Florida Senate - 2010 SB 2456 By Senator Ring 32-01876-10 20102456__ 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; defining terms; creating 5 the Interstate Insurance Product Regulation 6 Commission; providing responsibilities of the 7 commission; specifying the commission as an 8 instrumentality of the compact states; providing for 9 venue; specifying the powers of the commission; 10 providing for organization of the commission; 11 providing for membership, voting, and bylaws; 12 designating the Commissioner of the Office of 13 Insurance Regulation as the representative of Florida 14 on the commission; requiring the commission to draft 15 bylaws; specifying matters to be addressed in the 16 bylaws; requiring the commissioners to adopt a code of 17 ethics; providing for a management committee, 18 officers, and personnel of the commission; providing 19 authority of the management committee; providing for 20 legislative and advisory committees; providing for 21 qualified immunity, defense, and indemnification of 22 members, officers, employees, and representatives of 23 the commission; providing for meetings and acts of the 24 commission; providing rules and operating procedures; 25 providing rulemaking functions of the commission; 26 providing for opting out of the uniform standards; 27 providing procedures and requirements for opting out; 28 providing for commission records and enforcement; 29 authorizing the commission to adopt rules; providing 30 for disclosure of certain information; requiring the 31 commission to monitor compact states for compliance; 32 providing for dispute resolution; providing for 33 product filing and approval; requiring the commission 34 to establish filing and review processes and 35 procedures; providing for review of commission 36 decisions regarding filings; providing for the 37 financing of commission activities; providing for 38 payment of expenses; authorizing the commission to 39 collect filing fees for certain purposes; providing 40 for approval of a commission budget; exempting the 41 commission from all taxation; prohibiting the 42 commission from pledging the credit of any compact 43 states without authority; requiring that the 44 commission keep complete accurate accounts, provide 45 for audits, and make annual reports to the Governors 46 and Legislatures of compact states; providing for 47 effective date and amendment of the compact; providing 48 for withdrawal from the compact, default by compact 49 states, and dissolution of the compact; providing for 50 severability and construction; providing for the 51 binding effect of the compact and other laws; 52 providing a contingent effective date. 53 54 Be It Enacted by the Legislature of the State of Florida: 55 56 Section 1. Legislative findings; intent.— 57 (1) The Legislature finds that the financial services 58 marketplace has changed significantly in recent years and that 59 asset-based insurance products, which include life insurance, 60 annuities, disability income insurance, and long-term care 61 insurance, now compete directly with other retirement and estate 62 planning instruments that are sold by banks and securities 63 firms. 64 (2) The Legislature further finds that the increased 65 mobility of the population and the risks borne by these asset 66 based products are no longer local in nature. 67 (3) The Legislature also finds that the Interstate 68 Insurance Product Regulation Compact Model adopted by the 69 National Association of Insurance Commissioners and endorsed by 70 the National Conference of Insurance Legislators and the 71 National Conference of State Legislatures is designed to address 72 these market changes by providing a uniform set of product 73 standards and a single source for the filing of new products. 74 (4) The Legislature further finds that the product 75 standards that have been developed provide a high level of 76 consumer protection. 77 (5)(a) The Legislature further finds that the Interstate 78 Insurance Product Regulation Compact includes a mechanism for 79 opting out of all uniform standards involving long-term care 80 insurance products. The Legislature hereby purposefully opts out 81 and excludes long-term care insurance products from this state’s 82 agreement to abide by the decisions of the compact, thereby 83 leaving the authority over long-term care insurance products 84 with the state. The state relies on that understanding in 85 adopting this legislation. 86 (b) The state, pursuant to the terms and conditions of this 87 compact, intends to join with other states to establish the 88 Interstate Insurance Product Regulation Compact, and thus become 89 a member of the Interstate Insurance Product Regulation 90 Commission. The Commissioner of Insurance Regulation is hereby 91 designated to serve as the representative of this state on the 92 commission. 93 Section 2. Interstate Insurance Product Regulation 94 Compact.—The Interstate Insurance Product Regulation Compact is 95 hereby enacted into law and entered into by this state with all 96 states legally joining therein in the form substantially as 97 follows: 98 99 THE INTERSTATE INSURANCE PRODUCT REGULATION COMPACT 100 PREAMBLE 101 102 This compact is intended to help states join together to 103 establish an interstate compact to regulate designated insurance 104 products. Pursuant to the terms and conditions of this compact, 105 this state intends to join with other states to establish the 106 Interstate Insurance Product Regulation Compact and thus become 107 a member of the Interstate Insurance Product Regulation 108 Commission. 109 ARTICLE I 110 PURPOSE 111 112 The purposes of this compact are, through means of joint 113 and cooperative action among the compact states, to: 114 (1) Promote and protect the interest of consumers of 115 individual and group annuity, life insurance, disability income, 116 and long-term care insurance products. 117 (2) Develop uniform standards for insurance products 118 covered under the compact. 119 (3) Establish a central clearinghouse to receive and 120 provide prompt review of insurance products covered under the 121 compact and, in certain cases, advertisements related thereto, 122 submitted by insurers authorized to do business in one or more 123 of the compact states. 124 (4) Give appropriate regulatory approval to those product 125 filings and advertisements satisfying the applicable uniform 126 standard. 127 (5) Improve coordination of regulatory resources and 128 expertise between state insurance departments regarding the 129 setting of uniform standards and review of insurance products 130 covered under the compact. 131 (6) Create the Interstate Insurance Product Regulation 132 Commission. 