A04432 Summary:

BILL NOA04432C
 
SAME ASSAME AS S03057-B
 
SPONSORTitus (MS)
 
COSPNSRRobinson, Weisenberg
 
MLTSPNSR
 
Add Art 88 SS8801 - 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.
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A04432 Actions:

BILL NOA04432C
 
02/03/2011referred to insurance
06/07/2011amend (t) and recommit to insurance
06/07/2011print number 4432a
01/04/2012referred to insurance
01/25/2012amend and recommit to insurance
01/25/2012print number 4432b
03/23/2012amend and recommit to insurance
03/23/2012print number 4432c
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A04432 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         4432--C
 
                               2011-2012 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 3, 2011
                                       ___________
 
        Introduced  by  M.  of  A.  TITUS, ROBINSON, WEISENBERG -- read once and
          referred to the Committee on Insurance -- committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee -- recommitted to the Committee on Insurance  in  accordance  with
          Assembly Rule 3, sec. 2 -- committee discharged, bill amended, ordered

          reprinted  as  amended  and  recommitted  to  said  committee -- again
          reported from said committee with  amendments,  ordered  reprinted  as
          amended and recommitted to said committee
 
        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:
 

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08107-08-2

        A. 4432--C                          2
 
     1                                 ARTICLE 88
     2               INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
 
     3  Section 8801. Short title.
     4          8802. Purpose.
     5          8803. Definitions.
     6          8804. Establishment of the commission and venue.
     7          8805. Powers of the commission.
     8          8806. Organization of the commission.
     9          8807. Meetings and acts of the commission.

    10          8808.  Rules  and operating procedures; rule making functions of
    11                  the commission and opting out of uniform standards.
    12          8809. Commission records and enforcement.
    13          8810. Dispute resolution.
    14          8811. Product filing and approval.
    15          8812. Review of commission decisions regarding filings.
    16          8813. Finance.
    17          8814. Compacting states, effective date and amendment.
    18          8815. Withdrawal, default and termination.
    19          8816. Severability and construction.
    20          8817. Binding effect of compact and other laws.
    21    § 8801. Short title. This article shall be known and may be  cited  as
    22  the "interstate insurance product regulation compact".

    23    §  8802.  Purpose.  The purposes of this compact are, through means of
    24  joint and cooperative action among the compacting states:
    25    (a) to promote and protect the interest of consumers of individual and
    26  group annuity, life insurance,  disability  income  and  long-term  care
    27  insurance products;
    28    (b)  to develop uniform standards for insurance products covered under
    29  the compact;
    30    (c) to establish a central clearinghouse to receive and provide prompt
    31  review of insurance products covered under the compact and,  in  certain
    32  cases,  advertisements related thereto, submitted by insurers authorized
    33  to do business in one or more compacting states;
    34    (d) to give appropriate regulatory approval to those  product  filings

    35  and advertisements satisfying the applicable uniform standard;
    36    (e)  to  improve  coordination  of  regulatory resources and expertise
    37  between state insurance departments regarding  the  setting  of  uniform
    38  standards and review of insurance products covered under the compact;
    39    (f)  to create the interstate insurance product regulation commission;
    40  and
    41    (g) to perform such other related functions as may be consistent  with
    42  the state regulation of the business of insurance.
    43    § 8803. Definitions. As used in this article:
    44    (a)  "Advertisement"  means  any  material  designed  to create public
    45  interest in a product, or induce the public to purchase, increase, modi-

    46  fy, reinstate, borrow on, surrender, replace or retain a policy, as more
    47  specifically defined in  the  rules  and  operating  procedures  of  the
    48  commission.
    49    (b) "By-laws" mean those by-laws established by the commission for its
    50  governance  or  for directing or controlling the commission's actions or
    51  conduct.
    52    (c) "Compacting state" means any state which has enacted this  compact
    53  legislation  and  which has not withdrawn or been terminated pursuant to
    54  section eight thousand eight hundred fifteen of this article.

        A. 4432--C                          3
 
     1    (d) "Commission" means the "Interstate  insurance  product  regulation
     2  commission" established by the compact.

     3    (e)  "Commissioner" means the chief insurance regulatory official of a
     4  state including, but not limited to commissioner, superintendent, direc-
     5  tor or administrator.
     6    (f) "Domiciliary state" means the state in which an insurer is  incor-
     7  porated  or  organized or, in the case of an alien insurer, its state of
     8  entry.
     9    (g) "Insurer" means any entity licensed by a state to issue  contracts
    10  of insurance for any of the lines of insurance covered by this article.
    11    (h)  "Member"  means  the  person, or his or her designee, chosen by a
    12  compacting state for service on the commission.
    13    (i) "Non-compacting state" means any state which is not at the time  a
    14  compacting state.

    15    (j)  "Operating procedures" mean procedures promulgated by the commis-
    16  sion implementing a rule,  uniform  standard  or  a  provision  of  this
    17  compact.
    18    (k)  "Product"  means  the  form  of the contract, policy application,
    19  endorsements, certificate forms, evidence of coverage forms and  related
    20  forms  for  an  individual  or group annuity, life insurance, disability
    21  income or long-term care insurance product, which an insurer is  author-
    22  ized to issue.
    23    (l)  "Rule"  means  a statement of general or particular applicability
    24  and future effect promulgated by the  commission,  including  a  uniform
    25  standard  developed  pursuant  to  section  eight thousand eight hundred

    26  eight of this article, designed to implement,  interpret,  or  prescribe
    27  law  or  policy  or  describing the organization, procedure, or practice
    28  requirements of the commission, which shall have the force and effect of
    29  law in the compacting states.
    30    (m) "State" means any state,  district  or  territory  of  the  United
    31  States of America.
    32    (n)  "Third-party filer" means an entity that submits a product filing
    33  to the commission on behalf of an insurer.
    34    (o) "Uniform standard" means a standard adopted by the commission  for
    35  a  product  line, pursuant to section eight thousand eight hundred eight
    36  of this article and shall include all of  the  product  requirements  in

