HB 0403

1	A bill to be entitled
2	An act relating to the Interstate Insurance Product
3	Regulation Compact; providing legislative findings and
4	intent; providing purposes; providing definitions;
5	providing for establishment of an Interstate Insurance
6	Product Regulation Commission; providing responsibilities
7	of the commission; specifying the commission as an
8	instrumentality of the compacting states; providing for
9	venue; providing powers of the commission; providing for
10	organization of the commission; providing for membership,
11	voting, and bylaws; designating the Chief Financial
12	Officer as the representative of this state on the
13	commission; providing for a management committee,
14	officers, and personnel of the commission; providing
15	authority of the management committee; providing for
16	legislative and advisory committees; providing for
17	qualified immunity, defense, and indemnification of
18	members, officers, employees, and representatives of the
19	commission; providing for meetings and acts of the
20	commission; providing rules and operating procedures;
21	providing rulemaking functions of the commission;
22	providing for opting out of uniform standards; providing
23	procedures and requirements; providing for commission
24	records and enforcement; authorizing the commission to
25	adopt rules; providing for disclosure of certain
26	information; requiring the commission to monitor for
27	compliance; providing for dispute resolution; providing
28	for product filing and approval; requiring the commission
29	to establish filing and review processes and procedures;
30	providing for review of commission decisions regarding
31	filings; providing for finance of commission activities;
32	providing for payment of expenses; authorizing the
33	commission to collect filing fees for certain purposes;
34	providing for approval of a commission budget; exempting
35	the commission from all taxation; prohibiting the
36	commission from pledging the credit of any compacting
37	states without authority; requiring the commission to keep
38	complete accurate accounts, provide for audits, and make
39	annual reports to the Governors and Legislatures of
40	compacting states; providing for effective date and
41	amendment of the compact; providing for withdrawal from
42	the compact, default by compacting states, and dissolution
43	of the compact; providing severability and construction;
44	providing for binding effect of compact and other laws;
45	providing an effective date.
46
47	Be It Enacted by the Legislature of the State of Florida:
48
49	Section 1.  Legislative findings; intent.--
50	(1)  The Legislature finds that the financial services
51	marketplace has changed significantly in recent years and that
52	asset-based insurance products, which include life insurance,
53	annuities, disability income insurance, and long-term care
54	insurance, now compete directly with other retirement and estate
55	planning instruments that are sold by banks and securities
56	firms.
57	(2)  The Legislature further finds that the increased
58	mobility of the population and the risks borne by these asset-
59	based products are not local in nature.
60	(3)  The Legislature further finds that the Interstate
61	Insurance Product Regulation Compact Model adopted by the
62	National Association of Insurance Commissioners and endorsed by
63	the National Conference of Insurance Legislators and the
64	National Conference of State Legislatures is designed to address
65	these market changes by providing a uniform set of product
66	standards and a single source for filing of new products.
67	(4)  The Legislature further finds that the product
68	standards that have been developed provide a high level of
69	consumer protection. Further, it is noted that the Interstate
70	Insurance Product Regulation Compact Model includes a mechanism
71	for opting out of any product standard that the state determines
72	would not reasonably protect its citizens. With respect to long-
73	term care insurance, the Legislature understands that the
74	compact does not intend to develop a uniform standard for rate
75	increase filings, thereby leaving the authority over long-term
76	care rate increases with the state. The state relies on that
77	understanding in adopting this legislation. The state, pursuant
78	to the terms and conditions of this act, seeks to join with
79	other states and establish the Interstate Insurance Product
80	Regulation Compact, and thus become a member of the Interstate
81	Insurance Product Regulation Commission. The Commissioner of
82	Insurance Regulation is hereby designated to serve as the
83	representative of this state on the commission.
84	Section 2.  Interstate Insurance Product Regulation
85	Compact.--The Interstate Insurance Product Regulation Compact is
86	hereby enacted into law and entered into by this state with all
87	states legally joining therein in the form substantially as
88	follows:
89
90	Interstate Insurance Product Regulation Compact
91
92	Preamble
93
94	This compact is intended to help states join together to
95	establish an interstate compact to regulate designated insurance
96	products. Pursuant to terms and conditions of this compact, this
97	state seeks to join with other states and establish the
98	Interstate Insurance Product Regulation Compact and thus become
99	a member of the Interstate Insurance Product Regulation
100	Commission.
101
102	Article I
103
104	PURPOSES.--The purposes of this compact are, through means
105	of joint and cooperative action among the compacting states, to:
106	(1)  Promote and protect the interest of consumers of
107	individual and group annuity, life insurance, disability income,
108	and long-term care insurance products.
109	(2)  Develop uniform standards for insurance products
110	covered under the compact.
111	(3)  Establish a central clearinghouse to receive and
112	provide prompt review of insurance products covered under the
113	compact and, in certain cases, advertisements related thereto,
114	submitted by insurers authorized to do business in one or more
115	compacting states.
116	(4)  Give appropriate regulatory approval to those product
117	filings and advertisements satisfying the applicable uniform
118	standard.
119	(5)  Improve coordination of regulatory resources and
120	expertise between state insurance departments regarding the
121	setting of uniform standards and review of insurance products
122	covered under the compact.
123	(6)  Create the Interstate Insurance Product Regulation
124	Commission.
125	(7)  Perform these and such other related functions as may
126	be consistent with the state regulation of the business of
127	insurance.
