H.B. No. 2613
AN ACT
relating to the adoption of the Interstate Insurance Product
Regulation Compact.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Insurance Code is amended by adding Title 15
to read as follows:
TITLE 15. INTERSTATE INSURANCE COMPACTS
CHAPTER 5001. INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
Sec. 5001.001. ADOPTION OF COMPACT; REPRESENTATIVE TO
COMMISSION. Pursuant to the terms and conditions of this chapter,
the state joins with other states that have adopted the Interstate
Insurance Product Regulation Compact to establish and become a
member of the Interstate Insurance Product Regulation Commission.
The commissioner is the state's representative to that commission.
Sec. 5001.002. TERMS OF 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;
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.
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 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 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 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 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
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 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
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 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
and conducting meetings of the Commission that consist 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
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, 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.
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.
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 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 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 AND 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 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 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 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 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 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 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.
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 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 4.
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.
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, 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.
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 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 Paragraph 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 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 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
Section 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.
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 section.
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
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 2. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2613 was passed by the House on May 9,
2005, by a non-record vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2613 was passed by the Senate on May
25, 2005, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor