Bill Text: NY A07786 | 2011-2012 | General Assembly | Introduced
Bill Title: Establishes the surplus lines insurance multi-state compliance compact with respect to surplus lines insurance and premium tax allocation.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2012-05-23 - held for consideration in insurance [A07786 Detail]
Download: New_York-2011-A07786-Introduced.html
S T A T E O F N E W Y O R K ________________________________________________________________________ 7786 2011-2012 Regular Sessions I N A S S E M B L Y May 17, 2011 ___________ Introduced by M. of A. CALHOUN -- read once and referred to the Commit- tee on Insurance AN ACT to amend the insurance law and the tax law, in relation to estab- lishing the surplus lines insurance multi-state compliance compact with respect to surplus lines insurance and premium tax allocation THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Legislative findings. The legislature finds, with regard to 2 non-admitted insurance policies with risk exposures located in multiple 3 states, the 111th United States Congress has stipulated in title V, 4 subtitle B, the Non-Admitted and Reinsurance Reform Act of 2010 of the 5 Dodd-Frank Wall Street Reform and Consumer Protection Act (hereinafter 6 the NRRA) that: 7 1. The placement of non-admitted insurance shall be subject to the 8 statutory and regulatory requirements solely of the insured's home 9 state, and 10 2. Any law, regulation, provision or action of any state that applies 11 or purports to apply to non-admitted insurance sold to, solicited by or 12 negotiated with an insured whose home state is another state shall be 13 preempted with respect to such application; except that any state law, 14 rule or regulation that restricts the placement of workers' compensation 15 insurance or excess insurance for self-funded workers' compensation 16 plans with a non-admitted insurer shall not be preempted. 17 The legislature finds further that in compliance with NRRA, no state 18 other than the home state of an insured may require any premium tax 19 payment for non-admitted insurance; and no state other than an insured's 20 home state may require a surplus lines broker to be licensed in order to 21 sell, solicit or negotiate non-admitted insurance with respect to such 22 insured. 23 The legislature finds further that the NRRA intends that the states 24 may enter into a compact or otherwise establish procedures to allocate EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10246-02-1 A. 7786 2 1 among the states the premium taxes paid to an insured's home state; and 2 that each state adopt nationwide uniform requirements, form, and proce- 3 dures, such as an interstate compact, that provide for the reporting, 4 payment, collection and allocation of premium taxes for non-admitted 5 insurance. 6 The legislature finds further that after the expiration of the two- 7 year period beginning on the effective date of the NRRA, a state may not 8 collect any fees relating to licensing of an individual or entity as a 9 surplus lines licensee in the state unless the state has in effect at 10 such time laws or regulations that provide for participation by the 11 state in the national insurance producer database of the National Asso- 12 ciation of Insurance Commissioners (hereinafter the NAIC) or any other 13 equivalent uniform national database for the licensure of surplus lines 14 licensees and the renewal of such licenses. 15 The legislature recognizes that a need exists for a system of regu- 16 lation that will provide for surplus lines insurance to be placed with 17 reputable and financially sound non-admitted insurers and that will 18 permit orderly access to surplus lines insurance in this state and 19 encourage insurers to make new and innovative types of insurance avail- 20 able to consumers in this state. 21 The legislature finds that protecting the revenue of this state and 22 other compacting states may be accomplished by facilitating the payment 23 and collection of premium tax on non-admitted insurance and providing 24 for allocation of premium tax for non-admitted insurance of multi-state 25 risks among the states in accordance with uniform allocation formulas. 26 The legislature finds that the efficiency of the surplus lines market 27 may be improved by eliminating duplicative and inconsistent tax and 28 regulatory requirements among the states and by promoting and protecting 29 the interests of surplus lines licensees who assist such insureds and 30 non-admitted insurers, thereby ensuring the continued availability of 31 non-admitted insurance to consumers. 32 Regulatory compliance with respect to non-admitted insurance place- 33 ments may be streamlined by providing for exclusive single-state regula- 34 tory compliance for non-admitted insurance of multi-state risks, thereby 35 providing certainty regarding such compliance to all persons who have an 36 interest in such transactions, including but not limited to insureds, 37 regulators, surplus lines licensees, other insurance producers and 38 surplus lines insurers. 39 The legislature finds that coordination of regulatory resources and 40 expertise between state insurance departments and other state agencies, 41 as well as state surplus lines stamping offices, with respect to non-ad- 42 mitted insurance will be improved. 43 S 2. The insurance law is amended by adding a new article 29 to read 44 as follows: 45 ARTICLE 29 46 SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT 47 SECTION 2901. SHORT TITLE. 48 2902. PURPOSES. 49 2903. DEFINITIONS. 50 2904. ESTABLISHMENT OF THE COMMISSION AND VENUE. 51 2905. AUTHORITY TO ESTABLISH MANDATORY RULES. 52 2906. POWERS OF THE COMMISSION. 53 2907. ORGANIZATION OF THE COMMISSION. 54 2908. MEETINGS AND ACTS OF THE COMMISSION. 55 2909. RULEMAKING FUNCTIONS OF THE COMMISSION. 56 2910. COMMISSION RECORDS AND ENFORCEMENT. A. 7786 3 1 2911. DISPUTE RESOLUTION. 2 2912. REVIEW OF COMMISSION DECISIONS. 3 2913. FINANCE. 4 2914. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT. 5 2915. WITHDRAWAL, DEFAULT AND TERMINATION. 6 2916. SEVERABILITY AND CONSTRUCTION. 7 2917. BINDING EFFECT OF COMPACT AND OTHER LAWS. 8 S 2901. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS 9 THE "SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT". 10 S 2902. PURPOSES. THE PURPOSES OF THIS COMPACT ARE: 11 (A) TO IMPLEMENT THE EXPRESS PROVISIONS OF THE NON-ADMITTED AND REIN- 12 SURANCE REFORM ACT OF 2010 (HEREINAFTER THE NRRA). 13 (B) TO PROTECT THE PREMIUM TAX REVENUES OF THE COMPACTING STATES 14 THROUGH FACILITATING THE PAYMENT AND COLLECTION OF PREMIUM TAX ON 15 NON-ADMITTED INSURANCE; AND TO PROTECT THE INTERESTS OF THE COMPACTING 16 STATES BY SUPPORTING THE CONTINUED AVAILABILITY OF SUCH INSURANCE TO 17 CONSUMERS; AND TO PROVIDE FOR ALLOCATION OF PREMIUM TAX FOR NON-ADMITTED 18 INSURANCE OF MULTI-STATE RISKS AMONG THE STATES IN ACCORDANCE WITH 19 UNIFORM ALLOCATION FORMULAS TO BE DEVELOPED, ADOPTED, AND IMPLEMENTED BY 20 THE COMMISSION. 21 (C) TO STREAMLINE AND IMPROVE THE EFFICIENCY OF THE SURPLUS LINES 22 MARKET BY ELIMINATING DUPLICATIVE AND INCONSISTENT TAX AND REGULATORY 23 REQUIREMENTS AMONG THE STATES; AND PROMOTE AND PROTECT THE INTEREST OF 24 SURPLUS LINES LICENSEES WHO ASSIST SUCH INSUREDS AND SURPLUS LINES 25 INSURERS, THEREBY ENSURING THE CONTINUED AVAILABILITY OF SURPLUS LINES 26 INSURANCE TO CONSUMERS. 27 (D) TO STREAMLINE REGULATORY COMPLIANCE WITH RESPECT TO NON-ADMITTED 28 INSURANCE PLACEMENTS BY PROVIDING FOR EXCLUSIVE SINGLE-STATE REGULATORY 29 COMPLIANCE FOR NON-ADMITTED INSURANCE OF MULTI-STATE RISKS, IN ACCORD- 30 ANCE WITH RULES TO BE ADOPTED BY THE COMMISSION, THEREBY PROVIDING 31 CERTAINTY REGARDING SUCH COMPLIANCE TO ALL PERSONS WHO HAVE AN INTEREST 32 IN SUCH TRANSACTIONS, INCLUDING BUT NOT LIMITED TO INSUREDS, REGULATORS, 33 SURPLUS LINES LICENSEES, OTHER INSURANCE PRODUCERS AND SURPLUS LINES 34 INSURERS. 35 (E) TO ESTABLISH A CLEARINGHOUSE FOR RECEIPT AND DISSEMINATION OF 36 PREMIUM TAX AND CLEARINGHOUSE TRANSACTION DATA RELATED TO NON-ADMITTED 37 INSURANCE OF MULTI-STATE RISKS, IN ACCORDANCE WITH RULES TO BE ADOPTED 38 BY THE COMMISSION. 39 (F) TO IMPROVE COORDINATION OF REGULATORY RESOURCES AND EXPERTISE 40 BETWEEN STATE INSURANCE DEPARTMENTS AND OTHER STATE AGENCIES, AS WELL AS 41 STATE SURPLUS LINES STAMPING OFFICES, WITH RESPECT TO NON-ADMITTED 42 INSURANCE. 43 (G) TO ADOPT UNIFORM RULES TO PROVIDE FOR PREMIUM TAX PAYMENT, REPORT- 44 ING, ALLOCATION, DATA COLLECTION AND DISSEMINATION FOR NON-ADMITTED 45 INSURANCE OF MULTI-STATE RISKS AND SINGLE-STATE RISKS, IN ACCORDANCE 46 WITH RULES TO BE ADOPTED BY THE COMMISSION, THEREBY PROMOTING THE OVER- 47 ALL EFFICIENCY OF THE NON-ADMITTED INSURANCE MARKET. 