 § 8801. Short title. This article shall be known and may be cited as 17 the "interstate insurance product regulation compact". 18 § 8802. Purpose. The purposes of this compact are, through means of 19 joint and cooperative action among the compacting states: 20 (a) to promote and protect the interest of consumers of individual and 21 group annuity, life insurance, disability income and long-term care 22 insurance products; 23 (b) to develop uniform standards for insurance products covered under 24 the compact; 25 (c) to establish a central clearinghouse to receive and provide prompt 26 review of insurance products covered under the compact and, in certain 27 cases, advertisements related thereto, submitted by insurers authorized 28 to do business in one or more compacting states; 29 (d) to give appropriate regulatory approval to those product filings 30 and advertisements satisfying the applicable uniform standard; 31 (e) to improve coordination of regulatory resources and expertise 32 between state insurance departments regarding the setting of uniform 33 standards and review of insurance products covered under the compact; 34 (f) to create the interstate insurance product regulation commission; 35 and 36 (g) to perform such other related functions as may be consistent with 37 the state regulation of the business of insurance. 38 § 8803. Definitions. As used in this article: 39 (a) "Advertisement" means any material designed to create public 40 interest in a product, or induce the public to purchase, increase, modi- 41 fy, reinstate, borrow on, surrender, replace or retain a policy, as more 42 specifically defined in the rules and operating procedures of the 43 commission. 44 (b) "By-laws" mean those by-laws established by the commission for its 45 governance or for directing or controlling the commission's actions or 46 conduct. 47 (c) "Compacting state" means any state which has enacted this compact 48 legislation and which has not withdrawn or been terminated pursuant to 49 section eight thousand eight hundred fifteen of this article. 50 (d) "Commission" means the "Interstate insurance product regulation 51 commission" established by the compact. 52 (e) "Commissioner" means the chief insurance regulatory official of a 53 state including, but not limited to commissioner, superintendent, direc- 54 tor or administrator.A. 4822 3 1 (f) "Domiciliary state" means the state in which an insurer is incor- 2 porated or organized or, in the case of an alien insurer, its state of 3 entry. 4 (g) "Insurer" means any entity licensed by a state to issue contracts 5 of insurance for any of the lines of insurance covered by this article. 6 (h) "Member" means the person, or his or her designee, chosen by a 7 compacting state for service on the commission. 8 (i) "Non-compacting state" means any state which is not at the time a 9 compacting state. 10 (j) "Operating procedures" mean procedures promulgated by the commis- 11 sion implementing a rule, uniform standard or a provision of this 12 compact. 13 (k) "Product" means the form of the contract, policy application, 14 endorsements, certificate forms, evidence of coverage forms and related 15 forms for an individual or group annuity, life insurance, disability 16 income or long-term care insurance product, which an insurer is author- 17 ized to issue. 18 (l) "Rule" means a statement of general or particular applicability 19 and future effect promulgated by the commission, including a uniform 20 standard developed pursuant to section eight thousand eight hundred 21 eight of this article, designed to implement, interpret, or prescribe 22 law or policy or describing the organization, procedure, or practice 23 requirements of the commission, which shall have the force and effect of 24 law in the compacting states. 25 (m) "State" means any state, district or territory of the United 26 States of America. 27 (n) "Third-party filer" means an entity that submits a product filing 28 to the commission on behalf of an insurer. 29 (o) "Uniform standard" means a standard adopted by the commission for 30 a product line, pursuant to section eight thousand eight hundred eight 31 of this article and shall include all of the product requirements in 32 aggregate; provided, that each uniform standard shall be construed, 33 whether express or implied, to prohibit the use of any inconsistent, 34 misleading or ambiguous provisions in a product and the form of such 35 product made available to the public shall not be unfair, inequitable or 36 against public policy as determined by the commission. 37 § 8804. Establishment of the commission and venue. (a) The compacting 38 states hereby create and establish a joint public agency known as the 39 "Interstate insurance product regulation commission". Pursuant to 40 section eight thousand eight hundred eight of this article, the commis- 41 sion shall have the power to develop uniform standards for product 42 lines, receive and provide prompt review of products filed therewith, 43 and give approval to those product filings satisfying applicable uniform 44 standards; provided, however, that it is not intended for the commission 45 to be the exclusive entity for receipt and review of insurance product 46 filings. Nothing in this section shall prohibit any insurer from filing 47 its product in any state wherein such insurer is licensed to conduct the 48 business of insurance and such filing shall be subject to the laws of 49 the state where filed. 50 (b) The commission is a body corporate and politic, and an instrumen- 51 tality of the compacting states. 52 (c) The commission is a not-for-profit entity, separate and distinct 53 from the individual compacting states. 54 (d) The commission is solely responsible for its liabilities unless 55 otherwise specifically provided in this compact, except that, in no 56 event shall the obligations of the commission be the debt of the stateA. 4822 4 1 of New York nor shall any revenues or property of the state of New York 2 be liable therefor. 