Senate Bill sb2456

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    Florida Senate - 2005                                  SB 2456

    By Senator Aronberg





    27-1360A-05                                         See HB 403

  1                      A bill to be entitled

  2         An act relating to the Interstate Insurance

  3         Product Regulation Compact; providing

  4         legislative findings and intent; providing

  5         purposes; providing definitions; providing for

  6         establishment of an Interstate Insurance

  7         Product Regulation Commission; providing

  8         responsibilities of the commission; specifying

  9         the commission as an instrumentality of the

10         compacting states; providing for venue;

11         providing powers of the commission; providing

12         for organization of the commission; providing

13         for membership, voting, and bylaws; designating

14         the Chief Financial Officer as the

15         representative of this state on the commission;

16         providing for a management committee, officers,

17         and personnel of the commission; providing

18         authority of the management committee;

19         providing for legislative and advisory

20         committees; providing for qualified immunity,

21         defense, and indemnification of members,

22         officers, employees, and representatives of the

23         commission; providing for meetings and acts of

24         the commission; providing rules and operating

25         procedures; providing rulemaking functions of

26         the commission; providing for opting out of

27         uniform standards; providing procedures and

28         requirements; providing for commission records

29         and enforcement; authorizing the commission to

30         adopt rules; providing for disclosure of

31         certain information; requiring the commission

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         to monitor for compliance; providing for

 2         dispute resolution; providing for product

 3         filing and approval; requiring the commission

 4         to establish filing and review processes and

 5         procedures; providing for review of commission

 6         decisions regarding filings; providing for

 7         finance of commission activities; providing for

 8         payment of expenses; authorizing the commission

 9         to collect filing fees for certain purposes;

10         providing for approval of a commission budget;

11         exempting the commission from all taxation;

12         prohibiting the commission from pledging the

13         credit of any compacting states without

14         authority; requiring the commission to keep

15         complete accurate accounts, provide for audits,

16         and make annual reports to the Governors and

17         Legislatures of compacting states; providing

18         for effective date and amendment of the

19         compact; providing for withdrawal from the

20         compact, default by compacting states, and

21         dissolution of the compact; providing

22         severability and construction; providing for

23         binding effect of compact and other laws;

24         providing an effective date.

25  

26  Be It Enacted by the Legislature of the State of Florida:

27  

28         Section 1.  Legislative findings; intent.--

29         (1)  The Legislature finds that the financial services

30  marketplace has changed significantly in recent years and that

31  asset-based insurance products, which include life insurance,

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  annuities, disability income insurance, and long-term care

 2  insurance, now compete directly with other retirement and

 3  estate planning instruments that are sold by banks and

 4  securities firms.

 5         (2)  The Legislature further finds that the increased

 6  mobility of the population and the risks borne by these

 7  asset-based products are not local in nature.

 8         (3)  The Legislature further finds that the Interstate

 9  Insurance Product Regulation Compact Model adopted by the

10  National Association of Insurance Commissioners and endorsed

11  by the National Conference of Insurance Legislators and the

12  National Conference of State Legislatures is designed to

13  address these market changes by providing a uniform set of

14  product standards and a single source for filing of new

15  products.

16         (4)  The Legislature further finds that the product

17  standards that have been developed provide a high level of

18  consumer protection. Further, it is noted that the Interstate

19  Insurance Product Regulation Compact Model includes a

20  mechanism for opting out of any product standard that the

21  state determines would not reasonably protect its citizens.

22  With respect to long-term care insurance, the Legislature

23  understands that the compact does not intend to develop a

24  uniform standard for rate increase filings, thereby leaving

25  the authority over long-term care rate increases with the

26  state. The state relies on that understanding in adopting this

27  legislation. The state, pursuant to the terms and conditions

28  of this act, seeks to join with other states and establish the

29  Interstate Insurance Product Regulation Compact, and thus

30  become a member of the Interstate Insurance Product Regulation

31  Commission. The Commissioner of Insurance Regulation is hereby

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  designated to serve as the representative of this state on the

 2  commission.

 3         Section 2.  Interstate Insurance Product Regulation

 4  Compact.--The Interstate Insurance Product Regulation Compact

 5  is hereby enacted into law and entered into by this state with

 6  all states legally joining therein in the form substantially

 7  as follows:

 8  

 9         Interstate Insurance Product Regulation Compact

10  

11                             Preamble

12  

13  This compact is intended to help states join together to

14  establish an interstate compact to regulate designated

15  insurance products. Pursuant to terms and conditions of this

16  compact, this state seeks to join with other states and

17  establish the Interstate Insurance Product Regulation Compact

18  and thus become a member of the Interstate Insurance Product

19  Regulation Commission.

20  

21                            Article I

22  

23         PURPOSES.--The purposes of this compact are, through

24  means of joint and cooperative action among the compacting

25  states, to:

26         (1)  Promote and protect the interest of consumers of

27  individual and group annuity, life insurance, disability

28  income, and long-term care insurance products.

29         (2)  Develop uniform standards for insurance products

30  covered under the compact.

31  

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         (3)  Establish a central clearinghouse to receive and

 2  provide prompt review of insurance products covered under the

 3  compact and, in certain cases, advertisements related thereto,

 4  submitted by insurers authorized to do business in one or more

 5  compacting states.

 6         (4)  Give appropriate regulatory approval to those

 7  product filings and advertisements satisfying the applicable

 8  uniform standard.

 9         (5)  Improve coordination of regulatory resources and

10  expertise between state insurance departments regarding the

11  setting of uniform standards and review of insurance products

12  covered under the compact.

13         (6)  Create the Interstate Insurance Product Regulation

14  Commission.

15         (7)  Perform these and such other related functions as

16  may be consistent with the state regulation of the business of

17  insurance.