133 (7) Perform these and such other related functions as may 134 be consistent with the state regulation of the business of 135 insurance. 136 ARTICLE II 137 DEFINITIONS 138 139 As used in this compact, the term: 140 (1) “Advertisement” or “advertising” means any material 141 designed to create public interest in a product, or induce the 142 public to purchase, increase, modify, reinstate, borrow on, 143 surrender, replace, or retain a policy, as more specifically 144 defined in the rules and operating procedures of the commission. 145 (2) “Bylaws” mean those bylaws established by the 146 commission for its governance, or for directing or controlling 147 the commission’s actions or conduct. 148 (3) “Compact state” means any state that has enacted this 149 compact legislation and has not withdrawn from the compact 150 pursuant to subsection (1) of Article XIV or been terminated 151 from the compact pursuant to subsection (2) of Article XIV of 152 this compact. 153 (4) “Commission” means the “Interstate Insurance Product 154 Regulation Commission” established by this compact. 155 (5) “Commissioner” means the chief insurance regulatory 156 official of a state, including, but not limited to, 157 commissioner, superintendent, director, or administrator. For 158 purposes of this compact, the Commissioner of the Office of 159 Insurance Regulation is the chief insurance regulatory official 160 of this state. 161 (6) “Domiciliary state” means the state in which an insurer 162 is incorporated or organized or, in the case of an alien 163 insurer, its state of entry. 164 (7) “Insurer” means any entity licensed by a state to issue 165 contracts of insurance for any of the lines of insurance covered 166 by this compact. 167 (8) “Member” means the person chosen by a compact state as 168 its representative to the commission, or his or her designee. 169 (9) “Noncompact state” means a state that is not at the 170 time a compact state. 171 (10) “Operating procedures” mean procedures adopted by the 172 commission implementing a rule, uniform standard, or provision 173 of this compact. 174 (11) “Opt out” means any action by a compact state to 175 decline to adopt or participate in an adopted uniform standard. 176 (12) “Product” means the form of a policy or contract, 177 including any application, endorsement, or related form, which 178 is attached to and made a part of the policy or contract, and 179 any evidence of coverage or certificate, for an individual or 180 group annuity, life insurance, disability income, or long-term 181 care insurance product that an insurer is authorized to issue. 182 (13) “Rule” means a statement of general or particular 183 applicability and future effect adopted by the commission, 184 including a uniform standard developed pursuant to Article VII 185 of this compact, designed to implement, interpret, or prescribe 186 law or policy or describing the organization, procedure, or 187 practice requirements of the commission, which shall have the 188 force and effect of law in the compact states. 189 (14) “State” means any state, district, or territory of the 190 United States. 191 (15) “Third-party filer” means an entity that submits a 192 product filing to the commission on behalf of an insurer. 193 (16) “Uniform standard” means a standard adopted by the 194 commission for a product line pursuant to Article VII of this 195 compact and includes all of the product requirements in 196 aggregate; provided, each uniform standard shall be construed, 197 whether express or implied, to prohibit the use of any 198 inconsistent, misleading, or ambiguous provisions in a product 199 and the form of the product made available to the public shall 200 not be unfair, inequitable, or against public policy as 201 determined by the commission. 202 203 ARTICLE III 204 COMMISSION, ESTABLISHMENT, AND VENUE.— 205 206 (1) The compact states hereby create and establish a joint 207 public agency known as the “Interstate Insurance Product 208 Regulation Commission.” Pursuant to Article IV of this compact, 209 the commission has the power to develop uniform standards for 210 product lines, receive and provide prompt review of products 211 filed with the commission, and give approval to those product 212 filings satisfying applicable uniform standards; provided it is 213 not intended for the commission to be the exclusive entity for 214 receipt and review of insurance product filings. This article 215 does not prohibit any insurer from filing its product in any 216 state in which the insurer is licensed to conduct the business 217 of insurance and any such filing is subject to the laws of the 218 state where filed. 219 (2) The commission is a body corporate and politic and an 220 instrumentality of the compact states. 221 (3) The commission is solely responsible for its 222 liabilities, except as otherwise specifically provided in this 223 compact. 224 (4) Venue is proper and judicial proceedings by or against 225 the commission shall be brought solely and exclusively in a 226 court of competent jurisdiction where the principal office of 227 the commission is located. 228 229 ARTICLE IV 230 POWERS 231 232 The commission has the power to: 233 (1) Adopt rules, pursuant to Article VII of this compact, 234 which have the force and effect of law and are binding in the 235 compact states to the extent and in the manner provided in this 236 compact. 237 (2) Exercise its rulemaking authority and establish 238 reasonable uniform standards for products covered under the 239 compact, and advertising related to it, which have the force and 240 effect of law and are binding in the compact states, but only 241 for those products filed with the commission; provided a compact 242 state has the right to opt out of such uniform standard pursuant 243 to Article VII of this compact to the extent and in the manner 244 provided in this compact and any uniform standard established by 245 the commission for long-term care insurance products may provide 246 the same or greater protections for consumers as, but shall not 247 provide less than, those protections set forth in the National 248 Association of Insurance Commissioners’ Long-Term Care Insurance 249 Model Act and Long-Term Care Insurance Model Regulation, 250 respectively, adopted as of 2001. The commission shall consider 251 whether any subsequent amendments to the National Association of 252 Insurance Commissioners’ Long-Term Care Insurance Model Act or 253 Long-Term Care Insurance Model Regulation adopted by the 254 National Association of Insurance Commissioners require amending 255 of the uniform standards established by the commission for long 256 term care insurance products. 