    37  aggregate;  provided,  that  each  uniform  standard shall be construed,
    38  whether express or implied, to prohibit the  use  of  any  inconsistent,
    39  misleading  or  ambiguous  provisions  in a product and the form of such
    40  product made available to the public shall not be unfair, inequitable or
    41  against public policy as determined by the commission.
    42    § 8804. Establishment of the commission and venue. (a) The  compacting
    43  states  hereby  create  and establish a joint public agency known as the
    44  "Interstate  insurance  product  regulation  commission".  Pursuant   to
    45  section  eight thousand eight hundred eight of this article, the commis-
    46  sion shall have the power  to  develop  uniform  standards  for  product

    47  lines,  receive  and  provide prompt review of products filed therewith,
    48  and give approval to those product filings satisfying applicable uniform
    49  standards; provided, however, that it is not intended for the commission
    50  to be the exclusive entity for receipt and review of  insurance  product
    51  filings.  Nothing in this section shall prohibit any insurer from filing
    52  its product in any state wherein such insurer is licensed to conduct the
    53  business of insurance and such filing shall be subject to  the  laws  of
    54  the state where filed.
    55    (b)  The commission is a body corporate and politic, and an instrumen-
    56  tality of the compacting states.

        A. 4432--C                          4
 

     1    (c) The commission is a not-for-profit entity, separate  and  distinct
     2  from the individual compacting states.
     3    (d)  The  commission  is solely responsible for its liabilities unless
     4  otherwise specifically provided in this  compact,  except  that,  in  no
     5  event  shall  the obligations of the commission be the debt of the state
     6  of New York nor shall any revenues or property of the state of New  York
     7  be liable therefor.
     8    (e) Venue in proper and judicial proceedings by or against the commis-
     9  sion  shall  be  brought  solely and exclusively in a court of competent
    10  jurisdiction where the principal office of the commission is located.
    11    § 8805. Powers of the commission. (a) The commission  shall  have  the
    12  following powers:

    13    (1)  to  promulgate  rules,  pursuant  to section eight thousand eight
    14  hundred eight of this article, which shall have the force and effect  of
    15  law  and  shall be binding in the compacting states to the extent and in
    16  the manner provided in this article;
    17    (2) to exercise its rule making  authority  and  establish  reasonable
    18  uniform standards for products covered under the compact, and advertise-
    19  ment  related  thereto, which shall have the force and effect of law and
    20  shall be binding in the compacting states, but only  for  such  products
    21  filed  with  the  commission; provided, however, that a compacting state
    22  shall have the right to opt out of such  uniform  standard  pursuant  to

    23  section eight thousand eight hundred eight of this article to the extent
    24  and  in  the  manner provided in this article, and provided further that
    25  any uniform standard established by the commissioner for long-term  care
    26  insurance  products  may  provide  the  same  or greater protections for
    27  consumers as, but shall not provide less  than,  those  protections  set
    28  forth  in  the National Association of Insurance Commissioners' (herein-
    29  after referred to as the "NAIC") Long-Term Care Insurance Model Act  and
    30  Long-Term  Care  Insurance Model Regulation, respectively, adopted as of
    31  2001. The commission shall consider whether any subsequent amendments to
    32  the NAIC Long-Term Care Insurance Model Act or Long-Term Care  Insurance

    33  Model  Regulation  adopted  by  the NAIC require amending of the uniform
    34  standards  established  by  the  commission  for   long-term   insurance
    35  products;
    36    (3) to receive and review in an expeditious manner products filed with
    37  the  commission,  including rate filings for disability income and long-
    38  term care insurance products, and give approval of  those  products  and
    39  rate  filings  that  satisfy the applicable uniform standard, where such
    40  approval shall have the force and effect of law and be  binding  on  the
    41  compacting  states  to  the  extent  and  in  the manner provided in the
    42  compact;
    43    (4) to receive and  review  in  an  expeditious  manner  advertisement

    44  relating  to  long-term care insurance products for which uniform stand-
    45  ards have been adopted by the commission,  and  give  approval  of  such
    46  advertisement  that  satisfies  the applicable uniform standard. For any
    47  product covered under this article, other than long-term care  insurance
    48  products,  the commission shall have the authority to require an insurer
    49  to submit all or any part of its  advertisement  with  respect  to  that
    50  product for review or approval prior to use if the commission determines
    51  that  the  nature  of  the  product is such that an advertisement of the
    52  product could have the capacity or tendency to mislead the  public.  The
    53  actions  of  the  commission  as provided in this section shall have the

    54  force and effect of law and shall be binding in the compacting states to
    55  the extent and in the manner provided in the compact;

        A. 4432--C                          5
 
     1    (5) to exercise its rule making authority and designate  products  and
     2  advertisement  that may be subject to a self-certification process with-
     3  out the need for prior approval by the commission;
     4    (6)  to  promulgate  operating  procedures,  pursuant to section eight
     5  thousand eight hundred eight of this article, which shall be binding  in
     6  the  compacting  states  to the extent and in the manner provided in the
     7  compact;
     8    (7) to bring and prosecute legal proceedings or actions in its name as

     9  the commission; provided, that  the  standing  of  any  state  insurance
    10  department to sue or be sued under applicable law shall not be affected;
    11    (8)  to  issue  subpoenas  requiring  the  attendance and testimony of
    12  witnesses and the production of evidence;
    13    (9) to establish and maintain offices;
    14    (10) to purchase and maintain insurance and bonds;
    15    (11) to borrow, accept or contract for services of personnel,  includ-
    16  ing, but not limited to, employees of a compacting state;
    17    (12)  to  hire  employees,  professionals or specialists, and elect or
    18  appoint officers, and to fix their compensation, define their duties and
    19  give them appropriate  authority  to  carry  out  the  purposes  of  the

    20  compact,  and  determine  their  qualifications;  and  to  establish the
    21  commission's personnel policies and programs relating  to,  among  other
    22  things,  conflicts of interest, rates of compensation and qualifications
    23  of personnel;
    24    (13) to accept any and all appropriate donations and grants of  money,
    25  equipment, supplies, materials and services, and to receive, utilize and
    26  dispose  of  the  same;  provided that at all times the commission shall
    27  strive to avoid any appearance of impropriety;
    28    (14) to lease, purchase, accept appropriate gifts or donations of,  or
    29  otherwise  to own, hold, improve or use, any property, real, personal or
    30  mixed; provided that at all times the commission shall strive  to  avoid

    31  any appearance of impropriety;
    32    (15)  to  sell,  convey, mortgage, pledge, lease, exchange, abandon or
    33  otherwise dispose of any property, real, personal or mixed;
    34    (16) to remit filing fees to compacting states as may be set forth  in
    35  the by-laws, rules or operating procedures;
    36    (17)  to  enforce  compliance by compacting states with rules, uniform
    37  standards, operating procedures and by-laws;
    38    (18) to provide for dispute resolution among compacting states;
    39    (19) to advise compacting states on issues relating to insurers  domi-
    40  ciled or doing business in non-compacting jurisdictions, consistent with
    41  the purposes of the compact;
    42    (20) to provide advice and training to those personnel in state insur-

    43  ance  departments  responsible  for product review, and to be a resource
    44  for state insurance departments;
    45    (21) to establish a budget and make expenditures;
    46    (22) to borrow money;
    47    (23) to appoint committees, including advisory  committees  comprising
    48  members,  state  insurance regulators, state legislators or their repre-
    49  sentatives, insurance industry and consumer  representatives,  and  such
    50  other interested persons as may be designated in the by-laws;
    51    (24)  to  provide  and receive information from, and to cooperate with
    52  law enforcement agencies;
    53    (25) to adopt and use a corporate seal; and
    54    (26) to perform such other functions as may be necessary or  appropri-

    55  ate  to  achieve  the purposes of this compact consistent with the state
    56  regulation of the business of insurance.

        A. 4432--C                          6
 
     1    (b) All donations, grants of money, equipment, supplies, materials  or
     2  services,  purchases, gifts, donations, conveyances, mortgages, pledges,
     3  leases and exchanges, as authorized by subsection (a) of  this  section,
     4  received  by  or  on  behalf  of  the commission shall be limited to the
     5  direct  funding  of  the lawful and authorized operations of the commis-
     6  sion.
     7    § 8806. Organization of the  commission.  (a)  Each  compacting  state
     8  shall  have  and be limited to one member. The superintendent, or his or

     9  her designated representative,  shall  be  New  York's  member  of  such
    10  commission.  Each  member  shall  be qualified to serve in such capacity
    11  pursuant to applicable law of the compacting state. Any  member  may  be
    12  removed  or  suspended  from  office as provided by the law of the state
    13  from which he or she shall be appointed. Any vacancy  occurring  in  the
    14  commission shall be filled in accordance with the laws of the compacting
    15  state  wherein such vacancy exists. Nothing herein shall be construed to
    16  affect the manner in which a compacting state determines the election or
    17  appointment and qualification of its own commissioner.
    18    (b) Each member shall be entitled to one vote and shall have an oppor-

    19  tunity to participate in the governance of the commission in  accordance
    20  with  the  by-laws. Notwithstanding any provision of this article to the
    21  contrary, no action of the commission with respect to  the  promulgation
    22  of  a  uniform  standard  shall  be  effective  unless two-thirds of the
    23  members vote in favor thereof.
    24    (c) The commission shall, by a  majority  of  the  members,  prescribe
    25  by-laws  to  govern  its  conduct  as may be necessary or appropriate to
    26  carry out the purposes, and exercise the powers, of the compact, includ-
    27  ing, but not limited to:
    28    (1) establishing the fiscal year of the commission;
    29    (2) providing  reasonable  procedures  for  holding  meetings  of  the
    30  management committee;

    31    (3)  providing  reasonable standards and procedures for the establish-
    32  ment of other committees, and governing any general or  specific  deleg-
    33  ation of any authority or function of the commission;
    34    (4)  providing  reasonable procedures for calling and conducting meet-
    35  ings of the commission that consist of a majority of commission members,
    36  ensuring reasonable advance notice of each such meeting,  and  providing
    37  for  the  right  of citizens to attend each such meeting with enumerated
    38  exceptions designed to protect the public's  interest,  the  privacy  of
    39  individuals  and  insurers'  proprietary  information,  including  trade
    40  secrets. The commission may meet in camera only after a majority of  the

    41  entire  membership  votes to close a meeting in toto or in part. As soon
    42  as practicable, the commission must make public a copy of  the  vote  to
    43  close  the meeting revealing the vote of each member with no proxy votes
    44  allowed, and votes taken during such meeting;
    45    (5) establishing the  titles,  duties  and  authority  and  reasonable
    46  procedures for the election of the officers of the commission;
    47    (6)  providing  reasonable standards and procedures for the establish-
    48  ment of the personnel policies and programs of the commission.  Notwith-
    49  standing any civil service or  other  similar  laws  of  any  compacting
    50  state,  the  by-laws shall exclusively govern the personnel policies and
    51  programs of the commission;

    52    (7) promulgating a code of ethics to address permissible and prohibit-
    53  ed activities of commission members and employees; and
    54    (8) providing a mechanism for winding up the operations of the commis-
    55  sion and the equitable disposition of any surplus funds that  may  exist

