Bill Text: IL SB2544 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Creates the Interstate Insurance Product Regulation Compact. Provides that the purposes of the Compact include the promotion and protection of the interests of consumers of individual and group annuity, life insurance, disability income, and long-term care insurance products. Creates the Interstate Insurance Product Regulation Commission to develop uniform standards for insurance products covered under the Compact, establish a central clearing house to receive and provide prompt review of insurance products covered under the Compact, provide appropriate regulatory approval, and improve coordination of regulatory resources and expertise between state insurance departments. Effective immediately.

Spectrum: Slight Partisan Bill (Republican 2-1)

Status: (Passed) 2010-11-30 - Public Act . . . . . . . . . 96-1481 [SB2544 Detail]

Download: Illinois-2009-SB2544-Enrolled.html

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AN ACT concerning insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Interstate Insurance Product Regulation Compact.
Section 5. Agreement. Pursuant to terms and conditions of
this Act, the State of Illinois seeks to join with other States
and establish the Interstate Insurance Product Regulation
Compact, and thus become a member of the Interstate Insurance
Product Regulation Commission. The representative of this
State to the Commission shall be the Director of Insurance.
Section 10. Ratification. The State of Illinois ratifies,
approves, and adopts the following interstate compact:
Article I. PURPOSES
The purposes of this Compact are, through means of joint
and cooperative action among the Compacting States:
1. To promote and protect the interest of consumers of
individual and group annuity, life insurance, disability
income and long-term care insurance products;
2. To develop uniform standards for insurance products
covered under the Compact;

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3. To establish a central clearinghouse to receive and
provide prompt review of insurance products covered under
the Compact and, in certain cases, advertisements related
thereto, submitted by insurers authorized to do business in
one or more Compacting States;
4. To give appropriate regulatory approval to those
product filings and advertisements satisfying the
applicable uniform standard;
5. To improve coordination of regulatory resources and
expertise between state insurance departments regarding
the setting of uniform standards and review of insurance
products covered under the Compact;
6. To create the Interstate Insurance Product
Regulation Commission; and
7. To perform these and such other related functions as
may be consistent with the state regulation of the business
of insurance.
Article II. DEFINITIONS
For purposes of this Compact:
1. "Advertisement" means any material designed to
create public interest in a Product, or induce the public
to purchase, increase, modify, reinstate, borrow on,
surrender, replace or retain a policy, as more specifically
defined in the Rules and Operating Procedures of the
Commission.

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2. "Bylaws" mean those bylaws established by the
Commission for its governance, or for directing or
controlling the Commission's actions or conduct.
3. "Compacting State" means any State which has enacted
this Compact legislation and which has not withdrawn
pursuant to Article XIV, Section 1, or been terminated
pursuant to Article XIV, Section 2.
4. "Commission" means the "Interstate Insurance
Product Regulation Commission" established by this
Compact.
5. "Commissioner" means the chief insurance regulatory
official of a State including, but not limited to
commissioner, superintendent, director or administrator.
6. "Domiciliary State" means the state in which an
Insurer is incorporated or organized; or, in the case of an
alien Insurer, its state of entry.
7. "Insurer" means any entity licensed by a State to
issue contracts of insurance for any of the lines of
insurance covered by this Act.
8. "Member" means the person chosen by a Compacting
State as its representative to the Commission, or his or
her designee.
9. "Non-compacting State" means any State which is not
at the time a Compacting State.
10. "Operating Procedures" mean procedures promulgated
by the Commission implementing a Rule, Uniform Standard or

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a provision of this Compact.
11. "Product" means the form of a policy or contract,
including any application, endorsement, or related form
which is attached to and made a part of the policy or
contract, and any evidence of coverage or certificate, for
an individual or group annuity, life insurance, disability
income or long-term care insurance product that an Insurer
is authorized to issue.
12. "Rule" means a statement of general or particular
applicability and future effect promulgated by the
Commission, including a Uniform Standard developed
pursuant to Article VII of this Compact, designed to
implement, interpret, or prescribe law or policy or
describing the organization, procedure, or practice
requirements of the Commission, which shall have the force
and effect of law in the Compacting States.
13. "State" means any state, district or territory of
the United States of America.
14. "Third-Party Filer" means an entity that submits a
Product filing to the Commission on behalf of an Insurer.
15. "Uniform Standard" means a standard adopted by the
Commission for a Product line, pursuant to Article VII of
this Compact, and shall include all of the Product
requirements in aggregate; provided, that each Uniform
Standard shall be construed, whether express or implied, to
prohibit the use of any inconsistent, misleading or