257 (3) Receive and review in an expeditious manner products 258 filed with the commission and rate filings for disability income 259 and long-term care insurance products and give approval of those 260 products and rate filings that satisfy the applicable uniform 261 standard, and such approval has the force and effect of law and 262 is binding on the compact states to the extent and in the manner 263 provided in the compact. 264 (4) Receive and review in an expeditious manner advertising 265 relating to long-term care insurance products for which uniform 266 standards have been adopted by the commission, and give approval 267 to all advertisement that satisfies the applicable uniform 268 standard. For any product covered under this compact, other than 269 long-term care insurance products, the commission has the 270 authority to require an insurer to submit all or any part of its 271 advertising with respect to that product for review or approval 272 before its use, if the commission determines that the nature of 273 the product is such that an advertisement of the product could 274 have the capacity or tendency to mislead the public. The actions 275 of the commission as provided in this subsection have the force 276 and effect of law and are binding in the compact states to the 277 extent and in the manner provided in the compact. 278 (5) Exercise its rulemaking authority and designate 279 products and advertisement that may be subject to a self 280 certification process without the need for prior approval by the 281 commission. 282 (6) Adopt operating procedures, pursuant to Article VII of 283 this compact, which are binding in the compact states to the 284 extent and in the manner provided in this compact. 285 (7) Bring and prosecute legal proceedings or actions in its 286 name as the commission; provided the standing of any state 287 insurance department to sue or be sued under applicable law 288 shall not be affected. 289 (8) Issue subpoenas requiring the attendance and testimony 290 of witnesses and the production of evidence. 291 (9) Establish and maintain offices. 292 (10) Purchase and maintain insurance and bonds. 293 (11) Borrow, accept, or contract for services of personnel, 294 including, but not limited to, employees of a compact state. 295 (12) Hire employees, professionals, or specialists; elect 296 or appoint officers and fix their compensation, define their 297 duties, give them appropriate authority to carry out the 298 purposes of the compact, and determine their qualifications; and 299 establish the commission’s personnel policies and programs 300 relating to, among other things, conflicts of interest, rates of 301 compensation, and qualifications of personnel. 302 (13) Accept any and all appropriate donations and grants of 303 money, equipment, supplies, materials, and services and to 304 receive, use, and dispose of the same; provided at all times the 305 commission shall strive to avoid any appearance of impropriety. 306 (14) Lease, purchase, and accept appropriate gifts or 307 donations of, or otherwise to own, hold, improve, or use, any 308 property, real, personal, or mixed; provided at all times the 309 commission shall strive to avoid any appearance of impropriety. 310 (15) Sell, convey, mortgage, pledge, lease, exchange, 311 abandon, or otherwise dispose of any property whether real, 312 personal, or mixed. 313 (16) Remit filing fees to compact states as may be set 314 forth in the bylaws, rules, or operating procedures. 315 (17) Enforce compliance by compact states with rules, 316 uniform standards, operating procedures, and bylaws. 317 (18) Provide for dispute resolution among compact states. 318 (19) Advise compact states on issues relating to insurers 319 domiciled or doing business in noncompact jurisdictions, 320 consistent with the purposes of this compact. 321 (20) Provide advice and training to those personnel in 322 state insurance departments responsible for product review and 323 be a resource for state insurance departments. 324 (21) Establish a budget and make expenditures. 325 (22) Borrow money. 326 (23) Appoint committees, including advisory committees, 327 comprising members, state insurance regulators, state 328 legislators or their representatives, insurance industry and 329 consumer representatives, and such other interested persons as 330 may be designated in the bylaws. 331 (24) Provide and receive information from and to cooperate 332 with law enforcement agencies. 333 (25) Adopt and use a corporate seal. 334 (26) Perform such other functions as may be necessary or 335 appropriate to achieve the purposes of this compact consistent 336 with the state regulation of the business of insurance. 337 338 ARTICLE V 339 ORGANIZATION 340 341 (1) MEMBERSHIP, VOTING, AND BYLAWS.— 342 (a)1. Each compact state shall have and be limited to one 343 member. Each member must be qualified to serve in that capacity 344 pursuant to applicable law of the compact state. Any member may 345 be removed or suspended from office as provided by the law of 346 the state from which he or she is appointed. Any vacancy 347 occurring in the commission shall be filled in accordance with 348 the laws of the compact state in which the vacancy exists. This 349 article does not affect the manner in which a compact state 350 determines the election or appointment and qualification of its 351 own commissioner. 352 2. The Commissioner of the Office of Insurance Regulation 353 is hereby designated to serve as the representative of this 354 state on the commission. 355 (b) Each member is entitled to one vote and shall have an 356 opportunity to participate in the governance of the commission 357 in accordance with the bylaws. Notwithstanding any other 358 provision of this article, the commission shall take no action 359 with respect to the adoption of a uniform standard unless two 360 thirds of the members vote in favor of such action. 361 (c) The commission shall, by a majority of the members, 362 prescribe the bylaws to govern its conduct as may be necessary 363 or appropriate to carry out the purposes and exercise the powers 364 of the compact, including, but not limited to: 365 1. Establishing the fiscal year of the commission. 366 2. Providing reasonable procedures for appointing and 367 electing members, as well as holding meetings, of the management 368 committee. 369 3. Providing reasonable standards and procedures: 370 a. For the establishment and meetings of other committees. 371 b. Governing any general or specific delegation of any 372 authority or function of the commission. 