        A. 4432--C                          7
 
     1  after  the termination of the compact after the payment and/or reserving
     2  of all of its debts and obligations.
     3    (d)  The commission shall publish its by-laws in a convenient form and
     4  file a copy thereof and a copy of any amendment thereto, with the appro-
     5  priate agency or officer in each of the compacting states.
     6    (e) A management committee comprising no more  than  fourteen  members

     7  shall be established as follows:
     8    (1) one member from each of the six compacting states with the largest
     9  premium  volume  for  individual  and  group annuities, life, disability
    10  income and  long-term  care  insurance  products,  determined  from  the
    11  records of the NAIC as of December thirty-first of the prior year;
    12    (2)  four  members  from  those  compacting  states  with at least two
    13  percent of the market based on the premium volume described in paragraph
    14  one of this subsection, other than six compacting states with the  larg-
    15  est  premium  volume,  selected  on  a rotating basis as provided in the
    16  by-laws; and
    17    (3) four members from those  compacting  states  with  less  than  two

    18  percent  of  the  market, based on the premium volume described in para-
    19  graph one of this subsection, with one selected from each  of  the  four
    20  zone regions of the NAIC as provided in the by-laws.
    21    (f)  The  management committee shall have such authority and duties as
    22  may be set forth in the by-laws, including but not limited to:
    23    (1) managing the affairs of the commission in a manner consistent with
    24  the by-laws and purposes of the commission;
    25    (2) establishing and overseeing an  organizational  structure  within,
    26  and  appropriate  procedures  for,  the  commission  to  provide for the
    27  creation of uniform standards and other rules,  receipt  and  review  of
    28  product  filings, administrative and technical support functions, review

    29  of decisions regarding the disapproval of  a  product  filing,  and  the
    30  review  of  elections made by a compacting state to opt out of a uniform
    31  standard; provided that a uniform standard shall not be submitted to the
    32  compacting states for adoption unless  approved  by  two-thirds  of  the
    33  members of the management committee;
    34    (3) overseeing the offices of the commission; and
    35    (4) planning, implementing, and coordinating communications and activ-
    36  ities  with  other  state, federal and local government organizations in
    37  order to advance the goals of the commission.
    38    (g) The commission shall elect annually officers from  the  management
    39  committee,  with each having such authority and duties, as may be speci-

    40  fied in the by-laws.
    41    (h) The management committee may,  subject  to  the  approval  of  the
    42  commission,  appoint  or  retain  an executive director for such period,
    43  upon such terms and conditions and for such compensation as the  commis-
    44  sion  may deem appropriate. The executive director shall serve as secre-
    45  tary to the commission, but shall not be a member of the commission. The
    46  executive director shall hire and supervise such other staff as  may  be
    47  authorized by the commission.
    48    (i)  A  legislative  committee  comprising  state legislators or their
    49  designees shall be established to monitor the operations  of,  and  make
    50  recommendations   to,  the  commission;  provided  that  the  manner  of

    51  selection and term of any legislative committee member shall be  as  set
    52  forth  in  the  by-laws.  Prior to the adoption by the commission of any
    53  uniform standard, revision  to  the  by-laws,  annual  budget  or  other
    54  significant  matter  as  may  be provided in the by-laws, the management
    55  committee shall consult with and report to the legislative committee.

        A. 4432--C                          8
 
     1    (j) The commission shall establish two  advisory  committees,  one  of
     2  which  shall comprise consumer representatives independent of the insur-
     3  ance industry and the  other  comprising  insurance  industry  represen-
     4  tatives.
     5    (k) The commission may establish additional advisory committees as its

     6  by-laws may provide for the carrying out of its functions.
     7    (l)  The  commission shall maintain its corporate books and records in
     8  accordance with the by-laws.
     9    (m) The members, officers, executive director, employees and represen-
    10  tatives of the commission shall  be  immune  from  suit  and  liability,
    11  either  personally  or  in their official capacity, for any action taken
    12  reasonably and in good faith which results in a claim for damage  to  or
    13  loss  of  property or personal injury or other civil liability caused by
    14  or arising out of any actual or alleged  act,  error  or  omission  that
    15  occurred,  or  that  such  person  had  a reasonable basis for believing
    16  occurred within the scope of commission employment, duties or  responsi-

    17  bilities;  provided,  that nothing in this section shall be construed to
    18  protect any such person from suit and/or liability for any damage, loss,
    19  injury or liability caused by the  intentional  or  willful  and  wanton
    20  misconduct of that person.
    21    (n)  The commission shall defend any member, officer, executive direc-
    22  tor, employee or representative of the commission in  any  civil  action
    23  seeking  to  impose  liability arising out of any actual or alleged act,
    24  error or omission that occurred within the scope of  commission  employ-
    25  ment, duties or responsibilities, or that the defendant had a reasonable
    26  basis  for believing occurred within the scope of commission employment,
    27  duties or responsibilities; provided, that nothing in this section shall

    28  be construed to prohibit that person from retaining his or her own coun-
    29  sel; and provided further, that the actual  or  alleged  act,  error  or
    30  omission  did  not  result from that person's intentional or willful and
    31  wanton misconduct.
    32    (o) The commission shall indemnify and hold harmless any member, offi-
    33  cer, executive director, employee or representative  of  the  commission
    34  for  the  amount  of  any  settlement  or judgment obtained against such
    35  persons arising out of any actual or alleged act, error or omission that
    36  occurred within the scope of commission employment, duties or  responsi-
    37  bilities,  or  that  such  person  had  a reasonable basis for believing
    38  occurred within the scope of commission employment, duties or  responsi-

    39  bilities,  provided,  that  the actual or alleged act, error or omission
    40  did not result from the intentional or willful and wanton misconduct  of
    41  any such person.
    42    §  8807. Meetings and acts of the commission. (a) The commission shall
    43  meet and take such actions as are consistent with the provisions of this
    44  compact and the by-laws.
    45    (b) Each member of the commission shall have the right  and  power  to
    46  cast  a  vote  to which that compacting state is entitled and to partic-
    47  ipate in the business and affairs of the commission. A member shall vote
    48  in person or by such other means as provided in the by-laws. The by-laws
    49  may provide for members' participation in meetings by telephone or other
    50  means of communication.