3 (e) Venue in proper and judicial proceedings by or against the commis- 4 sion shall be brought solely and exclusively in a court of competent 5 jurisdiction where the principal office of the commission is located. 6 § 8805. Powers of the commission. (a) The commission shall have the 7 following powers: 8 (1) to promulgate rules, pursuant to section eight thousand eight 9 hundred eight of this article, which shall have the force and effect of 10 law and shall be binding in the compacting states to the extent and in 11 the manner provided in this article; 12 (2) to exercise its rule making authority and establish reasonable 13 uniform standards for products covered under the compact, and advertise- 14 ment related thereto, which shall have the force and effect of law and 15 shall be binding in the compacting states, but only for such products 16 filed with the commission; provided, however, that a compacting state 17 shall have the right to opt out of such uniform standard pursuant to 18 section eight thousand eight hundred eight of this article to the extent 19 and in the manner provided in this article, and provided further that 20 any uniform standard established by the commissioner for long-term care 21 insurance products may provide the same or greater protections for 22 consumers as, but shall not provide less than, those protections set 23 forth in the National Association of Insurance Commissioners' (herein- 24 after referred to as the "NAIC") Long-Term Care Insurance Model Act and 25 Long-Term Care Insurance Model Regulation, respectively, adopted as of 26 2001. The commission shall consider whether any subsequent amendments to 27 the NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance 28 Model Regulation adopted by the NAIC require amending of the uniform 29 standards established by the commission for long-term insurance 30 products; 31 (3) to receive and review in an expeditious manner products filed with 32 the commission, including rate filings for disability income and long- 33 term care insurance products, and give approval of those products and 34 rate filings that satisfy the applicable uniform standard, where such 35 approval shall have the force and effect of law and be binding on the 36 compacting states to the extent and in the manner provided in the 37 compact; 38 (4) to receive and review in an expeditious manner advertisement 39 relating to long-term care insurance products for which uniform stand- 40 ards have been adopted by the commission, and give approval of such 41 advertisement that satisfies the applicable uniform standard. For any 42 product covered under this article, other than long-term care insurance 43 products, the commission shall have the authority to require an insurer 44 to submit all or any part of its advertisement with respect to that 45 product for review or approval prior to use if the commission determines 46 that the nature of the product is such that an advertisement of the 47 product could have the capacity or tendency to mislead the public. The 48 actions of the commission as provided in this section shall have the 49 force and effect of law and shall be binding in the compacting states to 50 the extent and in the manner provided in the compact; 51 (5) to exercise its rule making authority and designate products and 52 advertisement that may be subject to a self-certification process with- 53 out the need for prior approval by the commission; 54 (6) to promulgate operating procedures, pursuant to section eight 55 thousand eight hundred eight of this article, which shall be binding inA. 4822 5 1 the compacting states to the extent and in the manner provided in the 2 compact; 3 (7) to bring and prosecute legal proceedings or actions in its name as 4 the commission; provided, that the standing of any state insurance 5 department to sue or be sued under applicable law shall not be affected; 6 (8) to issue subpoenas requiring the attendance and testimony of 7 witnesses and the production of evidence; 8 (9) to establish and maintain offices; 9 (10) to purchase and maintain insurance and bonds; 10 (11) to borrow, accept or contract for services of personnel, includ- 11 ing, but not limited to, employees of a compacting state; 12 (12) to hire employees, professionals or specialists, and elect or 13 appoint officers, and to fix their compensation, define their duties and 14 give them appropriate authority to carry out the purposes of the 15 compact, and determine their qualifications; and to establish the 16 commission's personnel policies and programs relating to, among other 17 things, conflicts of interest, rates of compensation and qualifications 18 of personnel; 19 (13) to accept any and all appropriate donations and grants of money, 20 equipment, supplies, materials and services, and to receive, utilize and 21 dispose of the same; provided that at all times the commission shall 22 strive to avoid any appearance of impropriety; 23 (14) to lease, purchase, accept appropriate gifts or donations of, or 24 otherwise to own, hold, improve or use, any property, real, personal or 25 mixed; provided that at all times the commission shall strive to avoid 26 any appearance of impropriety; 27 (15) to sell, convey, mortgage, pledge, lease, exchange, abandon or 28 otherwise dispose of any property, real, personal or mixed; 29 (16) to remit filing fees to compacting states as may be set forth in 30 the by-laws, rules or operating procedures; 31 (17) to enforce compliance by compacting states with rules, uniform 32 standards, operating procedures and by-laws; 33 (18) to provide for dispute resolution among compacting states; 34 (19) to advise compacting states on issues relating to insurers domi- 35 ciled or doing business in non-compacting jurisdictions, consistent with 36 the purposes of the compact; 37 (20) to provide advice and training to those personnel in state insur- 38 ance departments responsible for product review, and to be a resource 39 for state insurance departments; 40 (21) to establish a budget and make expenditures; 41 (22) to borrow money; 42 (23) to appoint committees, including advisory committees comprising 43 members, state insurance regulators, state legislators or their repre- 44 sentatives, insurance industry and consumer representatives, and such 45 other interested persons as may be designated in the by-laws; 46 (24) to provide and receive information from, and to cooperate with 47 law enforcement agencies; 48 (25) to adopt and use a corporate seal; and 49 (26) to perform such other functions as may be necessary or appropri- 50 ate to achieve the purposes of this compact consistent with the state 51 regulation of the business of insurance. 