48 (H) TO ADOPT UNIFORM MANDATORY RULES WITH RESPECT TO REGULATORY 49 COMPLIANCE REQUIREMENTS FOR: 50 (1) FOREIGN INSURER ELIGIBILITY REQUIREMENTS; AND 51 (2) SURPLUS LINES POLICYHOLDER NOTICES. 52 (I) TO ESTABLISH THE SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE 53 COMPACT COMMISSION. 54 (J) TO COORDINATE REPORTING OF CLEARINGHOUSE TRANSACTION DATA ON NON- 55 ADMITTED INSURANCE OF MULTI-STATE RISKS AMONG COMPACTING STATES AND 56 CONTRACTING STATES. A. 7786 4 1 (K) TO PERFORM THESE AND SUCH OTHER RELATED FUNCTIONS AS MAY BE 2 CONSISTENT WITH THE PURPOSES OF THE SURPLUS LINES INSURANCE MULTI-STATE 3 COMPLIANCE COMPACT. 4 S 2903. DEFINITIONS. FOR THE PURPOSES OF THIS COMPACT THE FOLLOWING 5 DEFINITIONS SHALL APPLY: 6 (A) "ADMITTED INSURER" MEANS AN INSURER THAT IS LICENSED OR AUTHORIZED 7 TO TRANSACT THE BUSINESS OF INSURANCE UNDER THE LAW OF THE HOME STATE; 8 FOR PURPOSES OF THIS COMPACT "ADMITTED INSURER" SHALL NOT INCLUDE A 9 DOMESTIC SURPLUS LINES INSURER AS MAY BE DEFINED BY APPLICABLE STATE 10 LAW. 11 (B) "AFFILIATE" MEANS, WITH RESPECT TO AN INSURED, ANY ENTITY THAT 12 CONTROLS, IS CONTROLLED BY OR IS UNDER COMMON CONTROL WITH THE INSURED. 13 (C) "ALLOCATION FORMULA" MEANS THE UNIFORM METHODS PROMULGATED BY THE 14 COMMISSION BY WHICH INSURED RISK EXPOSURES WILL BE APPORTIONED TO EACH 15 STATE FOR THE PURPOSE OF CALCULATING PREMIUM TAXES DUE. 16 (D) "BYLAWS" MEANS THOSE BYLAWS ESTABLISHED BY THE COMMISSION FOR ITS 17 GOVERNANCE OR FOR DIRECTING OR CONTROLLING THE COMMISSION'S ACTIONS OR 18 CONDUCT. 19 (E) "CLEARINGHOUSE" MEANS THE COMMISSION'S OPERATIONS INVOLVING THE 20 ACCEPTANCE, PROCESSING AND DISSEMINATION AMONG THE COMPACTING STATES, 21 CONTRACTING STATES, SURPLUS LINES LICENSEES, INSUREDS AND OTHER PERSONS 22 OF PREMIUM TAX AND CLEARINGHOUSE TRANSACTION DATA FOR NON-ADMITTED 23 INSURANCE OF MULTI-STATE RISKS IN ACCORDANCE WITH THIS COMPACT AND RULES 24 TO BE ADOPTED BY THE COMMISSION. 25 (F) "CLEARINGHOUSE TRANSACTION DATA" MEANS THE INFORMATION REGARDING 26 NON-ADMITTED INSURANCE OF MULTI-STATE RISKS REQUIRED TO BE REPORTED, 27 ACCEPTED, COLLECTED, PROCESSED AND DISSEMINATED BY SURPLUS LINES LICEN- 28 SEES FOR SURPLUS LINES INSURANCE AND INSUREDS FOR INDEPENDENTLY PROCURED 29 INSURANCE UNDER THIS COMPACT AND RULES TO BE ADOPTED BY THE COMMISSION. 30 CLEARINGHOUSE TRANSACTION DATA INCLUDES INFORMATION RELATED TO 31 SINGLE-STATE RISKS IF A STATE ELECTS TO HAVE THE CLEARINGHOUSE COLLECT 32 TAXES ON SINGLE-STATE RISKS FOR SUCH STATE. 33 (G) "COMPACTING STATE" MEANS ANY STATE WHICH HAS ENACTED THIS COMPACT 34 LEGISLATION AND WHICH HAS NOT WITHDRAWN PURSUANT TO SUBSECTION (A) OF 35 SECTION TWENTY-NINE HUNDRED FIFTEEN OF THIS ARTICLE OR BEEN TERMINATED 36 PURSUANT TO SUBSECTION (B) OF SECTION TWENTY-NINE HUNDRED FIFTEEN OF 37 THIS ARTICLE. 38 (H) "COMMISSION" MEANS THE SURPLUS LINES INSURANCE MULTI-STATE COMPLI- 39 ANCE COMPACT COMMISSION ESTABLISHED BY THIS COMPACT. 40 (I) "COMMISSIONER" MEANS THE CHIEF INSURANCE REGULATORY OFFICIAL OF A 41 STATE INCLUDING, BUT NOT LIMITED TO, COMMISSIONER, SUPERINTENDENT, 42 DIRECTOR OR ADMINISTRATOR OR THEIR DESIGNEES. 43 (J) "CONTRACTING STATE" MEANS ANY STATE WHICH HAS NOT ENACTED THIS 44 COMPACT LEGISLATION BUT HAS ENTERED INTO A WRITTEN CONTRACT WITH THE 45 COMMISSION TO UTILIZE THE SERVICES OF AND FULLY PARTICIPATE IN THE 46 CLEARINGHOUSE. 47 (K) "CONTROL" MEANS ONE ENTITY HAS POWER OVER ANOTHER. FOR THE 48 PURPOSES OF THIS ARTICLE, AN ENTITY HAS CONTROL OVER ANOTHER ENTITY IF: 49 (1) THE ENTITY DIRECTLY OR INDIRECTLY OR ACTING THROUGH ONE OR MORE 50 OTHER PERSONS OWN, CONTROLS OR HAS THE POWER TO VOTE TWENTY-FIVE PERCENT 51 OR MORE OF ANY CLASS OF VOTING SECURITIES OF THE OTHER ENTITY; OR 52 (2) SUCH ENTITY CONTROLS IN ANY MANNER THE ELECTION OF A MAJORITY OF 53 THE DIRECTORS OR TRUSTEES OF THE OTHER ENTITY. 54 (L) "HOME STATE" SHALL HAVE TWO MEANINGS DEPENDING ON CONTEXT: 55 (1) EXCEPT AS PROVIDED IN PARAGRAPH TWO OF THIS SUBSECTION, THE TERM 56 "HOME STATE" MEANS, WITH RESPECT TO AN INSURED: A. 7786 5 1 (A) THE STATE IN WHICH AN INSURED MAINTAINS ITS PRINCIPAL PLACE OF 2 BUSINESS OR, IN THE CASE OF AN INDIVIDUAL, THE INDIVIDUAL'S PRINCIPAL 3 RESIDENCE; OR 4 (B) IF ONE HUNDRED PERCENT OF THE INSURED RISK IS LOCATED OUT OF THE 5 STATE REFERRED TO IN SUBPARAGRAPH (A) OF THIS PARAGRAPH, THE STATE TO 6 WHICH THE GREATEST PERCENTAGE OF THE INSURED'S TAXABLE PREMIUM FOR THAT 7 INSURANCE CONTRACT IS ALLOCATED. 8 (2) IF MORE THAN ONE INSURED FROM AN AFFILIATED GROUP ARE NAMED 9 INSUREDS ON A SINGLE NON-ADMITTED INSURANCE CONTRACT, THE TERM "HOME 10 STATE" MEANS THE HOME STATE, AS DETERMINED PURSUANT TO PARAGRAPH ONE OF 11 THIS SUBSECTION, OF THE MEMBER OF THE AFFILIATED GROUP THAT HAS THE 12 LARGEST PERCENTAGE OF PREMIUM ATTRIBUTED TO IT UNDER SUCH INSURANCE 13 CONTRACT. 14 (M) "INDEPENDENTLY PROCURED INSURANCE" MEANS INSURANCE PROCURED BY AN 15 INSURED DIRECTLY FROM A SURPLUS LINES INSURER OR OTHER NON-ADMITTED 16 INSURER AS PERMITTED BY THE LAWS OF THE HOME STATE. 17 (N) "INSURER ELIGIBILITY REQUIREMENTS" MEANS THE CRITERIA, FORMS AND 18 PROCEDURES ESTABLISHED TO QUALIFY AS A SURPLUS LINES INSURER UNDER THE 19 LAW OF THE HOME STATE PROVIDED THAT SUCH CRITERIA, FORMS AND PROCEDURES 20 ARE CONSISTENT WITH THE EXPRESS PROVISIONS OF THE NRRA ON AND AFTER JULY 21 TWENTY-FIRST, TWO THOUSAND ELEVEN. 22 (O) "MEMBER" MEANS THE PERSON OR PERSONS CHOSEN BY A COMPACTING STATE 23 AS ITS REPRESENTATIVE OR REPRESENTATIVES TO THE COMMISSION PROVIDED THAT 24 EACH COMPACTING STATE SHALL BE LIMITED TO ONE VOTE. 25 (P) "MULTI-STATE RISK" MEANS A RISK WITH INSURED EXPOSURES IN MORE 26 THAN ONE STATE. 27 (Q) "NON-COMPACTING STATE" MEANS ANY STATE WHICH HAS NOT ADOPTED THIS 28 COMPACT. 29 (R) "NON-ADMITTED INSURANCE" MEANS SURPLUS LINES INSURANCE AND INDE- 30 PENDENTLY PROCURED INSURANCE. 31 (S) "NON-ADMITTED INSURER" MEANS AN INSURER THAT IS NOT AUTHORIZED OR 32 ADMITTED TO TRANSACT THE BUSINESS OF INSURANCE UNDER THE LAW OF THE HOME 33 STATE. 34 (T) "NRRA" MEANS THE NON-ADMITTED AND REINSURANCE REFORM ACT OF 2010, 35 FOUND IN TITLE V, SUBTITLE B OF THE FEDERAL DODD-FRANK WALL STREET 36 REFORM AND CONSUMER PROTECTION ACT. 37 (U) "POLICYHOLDER NOTICE" MEANS THE DISCLOSURE NOTICE OR STAMP THAT IS 38 REQUIRED TO BE FURNISHED TO THE APPLICANT OR POLICYHOLDER IN CONNECTION 39 WITH A SURPLUS LINES INSURANCE PLACEMENT. 40 (V) "PREMIUM TAX" MEANS WITH RESPECT TO NON-ADMITTED INSURANCE, ANY 41 TAX, FEE, ASSESSMENT OR OTHER CHARGE IMPOSED BY A GOVERNMENT ENTITY 42 DIRECTLY OR INDIRECTLY BASED ON ANY PAYMENT MADE AS CONSIDERATION FOR 43 SUCH INSURANCE, INCLUDING PREMIUM DEPOSITS, ASSESSMENTS, REGISTRATION 44 FEES AND ANY OTHER COMPENSATION GIVEN IN CONSIDERATION FOR A CONTRACT OF 45 INSURANCE. 46 (W) "PRINCIPAL PLACE OF BUSINESS" MEANS WITH RESPECT TO DETERMINING 47 THE HOME STATE OF THE INSURED, THE STATE WHERE THE INSURED MAINTAINS ITS 48 HEADQUARTERS AND WHERE THE INSURED'S HIGH-LEVEL OFFICERS DIRECT, CONTROL 49 AND COORDINATE THE BUSINESS ACTIVITIES OF THE INSURED. 50 (X) "PURCHASING GROUP" MEANS ANY GROUP FORMED PURSUANT TO THE LIABIL- 51 ITY RISK RETENTION ACT WHICH HAS AS ONE OF ITS PURPOSES THE PURCHASE OF 52 LIABILITY INSURANCE ON A GROUP BASIS, PURCHASES SUCH INSURANCE ONLY FOR 53 ITS GROUP MEMBERS AND ONLY TO COVER THEIR SIMILAR OR RELATED LIABILITY 54 EXPOSURE AND IS COMPOSED OF MEMBERS WHOSE BUSINESSES OR ACTIVITIES ARE 55 SIMILAR OR RELATED WITH RESPECT TO THE LIABILITY TO WHICH MEMBERS ARE A. 7786 6 1 EXPOSED BY VIRTUE OF ANY RELATED, SIMILAR OR COMMON BUSINESS, TRADE, 2 PRODUCT, SERVICES, PREMISES OR OPERATIONS AND IS DOMICILED IN ANY STATE. 3 (Y) "RULE" MEANS A STATEMENT OF GENERAL OR PARTICULAR APPLICABILITY 4 AND FUTURE EFFECT PROMULGATED BY THE COMMISSION DESIGNED TO IMPLEMENT, 5 INTERPRET OR PRESCRIBE LAW OR POLICY OR DESCRIBING THE ORGANIZATION, 6 PROCEDURE OR PRACTICE REQUIREMENTS OF THE COMMISSION WHICH SHALL HAVE 7 THE FORCE AND EFFECT OF LAW IN THE COMPACTING STATES. 8 (Z) "SINGLE-STATE RISK" MEANS A RISK WITH INSURED EXPOSURES IN ONLY 9 ONE STATE. 10 (AA) "STATE" MEANS ANY STATE, DISTRICT OR TERRITORY OF THE UNITED 11 STATES OF AMERICA. 12 (BB) "STATE TRANSACTION DOCUMENTATION" MEANS THE INFORMATION REQUIRED 13 UNDER THE LAWS OF THE HOME STATE TO BE FILED BY SURPLUS LINES LICENSEES 14 IN ORDER TO REPORT SURPLUS LINES INSURANCE AND VERIFY COMPLIANCE WITH 15 SURPLUS LINES LAWS AND BY INSUREDS IN ORDER TO REPORT INDEPENDENTLY 16 PROCURED INSURANCE. 17 (CC) "SURPLUS LINES INSURANCE" MEANS INSURANCE PROCURED BY A SURPLUS 18 LINES LICENSEE FROM A SURPLUS LINES INSURER OR OTHER NON-ADMITTED INSUR- 19 ER AS PERMITTED UNDER THE LAW OF THE HOME STATE. FOR THE PURPOSES OF 20 THIS COMPACT "SURPLUS LINES INSURANCE" SHALL ALSO MEAN EXCESS LINE 21 INSURANCE AS THAT TERM IS USED PURSUANT TO SECTION TWO THOUSAND ONE 22 HUNDRED FIVE OF THIS CHAPTER. 