373 4. Providing reasonable procedures for calling and 374 conducting meetings of the commission which consist of a 375 majority of commission members, ensuring reasonable advance 376 notice of each such meeting, and providing for the right of 377 citizens to attend each such meeting with enumerated exceptions 378 designed to protect the public’s interest, the privacy of 379 individuals, and insurers’ proprietary information, including, 380 but not limited to, trade secrets. The commission may meet in 381 camera only after a majority of the entire membership votes to 382 close a meeting in total or in part. As soon as practicable, the 383 commission must make public a copy of the vote to close the 384 meeting revealing the vote of each member, with no proxy votes 385 allowed, and votes taken during such meeting. 386 5. Establishing the titles, duties, and authority and 387 reasonable procedures for the election of the officers of the 388 commission. 389 6. Providing reasonable standards and procedures for the 390 establishment of the personnel policies and programs of the 391 commission. Notwithstanding any civil service or other similar 392 law of any compact state, the bylaws of the commission shall 393 exclusively govern the personnel policies and programs of the 394 commission. 395 7. Adopting a code of ethics to address permissible and 396 prohibited activities of commission members and employees. 397 8. Providing a mechanism for winding up the operations of 398 the commission and the equitable disposition of any surplus 399 funds that may exist after the termination of the compact after 400 the payment or reserving of all debts and obligations of the 401 commission. 402 (d) The commission shall publish its bylaws in a convenient 403 form and file a copy of such bylaws, and a copy of any amendment 404 to such bylaws, with the appropriate agency or officer in each 405 of the compact States. 406 (2) MANAGEMENT COMMITTEE, OFFICERS, AND PERSONNEL.— 407 (a) A management committee comprising no more than 14 408 members shall be established as follows: 409 1. One member from each of the six compact states having 410 the largest premium volume for individual and group annuities, 411 life, disability income, and long-term care insurance products, 412 determined from the records of the National Association of 413 Insurance Commissioners for the prior year. 414 2. Four members from those compact states having at least 2 415 percent of the market, based on the premium volume described 416 above, other than the six compact states having the largest 417 premium volume, selected on a rotating basis as provided in the 418 bylaws. 419 3. Four members from those compact states having less than 420 2 percent of the market, based on the premium volume described 421 above, with one member selected from each of the four zone 422 regions of the National Association of Insurance Commissioners 423 as provided in the bylaws. 424 (b) The management committee shall have such authority and 425 duties as may be set forth in the bylaws, including, but not 426 limited to: 427 1. Managing the affairs of the commission in a manner 428 consistent with the bylaws and purposes of the commission. 429 2. Establishing and overseeing an organizational structure 430 within, and appropriate procedures for, the commission to 431 provide for the creation of uniform standards and other rules, 432 receipt and review of product filings, administrative and 433 technical support functions, review of decisions regarding the 434 disapproval of a product filing, and the review of elections 435 made by a compact state to opt out of a uniform standard; 436 provided a uniform standard shall not be submitted to the 437 compact states for adoption unless approved by two-thirds of the 438 members of the management committee. 439 3. Overseeing the offices of the commission. 440 4. Planning, implementing, and coordinating communications 441 and activities with other state, federal, and local government 442 organizations in order to advance the goals of the commission. 443 (c) The commission shall elect annually officers from the 444 management committee, with each having such authority and duties 445 as may be specified in the bylaws. 446 (d) The management committee may, subject to the approval 447 of the commission, appoint or retain an executive director for 448 such period, upon such terms and conditions, and for such 449 compensation as the commission may deem appropriate. The 450 executive director shall serve as secretary to the commission 451 but is not a member of the commission. The executive director 452 shall hire and supervise such other staff as may be authorized 453 by the commission. 454 (3) LEGISLATIVE AND ADVISORY COMMITTEES.— 455 (a) A legislative committee comprised of state legislators 456 or their designees shall be established to monitor the 457 operations of and make recommendations to the commission, 458 including the management committee; provided the manner of 459 selection and term of any legislative committee member shall be 460 as set forth in the bylaws. Prior to the adoption by the 461 commission of any uniform standard, revision to the bylaws, 462 annual budget, or other significant matter as may be provided in 463 the bylaws, the management committee shall consult with and 464 report to the legislative committee. 465 (b) The commission shall establish two advisory committees, 466 one comprising consumer representatives independent of the 467 insurance industry and the other comprising insurance industry 468 representatives. 469 (c) The commission may establish additional advisory 470 committees as the bylaws may provide for the carrying out of 471 commission functions. 472 (4) CORPORATE RECORDS OF THE COMMISSION.—The commission 473 shall maintain its corporate books and records in accordance 474 with the bylaws. 475 (5) QUALIFIED IMMUNITY, DEFENSE, AND INDEMNIFICATION.— 476 (a) The members, officers, executive director, employees, 477 and representatives of the commission shall be immune from suit 478 and liability, either personally or in their official capacity, 479 for any claim for damage to or loss of property or personal 480 injury or other civil liability caused by or arising out of any 481 actual or alleged act, error, or omission that occurred, or that 482 the person against whom the claim is made had a reasonable basis 483 for believing occurred within the scope of commission 484 employment, duties, or responsibilities; provided nothing in 485 this paragraph shall be construed to protect any such person 486 from suit or liability for any damage, loss, injury, or 487 liability caused by the intentional or willful and wanton 488 misconduct of that person. 489 (b) The commission shall defend any member, officer, 490 executive director, employee, or representative of the 491 commission in any civil action seeking to impose liability 492 arising out of any actual or alleged act, error, or omission 493 that occurred within the scope of commission employment, duties, 494 or responsibilities, or that the person against whom the claim 495 is made had a reasonable basis for believing occurred within the 496 scope of commission employment, duties, or responsibilities; 497 provided nothing in this article shall be construed to prohibit 498 that person from retaining his or her own counsel and the actual 499 or alleged act, error, or omission did not result from that 500 person’s intentional or willful and wanton misconduct. 