52 (b) All donations, grants of money, equipment, supplies, materials or 53 services, purchases, gifts, donations, conveyances, mortgages, pledges, 54 leases and exchanges, as authorized by subsection (a) of this section, 55 received by or on behalf of the commission shall be limited to theA. 4822 6 1 direct funding of the lawful and authorized operations of the commis- 2 sion. 3 § 8806. Organization of the commission. (a) Each compacting state 4 shall have and be limited to one member. The superintendent, or his or 5 her designated representative, shall be New York's member of such 6 commission. Each member shall be qualified to serve in such capacity 7 pursuant to applicable law of the compacting state. Any member may be 8 removed or suspended from office as provided by the law of the state 9 from which he or she shall be appointed. Any vacancy occurring in the 10 commission shall be filled in accordance with the laws of the compacting 11 state wherein such vacancy exists. Nothing herein shall be construed to 12 affect the manner in which a compacting state determines the election or 13 appointment and qualification of its own commissioner. 14 (b) Each member shall be entitled to one vote and shall have an oppor- 15 tunity to participate in the governance of the commission in accordance 16 with the by-laws. Notwithstanding any provision of this article to the 17 contrary, no action of the commission with respect to the promulgation 18 of a uniform standard shall be effective unless two-thirds of the 19 members vote in favor thereof. 20 (c) The commission shall, by a majority of the members, prescribe 21 by-laws to govern its conduct as may be necessary or appropriate to 22 carry out the purposes, and exercise the powers, of the compact, includ- 23 ing, but not limited to: 24 (1) establishing the fiscal year of the commission; 25 (2) providing reasonable procedures for holding meetings of the 26 management committee; 27 (3) providing reasonable standards and procedures for the establish- 28 ment of other committees, and governing any general or specific deleg- 29 ation of any authority or function of the commission; 30 (4) providing reasonable procedures for calling and conducting meet- 31 ings of the commission that consist of a majority of commission members, 32 ensuring reasonable advance notice of each such meeting, and providing 33 for the right of citizens to attend each such meeting with enumerated 34 exceptions designed to protect the public's interest, the privacy of 35 individuals and insurers' proprietary information, including trade 36 secrets. The commission may meet in camera only after a majority of the 37 entire membership votes to close a meeting in toto or in part. As soon 38 as practicable, the commission must make public a copy of the vote to 39 close the meeting revealing the vote of each member with no proxy votes 40 allowed, and votes taken during such meeting; 41 (5) establishing the titles, duties and authority and reasonable 42 procedures for the election of the officers of the commission; 43 (6) providing reasonable standards and procedures for the establish- 44 ment of the personnel policies and programs of the commission. Notwith- 45 standing any civil service or other similar laws of any compacting 46 state, the by-laws shall exclusively govern the personnel policies and 47 programs of the commission; 48 (7) promulgating a code of ethics to address permissible and prohibit- 49 ed activities of commission members and employees; and 50 (8) providing a mechanism for winding up the operations of the commis- 51 sion and the equitable disposition of any surplus funds that may exist 52 after the termination of the compact after the payment and/or reserving 53 of all of its debts and obligations. 54 (d) The commission shall publish its by-laws in a convenient form and 55 file a copy thereof and a copy of any amendment thereto, with the appro- 56 priate agency or officer in each of the compacting states.A. 4822 7 1 (e) A management committee comprising no more than fourteen members 2 shall be established as follows: 3 (1) one member from each of the six compacting states with the largest 4 premium volume for individual and group annuities, life, disability 5 income and long-term care insurance products, determined from the 6 records of the NAIC as of December thirty-first of the prior year; 7 (2) four members from those compacting states with at least two 8 percent of the market based on the premium volume described in paragraph 9 one of this subsection, other than six compacting states with the larg- 10 est premium volume, selected on a rotating basis as provided in the 11 by-laws; and 12 (3) four members from those compacting states with less than two 13 percent of the market, based on the premium volume described in para- 14 graph one of this subsection, with one selected from each of the four 15 zone regions of the NAIC as provided in the by-laws. 16 (f) The management committee shall have such authority and duties as 17 may be set forth in the by-laws, including but not limited to: 18 (1) managing the affairs of the commission in a manner consistent with 19 the by-laws and purposes of the commission; 20 (2) establishing and overseeing an organizational structure within, 21 and appropriate procedures for, the commission to provide for the 22 creation of uniform standards and other rules, receipt and review of 23 product filings, administrative and technical support functions, review 24 of decisions regarding the disapproval of a product filing, and the 25 review of elections made by a compacting state to opt out of a uniform 26 standard; provided that a uniform standard shall not be submitted to the 27 compacting states for adoption unless approved by two-thirds of the 28 members of the management committee; 29 (3) overseeing the offices of the commission; and 30 (4) planning, implementing, and coordinating communications and activ- 31 ities with other state, federal and local government organizations in 32 order to advance the goals of the commission. 