23 (DD) "SURPLUS LINES INSURER" MEANS A NON-ADMITTED INSURER ELIGIBLE 24 UNDER THE LAW OF THE HOME STATE TO ACCEPT BUSINESS FROM A SURPLUS LINES 25 LICENSEE. FOR THE PURPOSES OF THIS COMPACT "SURPLUS LINES INSURER" 26 SHALL ALSO MEAN AN INSURER WHICH IS PERMITTED TO WRITE SURPLUS LINES 27 INSURANCE UNDER THE LAWS OF THE STATE WHERE SUCH INSURER IS DOMICILED. 28 (EE) "SURPLUS LINES LICENSEE" MEANS AN INDIVIDUAL, FIRM OR CORPORATION 29 LICENSED UNDER THE LAW OF THE HOME STATE TO PLACE SURPLUS LINES INSUR- 30 ANCE. 31 S 2904. ESTABLISHMENT OF THE COMMISSION AND VENUE. (A) THE COMPACTING 32 STATES HEREBY CREATE AND ESTABLISH A JOINT PUBLIC AGENCY KNOWN AS THE 33 "SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT COMMISSION." 34 (B) PURSUANT TO SECTION TWO THOUSAND NINE HUNDRED FIVE OF THIS ARTI- 35 CLE, THE COMMISSION WILL HAVE THE POWER TO ADOPT MANDATORY RULES WHICH 36 ESTABLISH EXCLUSIVE HOME STATE AUTHORITY REGARDING NON-ADMITTED INSUR- 37 ANCE OF MULTI-STATE RISKS, ALLOCATION FORMULAS, CLEARINGHOUSE TRANS- 38 ACTION DATA, A CLEARINGHOUSE FOR RECEIPT AND DISTRIBUTION OF ALLOCATED 39 PREMIUM TAX AND CLEARINGHOUSE TRANSACTION DATA AND UNIFORM RULEMAKING 40 PROCEDURES AND RULES FOR THE PURPOSE OF FINANCING, ADMINISTERING, OPER- 41 ATING AND ENFORCING COMPLIANCE WITH THE PROVISIONS OF THIS COMPACT, ITS 42 BYLAWS AND RULES. 43 (C) PURSUANT TO SECTION TWO THOUSAND NINE HUNDRED FIVE OF THIS ARTI- 44 CLE, THE COMMISSION WILL HAVE THE POWER TO ADOPT MANDATORY RULES ESTAB- 45 LISHING FOREIGN INSURER ELIGIBILITY REQUIREMENTS AND A CONCISE AND 46 OBJECTIVE POLICYHOLDER NOTICE REGARDING THE NATURE OF A SURPLUS LINES 47 PLACEMENT. 48 (D) THE COMMISSION IS A BODY CORPORATE AND POLITIC AND AN INSTRUMEN- 49 TALITY OF THE COMPACTING STATES. 50 (E) THE COMMISSION IS SOLELY RESPONSIBLE FOR ITS LIABILITIES, EXCEPT 51 AS OTHERWISE SPECIFICALLY PROVIDED IN THIS COMPACT. 52 (F) VENUE IS PROPER AND JUDICIAL PROCEEDINGS BY OR AGAINST THE COMMIS- 53 SION SHALL BE BROUGHT SOLELY AND EXCLUSIVELY IN A COURT OF COMPETENT 54 JURISDICTION WHERE THE PRINCIPAL OFFICE OF THE COMMISSION IS LOCATED. 55 THE COMMISSION MAY WAIVE VENUE AND JURISDICTIONAL DEFENSES TO THE EXTENT A. 7786 7 1 IT ADOPTS OR CONSENTS TO PARTICIPATE IN ALTERNATIVE DISPUTE RESOLUTION 2 PROCEEDINGS. 3 S 2905. AUTHORITY TO ESTABLISH MANDATORY RULES. THE COMMISSION SHALL 4 ADOPT MANDATORY RULES WHICH ESTABLISH: 5 (A) ALLOCATION FORMULAS FOR EACH TYPE OF NON-ADMITTED INSURANCE COVER- 6 AGE, WHICH ALLOCATION FORMULAS MUST BE USED BY EACH COMPACTING STATE AND 7 CONTRACTING STATE IN ACQUIRING PREMIUM TAX AND CLEARINGHOUSE TRANSACTION 8 DATA FROM SURPLUS LINES LICENSEES AND INSUREDS FOR REPORTING TO THE 9 CLEARINGHOUSE CREATED BY THE COMPACT COMMISSION. SUCH ALLOCATION FORMU- 10 LAS WILL BE ESTABLISHED WITH INPUT FROM SURPLUS LINES LICENSEES AND BE 11 BASED UPON READILY AVAILABLE DATA WITH SIMPLICITY AND UNIFORMITY FOR THE 12 SURPLUS LINES LICENSEE AS A MATERIAL CONSIDERATION. 13 (B) UNIFORM CLEARINGHOUSE TRANSACTION DATA REPORTING REQUIREMENTS FOR 14 ALL INFORMATION REPORTED TO THE CLEARINGHOUSE. 15 (C) METHODS BY WHICH COMPACTING STATES AND CONTRACTING STATES REQUIRE 16 SURPLUS LINES LICENSEES AND INSUREDS TO PAY PREMIUM TAX AND TO REPORT 17 CLEARINGHOUSE TRANSACTION DATA TO THE CLEARINGHOUSE, INCLUDING BUT NOT 18 LIMITED TO PROCESSING CLEARINGHOUSE TRANSACTION DATA THROUGH STATE 19 STAMPING AND SERVICE OFFICES, STATE INSURANCE DEPARTMENTS, OR OTHER 20 STATE-DESIGNATED AGENCIES OR ENTITIES. 21 (D) THAT NON-ADMITTED INSURANCE OF MULTI-STATE RISKS SHALL BE SUBJECT 22 TO ALL OF THE REGULATORY COMPLIANCE REQUIREMENTS OF THE HOME STATE 23 EXCLUSIVELY. HOME STATE REGULATORY COMPLIANCE REQUIREMENTS APPLICABLE TO 24 SURPLUS LINES INSURANCE SHALL INCLUDE, BUT NOT BE LIMITED TO: 25 (1) PERSONS REQUIRED TO BE LICENSED TO SELL, SOLICIT OR NEGOTIATE 26 SURPLUS LINES INSURANCE; 27 (2) INSURER ELIGIBILITY REQUIREMENTS OR OTHER APPROVED NON-ADMITTED 28 INSURER REQUIREMENTS; 29 (3) DILIGENT SEARCH; AND 30 (4) STATE TRANSACTION DOCUMENTATION AND CLEARINGHOUSE TRANSACTION DATA 31 REGARDING THE PAYMENT OF PREMIUM TAX AS SET FORTH IN THIS COMPACT AND 32 RULES TO BE ADOPTED BY THE COMMISSION. HOME STATE REGULATORY COMPLIANCE 33 REQUIREMENTS APPLICABLE TO INDEPENDENTLY PROCURED INSURANCE PLACEMENTS 34 SHALL INCLUDE, BUT NOT BE LIMITED TO, PROVIDING STATE TRANSACTION 35 DOCUMENTATION AND CLEARINGHOUSE TRANSACTION DATA REGARDING THE PAYMENT 36 OF PREMIUM TAX AS SET FORTH IN THIS COMPACT AND RULES TO BE ADOPTED BY 37 THE COMMISSION. 38 (E) THAT EACH COMPACTING STATE AND CONTRACTING STATE MAY CHARGE ITS 39 OWN RATE OF TAXATION ON THE PREMIUM ALLOCATED TO SUCH STATE BASED ON THE 40 APPLICABLE ALLOCATION FORMULA PROVIDED THAT THE STATE ESTABLISHES ONE 41 SINGLE RATE OF TAXATION APPLICABLE TO ALL NON-ADMITTED INSURANCE TRANS- 42 ACTIONS AND NO OTHER TAX, FEE ASSESSMENT OR OTHER CHARGE BY ANY GOVERN- 43 MENTAL OR QUASI-GOVERNMENTAL AGENCY BE PERMITTED. NOTWITHSTANDING THE 44 FOREGOING, STAMPING OFFICE FEES MAY BE CHARGED AS A SEPARATE, ADDITIONAL 45 COST UNLESS SUCH FEES ARE INCORPORATED INTO A STATE'S SINGLE RATE OF 46 TAXATION. 47 (F) THAT ANY CHANGE IN THE RATE OF TAXATION BY ANY COMPACTING STATE OR 48 CONTRACTING STATE BE RESTRICTED TO CHANGES MADE PROSPECTIVELY ON NOT 49 LESS THAN NINETY DAYS ADVANCE NOTICE TO THE COMPACT COMMISSION. 50 (G) THAT EACH COMPACTING STATE AND CONTRACTING STATE SHALL REQUIRE 51 PREMIUM TAX PAYMENTS EITHER ANNUALLY, SEMI-ANNUALLY OR QUARTERLY UTILIZ- 52 ING ONE OR MORE OF THE FOLLOWING DATES ONLY: MARCH FIRST, JUNE FIRST, 53 SEPTEMBER FIRST AND DECEMBER FIRST. 54 (H) THAT EACH COMPACTING STATE AND CONTRACTING STATE PROHIBIT ANY 55 OTHER STATE AGENCY OR POLITICAL SUBDIVISION FROM REQUIRING SURPLUS LINES 56 LICENSEES TO PROVIDE CLEARINGHOUSE TRANSACTION DATA AND STATE TRANS- A. 7786 8 1 ACTION DOCUMENTATION OTHER THAN TO THE INSURANCE DEPARTMENT OR TAX OFFI- 2 CIALS OF THE HOME STATE OR ONE SINGLE DESIGNATED AGENT THEREOF. 3 (I) THE OBLIGATION OF THE HOME STATE BY ITSELF, THROUGH A DESIGNATED 4 AGENT, SURPLUS LINES STAMPING OR SERVICE OFFICE, TO COLLECT CLEARING- 5 HOUSE TRANSACTION DATA FROM SURPLUS LINES LICENSEES AND FROM INSUREDS 6 FOR INDEPENDENTLY PROCURED INSURANCE, WHERE APPLICABLE, FOR REPORTING TO 7 THE CLEARINGHOUSE. 8 (J) A METHOD FOR THE CLEARINGHOUSE TO PERIODICALLY REPORT TO COMPACT- 9 ING STATES, CONTRACTING STATES, SURPLUS LINES LICENSEES AND INSUREDS WHO 10 INDEPENDENTLY PROCURE INSURANCE ALL PREMIUM TAXES OWED TO EACH OF THE 11 COMPACTING STATES AND CONTRACTING STATES, THE DATES UPON WHICH PAYMENT 12 OF SUCH PREMIUM TAXES ARE DUE AND A METHOD TO PAY THEM THROUGH THE 13 CLEARINGHOUSE. 14 (K) THAT EACH SURPLUS LINES LICENSEE IS REQUIRED TO BE LICENSED ONLY 15 IN THE HOME STATE OF EACH INSURED FOR WHOM SURPLUS LINES INSURANCE HAS 16 BEEN PROCURED. 17 (L) THAT A POLICY CONSIDERED TO BE SURPLUS LINES INSURANCE IN THE 18 INSURED'S HOME STATE SHALL BE CONSIDERED SURPLUS LINES INSURANCE IN ALL 19 COMPACTING STATES AND CONTRACTING STATES AND TAXED AS A SURPLUS LINES 20 TRANSACTION IN ALL STATES TO WHICH A PORTION OF THE RISK IS ALLOCATED. 21 EACH COMPACTING STATE AND CONTRACTING STATE SHALL REQUIRE EACH SURPLUS 22 LINES LICENSEE TO PAY TO EVERY OTHER COMPACTING STATE AND CONTRACTING 23 STATE PREMIUM TAXES ON EACH MULTI-STATE RISK THROUGH THE CLEARINGHOUSE 24 AT SUCH TAX RATE CHARGED ON SURPLUS LINES TRANSACTIONS IN SUCH OTHER 25 COMPACTING STATES AND CONTRACTING STATES ON THE PORTION OF THE RISK IN 26 EACH SUCH COMPACTING STATE AND CONTRACTING STATE AS DETERMINED BY THE 27 APPLICABLE UNIFORM ALLOCATION FORMULA ADOPTED BY THE COMMISSION. A POLI- 28 CY CONSIDERED TO BE INDEPENDENTLY PROCURED INSURANCE IN THE INSURED'S 29 HOME STATE SHALL BE CONSIDERED INDEPENDENTLY PROCURED INSURANCE IN ALL 30 COMPACTING STATES AND CONTRACTING STATES. EACH COMPACTING STATE AND 31 CONTRACTING STATE SHALL REQUIRE THE INSURED TO PAY EVERY OTHER COMPACT- 32 ING STATE AND CONTRACTING STATE THE INDEPENDENTLY PROCURED INSURANCE 33 PREMIUM TAX ON EACH MULTI-STATE RISK THROUGH THE CLEARINGHOUSE PURSUANT 34 TO THE UNIFORM ALLOCATION FORMULA ADOPTED BY THE COMMISSION. 35 (M) UNIFORM FOREIGN INSURER ELIGIBILITY REQUIREMENTS AS AUTHORIZED BY 36 THE NRRA. 37 (N) A UNIFORM POLICYHOLDER NOTICE. 38 (O) UNIFORM TREATMENT OF PURCHASING GROUP SURPLUS LINES INSURANCE 39 PLACEMENTS. 