Print Friendly HOUSE BILL NO. 120 – Insurance Product Regulatn Compact
HOUSE BILL NO. 120
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INTERSTATE INSURANCE PRODUCT REGULATION COMPACT - Adds to existing law to
enact the Interstate Insurance Product Regulation Compact; to provide that
the director of the Idaho Department of Insurance shall serve as Idaho's
representative on the Interstate Insurance Product Regulation Commission;
to set forth purposes; to define terms; to provide for the establishment of
the commission; to provide for venue; to provide for powers and
organization of the commission; to provide for meetings and acts of the
commission; to provide for rules and operating procedures; to set forth
provisions relating to commission records and enforcement; to provide for
dispute resolution; to provide for product filing and approval; to provide
for the review of commission decisions regarding filings; to set forth
provisions relating to commission finances; to provide that any state is
eligible to become a compacting state; to provide for the effective date of
the compact; to provide for amendments to the compact; to provide for
withdrawal, default and termination; to provide for severability and
construction; and to set forth the binding effect of the compact and other
02/04 House intro - 1st rdg - to printing
02/07 Rpt prt - to Bus
02/18 Rpt out - rec d/p - to 2nd rdg
02/21 2nd rdg - to 3rd rdg
02/24 3rd rdg - PASSED - 65-0-5
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon,
Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth,
Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henderson,
Jaquet, Jones, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews,
McKague, Miller, Mitchell, Moyle, Nonini, Pasley-Stuart, Pence,
Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sayler, Schaefer,
Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24),
Smylie, Snodgrass, Trail, Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Henbest, McGeachin, Nielsen, Sali, Stevenson
Floor Sponsor - Collins
Title apvd - to Senate
02/25 Senate intro - 1st rdg - to Com/HuRes
03/09 Rpt out - rec d/p - to 2nd rdg
03/10 2nd rdg - to 3rd rdg
03/11 3rd rdg - PASSED - 32-0-2, 1 vacancy
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Gannon, Geddes, Goedde, Jorgenson, Kelly, Keough, Langhorst, Little,
Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson,
Schroeder, Stegner, Stennett, Werk, Williams
NAYS -- None
Absent and excused -- Hill, Sweet, (District 21 seat vacant)