33 (g) The commission shall elect annually officers from the management 34 committee, with each having such authority and duties, as may be speci- 35 fied in the by-laws. 36 (h) The management committee may, subject to the approval of the 37 commission, appoint or retain an executive director for such period, 38 upon such terms and conditions and for such compensation as the commis- 39 sion may deem appropriate. The executive director shall serve as secre- 40 tary to the commission, but shall not be a member of the commission. The 41 executive director shall hire and supervise such other staff as may be 42 authorized by the commission. 43 (i) A legislative committee comprising state legislators or their 44 designees shall be established to monitor the operations of, and make 45 recommendations to, the commission; provided that the manner of 46 selection and term of any legislative committee member shall be as set 47 forth in the by-laws. Prior to the adoption by the commission of any 48 uniform standard, revision to the by-laws, annual budget or other 49 significant matter as may be provided in the by-laws, the management 50 committee shall consult with and report to the legislative committee. 51 (j) The commission shall establish two advisory committees, one of 52 which shall comprise consumer representatives independent of the insur- 53 ance industry and the other comprising insurance industry represen- 54 tatives. 55 (k) The commission may establish additional advisory committees as its 56 by-laws may provide for the carrying out of its functions.A. 4822 8 1 (l) The commission shall maintain its corporate books and records in 2 accordance with the by-laws. 3 (m) The members, officers, executive director, employees and represen- 4 tatives of the commission shall be immune from suit and liability, 5 either personally or in their official capacity, for any action taken 6 reasonably and in good faith which results in a claim for damage to or 7 loss of property or personal injury or other civil liability caused by 8 or arising out of any actual or alleged act, error or omission that 9 occurred, or that such person had a reasonable basis for believing 10 occurred within the scope of commission employment, duties or responsi- 11 bilities; provided, that nothing in this section shall be construed to 12 protect any such person from suit and/or liability for any damage, loss, 13 injury or liability caused by the intentional or willful and wanton 14 misconduct of that person. 15 (n) The commission shall defend any member, officer, executive direc- 16 tor, employee or representative of the commission in any civil action 17 seeking to impose liability arising out of any actual or alleged act, 18 error or omission that occurred within the scope of commission employ- 19 ment, duties or responsibilities, or that the defendant had a reasonable 20 basis for believing occurred within the scope of commission employment, 21 duties or responsibilities; provided, that nothing in this section shall 22 be construed to prohibit that person from retaining his or her own coun- 23 sel; and provided further, that the actual or alleged act, error or 24 omission did not result from that person's intentional or willful and 25 wanton misconduct. 26 (o) The commission shall indemnify and hold harmless any member, offi- 27 cer, executive director, employee or representative of the commission 28 for the amount of any settlement or judgment obtained against such 29 persons arising out of any actual or alleged act, error or omission that 30 occurred within the scope of commission employment, duties or responsi- 31 bilities, or that such person had a reasonable basis for believing 32 occurred within the scope of commission employment, duties or responsi- 33 bilities, provided, that the actual or alleged act, error or omission 34 did not result from the intentional or willful and wanton misconduct of 35 any such person. 36 § 8807. Meetings and acts of the commission. (a) The commission shall 37 meet and take such actions as are consistent with the provisions of this 38 compact and the by-laws. 39 (b) Each member of the commission shall have the right and power to 40 cast a vote to which that compacting state is entitled and to partic- 41 ipate in the business and affairs of the commission. A member shall vote 42 in person or by such other means as provided in the by-laws. The by-laws 43 may provide for members' participation in meetings by telephone or other 44 means of communication. 45 (c) The commission shall meet at least once during each calendar year. 46 Additional meetings shall be held as set forth in the by-laws. 47 § 8808. Rules and operating procedures; rule making functions of the 48 commission and opting out of uniform standards. (a) The commission shall 49 promulgate reasonable rules, including uniform standards and operating 50 procedures, in order to effectively and efficiently achieve the purposes 51 of the compact. Notwithstanding the foregoing, in the event the commis- 52 sion exercises its rule making authority in a manner that is beyond the 53 scope of the purposes of this article, or the powers granted in this 54 section, then such action by the commission shall be invalid and have no 55 force and effect.A. 4822 9 1 (b) Rules and operating procedures shall be made pursuant to a rule 2 making process that conforms to the model state administrative procedure 3 act of 1981 as amended, as may be appropriate to the operations of the 4 commission. Before the commission adopts a uniform standard, the commis- 5 sion shall give written notice to the relevant state legislative commit- 6 tee in each compacting state responsible for insurance issues of its 7 intention to adopt such uniform standard. The commission in adopting a 8 uniform standard shall consider fully all submitted materials and issue 9 a concise explanation of its decision. 