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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which has not withdrawn pursuant to Article XIV, Section (1), or been terminated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 organized;
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(1)
(2)
(3)
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.
(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
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)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
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;
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;
(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
(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.
(2)
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.
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
(3)
(4)
(5)
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;
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
(1)
(2)
(3)
(1)
(2)
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,
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
(3)
(4)
(5)
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.
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
(6)
(7)
(1)
(2)
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.
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.
(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 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.
(3)
(1)
(2)
(1)
(2)
(3)
(4)
(5)
(6)
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.
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
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
(7)
(1)
(2)
(3)
(1)
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.
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
(2)
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.
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)
(1)
(2)
(1)
(2)
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.
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)
(d)
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.
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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