Floor Sponsor - Compton
Title apvd - to House
03/14 To enrol
03/15 Rpt enrol - Sp signed
03/16 Pres signed
03/17 To Governor
03/21 Governor signed
Session Law Chapter 79
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 120
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE INTERSTATE INSURANCE PRODUCT REGULATION COMPACT; AMENDING
3 TITLE 41, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 57, TITLE 41, IDAHO
4 CODE, TO PROVIDE A PREAMBLE, TO PROVIDE THAT THE DIRECTOR OF THE IDAHO
5 DEPARTMENT OF INSURANCE SHALL SERVE AS IDAHO'S REPRESENTATIVE ON THE
6 INTERSTATE INSURANCE PRODUCT REGULATION COMMISSION, TO PROVIDE FOR ADOP-
7 TION OF THE COMPACT, TO SET FORTH PURPOSES, TO DEFINE TERMS, TO PROVIDE
8 FOR THE ESTABLISHMENT OF THE COMMISSION, TO PROVIDE FOR VENUE, TO PROVIDE
9 FOR POWERS OF THE COMMISSION, TO PROVIDE FOR THE ORGANIZATION OF THE COM-
10 MISSION, TO PROVIDE FOR MEETINGS AND ACTS OF THE COMMISSION, TO PROVIDE
11 FOR RULES AND OPERATING PROCEDURES, TO SET FORTH PROVISIONS RELATING TO
12 COMMISSION RECORDS AND ENFORCEMENT, TO PROVIDE FOR DISPUTE RESOLUTION, TO
13 PROVIDE FOR PRODUCT FILING AND APPROVAL, TO PROVIDE FOR THE REVIEW OF COM-
14 MISSION DECISIONS REGARDING FILINGS, TO SET FORTH PROVISIONS RELATING TO
15 THE FINANCES OF THE COMMISSION, TO PROVIDE THAT ANY STATE IS ELIGIBLE TO
16 BECOME A COMPACTING STATE, TO PROVIDE FOR THE EFFECTIVE DATE OF THE COM-
17 PACT, TO PROVIDE FOR AMENDMENTS TO THE COMPACT, TO PROVIDE FOR WITHDRAWAL,
18 DEFAULT AND TERMINATION, TO PROVIDE FOR SEVERABILITY AND CONSTRUCTION AND
19 TO SET FORTH THE BINDING EFFECT OF THE COMPACT AND OTHER LAWS.
20 Be it Enacted by the Legislature of the State of Idaho:
21 SECTION 1. That Title 41, Idaho Code, be, and same is hereby amended by
22 the addition thereto of a NEW CHAPTER, to be known and designated as Chapter
23 57, Title 41, Idaho Code, and to read as follows:
24 CHAPTER 57
25 INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
26 41-5701. PREAMBLE. Pursuant to terms and conditions of this chapter, the
27 state of Idaho seeks to join with other states and establish the interstate
28 insurance product regulation compact, and thus become a member of the inter-
29 state insurance product regulation commission. The director of the department
30 of insurance is hereby designated to serve as the representative of this state
31 to the interstate insurance product regulation commission.
32 41-5702. INTERSTATE INSURANCE PRODUCT REGULATION COMPACT. The "Interstate
33 Insurance Product Regulation Compact" is hereby enacted into law and entered
34 into by this state with any other states legally joining therein in the form
35 substantially as follows:
1 INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
2 ARTICLE I
4 The purposes of this compact are, through means of joint and cooperative
5 action among the compacting states:
6 (1) To promote and protect the interest of consumers of individual and
7 group annuity, life insurance, disability income and long-term care insurance
9 (2) To develop uniform standards for insurance products covered under the
11 (3) To establish a central clearinghouse to receive and provide prompt
12 review of insurance products covered under the compact and, in certain cases,
13 advertisements related thereto, submitted by insurers authorized to do busi-
14 ness in one (1) or more compacting states;
15 (4) To give appropriate regulatory approval to those product filings and
16 advertisements satisfying the applicable uniform standard;
17 (5) To improve coordination of regulatory resources and expertise between
18 state insurance departments regarding the setting of uniform standards and
19 review of insurance products covered under the compact;
20 (6) To create the "Interstate Insurance Product Regulation Commission";
22 (7) To perform these and such other related functions as may be consis-
23 tent with the state regulation of the business of insurance.
24 ARTICLE II
26 For purposes of this compact:
27 (1) "Advertisement" means any material designed to create public interest
28 in a product, or induce the public to purchase, increase, modify, reinstate,
29 borrow on, surrender, replace or retain a policy, as more specifically defined
30 in the rules and operating procedures of the commission.
31 (2) "Bylaws" means those bylaws established by the commission for its
32 governance, or for directing or controlling the commission's actions or con-
34 (3) "Compacting state" means any state which has enacted this compact
35 legislation and which has not withdrawn pursuant to article XIV, section (1)
36 of this compact, or been terminated pursuant to article XIV, section (2) of
37 this compact.
38 (4) "Commission" means the "Interstate Insurance Product Regulation Com-
39 mission" established by this compact.
40 (5) "Commissioner" means the chief insurance regulatory official of a
41 state including, but not limited to, commissioner, superintendent, director or
43 (6) "Domiciliary state" means the state in which an insurer is incorpo-
44 rated or organized; or, in the case of an alien insurer, its state of entry.
45 (7) "Insurer" means any entity licensed by a state to issue contracts of
46 insurance for any of the lines of insurance covered by this act.
47 (8) "Member" means the person chosen by a compacting state as its repre-
48 sentative to the commission, or his or her designee.
49 (9) "Noncompacting state" means any state which is not at the time a com-
50 pacting state.
51 (10) "Operating procedures" means procedures promulgated by the commission
1 implementing a rule, uniform standard or a provision of this compact.
2 (11) "Product" means the form of a policy or contract, including any
3 application, endorsement, or related form which is attached to and made a part
4 of the policy or contract, and any evidence of coverage or certificate, for an
5 individual or group annuity, life insurance, disability income or long-term
6 care insurance product that an insurer is authorized to issue.
7 (12) "Rule" means a statement of general or particular applicability and
8 future effect promulgated by the commission, including a uniform standard
9 developed pursuant to article VII of this compact, designed to implement,
10 interpret, or prescribe law or policy or describing the organization, proce-
11 dure, or practice requirements of the commission, which shall have the force
12 and effect of law in the compacting states.
13 (13) "State" means any state, district or territory of the United States
14 of America.