10 (c) A uniform standard shall become effective ninety days after its 11 promulgation by the commission or such later date as the commission may 12 determine; provided, however, that a compacting state may opt out of a 13 uniform standard as provided in this article. "Opt out" shall be defined 14 as any action by a compacting state to decline to adopt or participate 15 in a promulgated uniform standard. All other rules and operating proce- 16 dures, and amendments thereto, shall become effective as of the date 17 specified in each rule, operating procedure or amendment. 18 (d) A compacting state may opt out of a uniform standard, either by 19 legislation or regulation duly promulgated by the insurance department 20 under the compacting state's administrative procedure act. If a compact- 21 ing state elects to opt out of a uniform standard by regulation, it must 22 give written notice to the commission no later than ten business days 23 after the later of the uniform standard is promulgated or at the time 24 the state becomes a compacting state, and find that the uniform standard 25 does not provide reasonable protections to the citizens of the state 26 given the conditions in the state. The commissioner shall make specific 27 findings of fact and conclusions of law, based on a preponderance of the 28 evidence, detailing the conditions in the state which warrant a depar- 29 ture from the uniform standard and determining that the uniform standard 30 would not reasonably protect the citizens of the state. The commissioner 31 must consider and balance the following factors and find that the condi- 32 tions in the state and needs of the citizens of the state outweigh: 33 (1) the intent of the legislature to participate in, and the benefits 34 of, an interstate agreement to establish national uniform consumer 35 protections for the products subject to this article; and 36 (2) the presumption that a uniform standard adopted by the commission 37 provides reasonable protections to consumers of the relevant product. 38 Notwithstanding the foregoing, a compacting state may, at the time of 39 its enactment of the compact, prospectively opt out of all uniform stan- 40 dards involving the long-term care insurance products by expressly 41 providing for such opt out in the enacted compact, and such opt out 42 shall not be treated as a material variance in the offer or acceptance 43 of any state to participate in the compact. Such an opt out shall be 44 effective at the time of enactment of the compact by the compacting 45 state and shall apply to all existing uniform standards involving long- 46 term care insurance products and those subsequently promulgated. 47 (e) If a compacting state elects to opt out of a uniform standard, the 48 uniform standard shall remain applicable in the compacting state elect- 49 ing to opt out until such time the opt out legislation is enacted into 50 law or the regulation opting out becomes effective. 51 (f) Once the opt out of a uniform standard by a compacting state 52 becomes effective as provided under the laws of that state, the uniform 53 standard shall have no further force and effect in that state unless and 54 until the legislation or regulation implementing the opt out is repealed 55 or otherwise becomes ineffective under the laws of the state. If a 56 compacting state opts out of a uniform standard after the uniform stand-A. 4822 10 1 ard has been made effective in that state, the opt out shall have the 2 same prospective effect as provided under section eight thousand eight 3 hundred fifteen of this article for withdrawals. 4 (g) If a compacting state has formally initiated the process of opting 5 out of a uniform standard by regulation, and while the regulatory opt 6 out is pending, the compacting state may petition the commission, at 7 least fifteen days before the effective date of the uniform standard, to 8 stay the effectiveness of the uniform standard in that state. The 9 commission may grant a stay if it determines the regulatory opt out is 10 being pursued in a reasonable manner and there is a likelihood of 11 success. If a stay is granted or extended by the commission, the stay or 12 extension thereof may postpone the effective date by up to ninety days, 13 unless affirmatively extended by the commission; provided however, a 14 stay may not be permitted to remain in effect for more than one year 15 unless the compacting state can show extraordinary circumstances which 16 warrant a continuance of the stay including, but not limited to, the 17 existence of a legal challenge which prevents the compacting state from 18 opting out. A stay may be terminated by the commission upon notice that 19 the rule making process has been terminated. 20 (h) Not later than thirty days after a rule or operating procedure is 21 promulgated, any person may file a petition for judicial review of the 22 rule or operating procedure; provided, however, that the filing of such 23 a petition shall not stay or otherwise prevent the rule or operating 24 procedure from becoming effective unless the court finds that the peti- 25 tioner has a substantial likelihood of success. The court shall give 26 deference to the actions of the commission consistent with applicable 27 law and shall not find the rule or operating procedure to be unlawful if 28 the rule or operating procedure represents a reasonable exercise of the 29 commission's authority. 