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ambiguous provisions in a Product and the form of the
Product made available to the public shall not be unfair,
inequitable or against public policy as determined by the
Commission.
Article III. ESTABLISHMENT OF THE COMMISSION AND VENUE
1. The Compacting States hereby create and establish a
joint public agency known as the "Interstate Insurance Product
Regulation Commission." Pursuant to Article IV, the Commission
will have the power to develop Uniform Standards for Product
lines, receive and provide prompt review of Products filed
therewith, and give approval to those Product filings
satisfying applicable Uniform Standards; provided, it is not
intended for the Commission to be the exclusive entity for
receipt and review of insurance product filings. Nothing herein
shall prohibit any Insurer from filing its product in any State
wherein the Insurer is licensed to conduct the business of
insurance; and any such filing shall be subject to the laws of
the State where filed.
2. The Commission is a body corporate and politic, and an
instrumentality of the Compacting States.
3. The Commission is solely responsible for its liabilities
except as otherwise specifically provided in this Compact.
4. Venue is proper and judicial proceedings by or against
the Commission shall be brought solely and exclusively in a
Court of competent jurisdiction where the principal office of

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the Commission is located.
Article IV. POWERS OF THE COMMISSION
The Commission shall have the following powers:
1. To promulgate Rules, pursuant to Article VII of this
Compact, which shall have the force and effect of law and
shall be binding in the Compacting States to the extent and
in the manner provided in this Compact;
2. To exercise its rule-making authority and establish
reasonable Uniform Standards for Products covered under
the Compact, and Advertisement related thereto, which
shall have the force and effect of law and shall be binding
in the Compacting States, but only for those Products filed
with the Commission, provided, that a Compacting State
shall have the right to opt out of such Uniform Standard
pursuant to Article VII, to the extent and in the manner
provided in this Compact, and, provided further, that any
Uniform Standard established by the Commission for
long-term care insurance products may provide the same or
greater protections for consumers as, but shall not provide
less than, those protections set forth in the National
Association of Insurance Commissioners' Long-Term Care
Insurance Model Act and Long-Term Care Insurance Model
Regulation, respectively, adopted as of 2001. The
Commission shall consider whether any subsequent
amendments to the NAIC Long-Term Care Insurance Model Act

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or Long-Term Care Insurance Model Regulation adopted by the
NAIC require amending of the Uniform Standards established
by the Commission for long-term care insurance products;
3. To receive and review in an expeditious manner
Products filed with the Commission, and rate filings for
disability income and long-term care insurance Products,
and give approval of those Products and rate filings that
satisfy the applicable Uniform Standard, where such
approval shall have the force and effect of law and be
binding on the Compacting States to the extent and in the
manner provided in the Compact;
4. To receive and review in an expeditious manner
Advertisement relating to long-term care insurance
products for which Uniform Standards have been adopted by
the Commission, and give approval to all Advertisement that
satisfies the applicable Uniform Standard. For any product
covered under this Compact, other than long-term care
insurance products, the Commission shall have the
authority to require an insurer to submit all or any part
of its Advertisement with respect to that product for
review or approval prior to use, if the Commission
determines that the nature of the product is such that an
Advertisement of the product could have the capacity or
tendency to mislead the public. The actions of Commission
as provided in this section shall have the force and effect
of law and shall be binding in the Compacting States to the

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extent and in the manner provided in the Compact;
5. To exercise its rule-making authority and designate
Products and Advertisement that may be subject to a
self-certification process without the need for prior
approval by the Commission.
6. To promulgate Operating Procedures, pursuant to
Article VII of this Compact, which shall be binding in the
Compacting States to the extent and in the manner provided
in this Compact;
7. To bring and prosecute legal proceedings or actions
in its name as the Commission; provided, that the standing
of any state insurance department to sue or be sued under
applicable law shall not be affected;
8. To issue subpoenas requiring the attendance and
testimony of witnesses and the production of evidence;
9. To establish and maintain offices;
10. To purchase and maintain insurance and bonds;
11. To borrow, accept or contract for services of
personnel, including, but not limited to, employees of a
Compacting State;
12. To hire employees, professionals or specialists,
and elect or appoint officers, and to fix their
compensation, define their duties and give them
appropriate authority to carry out the purposes of the
Compact, and determine their qualifications; and to
establish the Commission's personnel policies and programs

