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S.B. 162 Enrolled

                 

INTERSTATE INSURANCE PRODUCT

                 
REGULATION - COMPACT

                 
2004 GENERAL SESSION

                 
STATE OF UTAH

                 
Sponsor: John L. Valentine

                 
                  LONG TITLE
                  General Description:
                          This bill amends the Insurance Title to enact the Interstate Insurance Product
                  Regulation Compact.
                  Highlighted Provisions:
                      This bill:
                      .    provides a purpose statement;
                      .    provides definitions;
                      .    establishes the Interstate Insurance Product Regulation Commission and venue for
                  proceedings by or against the commission;
                      .    establishes the powers of the commission;
                      .    addresses the organization of the commission;
                      .    addresses meetings and acts of the commission;
                      .    provides for rulemaking by the commission including establishing uniform standards
                  from which a state can opt out;
                      .    addresses commission records and enforcement;
                      .    provides for dispute resolution;
                      .    provides for product filing and approval;
                      .    provides for the review of commission decisions regarding filings;
                      .    addresses the finances of the commission;
                      .    provides for compacting states, effective date, and amendment;
                      .    provides for withdrawal, default, and termination;
                      .    provides for severability and construction of the compact; and


                      .    addresses binding effect of the compact and other laws.
                  Monies Appropriated in this Bill:
                      None
                  Other Special Clauses:
                      This bill takes effect on May 3, 2004, except that the compact provides that it takes effect
                  upon legislative enactment by two Compacting States and the Commission becomes
                  effective for certain purposes only after 26 states are Compacting States or states
                  representing greater than 40% of premium volume for life insurance, annuity, disability
                  income, and long-term care insurance products enact the compact.
                  Utah Code Sections Affected:
                  ENACTS:
                      31A-38-101, Utah Code Annotated 1953
                 
                  Be it enacted by the Legislature of the state of Utah:
                      Section 1. Section 31A-38-101 is enacted to read:
                 
CHAPTER 38. INTERSTATE INSURANCE PRODUCT REGULATION COMPACT

                      31A-38-101. Interstate Insurance Product Regulation Compact.
                      Pursuant to the terms and conditions of this Act, the State of Utah 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. Utah's insurance
                  commissioner is hereby designated to serve as the representative of this State to the Commission.
                 
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

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                  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.

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                      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

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                  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 rulemaking 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

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                  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 rulemaking 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;

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                      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

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                  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

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

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                      (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

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                  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

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                  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 & OPERATING PROCEDURES: RULEMAKING FUNCTIONS

                 
OF THE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS


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                      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,

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                  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

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                  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

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                  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

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                  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

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                  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

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                  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

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                  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

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                  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

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                  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.

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