15 (14) "Third-party filer" means an entity that submits a product filing to
16 the commission on behalf of an insurer.
17 (15) "Uniform standard" means a standard adopted by the commission for a
18 product line, pursuant to article VII of this compact, and shall include all
19 of the product requirements in aggregate; provided, that each uniform standard
20 shall be construed, whether express or implied, to prohibit the use of any
21 inconsistent, misleading or ambiguous provisions in a product and the form of
22 the product made available to the public shall not be unfair, inequitable or
23 against public policy as determined by the commission.
24 ARTICLE III
25 ESTABLISHMENT OF THE COMMISSION AND VENUE
26 (1) The compacting states hereby create and establish a joint public
27 agency known as the "Interstate Insurance Product Regulation Commission." Pur-
28 suant to article IV, the commission will have the power to develop uniform
29 standards for product lines, receive and provide prompt review of products
30 filed therewith, and give approval to those product filings satisfying appli-
31 cable uniform standards; provided, it is not intended for the commission to be
32 the exclusive entity for receipt and review of insurance product filings.
33 Nothing herein shall prohibit any insurer from filing its product in any state
34 wherein the insurer is licensed to conduct the business of insurance; and any
35 such filing shall be subject to the laws of the state where filed.
36 (2) The commission is a body corporate and politic, and an instrumental-
37 ity of the compacting states.
38 (3) The commission is solely responsible for its liabilities except as
39 otherwise specifically provided in this compact.
40 (4) Venue is proper and judicial proceedings by or against the commission
41 shall be brought solely and exclusively in a court of competent jurisdiction
42 where the principal office of the commission is located.
43 ARTICLE IV
44 POWERS OF THE COMMISSION
45 The commission shall have the following powers:
46 (1) To promulgate rules, pursuant to article VII of this compact, which
47 shall have the force and effect of law and shall be binding in the compacting
48 states to the extent and in the manner provided in this compact;
49 (2) To exercise its rulemaking authority and establish reasonable uniform
50 standards for products covered under the compact, and advertisement related
51 thereto, which shall have the force and effect of law and shall be binding in
1 the compacting states, but only for those products filed with the commission,
2 provided that a compacting state shall have the right to opt out of such uni-
3 form standard pursuant to article VII, to the extent and in the manner pro-
4 vided in this compact, and, provided further, that any uniform standard estab-
5 lished by the commission for long-term care insurance products may provide the
6 same or greater protections for consumers as, but shall not provide less than,
7 those protections set forth in the national association of insurance commis-
8 sioners' (NAIC) long-term care insurance model act and long-term care insur-
9 ance model regulation, respectively, adopted as of 2001. The commission shall
10 consider whether any subsequent amendments to the NAIC long-term care insur-
11 ance model act or long-term care insurance model regulation adopted by the
12 NAIC require amending of the uniform standards established by the commission
13 for long-term care insurance products;
14 (3) To receive and review in an expeditious manner products filed with
15 the commission, and rate filings for disability income and long-term care
16 insurance products, and give approval of those products and rate filings that
17 satisfy the applicable uniform standard, where such approval shall have the
18 force and effect of law and be binding on the compacting states to the extent
19 and in the manner provided in the compact;
20 (4) To receive and review in an expeditious manner advertisement relating
21 to long-term care insurance products for which uniform standards have been
22 adopted by the commission, and give approval to all advertisement that satis-
23 fies the applicable uniform standard. For any product covered under this com-
24 pact, other than long-term care insurance products, the commission shall have
25 the authority to require an insurer to submit all or any part of its adver-
26 tisement with respect to that product for review or approval prior to use, if
27 the commission determines that the nature of the product is such that an
28 advertisement of the product could have the capacity or tendency to mislead
29 the public. The actions of the commission as provided in this section shall
30 have the force and effect of law and shall be binding in the compacting states
31 to the extent and in the manner provided in the compact;
32 (5) To exercise its rulemaking authority and designate products and
33 advertisement that may be subject to a self-certification process without the
34 need for prior approval by the commission.