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relating to, among other things, conflicts of interest,
rates of compensation and qualifications of personnel;
13. To accept any and all appropriate donations and
grants of money, equipment, supplies, materials and
services, and to receive, utilize and dispose of the same;
provided that at all times the Commission shall strive to
avoid any appearance of impropriety;
14. To lease, purchase, accept appropriate gifts or
donations of, or otherwise to own, hold, improve or use,
any property, real, personal or mixed; provided that at all
times the Commission shall strive to avoid any appearance
of impropriety;
15. To sell, convey, mortgage, pledge, lease,
exchange, abandon or otherwise dispose of any property,
real, personal or mixed;
16. To remit filing fees to Compacting States as may be
set forth in the Bylaws, Rules or Operating Procedures;
17. To enforce compliance by Compacting States with
Rules, Uniform Standards, Operating Procedures and Bylaws;
18. To provide for dispute resolution among Compacting
States;
19. To advise Compacting States on issues relating to
Insurers domiciled or doing business in Non-compacting
jurisdictions, consistent with the purposes of this
Compact;
20. To provide advice and training to those personnel

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in state insurance departments responsible for product
review, and to be a resource for state insurance
departments;
21. To establish a budget and make expenditures;
22. To borrow money;
23. To appoint committees, including advisory
committees comprising Members, state insurance regulators,
state legislators or their representatives, insurance
industry and consumer representatives, and such other
interested persons as may be designated in the Bylaws;
24. To provide and receive information from, and to
cooperate with law enforcement agencies;
25. To adopt and use a corporate seal; and
26. To perform such other functions as may be necessary
or appropriate to achieve the purposes of this Compact
consistent with the state regulation of the business of
insurance.
Article V. ORGANIZATION OF THE COMMISSION
1. Membership, Voting and Bylaws.
a. Each Compacting State shall have and be limited to one
Member. Each Member shall be qualified to serve in that
capacity pursuant to applicable law of the Compacting State.
Any Member may be removed or suspended from office as provided
by the law of the State from which he or she shall be
appointed. Any vacancy occurring in the Commission shall be

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filled in accordance with the laws of the Compacting State
wherein the vacancy exists. Nothing herein shall be construed
to affect the manner in which a Compacting State determines the
election or appointment and qualification of its own
Commissioner.
b. Each Member shall be entitled to one vote and shall have
an opportunity to participate in the governance of the
Commission in accordance with the Bylaws. Notwithstanding any
provision herein to the contrary, no action of the Commission
with respect to the promulgation of a Uniform Standard shall be
effective unless two-thirds (2/3) of the Members vote in favor
thereof.
c. The Commission shall, by a majority of the Members,
prescribe Bylaws to govern its conduct as may be necessary or
appropriate to carry out the purposes, and exercise the powers,
of the Compact, including, but not limited to:
i. establishing the fiscal year of the Commission;
ii. providing reasonable procedures for appointing
and electing members, as well as holding meetings, of
the Management Committee;
iii. providing reasonable standards and
procedures: (i) for the establishment and meetings of
other committees, and (ii) governing any general or
specific delegation of any authority or function of the
Commission;
iv. providing reasonable procedures for calling

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and conducting meetings of the Commission that
consists of a majority of Commission members, ensuring
reasonable advance notice of each such meeting, and
providing for the right of citizens to attend each such
meeting with enumerated exceptions designed to protect
the public's interest, the privacy of individuals, and
insurers' proprietary information, including trade
secrets. The Commission may meet in camera only after a
majority of the entire membership votes to close a
meeting en toto or in part. As soon as practicable, the
Commission must make public (i) a copy of the vote to
close the meeting revealing the vote of each Member
with no proxy votes allowed, and (ii) votes taken
during such meeting;
v. establishing the titles, duties and authority
and reasonable procedures for the election of the
officers of the Commission;
vi. providing reasonable standards and procedures
for the establishment of the personnel policies and
programs of the Commission. Notwithstanding any civil
service or other similar laws of any Compacting State,
the Bylaws shall exclusively govern the personnel
policies and programs of the Commission;
vii. promulgating a code of ethics to address
permissible and prohibited activities of commission
members and employees; and

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viii. providing a mechanism for winding up the
operations of the Commission and the equitable
disposition of any surplus funds that may exist after
the termination of the Compact after the payment and/or
reserving of all of its debts and obligations.
d. The Commission shall publish its bylaws in a convenient
form and file a copy thereof and a copy of any amendment
thereto, with the appropriate agency or officer in each of the
Compacting States.
2. Management Committee, Officers and Personnel.
a. A Management Committee comprising no more than fourteen
(14) members shall be established as follows:
(i) One (1) member from each of the six (6)
Compacting States with the largest premium volume for
individual and group annuities, life, disability
income and long-term care insurance products,
determined from the records of the NAIC for the prior
year;
(ii) Four (4) members from those Compacting States
with at least two percent (2%) of the market based on
the premium volume described above, other than the six
(6) Compacting States with the largest premium volume,
selected on a rotating basis as provided in the Bylaws,
and;
(iii) Four (4) members from those Compacting
States with less than two percent (2%) of the market,