30 § 8809. Commission records and enforcement. (a) The commission shall 31 promulgate rules establishing conditions and procedures for public 32 inspection and copying of its information and official records, except 33 such information and records involving the privacy of individuals and 34 insurers' trade secrets. The commission may promulgate additional rules 35 under which it may make available to federal and state agencies, includ- 36 ing law enforcement agencies, records and information otherwise exempt 37 from disclosure, and may enter into agreements with such agencies to 38 receive or exchange information or records subject to nondisclosure and 39 confidentiality provisions. 40 (b) Except as to privileged records, data and information, the laws of 41 any compacting state pertaining to confidentiality or nondisclosure 42 shall not relieve any compacting state commissioner of the duty to 43 disclose any relevant records, data or information to the commission; 44 provided however, that disclosure to the commission shall not be deemed 45 to waive or otherwise affect any confidentiality requirement; and 46 provided further that, except as otherwise expressly provided in this 47 article, the commission shall not be subject to the laws of any compact- 48 ing state pertaining to confidentiality and nondisclosure with respect 49 to records, data and information in its possession. Confidential infor- 50 mation of the commission shall remain confidential after such informa- 51 tion is provided to any commissioner. 52 (c) The commission shall monitor compacting states for compliance with 53 duly adopted by-laws, rules, including uniform standards, and operating 54 procedures. The commission shall notify such noncomplying compacting 55 state in writing of its noncompliance with commission by-laws, rules or 56 operating procedures. If the noncomplying compacting state fails toA. 4822 11 1 remedy such noncompliance within the time specified in the notice of 2 noncompliance, the compacting state shall be deemed to be in default as 3 set forth in section eight thousand eight hundred fifteen of this arti- 4 cle. 5 (d) The commissioner of any state in which an insurer is authorized to 6 do business, or is conducting the business of insurance, shall continue 7 to exercise his or her authority to oversee the market regulation of the 8 activities of the insurer in accordance with the provisions of the 9 state's law. The commissioner's enforcement of compliance with the 10 compact is governed by the following provisions: 11 (1) with respect to the commissioner's market regulation of a product 12 or advertisement that is approved or certified to the commission, the 13 content of the product or advertisement shall not constitute a violation 14 of the provisions, standards or requirements of the compact except upon 15 a final order of the commission, issued at the request of a commissioner 16 after prior notice to the insurer and an opportunity for hearing before 17 the commission. 18 (2) before a commissioner may bring an action for violation of any 19 provision, standard or requirement of the compact relating to the 20 content of an advertisement not approved or certified to the commission, 21 the commission or an authorized commission officer or employee, must 22 authorize the action. However, authorization pursuant to this paragraph 23 does not require notice to the insurer, opportunity for hearing or 24 disclosure of requests for authorization or records of the commission's 25 action on such requests. 26 § 8810. Dispute resolution. The commission shall attempt, upon the 27 request of a member, to resolve any disputes or other issues that are 28 subject to this compact and which may arise between two or more compact- 29 ing states, or between compacting states and non-compacting states, and 30 the commission shall promulgate an operating procedure providing for 31 resolution of such disputes. 32 § 8811. Product filing and approval. (a) Insurers and third-party 33 filers seeking to have a product approved by the commission shall file 34 such product with, and pay applicable filing fees to, the commission. 35 Nothing in this article shall be construed to restrict or otherwise 36 prevent an insurer from filing its product with the insurance department 37 in any state wherein such insurer is licensed to conduct the business of 38 insurance, and such filing shall be subject to the laws of the states 39 where filed. 40 (b) The commission shall establish appropriate filing and review proc- 41 esses and procedures pursuant to commission rules and operating proce- 42 dures. Notwithstanding any provision in this section to the contrary, 43 the commission shall promulgate rules to establish conditions and proce- 44 dures under which the commission will provide public access to product 45 filing information. In establishing such rules, the commission shall 46 consider the interests of the public in having access to such informa- 47 tion, as well as protection of personal medical and financial informa- 48 tion and trade secrets, that may be contained in a product filing or 49 supporting information. 50 (c) Any product approved by the commission may be sold or otherwise 51 issued in those compacting states in which the insurer is legally 52 authorized to do business. 53 § 8812. Review of commission decisions regarding filings. (a) Not 54 later than thirty days after the commission has given notice of a disap- 55 proved product or advertisement filed with the commission, the insurer 56 or third party filer whose filing was disapproved may appeal the deter-A. 4822 12 1 mination to a review panel appointed by the commission. The commission 2 shall promulgate rules to establish procedures for appointing such 3 review panel and provide for notice and hearing. An allegation that the 4 commission, in disapproving a product or advertisement filed with the 5 commission, acted arbitrarily, capriciously or in a manner that is an 6 abuse of discretion or otherwise not in accordance with law, is subject 7 to judicial review in accordance with subsection (e) of section eight 8 thousand eight hundred four of this article. 