35 (6) To promulgate operating procedures, pursuant to article VII of this
36 compact, which shall be binding in the compacting states to the extent and in
37 the manner provided in this compact;
38 (7) To bring and prosecute legal proceedings or actions in its name as
39 the commission; provided, that the standing of any state insurance department
40 to sue or be sued under applicable law shall not be affected;
41 (8) To issue subpoenas requiring the attendance and testimony of wit-
42 nesses and the production of evidence;
43 (9) To establish and maintain offices;
44 (10) To purchase and maintain insurance and bonds;
45 (11) To borrow, accept or contract for services of personnel, including,
46 but not limited to, employees of a compacting state;
47 (12) To hire employees, professionals or specialists, and elect or appoint
48 officers, and to fix their compensation, define their duties and give them
49 appropriate authority to carry out the purposes of the compact, and determine
50 their qualifications; and to establish the commission's personnel policies and
51 programs relating to, among other things, conflicts of interest, rates of com-
52 pensation and qualifications of personnel;
53 (13) To accept any and all appropriate donations and grants of money,
54 equipment, supplies, materials and services, and to receive, utilize and dis-
55 pose of the same; provided that at all times the commission shall strive to
1 avoid any appearance of impropriety;
2 (14) To lease, purchase, accept appropriate gifts or donations of, or
3 otherwise to own, hold, improve or use, any property, real, personal or mixed;
4 provided that at all times the commission shall strive to avoid any appearance
5 of impropriety;
6 (15) To sell, convey, mortgage, pledge, lease, exchange, abandon or other-
7 wise dispose of any property, real, personal or mixed;
8 (16) To remit filing fees to compacting states as may be set forth in the
9 bylaws, rules or operating procedures;
10 (17) To enforce compliance by compacting states with rules, uniform stan-
11 dards, operating procedures and bylaws;
12 (18) To provide for dispute resolution among compacting states;
13 (19) To advise compacting states on issues relating to insurers domiciled
14 or doing business in noncompacting jurisdictions, consistent with the purposes
15 of this compact;
16 (20) To provide advice and training to those personnel in state insurance
17 departments responsible for product review, and to be a resource for state
18 insurance departments;
19 (21) To establish a budget and make expenditures;
20 (22) To borrow money;
21 (23) To appoint committees, including advisory committees comprising mem-
22 bers, state insurance regulators, state legislators or their representatives,
23 insurance industry and consumer representatives, and such other interested
24 persons as may be designated in the bylaws;
25 (24) To provide and receive information from, and to cooperate with law
26 enforcement agencies;
27 (25) To adopt and use a corporate seal; and
28 (26) To perform such other functions as may be necessary or appropriate
29 to achieve the purposes of this compact consistent with the state regulation
30 of the business of insurance.
31 ARTICLE V
32 ORGANIZATION OF THE COMMISSION
33 (1) Membership, Voting and Bylaws.
34 (a) Each compacting state shall have and be limited to one (1) member.
35 Each member shall be qualified to serve in that capacity pursuant to
36 applicable law of the compacting state. Any member may be removed or sus-
37 pended from office as provided by the law of the state from which he or
38 she shall be appointed. Any vacancy occurring in the commission shall be
39 filled in accordance with the laws of the compacting state wherein the
40 vacancy exists. Nothing herein shall be construed to affect the manner in
41 which a compacting state determines the election or appointment and quali-
42 fication of its own commissioner.
43 (b) Each member shall be entitled to one (1) vote and shall have an
44 opportunity to participate in the governance of the commission in accor-
45 dance with the bylaws. Notwithstanding any provision herein to the con-
46 trary, no action of the commission with respect to the promulgation of a
47 uniform standard shall be effective unless two-thirds (2/3) of the members
48 vote in favor thereof.
49 (c) The commission shall, by a majority of the members, prescribe bylaws
50 to govern its conduct as may be necessary or appropriate to carry out the
51 purposes, and exercise the powers, of the compact, including, but not lim-
52 ited to:
53 (i) Establishing the fiscal year of the commission;
1 (ii) Providing reasonable procedures for appointing and electing
2 members, as well as holding meetings, of the management committee;
3 (iii) Providing reasonable standards and procedures: (i) for the
4 establishment and meetings of other committees; and (ii) governing
5 any general or specific delegation of any authority or function of
6 the commission;
7 (iv) Providing reasonable procedures for calling and conducting
8 meetings of the commission that consists of a majority of commission
9 members, ensuring reasonable advance notice of each such meeting and
10 providing for the right of citizens to attend each such meeting with
11 enumerated exceptions designed to protect the public's interest, the
12 privacy of individuals, and insurers' proprietary information,
13 including trade secrets. The commission may meet in camera only after
14 a majority of the entire membership votes to close a meeting in toto
15 or in part. As soon as practicable, the commission must make public:
16 (i) a copy of the vote to close the meeting revealing the vote of
17 each member with no proxy votes allowed; and (ii) votes taken during
18 such meeting;
19 (v) Establishing the titles, duties and authority and reasonable
20 procedures for the election of the officers of the commission;
21 (vi) Providing reasonable standards and procedures for the estab-
22 lishment of the personnel policies and programs of the commission.