40 S 2906. POWERS OF THE COMMISSION. THE COMMISSION SHALL HAVE THE 41 FOLLOWING POWERS: 42 (A) TO PROMULGATE RULES AND OPERATING PROCEDURES, PURSUANT TO SECTION 43 TWO THOUSAND NINE HUNDRED NINE OF THIS ARTICLE, WHICH SHALL HAVE THE 44 FORCE AND EFFECT OF LAW AND SHALL BE BINDING IN THE COMPACTING STATES TO 45 THE EXTENT AND IN THE MANNER PROVIDED IN THIS ARTICLE; 46 (B) TO BRING AND PROSECUTE LEGAL PROCEEDINGS OR ACTIONS IN THE NAME OF 47 THE COMMISSION, PROVIDED THAT THE STANDING OF ANY STATE INSURANCE 48 DEPARTMENT TO SUE OR BE SUED UNDER APPLICABLE LAW SHALL NOT BE AFFECTED; 49 (C) TO ISSUE SUBPOENAS REQUIRING THE ATTENDANCE AND TESTIMONY OF 50 WITNESSES AND THE PRODUCTION OF EVIDENCE, PROVIDED HOWEVER, THE COMMIS- 51 SION IS NOT EMPOWERED TO DEMAND OR SUBPOENA RECORDS OR DATA FROM NON-AD- 52 MITTED INSURERS; 53 (D) TO ESTABLISH AND MAINTAIN OFFICES, INCLUDING THE CREATION OF A 54 CLEARINGHOUSE FOR THE RECEIPT OF PREMIUM TAX AND CLEARINGHOUSE TRANS- 55 ACTION DATA REGARDING NON-ADMITTED INSURANCE OF MULTI-STATE RISKS, 56 SINGLE-STATE RISKS FOR STATES WHICH ELECT TO REQUIRE SURPLUS LINES A. 7786 9 1 LICENSEES TO PAY PREMIUM TAX ON SINGLE-STATE RISKS THROUGH THE CLEARING- 2 HOUSE AND TAX REPORTING FORMS; 3 (E) TO PURCHASE AND MAINTAIN INSURANCE AND BONDS; 4 (F) TO BORROW, ACCEPT OR CONTRACT FOR SERVICES OF PERSONNEL, INCLUD- 5 ING, BUT NOT LIMITED TO, EMPLOYEES OF A COMPACTING STATE OR STAMPING 6 OFFICE, PURSUANT TO AN OPEN, TRANSPARENT, OBJECTIVE COMPETITIVE PROCESS 7 AND PROCEDURE ADOPTED BY THE COMMISSION; 8 (G) TO HIRE EMPLOYEES, PROFESSIONALS OR SPECIALISTS AND ELECT OR 9 APPOINT OFFICERS AND TO FIX THEIR COMPENSATION, DEFINE THEIR DUTIES AND 10 GIVE THEM APPROPRIATE AUTHORITY TO CARRY OUT THE PURPOSES OF THE COMPACT 11 AND DETERMINE THEIR QUALIFICATIONS, PURSUANT TO AN OPEN, TRANSPARENT, 12 OBJECTIVE COMPETITIVE PROCESS AND PROCEDURE ADOPTED BY THE COMMISSION; 13 AND TO ESTABLISH THE COMMISSION'S PERSONNEL POLICIES AND PROGRAMS RELAT- 14 ING TO CONFLICTS OF INTEREST, RATES OF COMPENSATION AND QUALIFICATIONS 15 OF PERSONNEL AND OTHER RELATED PERSONNEL MATTERS; 16 (H) TO ACCEPT ANY AND ALL APPROPRIATE DONATIONS AND GRANTS OF MONEY, 17 EQUIPMENT, SUPPLIES, MATERIALS AND SERVICES AND TO RECEIVE, UTILIZE AND 18 DISPOSE OF THE SAME; PROVIDED THAT AT ALL TIMES THE COMMISSION SHALL 19 AVOID ANY APPEARANCE OF IMPROPRIETY AND/OR CONFLICT OF INTEREST; 20 (I) TO LEASE, PURCHASE, ACCEPT APPROPRIATE GIFTS OR DONATIONS OF, OR 21 OTHERWISE TO OWN, HOLD, IMPROVE OR USE ANY PROPERTY, REAL, PERSONAL OR 22 MIXED; PROVIDED THAT AT ALL TIMES THE COMMISSION SHALL AVOID ANY APPEAR- 23 ANCE OF IMPROPRIETY AND/OR CONFLICT OF INTEREST; 24 (J) TO SELL, CONVEY, MORTGAGE, PLEDGE, LEASE, EXCHANGE, ABANDON OR 25 OTHERWISE DISPOSE OF ANY PROPERTY, REAL, PERSONAL OR MIXED; 26 (K) TO PROVIDE FOR TAX AUDIT RULES AND PROCEDURES FOR THE COMPACTING 27 STATES WITH RESPECT TO THE ALLOCATION OF PREMIUM TAXES, INCLUDING: 28 (1) MINIMUM AUDIT STANDARDS, INCLUDING SAMPLING METHODS; 29 (2) REVIEW OF INTERNAL CONTROLS; 30 (3) COOPERATION AND SHARING OF AUDIT RESPONSIBILITIES BETWEEN COMPACT- 31 ING STATES; 32 (4) HANDLING OF REFUNDS OR CREDITS DUE TO OVERPAYMENTS OR IMPROPER 33 ALLOCATION OF PREMIUM TAXES; 34 (5) TAXPAYER RECORDS TO BE REVIEWED INCLUDING A MINIMUM RETENTION 35 PERIOD; AND 36 (6) AUTHORITY OF COMPACTING STATES TO REVIEW, CHALLENGE OR RE-AUDIT 37 TAXPAYER RECORDS. 38 (L) TO ENFORCE COMPLIANCE BY COMPACTING STATES AND CONTRACTING STATES 39 WITH RULES AND BYLAWS PURSUANT TO THE AUTHORITY SET FORTH IN SECTION TWO 40 THOUSAND NINE HUNDRED SEVENTEEN OF THIS ARTICLE; 41 (M) TO PROVIDE FOR DISPUTE RESOLUTION AMONG COMPACTING STATES AND 42 CONTRACTING STATES; 43 (N) TO ADVISE COMPACTING STATES AND CONTRACTING STATES ON TAX-RELATED 44 ISSUES RELATING TO INSURERS, INSUREDS, SURPLUS LINES LICENSEES, AGENTS 45 OR BROKERS DOMICILED OR DOING BUSINESS IN NON-COMPACTING STATES, 46 CONSISTENT WITH THE PURPOSES OF THIS COMPACT; 47 (O) TO MAKE AVAILABLE ADVICE AND TRAINING TO THOSE PERSONNEL IN STATE 48 STAMPING OFFICES, STATE INSURANCE DEPARTMENTS OR OTHER STATE DEPARTMENTS 49 FOR RECORD KEEPING, TAX COMPLIANCE AND TAX ALLOCATIONS; AND TO BE A 50 RESOURCE FOR STATE INSURANCE DEPARTMENTS AND OTHER STATE DEPARTMENTS; 51 (P) TO ESTABLISH A BUDGET AND MAKE EXPENDITURES; 52 (Q) TO BORROW MONEY; 53 (R) TO APPOINT AND OVERSEE COMMITTEES, INCLUDING ADVISORY COMMITTEES 54 COMPRISED OF MEMBERS, STATE INSURANCE REGULATORS, STATE LEGISLATORS OR 55 THEIR REPRESENTATIVES, INSURANCE INDUSTRY AND CONSUMER REPRESENTATIVES A. 7786 10 1 AND SUCH OTHER INTERESTED PERSONS AS MAY BE DESIGNATED IN THIS COMPACT 2 AND THE BYLAWS; 3 (S) TO ESTABLISH AN EXECUTIVE COMMITTEE OF NOT LESS THAN SEVEN NOR 4 MORE THAN FIFTEEN REPRESENTATIVES, WHICH SHALL INCLUDE OFFICERS ELECTED 5 BY THE COMMISSION AND SUCH OTHER REPRESENTATIVES AS PROVIDED FOR HEREIN 6 AND DETERMINED BY THE BYLAWS. REPRESENTATIVES OF THE EXECUTIVE COMMIT- 7 TEE SHALL SERVE A ONE YEAR TERM. REPRESENTATIVES OF THE EXECUTIVE 8 COMMITTEE SHALL BE ENTITLED TO ONE VOTE EACH. THE EXECUTIVE COMMITTEE 9 SHALL HAVE THE POWER TO ACT ON BEHALF OF THE COMMISSION, WITH THE EXCEP- 10 TION OF RULEMAKING, DURING PERIODS WHEN THE COMMISSION IS NOT IN 11 SESSION. THE EXECUTIVE COMMITTEE SHALL OVERSEE THE DAY TO DAY ACTIVITIES 12 OF THE ADMINISTRATION OF THE COMPACT, INCLUDING THE ACTIVITIES OF THE 13 OPERATIONS COMMITTEE CREATED UNDER THIS ARTICLE AND COMPLIANCE AND 14 ENFORCEMENT OF THE PROVISIONS OF THE COMPACT, ITS BYLAWS AND RULES AND 15 SUCH OTHER DUTIES AS PROVIDED HEREIN AND AS DEEMED NECESSARY; 16 (T) TO ESTABLISH AN OPERATIONS COMMITTEE OF NOT LESS THAN SEVEN AND 17 NOT MORE THAN FIFTEEN REPRESENTATIVES TO PROVIDE ANALYSIS, ADVICE, 18 DETERMINATIONS AND RECOMMENDATIONS REGARDING TECHNOLOGY, SOFTWARE AND 19 SYSTEMS INTEGRATION TO BE ACQUIRED BY THE COMMISSION AND TO PROVIDE 20 ANALYSIS, ADVICE, DETERMINATIONS AND RECOMMENDATIONS REGARDING THE 21 ESTABLISHMENT OF MANDATORY RULES TO BE ADOPTED BY THE COMMISSION; 22 (U) TO ENTER INTO CONTRACTS WITH CONTRACTING STATES SO THAT CONTRACT- 23 ING STATES CAN UTILIZE THE SERVICES OF AND FULLY PARTICIPATE IN THE 24 CLEARINGHOUSE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SUCH 25 CONTRACTS; 26 (V) TO ADOPT AND USE A CORPORATE SEAL; AND 27 (W) TO PERFORM SUCH OTHER FUNCTIONS AS MAY BE NECESSARY OR APPROPRIATE 28 TO ACHIEVE THE PURPOSES OF THIS COMPACT CONSISTENT WITH THE STATE REGU- 29 LATION OF THE BUSINESS OF INSURANCE. 30 S 2907. ORGANIZATION OF THE COMMISSION. (A) (1) EACH COMPACTING STATE 31 SHALL HAVE AND BE LIMITED TO ONE MEMBER. EACH STATE SHALL DETERMINE THE 32 QUALIFICATIONS AND THE METHOD BY WHICH IT SELECTS A MEMBER AND SET FORTH 33 THE SELECTION PROCESS IN THE ENABLING PROVISION OF THE LEGISLATION WHICH 34 ENACTS THIS COMPACT. IN THE ABSENCE OF SUCH A PROVISION THE MEMBER SHALL 35 BE APPOINTED BY THE GOVERNOR OF SUCH COMPACTING STATE. ANY MEMBER MAY BE 36 REMOVED OR SUSPENDED FROM OFFICE AS PROVIDED BY THE LAW OF THE STATE 37 FROM WHICH HE OR SHE SHALL BE APPOINTED. ANY VACANCY OCCURRING IN THE 38 COMMISSION SHALL BE FILLED IN ACCORDANCE WITH THE LAWS OF THE COMPACTING 39 STATE WHEREIN THE VACANCY EXISTS. 40 (2) EACH MEMBER SHALL BE ENTITLED TO ONE VOTE AND SHALL OTHERWISE HAVE 41 AN OPPORTUNITY TO PARTICIPATE IN THE GOVERNANCE OF THE COMMISSION IN 42 ACCORDANCE WITH THE BYLAWS. 43 (3) THE COMMISSION SHALL, BY A MAJORITY VOTE OF THE MEMBERS, PRESCRIBE 44 BYLAWS TO GOVERN ITS CONDUCT AS MAY BE NECESSARY OR APPROPRIATE TO CARRY 45 OUT THE PURPOSES AND EXERCISE THE POWERS OF THE COMPACT INCLUDING, BUT 46 NOT LIMITED TO: 47 (A) ESTABLISHING THE FISCAL YEAR OF THE COMMISSION; 48 (B) PROVIDING REASONABLE PROCEDURES FOR HOLDING MEETINGS OF THE 49 COMMISSION, THE EXECUTIVE COMMITTEE, AND THE OPERATIONS COMMITTEE; 50 (C) PROVIDING REASONABLE STANDARDS AND PROCEDURES: 51 (I) FOR THE ESTABLISHMENT AND MEETINGS OF COMMITTEES, AND 52 (II) GOVERNING ANY GENERAL OR SPECIFIC DELEGATION OF ANY AUTHORITY OR 53 FUNCTION OF THE COMMISSION; 54 (D) PROVIDING REASONABLE PROCEDURES FOR CALLING AND CONDUCTING MEET- 55 INGS OF THE COMMISSION THAT CONSIST OF A MAJORITY OF COMMISSION MEMBERS, 56 ENSURING REASONABLE ADVANCE NOTICE OF EACH SUCH MEETING AND PROVIDING A. 7786 11 1 FOR THE RIGHT OF CITIZENS TO ATTEND EACH SUCH MEETING WITH ENUMERATED 2 EXCEPTIONS DESIGNED TO PROTECT THE PUBLIC'S INTEREST, THE PRIVACY OF 3 INDIVIDUALS AND INSURERS' AND SURPLUS LINES LICENSEES' PROPRIETARY 4 INFORMATION, INCLUDING TRADE SECRETS. THE COMMISSION MAY MEET IN CAMERA 5 ONLY AFTER A MAJORITY OF THE ENTIRE MEMBERSHIP VOTES TO CLOSE A MEETING 6 IN TOTO OR IN PART. AS SOON AS PRACTICABLE, THE COMMISSION MUST MAKE 7 PUBLIC: 8 (I) A COPY OF THE VOTE TO CLOSE THE MEETING REVEALING THE VOTE OF EACH 9 MEMBER WITH NO PROXY VOTES ALLOWED, AND 10 (II) VOTES TAKEN DURING SUCH MEETING; 11 (E) ESTABLISHING THE TITLES, DUTIES AND AUTHORITY AND REASONABLE 12 PROCEDURES FOR THE ELECTION OF THE OFFICERS OF THE COMMISSION; 13 (F) PROVIDING REASONABLE STANDARDS AND PROCEDURES FOR THE ESTABLISH- 14 MENT OF THE PERSONNEL POLICIES AND PROGRAMS OF THE COMMISSION. NOTWITH- 15 STANDING ANY CIVIL SERVICE OR OTHER SIMILAR LAWS OF ANY COMPACTING 16 STATE, THE BYLAWS SHALL EXCLUSIVELY GOVERN THE PERSONNEL POLICIES AND 17 PROGRAMS OF THE COMMISSION; 18 (G) PROMULGATING A CODE OF ETHICS TO ADDRESS PERMISSIBLE AND PROHIBIT- 19 ED ACTIVITIES OF COMMISSION MEMBERS AND EMPLOYEES; AND 20 (H) PROVIDING A MECHANISM FOR WINDING UP THE OPERATIONS OF THE COMMIS- 21 SION AND THE EQUITABLE DISPOSITION OF ANY EXCESS FUNDS THAT MAY EXIST 22 AFTER THE TERMINATION OF THE COMPACT AFTER THE PAYMENT AND/OR RESERVING 23 OF ALL OF ITS DEBTS AND OBLIGATIONS; 24 (4) THE COMMISSION SHALL PUBLISH ITS BYLAWS IN A CONVENIENT FORM AND 25 FILE A COPY THEREOF AND A COPY OF ANY AMENDMENT THERETO WITH THE APPRO- 26 PRIATE AGENCY OR OFFICER IN EACH OF THE COMPACTING STATES. 