501 (c) The commission shall indemnify and hold harmless any 502 member, officer, executive director, employee, or representative 503 of the commission for the amount of any settlement or judgment 504 obtained against that person arising out of any actual or 505 alleged act, error, or omission that occurred within the scope 506 of commission employment, duties, or responsibilities, or that 507 such person had a reasonable basis for believing occurred within 508 the scope of commission employment, duties, or responsibilities; 509 provided the actual or alleged act, error, or omission did not 510 result from the intentional or willful and wanton misconduct of 511 that person. 512 513 ARTICLE VI 514 MEETINGS AND ACTS 515 516 (1) The commission shall meet and take such actions as are 517 consistent with the provisions of this compact and the bylaws. 518 (2) Each member of the commission shall have the right and 519 power to cast a vote to which that compact state is entitled and 520 to participate in the business and affairs of the commission. A 521 member shall vote in person or by such other means as provided 522 in the bylaws. The bylaws may provide for members’ participation 523 in meetings by telephone or other means of communication. 524 (3) The commission shall meet at least once during each 525 calendar year. Additional meetings shall be held as set forth in 526 the bylaws. 527 528 ARTICLE VII 529 RULEMAKING FUNCTIONS OF THE COMMISSION; RULES AND OPERATING 530 PROCEDURES; AND OPTING OUT OF UNIFORM STANDARDS 531 532 (1) RULEMAKING AUTHORITY.—The commission shall adopt 533 reasonable rules, including uniform standards, and operating 534 procedures in order to effectively and efficiently achieve the 535 purposes of this compact. Notwithstanding such requirement, if 536 the commission exercises its rulemaking authority in a manner 537 that is beyond the scope of the purposes of this compact or the 538 powers granted under this compact, such action by the commission 539 shall be invalid and have no force and effect. 540 (2) RULEMAKING PROCEDURE.—Rules and operating procedures 541 shall be made pursuant to a rulemaking process that conforms to 542 the Model State Administrative Procedure Act of 1981, as 543 amended, as may be appropriate to the operations of the 544 commission. Before the commission adopts a uniform standard, the 545 commission shall give written notice to the relevant state 546 legislative committees in each compact state responsible for 547 insurance issues of its intention to adopt the uniform standard. 548 The commission, in adopting a uniform standard, shall consider 549 fully all submitted materials and issue a concise explanation of 550 its decision. 551 (3) EFFECTIVE DATE AND OPT OUT OF A UNIFORM STANDARD.—A 552 uniform standard shall become effective 90 days after its 553 adoption by the commission or such later date as the commission 554 may determine; provided a compact state may opt out of a uniform 555 standard as provided in this article. All other rules and 556 operating procedures, and amendments thereto, shall become 557 effective as of the date specified in each rule, operating 558 procedure, or amendment. 559 (4) OPT-OUT PROCEDURE.— 560 (a) A compact state may opt out of a uniform standard by 561 legislation or regulation adopted by the Office of Insurance 562 Regulation under such state’s Administrative Procedure Act. For 563 purposes of this compact and this state, the Office of Insurance 564 Regulation constitutes this state’s agency for purposes of this 565 subsection. If a compact state elects to opt out of a uniform 566 standard by regulation, the state must: 567 1. Give written notice to the commission no later than 10 568 business days after the uniform standard is adopted, or at the 569 time the state becomes a compact state. 570 2. Find that the uniform standard does not provide 571 reasonable protections to the residents of the state, given the 572 conditions in the state. 573 (b) The commissioner shall make specific findings of fact 574 and conclusions of law, based on a preponderance of the 575 evidence, detailing the conditions in the state which warrant a 576 departure from the uniform standard and determining that the 577 uniform standard would not reasonably protect the residents of 578 the state. The commissioner must consider and balance the 579 following factors and find that the conditions in the state and 580 needs of the residents of the state outweigh: 581 1. The intent of the Legislature to participate in, and the 582 benefits of, an interstate agreement to establish national 583 uniform consumer protections for the products subject to this 584 compact. 585 2. The presumption that a uniform standard adopted by the 586 commission provides reasonable protections to consumers of the 587 relevant product. 588 589 Notwithstanding this subsection, a compact state may, at the 590 time of its enactment of this compact, prospectively opt out of 591 all uniform standards involving long-term care insurance 592 products by expressly providing for such opt out in the enacted 593 compact, and such an opt out shall not be treated as a material 594 variance in the offer or acceptance of any state to participate 595 in this compact. Such an opt out shall be effective at the time 596 of enactment of this compact by the compact state and shall 597 apply to all existing uniform standards involving long-term care 598 insurance products and those subsequently adopted. 599 (5) EFFECT OF OPTING OUT.—If a compact state elects to opt 600 out of a uniform standard, the uniform standard shall remain 601 applicable in the compact state electing to opt out until such 602 time the opt-out legislation is enacted into law or the 603 regulation opting out becomes effective. Once the opt out of a 604 uniform standard by a compact state becomes effective as 605 provided under the laws of that state, the uniform standard 606 shall have no further force and effect in that state unless and 607 until the legislation or regulation implementing the opt out is 608 repealed or otherwise becomes ineffective under the laws of the 609 state. If a compact state opts out of a uniform standard after 610 the uniform standard has been made effective in that state, the 611 opt out shall have the same prospective effect as provided under 612 Article XIV of this compact for withdrawals. 613 (6) STAY OF UNIFORM STANDARD.