128
129	Article II
130
131	DEFINITIONS.--For purposes of this compact:
132	(1)  "Advertisement" means any material designed to create
133	public interest in a product, or induce the public to purchase,
134	increase, modify, reinstate, borrow on, surrender, replace, or
135	retain a policy, as more specifically defined in the rules and
136	operating procedures of the commission.
137	(2)  "Bylaws" mean those bylaws established by the
138	commission for its governance, or for directing or controlling
139	the commission's actions or conduct.
140	(3)  "Compacting state" means any state which has enacted
141	this compact legislation and which has not withdrawn pursuant to
142	subsection (1) of Article XIV or been terminated pursuant to
143	subsection (2) of Article XIV.
144	(4)  "Commission" means the "Interstate Insurance Product
145	Regulation Commission" established by this compact.
146	(5)  "Commissioner" means the chief insurance regulatory
147	official of a state, including, but not limited to,
148	commissioner, superintendent, director, or administrator. For
149	purposes of this compact, the Chief Financial Officer is the
150	chief insurance regulatory official of this state.
151	(6)  "Domiciliary state" means the state in which an
152	insurer is incorporated or organized or, in the case of an alien
153	insurer, its state of entry.
154	(7)  "Insurer" means any entity licensed by a state to
155	issue contracts of insurance for any of the lines of insurance
156	covered by this compact.
157	(8)  "Member" means the person chosen by a compacting state
158	as its representative to the commission, or his or her designee.
159	(9)  "Noncompacting state" means any state which is not at
160	the time a compacting state.
161	(10)  "Operating procedures" mean procedures adopted by the
162	commission implementing a rule, uniform standard, or provision
163	of this compact.
164	(11)  "Product" means the form of a policy or contract,
165	including any application, endorsement, or related form which is
166	attached to and made a part of the policy or contract, and any
167	evidence of coverage or certificate, for an individual or group
168	annuity, life insurance, disability income, or long-term care
169	insurance product that an insurer is authorized to issue.
170	(12)  "Rule" means a statement of general or particular
171	applicability and future effect adopted by the commission,
172	including a uniform standard developed pursuant to Article VII,
173	designed to implement, interpret, or prescribe law or policy or
174	describing the organization, procedure, or practice requirements
175	of the commission, which shall have the force and effect of law
176	in the compacting states.
177	(13)  "State" means any state, district, or territory of
178	the United States.
179	(14)  "Third-party filer" means an entity that submits a
180	product filing to the commission on behalf of an insurer.
181	(15)  "Uniform standard" means a standard adopted by the
182	commission for a product line pursuant to Article VII and shall
183	include all of the product requirements in aggregate; provided,
184	each uniform standard shall be construed, whether express or
185	implied, to prohibit the use of any inconsistent, misleading, or
186	ambiguous provisions in a product and the form of the product
187	made available to the public shall not be unfair, inequitable,
188	or against public policy as determined by the commission.
189
190	Article III
191
192	COMMISSION; ESTABLISHMENT; VENUE.--
193	(1)  The compacting states hereby create and establish a
194	joint public agency known as the Interstate Insurance Product
195	Regulation Commission. Pursuant to Article IV, the commission
196	has the power to develop uniform standards for product lines,
197	receive and provide prompt review of products filed with the
198	commission, and give approval to those product filings
199	satisfying applicable uniform standards; provided, it is not
200	intended for the commission to be the exclusive entity for
201	receipt and review of insurance product filings. Nothing in this
202	article shall prohibit any insurer from filing its product in
203	any state in which the insurer is licensed to conduct the
204	business of insurance and any such filing shall be subject to
205	the laws of the state where filed.
206	(2)  The commission is a body corporate and politic and an
207	instrumentality of the compacting states.
208	(3)  The commission is solely responsible for its
209	liabilities, except as otherwise specifically provided in this
210	compact.
211	(4)  Venue is proper and judicial proceedings by or against
212	the commission shall be brought solely and exclusively in a
213	court of competent jurisdiction where the principal office of
214	the commission is located.
215
216	Article IV
217
218	POWERS.--The commission shall have the following powers to:
219	(1)  Adopt rules, pursuant to Article VII, which shall have
220	the force and effect of law and shall be binding in the
221	compacting states to the extent and in the manner provided in
222	this compact.
223	(2)  Exercise its rulemaking authority and establish
224	reasonable uniform standards for products covered under the
225	compact, and advertisement related thereto, which shall have the
226	force and effect of law and shall be binding in the compacting
227	states, but only for those products filed with the commission;
228	provided a compacting state shall have the right to opt out of
229	such uniform standard pursuant to Article VII to the extent and
230	in the manner provided in this compact and any uniform standard
231	established by the commission for long-term care insurance
232	products may provide the same or greater protections for
233	consumers as, but shall not provide less than, those protections
234	set forth in the National Association of Insurance
235	Commissioners' Long-Term Care Insurance Model Act and Long-Term
236	Care Insurance Model Regulation, respectively, adopted as of
237	2001. The commission shall consider whether any subsequent
238	amendments to the National Association of Insurance
239	Commissioners' Long-Term Care Insurance Model Act or Long-Term
240	Care Insurance Model Regulation adopted by the National
241	Association of Insurance Commissioners require amending of the
242	uniform standards established by the commission for long-term
243	care insurance products.
244	(3)  Receive and review in an expeditious manner products
245	filed with the commission and rate filings for disability income
246	and long-term care insurance products and give approval of those
247	products and rate filings that satisfy the applicable uniform
248	standard, and such approval shall have the force and effect of
249	law and be binding on the compacting states to the extent and in
250	the manner provided in the compact.