27 (B) (1) AN EXECUTIVE COMMITTEE OF THE COMMISSION ("EXECUTIVE COMMIT- 28 TEE") SHALL BE ESTABLISHED. ALL ACTIONS OF THE EXECUTIVE COMMITTEE, 29 INCLUDING COMPLIANCE AND ENFORCEMENT ARE SUBJECT TO THE REVIEW AND 30 RATIFICATION OF THE COMMISSION AS PROVIDED IN THE BYLAWS. THE EXECUTIVE 31 COMMITTEE SHALL HAVE NO MORE THAN FIFTEEN REPRESENTATIVES OR ONE FOR 32 EACH STATE IF THERE ARE LESS THAN FIFTEEN COMPACTING STATES, WHO SHALL 33 SERVE FOR A TERM AND BE ESTABLISHED IN ACCORDANCE WITH THE BYLAWS. 34 (2) THE EXECUTIVE COMMITTEE SHALL HAVE SUCH AUTHORITY AND DUTIES AS 35 MAY BE SET FORTH IN THE BYLAWS, INCLUDING BUT NOT LIMITED TO: 36 (A) MANAGING THE AFFAIRS OF THE COMMISSION IN A MANNER CONSISTENT WITH 37 THE BYLAWS AND PURPOSES OF THE COMMISSION; 38 (B) ESTABLISHING AND OVERSEEING AN ORGANIZATIONAL STRUCTURE WITHIN AND 39 APPROPRIATE PROCEDURES FOR THE COMMISSION TO PROVIDE FOR THE CREATION OF 40 RULES AND OPERATING PROCEDURES; 41 (C) OVERSEEING THE OFFICES OF THE COMMISSION; AND 42 (D) PLANNING, IMPLEMENTING AND COORDINATING COMMUNICATIONS AND ACTIV- 43 ITIES WITH OTHER STATE, FEDERAL AND LOCAL GOVERNMENT ORGANIZATIONS IN 44 ORDER TO ADVANCE THE GOALS OF THE COMMISSION. 45 (3) THE COMMISSION SHALL ANNUALLY ELECT OFFICERS FROM THE EXECUTIVE 46 COMMITTEE, WITH EACH HAVING SUCH AUTHORITY AND DUTIES AS MAY BE SPECI- 47 FIED IN THE BYLAWS. 48 (4) THE EXECUTIVE COMMITTEE MAY, SUBJECT TO THE APPROVAL OF THE 49 COMMISSION, APPOINT OR RETAIN AN EXECUTIVE DIRECTOR FOR SUCH PERIOD, 50 UPON SUCH TERMS AND CONDITIONS AND FOR SUCH COMPENSATION AS THE COMMIS- 51 SION MAY DEEM APPROPRIATE. THE EXECUTIVE DIRECTOR SHALL SERVE AS SECRE- 52 TARY TO THE COMMISSION BUT SHALL NOT BE A MEMBER OF THE COMMISSION. THE 53 EXECUTIVE DIRECTOR SHALL HIRE AND SUPERVISE SUCH OTHER PERSONS AS MAY BE 54 AUTHORIZED BY THE COMMISSION. 55 (C) (1) AN OPERATIONS COMMITTEE SHALL BE ESTABLISHED. ALL ACTIONS OF 56 THE OPERATIONS COMMITTEE ARE SUBJECT TO THE REVIEW AND OVERSIGHT OF THE A. 7786 12 1 COMMISSION AND THE EXECUTIVE COMMITTEE AND MUST BE APPROVED BY THE 2 COMMISSION. THE EXECUTIVE COMMITTEE WILL ACCEPT THE DETERMINATIONS AND 3 RECOMMENDATIONS OF THE OPERATIONS COMMITTEE UNLESS GOOD CAUSE IS SHOWN 4 WHY SUCH DETERMINATIONS AND RECOMMENDATIONS SHOULD NOT BE APPROVED. ANY 5 DISPUTES AS TO WHETHER GOOD CAUSE EXISTS TO REJECT ANY DETERMINATION OR 6 RECOMMENDATION OF THE OPERATIONS COMMITTEE SHALL BE RESOLVED BY THE 7 MAJORITY VOTE OF THE COMMISSION. THE OPERATIONS COMMITTEE SHALL HAVE NO 8 MORE THAN FIFTEEN REPRESENTATIVES OR ONE FOR EACH STATE IF THERE ARE 9 LESS THAN FIFTEEN COMPACTING STATES, WHO SHALL SERVE FOR A TERM AND 10 SHALL BE ESTABLISHED AS SET FORTH IN THE BYLAWS. THE OPERATIONS COMMIT- 11 TEE SHALL HAVE RESPONSIBILITY FOR: 12 (A) EVALUATING TECHNOLOGY REQUIREMENTS FOR THE CLEARINGHOUSE, ASSESS- 13 ING EXISTING SYSTEMS USED BY STATE REGULATORY AGENCIES AND STATE STAMP- 14 ING OFFICES TO MAXIMIZE THE EFFICIENCY AND SUCCESSFUL INTEGRATION OF THE 15 CLEARINGHOUSE TECHNOLOGY SYSTEMS WITH STATE AND STATE STAMPING OFFICE 16 TECHNOLOGY PLATFORMS AND TO MINIMIZE COSTS TO THE STATES, STATE STAMPING 17 OFFICES AND THE CLEARINGHOUSE; 18 (B) MAKING RECOMMENDATIONS TO THE EXECUTIVE COMMITTEE BASED ON ITS 19 ANALYSIS AND DETERMINATION OF THE CLEARINGHOUSE TECHNOLOGY REQUIREMENTS 20 AND COMPATIBILITY WITH EXISTING STATE AND STATE STAMPING OFFICE SYSTEMS; 21 (C) EVALUATING THE MOST SUITABLE PROPOSALS FOR ADOPTION AS MANDATORY 22 RULES, ASSESSING SUCH PROPOSALS FOR EASE OF INTEGRATION BY STATES AND 23 LIKELIHOOD OF SUCCESSFUL IMPLEMENTATION AND TO REPORT TO THE EXECUTIVE 24 COMMITTEE ITS DETERMINATIONS AND RECOMMENDATIONS; AND 25 (D) SUCH OTHER DUTIES AND RESPONSIBILITIES AS ARE DELEGATED TO IT BY 26 THE BYLAWS, THE EXECUTIVE COMMITTEE OR THE COMMISSION. 27 (2) ALL REPRESENTATIVES OF THE OPERATIONS COMMITTEE SHALL BE INDIVID- 28 UALS WHO HAVE EXTENSIVE EXPERIENCE AND/OR EMPLOYMENT IN THE SURPLUS 29 LINES INSURANCE BUSINESS, INCLUDING, BUT NOT LIMITED TO, EXECUTIVES AND 30 ATTORNEYS EMPLOYED BY SURPLUS LINES INSURERS, SURPLUS LINES LICENSEES, 31 LAW FIRMS, STATE INSURANCE DEPARTMENTS AND/OR STATE STAMPING OFFICES. 32 OPERATIONS COMMITTEE REPRESENTATIVES FROM COMPACTING STATES WHICH 33 UTILIZE THE SERVICES OF A STATE STAMPING OFFICE MUST APPOINT THE CHIEF 34 OPERATING OFFICER OR A SENIOR MANAGER OF THE STATE STAMPING OFFICE TO 35 THE OPERATIONS COMMITTEE. 36 (D) (1) A LEGISLATIVE COMMITTEE COMPRISED OF STATE LEGISLATORS OR 37 THEIR DESIGNEES SHALL BE ESTABLISHED TO MONITOR THE OPERATIONS OF AND 38 MAKE RECOMMENDATIONS TO THE COMMISSION, INCLUDING THE EXECUTIVE COMMIT- 39 TEE; PROVIDED THAT THE MANNER OF SELECTION AND TERM OF ANY LEGISLATIVE 40 COMMITTEE MEMBER SHALL BE AS SET FORTH IN THE BYLAWS. PRIOR TO THE 41 ADOPTION BY THE COMMISSION OF ANY UNIFORM STANDARD, REVISION TO THE 42 BYLAWS, ANNUAL BUDGET OR OTHER SIGNIFICANT MATTER AS MAY BE PROVIDED IN 43 THE BYLAWS, THE EXECUTIVE COMMITTEE SHALL CONSULT WITH AND REPORT TO THE 44 LEGISLATIVE COMMITTEE. 45 (2) THE COMMISSION MAY ESTABLISH ADDITIONAL ADVISORY COMMITTEES AS ITS 46 BYLAWS MAY PROVIDE FOR THE CARRYING OUT OF ITS FUNCTIONS. 47 (E) THE COMMISSION SHALL MAINTAIN ITS CORPORATE BOOKS AND RECORDS IN 48 ACCORDANCE WITH THE BYLAWS. 49 (F) (1) THE MEMBERS, OFFICERS, EXECUTIVE DIRECTOR, EMPLOYEES AND 50 REPRESENTATIVES OF THE COMMISSION, THE EXECUTIVE COMMITTEE AND ANY OTHER 51 COMMITTEE OF THE COMMISSION SHALL BE IMMUNE FROM SUIT AND LIABILITY, 52 EITHER PERSONALLY OR IN THEIR OFFICIAL CAPACITY, FOR ANY CLAIM FOR 53 DAMAGE TO OR LOSS OF PROPERTY OR PERSONAL INJURY OR OTHER CIVIL LIABIL- 54 ITY CAUSED BY OR ARISING OUT OF ANY ACTUAL OR ALLEGED ACT, ERROR OR 55 OMISSION THAT OCCURRED, OR THAT THE PERSON AGAINST WHOM THE CLAIM IS 56 MADE HAD A REASONABLE BASIS FOR BELIEVING OCCURRED, WITHIN THE SCOPE OF A. 7786 13 1 COMMISSION EMPLOYMENT, DUTIES OR RESPONSIBILITIES; PROVIDED THAT NOTHING 2 IN THIS PARAGRAPH SHALL BE CONSTRUED TO PROTECT ANY SUCH PERSON FROM 3 SUIT AND/OR LIABILITY FOR ANY DAMAGE, LOSS, INJURY OR LIABILITY CAUSED 4 BY THE INTENTIONAL OR WILLFUL OR WANTON MISCONDUCT OF THAT PERSON. 5 (2) THE COMMISSION SHALL DEFEND ANY MEMBER, OFFICER, EXECUTIVE DIREC- 6 TOR, EMPLOYEE OR REPRESENTATIVE OF THE COMMISSION, THE EXECUTIVE COMMIT- 7 TEE OR ANY OTHER COMMITTEE OF THE COMMISSION IN ANY CIVIL ACTION SEEKING 8 TO IMPOSE LIABILITY ARISING OUT OF ANY ACTUAL OR ALLEGED ACT, ERROR OR 9 OMISSION THAT OCCURRED WITHIN THE SCOPE OF COMMISSION EMPLOYMENT, DUTIES 10 OR RESPONSIBILITIES OR THAT THE PERSON AGAINST WHOM THE CLAIM IS MADE 11 HAD A REASONABLE BASIS FOR BELIEVING OCCURRED WITHIN THE SCOPE OF 12 COMMISSION EMPLOYMENT, DUTIES OR RESPONSIBILITIES; PROVIDED THAT NOTHING 13 HEREIN SHALL BE CONSTRUED TO PROHIBIT THAT PERSON FROM RETAINING HIS OR 14 HER OWN COUNSEL; AND PROVIDED FURTHER, THAT THE ACTUAL OR ALLEGED ACT, 15 ERROR OR OMISSION DID NOT RESULT FROM THAT PERSON'S INTENTIONAL OR WILL- 16 FUL OR WANTON MISCONDUCT. 17 (3) THE COMMISSION SHALL INDEMNIFY AND HOLD HARMLESS ANY MEMBER, OFFI- 18 CER, EXECUTIVE DIRECTOR, EMPLOYEE OR REPRESENTATIVE OF THE COMMISSION, 19 EXECUTIVE COMMITTEE OR ANY OTHER COMMITTEE OF THE COMMISSION FOR THE 20 AMOUNT OF ANY SETTLEMENT OR JUDGMENT OBTAINED AGAINST THAT PERSON ARIS- 21 ING OUT OF ANY ACTUAL OR ALLEGED ACT, ERROR OR OMISSION THAT OCCURRED 22 WITHIN THE SCOPE OF COMMISSION EMPLOYMENT, DUTIES OR RESPONSIBILITIES OR 23 THAT SUCH PERSON HAD A REASONABLE BASIS FOR BELIEVING OCCURRED WITHIN 24 THE SCOPE OF COMMISSION EMPLOYMENT, DUTIES OR RESPONSIBILITIES, PROVIDED 25 THAT THE ACTUAL OR ALLEGED ACT, ERROR OR OMISSION DID NOT RESULT FROM 26 THE INTENTIONAL OR WILLFUL OR WANTON MISCONDUCT OF THAT PERSON. 27 S 2908. MEETINGS AND ACTS OF THE COMMISSION. (A) THE COMMISSION SHALL 28 MEET AND TAKE SUCH ACTIONS AS ARE CONSISTENT WITH THE PROVISIONS OF THIS 29 COMPACT AND THE BYLAWS. 30 (B) EACH MEMBER OF THE COMMISSION SHALL HAVE THE RIGHT AND POWER TO 31 CAST A VOTE TO WHICH THAT COMPACTING STATE IS ENTITLED AND TO PARTIC- 32 IPATE IN THE BUSINESS AND AFFAIRS OF THE COMMISSION. A MEMBER SHALL VOTE 33 IN PERSON OR BY SUCH OTHER MEANS AS PROVIDED IN THE BYLAWS. THE BYLAWS 34 MAY PROVIDE FOR MEMBERS' PARTICIPATION IN MEETINGS BY TELEPHONE OR OTHER 35 MEANS OF COMMUNICATION. 36 (C) THE COMMISSION SHALL MEET AT LEAST ONCE DURING EACH CALENDAR YEAR. 37 ADDITIONAL MEETINGS SHALL BE HELD AS SET FORTH IN THE BYLAWS. 