—If a compact state has 614 formally initiated the process of opting out of a uniform 615 standard by regulation, and while the regulatory opt out is 616 pending, the compact state may petition the commission, at least 617 15 days before the effective date of the uniform standard, to 618 stay the effectiveness of the uniform standard in that state. 619 The commission may grant a stay if the commission determines the 620 regulatory opt out is being pursued in a reasonable manner and 621 there is a likelihood of success. If a stay is granted or 622 extended by the commission, the stay or extension thereof may 623 postpone the effective date by up to 90 days, unless 624 affirmatively extended by the commission; provided a stay may 625 not be permitted to remain in effect for more than 1 year unless 626 the compact state can show extraordinary circumstances that 627 warrant a continuance of the stay, including, but not limited 628 to, the existence of a legal challenge that prevents the compact 629 state from opting out. A stay may be terminated by the 630 commission upon notice that the rulemaking process has been 631 terminated. 632 (7) JUDICIAL REVIEW.—Not later than 30 days after a rule or 633 operating procedure is adopted, any person may file a petition 634 for judicial review of the rule or operating procedure; provided 635 the filing of such a petition shall not stay or otherwise 636 prevent the rule or operating procedure from becoming effective 637 unless the court finds that the petitioner has a substantial 638 likelihood of success. The court shall give deference to the 639 actions of the commission consistent with applicable law and 640 shall not find the rule or operating procedure to be unlawful if 641 the rule or operating procedure represents a reasonable exercise 642 of the commission’s authority. 643 644 ARTICLE VIII 645 COMMISSION RECORDS AND ENFORCEMENT.— 646 647 (1) The commission shall adopt rules establishing 648 conditions and procedures for public inspection and copying of 649 its information and official records, except such information 650 and records involving the privacy of individuals and insurers’ 651 trade secrets. The commission may adopt additional rules under 652 which the commission may make available to federal and state 653 agencies, including law enforcement agencies, records and 654 information otherwise exempt from disclosure and may enter into 655 agreements with such agencies to receive or exchange information 656 or records subject to nondisclosure and confidentiality 657 provisions. 658 (2) Except as to privileged records, data, and information, 659 the laws of any compact state pertaining to confidentiality or 660 nondisclosure shall not relieve any compact state commissioner 661 of the duty to disclose any relevant records, data, or 662 information to the commission; provided disclosure to the 663 commission shall not be deemed to waive or otherwise affect any 664 confidentiality requirement; and further provided, except as 665 otherwise expressly provided in this compact, the commission 666 shall not be subject to the compact state’s laws pertaining to 667 confidentiality and nondisclosure with respect to records, data, 668 and information in its possession. Confidential information of 669 the commission shall remain confidential after such information 670 is provided to any commissioner. 671 (3) The commission shall monitor compact states for 672 compliance with duly adopted bylaws, rules, uniform standards, 673 and operating procedures. The commission shall notify any 674 noncomplying compact state in writing of its noncompliance with 675 commission bylaws, rules, or operating procedures. If a 676 noncomplying compact state fails to remedy its noncompliance 677 within the time specified in the notice of noncompliance, the 678 compact state shall be deemed to be in default as set forth in 679 Article XIV of this compact. 680 (4) The commissioner of any state in which an insurer is 681 authorized to do business or is conducting the business of 682 insurance shall continue to exercise his or her authority to 683 oversee the market regulation of the activities of the insurer 684 in accordance with the provisions of the state’s law. The 685 commissioner’s enforcement of compliance with the compact is 686 governed by the following provisions: 687 (a) With respect to the commissioner’s market regulation of 688 a product or advertisement that is approved or certified to the 689 commission, the content of the product or advertisement shall 690 not constitute a violation of the provisions, standards, or 691 requirements of the compact except upon a final order of the 692 commission, issued at the request of a commissioner after prior 693 notice to the insurer and an opportunity for hearing before the 694 commission. 695 (b) Before a commissioner may bring an action for violation 696 of any provision, standard, or requirement of the compact 697 relating to the content of an advertisement not approved or 698 certified to the commission, the commission, or an authorized 699 commission officer or employee, must authorize the action. 700 However, authorization pursuant to this paragraph does not 701 require notice to the insurer, opportunity for hearing, or 702 disclosure of requests for authorization or records of the 703 commission’s action on such requests. 704 705 ARTICLE IX 706 DISPUTE RESOLUTION 707 708 The commission shall attempt, upon the request of a member, 709 to resolve any disputes or other issues that are subject to this 710 compact and that may arise between two or more compact states, 711 or between compact states and noncompact states, and the 712 commission shall adopt an operating procedure providing for 713 resolution of such disputes. 714 715 ARTICLE X 716 PRODUCT FILING AND APPROVAL 717 718 (1) Insurers and third-party filers seeking to have a 719 product approved by the commission shall file the product with 720 and pay applicable filing fees to the commission. This compact 721 does not restrict or otherwise prevent an insurer from filing 722 its product with the insurance department in any state in which 723 the insurer is licensed to conduct the business of insurance and 724 such filing shall be subject to the laws of the states where 725 filed. 726 (2) The commission shall establish appropriate filing and 727 review processes and procedures pursuant to commission rules and 728 operating procedures. Notwithstanding any provision of this 729 article, the commission shall adopt rules to establish 730 conditions and procedures under which the commission will 731 provide public access to product filing information. In 732 establishing such rules, the commission shall consider the 733 interests of the public in having access to such information, as 734 well as protection of personal medical and financial information 735 and trade secrets, which may be contained in a product filing or 736 supporting information. 