18  

19                            Article II

20  

21         DEFINITIONS.--For purposes of this compact:

22         (1)  "Advertisement" means any material designed to

23  create public interest in a product, or induce the public to

24  purchase, increase, modify, reinstate, borrow on, surrender,

25  replace, or retain a policy, as more specifically defined in

26  the rules and operating procedures of the commission.

27         (2)  "Bylaws" mean those bylaws established by the

28  commission for its governance, or for directing or controlling

29  the commission's actions or conduct.

30         (3)  "Compacting state" means any state which has

31  enacted this compact legislation and which has not withdrawn

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  pursuant to subsection (1) of Article XIV or been terminated

 2  pursuant to subsection (2) of Article XIV.

 3         (4)  "Commission" means the "Interstate Insurance

 4  Product Regulation Commission" established by this compact.

 5         (5)  "Commissioner" means the chief insurance

 6  regulatory official of a state, including, but not limited to,

 7  commissioner, superintendent, director, or administrator. For

 8  purposes of this compact, the Chief Financial Officer is the

 9  chief insurance regulatory official of this state.

10         (6)  "Domiciliary state" means the state in which an

11  insurer is incorporated or organized or, in the case of an

12  alien insurer, its state of entry.

13         (7)  "Insurer" means any entity licensed by a state to

14  issue contracts of insurance for any of the lines of insurance

15  covered by this compact.

16         (8)  "Member" means the person chosen by a compacting

17  state as its representative to the commission, or his or her

18  designee.

19         (9)  "Noncompacting state" means any state which is not

20  at the time a compacting state.

21         (10)  "Operating procedures" mean procedures adopted by

22  the commission implementing a rule, uniform standard, or

23  provision of this compact.

24         (11)  "Product" means the form of a policy or contract,

25  including any application, endorsement, or related form which

26  is attached to and made a part of the policy or contract, and

27  any evidence of coverage or certificate, for an individual or

28  group annuity, life insurance, disability income, or long-term

29  care insurance product that an insurer is authorized to issue.

30         (12)  "Rule" means a statement of general or particular

31  applicability and future effect adopted by the commission,

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  including a uniform standard developed pursuant to Article

 2  VII, designed to implement, interpret, or prescribe law or

 3  policy or describing the organization, procedure, or practice

 4  requirements of the commission, which shall have the force and

 5  effect of law in the compacting states.

 6         (13)  "State" means any state, district, or territory

 7  of the United States.

 8         (14)  "Third-party filer" means an entity that submits

 9  a product filing to the commission on behalf of an insurer.

10         (15)  "Uniform standard" means a standard adopted by

11  the commission for a product line pursuant to Article VII and

12  shall include all of the product requirements in aggregate;

13  provided, each uniform standard shall be construed, whether

14  express or implied, to prohibit the use of any inconsistent,

15  misleading, or ambiguous provisions in a product and the form

16  of the product made available to the public shall not be

17  unfair, inequitable, or against public policy as determined by

18  the commission.

19  

20                           Article III

21  

22         COMMISSION; ESTABLISHMENT; VENUE.--

23         (1)  The compacting states hereby create and establish

24  a joint public agency known as the Interstate Insurance

25  Product Regulation Commission. Pursuant to Article IV, the

26  commission has the power to develop uniform standards for

27  product lines, receive and provide prompt review of products

28  filed with the commission, and give approval to those product

29  filings satisfying applicable uniform standards; provided, it

30  is not intended for the commission to be the exclusive entity

31  for receipt and review of insurance product filings. Nothing

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  in this article shall prohibit any insurer from filing its

 2  product in any state in which the insurer is licensed to

 3  conduct the business of insurance and any such filing shall be

 4  subject to the laws of the state where filed.

 5         (2)  The commission is a body corporate and politic and

 6  an instrumentality of the compacting states.

 7         (3)  The commission is solely responsible for its

 8  liabilities, except as otherwise specifically provided in this

 9  compact.

10         (4)  Venue is proper and judicial proceedings by or

11  against the commission shall be brought solely and exclusively

12  in a court of competent jurisdiction where the principal

13  office of the commission is located.

14  

15                            Article IV

16  

17         POWERS.--The commission shall have the following powers

18  to:

19         (1)  Adopt rules, pursuant to Article VII, which shall

20  have the force and effect of law and shall be binding in the

21  compacting states to the extent and in the manner provided in

22  this compact.

23         (2)  Exercise its rulemaking authority and establish

24  reasonable uniform standards for products covered under the

25  compact, and advertisement related thereto, which shall have

26  the force and effect of law and shall be binding in the

27  compacting states, but only for those products filed with the

28  commission; provided a compacting state shall have the right

29  to opt out of such uniform standard pursuant to Article VII to

30  the extent and in the manner provided in this compact and any

31  uniform standard established by the commission for long-term

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  care insurance products may provide the same or greater

 2  protections for consumers as, but shall not provide less than,

 3  those protections set forth in the National Association of

 4  Insurance Commissioners' Long-Term Care Insurance Model Act

 5  and Long-Term Care Insurance Model Regulation, respectively,

 6  adopted as of 2001. The commission shall consider whether any

 7  subsequent amendments to the National Association of Insurance

 8  Commissioners' Long-Term Care Insurance Model Act or Long-Term

 9  Care Insurance Model Regulation adopted by the National

10  Association of Insurance Commissioners require amending of the

11  uniform standards established by the commission for long-term

12  care insurance products.

13         (3)  Receive and review in an expeditious manner

14  products filed with the commission and rate filings for

15  disability income and long-term care insurance products and

16  give approval of those products and rate filings that satisfy

17  the applicable uniform standard, and such approval shall have

18  the force and effect of law and be binding on the compacting

19  states to the extent and in the manner provided in the

20  compact.