9 (b) The commission shall have authority to monitor, review and recon- 10 sider products and advertisement subsequent to their filing or approval 11 upon a finding that the product does not meet the relevant uniform stan- 12 dard. Where appropriate, the commission may withdraw or modify its 13 approval after proper notice and hearing, subject to the appeal process 14 set forth in subsection (a) of this section. 15 § 8813. Finance. (a) The commission shall pay or provide for the 16 payment of the reasonable expenses of its establishment and organiza- 17 tion. To fund the cost of its initial operations, the commission may 18 accept contributions and other forms of funding from the NAIC, compact- 19 ing states and other sources. Contributions and other forms of funding 20 from other sources shall be of such a nature that the independence of 21 the commission concerning the performance of its duties shall not be 22 compromised. 23 (b) The commission shall collect a filing fee from each insurer and 24 third party filer filing a product with the commission to cover the cost 25 of the operations and activities of the commission and its staff in a 26 total amount sufficient to cover the commission's annual budget. 27 (c) The commission's budget for a fiscal year shall not be approved 28 until it has been subject to notice and comment as set forth in section 29 eight thousand eight hundred eight of this article. 30 (d) The commission shall be exempt from all taxation in and by the 31 compacting states. 32 (e) The commission shall not pledge the credit of any compacting 33 state, except by and with the appropriate legal authority of that 34 compacting state. 35 (f) The commission shall keep complete and accurate accounts of all 36 its internal receipts, including grants and donations and disbursements 37 of all funds under its control. The internal financial accounts of the 38 commission shall be subject to the accounting procedures established 39 under its by-laws. The financial accounts and reports including the 40 system of internal controls and procedures of the commission shall be 41 audited annually by an independent certified public accountant. Upon the 42 determination of the commission, but no less frequently than every three 43 years, the review of such independent auditor shall include a management 44 and performance audit of the commission. The commission shall make an 45 annual report to the governor and legislature of the compacting states, 46 which shall include a report of such independent audit. The commission's 47 internal accounts shall not be confidential and such materials may be 48 shared with the commissioner of any compacting state upon request, 49 provided, however, that any work papers related to any internal or inde- 50 pendent audit and any information regarding the privacy of individuals 51 and insurers' proprietary information, including trade secrets, shall 52 remain confidential. 53 (g) No compacting state shall have any claim to or ownership of any 54 property held by or vested in the commission or to any commission funds 55 held pursuant to the provisions of this compact.A. 4822 13 1 § 8814. Compacting states, effective date and amendment. (a) Any state 2 is eligible to become a compacting state. 3 (b) The compact shall become effective and binding upon legislative 4 enactment of the compact into law by two compacting states; provided 5 however, that the commission shall become effective for purposes of 6 adopting uniform standards for reviewing, and giving approval or disap- 7 proval of, products filed with the commission that satisfy applicable 8 uniform standards only after twenty-six states are compacting states or, 9 alternatively, by states representing greater than forty percent of the 10 premium volume for life insurance, annuity, disability income and long- 11 term care insurance products, based on records of the NAIC for the prior 12 year. Thereafter, it shall become effective and binding as to any other 13 compacting state upon enactment of the compact into law by that state. 14 (c) Amendments to the compact may be proposed by the commission for 15 enactment by the compacting states. No amendment shall become effective 16 and binding upon the commission and the compacting states unless and 17 until all compacting states enact the amendment into law. 18 § 8815. Withdrawal, default and termination. (a)(1) Once effective, 19 the compact shall continue in force and remain binding upon each and 20 every compacting state; provided that a compacting state may withdraw 21 from the compact ("withdrawing state") by enacting a statute specif- 22 ically repealing the statute which enacted the compact into law. 23 (2) The effective date of withdrawal is the effective date of the 24 repealing statute. However, the withdrawal shall not apply to any prod- 25 uct filings approved or self-certified, or any advertisement of such 26 products, on the date the repealing statute becomes effective, except by 27 mutual agreement of the commission and the withdrawing state unless the 28 approval is rescinded by the withdrawing state as provided in paragraph 29 five of this subsection. 30 (3) The commissioner of the withdrawing state shall immediately notify 31 the management committee in writing upon the introduction of legislation 32 repealing this compact in the withdrawing state. 33 (4) The commission shall notify the other compacting states of the 34 introduction of such legislation within ten days after its receipt of 35 notice thereof. 