    51    (c) The commission shall meet at least once during each calendar year.
    52  Additional meetings shall be held as set forth in the by-laws.
    53    § 8808. Rules and operating procedures; rule making functions  of  the
    54  commission and opting out of uniform standards. (a) The commission shall
    55  promulgate  reasonable  rules, including uniform standards and operating
    56  procedures, in order to effectively and efficiently achieve the purposes

        A. 4432--C                          9
 
     1  of the compact. Notwithstanding the foregoing, in the event the  commis-
     2  sion  exercises its rule making authority in a manner that is beyond the
     3  scope of the purposes of this article, or the  powers  granted  in  this

     4  section, then such action by the commission shall be invalid and have no
     5  force and effect.
     6    (b)  Rules  and  operating procedures shall be made pursuant to a rule
     7  making process that conforms to the model state administrative procedure
     8  act of 1981 as amended, as may be appropriate to the operations  of  the
     9  commission. Before the commission adopts a uniform standard, the commis-
    10  sion shall give written notice to the relevant state legislative commit-
    11  tee  in  each  compacting  state responsible for insurance issues of its
    12  intention to adopt such uniform standard. The commission in  adopting  a
    13  uniform  standard shall consider fully all submitted materials and issue
    14  a concise explanation of its decision.

    15    (c) A uniform standard shall become effective ninety  days  after  its
    16  promulgation  by the commission or such later date as the commission may
    17  determine; provided, however, that a compacting state may opt out  of  a
    18  uniform standard as provided in this article. "Opt out" shall be defined
    19  as  any  action by a compacting state to decline to adopt or participate
    20  in a promulgated uniform standard. All other rules and operating  proce-
    21  dures,  and  amendments  thereto,  shall become effective as of the date
    22  specified in each rule, operating procedure or amendment.
    23    (d) A compacting state may opt out of a uniform  standard,  either  by
    24  legislation  or  regulation duly promulgated by the insurance department

    25  under the compacting state's administrative procedure act. If a compact-
    26  ing state elects to opt out of a uniform standard by regulation, it must
    27  give written notice to the commission no later than  ten  business  days
    28  after  the  later  of the uniform standard is promulgated or at the time
    29  the state becomes a compacting state, and find that the uniform standard
    30  does not provide reasonable protections to the  citizens  of  the  state
    31  given  the conditions in the state. The commissioner shall make specific
    32  findings of fact and conclusions of law, based on a preponderance of the
    33  evidence, detailing the conditions in the state which warrant  a  depar-
    34  ture from the uniform standard and determining that the uniform standard

    35  would not reasonably protect the citizens of the state. The commissioner
    36  must consider and balance the following factors and find that the condi-
    37  tions in the state and needs of the citizens of the state outweigh:
    38    (1)  the intent of the legislature to participate in, and the benefits
    39  of, an interstate  agreement  to  establish  national  uniform  consumer
    40  protections for the products subject to this article; and
    41    (2)  the presumption that a uniform standard adopted by the commission
    42  provides reasonable protections to consumers of the relevant product.
    43    Notwithstanding the foregoing, a compacting state may, at the time  of
    44  its enactment of the compact, prospectively opt out of all uniform stan-

    45  dards  involving  the  long-term  care  insurance  products by expressly
    46  providing for such opt out in the enacted  compact,  and  such  opt  out
    47  shall  not  be treated as a material variance in the offer or acceptance
    48  of any state to participate in the compact. Such an  opt  out  shall  be
    49  effective  at  the  time  of  enactment of the compact by the compacting
    50  state and shall apply to all existing uniform standards involving  long-
    51  term care insurance products and those subsequently promulgated.
    52    (e) If a compacting state elects to opt out of a uniform standard, the
    53  uniform  standard shall remain applicable in the compacting state elect-
    54  ing to opt out until such time the opt out legislation is  enacted  into

    55  law or the regulation opting out becomes effective.

        A. 4432--C                         10
 
     1    (f)  Once  the  opt  out  of  a uniform standard by a compacting state
     2  becomes effective as provided under the laws of that state, the  uniform
     3  standard shall have no further force and effect in that state unless and
     4  until the legislation or regulation implementing the opt out is repealed
     5  or  otherwise  becomes  ineffective  under  the  laws of the state. If a
     6  compacting state opts out of a uniform standard after the uniform stand-
     7  ard has been made effective in that state, the opt out  shall  have  the
     8  same  prospective  effect as provided under section eight thousand eight
     9  hundred fifteen of this article for withdrawals.