251	(4)  Receive and review in an expeditious manner
252	advertisement relating to long-term care insurance products for
253	which uniform standards have been adopted by the commission, and
254	give approval to all advertisement that satisfies the applicable
255	uniform standard. For any product covered under this compact,
256	other than long-term care insurance products, the commission
257	shall have the authority to require an insurer to submit all or
258	any part of its advertisement with respect to that product for
259	review or approval prior to use, if the commission determines
260	that the nature of the product is such that an advertisement of
261	the product could have the capacity or tendency to mislead the
262	public. The actions of the commission as provided in this
263	subsection shall have the force and effect of law and shall be
264	binding in the compacting states to the extent and in the manner
265	provided in the compact.
266	(5)  Exercise its rulemaking authority and designate
267	products and advertisement that may be subject to a self-
268	certification process without the need for prior approval by the
269	commission.
270	(6)  Adopt operating procedures, pursuant to Article VII,
271	which shall be binding in the compacting states to the extent
272	and in the manner provided in this compact.
273	(7)  Bring and prosecute legal proceedings or actions in
274	its name as the commission; provided the standing of any state
275	insurance department to sue or be sued under applicable law
276	shall not be affected.
277	(8)  Issue subpoenas requiring the attendance and testimony
278	of witnesses and the production of evidence.
279	(9)  Establish and maintain offices.
280	(10)  Purchase and maintain insurance and bonds.
281	(11)  Borrow, accept, or contract for services of
282	personnel, including, but not limited to, employees of a
283	compacting state.
284	(12)  Hire employees, professionals, or specialists; elect
285	or appoint officers and fix their compensation, define their
286	duties, give them appropriate authority to carry out the
287	purposes of the compact, and determine their qualifications; and
288	establish the commission's personnel policies and programs
289	relating to, among other things, conflicts of interest, rates of
290	compensation, and qualifications of personnel.
291	(13)  Accept any and all appropriate donations and grants
292	of money, equipment, supplies, materials, and services and to
293	receive, use, and dispose of the same; provided at all times the
294	commission shall strive to avoid any appearance of impropriety.
295	(14)  Lease, purchase, and accept appropriate gifts or
296	donations of, or otherwise to own, hold, improve, or use, any
297	property, real, personal, or mixed; provided at all times the
298	commission shall strive to avoid any appearance of impropriety.
299	(15)  Sell, convey, mortgage, pledge, lease, exchange,
300	abandon, or otherwise dispose of any property, real, personal,
301	or mixed.
302	(16)  Remit filing fees to compacting states as may be set
303	forth in the bylaws, rules, or operating procedures.
304	(17)  Enforce compliance by compacting states with rules,
305	uniform standards, operating procedures, and bylaws.
306	(18)  Provide for dispute resolution among compacting
307	states.
308	(19)  Advise compacting states on issues relating to
309	insurers domiciled or doing business in noncompacting
310	jurisdictions, consistent with the purposes of this compact.
311	(20)  Provide advice and training to those personnel in
312	state insurance departments responsible for product review and
313	to be a resource for state insurance departments.
314	(21)  Establish a budget and make expenditures.
315	(22)  Borrow money.
316	(23)  Appoint committees, including advisory committees,
317	comprising members, state insurance regulators, state
318	legislators or their representatives, insurance industry and
319	consumer representatives, and such other interested persons as
320	may be designated in the bylaws.
321	(24)  Provide and receive information from and to cooperate
322	with law enforcement agencies.
323	(25)  Adopt and use a corporate seal.
324	(26)  Perform such other functions as may be necessary or
325	appropriate to achieve the purposes of this compact consistent
326	with the state regulation of the business of insurance.
327
328	Article V
329
330	ORGANIZATION.--
331	(1)  Membership; voting; bylaws.--
332	(a)1.  Each compacting state shall have and be limited to
333	one member. Each member shall be qualified to serve in that
334	capacity pursuant to applicable law of the compacting state. Any
335	member may be removed or suspended from office as provided by
336	the law of the state from which he or she is appointed. Any
337	vacancy occurring in the commission shall be filled in
338	accordance with the laws of the compacting state in which the
339	vacancy exists. Nothing in this article shall be construed to
340	affect the manner in which a compacting state determines the
341	election or appointment and qualification of its own
342	commissioner.
343	2.  The Chief Financial Officer is hereby designated to
344	serve as the representative of this state on the commission.
345	(b)  Each member shall be entitled to one vote and shall
346	have an opportunity to participate in the governance of the
347	commission in accordance with the bylaws. Notwithstanding any
348	other provision of this article, no action of the commission
349	with respect to the adoption of a uniform standard shall be
350	effective unless two-thirds of the members vote in favor of such
351	action.
352	(c)  The commission shall, by a majority of the members,
353	prescribe bylaws to govern its conduct as may be necessary or
354	appropriate to carry out the purposes and exercise the powers of
355	the compact, including, but not limited to:
356	1.  Establishing the fiscal year of the commission.
357	2.  Providing reasonable procedures for appointing and
358	electing members, as well as holding meetings, of the management
359	committee.
360	3.  Providing reasonable standards and procedures:
361	a.  For the establishment and meetings of other committees.
362	b.  Governing any general or specific delegation of any
363	authority or function of the commission.