36 (5) The withdrawing state is responsible for all obligations, duties 37 and liabilities incurred through the effective date of withdrawal, 38 including any obligations, the performance of which extend beyond the 39 effective date of withdrawal, except to the extent those obligations may 40 have been released or relinquished by mutual agreement of the commission 41 and the withdrawing state. The commission's approval of products and 42 advertisement prior to the effective date of withdrawal shall continue 43 to be effective and be given full force and effect in the withdrawing 44 state, unless formally rescinded by the withdrawing state in the same 45 manner as provided by the laws of the withdrawing state for the prospec- 46 tive disapproval of products or advertisement previously approved under 47 state law. 48 (6) Reinstatement following withdrawal of any compacting state shall 49 occur upon the effective date of the withdrawing state's legislation 50 reenacting the compact. 51 (b) (1) If the commission determines that any compacting state has at 52 any time defaulted ("defaulting state") in the performance of any of its 53 obligations or responsibilities under this compact, the by-laws or duly 54 promulgated rules or operating procedures, then, after notice and hear- 55 ing as set forth in the by-laws, all rights, privileges and benefits 56 conferred by the compact on the defaulting state shall be suspended fromA. 4822 14 1 the effective date of default as fixed by the commission. The grounds 2 for default include, but are not limited to, failure of a compacting 3 state to perform its obligations or responsibilities, and any other 4 grounds designated in commission rules. The commission shall immediately 5 notify the defaulting state in writing of the defaulting state's suspen- 6 sion pending a cure of the default. The commission shall stipulate the 7 conditions and the time period within which the defaulting state must 8 cure its default. If the defaulting state fails to cure the default 9 within the time period specified by the commission, the defaulting state 10 shall be terminated from the compact and all rights, privileges and 11 benefits conferred by the compact shall be terminated from the effective 12 date of termination. 13 (2) Product approvals by the commission or product self-certifica- 14 tions, or any advertisement in connection with such product, that are in 15 force on the effective date of termination shall remain in force in the 16 defaulting state in the same manner as if the defaulting state had with- 17 drawn voluntarily under this section. 18 (3) Reinstatement following termination of any compacting state 19 requires a reenactment of the compact by that state. 20 (c)(1) The compact dissolves effective upon the date of the withdrawal 21 or default of the compacting state which reduces membership in the 22 compact to one compacting state. 23 (2) Upon the dissolution of the compact, the compact becomes null and 24 void and shall be of no further force or effect, and the business and 25 affairs of the commission shall be wound up and any surplus funds shall 26 be distributed in accordance with the by-laws. 27 § 8816. Severability and construction. (a) The provisions of the 28 compact shall be severable; and if any phrase, clause, sentence or 29 provision is deemed unenforceable, the remaining provisions of the 30 compact shall be enforceable. 31 (b) The provisions of the compact shall be liberally construed to 32 effectuate its purposes. 33 § 8817. Binding effect of compact and other laws. (a) Nothing in this 34 section prevents the enforcement of any other law of a compacting state, 35 except as provided in subsection (b) of this section. 36 (b) For any product approved or certified to the commission, the 37 rules, uniform standards and any other requirements of the commission 38 shall constitute the exclusive provisions applicable to the content, 39 approval and certification of such products. For advertisement that is 40 subject to the commission's authority, any rule, uniform standard or 41 other requirement of the commission which governs the content of the 42 advertisement shall constitute the exclusive provision that a commis- 43 sioner may apply to the content of the advertisement. Notwithstanding 44 the foregoing, no action taken by the commission shall abrogate or 45 restrict: 46 (1) the access of any person to state courts; 47 (2) remedies available under state law related to breach of contract, 48 tort or other laws not specifically directed to the content of the prod- 49 uct; 50 (3) state law relating to the construction of insurance contracts; or 51 (4) the authority of the attorney general of the state including, but 52 not limited to, maintaining any actions or proceedings as authorized by 53 law. 54 (c) All insurance products filed with individual states shall be 55 subject to the laws of those states.A. 4822 15 1 (d) All lawful actions of the commission, including all rules and 2 operating procedures promulgated by the commission, are binding upon the 3 compacting states. 4 (e) All agreements between the commission and the compacting states 5 are binding in accordance with their terms. 6 (f) Upon the request of a party to a conflict over the meaning or 7 interpretation of commission actions, and upon a majority vote of the 8 compacting states, the commission may issue advisory opinions regarding 9 the disputed meaning or interpretation. 10 (g) In the event any provision of this article exceeds the constitu- 11 tional limits imposed on the legislature of any compacting state, the 12 obligations, duties, powers or jurisdiction sought to be conferred by 13 that provision upon the commission shall be ineffective as to such 14 compacting state, and such obligations, duties, powers or jurisdiction 15 shall remain in the compacting state and shall be exercised by the agen- 16 cy thereof to which such obligations, duties, powers or jurisdiction are 17 delegated by law in effect at the time the compact becomes effective. 18 § 3. This act shall take effect January 1, 2018 and shall expire and 19 be deemed repealed December 31, 2020; provided, however, that any policy 20 or contract issued during the period that the provisions of this act are 21 in effect that has been approved in accordance with the provisions of 22 this act shall continue in full force and effect.