38 (D) PUBLIC NOTICE SHALL BE GIVEN OF ALL MEETINGS AND ALL MEETINGS 39 SHALL BE OPEN TO THE PUBLIC, EXCEPT AS SET FORTH IN THE RULES OR OTHER- 40 WISE PROVIDED IN THE COMPACT. 41 (E) THE COMMISSION SHALL PROMULGATE RULES CONCERNING ITS MEETINGS 42 CONSISTENT WITH THE PRINCIPLES CONTAINED IN THE GOVERNMENT IN THE 43 SUNSHINE ACT, 5 U.S.C. S 552B, AS MAY BE AMENDED. 44 (F) THE COMMISSION AND ITS COMMITTEES MAY CLOSE A MEETING, OR PORTION 45 THEREOF, WHERE IT DETERMINES BY MAJORITY VOTE THAT AN OPEN MEETING WOULD 46 BE LIKELY TO: 47 (1) RELATE SOLELY TO THE COMMISSION'S INTERNAL PERSONNEL PRACTICES AND 48 PROCEDURES; 49 (2) DISCLOSE MATTERS SPECIFICALLY EXEMPTED FROM DISCLOSURE BY FEDERAL 50 AND STATE STATUTE; 51 (3) DISCLOSE TRADE SECRETS OR COMMERCIAL OR FINANCIAL INFORMATION 52 WHICH IS PRIVILEGED OR CONFIDENTIAL; 53 (4) INVOLVE ACCUSING A PERSON OF A CRIME, OR FORMALLY CENSURING A 54 PERSON; 55 (5) DISCLOSE INFORMATION OF A PERSONAL NATURE WHERE DISCLOSURE WOULD 56 CONSTITUTE A CLEARLY UNWARRANTED INVASION OF PERSONAL PRIVACY; A. 7786 14 1 (6) DISCLOSE INVESTIGATIVE RECORDS COMPILED FOR LAW ENFORCEMENT 2 PURPOSES; OR 3 (7) SPECIFICALLY RELATE TO THE COMMISSION'S ISSUANCE OF A SUBPOENA OR 4 ITS PARTICIPATION IN A CIVIL ACTION OR OTHER LEGAL PROCEEDING. 5 (G) FOR A MEETING, OR PORTION OF A MEETING, CLOSED PURSUANT TO 6 SUBSECTION (F) OF THIS SECTION, THE COMMISSION'S LEGAL COUNSEL OR DESIG- 7 NEE SHALL CERTIFY THAT THE MEETING MAY BE CLOSED AND SHALL REFERENCE 8 EACH RELEVANT EXEMPTIVE PROVISION. THE COMMISSION SHALL KEEP MINUTES 9 WHICH SHALL FULLY AND CLEARLY DESCRIBE ALL MATTERS DISCUSSED IN A MEET- 10 ING AND SHALL PROVIDE A FULL AND ACCURATE SUMMARY OF ACTIONS TAKEN AND 11 THE REASONS THEREFORE, INCLUDING A DESCRIPTION OF THE VIEWS EXPRESSED 12 AND THE RECORD OF A ROLL CALL VOTE. ALL DOCUMENTS CONSIDERED IN 13 CONNECTION WITH AN ACTION SHALL BE IDENTIFIED IN SUCH MINUTES. ALL 14 MINUTES AND DOCUMENTS OF A CLOSED MEETING SHALL REMAIN UNDER SEAL, 15 SUBJECT TO RELEASE BY A MAJORITY VOTE OF THE COMMISSION. 16 S 2909. RULEMAKING FUNCTIONS OF THE COMMISSION. (A) THE COMMISSION 17 SHALL PROMULGATE REASONABLE RULES IN ORDER TO EFFECTIVELY AND EFFICIENT- 18 LY ACHIEVE THE PURPOSES OF THIS COMPACT. NOTWITHSTANDING THE FOREGOING, 19 IN THE EVENT THE COMMISSION EXERCISES ITS RULEMAKING AUTHORITY IN A 20 MANNER THAT IS BEYOND THE SCOPE OF THE PURPOSES OF THIS ARTICLE OR THE 21 POWERS GRANTED HEREUNDER, THEN SUCH AN ACTION BY THE COMMISSION SHALL BE 22 INVALID AND HAVE NO FORCE OR EFFECT. 23 (B) RULES SHALL BE MADE PURSUANT TO A RULEMAKING PROCESS THAT SUBSTAN- 24 TIALLY CONFORMS TO THE MODEL STATE ADMINISTRATIVE PROCEDURE ACT OF 1981, 25 FOUND IN VOLUME FIFTEEN OF THE UNIFORM LAWS ANNOTATED, AS AMENDED, AS 26 MAY BE APPROPRIATE TO THE OPERATIONS OF THE COMMISSION. 27 (C) ALL RULES AND AMENDMENTS THERETO SHALL BECOME EFFECTIVE AS OF THE 28 DATE SPECIFIED IN EACH RULE, OPERATING PROCEDURE OR AMENDMENT. 29 (D) NOT LATER THAN THIRTY DAYS AFTER A RULE IS PROMULGATED, ANY PERSON 30 MAY FILE A PETITION FOR JUDICIAL REVIEW OF THE RULE; PROVIDED THAT THE 31 FILING OF SUCH A PETITION SHALL NOT STAY OR OTHERWISE PREVENT THE RULE 32 FROM BECOMING EFFECTIVE UNLESS THE COURT FINDS THAT THE PETITIONER HAS A 33 SUBSTANTIAL LIKELIHOOD OF SUCCESS. THE COURT SHALL GIVE DEFERENCE TO THE 34 ACTIONS OF THE COMMISSION CONSISTENT WITH APPLICABLE LAW AND SHALL NOT 35 FIND THE RULE TO BE UNLAWFUL IF THE RULE REPRESENTS A REASONABLE EXER- 36 CISE OF THE COMMISSION'S AUTHORITY. 37 S 2910. COMMISSION RECORDS AND ENFORCEMENT. (A) THE COMMISSION SHALL 38 PROMULGATE RULES ESTABLISHING CONDITIONS AND PROCEDURES FOR PUBLIC 39 INSPECTION AND COPYING OF ITS INFORMATION AND OFFICIAL RECORDS, EXCEPT 40 SUCH INFORMATION AND RECORDS INVOLVING THE PRIVACY OF INDIVIDUALS, 41 INSURERS, INSUREDS OR SURPLUS LINES LICENSEE TRADE SECRETS. STATE TRANS- 42 ACTION DOCUMENTATION AND CLEARINGHOUSE TRANSACTION DATA COLLECTED BY THE 43 CLEARINGHOUSE SHALL BE USED FOR ONLY THOSE PURPOSES EXPRESSED IN OR 44 REASONABLY IMPLIED UNDER THE PROVISIONS OF THIS COMPACT AND THE COMMIS- 45 SION SHALL AFFORD THIS DATA THE BROADEST PROTECTIONS AS PERMITTED BY ANY 46 APPLICABLE LAW FOR PROPRIETARY INFORMATION, TRADE SECRETS OR PERSONAL 47 DATA. THE COMMISSION MAY PROMULGATE ADDITIONAL RULES UNDER WHICH IT MAY 48 MAKE AVAILABLE TO FEDERAL AND STATE AGENCIES, INCLUDING LAW ENFORCEMENT 49 AGENCIES, RECORDS AND INFORMATION OTHERWISE EXEMPT FROM DISCLOSURE AND 50 MAY ENTER INTO AGREEMENTS WITH SUCH AGENCIES TO RECEIVE OR EXCHANGE 51 INFORMATION OR RECORDS SUBJECT TO NONDISCLOSURE AND CONFIDENTIALITY 52 PROVISIONS. 53 (B) EXCEPT AS TO PRIVILEGED RECORDS, DATA AND INFORMATION, THE LAWS OF 54 ANY COMPACTING STATE PERTAINING TO CONFIDENTIALITY OR NONDISCLOSURE 55 SHALL NOT RELIEVE ANY COMPACTING STATE MEMBER OF THE DUTY TO DISCLOSE 56 ANY RELEVANT RECORDS, DATA OR INFORMATION TO THE COMMISSION; PROVIDED A. 7786 15 1 THAT DISCLOSURE TO THE COMMISSION SHALL NOT BE DEEMED TO WAIVE OR OTHER- 2 WISE AFFECT ANY CONFIDENTIALITY REQUIREMENT AND FURTHER PROVIDED THAT, 3 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS ARTICLE, THE COMMISSION 4 SHALL NOT BE SUBJECT TO THE COMPACTING STATE'S LAWS PERTAINING TO CONFI- 5 DENTIALITY AND NONDISCLOSURE WITH RESPECT TO RECORDS, DATA AND INFORMA- 6 TION IN ITS POSSESSION. CONFIDENTIAL INFORMATION OF THE COMMISSION 7 SHALL REMAIN CONFIDENTIAL AFTER SUCH INFORMATION IS PROVIDED TO ANY 8 MEMBER, AND THE COMMISSION SHALL MAINTAIN THE CONFIDENTIALITY OF ANY 9 INFORMATION PROVIDED BY A MEMBER THAT IS CONFIDENTIAL UNDER THAT 10 MEMBER'S STATE LAW. 11 (C) THE COMMISSION SHALL MONITOR COMPACTING STATES FOR COMPLIANCE WITH 12 DULY ADOPTED BYLAWS AND RULES. THE COMMISSION SHALL NOTIFY ANY NON-COM- 13 PLYING COMPACTING STATE IN WRITING OF ITS NONCOMPLIANCE WITH COMMISSION 14 BYLAWS OR RULES. IF A NON-COMPLYING COMPACTING STATE FAILS TO REMEDY 15 ITS NONCOMPLIANCE WITHIN THE TIME SPECIFIED IN THE NOTICE OF NONCOMPLI- 16 ANCE, THE COMPACTING STATE SHALL BE DEEMED TO BE IN DEFAULT AS SET FORTH 17 IN SECTION TWO THOUSAND NINE HUNDRED FIFTEEN OF THIS ARTICLE. 18 S 2911. DISPUTE RESOLUTION. (A) BEFORE A MEMBER MAY BRING AN ACTION IN 19 A COURT OF COMPETENT JURISDICTION FOR VIOLATION OF ANY PROVISION, STAND- 20 ARD OR REQUIREMENT OF THE COMPACT, THE COMMISSION SHALL ATTEMPT, UPON 21 THE REQUEST OF A MEMBER, TO RESOLVE ANY DISPUTES OR OTHER ISSUES THAT 22 ARE SUBJECT TO THIS COMPACT AND WHICH MAY ARISE BETWEEN TWO OR MORE 23 COMPACTING STATES, CONTRACTING STATES OR NON-COMPACTING STATES AND THE 24 COMMISSION SHALL PROMULGATE A RULE PROVIDING ALTERNATIVE DISPUTE RESOL- 25 UTION PROCEDURES FOR SUCH DISPUTES. 26 (B) THE COMMISSION SHALL ALSO PROVIDE ALTERNATIVE DISPUTE RESOLUTION 27 PROCEDURES TO RESOLVE ANY DISPUTES BETWEEN INSUREDS OR SURPLUS LINES 28 LICENSEES CONCERNING A TAX CALCULATION OR ALLOCATION OR RELATED ISSUES 29 WHICH ARE THE SUBJECT OF THIS COMPACT. 30 (C) ANY ALTERNATIVE DISPUTE RESOLUTION PROCEDURES SHALL BE UTILIZED IN 31 CIRCUMSTANCES WHERE A DISPUTE ARISES AS TO WHICH STATE CONSTITUTES THE 32 HOME STATE. 33 S 2912. REVIEW OF COMMISSION DECISIONS. REGARDING COMMISSION DECI- 34 SIONS: 35 (A) EXCEPT AS NECESSARY FOR PROMULGATING RULES TO FULFILL THE PURPOSES 36 OF THIS COMPACT, THE COMMISSION SHALL NOT HAVE AUTHORITY TO OTHERWISE 37 REGULATE INSURANCE IN THE COMPACTING STATES. 38 (B) NOT LATER THAN THIRTY DAYS AFTER THE COMMISSION HAS GIVEN NOTICE 39 OF ANY RULE OR ALLOCATION FORMULA, ANY THIRD PARTY FILER OR COMPACTING 40 STATE MAY APPEAL THE DETERMINATION TO A REVIEW PANEL APPOINTED BY THE 41 COMMISSION. THE COMMISSION SHALL PROMULGATE RULES TO ESTABLISH PROCE- 42 DURES FOR APPOINTING SUCH REVIEW PANELS AND PROVIDE FOR NOTICE AND HEAR- 43 ING. AN ALLEGATION THAT THE COMMISSION, IN MAKING COMPLIANCE OR TAX 44 DETERMINATIONS ACTED ARBITRARILY, CAPRICIOUSLY OR IN A MANNER THAT IS AN 45 ABUSE OF DISCRETION OR OTHERWISE NOT IN ACCORDANCE WITH THE LAW, IS 46 SUBJECT TO JUDICIAL REVIEW IN ACCORDANCE WITH SUBSECTION (F) OF SECTION 47 TWO THOUSAND NINE HUNDRED FOUR OF THIS ARTICLE. 48 (C) THE COMMISSION SHALL HAVE AUTHORITY TO MONITOR, REVIEW AND RECON- 49 SIDER COMMISSION DECISIONS UPON A FINDING THAT THE DETERMINATIONS OR 50 ALLOCATIONS DO NOT MEET THE RELEVANT RULE. WHERE APPROPRIATE, THE 51 COMMISSION MAY WITHDRAW OR MODIFY ITS DETERMINATION OR ALLOCATION AFTER 52 PROPER NOTICE AND HEARING, SUBJECT TO THE APPEAL PROCESS SET FORTH IN 53 SUBSECTION (B) OF THIS SECTION. 54 S 2913. FINANCE. (A) THE COMMISSION SHALL PAY OR PROVIDE FOR THE 55 PAYMENT OF THE REASONABLE EXPENSES OF ITS ESTABLISHMENT AND ORGANIZA- 56 TION. TO FUND THE COST OF ITS INITIAL OPERATIONS THE COMMISSION MAY A. 7786 16 1 ACCEPT CONTRIBUTIONS, GRANTS AND OTHER FORMS OF FUNDING FROM THE STATE 2 STAMPING OFFICES, COMPACTING STATES AND OTHER SOURCES. 