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based on the premium volume described above, with one
(1) selected from each of the four (4) zone regions of
the NAIC as provided in the Bylaws.
b. The Management Committee shall have such authority and
duties as may be set forth in the Bylaws, including but not
limited to:
i. managing the affairs of the Commission in a
manner consistent with the Bylaws and purposes of the
Commission;
ii. establishing and overseeing an organizational
structure within, and appropriate procedures for, the
Commission to provide for the creation of Uniform
Standards and other Rules, receipt and review of
product filings, administrative and technical support
functions, review of decisions regarding the
disapproval of a product filing, and the review of
elections made by a Compacting State to opt out of a
Uniform Standard; provided that a Uniform Standard
shall not be submitted to the Compacting States for
adoption unless approved by two-thirds (2/3) of the
members of the Management Committee;
iii. overseeing the offices of the Commission; and
iv. planning, implementing, and coordinating
communications and activities with other state,
federal and local government organizations in order to
advance the goals of the Commission.

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c. The Commission shall elect annually officers from the
Management Committee, with each having such authority and
duties, as may be specified in the Bylaws.
d. The Management Committee may, subject to the approval of
the Commission, appoint or retain an executive director for
such period, upon such terms and conditions and for such
compensation as the Commission may deem appropriate. The
executive director shall serve as secretary to the Commission,
but shall not be a Member of the Commission. The executive
director shall hire and supervise such other staff as may be
authorized by the Commission.
3. Legislative and Advisory Committees.
a. A legislative committee comprising state legislators or
their designees shall be established to monitor the operations
of, and make recommendations to, the Commission, including the
Management Committee; provided that the manner of selection and
term of any legislative committee member shall be as set forth
in the Bylaws. Prior to the adoption by the Commission of any
Uniform Standard, revision to the Bylaws, annual budget or
other significant matter as may be provided in the Bylaws, the
Management Committee shall consult with and report to the
legislative committee.
b. The Commission shall establish two (2) advisory
committees, one of which shall comprise consumer
representatives independent of the insurance industry, and the
other comprising insurance industry representatives.

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c. The Commission may establish additional advisory
committees as its Bylaws may provide for the carrying out of
its functions.
4. Corporate Records of the Commission. The Commission
shall maintain its corporate books and records in accordance
with the Bylaws.
5. Qualified Immunity, Defense and Indemnification.
a. The Members, officers, executive director, employees
and representatives of the Commission shall be immune from suit
and liability, either personally or in their official capacity,
for any claim for damage to or loss of property or personal
injury or other civil liability caused by or arising out of any
actual or alleged act, error or omission that occurred, or that
the person against whom the claim is made had a reasonable
basis for believing occurred within the scope of Commission
employment, duties or responsibilities; provided, that nothing
in this paragraph shall be construed to protect any such person
from suit and/or liability for any damage, loss, injury or
liability caused by the intentional or willful and wanton
misconduct of that person.
b. The Commission shall defend any Member, officer,
executive director, employee or representative of the
Commission in any civil action seeking to impose liability
arising out of any actual or alleged act, error or omission
that occurred within the scope of Commission employment, duties
or responsibilities, or that the person against whom the claim

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is made had a reasonable basis for believing occurred within
the scope of Commission employment, duties or
responsibilities; provided, that nothing herein shall be
construed to prohibit that person from retaining his or her own
counsel; and provided further, that the actual or alleged act,
error or omission did not result from that person's intentional
or willful and wanton misconduct.
c. The Commission shall indemnify and hold harmless any
Member, officer, executive director, employee or
representative of the Commission for the amount of any
settlement or judgment obtained against that person arising out
of any actual or alleged act, error or omission that occurred
within the scope of Commission employment, duties or
responsibilities, or that such person had a reasonable basis
for believing occurred within the scope of Commission
employment, duties or responsibilities, provided, that the
actual or alleged act, error or omission did not result from
the intentional or willful and wanton misconduct of that
person.
Article VI. MEETINGS AND ACTS OF THE COMMISSION
1. The Commission shall meet and take such actions as are
consistent with the provisions of this Compact and the Bylaws.
2. Each Member of the Commission shall have the right and
power to cast a vote to which that Compacting State is entitled
and to participate in the business and affairs of the

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Commission. A Member shall vote in person or by such other
means as provided in the Bylaws. The Bylaws may provide for
Members' participation in meetings by telephone or other means
of communication.
3. The Commission shall meet at least once during each
calendar year. Additional meetings shall be held as set forth
in the Bylaws.
Article VII. RULES & OPERATING PROCEDURES: RULEMAKING
FUNCTIONS OF THE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS
1. Rulemaking Authority. The Commission shall promulgate
reasonable Rules, including Uniform Standards, and Operating
Procedures in order to effectively and efficiently achieve the
purposes of this Compact. Notwithstanding the foregoing, in the
event the Commission exercises its rulemaking authority in a
manner that is beyond the scope of the purposes of this Act, or
the powers granted hereunder, then such an action by the
Commission shall be invalid and have no force and effect.
2. Rulemaking Procedure. Rules and Operating Procedures
shall be made pursuant to a rulemaking process that conforms to
the Model State Administrative Procedure Act of 1981 as
amended, as may be appropriate to the operations of the
Commission. Before the Commission adopts a Uniform Standard,
the Commission shall give written notice to the relevant state
legislative committee(s) in each Compacting State responsible
for insurance issues of its intention to adopt the Uniform

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Standard. The Commission in adopting a Uniform Standard shall
consider fully all submitted materials and issue a concise
explanation of its decision.
3. Effective Date and Opt Out of a Uniform Standard. A
Uniform Standard shall become effective ninety (90) days after
its promulgation by the Commission or such later date as the
Commission may determine; provided, however, that a Compacting
State may opt out of a Uniform Standard as provided in this
Article. "Opt out" shall be defined as any action by a
Compacting State to decline to adopt or participate in a
promulgated Uniform Standard. All other Rules and Operating
Procedures, and amendments thereto, shall become effective as
of the date specified in each Rule, Operating Procedure or
amendment.
4. Opt Out Procedure. A Compacting State may opt out of a
Uniform Standard, either by legislation or regulation duly
promulgated by the Insurance Department under the Compacting
State's Administrative Procedure Act. If a Compacting State
elects to opt out of a Uniform Standard by regulation, it must
(a) give written notice to the Commission no later than ten
(10) business days after the Uniform Standard is promulgated,
or at the time the State becomes a Compacting State and (b)
find that the Uniform Standard does not provide reasonable
protections to the citizens of the State, given the conditions
in the State. The Commissioner shall make specific findings of
fact and conclusions of law, based on a preponderance of the

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evidence, detailing the conditions in the State which warrant a
departure from the Uniform Standard and determining that the
Uniform Standard would not reasonably protect the citizens of
the State. The Commissioner must consider and balance the
following factors and find that the conditions in the State and
needs of the citizens of the State outweigh: (i) the intent of
the legislature to participate in, and the benefits of, an
interstate agreement to establish national uniform consumer
protections for the Products subject to this Act; and (ii) the
presumption that a Uniform Standard adopted by the Commission
provides reasonable protections to consumers of the relevant
Product.
Notwithstanding the foregoing, a Compacting State may, at
the time of its enactment of this Compact, prospectively opt
out of all Uniform Standards involving long-term care insurance
products by expressly providing for such opt out in the enacted
Compact, and such an opt out shall not be treated as a material
variance in the offer or acceptance of any State to participate
in this Compact. Such an opt out shall be effective at the time
of enactment of this Compact by the Compacting State and shall
apply to all existing Uniform Standards involving long-term
care insurance products and those subsequently promulgated.
5. Effect of Opt Out. If a Compacting State elects to opt
out of a Uniform Standard, the Uniform Standard shall remain
applicable in the Compacting State electing to opt out until
such time the opt out legislation is enacted into law or the

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regulation opting out becomes effective.
Once the opt out of a Uniform Standard by a Compacting
State becomes effective as provided under the laws of that
State, the Uniform Standard shall have no further force and
effect in that State unless and until the legislation or
regulation implementing the opt out is repealed or otherwise
becomes ineffective under the laws of the State. If a
Compacting State opts out of a Uniform Standard after the
Uniform Standard has been made effective in that State, the opt
out shall have the same prospective effect as provided under
Article XIV for withdrawals.
6. Stay of Uniform Standard. If a Compacting State has
formally initiated the process of opting out of a Uniform
Standard by regulation, and while the regulatory opt out is
pending, the Compacting State may petition the Commission, at
least fifteen (15) days before the effective date of the
Uniform Standard, to stay the effectiveness of the Uniform
Standard in that State. The Commission may grant a stay if it
determines the regulatory opt out is being pursued in a
reasonable manner and there is a likelihood of success. If a
stay is granted or extended by the Commission, the stay or
extension thereof may postpone the effective date by up to
ninety (90) days, unless affirmatively extended by the
Commission; provided, a stay may not be permitted to remain in
effect for more than one (1) year unless the Compacting State
can show extraordinary circumstances which warrant a