23 Notwithstanding any civil service or other similar laws of any com-
24 pacting state, the bylaws shall exclusively govern the personnel pol-
25 icies and programs of the commission;
26 (vii) Promulgating a code of ethics to address permissible and pro-
27 hibited activities of commission members and employees; and
28 (viii) Providing a mechanism for winding up the operations of the
29 commission and the equitable disposition of any surplus funds that
30 may exist after the termination of the compact after the payment
31 and/or reserving of all of its debts and obligations.
32 (d) The commission shall publish its bylaws in a convenient form and file
33 a copy thereof and a copy of any amendment thereto, with the appropriate
34 agency or officer in each of the compacting states.
35 (2) Management Committee, Officers and Personnel.
36 (a) A management committee comprising no more than fourteen (14) members
37 shall be established as follows:
38 (i) One (1) member from each of the six (6) compacting states with
39 the largest premium volume for individual and group annuities, life,
40 disability income and long-term care insurance products, determined
41 from the records of the NAIC for the prior year;
42 (ii) Four (4) members from those compacting states with at least two
43 percent (2%) of the market based on the premium volume described
44 above, other than the six (6) compacting states with the largest pre-
45 mium volume, selected on a rotating basis as provided in the bylaws;
47 (iii) Four (4) members from those compacting states with less than
48 two percent (2%) of the market, based on the premium volume described
49 above, with one (1) selected from each of the four (4) zone regions
50 of the NAIC as provided in the bylaws.
51 (b) The management committee shall have such authority and duties as may
52 be set forth in the bylaws including, but not limited to:
53 (i) Managing the affairs of the commission in a manner consistent
54 with the bylaws and purposes of the commission;
55 (ii) Establishing and overseeing an organizational structure within,
1 and appropriate procedures for, the commission to provide for the
2 creation of uniform standards and other rules, receipt and review of
3 product filings, administrative and technical support functions,
4 review of decisions regarding the disapproval of a product filing,
5 and the review of elections made by a compacting state to opt out of
6 a uniform standard; provided that a uniform standard shall not be
7 submitted to the compacting states for adoption unless approved by
8 two-thirds (2/3) of the members of the management committee;
9 (iii) Overseeing the offices of the commission; and
10 (iv) Planning, implementing, and coordinating communications and
11 activities with other state, federal and local government organiza-
12 tions in order to advance the goals of the commission.
13 (c) The commission shall elect annually officers from the management com-
14 mittee, with each having such authority and duties, as may be specified in
15 the bylaws.
16 (d) The management committee may, subject to the approval of the commis-
17 sion, appoint or retain an executive director for such period, upon such
18 terms and conditions and for such compensation as the commission may deem
19 appropriate. The executive director shall serve as secretary to the com-
20 mission, but shall not be a member of the commission. The executive direc-
21 tor shall hire and supervise such other staff as may be authorized by the
23 (3) Legislative and Advisory Committees.
24 (a) A legislative committee comprising state legislators or their desig-
25 nees shall be established to monitor the operations of, and make recommen-
26 dations to, the commission, including the management committee; provided
27 that the manner of selection and term of any legislative committee member
28 shall be as set forth in the bylaws. Prior to the adoption by the commis-
29 sion of any uniform standard, revision to the bylaws, annual budget or
30 other significant matter as may be provided in the bylaws, the management
31 committee shall consult with and report to the legislative committee.
32 (b) The commission shall establish two (2) advisory committees, one (1)
33 of which shall comprise consumer representatives independent of the insur-
34 ance industry, and the other comprising insurance industry representa-
36 (c) The commission may establish additional advisory committees as its
37 bylaws may provide for the carrying out of its functions.
38 (4) Corporate Records of the Commission. The commission shall maintain
39 its corporate books and records in accordance with the bylaws.
40 (5) Qualified Immunity, Defense and Indemnification.