21         (4)  Receive and review in an expeditious manner

22  advertisement relating to long-term care insurance products

23  for which uniform standards have been adopted by the

24  commission, and give approval to all advertisement that

25  satisfies the applicable uniform standard. For any product

26  covered under this compact, other than long-term care

27  insurance products, the commission shall have the authority to

28  require an insurer to submit all or any part of its

29  advertisement with respect to that product for review or

30  approval prior to use, if the commission determines that the

31  nature of the product is such that an advertisement of the

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  product could have the capacity or tendency to mislead the

 2  public. The actions of the commission as provided in this

 3  subsection shall have the force and effect of law and shall be

 4  binding in the compacting states to the extent and in the

 5  manner provided in the compact.

 6         (5)  Exercise its rulemaking authority and designate

 7  products and advertisement that may be subject to a

 8  self-certification process without the need for prior approval

 9  by the commission.

10         (6)  Adopt operating procedures, pursuant to Article

11  VII, which shall be binding in the compacting states to the

12  extent and in the manner provided in this compact.

13         (7)  Bring and prosecute legal proceedings or actions

14  in its name as the commission; provided the standing of any

15  state insurance department to sue or be sued under applicable

16  law shall not be affected.

17         (8)  Issue subpoenas requiring the attendance and

18  testimony of witnesses and the production of evidence.

19         (9)  Establish and maintain offices.

20         (10)  Purchase and maintain insurance and bonds.

21         (11)  Borrow, accept, or contract for services of

22  personnel, including, but not limited to, employees of a

23  compacting state.

24         (12)  Hire employees, professionals, or specialists;

25  elect or appoint officers and fix their compensation, define

26  their duties, give them appropriate authority to carry out the

27  purposes of the compact, and determine their qualifications;

28  and establish the commission's personnel policies and programs

29  relating to, among other things, conflicts of interest, rates

30  of compensation, and qualifications of personnel.

31  

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         (13)  Accept any and all appropriate donations and

 2  grants of money, equipment, supplies, materials, and services

 3  and to receive, use, and dispose of the same; provided at all

 4  times the commission shall strive to avoid any appearance of

 5  impropriety.

 6         (14)  Lease, purchase, and accept appropriate gifts or

 7  donations of, or otherwise to own, hold, improve, or use, any

 8  property, real, personal, or mixed; provided at all times the

 9  commission shall strive to avoid any appearance of

10  impropriety.

11         (15)  Sell, convey, mortgage, pledge, lease, exchange,

12  abandon, or otherwise dispose of any property, real, personal,

13  or mixed.

14         (16)  Remit filing fees to compacting states as may be

15  set forth in the bylaws, rules, or operating procedures.

16         (17)  Enforce compliance by compacting states with

17  rules, uniform standards, operating procedures, and bylaws.

18         (18)  Provide for dispute resolution among compacting

19  states.

20         (19)  Advise compacting states on issues relating to

21  insurers domiciled or doing business in noncompacting

22  jurisdictions, consistent with the purposes of this compact.

23         (20)  Provide advice and training to those personnel in

24  state insurance departments responsible for product review and

25  to be a resource for state insurance departments.

26         (21)  Establish a budget and make expenditures.

27         (22)  Borrow money.

28         (23)  Appoint committees, including advisory

29  committees, comprising members, state insurance regulators,

30  state legislators or their representatives, insurance industry

31  

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  and consumer representatives, and such other interested

 2  persons as may be designated in the bylaws.

 3         (24)  Provide and receive information from and to

 4  cooperate with law enforcement agencies.

 5         (25)  Adopt and use a corporate seal.

 6         (26)  Perform such other functions as may be necessary

 7  or appropriate to achieve the purposes of this compact

 8  consistent with the state regulation of the business of

 9  insurance.

10  

11                            Article V

12  

13         ORGANIZATION.--

14         (1)  Membership; voting; bylaws.--

15         (a)1.  Each compacting state shall have and be limited

16  to one member. Each member shall be qualified to serve in that

17  capacity pursuant to applicable law of the compacting state.

18  Any member may be removed or suspended from office as provided

19  by the law of the state from which he or she is appointed. Any

20  vacancy occurring in the commission shall be filled in

21  accordance with the laws of the compacting state in which the

22  vacancy exists. Nothing in this article shall be construed to

23  affect the manner in which a compacting state determines the

24  election or appointment and qualification of its own

25  commissioner.

26         2.  The Chief Financial Officer is hereby designated to

27  serve as the representative of this state on the

28  commission.(b)  Each member shall be entitled to one vote and

29  shall have an opportunity to participate in the governance of

30  the commission in accordance with the bylaws. Notwithstanding

31  any other provision of this article, no action of the

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  commission with respect to the adoption of a uniform standard

 2  shall be effective unless two-thirds of the members vote in

 3  favor of such action.

 4         (c)  The commission shall, by a majority of the

 5  members, prescribe bylaws to govern its conduct as may be

 6  necessary or appropriate to carry out the purposes and

 7  exercise the powers of the compact, including, but not limited

 8  to:

 9         1.  Establishing the fiscal year of the commission.

10         2.  Providing reasonable procedures for appointing and

11  electing members, as well as holding meetings, of the

12  management committee.

13         3.  Providing reasonable standards and procedures:

14         a.  For the establishment and meetings of other

15  committees.

16         b.  Governing any general or specific delegation of any

17  authority or function of the commission.