364	4.  Providing reasonable procedures for calling and
365	conducting meetings of the commission that consist of a majority
366	of commission members, ensuring reasonable advance notice of
367	each such meeting, and providing for the right of citizens to
368	attend each such meeting with enumerated exceptions designed to
369	protect the public's interest, the privacy of individuals, and
370	insurers' proprietary information, including, but not limited
371	to, trade secrets. The commission may meet in camera only after
372	a majority of the entire membership votes to close a meeting in
373	total or in part. As soon as practicable, the commission must
374	make public a copy of the vote to close the meeting revealing
375	the vote of each member with no proxy votes allowed, and votes
376	taken during such meeting.
377	5.  Establishing the titles, duties, and authority and
378	reasonable procedures for the election of the officers of the
379	commission.
380	6.  Providing reasonable standards and procedures for the
381	establishment of the personnel policies and programs of the
382	commission. Notwithstanding any civil service or other similar
383	laws of any compacting state, the bylaws shall exclusively
384	govern the personnel policies and programs of the commission.
385	7.  Adopting a code of ethics to address permissible and
386	prohibited activities of commission members and employees.
387	8.  Providing a mechanism for winding up the operations of
388	the commission and the equitable disposition of any surplus
389	funds that may exist after the termination of the compact after
390	the payment or reserving of all debts and obligations of the
391	commission.
392	(d)  The commission shall publish its bylaws in a
393	convenient form and file a copy of such bylaws and a copy of any
394	amendment to such bylaws, with the appropriate agency or officer
395	in each of the compacting States.
396	(2)  Management committee, officers, and personnel.--
397	(a)  A management committee comprising no more than 14
398	members shall be established as follows:
399	1.  One member from each of the 6 compacting states with
400	the largest premium volume for individual and group annuities,
401	life, disability income, and long-term care insurance products,
402	determined from the records of the National Association of
403	Insurance Commissioners for the prior year.
404	2.  Four members from those compacting states with at least
405	2 percent of the market based on the premium volume described
406	above, other than the 6 compacting states with the largest
407	premium volume, selected on a rotating basis as provided in the
408	bylaws.
409	3.  Four members from those compacting states with less
410	than 2 percent of the market, based on the premium volume
411	described above, with 1 selected from each of the 4 zone regions
412	of the National Association of Insurance Commissioners as
413	provided in the bylaws.
414	(b)  The management committee shall have such authority and
415	duties as may be set forth in the bylaws, including, but not
416	limited to:
417	1.  Managing the affairs of the commission in a manner
418	consistent with the bylaws and purposes of the commission.
419	2.  Establishing and overseeing an organizational structure
420	within, and appropriate procedures for, the commission to
421	provide for the creation of uniform standards and other rules,
422	receipt and review of product filings, administrative and
423	technical support functions, review of decisions regarding the
424	disapproval of a product filing, and the review of elections
425	made by a compacting state to opt out of a uniform standard;
426	provided a uniform standard shall not be submitted to the
427	compacting states for adoption unless approved by two-thirds of
428	the members of the management committee.
429	3.  Overseeing the offices of the commission.
430	4.  Planning, implementing, and coordinating communications
431	and activities with other state, federal, and local government
432	organizations in order to advance the goals of the commission.
433	(c)  The commission shall elect annually officers from the
434	management committee, with each having such authority and duties
435	as may be specified in the bylaws.
436	(d)  The management committee may, subject to the approval
437	of the commission, appoint or retain an executive director for
438	such period, upon such terms and conditions, and for such
439	compensation as the commission may deem appropriate. The
440	executive director shall serve as secretary to the commission
441	but shall not be a member of the commission. The executive
442	director shall hire and supervise such other staff as may be
443	authorized by the commission.
444	(3)  Legislative and advisory committees.--
445	(a)  A legislative committee comprised of state legislators
446	or their designees shall be established to monitor the
447	operations of and make recommendations to the commission,
448	including the management committee; provided the manner of
449	selection and term of any legislative committee member shall be
450	as set forth in the bylaws. Prior to the adoption by the
451	commission of any uniform standard, revision to the bylaws,
452	annual budget, or other significant matter as may be provided in
453	the bylaws, the management committee shall consult with and
454	report to the legislative committee.
455	(b)  The commission shall establish two advisory
456	committees, one comprising consumer representatives independent
457	of the insurance industry and the other comprising insurance
458	industry representatives.
459	(c)  The commission may establish additional advisory
460	committees as the bylaws may provide for the carrying out of
461	commission functions.
462	(4)  Corporate records of the commission.--The commission
463	shall maintain its corporate books and records in accordance
464	with the bylaws.
465	(5)  Qualified immunity, defense and indemnification.--
466	(a)  The members, officers, executive director, employees,
467	and representatives of the commission shall be immune from suit
468	and liability, either personally or in their official capacity,
469	for any claim for damage to or loss of property or personal
470	injury or other civil liability caused by or arising out of any
471	actual or alleged act, error, or omission that occurred, or that
472	the person against whom the claim is made had a reasonable basis
473	for believing occurred within the scope of commission
474	employment, duties, or responsibilities; provided nothing in
475	this paragraph shall be construed to protect any such person
476	from suit or liability for any damage, loss, injury, or
477	liability caused by the intentional or willful and wanton
478	misconduct of that person.
479	(b)  The commission shall defend any member, officer,
480	executive director, employee, or representative of the
481	commission in any civil action seeking to impose liability
482	arising out of any actual or alleged act, error, or omission
483	that occurred within the scope of commission employment, duties,
484	or responsibilities, or that the person against whom the claim
485	is made had a reasonable basis for believing occurred within the
486	scope of commission employment, duties, or responsibilities;
487	provided nothing in this article shall be construed to prohibit
488	that person from retaining his or her own counsel and the actual
489	or alleged act, error, or omission did not result from that
490	person's intentional or willful and wanton misconduct.