    10    (g) If a compacting state has formally initiated the process of opting
    11  out of a uniform standard by regulation, and while  the  regulatory  opt
    12  out  is  pending,  the  compacting state may petition the commission, at
    13  least fifteen days before the effective date of the uniform standard, to
    14  stay the effectiveness of  the  uniform  standard  in  that  state.  The
    15  commission  may  grant a stay if it determines the regulatory opt out is
    16  being pursued in a reasonable  manner  and  there  is  a  likelihood  of
    17  success. If a stay is granted or extended by the commission, the stay or
    18  extension  thereof may postpone the effective date by up to ninety days,
    19  unless affirmatively extended by the  commission;  provided  however,  a

    20  stay  may  not  be  permitted to remain in effect for more than one year
    21  unless the compacting state can show extraordinary  circumstances  which
    22  warrant  a  continuance  of  the stay including, but not limited to, the
    23  existence of a legal challenge which prevents the compacting state  from
    24  opting  out. A stay may be terminated by the commission upon notice that
    25  the rule making process has been terminated.
    26    (h) Not later than thirty days after a rule or operating procedure  is
    27  promulgated,  any  person may file a petition for judicial review of the
    28  rule or operating procedure; provided, however, that the filing of  such
    29  a  petition  shall  not  stay or otherwise prevent the rule or operating

    30  procedure from becoming effective unless the court finds that the  peti-
    31  tioner  has  a  substantial  likelihood of success. The court shall give
    32  deference to the actions of the commission  consistent  with  applicable
    33  law and shall not find the rule or operating procedure to be unlawful if
    34  the  rule or operating procedure represents a reasonable exercise of the
    35  commission's authority.
    36    § 8809. Commission records and enforcement. (a) The  commission  shall
    37  promulgate  rules  establishing  conditions  and  procedures  for public
    38  inspection and copying of its information and official  records,  except
    39  such  information  and  records involving the privacy of individuals and

    40  insurers' trade secrets. The commission may promulgate additional  rules
    41  under which it may make available to federal and state agencies, includ-
    42  ing  law  enforcement agencies, records and information otherwise exempt
    43  from disclosure, and may enter into agreements  with  such  agencies  to
    44  receive  or exchange information or records subject to nondisclosure and
    45  confidentiality provisions.
    46    (b) Except as to privileged records, data and information, the laws of
    47  any compacting state  pertaining  to  confidentiality  or  nondisclosure
    48  shall  not  relieve  any  compacting  state  commissioner of the duty to
    49  disclose any relevant records, data or information  to  the  commission;
    50  provided  however, that disclosure to the commission shall not be deemed

    51  to waive  or  otherwise  affect  any  confidentiality  requirement;  and
    52  provided  further  that,  except as otherwise expressly provided in this
    53  article, the commission shall not be subject to the laws of any compact-
    54  ing state pertaining to confidentiality and nondisclosure  with  respect
    55  to  records, data and information in its possession. Confidential infor-

        A. 4432--C                         11
 
     1  mation of the commission shall remain confidential after  such  informa-
     2  tion is provided to any commissioner.
     3    (c) The commission shall monitor compacting states for compliance with
     4  duly  adopted by-laws, rules, including uniform standards, and operating

     5  procedures. The commission shall  notify  such  noncomplying  compacting
     6  state  in writing of its noncompliance with commission by-laws, rules or
     7  operating procedures. If the  noncomplying  compacting  state  fails  to
     8  remedy  such  noncompliance  within  the time specified in the notice of
     9  noncompliance, the compacting state shall be deemed to be in default  as
    10  set  forth in section eight thousand eight hundred fifteen of this arti-
    11  cle.
    12    (d) The commissioner of any state in which an insurer is authorized to
    13  do business, or is conducting the business of insurance, shall  continue
    14  to exercise his or her authority to oversee the market regulation of the
    15  activities  of  the  insurer  in  accordance  with the provisions of the

    16  state's law. The  commissioner's  enforcement  of  compliance  with  the
    17  compact is governed by the following provisions:
    18    (1)  with respect to the commissioner's market regulation of a product
    19  or advertisement that is approved or certified to  the  commission,  the
    20  content of the product or advertisement shall not constitute a violation
    21  of  the provisions, standards or requirements of the compact except upon
    22  a final order of the commission, issued at the request of a commissioner
    23  after prior notice to the insurer and an opportunity for hearing  before
    24  the commission.
    25    (2)  before  a  commissioner  may bring an action for violation of any
    26  provision, standard or  requirement  of  the  compact  relating  to  the

    27  content of an advertisement not approved or certified to the commission,
    28  the  commission  or  an  authorized commission officer or employee, must
    29  authorize the action. However, authorization pursuant to this  paragraph
    30  does  not  require  notice  to  the  insurer, opportunity for hearing or
    31  disclosure of requests for authorization or records of the  commission's
    32  action on such requests.
    33    §  8810.  Dispute  resolution.  The commission shall attempt, upon the
    34  request of a member, to resolve any disputes or other  issues  that  are
    35  subject to this compact and which may arise between two or more compact-
    36  ing  states, or between compacting states and non-compacting states, and

    37  the commission shall promulgate an  operating  procedure  providing  for
    38  resolution of such disputes.
    39    §  8811.  Product  filing  and  approval. (a) Insurers and third-party
    40  filers seeking to have a product approved by the commission  shall  file
    41  such  product  with,  and pay applicable filing fees to, the commission.
    42  Nothing in this article shall be  construed  to  restrict  or  otherwise
    43  prevent an insurer from filing its product with the insurance department
    44  in any state wherein such insurer is licensed to conduct the business of
    45  insurance,  and  such  filing shall be subject to the laws of the states
    46  where filed.
    47    (b) The commission shall establish appropriate filing and review proc-

    48  esses and procedures pursuant to commission rules and  operating  proce-
    49  dures.  Notwithstanding  any  provision in this section to the contrary,
    50  the commission shall promulgate rules to establish conditions and proce-
    51  dures under which the commission will provide public access  to  product
    52  filing  information.  In  establishing  such rules, the commission shall
    53  consider the interests of the public in having access to  such  informa-
    54  tion,  as  well as protection of personal medical and financial informa-
    55  tion and trade secrets, that may be contained in  a  product  filing  or
    56  supporting information.