3 (B) THE COMMISSION SHALL COLLECT A FEE PAYABLE BY THE INSURED DIRECTLY 4 OR THROUGH A SURPLUS LINES LICENSEE ON EACH TRANSACTION PROCESSED 5 THROUGH THE COMPACT CLEARINGHOUSE TO COVER THE COST OF THE OPERATIONS 6 AND ACTIVITIES OF THE COMMISSION AND ITS STAFF IN A TOTAL AMOUNT SUFFI- 7 CIENT TO COVER THE COMMISSION'S ANNUAL BUDGET. 8 (C) THE COMMISSION'S BUDGET FOR A FISCAL YEAR SHALL NOT BE APPROVED 9 UNTIL IT HAS BEEN SUBJECT TO NOTICE AND COMMENT AS SET FORTH IN SECTION 10 TWO THOUSAND NINE HUNDRED NINE OF THIS ARTICLE. 11 (D) THE COMMISSION SHALL BE REGARDED AS PERFORMING ESSENTIAL GOVERN- 12 MENTAL FUNCTIONS IN EXERCISING SUCH POWERS AND FUNCTIONS AND IN CARRYING 13 OUT THE PROVISIONS OF THIS COMPACT AND OF ANY LAW RELATING THERETO AND 14 SHALL NOT BE REQUIRED TO PAY ANY TAXES OR ASSESSMENTS OF ANY CHARACTER 15 LEVIED BY ANY STATE OR POLITICAL SUBDIVISION THEREOF UPON ANY OF THE 16 PROPERTY USED BY IT FOR SUCH PURPOSES OR ANY INCOME OR REVENUE THERE- 17 FROM, INCLUDING ANY PROFIT FROM A SALE OR EXCHANGE. 18 (E) THE COMMISSION SHALL KEEP COMPLETE AND ACCURATE ACCOUNTS OF ALL 19 ITS INTERNAL RECEIPTS, INCLUDING GRANTS AND DONATIONS AND DISBURSEMENTS 20 FOR ALL FUNDS UNDER ITS CONTROL. THE INTERNAL FINANCIAL ACCOUNTS OF THE 21 COMMISSION SHALL BE SUBJECT TO THE ACCOUNTING PROCEDURES ESTABLISHED 22 UNDER ITS BYLAWS. THE FINANCIAL ACCOUNTS AND REPORTS INCLUDING THE 23 SYSTEM OF INTERNAL CONTROLS AND PROCEDURES OF THE COMMISSION SHALL BE 24 AUDITED ANNUALLY BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. UPON THE 25 DETERMINATION OF THE COMMISSION, BUT NOT LESS FREQUENTLY THAN EVERY 26 THREE YEARS, THE REVIEW OF THE INDEPENDENT AUDITOR SHALL INCLUDE A 27 MANAGEMENT AND PERFORMANCE AUDIT OF THE COMMISSION. THE COMMISSION SHALL 28 MAKE AN ANNUAL REPORT TO THE GOVERNOR AND LEGISLATURE OF THE COMPACTING 29 STATES, WHICH SHALL INCLUDE A REPORT OF THE INDEPENDENT AUDIT. THE 30 COMMISSION'S INTERNAL ACCOUNTS SHALL NOT BE CONFIDENTIAL AND SUCH MATE- 31 RIALS MAY BE SHARED WITH THE COMMISSIONER, THE CONTROLLER OR THE STAMP- 32 ING OFFICE OF ANY COMPACTING STATE UPON REQUEST; PROVIDED, HOWEVER, THAT 33 ANY WORK PAPERS RELATED TO ANY INTERNAL OR INDEPENDENT AUDIT AND ANY 34 INFORMATION REGARDING THE PRIVACY OF INDIVIDUALS AND LICENSEES' AND 35 INSURERS' PROPRIETARY INFORMATION, INCLUDING TRADE SECRETS, SHALL REMAIN 36 CONFIDENTIAL. 37 (F) NO COMPACTING STATE SHALL HAVE ANY CLAIM TO OR OWNERSHIP OF ANY 38 PROPERTY HELD BY OR VESTED IN THE COMMISSION OR TO ANY COMMISSION FUNDS 39 HELD PURSUANT TO THE PROVISIONS OF THIS COMPACT. 40 (G) THE COMMISSION SHALL NOT MAKE ANY POLITICAL CONTRIBUTIONS TO 41 CANDIDATES FOR ELECTED OFFICE, ELECTED OFFICIALS, POLITICAL PARTIES OR 42 POLITICAL ACTION COMMITTEES. THE COMMISSION SHALL NOT ENGAGE IN LOBBYING 43 EXCEPT WITH RESPECT TO CHANGES TO THIS COMPACT. 44 S 2914. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT. (A) ANY STATE 45 IS ELIGIBLE TO BECOME A COMPACTING STATE. 46 (B) THE COMPACT SHALL BECOME EFFECTIVE AND BINDING UPON LEGISLATIVE 47 ENACTMENT OF THE COMPACT INTO LAW BY TWO COMPACTING STATES; PROVIDED, 48 THE COMMISSION SHALL BECOME EFFECTIVE FOR PURPOSES OF ADOPTING RULES AND 49 CREATING THE CLEARINGHOUSE WHEN THERE ARE A TOTAL OF TEN COMPACTING 50 STATES AND CONTRACTING STATES OR, ALTERNATIVELY, WHEN THERE ARE COMPACT- 51 ING STATES AND CONTRACTING STATES REPRESENTING GREATER THAN FORTY 52 PERCENT OF THE SURPLUS LINES INSURANCE PREMIUM VOLUME BASED ON RECORDS 53 OF THE PERCENTAGE OF SURPLUS LINES INSURANCE PREMIUM SET FORTH IN APPEN- 54 DIX A OF SECTION TWO THOUSAND NINE HUNDRED SEVENTEEN OF THIS ARTICLE. 55 THEREAFTER, IT SHALL BECOME EFFECTIVE AND BINDING AS TO ANY OTHER 56 COMPACTING STATE UPON ENACTMENT OF THE COMPACT INTO LAW BY THAT STATE. A. 7786 17 1 NOTWITHSTANDING THE FOREGOING, THE CLEARINGHOUSE OPERATIONS AND THE DUTY 2 TO REPORT CLEARINGHOUSE TRANSACTION DATA SHALL BEGIN ON THE FIRST OF 3 JANUARY OR THE FIRST OF JULY NEXT FOLLOWING THE FIRST ANNIVERSARY OF THE 4 COMMISSION'S EFFECTIVE DATE. FOR STATES WHICH JOIN THE COMPACT SUBSE- 5 QUENT TO THE EFFECTIVE DATE, A START DATE FOR REPORTING CLEARINGHOUSE 6 TRANSACTION DATA SHALL BE SET BY THE COMMISSION PROVIDED SURPLUS LINES 7 LICENSEES AND ALL OTHER INTERESTED PARTIES RECEIVE NOT LESS THAN NINETY 8 DAYS ADVANCE NOTICE. 9 (C) AMENDMENTS TO THE COMPACT MAY BE PROPOSED BY THE COMMISSION FOR 10 ENACTMENT BY THE COMPACTING STATES. NO AMENDMENT SHALL BECOME EFFECTIVE 11 AND BINDING UPON THE COMMISSION AND THE COMPACTING STATES UNLESS AND 12 UNTIL ALL COMPACTING STATES ENACT THE AMENDMENT INTO LAW. 13 S 2915. WITHDRAWAL, DEFAULT AND TERMINATION. (A) (1) ONCE EFFECTIVE, 14 THE COMPACT SHALL CONTINUE IN FORCE AND REMAIN BINDING UPON EACH AND 15 EVERY COMPACTING STATE, PROVIDED THAT A COMPACTING STATE MAY WITHDRAW 16 FROM THE COMPACT ("WITHDRAWING STATE") BY ENACTING A STATUTE SPECIF- 17 ICALLY REPEALING THE STATUTE WHICH ENACTED THE COMPACT INTO LAW. 18 (2) THE EFFECTIVE DATE OF WITHDRAWAL IS THE EFFECTIVE DATE OF THE 19 REPEALING STATUTE. HOWEVER, THE WITHDRAWAL SHALL NOT APPLY TO ANY TAX 20 OR COMPLIANCE DETERMINATIONS APPROVED ON THE DATE THE REPEALING STATUTE 21 BECOMES EFFECTIVE, EXCEPT BY MUTUAL AGREEMENT OF THE COMMISSION AND THE 22 WITHDRAWING STATE UNLESS THE APPROVAL IS RESCINDED BY THE COMMISSION. 23 (3) THE MEMBER OF THE WITHDRAWING STATE SHALL IMMEDIATELY NOTIFY THE 24 EXECUTIVE COMMITTEE OF THE COMMISSION IN WRITING UPON THE INTRODUCTION 25 OF LEGISLATION REPEALING THIS COMPACT IN THE WITHDRAWING STATE. 26 (4) THE COMMISSION SHALL NOTIFY THE OTHER COMPACTING STATES OF THE 27 INTRODUCTION OF SUCH LEGISLATION WITHIN TEN DAYS AFTER ITS RECEIPT OF 28 NOTICE THEREOF. 29 (5) THE WITHDRAWING STATE IS RESPONSIBLE FOR ALL OBLIGATIONS, DUTIES 30 AND LIABILITIES INCURRED THROUGH THE EFFECTIVE DATE OF WITHDRAWAL, 31 INCLUDING ANY OBLIGATIONS, THE PERFORMANCE OF WHICH EXTEND BEYOND THE 32 EFFECTIVE DATE OF WITHDRAWAL. TO THE EXTENT THOSE OBLIGATIONS MAY HAVE 33 BEEN RELEASED OR RELINQUISHED BY MUTUAL AGREEMENT OF THE COMMISSION AND 34 THE WITHDRAWING STATE, THE COMMISSION'S DETERMINATIONS PRIOR TO THE 35 EFFECTIVE DATE OF WITHDRAWAL SHALL CONTINUE TO BE EFFECTIVE AND BE GIVEN 36 FULL FORCE AND EFFECT IN THE WITHDRAWING STATE, UNLESS FORMALLY RESCIND- 37 ED BY THE COMMISSION. 38 (6) REINSTATEMENT FOLLOWING WITHDRAWAL OF ANY COMPACTING STATE SHALL 39 OCCUR UPON THE EFFECTIVE DATE OF THE WITHDRAWING STATE REENACTING THE 40 COMPACT. 41 (B) (1) IF THE COMMISSION DETERMINES THAT ANY COMPACTING STATE HAS AT 42 ANY TIME DEFAULTED ("DEFAULTING STATE") IN THE PERFORMANCE OF ANY OF ITS 43 OBLIGATIONS OR RESPONSIBILITIES UNDER THIS COMPACT, THE BYLAWS OR DULY 44 PROMULGATED RULES, THEN AFTER NOTICE AND HEARING AS SET FORTH IN THE 45 BYLAWS, ALL RIGHTS, PRIVILEGES AND BENEFITS CONFERRED BY THIS COMPACT ON 46 THE DEFAULTING STATE SHALL BE SUSPENDED FROM THE EFFECTIVE DATE OF 47 DEFAULT AS FIXED BY THE COMMISSION. THE GROUNDS FOR DEFAULT INCLUDE, BUT 48 ARE NOT LIMITED TO, FAILURE OF A COMPACTING STATE TO PERFORM ITS OBLI- 49 GATIONS OR RESPONSIBILITIES AND ANY OTHER GROUNDS DESIGNATED IN COMMIS- 50 SION RULES. THE COMMISSION SHALL IMMEDIATELY NOTIFY THE DEFAULTING STATE 51 IN WRITING OF THE DEFAULTING STATE'S SUSPENSION PENDING A CURE OF THE 52 DEFAULT. THE COMMISSION SHALL STIPULATE THE CONDITIONS AND THE TIME 53 PERIOD WITHIN WHICH THE DEFAULTING STATE MUST CURE ITS DEFAULT. IF THE 54 DEFAULTING STATE FAILS TO CURE THE DEFAULT WITHIN THE TIME PERIOD SPECI- 55 FIED BY THE COMMISSION, THE DEFAULTING STATE SHALL BE TERMINATED FROM A. 7786 18 1 THE COMPACT AND ALL RIGHTS, PRIVILEGES AND BENEFITS CONFERRED BY THIS 2 COMPACT SHALL BE TERMINATED FROM THE EFFECTIVE DATE OF TERMINATION. 3 (2) DECISIONS OF THE COMMISSION THAT ARE ISSUED ON THE EFFECTIVE DATE 4 OF TERMINATION SHALL REMAIN IN FORCE IN THE DEFAULTING STATE IN THE SAME 5 MANNER AS IF THE DEFAULTING STATE HAD WITHDRAWN VOLUNTARILY PURSUANT TO 6 SUBSECTION (A) OF THIS SECTION. 7 (3) REINSTATEMENT FOLLOWING TERMINATION OF ANY COMPACTING STATE 8 REQUIRES A REENACTMENT OF THE COMPACT. 9 (C) (1) THE COMPACT DISSOLVES EFFECTIVE UPON THE DATE OF THE WITH- 10 DRAWAL OR DEFAULT OF THE COMPACTING STATE WHICH REDUCES MEMBERSHIP IN 11 THE COMPACT TO ONE COMPACTING STATE. 12 (2) UPON THE DISSOLUTION OF THIS COMPACT, THE COMPACT BECOMES NULL AND 13 VOID AND SHALL HAVE NO FURTHER FORCE OR EFFECT AND THE BUSINESS AND 14 AFFAIRS OF THE COMMISSION SHALL BE WOUND UP AND ANY EXCESS FUNDS SHALL 15 BE DISTRIBUTED IN ACCORDANCE WITH THE RULES AND BYLAWS. 16 S 2916. SEVERABILITY AND CONSTRUCTION. (A) THE PROVISIONS OF THIS 17 COMPACT SHALL BE SEVERABLE AND IF ANY PHRASE, CLAUSE, SENTENCE OR 18 PROVISION IS DEEMED UNENFORCEABLE, THE REMAINING PROVISIONS OF THE 19 COMPACT SHALL BE ENFORCEABLE. 20 (B) THE PROVISIONS OF THIS COMPACT SHALL BE LIBERALLY CONSTRUED TO 21 EFFECTUATE ITS PURPOSES. 