491	(c)  The commission shall indemnify and hold harmless any
492	member, officer, executive director, employee, or representative
493	of the commission for the amount of any settlement or judgment
494	obtained against that person arising out of any actual or
495	alleged act, error, or omission that occurred within the scope
496	of commission employment, duties, or responsibilities, or that
497	such person had a reasonable basis for believing occurred within
498	the scope of commission employment, duties, or responsibilities;
499	provided the actual or alleged act, error, or omission did not
500	result from the intentional or willful and wanton misconduct of
501	that person.
502
503	Article VI
504
505	MEETINGS; ACTS.--
506	(1)  The commission shall meet and take such actions as are
507	consistent with the provisions of this compact and the bylaws.
508	(2)  Each member of the commission shall have the right and
509	power to cast a vote to which that compacting state is entitled
510	and to participate in the business and affairs of the
511	commission. A member shall vote in person or by such other means
512	as provided in the bylaws. The bylaws may provide for members'
513	participation in meetings by telephone or other means of
514	communication.
515	(3)  The commission shall meet at least once during each
516	calendar year. Additional meetings shall be held as set forth in
517	the bylaws.
518
519	Article VII
520
521	RULES AND OPERATING PROCEDURES; RULEMAKING FUNCTIONS OF THE
522	COMMISSION; OPTING OUT OF UNIFORM STANDARDS.--
523	(1)  Rulemaking authority.--The commission shall adopt
524	reasonable rules, including uniform standards, and operating
525	procedures in order to effectively and efficiently achieve the
526	purposes of this compact. Notwithstanding such requirement, if
527	the commission exercises its rulemaking authority in a manner
528	that is beyond the scope of the purposes of this compact or the
529	powers granted under this compact, such action by the commission
530	shall be invalid and have no force and effect.
531	(2)  Rulemaking procedure.--Rules and operating procedures
532	shall be made pursuant to a rulemaking process that conforms to
533	the Model State Administrative Procedure Act of 1981, as
534	amended, as may be appropriate to the operations of the
535	commission. Before the commission adopts a uniform standard, the
536	commission shall give written notice to the relevant state
537	legislative committees in each compacting state responsible for
538	insurance issues of its intention to adopt the uniform standard.
539	The commission in adopting a uniform standard shall consider
540	fully all submitted materials and issue a concise explanation of
541	its decision.
542	(3)  Effective date and opt out of a uniform standard.--A
543	uniform standard shall become effective 90 days after its
544	adoption by the commission or such later date as the commission
545	may determine; provided a compacting state may opt out of a
546	uniform standard as provided in this article. The term "opt out"
547	means any action by a compacting state to decline to adopt or
548	participate in an adopted uniform standard. All other rules and
549	operating procedures, and amendments thereto, shall become
550	effective as of the date specified in each rule, operating
551	procedure, or amendment.
552	(4)  Opt out procedure.--
553	(a)  A compacting state may opt out of a uniform standard
554	by legislation or regulation adopted by the Office of Insurance
555	Regulation of the Financial Services Commission under such
556	state's Administrative Procedure Act. For purposes of this
557	compact and this state, the Office of Insurance Regulation of
558	the Department of Financial Services constitutes this state's
559	agency for purposes of this subsection. If a compacting state
560	elects to opt out of a uniform standard by regulation, such
561	state must:
562	1.  Give written notice to the commission no later than 10
563	business days after the uniform standard is adopted, or at the
564	time the state becomes a compacting state.
565	2.  Find that the uniform standard does not provide
566	reasonable protections to the citizens of the state, given the
567	conditions in the state.
568	(b)  The commissioner shall make specific findings of fact
569	and conclusions of law, based on a preponderance of the
570	evidence, detailing the conditions in the state which warrant a
571	departure from the uniform standard and determining that the
572	uniform standard would not reasonably protect the citizens of
573	the state. The commissioner must consider and balance the
574	following factors and find that the conditions in the state and
575	needs of the citizens of the state outweigh:
576	1.  The intent of the Legislature to participate in, and
577	the benefits of, an interstate agreement to establish national
578	uniform consumer protections for the products subject to this
579	compact.
580	2.  The presumption that a uniform standard adopted by the
581	commission provides reasonable protections to consumers of the
582	relevant product.
583
584	Notwithstanding this subsection, a compacting state may, at the
585	time of its enactment of this compact, prospectively opt out of
586	all uniform standards involving long-term care insurance
587	products by expressly providing for such opt out in the enacted
588	compact, and such an opt out shall not be treated as a material
589	variance in the offer or acceptance of any state to participate
590	in this compact. Such an opt out shall be effective at the time
591	of enactment of this compact by the compacting state and shall
592	apply to all existing uniform standards involving long-term care
593	insurance products and those subsequently adopted.
594	(5)  Effect of opting out.--If a compacting state elects to
595	opt out of a uniform standard, the uniform standard shall remain
596	applicable in the compacting state electing to opt out until
597	such time the opt out legislation is enacted into law or the
598	regulation opting out becomes effective. Once the opt out of a
599	uniform standard by a compacting state becomes effective as
600	provided under the laws of that state, the uniform standard
601	shall have no further force and effect in that state unless and
602	until the legislation or regulation implementing the opt out is
603	repealed or otherwise becomes ineffective under the laws of the
604	state. If a compacting state opts out of a uniform standard
605	after the uniform standard has been made effective in that
606	state, the opt out shall have the same prospective effect as
607	provided under Article XIV for withdrawals.