737 (3) Any product approved by the commission may be sold or 738 otherwise issued in those compact states for which the insurer 739 is legally authorized to do business. 740 741 ARTICLE XI 742 REVIEW OF COMMISSION DECISIONS REGARDING FILINGS 743 744 (1) No later than 30 days after the commission has given 745 notice of a disapproved product or advertisement filed with the 746 commission, the insurer or third-party filer whose filing was 747 disapproved may appeal the determination to a review panel 748 appointed by the commission. The commission shall adopt rules to 749 establish procedures for appointing such review panels and 750 provide for notice and hearing. An allegation that the 751 commission, in disapproving a product or advertisement filed 752 with the commission, acted arbitrarily, capriciously, or in a 753 manner that is an abuse of discretion or otherwise not in 754 accordance with the bylaw, is subject to judicial review in 755 accordance with subsection (4) of Article III of this compact. 756 (2) The commission may monitor, review, and reconsider 757 products and advertisement subsequent to their filing or 758 approval upon a finding that the product does not meet the 759 relevant uniform standard. Where appropriate, the commission may 760 withdraw or modify its approval after proper notice and hearing, 761 subject to the appeal process in subsection (1). 762 763 ARTICLE XII 764 FINANCE 765 766 (1) The commission shall pay or provide for the payment of 767 the reasonable expenses of the commission’s establishment and 768 organization. To fund the cost of the commission’s initial 769 operations, the commission may accept contributions and other 770 forms of funding from the National Association of Insurance 771 Commissioners, compact states, and other sources. Contributions 772 and other forms of funding from other sources shall be of such a 773 nature that the independence of the commission concerning the 774 performance of commission duties shall not be compromised. 775 (2) The commission shall collect a filing fee from each 776 insurer and third-party filer filing a product with the 777 commission to cover the cost of the operations and activities of 778 the commission and its staff in a total amount sufficient to 779 cover the commission’s annual budget. 780 (3) The commission’s budget for a fiscal year shall not be 781 approved until the budget has been subject to notice and comment 782 as set forth in Article VII of this compact. 783 (4) The commission shall be exempt from all taxation in and 784 by the compact states. 785 (5) The commission shall not pledge the credit of any 786 compact state, except by and with the appropriate legal 787 authority of that compact state. 788 (6) The commission shall keep complete and accurate 789 accounts of all its internal receipts, including grants and 790 donations, and disbursements of all funds under its control. The 791 internal financial accounts of the commission shall be subject 792 to the accounting procedures established under its bylaws. The 793 financial accounts and reports, including the system of internal 794 controls and procedures of the commission, shall be audited 795 annually by an independent certified public accountant. Upon the 796 determination of the commission, but no less frequently than 797 every 3 years, the review of the independent auditor shall 798 include a management and performance audit of the commission. 799 The commission shall make an annual report to the Governor and 800 the presiding officers of the Legislature of the compact states, 801 which shall include a report of the independent audit. The 802 commission’s internal accounts shall not be confidential and 803 such materials may be shared with the commissioner of any 804 compact state upon request; provided insurers’ trade secrets 805 shall remain confidential. 806 (7) A compact state does not have any claim to or ownership 807 of any property held by or vested in the commission or to any 808 commission funds held pursuant to the provisions of this 809 compact. 810 811 ARTICLE XIII 812 COMPACT STATES, EFFECTIVE DATE, AND AMENDMENTS 813 814 (1) Any state is eligible to become a compact state. 815 (2) The compact shall become effective and binding upon 816 legislative enactment of the compact into law by at least two 817 compact states; provided the commission shall become effective 818 for purposes of adopting uniform standards for, reviewing, and 819 giving approval or disapproval of, products filed with the 820 commission which satisfy applicable uniform standards only after 821 26 states are compact states or, alternatively, by states 822 representing greater than 40 percent of the premium volume for 823 life insurance, annuity, disability income, and long-term care 824 insurance products, based on records of the National Association 825 of Insurance Commissioners for the previous year. Thereafter, 826 the compact shall become effective and binding as to any other 827 compact state upon enactment of the compact into law by that 828 state. 829 (3) Amendments to the compact may be proposed by the 830 commission for enactment by the compact states. No amendment 831 shall become effective and binding upon the commission and the 832 compact states unless and until all compact states enact the 833 amendment into law. 834 835 ARTICLE XIV 836 WITHDRAWAL, DEFAULT, AND DISSOLUTION 837 838 (1) WITHDRAWAL.— 839 (a) Once effective, the compact shall continue in force and 840 remain binding upon each and every compact state; provided a 841 compact state may withdraw from the compact by enacting a law 842 specifically repealing the law that enacted the compact into 843 law. 844 (b) The effective date of withdrawal is the effective date 845 of the repealing law. However, the withdrawal shall not apply to 846 any product filings approved or self-certified, or any 847 advertisement of such products, on the date the repealing law 848 becomes effective, except by mutual agreement of the commission 849 and the withdrawing state unless the approval is rescinded by 850 the withdrawing state as provided in paragraph (e). 851 (c) The commissioner of the withdrawing state shall 852 immediately notify the management committee in writing upon the 853 introduction of legislation repealing this compact in the 854 withdrawing state. 855 (d) The commission shall notify the other compact states of 856 the introduction of such legislation within 10 days after the 857 commission’s receipt of notice of such legislation. 