        A. 4432--C                         12
 
     1    (c)  Any  product  approved by the commission may be sold or otherwise

     2  issued in those compacting  states  in  which  the  insurer  is  legally
     3  authorized to do business.
     4    §  8812.  Review  of  commission  decisions regarding filings. (a) Not
     5  later than thirty days after the commission has given notice of a disap-
     6  proved product or advertisement filed with the commission,  the  insurer
     7  or  third party filer whose filing was disapproved may appeal the deter-
     8  mination to a review panel appointed by the commission.  The  commission
     9  shall  promulgate  rules  to  establish  procedures  for appointing such
    10  review panel and provide for notice and hearing. An allegation that  the
    11  commission,  in  disapproving  a product or advertisement filed with the

    12  commission, acted arbitrarily, capriciously or in a manner  that  is  an
    13  abuse  of discretion or otherwise not in accordance with law, is subject
    14  to judicial review in accordance with subsection (e)  of  section  eight
    15  thousand eight hundred four of this article.
    16    (b)  The commission shall have authority to monitor, review and recon-
    17  sider products and advertisement subsequent to their filing or  approval
    18  upon a finding that the product does not meet the relevant uniform stan-
    19  dard.  Where  appropriate,  the  commission  may  withdraw or modify its
    20  approval after proper notice and hearing, subject to the appeal  process
    21  set forth in subsection (a) of this section.
    22    §  8813.  Finance.  (a)  The  commission  shall pay or provide for the

    23  payment of the reasonable expenses of its  establishment  and  organiza-
    24  tion.  To  fund  the  cost of its initial operations, the commission may
    25  accept contributions and other forms of funding from the NAIC,  compact-
    26  ing  states  and other sources. Contributions and other forms of funding
    27  from other sources shall be of such a nature that  the  independence  of
    28  the  commission  concerning  the  performance of its duties shall not be
    29  compromised.
    30    (b) The commission shall collect a filing fee from  each  insurer  and
    31  third party filer filing a product with the commission to cover the cost
    32  of  the  operations  and activities of the commission and its staff in a
    33  total amount sufficient to cover the commission's annual budget.

    34    (c) The commission's budget for a fiscal year shall  not  be  approved
    35  until  it has been subject to notice and comment as set forth in section
    36  eight thousand eight hundred eight of this article.
    37    (d) The commission shall be exempt from all taxation  in  and  by  the
    38  compacting states.
    39    (e)  The  commission  shall  not  pledge  the credit of any compacting
    40  state, except by and  with  the  appropriate  legal  authority  of  that
    41  compacting state.
    42    (f)  The  commission  shall keep complete and accurate accounts of all
    43  its internal receipts, including grants and donations and  disbursements
    44  of  all  funds under its control. The internal financial accounts of the

    45  commission shall be subject to  the  accounting  procedures  established
    46  under  its  by-laws.  The  financial  accounts and reports including the
    47  system of internal controls and procedures of the  commission  shall  be
    48  audited annually by an independent certified public accountant. Upon the
    49  determination of the commission, but no less frequently than every three
    50  years, the review of such independent auditor shall include a management
    51  and  performance  audit  of the commission. The commission shall make an
    52  annual report to the governor and legislature of the compacting  states,
    53  which shall include a report of such independent audit. The commission's
    54  internal  accounts  shall  not be confidential and such materials may be

    55  shared with the commissioner  of  any  compacting  state  upon  request,
    56  provided, however, that any work papers related to any internal or inde-

        A. 4432--C                         13
 
     1  pendent  audit  and any information regarding the privacy of individuals
     2  and insurers' proprietary information, including  trade  secrets,  shall
     3  remain confidential.
     4    (g)  No  compacting  state shall have any claim to or ownership of any
     5  property held by or vested in the commission or to any commission  funds
     6  held pursuant to the provisions of this compact.
     7    § 8814. Compacting states, effective date and amendment. (a) Any state
     8  is eligible to become a compacting state.

     9    (b)  The  compact  shall become effective and binding upon legislative
    10  enactment of the compact into law by  two  compacting  states;  provided
    11  however,  that  the  commission  shall  become effective for purposes of
    12  adopting uniform standards for reviewing, and giving approval or  disap-
    13  proval  of,  products  filed with the commission that satisfy applicable
    14  uniform standards only after twenty-six states are compacting states or,
    15  alternatively, by states representing greater than forty percent of  the
    16  premium  volume for life insurance, annuity, disability income and long-
    17  term care insurance products, based on records of the NAIC for the prior
    18  year. Thereafter, it shall become effective and binding as to any  other

    19  compacting state upon enactment of the compact into law by that state.
    20    (c)  Amendments  to  the compact may be proposed by the commission for
    21  enactment by the compacting states. No amendment shall become  effective
    22  and  binding  upon  the  commission and the compacting states unless and
    23  until all compacting states enact the amendment into law.
    24    § 8815. Withdrawal, default and termination.  (a)(1)  Once  effective,
    25  the  compact  shall  continue  in force and remain binding upon each and
    26  every compacting state; provided that a compacting  state  may  withdraw
    27  from  the  compact  ("withdrawing  state") by enacting a statute specif-
    28  ically repealing the statute which enacted the compact into law.

    29    (2) The effective date of withdrawal is  the  effective  date  of  the
    30  repealing statute.  However, the withdrawal shall not apply to any prod-
    31  uct  filings  approved  or  self-certified, or any advertisement of such
    32  products, on the date the repealing statute becomes effective, except by
    33  mutual agreement of the commission and the withdrawing state unless  the
    34  approval  is rescinded by the withdrawing state as provided in paragraph
    35  five of this subsection.
    36    (3) The commissioner of the withdrawing state shall immediately notify
    37  the management committee in writing upon the introduction of legislation
    38  repealing this compact in the withdrawing state.
    39    (4) The commission shall notify the other  compacting  states  of  the

    40  introduction  of  such  legislation within ten days after its receipt of
    41  notice thereof.
    42    (5) The withdrawing state is responsible for all  obligations,  duties
    43  and  liabilities  incurred  through  the  effective  date of withdrawal,
    44  including any obligations, the performance of which  extend  beyond  the
    45  effective date of withdrawal, except to the extent those obligations may
    46  have been released or relinquished by mutual agreement of the commission
    47  and  the  withdrawing  state.  The commission's approval of products and
    48  advertisement prior to the effective date of withdrawal  shall  continue
    49  to  be  effective  and be given full force and effect in the withdrawing
    50  state, unless formally rescinded by the withdrawing state  in  the  same

    51  manner as provided by the laws of the withdrawing state for the prospec-
    52  tive  disapproval of products or advertisement previously approved under
    53  state law.
    54    (6) Reinstatement following withdrawal of any compacting  state  shall
    55  occur  upon  the  effective  date of the withdrawing state's legislation
    56  reenacting the compact.