608	(6)  Stay of uniform standard.--If a compacting state has
609	formally initiated the process of opting out of a uniform
610	standard by regulation, and while the regulatory opt out is
611	pending, the compacting state may petition the commission, at
612	least 15 days before the effective date of the uniform standard,
613	to stay the effectiveness of the uniform standard in that state.
614	The commission may grant a stay if the commission determines the
615	regulatory opt out is being pursued in a reasonable manner and
616	there is a likelihood of success. If a stay is granted or
617	extended by the commission, the stay or extension thereof may
618	postpone the effective date by up to 90 days, unless
619	affirmatively extended by the commission; provided a stay may
620	not be permitted to remain in effect for more than 1 year unless
621	the compacting state can show extraordinary circumstances which
622	warrant a continuance of the stay, including, but not limited
623	to, the existence of a legal challenge which prevents the
624	compacting state from opting out. A stay may be terminated by
625	the commission upon notice that the rulemaking process has been
626	terminated.
627	(7)  Judicial review.--Not later than 30 days after a rule
628	or operating procedure is adopted, any person may file a
629	petition for judicial review of the rule or operating procedure;
630	provided the filing of such a petition shall not stay or
631	otherwise prevent the rule or operating procedure from becoming
632	effective unless the court finds that the petitioner has a
633	substantial likelihood of success. The court shall give
634	deference to the actions of the commission consistent with
635	applicable law and shall not find the rule or operating
636	procedure to be unlawful if the rule or operating procedure
637	represents a reasonable exercise of the commission's authority.
638
639	Article VIII
640
641	COMMISSION RECORDS AND ENFORCEMENT.--
642	(1)  The commission shall adopt rules establishing
643	conditions and procedures for public inspection and copying of
644	its information and official records, except such information
645	and records involving the privacy of individuals and insurers'
646	trade secrets. The commission may adopt additional rules under
647	which the commission may make available to federal and state
648	agencies, including law enforcement agencies, records and
649	information otherwise exempt from disclosure and may enter into
650	agreements with such agencies to receive or exchange information
651	or records subject to nondisclosure and confidentiality
652	provisions.
653	(2)  Except as to privileged records, data, and
654	information, the laws of any compacting state pertaining to
655	confidentiality or nondisclosure shall not relieve any
656	compacting state commissioner of the duty to disclose any
657	relevant records, data, or information to the commission;
658	provided disclosure to the commission shall not be deemed to
659	waive or otherwise affect any confidentiality requirement; and
660	further provided, except as otherwise expressly provided in this
661	compact, the commission shall not be subject to the compacting
662	state's laws pertaining to confidentiality and nondisclosure
663	with respect to records, data, and information in its
664	possession. Confidential information of the commission shall
665	remain confidential after such information is provided to any
666	commissioner.
667	(3)  The commission shall monitor compacting states for
668	compliance with duly adopted bylaws, rules, uniform standards,
669	and operating procedures. The commission shall notify any
670	noncomplying compacting state in writing of its noncompliance
671	with commission bylaws, rules, or operating procedures. If a
672	noncomplying compacting state fails to remedy its noncompliance
673	within the time specified in the notice of noncompliance, the
674	compacting state shall be deemed to be in default as set forth
675	in Article XIV.
676	(4)  The commissioner of any state in which an insurer is
677	authorized to do business or is conducting the business of
678	insurance shall continue to exercise his or her authority to
679	oversee the market regulation of the activities of the insurer
680	in accordance with the provisions of the state's law. The
681	commissioner's enforcement of compliance with the compact is
682	governed by the following provisions:
683	(a)  With respect to the commissioner's market regulation
684	of a product or advertisement that is approved or certified to
685	the commission, the content of the product or advertisement
686	shall not constitute a violation of the provisions, standards,
687	or requirements of the compact except upon a final order of the
688	commission, issued at the request of a commissioner after prior
689	notice to the insurer and an opportunity for hearing before the
690	commission.
691	(b)  Before a commissioner may bring an action for
692	violation of any provision, standard, or requirement of the
693	compact relating to the content of an advertisement not approved
694	or certified to the commission, the commission, or an authorized
695	commission officer or employee, must authorize the action.
696	However, authorization pursuant to this paragraph does not
697	require notice to the insurer, opportunity for hearing, or
698	disclosure of requests for authorization or records of the
699	commission's action on such requests.
700
701	Article IX
702
703	DISPUTE RESOLUTION.--The commission shall attempt, upon the
704	request of a member, to resolve any disputes or other issues
705	that are subject to this compact and which may arise between two
706	or more compacting states, or between compacting states and
707	noncompacting states, and the commission shall adopt an
708	operating procedure providing for resolution of such disputes.
709
710	Article X
711
712	PRODUCT FILING AND APPROVAL.--
713	(1)  Insurers and third-party filers seeking to have a
714	product approved by the commission shall file the product with
715	and pay applicable filing fees to the commission. Nothing in
716	this compact shall be construed to restrict or otherwise prevent
717	an insurer from filing its product with the insurance department
718	in any state in which the insurer is licensed to conduct the
719	business of insurance and such filing shall be subject to the
720	laws of the states where filed.
721	(2)  The commission shall establish appropriate filing and
722	review processes and procedures pursuant to commission rules and
723	operating procedures. Notwithstanding any provision of this
724	article, the commission shall adopt rules to establish
725	conditions and procedures under which the commission will
726	provide public access to product filing information. In
727	establishing such rules, the commission shall consider the
728	interests of the public in having access to such information, as
729	well as protection of personal medical and financial information
730	and trade secrets, that may be contained in a product filing or
731	supporting information.