18         4.  Providing reasonable procedures for calling and

19  conducting meetings of the commission that consist of a

20  majority of commission members, ensuring reasonable advance

21  notice of each such meeting, and providing for the right of

22  citizens to attend each such meeting with enumerated

23  exceptions designed to protect the public's interest, the

24  privacy of individuals, and insurers' proprietary information,

25  including, but not limited to, trade secrets. The commission

26  may meet in camera only after a majority of the entire

27  membership votes to close a meeting in total or in part. As

28  soon as practicable, the commission must make public a copy of

29  the vote to close the meeting revealing the vote of each

30  member with no proxy votes allowed, and votes taken during

31  such meeting.

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         5.  Establishing the titles, duties, and authority and

 2  reasonable procedures for the election of the officers of the

 3  commission.

 4         6.  Providing reasonable standards and procedures for

 5  the establishment of the personnel policies and programs of

 6  the commission. Notwithstanding any civil service or other

 7  similar laws of any compacting state, the bylaws shall

 8  exclusively govern the personnel policies and programs of the

 9  commission.

10         7.  Adopting a code of ethics to address permissible

11  and prohibited activities of commission members and employees.

12         8.  Providing a mechanism for winding up the operations

13  of the commission and the equitable disposition of any surplus

14  funds that may exist after the termination of the compact

15  after the payment or reserving of all debts and obligations of

16  the commission.

17         (d)  The commission shall publish its bylaws in a

18  convenient form and file a copy of such bylaws and a copy of

19  any amendment to such bylaws, with the appropriate agency or

20  officer in each of the compacting States.

21         (2)  Management committee, officers, and personnel.--

22         (a)  A management committee comprising no more than 14

23  members shall be established as follows:

24         1.  One member from each of the 6 compacting states

25  with the largest premium volume for individual and group

26  annuities, life, disability income, and long-term care

27  insurance products, determined from the records of the

28  National Association of Insurance Commissioners for the prior

29  year.

30         2.  Four members from those compacting states with at

31  least 2 percent of the market based on the premium volume

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1  described above, other than the 6 compacting states with the

 2  largest premium volume, selected on a rotating basis as

 3  provided in the bylaws.

 4         3.  Four members from those compacting states with less

 5  than 2 percent of the market, based on the premium volume

 6  described above, with 1 selected from each of the 4 zone

 7  regions of the National Association of Insurance Commissioners

 8  as provided in the bylaws.

 9         (b)  The management committee shall have such authority

10  and duties as may be set forth in the bylaws, including, but

11  not limited to:

12         1.  Managing the affairs of the commission in a manner

13  consistent with the bylaws and purposes of the commission.

14         2.  Establishing and overseeing an organizational

15  structure within, and appropriate procedures for, the

16  commission to provide for the creation of uniform standards

17  and other rules, receipt and review of product filings,

18  administrative and technical support functions, review of

19  decisions regarding the disapproval of a product filing, and

20  the review of elections made by a compacting state to opt out

21  of a uniform standard; provided a uniform standard shall not

22  be submitted to the compacting states for adoption unless

23  approved by two-thirds of the members of the management

24  committee.

25         3.  Overseeing the offices of the commission.

26         4.  Planning, implementing, and coordinating

27  communications and activities with other state, federal, and

28  local government organizations in order to advance the goals

29  of the commission.

30  

31  

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         (c)  The commission shall elect annually officers from

 2  the management committee, with each having such authority and

 3  duties as may be specified in the bylaws.

 4         (d)  The management committee may, subject to the

 5  approval of the commission, appoint or retain an executive

 6  director for such period, upon such terms and conditions, and

 7  for such compensation as the commission may deem appropriate.

 8  The executive director shall serve as secretary to the

 9  commission but shall not be a member of the commission. The

10  executive director shall hire and supervise such other staff

11  as may be authorized by the commission.

12         (3)  Legislative and advisory committees.--

13         (a)  A legislative committee comprised of state

14  legislators or their designees shall be established to monitor

15  the operations of and make recommendations to the commission,

16  including the management committee; provided the manner of

17  selection and term of any legislative committee member shall

18  be as set forth in the bylaws. Prior to the adoption by the

19  commission of any uniform standard, revision to the bylaws,

20  annual budget, or other significant matter as may be provided

21  in the bylaws, the management committee shall consult with and

22  report to the legislative committee.

23         (b)  The commission shall establish two advisory

24  committees, one comprising consumer representatives

25  independent of the insurance industry and the other comprising

26  insurance industry representatives.

27         (c)  The commission may establish additional advisory

28  committees as the bylaws may provide for the carrying out of

29  commission functions.

30  

31  

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         (4)  Corporate records of the commission.--The

 2  commission shall maintain its corporate books and records in

 3  accordance with the bylaws.

 4         (5)  Qualified immunity, defense and indemnification.--

 5         (a)  The members, officers, executive director,

 6  employees, and representatives of the commission shall be

 7  immune from suit and liability, either personally or in their

 8  official capacity, for any claim for damage to or loss of

 9  property or personal injury or other civil liability caused by

10  or arising out of any actual or alleged act, error, or

11  omission that occurred, or that the person against whom the

12  claim is made had a reasonable basis for believing occurred

13  within the scope of commission employment, duties, or

14  responsibilities; provided nothing in this paragraph shall be

15  construed to protect any such person from suit or liability

16  for any damage, loss, injury, or liability caused by the

17  intentional or willful and wanton misconduct of that person.

18         (b)  The commission shall defend any member, officer,

19  executive director, employee, or representative of the

20  commission in any civil action seeking to impose liability

21  arising out of any actual or alleged act, error, or omission

22  that occurred within the scope of commission employment,

23  duties, or responsibilities, or that the person against whom

24  the claim is made had a reasonable basis for believing

25  occurred within the scope of commission employment, duties, or

26  responsibilities; provided nothing in this article shall be

27  construed to prohibit that person from retaining his or her

28  own counsel and the actual or alleged act, error, or omission

29  did not result from that person's intentional or willful and

30  wanton misconduct.