22 (C) THROUGHOUT THIS COMPACT THE USE OF THE SINGULAR SHALL INCLUDE THE 23 PLURAL AND VICE-VERSA. 24 (D) THE HEADINGS AND CAPTIONS OF ARTICLES, SECTIONS AND SUBSECTIONS 25 USED IN THIS COMPACT ARE FOR CONVENIENCE ONLY AND SHALL BE IGNORED IN 26 CONSTRUING THE SUBSTANTIVE PROVISIONS OF THIS COMPACT. 27 S 2917. BINDING EFFECT OF COMPACT AND OTHER LAWS. (A) (1) NOTHING 28 HEREIN PREVENTS THE ENFORCEMENT OF ANY OTHER LAW OF A COMPACTING STATE, 29 EXCEPT AS PROVIDED IN SUBSECTION (B) OF THIS SECTION. 30 (2) DECISIONS OF THE COMMISSION AND ANY RULES AND ANY OTHER REQUIRE- 31 MENTS OF THE COMMISSION SHALL CONSTITUTE THE EXCLUSIVE RULE OR DETERMI- 32 NATION APPLICABLE TO THE COMPACTING STATES. ANY LAW OR REGULATION 33 REGARDING NON-ADMITTED INSURANCE OF MULTI-STATE RISKS THAT IS CONTRARY 34 TO RULES OF THE COMMISSION IS PREEMPTED WITH RESPECT TO THE FOLLOWING: 35 (A) CLEARINGHOUSE TRANSACTION DATA REPORTING REQUIREMENTS; 36 (B) ALLOCATION FORMULA; 37 (C) CLEARINGHOUSE TRANSACTION DATA COLLECTION REQUIREMENTS; 38 (D) PREMIUM TAX PAYMENT TIME FRAMES AND RULES CONCERNING DISSEMINATION 39 OF DATA AMONG THE COMPACTING STATES FOR NON-ADMITTED INSURANCE OF 40 MULTI-STATE RISKS AND SINGLE-STATE RISKS; 41 (E) EXCLUSIVE COMPLIANCE WITH SURPLUS LINES LAW OF THE HOME STATE OF 42 THE INSURED; 43 (F) RULES FOR REPORTING TO A CLEARINGHOUSE FOR RECEIPT AND DISTRIB- 44 UTION OF CLEARINGHOUSE TRANSACTION DATA RELATED TO NON-ADMITTED INSUR- 45 ANCE OF MULTI-STATE RISKS; 46 (G) UNIFORM FOREIGN INSURERS ELIGIBILITY REQUIREMENTS; 47 (H) UNIFORM POLICYHOLDER NOTICE; AND 48 (I) UNIFORM TREATMENT OF PURCHASING GROUPS PROCURING NON-ADMITTED 49 INSURANCE. 50 (3) EXCEPT AS SET FORTH IN SUBSECTION (B) OF THIS SECTION, ANY RULE, 51 UNIFORM STANDARD OR OTHER REQUIREMENT OF THE COMMISSION SHALL CONSTITUTE 52 THE EXCLUSIVE PROVISION THAT A COMMISSIONER MAY APPLY TO COMPLIANCE OR 53 TAX DETERMINATIONS. NOTWITHSTANDING THE FOREGOING, NO ACTION TAKEN BY 54 THE COMMISSION SHALL ABROGATE OR RESTRICT: 55 (A) THE ACCESS OF ANY PERSON TO STATE COURTS; A. 7786 19 1 (B) THE AVAILABILITY OF ALTERNATIVE DISPUTE RESOLUTION UNDER SECTION 2 TWO THOUSAND NINE HUNDRED ELEVEN OF THIS ARTICLE; 3 (C) REMEDIES AVAILABLE UNDER STATE LAW RELATED TO BREACH OF CONTRACT, 4 TORT OR OTHER LAWS NOT SPECIFICALLY DIRECTED TO COMPLIANCE OR TAX DETER- 5 MINATIONS; 6 (D) STATE LAW RELATING TO THE CONSTRUCTION OF INSURANCE CONTRACTS; OR 7 (E) THE AUTHORITY OF THE ATTORNEY GENERAL OF THE STATE, INCLUDING BUT 8 NOT LIMITED TO MAINTAINING ANY ACTIONS OR PROCEEDINGS, AS AUTHORIZED BY 9 LAW. 10 (B) (1) ALL LAWFUL ACTIONS OF THE COMMISSION, INCLUDING ALL RULES 11 PROMULGATED BY THE COMMISSION, ARE BINDING UPON THE COMPACTING STATES, 12 EXCEPT AS PROVIDED HEREIN. 13 (2) ALL AGREEMENTS BETWEEN THE COMMISSION AND THE COMPACTING STATES 14 ARE BINDING IN ACCORDANCE WITH THEIR TERMS. 15 (3) UPON THE REQUEST OF A PARTY TO A CONFLICT OVER THE MEANING OR 16 INTERPRETATION OF COMMISSION ACTIONS AND UPON A MAJORITY VOTE OF THE 17 COMPACTING STATES, THE COMMISSION MAY ISSUE ADVISORY OPINIONS REGARDING 18 THE MEANING OR INTERPRETATION IN DISPUTE. THIS PROVISION MAY BE IMPLE- 19 MENTED BY RULE AT THE DISCRETION OF THE COMMISSION. 20 (4) IN THE EVENT ANY PROVISION OF THIS COMPACT EXCEEDS THE CONSTITU- 21 TIONAL LIMITS IMPOSED ON THE LEGISLATURE OF ANY COMPACTING STATE, THE 22 OBLIGATIONS, DUTIES, POWERS OR JURISDICTION SOUGHT TO BE CONFERRED BY 23 THAT PROVISION UPON THE COMMISSION SHALL BE INEFFECTIVE AS TO THAT STATE 24 AND THOSE OBLIGATIONS, DUTIES, POWERS OR JURISDICTION SHALL REMAIN IN 25 THE COMPACTING STATE AND SHALL BE EXERCISED BY THE AGENCY THEREOF TO 26 WHICH THOSE OBLIGATIONS, DUTIES, POWERS OR JURISDICTION ARE DELEGATED BY 27 LAW IN EFFECT AT THE TIME THIS COMPACT BECOMES EFFECTIVE. 28 APPENDIX A 29 SURPLUS LINE INSURANCE PREMIUMS BY STATE 30 PREMIUMS BASED ON SHARE OF TOTAL 31 STATE TAXES PAID PREMIUMS 32 ALABAMA 445,746,000 1.47% 33 ALASKA 89,453,519 0.29% 34 ARIZONA 663,703,267 2.18% 35 ARKANSAS 201,859,750 0.66% 36 CALIFORNIA 5,622,450,467 18.49% 37 COLORADO 543,781,333 1.79% 38 CONNECTICUT 329,358,800 1.08% 39 DELAWARE 92,835,950 0.31% 40 FLORIDA 2,660,908,760 8.75% 41 GEORGIA 895,643,150 2.95% 42 HAWAII 232,951,489 0.77% 43 IDAHO 74,202,255 0.24% 44 ILLINOIS 1,016,504,629 3.34% 45 INDIANA 412,265,320 1.36% 46 IOWA 135,130,933 0.44% 47 KANSAS 160,279,300 0.53% 48 KENTUCKY 167,996,133 0.55% 49 LOUISIANA 853,173,280 2.81% 50 MAINE 60,111,200 0.20% 51 MARYLAND 434,887,600 1.43% 52 MASSACHUSETTS 708,640,225 2.33% 53 MICHIGAN 703,357,040 2.31% 54 MINNESOTA 393,128,400 1.29% 55 MISSISSIPPI 263,313,175 0.87% 56 MISSOURI 404,489,860 1.33% A. 7786 20 1 MONTANA 64,692,873 0.21% 2 NEBRASKA 92,141,167 0.30% 3 NEVADA 354,271,514 1.17% 4 NEW HAMPSHIRE 102,946,250 0.34% 5 NEW JERSEY 1,087,994,033 3.58% 6 NEW MEXICO 67,608,458 0.22% 7 NEW YORK 2,768,618,083 9.11% 8 NORTH CAROLINA 514,965,060 1.69% 9 NORTH DAKOTA 36,223,943 0.12% 10 OHIO 342,000,000 1.12% 11 OKLAHOMA 319,526,400 1.05% 12 OREGON 312,702,150 1.03% 13 PENNSYLVANIA 780,666,667 2.57% 14 RHODE ISLAND 71,794,067 0.24% 15 SOUTH CAROLINA 412,489,825 1.36% 16 SOUTH DAKOTA 38,702,120 0.13% 17 TENNESSEE 451,775,240 1.49% 18 TEXAS 3,059,170,454 10.06% 19 UTAH 142,593,412 0.47% 20 VERMONT 41,919,433 0.14% 21 VIRGINIA 611,530,667 2.01% 22 WASHINGTON 739,932,050 2.43% 23 WEST VIRGINIA 130,476,250 0.43% 24 WISCONSIN 248,758,333 0.82% 25 WYOMING 40,526,967 0.13% 26 TOTAL 30,400,197,251 100.00% 27 S 3. Subsection (d) of section 2118 of the insurance law is amended by 28 adding a new paragraph 4 to read as follows: 29 (4) IN THE EVENT THAT THE SURPLUS LINES INSURANCE MULTISTATE COMPLI- 30 ANCE COMPACT ("SLIMPACT") IS ENACTED BY THIS STATE AND THE COMMISSION 31 CREATED THEREUNDER BECOMES ACTIVE PURSUANT TO THE PROVISION OF SLIMPACT, 32 THEN THIS STATE, WHEN IT IS THE HOME STATE OF THE INSURED, WILL REQUIRE 33 THE PAYMENT OF TAXES BE ALLOCATED BASED UPON SLIMPACT'S PROVISIONS TO 34 ALL OTHER STATES WHICH HAVE ADOPTED SLIMPACT; PROVIDED, HOWEVER, THAT 35 THIS STATE WILL APPLY ITS STATE TAX TO THE PREMIUM FOR ALL RISK EXPO- 36 SURES ALLOCATED TO THIS STATE AND TO RISK EXPOSURES LOCATED IN ANY 37 STATES WHICH HAVE NOT ENACTED SLIMPACT. 38 S 4. Section 9102 of the insurance law, as amended by section 14 of 39 part I of chapter 61 of the laws of 2011, is amended to read as follows: 40 S 9102. Allocation of premiums. In determining the amount of direct 41 premiums taxable in this state, all such premiums written, procured, or 42 received in this state shall be deemed written on property or risks 43 located or resident in this state except such premiums properly allo- 44 cated and reported as taxable premiums of any other state or states. IN 45 THE EVENT THAT THE SURPLUS LINES INSURANCE MULTISTATE COMPLIANCE COMPACT 46 ("SLIMPACT") IS ENACTED BY THIS STATE AND THE COMMISSION CREATED THERE- 47 UNDER BECOMES ACTIVE PURSUANT TO THE PROVISIONS OF SLIMPACT, THEN THIS 48 STATE, WHEN IT IS THE HOME STATE OF THE INSURED, WILL REQUIRE THE 49 PAYMENT OF TAXES BE ALLOCATED BASED UPON SLIMPACT'S PROVISIONS TO ALL 50 OTHER STATES WHICH HAVE ADOPTED SLIMPACT; PROVIDED, HOWEVER, THAT THIS 51 STATE WILL APPLY ITS STATE TAX TO THE PREMIUM FOR ALL RISK EXPOSURES 52 ALLOCATED TO THIS STATE AND TO RISK EXPOSURES LOCATED IN ANY STATES 53 WHICH HAVE NOT ENACTED SLIMPACT. 54 S 5. Section 1552 of the tax law, as amended by section 18 of part I 55 of chapter 61 of the laws of 2011, is amended to read as follows: A. 7786 21 1 S 1552. Allocation. Where the taxable insurance contract covers risks 2 located or resident both within and without this state and the taxpay- 3 er's home state is New York, one hundred percent of premiums shall be 4 allocable to this state. IN THE EVENT THAT THE SURPLUS LINES INSURANCE 5 MULTISTATE COMPLIANCE COMPACT ("SLIMPACT") IS ENACTED BY THIS STATE AND 6 THE COMMISSION CREATED THEREUNDER BECOMES ACTIVE PURSUANT TO THE 7 PROVISIONS OF SLIMPACT, THEN THIS STATE, WHEN IT IS THE HOME STATE OF 8 THE INSURED, WILL REQUIRE THE PAYMENT OF TAXES BE ALLOCATED BASED UPON 9 SLIMPACT'S PROVISIONS TO ALL OTHER STATES WHICH HAVE ADOPTED SLIMPACT; 10 PROVIDED, HOWEVER, THAT THIS STATE WILL APPLY ITS STATE TAX TO THE 11 PREMIUM FOR ALL RISK EXPOSURES ALLOCATED TO THIS STATE AND TO RISK EXPO- 12 SURES LOCATED IN ANY STATES WHICH HAVE NOT ENACTED SLIMPACT. 13 S 6. This act shall take effect October 19, 2011; provided, however, 14 that if the amendments to section 9102 of the insurance law and section 15 1552 of the tax law made by sections 14 and 18 of Part I of chapter 61 16 of the laws of 2011, respectively, shall not have taken effect on or 17 before such date, then sections four and five of this act shall take 18 effect on the same date and in the same manner as such sections take 19 effect pursuant to section 19 of Part I of chapter 61 of the laws of 20 2011, takes effect.