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continuance of the stay, including, but not limited to, the
existence of a legal challenge which prevents the Compacting
State from opting out. A stay may be terminated by the
Commission upon notice that the rulemaking process has been
terminated.
7. Not later than thirty (30) days after a Rule or
Operating Procedure is promulgated, any person may file a
petition for judicial review of the Rule or Operating
Procedure; provided, that the filing of such a petition shall
not stay or otherwise prevent the Rule or Operating Procedure
from becoming effective unless the court finds that the
petitioner has a substantial likelihood of success. The court
shall give deference to the actions of the Commission
consistent with applicable law and shall not find the Rule or
Operating Procedure to be unlawful if the Rule or Operating
Procedure represents a reasonable exercise of the Commission's
authority.
Article VIII. COMMISSION RECORDS AND ENFORCEMENT
1. The Commission shall promulgate Rules establishing
conditions and procedures for public inspection and copying of
its information and official records, except such information
and records involving the privacy of individuals and insurers'
trade secrets. The Commission may promulgate additional Rules
under which it may make available to federal and state
agencies, including law enforcement agencies, records and

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information otherwise exempt from disclosure, and may enter
into agreements with such agencies to receive or exchange
information or records subject to nondisclosure and
confidentiality provisions.
2. Except as to privileged records, data and information,
the laws of any Compacting State pertaining to confidentiality
or nondisclosure shall not relieve any Compacting State
Commissioner of the duty to disclose any relevant records, data
or information to the Commission; provided, that disclosure to
the Commission shall not be deemed to waive or otherwise affect
any confidentiality requirement; and further provided, that,
except as otherwise expressly provided in this Act, the
Commission shall not be subject to the Compacting State's laws
pertaining to confidentiality and nondisclosure with respect
to records, data and information in its possession.
Confidential information of the Commission shall remain
confidential after such information is provided to any
Commissioner.
3. The Commission shall monitor Compacting States for
compliance with duly adopted Bylaws, Rules, including Uniform
Standards, and Operating Procedures. The Commission shall
notify any non-complying Compacting State in writing of its
noncompliance with Commission Bylaws, Rules or Operating
Procedures. If a non-complying Compacting State fails to remedy
its noncompliance within the time specified in the notice of
noncompliance, the Compacting State shall be deemed to be in

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default as set forth in Article XIV.
4. The Commissioner of any State in which an Insurer is
authorized to do business, or is conducting the business of
insurance, shall continue to exercise his or her authority to
oversee the market regulation of the activities of the Insurer
in accordance with the provisions of the State's law. The
Commissioner's enforcement of compliance with the Compact is
governed by the following provisions:
a. With respect to the Commissioner's market regulation of
a Product or Advertisement that is approved or certified to the
Commission, the content of the Product or Advertisement shall
not constitute a violation of the provisions, standards or
requirements of the Compact except upon a final order of the
Commission, issued at the request of a Commissioner after prior
notice to the Insurer and an opportunity for hearing before the
Commission.
b. Before a Commissioner may bring an action for violation
of any provision, standard or requirement of the Compact
relating to the content of an Advertisement not approved or
certified to the Commission, the Commission, or an authorized
Commission officer or employee, must authorize the action.
However, authorization pursuant to this Paragraph does not
require notice to the Insurer, opportunity for hearing or
disclosure of requests for authorization or records of the
Commission's action on such requests.

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Article IX. DISPUTE RESOLUTION
The Commission shall attempt, upon the request of a Member,
to resolve any disputes or other issues that are subject to
this Compact and which may arise between two or more Compacting
States, or between Compacting States and Non-compacting
States, and the Commission shall promulgate an Operating
Procedure providing for resolution of such disputes.
Article X. PRODUCT FILING AND APPROVAL
1. Insurers and Third-Party Filers seeking to have a
Product approved by the Commission shall file the Product with,
and pay applicable filing fees to, the Commission. Nothing in
this Act shall be construed to restrict or otherwise prevent an
insurer from filing its Product with the insurance department
in any State wherein the insurer is licensed to conduct the
business of insurance, and such filing shall be subject to the
laws of the States where filed.
2. The Commission shall establish appropriate filing and
review processes and procedures pursuant to Commission Rules
and Operating Procedures. Notwithstanding any provision herein
to the contrary, the Commission shall promulgate Rules to
establish conditions and procedures under which the Commission
will provide public access to Product filing information. In
establishing such Rules, the Commission shall consider the
interests of the public in having access to such information,
as well as protection of personal medical and financial