31  

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    Florida Senate - 2005                                  SB 2456
    27-1360A-05                                         See HB 403




 1         (c)  The commission shall indemnify and hold harmless

 2  any member, officer, executive director, employee, or

 3  representative of the commission for the amount of any

 4  settlement or judgment obtained against that person arising

 5  out of any actual or alleged act, error, or omission that

 6  occurred within the scope of commission employment, duties, or

 7  responsibilities, or that such person had a reasonable basis

 8  for believing occurred within the scope of commission

 9  employment, duties, or responsibilities; provided the actual

10  or alleged act, error, or omission did not result from the

11  intentional or willful and wanton misconduct of that person.

12  

13                            Article VI

14  

15         MEETINGS; ACTS.--

16         (1)  The commission shall meet and take such actions as

17  are consistent with the provisions of this compact and the

18  bylaws.

19         (2)  Each member of the commission shall have the right

20  and power to cast a vote to which that compacting state is

21  entitled and to participate in the business and affairs of the

22  commission. A member shall vote in person or by such other

23  means as provided in the bylaws. The bylaws may provide for

24  members' participation in meetings by telephone or other means

25  of communication.

26         (3)  The commission shall meet at least once during

27  each calendar year. Additional meetings shall be held as set

28  forth in the bylaws.

29  

30                           Article VII

31  

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 1         RULES AND OPERATING PROCEDURES; RULEMAKING FUNCTIONS OF

 2  THE COMMISSION; OPTING OUT OF UNIFORM STANDARDS.--

 3         (1)  Rulemaking authority.--The commission shall adopt

 4  reasonable rules, including uniform standards, and operating

 5  procedures in order to effectively and efficiently achieve the

 6  purposes of this compact. Notwithstanding such requirement, if

 7  the commission exercises its rulemaking authority in a manner

 8  that is beyond the scope of the purposes of this compact or

 9  the powers granted under this compact, such action by the

10  commission shall be invalid and have no force and effect.

11         (2)  Rulemaking procedure.--Rules and operating

12  procedures shall be made pursuant to a rulemaking process that

13  conforms to the Model State Administrative Procedure Act of

14  1981, as amended, as may be appropriate to the operations of

15  the commission. Before the commission adopts a uniform

16  standard, the commission shall give written notice to the

17  relevant state legislative committees in each compacting state

18  responsible for insurance issues of its intention to adopt the

19  uniform standard. The commission in adopting a uniform

20  standard shall consider fully all submitted materials and

21  issue a concise explanation of its decision.

22         (3)  Effective date and opt out of a uniform

23  standard.--A uniform standard shall become effective 90 days

24  after its adoption by the commission or such later date as the

25  commission may determine; provided a compacting state may opt

26  out of a uniform standard as provided in this article. The

27  term "opt out" means any action by a compacting state to

28  decline to adopt or participate in an adopted uniform

29  standard. All other rules and operating procedures, and

30  amendments thereto, shall become effective as of the date

31  specified in each rule, operating procedure, or amendment.

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 1         (4)  Opt out procedure.--

 2         (a)  A compacting state may opt out of a uniform

 3  standard by legislation or regulation adopted by the Office of

 4  Insurance Regulation of the Financial Services Commission

 5  under such state's Administrative Procedure Act. For purposes

 6  of this compact and this state, the Office of Insurance

 7  Regulation of the Department of Financial Services constitutes

 8  this state's agency for purposes of this subsection. If a

 9  compacting state elects to opt out of a uniform standard by

10  regulation, such state must:

11         1.  Give written notice to the commission no later than

12  10 business days after the uniform standard is adopted, or at

13  the time the state becomes a compacting state.

14         2.  Find that the uniform standard does not provide

15  reasonable protections to the citizens of the state, given the

16  conditions in the state.

17         (b)  The commissioner shall make specific findings of

18  fact and conclusions of law, based on a preponderance of the

19  evidence, detailing the conditions in the state which warrant

20  a departure from the uniform standard and determining that the

21  uniform standard would not reasonably protect the citizens of

22  the state. The commissioner must consider and balance the

23  following factors and find that the conditions in the state

24  and needs of the citizens of the state outweigh:

25         1.  The intent of the Legislature to participate in,

26  and the benefits of, an interstate agreement to establish

27  national uniform consumer protections for the products subject

28  to this compact.

29         2.  The presumption that a uniform standard adopted by

30  the commission provides reasonable protections to consumers of

31  the relevant product.

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 1  

 2  Notwithstanding this subsection, a compacting state may, at

 3  the time of its enactment of this compact, prospectively opt

 4  out of all uniform standards involving long-term care

 5  insurance products by expressly providing for such opt out in

 6  the enacted compact, and such an opt out shall not be treated

 7  as a material variance in the offer or acceptance of any state

 8  to participate in this compact. Such an opt out shall be

 9  effective at the time of enactment of this compact by the

10  compacting state and shall apply to all existing uniform

11  standards involving long-term care insurance products and

12  those subsequently adopted.

13         (5)  Effect of opting out.--If a compacting state

14  elects to opt out of a uniform standard, the uniform standard

15  shall remain applicable in the compacting state electing to

16  opt out until such time the opt out legislation is enacted

17  into law or the regulation opting out becomes effective. Once

18  the opt out of a uniform standard by a compacting state

19  becomes effective as provided under the laws of that state,

20  the uniform standard shall have no further force and effect in

21  that state unless and until the legislation or regulation

22  implementing the opt out is repealed or otherwise becomes

23  ineffective under the laws of the state. If a compacting state

24  opts out of a uniform standard after the uniform standard has

25  been made effective in that state, the opt out shall have the

26  same prospective effect as provided under Article XIV for

27  withdrawals.