        A. 4432--C                         14
 
     1    (b) (1) If the commission determines that any compacting state has  at
     2  any time defaulted ("defaulting state") in the performance of any of its
     3  obligations  or responsibilities under this compact, the by-laws or duly
     4  promulgated rules or operating procedures, then, after notice and  hear-

     5  ing  as  set  forth  in the by-laws, all rights, privileges and benefits
     6  conferred by the compact on the defaulting state shall be suspended from
     7  the effective date of default as fixed by the  commission.  The  grounds
     8  for  default  include,  but  are not limited to, failure of a compacting
     9  state to perform its obligations  or  responsibilities,  and  any  other
    10  grounds designated in commission rules. The commission shall immediately
    11  notify the defaulting state in writing of the defaulting state's suspen-
    12  sion  pending  a cure of the default. The commission shall stipulate the
    13  conditions and the time period within which the  defaulting  state  must
    14  cure  its  default.  If  the  defaulting state fails to cure the default

    15  within the time period specified by the commission, the defaulting state
    16  shall be terminated from the compact  and  all  rights,  privileges  and
    17  benefits conferred by the compact shall be terminated from the effective
    18  date of termination.
    19    (2)  Product  approvals  by  the commission or product self-certifica-
    20  tions, or any advertisement in connection with such product, that are in
    21  force on the effective date of termination shall remain in force in  the
    22  defaulting state in the same manner as if the defaulting state had with-
    23  drawn voluntarily under this section.
    24    (3)  Reinstatement  following  termination  of  any  compacting  state
    25  requires a reenactment of the compact by that state.

    26    (c)(1) The compact dissolves effective upon the date of the withdrawal
    27  or default of the compacting  state  which  reduces  membership  in  the
    28  compact to one compacting state.
    29    (2)  Upon the dissolution of the compact, the compact becomes null and
    30  void and shall be of no further force or effect, and  the  business  and
    31  affairs  of the commission shall be wound up and any surplus funds shall
    32  be distributed in accordance with the by-laws.
    33    § 8816. Severability and  construction.  (a)  The  provisions  of  the
    34  compact  shall  be  severable;  and  if  any phrase, clause, sentence or
    35  provision is deemed  unenforceable,  the  remaining  provisions  of  the
    36  compact shall be enforceable.

    37    (b)  The  provisions  of  the  compact shall be liberally construed to
    38  effectuate its purposes.
    39    § 8817. Binding effect of compact and other laws. (a) Nothing in  this
    40  section prevents the enforcement of any other law of a compacting state,
    41  except as provided in subsection (b) of this section.
    42    (b)  For  any  product  approved  or  certified to the commission, the
    43  rules, uniform standards and any other requirements  of  the  commission
    44  shall  constitute  the  exclusive  provisions applicable to the content,
    45  approval and certification of such products. For advertisement  that  is
    46  subject  to  the  commission's  authority, any rule, uniform standard or
    47  other requirement of the commission which governs  the  content  of  the

    48  advertisement  shall  constitute  the exclusive provision that a commis-
    49  sioner may apply to the content of  the  advertisement.  Notwithstanding
    50  the  foregoing,  no  action  taken  by  the commission shall abrogate or
    51  restrict:
    52    (1) the access of any person to state courts;
    53    (2) remedies available under state law related to breach of  contract,
    54  tort or other laws not specifically directed to the content of the prod-
    55  uct;
    56    (3) state law relating to the construction of insurance contracts; or

        A. 4432--C                         15
 
     1    (4)  the authority of the attorney general of the state including, but
     2  not limited to, maintaining any actions or proceedings as authorized  by

     3  law.
     4    (c)  All  insurance  products  filed  with  individual states shall be
     5  subject to the laws of those states.
     6    (d) All lawful actions of the  commission,  including  all  rules  and
     7  operating procedures promulgated by the commission, are binding upon the
     8  compacting states.
     9    (e)  All  agreements  between the commission and the compacting states
    10  are binding in accordance with their terms.
    11    (f) Upon the request of a party to a  conflict  over  the  meaning  or
    12  interpretation  of  commission  actions, and upon a majority vote of the
    13  compacting states, the commission may issue advisory opinions  regarding
    14  the disputed meaning or interpretation.

    15    (g)  In  the event any provision of this article exceeds the constitu-
    16  tional limits imposed on the legislature of any  compacting  state,  the
    17  obligations,  duties,  powers  or jurisdiction sought to be conferred by
    18  that provision upon the commission  shall  be  ineffective  as  to  such
    19  compacting  state,  and such obligations, duties, powers or jurisdiction
    20  shall remain in the compacting state and shall be exercised by the agen-
    21  cy thereof to which such obligations, duties, powers or jurisdiction are
    22  delegated by law in effect at the time the compact becomes effective.
    23    § 3. This act shall take effect January 1, 2013 and shall  expire  and
    24  be deemed repealed December 31, 2015; provided, however, that any policy

    25  or contract issued during the period that the provisions of this act are
    26  in  effect  that  has been approved in accordance with the provisions of
    27  this act shall continue in full force and effect.
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