858 (e) The withdrawing state is responsible for all 859 obligations, duties, and liabilities incurred through the 860 effective date of withdrawal, including any obligations, the 861 performance of which extend beyond the effective date of 862 withdrawal, except to the extent those obligations may have been 863 released or relinquished by mutual agreement of the commission 864 and the withdrawing state. The commission’s approval of products 865 and advertisement prior to the effective date of withdrawal 866 shall continue to be effective and be given full force and 867 effect in the withdrawing state unless formally rescinded by the 868 withdrawing state in the same manner as provided by the laws of 869 the withdrawing state for the prospective disapproval of 870 products or advertisement previously approved under state law. 871 (f) Reinstatement following withdrawal of any compact state 872 shall occur upon the effective date of the withdrawing state 873 reenacting the compact. 874 (2) DEFAULT.— 875 (a) If the commission determines that any compact state has 876 at any time defaulted in the performance of any of its 877 obligations or responsibilities under this compact, the bylaws, 878 or duly adopted rules or operating procedures, after notice and 879 hearing as set forth in the bylaws, all rights, privileges, and 880 benefits conferred by this compact on the defaulting state shall 881 be suspended from the effective date of default as fixed by the 882 commission. The grounds for default include, but are not limited 883 to, failure of a compact state to perform its obligations or 884 responsibilities, and any other grounds designated in commission 885 rules. The commission shall immediately notify the defaulting 886 state in writing of the defaulting state’s suspension pending a 887 cure of the default. The commission shall stipulate the 888 conditions and the time period within which the defaulting state 889 must cure its default. If the defaulting state fails to cure the 890 default within the time period specified by the commission, the 891 defaulting state shall be terminated from the compact and all 892 rights, privileges, and benefits conferred by this compact shall 893 be terminated from the effective date of termination. 894 (b) Product approvals by the commission or product self 895 certifications, or any advertisement in connection with such 896 product, which are in force on the effective date of termination 897 shall remain in force in the defaulting state in the same manner 898 as if the defaulting state had withdrawn voluntarily pursuant to 899 subsection (1). 900 (c) Reinstatement following termination of any compact 901 state requires a reenactment of the compact. 902 (3) DISSOLUTION OF THE COMPACT.— 903 (a) The compact dissolves effective upon the date of the 904 withdrawal or default of the compact state that reduces 905 membership in the compact to a single compact state. 906 (b) Upon the dissolution of this compact, the compact 907 becomes null and void and shall be of no further force or effect 908 and the business and affairs of the commission shall be 909 concluded and any surplus funds shall be distributed in 910 accordance with the bylaws. 911 912 ARTICLE XV 913 SEVERABILITY AND CONSTRUCTION 914 915 (1) If any provision of this act or its application to any 916 person or circumstance is held invalid, the invalidity does not 917 affect other provisions or applications of this act which can be 918 given effect without the invalid provision or application, and 919 to this end the provisions of this act are severable. 920 (2) The provisions of this compact shall be liberally 921 construed to effectuate its purposes. 922 923 Article XVI 924 BINDING EFFECT OF COMPACT AND OTHER LAWS 925 926 (1) BINDING EFFECT OF THIS COMPACT.— 927 (a) All lawful actions of the commission, including all 928 rules and operating procedures adopted by the commission, are 929 binding upon the compact states. 930 (b) All agreements between the commission and the compact 931 states are binding in accordance with their terms. 932 (c) Upon the request of a party to a conflict over the 933 meaning or interpretation of commission actions, and upon a 934 majority vote of the compact states, the commission may issue 935 advisory opinions regarding the meaning or interpretation in 936 dispute. 937 (d) If any provision of this compact exceeds the 938 constitutional limits imposed on the Legislature of any compact 939 state, the obligations, duties, powers, or jurisdiction sought 940 to be conferred by that provision upon the commission shall be 941 ineffective as to that compact state and those obligations, 942 duties, powers, or jurisdiction shall remain in the compact 943 state and shall be exercised by the agency of such state to 944 which those obligations, duties, powers, or jurisdiction are 945 delegated by law in effect at the time this compact becomes 946 effective. 947 (2) OTHER LAWS.— 948 (a) This compact does not prevent the enforcement of any 949 other law of a compact state, except as provided in paragraph 950 (b). 951 (b) For any product approved or certified to the 952 commission, the rules, uniform standards, and any other 953 requirements of the commission shall constitute the exclusive 954 provisions applicable to the content, approval, and 955 certification of such products. For advertising that is subject 956 to the commission’s authority, any rule, uniform standard, or 957 other requirement of the commission which governs the content of 958 the advertisement shall constitute the exclusive provision that 959 a commissioner may apply to the content of the advertisement. 960 Notwithstanding this paragraph, an action taken by the 961 commission does not abrogate or restrict: 962 1. The access of any person to a court of this state; 963 2. Remedies available under the laws of this state related 964 to breach of contract, tort, or other laws not specifically 965 directed to the content of the product; 966 3. State law relating to the construction of insurance 967 contracts; or 968 4. The authority of the Attorney General, including, but 969 not limited to, maintaining any action or proceeding, as 970 authorized by law. 971 (c) All insurance products filed with individual states 972 shall be subject to the laws of those states. 973 Section 3. (1) This act shall take effect on the date upon 974 which the operational procedures and adopted rules of the 975 Interstate Insurance Product Regulation Commission comply with 976 the public-records laws of this state. 977 (2) If this act takes effect pursuant to subsection (1), 978 this act becomes void on the date upon which the operational 979 procedures and adopted rules of the Interstate Insurance Product 980 Regulation Commission no longer comply with the provisions of 981 the public-records laws of this state.