732	(3)  Any product approved by the commission may be sold or
733	otherwise issued in those compacting states for which the
734	insurer is legally authorized to do business.
735
736	Article XI
737
738	REVIEW OF COMMISSION DECISIONS REGARDING FILINGS.--
739	(1)  Not later than 30 days after the commission has given
740	notice of a disapproved product or advertisement filed with the
741	commission, the insurer or third-party filer whose filing was
742	disapproved may appeal the determination to a review panel
743	appointed by the commission. The commission shall adopt rules to
744	establish procedures for appointing such review panels and
745	provide for notice and hearing. An allegation that the
746	commission, in disapproving a product or advertisement filed
747	with the commission, acted arbitrarily, capriciously, or in a
748	manner that is an abuse of discretion or otherwise not in
749	accordance with the law, is subject to judicial review in
750	accordance with subsection (4) of Article III.
751	(2)  The commission shall have authority to monitor,
752	review, and reconsider products and advertisement subsequent to
753	their filing or approval upon a finding that the product does
754	not meet the relevant uniform standard. Where appropriate, the
755	commission may withdraw or modify its approval after proper
756	notice and hearing, subject to the appeal process in subsection
757	(1).
758
759	Article XII
760
761	FINANCE.--
762	(1)  The commission shall pay or provide for the payment of
763	the reasonable expenses of the commission's establishment and
764	organization. To fund the cost of the commission's initial
765	operations, the commission may accept contributions and other
766	forms of funding from the National Association of Insurance
767	Commissioners, compacting states, and other sources.
768	Contributions and other forms of funding from other sources
769	shall be of such a nature that the independence of the
770	commission concerning the performance of commission duties shall
771	not be compromised.
772	(2)  The commission shall collect a filing fee from each
773	insurer and third-party filer filing a product with the
774	commission to cover the cost of the operations and activities of
775	the commission and its staff in a total amount sufficient to
776	cover the commission's annual budget.
777	(3)  The commission's budget for a fiscal year shall not be
778	approved until the budget has been subject to notice and comment
779	as set forth in Article VII.
780	(4)  The commission shall be exempt from all taxation in
781	and by the compacting states.
782	(5)  The commission shall not pledge the credit of any
783	compacting state, except by and with the appropriate legal
784	authority of that compacting state.
785	(6)  The commission shall keep complete and accurate
786	accounts of all its internal receipts, including grants and
787	donations, and disbursements of all funds under its control. The
788	internal financial accounts of the commission shall be subject
789	to the accounting procedures established under its bylaws. The
790	financial accounts and reports including the system of internal
791	controls and procedures of the commission shall be audited
792	annually by an independent certified public accountant. Upon the
793	determination of the commission, but no less frequently than
794	every 3 years, the review of the independent auditor shall
795	include a management and performance audit of the commission.
796	The commission shall make an annual report to the Governor and
797	the presiding officers of the Legislature of the compacting
798	states, which shall include a report of the independent audit.
799	The commission's internal accounts shall not be confidential and
800	such materials may be shared with the commissioner of any
801	compacting state upon request; provided any work papers related
802	to any internal or independent audit and any information
803	regarding the privacy of individuals and insurers' proprietary
804	information, including trade secrets, shall remain confidential.
805	(7)  No compacting state shall have any claim to or
806	ownership of any property held by or vested in the commission or
807	to any commission funds held pursuant to the provisions of this
808	compact.
809
810	Article XIII
811
812	COMPACTING STATES, EFFECTIVE DATE, AMENDMENT.--
813	(1)  Any state is eligible to become a compacting state.
814	(2)  The compact shall become effective and binding upon
815	legislative enactment of the compact into law by two compacting
816	states; provided the commission shall become effective for
817	purposes of adopting uniform standards for, reviewing, and
818	giving approval or disapproval of, products filed with the
819	commission that satisfy applicable uniform standards only after
820	26 states are compacting states or, alternatively, by states
821	representing greater than 40 percent of the premium volume for
822	life insurance, annuity, disability income, and long-term care
823	insurance products, based on records of the National Association
824	of Insurance Commissioners for the prior year. Thereafter, the
825	compact shall become effective and binding as to any other
826	compacting state upon enactment of the compact into law by that
827	state.
828	(3)  Amendments to the compact may be proposed by the
829	commission for enactment by the compacting states. No amendment
830	shall become effective and binding upon the commission and the
831	compacting states unless and until all compacting states enact
832	the amendment into law.
833
834	Article XIV
835
836	WITHDRAWAL; DEFAULT; DISSOLUTION.--
837	(1)  Withdrawal.--
838	(a)  Once effective, the compact shall continue in force
839	and remain binding upon each and every compacting state;
840	provided a compacting state may withdraw from the compact by
841	enacting a law specifically repealing the law which enacted the
842	compact into law.
843	(b)  The effective date of withdrawal is the effective date
844	of the repealing law. However, the withdrawal shall not apply to
845	any product filings approved or self-certified, or any
846	advertisement of such products, on the date the repealing law
847	becomes effective, except by mutual agreement of the commission
848	and the withdrawing state unless the approval is rescinded by
849	the withdrawing state as provided in paragraph (e).
850	(c)  The commissioner of the withdrawing state shall
851	immediately notify the management committee in writing upon the
852	introduction of legislation repealing this compact in the
853	withdrawing state.
