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304.51-010 Interstate Insurance Product Regulation Compact.
Interstate Insurance Product Regulation Compact
Pursuant to terms and conditions of this compact, the Commonwealth of Kentucky
seeks to join with other states and establish the Interstate Insurance Product
Regulation Compact, and thus become a member of the Interstate Insurance
Product Regulation Commission. The commissioner of insurance, or his or her
designee, is hereby designated to serve as the representative of this state to the
commission.
ARTICLE I
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 (1) 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
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legislation and which has not withdrawn pursuant to Article XIV, Section (1), or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
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(1)
(2)
(3)
(4)
organized; or, in the case of an alien insurer, its state of entry;
"Insurer" means any entity licensed by a state to issue contracts of insurance
for any of the lines of insurance covered by this compact;
"Member" means the person chosen by a compacting state as its
representative to the commission, or his or her designee;
"Noncompacting state" means any state which is not at the time a compacting
state;
"Operating procedures" mean procedures promulgated by the commission
implementing a rule, uniform standard or a provision of this compact;
"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;
"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;
"State" means any state, district, or territory of the United States of America;
"Third-party filer" means an entity that submits a product filing to the
commission on behalf of an insurer; and
"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
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.
The commission is a body corporate and politic, and an instrumentality of the
compacting states.
The commission is solely responsible for its liabilities except as otherwise
specifically provided in this compact.
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
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'
(NAIC) 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 National Association of
Insurance Commissioners' Long-Term Care Insurance Model Act or Long-Term
Care Insurance Model Regulation adopted by the National Association of
Insurance Commissioners 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
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
provided in this compact;
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;
To issue subpoenas requiring the attendance and testimony of witnesses and
the production of evidence;
To establish and maintain offices;
To purchase and maintain insurance and bonds;
To borrow, accept or contract for services of personnel, including but not
limited to employees of a compacting state;
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;
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;
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;
To sell, convey, mortgage, pledge, lease, exchange, abandon, or otherwise
dispose of any property, real, personal, or mixed;
To remit filing fees to compacting states as may be set forth in the bylaws,
rules, or operating procedures;
To enforce compliance by compacting states with rules, uniform standards,
operating procedures, and bylaws;
To provide for dispute resolution among compacting states;
To advise compacting states on issues relating to insurers domiciled or doing
business in noncompacting jurisdictions, consistent with the purposes of this
compact;
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;
To establish a budget and make expenditures;
To borrow money;
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;
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
(1) Membership, Voting, and Bylaws.
(a) Each compacting state shall have and be limited to one (1) 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 (1) 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:
1.
Establishing the fiscal year of the commission;
2.
Providing reasonable procedures for appointing and electing
members, as well as holding meetings, of the management
committee;
3.
Providing reasonable standards and procedures:
a.
For the establishment and meetings of other committees; and
b.
Governing any general or specific delegation of any authority
or function of the commission;
4.
Providing reasonable procedures for calling and conducting
meetings of the commission that consists of a majority of
commission members, ensuring reasonable advance notice of each
such meeting and providing for the right of citizens to attend each
such meeting with enumerated exceptions designed to protect the
public's interest, the privacy of individuals, and insurers' proprietary
information, including trade secrets. The commission may meet in
camera only after a majority of the entire membership votes to close
a meeting in total or in part. As soon as practicable, the commission
must make public:
a.
A copy of the vote to close the meeting revealing the vote of
each member with no proxy votes allowed; and
b.
Votes taken during such meeting;
5.
(2)
Establishing the titles, duties, and authority and reasonable
procedures for the election of the officers of the commission;
6.
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;
7.
Promulgating a code of ethics to address permissible and prohibited
activities of commission members and employees; and
8.
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.
Management Committee, Officers, and Personnel.
(a) A management committee comprising no more than fourteen (14)
members shall be established as follows:
1.
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 National Association of
Insurance Commissioners for the prior year;
2.
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
3.
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 National Association of Insurance
Commissioners 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:
1.
Managing the affairs of the commission in a manner consistent with
the bylaws and purposes of the commission;
2.
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
(3)
(4)
(5)
two-thirds (2/3) of the members of the management committee;
3.
Overseeing the offices of the commission; and
4.
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.
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 (1) 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.
Corporate Records of the Commission. The commission shall maintain its
corporate books and records in accordance with the bylaws.
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 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,
(1)
(2)
(3)
(1)
(2)
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
The commission shall meet and take such actions as are consistent with the
provisions of this compact and the bylaws.
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.
The commission shall meet at least once during each calendar year. Additional
meetings shall be held as set forth in the bylaws.
ARTICLE VII
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 compact, or the
powers granted hereunder, then such an action by the commission shall be
invalid and have no force and effect.
Rulemaking Procedure, Rules, and Operating Procedures. 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
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)
(4)
(5)
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.
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
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 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:
(a) 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 compact; and
(b) 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.
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)
(7)
(1)
(2)
(3)
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 rule-making process has been terminated.
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
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.
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 compact, 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.
The commission shall monitor compacting states for compliance with duly
adopted bylaws, rules, including uniform standards, and operating procedures.
The commission shall notify any noncomplying compacting state in writing of its
noncompliance with commission bylaws, rules, or operating procedures. If a
noncomplying 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
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 (2) or more compacting states, or between compacting states and
noncompacting states, and the commission shall promulgate an operating procedure
providing for resolution of such disputes.
ARTICLE X
(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 compact 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
(1)
(2)
(1)
(2)
(3)
(4)
(5)
(6)
those compacting states for which the insurer is legally authorized to do
business.
ARTICLE XI
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).
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
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.
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.
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.
The commission shall be exempt from all taxation in and by the compacting
states.
The commission shall not pledge the credit of any compacting state, except by
and with the appropriate legal authority of that compacting state.
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
(7)
(1)
(2)
(3)
(1)
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.
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
Any state is eligible to become a compacting state.
The compact shall become effective and binding upon legislative enactment of
the compact into law by two (2) 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 National Association of Insurance Commissioners 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.
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.
(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)
(2)
(3)
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.
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.
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 (1) 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.
(1)
(2)
(1)
(2)
ARTICLE XV
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.
The provisions of this compact shall be liberally construed to effectuate its
purposes.
ARTICLE XVI
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:
1.
The access of any person to state courts;
2.
Remedies available under state law related to breach of contract,
tort, or other laws not specifically directed to the content of the
product;
3.
State law relating to the construction of insurance contracts; or
4.
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.
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.
Effective:July 12, 2006
History: Created 2006 Ky. Acts ch. 117, sec. 1, effective July 12, 2006.
Legislative Research Commission Note (7/12/2006). Under KRS 7.136, the
Reviser of Statutes has assigned the number 51 to this subtitle, although 2006
Ky. Acts ch. 117, sec. 1, instructed that it should be given the number 50.
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