28         (6)  Stay of uniform standard.--If a compacting state

29  has formally initiated the process of opting out of a uniform

30  standard by regulation, and while the regulatory opt out is

31  pending, the compacting state may petition the commission, at

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 1  least 15 days before the effective date of the uniform

 2  standard, to stay the effectiveness of the uniform standard in

 3  that state. The commission may grant a stay if the commission

 4  determines the regulatory opt out is being pursued in a

 5  reasonable manner and there is a likelihood of success. If a

 6  stay is granted or extended by the commission, the stay or

 7  extension thereof may postpone the effective date by up to 90

 8  days, unless affirmatively extended by the commission;

 9  provided a stay may not be permitted to remain in effect for

10  more than 1 year unless the compacting state can show

11  extraordinary circumstances which warrant a continuance of the

12  stay, including, but not limited to, the existence of a legal

13  challenge which prevents the compacting state from opting out.

14  A stay may be terminated by the commission upon notice that

15  the rulemaking process has been terminated.

16         (7)  Judicial review.--Not later than 30 days after a

17  rule or operating procedure is adopted, any person may file a

18  petition for judicial review of the rule or operating

19  procedure; provided the filing of such a petition shall not

20  stay or otherwise prevent the rule or operating procedure from

21  becoming effective unless the court finds that the petitioner

22  has a substantial likelihood of success. The court shall give

23  deference to the actions of the commission consistent with

24  applicable law and shall not find the rule or operating

25  procedure to be unlawful if the rule or operating procedure

26  represents a reasonable exercise of the commission's

27  authority.

28  

29                           Article VIII

30  

31         COMMISSION RECORDS AND ENFORCEMENT.--

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 1         (1)  The commission shall adopt rules establishing

 2  conditions and procedures for public inspection and copying of

 3  its information and official records, except such information

 4  and records involving the privacy of individuals and insurers'

 5  trade secrets. The commission may adopt additional rules under

 6  which the commission may make available to federal and state

 7  agencies, including law enforcement agencies, records and

 8  information otherwise exempt from disclosure and may enter

 9  into agreements with such agencies to receive or exchange

10  information or records subject to nondisclosure and

11  confidentiality provisions.

12         (2)  Except as to privileged records, data, and

13  information, the laws of any compacting state pertaining to

14  confidentiality or nondisclosure shall not relieve any

15  compacting state commissioner of the duty to disclose any

16  relevant records, data, or information to the commission;

17  provided disclosure to the commission shall not be deemed to

18  waive or otherwise affect any confidentiality requirement; and

19  further provided, except as otherwise expressly provided in

20  this compact, the commission shall not be subject to the

21  compacting state's laws pertaining to confidentiality and

22  nondisclosure with respect to records, data, and information

23  in its possession. Confidential information of the commission

24  shall remain confidential after such information is provided

25  to any commissioner.

26         (3)  The commission shall monitor compacting states for

27  compliance with duly adopted bylaws, rules, uniform standards,

28  and operating procedures. The commission shall notify any

29  noncomplying compacting state in writing of its noncompliance

30  with commission bylaws, rules, or operating procedures. If a

31  noncomplying compacting state fails to remedy its

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 1  noncompliance within the time specified in the notice of

 2  noncompliance, the compacting state shall be deemed to be in

 3  default as set forth in Article XIV.

 4         (4)  The commissioner of any state in which an insurer

 5  is authorized to do business or is conducting the business of

 6  insurance shall continue to exercise his or her authority to

 7  oversee the market regulation of the activities of the insurer

 8  in accordance with the provisions of the state's law. The

 9  commissioner's enforcement of compliance with the compact is

10  governed by the following provisions:

11         (a)  With respect to the commissioner's market

12  regulation of a product or advertisement that is approved or

13  certified to the commission, the content of the product or

14  advertisement shall not constitute a violation of the

15  provisions, standards, or requirements of the compact except

16  upon a final order of the commission, issued at the request of

17  a commissioner after prior notice to the insurer and an

18  opportunity for hearing before the commission.

19         (b)  Before a commissioner may bring an action for

20  violation of any provision, standard, or requirement of the

21  compact relating to the content of an advertisement not

22  approved or certified to the commission, the commission, or an

23  authorized commission officer or employee, must authorize the

24  action. However, authorization pursuant to this paragraph does

25  not require notice to the insurer, opportunity for hearing, or

26  disclosure of requests for authorization or records of the

27  commission's action on such requests.

28  

29                            Article IX

30  

31  

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 1         DISPUTE RESOLUTION.--The commission shall attempt, upon

 2  the request of a member, to resolve any disputes or other

 3  issues that are subject to this compact and which may arise

 4  between two or more compacting states, or between compacting

 5  states and noncompacting states, and the commission shall

 6  adopt an operating procedure providing for resolution of such

 7  disputes.

 8  

 9                            Article X

10  

11         PRODUCT FILING AND APPROVAL.--

12         (1)  Insurers and third-party filers seeking to have a

13  product approved by the commission shall file the product with

14  and pay applicable filing fees to the commission. Nothing in

15  this compact shall be construed to restrict or otherwise

16  prevent an insurer from filing its product with the insurance

17  department in any state in which the insurer is licensed to

18  conduct the business of insurance and such filing shall be

19  subject to the laws of the states where filed.

20         (2)  The commission shall establish appropriate filing

21  and review processes and procedures pursuant to commission

22  rules and operating procedures. Notwithstanding any provision

23  of this article, the commission shall adopt rules to establish

24  conditions and procedures under which the commission will

25  provide public access to product filing information. In

26  establishing such rules, the commission shall consider the

27  interests of the public in having access to such information,

28  as well as protection of personal medical and financial

29  information and trade secrets, that may be contained in a

30  product filing or supporting information.

31  

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 1         (3)  Any product approved by the commission may be sold

 2  or otherwise issued in those compacting states for which the

 3  insurer is legally authorized to do business.

 4  

 5                            Article XI

 6  

 7         REVIEW OF COMMISSION DECISIONS REGARDING FILINGS.--

 8         (1)  Not later than 30 days after the commission has

 9  given notice of a disapproved product or advertisement filed

10  with the commission, the insurer or third-party filer whose

11  filing was disapproved may appeal the determination to a

12  review panel appointed by the commission. The commission shall

13  adopt rules to establish procedures for appointing such review

14  panels and provide for notice and hearing. An allegation that

15  the commission, in disapproving a product or advertisement

16  filed with the commission, acted arbitrarily, capriciously, or

17  in a manner that is an abuse of discretion or otherwise not in

18  accordance with the law, is subject to judicial review in

19  accordance with subsection (4) of Article III.

20         (2)  The commission shall have authority to monitor,

21  review, and reconsider products and advertisement subsequent

22  to their filing or approval upon a finding that the product

23  does not meet the relevant uniform standard. Where

24  appropriate, the commission may withdraw or modify its

25  approval after proper notice and hearing, subject to the

26  appeal process in subsection (1).

27  

28                           Article XII

29  

30         FINANCE.--

31  

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 1         (1)  The commission shall pay or provide for the

 2  payment of the reasonable expenses of the commission's

 3  establishment and organization. To fund the cost of the

 4  commission's initial operations, the commission may accept

 5  contributions and other forms of funding from the National

 6  Association of Insurance Commissioners, compacting states, and

 7  other sources. Contributions and other forms of funding from

 8  other sources shall be of such a nature that the independence

 9  of the commission concerning the performance of commission

10  duties shall not be compromised.

11         (2)  The commission shall collect a filing fee from

12  each insurer and third-party filer filing a product with the

13  commission to cover the cost of the operations and activities

14  of the commission and its staff in a total amount sufficient

15  to cover the commission's annual budget.

16         (3)  The commission's budget for a fiscal year shall

17  not be approved until the budget has been subject to notice

18  and comment as set forth in Article VII.

19         (4)  The commission shall be exempt from all taxation

20  in and by the compacting states.

21         (5)  The commission shall not pledge the credit of any

22  compacting state, except by and with the appropriate legal

23  authority of that compacting state.

24         (6)  The commission shall keep complete and accurate

25  accounts of all its internal receipts, including grants and

26  donations, and disbursements of all funds under its control.

27  The internal financial accounts of the commission shall be

28  subject to the accounting procedures established under its

29  bylaws. The financial accounts and reports including the

30  system of internal controls and procedures of the commission

31  shall be audited annually by an independent certified public

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 1  accountant. Upon the determination of the commission, but no

 2  less frequently than every 3 years, the review of the

 3  independent auditor shall include a management and performance

 4  audit of the commission. The commission shall make an annual

 5  report to the Governor and the presiding officers of the

 6  Legislature of the compacting states, which shall include a

 7  report of the independent audit. The commission's internal

 8  accounts shall not be confidential and such materials may be

 9  shared with the commissioner of any compacting state upon

10  request; provided any work papers related to any internal or

11  independent audit and any information regarding the privacy of

12  individuals and insurers' proprietary information, including

13  trade secrets, shall remain confidential.

14         (7)  No compacting state shall have any claim to or

15  ownership of any property held by or vested in the commission

16  or to any commission funds held pursuant to the provisions of

17  this compact.

18  

19                           Article XIII

20  

21         COMPACTING STATES, EFFECTIVE DATE, AMENDMENT.--

22         (1)  Any state is eligible to become a compacting

23  state.

24         (2)  The compact shall become effective and binding

25  upon legislative enactment of the compact into law by two

26  compacting states; provided the commission shall become

27  effective for purposes of adopting uniform standards for,

28  reviewing, and giving approval or disapproval of, products

29  filed with the commission that satisfy applicable uniform

30  standards only after 26 states are compacting states or,

31  alternatively, by states representing greater than 40 percent

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 1  of the premium volume for life insurance, annuity, disability

 2  income, and long-term care insurance products, based on

 3  records of the National Association of Insurance Commissioners

 4  for the prior year. Thereafter, the compact shall become

 5  effective and binding as to any other compacting state upon

 6  enactment of the compact into law by that state.

 7         (3)  Amendments to the compact may be proposed by the

 8  commission for enactment by the compacting states. No

 9  amendment shall become effective and binding upon the

10  commission and the compacting states unless and until all

11  compacting states enact the amendment into law.

12  

13                           Article XIV

14  

15         WITHDRAWAL; DEFAULT; DISSOLUTION.--

16         (1)  Withdrawal.--

17         (a)  Once effective, the compact shall continue in

18  force and remain binding upon each and every compacting state;

19  provided a compacting state may withdraw from the compact by

20  enacting a law specifically repealing the law which enacted

21  the compact into law.

22         (b)  The effective date of withdrawal is the effective

23  date of the repealing law. However, the withdrawal shall not

24  apply to any product filings approved or self-certified, or

25  any advertisement of such products, on the date the repealing

26  law becomes effective, except by mutual agreement of the

27  commission and the withdrawing state unless the approval is

28  rescinded by the withdrawing state as provided in paragraph

29  (e).