854	(d)  The commission shall notify the other compacting
855	states of the introduction of such legislation within 10 days
856	after the commission's receipt of notice of such legislation.
857	(e)  The withdrawing state is responsible for all
858	obligations, duties, and liabilities incurred through the
859	effective date of withdrawal, including any obligations, the
860	performance of which extend beyond the effective date of
861	withdrawal, except to the extent those obligations may have been
862	released or relinquished by mutual agreement of the commission
863	and the withdrawing state. The commission's approval of products
864	and advertisement prior to the effective date of withdrawal
865	shall continue to be effective and be given full force and
866	effect in the withdrawing state unless formally rescinded by the
867	withdrawing state in the same manner as provided by the laws of
868	the withdrawing state for the prospective disapproval of
869	products or advertisement previously approved under state law.
870	(f)  Reinstatement following withdrawal of any compacting
871	state shall occur upon the effective date of the withdrawing
872	state reenacting the compact.
873	(2)  Default.--
874	(a)  If the commission determines that any compacting state
875	has at any time defaulted in the performance of any of its
876	obligations or responsibilities under this compact, the bylaws,
877	or duly adopted rules or operating procedures, after notice and
878	hearing as set forth in the bylaws, all rights, privileges, and
879	benefits conferred by this compact on the defaulting state shall
880	be suspended from the effective date of default as fixed by the
881	commission. The grounds for default include, but are not limited
882	to, failure of a compacting state to perform its obligations or
883	responsibilities, and any other grounds designated in commission
884	rules. The commission shall immediately notify the defaulting
885	state in writing of the defaulting state's suspension pending a
886	cure of the default. The commission shall stipulate the
887	conditions and the time period within which the defaulting state
888	must cure its default. If the defaulting state fails to cure the
889	default within the time period specified by the commission, the
890	defaulting state shall be terminated from the compact and all
891	rights, privileges, and benefits conferred by this compact shall
892	be terminated from the effective date of termination.
893	(b)  Product approvals by the commission or product self-
894	certifications, or any advertisement in connection with such
895	product that are in force on the effective date of termination
896	shall remain in force in the defaulting state in the same manner
897	as if the defaulting state had withdrawn voluntarily pursuant to
898	subsection (1).
899	(c)  Reinstatement following termination of any compacting
900	state requires a reenactment of the compact.
901	(3)  Dissolution of compact.--
902	(a)  The compact dissolves effective upon the date of the
903	withdrawal or default of the compacting state which reduces
904	membership in the compact to a single compacting state.
905	(b)  Upon the dissolution of this compact, the compact
906	becomes null and void and shall be of no further force or effect
907	and the business and affairs of the commission shall be
908	concluded and any surplus funds shall be distributed in
909	accordance with the bylaws.
910	Article XV
911
912	SEVERABILITY; CONSTRUCTION.--
913	(1)  The provisions of this compact are severable and if
914	any phrase, clause, sentence, or provision is deemed
915	unenforceable, the remaining provisions of the compact shall be
916	enforceable.
917	(2)  The provisions of this compact shall be liberally
918	construed to effectuate its purposes.
919
920	Article XVI
921
922	BINDING EFFECT OF COMPACT AND OTHER LAWS.--
923	(1)  Binding effect of this compact.--
924	(a)  All lawful actions of the commission, including all
925	rules and operating procedures adopted by the commission, are
926	binding upon the compacting states.
927	(b)  All agreements between the commission and the
928	compacting states are binding in accordance with their terms.
929	(c)  Upon the request of a party to a conflict over the
930	meaning or interpretation of commission actions, and upon a
931	majority vote of the compacting states, the commission may issue
932	advisory opinions regarding the meaning or interpretation in
933	dispute.
934	(d)  If any provision of this compact exceeds the
935	constitutional limits imposed on the Legislature of any
936	compacting state, the obligations, duties, powers, or
937	jurisdiction sought to be conferred by that provision upon the
938	commission shall be ineffective as to that compacting state and
939	those obligations, duties, powers, or jurisdiction shall remain
940	in the compacting state and shall be exercised by the agency of
941	such state to which those obligations, duties, powers, or
942	jurisdiction are delegated by law in effect at the time this
943	compact becomes effective.
944	(2)  Other laws.--
945	(a)  Nothing in this compact prevents the enforcement of
946	any other law of a compacting state, except as provided in
947	paragraph (b).
948	(b)  For any product approved or certified to the
949	commission, the rules, uniform standards, and any other
950	requirements of the commission shall constitute the exclusive
951	provisions applicable to the content, approval, and
952	certification of such products. For advertisement that is
953	subject to the commission's authority, any rule, uniform
954	standard, or other requirement of the commission which governs
955	the content of the advertisement shall constitute the exclusive
956	provision that a commissioner may apply to the content of the
957	advertisement. Notwithstanding this paragraph, no action taken
958	by the commission shall abrogate or restrict:
959	1.  The access of any person to state courts;
960	2.  Remedies available under state law related to breach of
961	contract, tort, or other laws not specifically directed to the
962	content of the product;
963	3.  State law relating to the construction of insurance
964	contracts; or
965	4.  The authority of the attorney general of the state,
966	including, but not limited to, maintaining any actions or
967	proceedings, as authorized by law.
968	(c)  All insurance products filed with individual states
969	shall be subject to the laws of those states.
970	Section 3.  This act shall take effect July 1, 2005.

CODING: Words stricken are deletions; words underlined are additions.