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information and trade secrets, that may be contained in a
Product filing or supporting information.
3. Any Product approved by the Commission may be sold or
otherwise issued in those Compacting States for which the
Insurer is legally authorized to do business.
Article XI. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS
1. Not later than thirty (30) days after the Commission has
given notice of a disapproved Product or Advertisement filed
with the Commission, the Insurer or Third Party Filer whose
filing was disapproved may appeal the determination to a review
panel appointed by the Commission. The Commission shall
promulgate Rules to establish procedures for appointing such
review panels and provide for notice and hearing. An allegation
that the Commission, in disapproving a Product or Advertisement
filed with the Commission, acted arbitrarily, capriciously, or
in a manner that is an abuse of discretion or otherwise not in
accordance with the law, is subject to judicial review in
accordance with Article III, section 5.
2. The Commission shall have authority to monitor, review
and reconsider Products and Advertisement subsequent to their
filing or approval upon a finding that the product does not
meet the relevant Uniform Standard. Where appropriate, the
Commission may withdraw or modify its approval after proper
notice and hearing, subject to the appeal process in section 1
above.

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Article XII. FINANCE
1. The Commission shall pay or provide for the payment of
the reasonable expenses of its establishment and organization.
To fund the cost of its initial operations, the Commission may
accept contributions and other forms of funding from the
National Association of Insurance Commissioners, Compacting
States and other sources. Contributions and other forms of
funding from other sources shall be of such a nature that the
independence of the Commission concerning the performance of
its duties shall not be compromised.
2. The Commission shall collect a filing fee from each
Insurer and Third Party Filer filing a product with the
Commission to cover the cost of the operations and activities
of the Commission and its staff in a total amount sufficient to
cover the Commission's annual budget.
3. The Commission's budget for a fiscal year shall not be
approved until it has been subject to notice and comment as set
forth in Article VII of this Compact.
4. The Commission shall be exempt from all taxation in and
by the Compacting States.
5. The Commission shall not pledge the credit of any
Compacting State, except by and with the appropriate legal
authority of that Compacting State.
6. The Commission shall keep complete and accurate accounts
of all its internal receipts, including grants and donations,

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and disbursements of all funds under its control. The internal
financial accounts of the Commission shall be subject to the
accounting procedures established under its Bylaws. The
financial accounts and reports including the system of internal
controls and procedures of the Commission shall be audited
annually by an independent certified public accountant. Upon
the determination of the Commission, but no less frequently
than every three (3) years, the review of the independent
auditor shall include a management and performance audit of the
Commission. The Commission shall make an Annual Report to the
Governor and legislature of the Compacting States, which shall
include a report of the independent audit. The Commission's
internal accounts shall not be confidential and such materials
may be shared with the Commissioner of any Compacting State
upon request, provided, however, that any work papers related
to any internal or independent audit and any information
regarding the privacy of individuals and insurers' proprietary
information, including trade secrets, shall remain
confidential.
7. No Compacting State shall have any claim to or ownership
of any property held by or vested in the Commission or to any
Commission funds held pursuant to the provisions of this
Compact.
Article XIII. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT
1. Any State is eligible to become a Compacting State.

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2. The Compact shall become effective and binding upon
legislative enactment of the Compact into law by two Compacting
States; provided, the Commission shall become effective for
purposes of adopting Uniform Standards for, reviewing, and
giving approval or disapproval of, Products filed with the
Commission that satisfy applicable Uniform Standards only
after twenty-six (26) States are Compacting States or,
alternatively, by States representing greater than forty
percent (40%) of the premium volume for life insurance,
annuity, disability income and long-term care insurance
products, based on records of the NAIC for the prior year.
Thereafter, it shall become effective and binding as to any
other Compacting State upon enactment of the Compact into law
by that State.
3. Amendments to the Compact may be proposed by the
Commission for enactment by the Compacting States. No amendment
shall become effective and binding upon the Commission and the
Compacting States unless and until all Compacting States enact
the amendment into law.
Article XIV. WITHDRAWAL, DEFAULT AND TERMINATION
1. Withdrawal.
a. Once effective, the Compact shall continue in force and
remain binding upon each and every Compacting State; provided,
that a Compacting State may withdraw from the Compact
("Withdrawing State") by enacting a statute specifically

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repealing the statute which enacted the Compact into law.
b. The effective date of withdrawal is the effective date
of the repealing statute. However, the withdrawal shall not
apply to any product filings approved or self-certified, or any
Advertisement of such products, on the date the repealing
statute becomes effective, except by mutual agreement of the
Commission and the Withdrawing State unless the approval is
rescinded by the Withdrawing State as provided in subsection e.
of this section.
c. The Commissioner of the Withdrawing State shall
immediately notify the Management Committee in writing upon the
introduction of legislation repealing this Compact in the
Withdrawing State.
d. The Commission shall notify the other Compacting States
of the introduction of such legislation within ten (10) days
after its receipt of notice thereof.
e. The Withdrawing State is responsible for all
obligations, duties and liabilities incurred through the
effective date of withdrawal, including any obligations, the
performance of which extend beyond the effective date of
withdrawal, except to the extent those obligations may have
been released or relinquished by mutual agreement of the
Commission and the Withdrawing State. The Commission's
approval of Products and Advertisement prior to the effective
date of withdrawal shall continue to be effective and be given
full force and effect in the Withdrawing State, unless formally

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rescinded by the Withdrawing State in the same manner as
provided by the laws of the Withdrawing State for the
prospective disapproval of products or advertisement
previously approved under state law.
f. Reinstatement following withdrawal of any Compacting
State shall occur upon the effective date of the Withdrawing
State reenacting the Compact.
2. Default.
a. If the Commission determines that any Compacting State
has at any time defaulted ("Defaulting State") in the
performance of any of its obligations or responsibilities under
this Compact, the Bylaws or duly promulgated Rules or Operating
Procedures, then, after notice and hearing as set forth in the
Bylaws, all rights, privileges and benefits conferred by this
Compact on the Defaulting State shall be suspended from the
effective date of default as fixed by the Commission. The
grounds for default include, but are not limited to, failure of
a Compacting State to perform its obligations or
responsibilities, and any other grounds designated in
Commission Rules. The Commission shall immediately notify the
Defaulting State in writing of the Defaulting State's
suspension pending a cure of the default. The Commission shall
stipulate the conditions and the time period within which the
Defaulting State must cure its default. If the Defaulting State
fails to cure the default within the time period specified by
the Commission, the Defaulting State shall be terminated from

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the Compact and all rights, privileges and benefits conferred
by this Compact shall be terminated from the effective date of
termination.
b. Product approvals by the Commission or product
self-certifications, or any Advertisement in connection with
such product, that are in force on the effective date of
termination shall remain in force in the Defaulting State in
the same manner as if the Defaulting State had withdrawn
voluntarily pursuant to paragraph 1 of this Article.
c. Reinstatement following termination of any Compacting
State requires a reenactment of the Compact.
3. Dissolution of Compact.
a. The Compact dissolves effective upon the date of the
withdrawal or default of the Compacting State which reduces
membership in the Compact to one Compacting State.
b. Upon the dissolution of this Compact, the Compact
becomes null and void and shall be of no further force or
effect, and the business and affairs of the Commission shall be
wound up and any surplus funds shall be distributed in
accordance with the Bylaws.
Article XV. SEVERABILITY AND CONSTRUCTION
1. The provisions of this Compact shall be severable; and
if any phrase, clause, sentence or provision is deemed
unenforceable, the remaining provisions of the Compact shall be
enforceable.

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2. The provisions of this Compact shall be liberally
construed to effectuate its purposes.
Article XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS
1. Other Laws.
a. Nothing herein prevents the enforcement of any other law
of a Compacting State, except as provided in paragraph b of
this Article.
b. For any Product approved or certified to the Commission,
the Rules, Uniform Standards and any other requirements of the
Commission shall constitute the exclusive provisions
applicable to the content, approval and certification of such
Products. For Advertisement that is subject to the Commission's
authority, any Rule, Uniform Standard or other requirement of
the Commission which governs the content of the Advertisement
shall constitute the exclusive provision that a Commissioner
may apply to the content of the Advertisement. Notwithstanding
the foregoing, no action taken by the Commission shall abrogate
or restrict: (i) the access of any person to state courts; (ii)
remedies available under state law related to breach of
contract, tort, or other laws not specifically directed to the
content of the Product; (iii) state law relating to the
construction of insurance contracts; or (iv) the authority of
the attorney general of the state, including but not limited to
maintaining any actions or proceedings, as authorized by law.
c. All insurance products filed with individual States

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shall be subject to the laws of those States.
2. Binding Effect of this Compact.
a. All lawful actions of the Commission, including all
Rules and Operating Procedures promulgated by the Commission,
are binding upon the Compacting States.
b. All agreements between the Commission and the Compacting
States are binding in accordance with their terms.
c. Upon the request of a party to a conflict over the
meaning or interpretation of Commission actions, and upon a
majority vote of the Compacting States, the Commission may
issue advisory opinions regarding the meaning or
interpretation in dispute.
d. In the event any provision of this Compact exceeds the
constitutional limits imposed on the legislature of any
Compacting State, the obligations, duties, powers or
jurisdiction sought to be conferred by that provision upon the
Commission shall be ineffective as to that Compacting State,
and those obligations, duties, powers or jurisdiction shall
remain in the Compacting State and shall be exercised by the
agency thereof to which those obligations, duties, powers or
jurisdiction are delegated by law in effect at the time this
Compact becomes effective.
Section 99. Effective date. This Act takes effect upon
becoming law.