30         (c)  The commissioner of the withdrawing state shall

31  immediately notify the management committee in writing upon

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 1  the introduction of legislation repealing this compact in the

 2  withdrawing state.

 3         (d)  The commission shall notify the other compacting

 4  states of the introduction of such legislation within 10 days

 5  after the commission's receipt of notice of such legislation.

 6         (e)  The withdrawing state is responsible for all

 7  obligations, duties, and liabilities incurred through the

 8  effective date of withdrawal, including any obligations, the

 9  performance of which extend beyond the effective date of

10  withdrawal, except to the extent those obligations may have

11  been released or relinquished by mutual agreement of the

12  commission and the withdrawing state. The commission's

13  approval of products and advertisement prior to the effective

14  date of withdrawal shall continue to be effective and be given

15  full force and effect in the withdrawing state unless formally

16  rescinded by the withdrawing state in the same manner as

17  provided by the laws of the withdrawing state for the

18  prospective disapproval of products or advertisement

19  previously approved under state law.

20         (f)  Reinstatement following withdrawal of any

21  compacting state shall occur upon the effective date of the

22  withdrawing state reenacting the compact.

23         (2)  Default.--

24         (a)  If the commission determines that any compacting

25  state has at any time defaulted in the performance of any of

26  its obligations or responsibilities under this compact, the

27  bylaws, or duly adopted rules or operating procedures, after

28  notice and hearing as set forth in the bylaws, all rights,

29  privileges, and benefits conferred by this compact on the

30  defaulting state shall be suspended from the effective date of

31  default as fixed by the commission. The grounds for default

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 1  include, but are not limited to, failure of a compacting state

 2  to perform its obligations or responsibilities, and any other

 3  grounds designated in commission rules. The commission shall

 4  immediately notify the defaulting state in writing of the

 5  defaulting state's suspension pending a cure of the default.

 6  The commission shall stipulate the conditions and the time

 7  period within which the defaulting state must cure its

 8  default. If the defaulting state fails to cure the default

 9  within the time period specified by the commission, the

10  defaulting state shall be terminated from the compact and all

11  rights, privileges, and benefits conferred by this compact

12  shall be terminated from the effective date of termination.

13         (b)  Product approvals by the commission or product

14  self-certifications, or any advertisement in connection with

15  such product that are in force on the effective date of

16  termination shall remain in force in the defaulting state in

17  the same manner as if the defaulting state had withdrawn

18  voluntarily pursuant to subsection (1).

19         (c)  Reinstatement following termination of any

20  compacting state requires a reenactment of the compact.

21         (3)  Dissolution of compact.--

22         (a)  The compact dissolves effective upon the date of

23  the withdrawal or default of the compacting state which

24  reduces membership in the compact to a single compacting

25  state.

26         (b)  Upon the dissolution of this compact, the compact

27  becomes null and void and shall be of no further force or

28  effect and the business and affairs of the commission shall be

29  concluded and any surplus funds shall be distributed in

30  accordance with the bylaws.

31  

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 1                            Article XV

 2  

 3         SEVERABILITY; CONSTRUCTION.--

 4         (1)  The provisions of this compact are severable and

 5  if any phrase, clause, sentence, or provision is deemed

 6  unenforceable, the remaining provisions of the compact shall

 7  be enforceable.

 8         (2)  The provisions of this compact shall be liberally

 9  construed to effectuate its purposes.

10  

11                           Article XVI

12  

13         BINDING EFFECT OF COMPACT AND OTHER LAWS.--

14         (1)  Binding effect of this compact.--

15         (a)  All lawful actions of the commission, including

16  all rules and operating procedures adopted by the commission,

17  are binding upon the compacting states.

18         (b)  All agreements between the commission and the

19  compacting states are binding in accordance with their terms.

20         (c)  Upon the request of a party to a conflict over the

21  meaning or interpretation of commission actions, and upon a

22  majority vote of the compacting states, the commission may

23  issue advisory opinions regarding the meaning or

24  interpretation in dispute.

25         (d)  If any provision of this compact exceeds the

26  constitutional limits imposed on the Legislature of any

27  compacting state, the obligations, duties, powers, or

28  jurisdiction sought to be conferred by that provision upon the

29  commission shall be ineffective as to that compacting state

30  and those obligations, duties, powers, or jurisdiction shall

31  remain in the compacting state and shall be exercised by the

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 1  agency of such state to which those obligations, duties,

 2  powers, or jurisdiction are delegated by law in effect at the

 3  time this compact becomes effective.

 4         (2)  Other laws.--

 5         (a)  Nothing in this compact prevents the enforcement

 6  of any other law of a compacting state, except as provided in

 7  paragraph (b).

 8         (b)  For any product approved or certified to the

 9  commission, the rules, uniform standards, and any other

10  requirements of the commission shall constitute the exclusive

11  provisions applicable to the content, approval, and

12  certification of such products. For advertisement that is

13  subject to the commission's authority, any rule, uniform

14  standard, or other requirement of the commission which governs

15  the content of the advertisement shall constitute the

16  exclusive provision that a commissioner may apply to the

17  content of the advertisement. Notwithstanding this paragraph,

18  no action taken by the commission shall abrogate or restrict:

19         1.  The access of any person to state courts;

20         2.  Remedies available under state law related to

21  breach of contract, tort, or other laws not specifically

22  directed to the content of the product;

23         3.  State law relating to the construction of insurance

24  contracts; or

25         4.  The authority of the attorney general of the state,

26  including, but not limited to, maintaining any actions or

27  proceedings, as authorized by law.

28         (c)  All insurance products filed with individual

29  states shall be subject to the laws of those states.

30         Section 3.  This act shall take effect July 1, 2005.

31  

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