41 (a) The members, officers, executive director, employees and representa-
42 tives of the commission shall be immune from suit and liability, either
43 personally or in their official capacity, for any claim for damage to or
44 loss of property or personal injury or other civil liability caused by or
45 arising out of any actual or alleged act, error or omission that occurred,
46 or that the person against whom the claim is made had a reasonable basis
47 for believing occurred within the scope of commission employment, duties
48 or responsibilities; provided, that nothing in this paragraph shall be
49 construed to protect any such person from suit and/or liability for any
50 damage, loss, injury or liability caused by the intentional or willful and
51 wanton misconduct of that person.
52 (b) The commission shall defend any member, officer, executive director,
53 employee or representative of the commission in any civil action seeking
54 to impose liability arising out of any actual or alleged act, error or
55 omission that occurred within the scope of commission employment, duties
1 or responsibilities, or that the person against whom the claim is made had
2 a reasonable basis for believing occurred within the scope of commission
3 employment, duties or responsibilities; provided, that nothing herein
4 shall be construed to prohibit that person from retaining his or her own
5 counsel; and provided further, that the actual or alleged act, error or
6 omission did not result from that person's intentional or willful and wan-
7 ton misconduct.
8 (c) The commission shall indemnify and hold harmless any member, officer,
9 executive director, employee or representative of the commission for the
10 amount of any settlement or judgment obtained against that person arising
11 out of any actual or alleged act, error or omission that occurred within
12 the scope of commission employment, duties or responsibilities, or that
13 such person had a reasonable basis for believing occurred within the scope
14 of commission employment, duties or responsibilities, provided that the
15 actual or alleged act, error or omission did not result from the inten-
16 tional or willful and wanton misconduct of that person.
17 ARTICLE VI
18 MEETINGS AND ACTS OF THE COMMISSION
19 (1) The commission shall meet and take such actions as are consistent
20 with the provisions of this compact and the bylaws.
21 (2) Each member of the commission shall have the right and power to cast
22 a vote to which that compacting state is entitled and to participate in the
23 business and affairs of the commission. A member shall vote in person or by
24 such other means as provided in the bylaws. The bylaws may provide for mem-
25 bers' participation in meetings by telephone or other means of communication.
26 (3) The commission shall meet at least once during each calendar year.
27 Additional meetings shall be held as set forth in the bylaws.
28 ARTICLE VII
29 RULES AND OPERATING PROCEDURES: RULEMAKING FUNCTIONS OF THE
30 COMMISSION AND OPTING OUT OF UNIFORM STANDARDS
31 (1) Rulemaking Authority. The commission shall promulgate reasonable
32 rules, including uniform standards, and operating procedures in order to
33 effectively and efficiently achieve the purposes of this compact. Notwith-
34 standing the foregoing, in the event the commission exercises its rulemaking
35 authority in a manner that is beyond the scope of the purposes of this act, or
36 the powers granted hereunder, then such an action by the commission shall be
37 invalid and have no force and effect.
38 (2) Rulemaking Procedure. Rules and operating procedures shall be made
39 pursuant to a rulemaking process that conforms to the model state administra-
40 tive procedure act of 1981 as amended, as may be appropriate to the operations
41 of the commission. Before the commission adopts a uniform standard, the com-
42 mission shall give written notice to the relevant state legislative
43 committee(s) in each compacting state responsible for insurance issues of its
44 intention to adopt the uniform standard. The commission in adopting a uniform
45 standard shall consider fully all submitted materials and issue a concise
46 explanation of its decision.
47 (3) Effective Date and Opt Out of a Uniform Standard. A uniform standard
48 shall become effective ninety (90) days after its promulgation by the commis-
49 sion or such later date as the commission may determine; provided, however,
50 that a compacting state may opt out of a uniform standard as provided in this
51 article. "Opt out" shall be defined as any action by a compacting state to
1 decline to adopt or participate in a promulgated uniform standard. All other
2 rules and operating procedures, and amendments thereto, shall become effective
3 as of the date specified in each rule, operating procedure or amendment.
4 (4) Opt Out Procedure. A compacting state may opt out of a uniform stan-
5 dard, either by legislation or regulation duly promulgated by the insurance
6 department under the compacting state's administrative procedure act. If a
7 compacting state elects to opt out of a uniform standard by regulation, it
8 must: (a) give written notice to the commission no later than ten (10) busi-
9 ness days after the uniform standard is promulgated, or at the time the state
10 becomes a compacting state; and (b) find that the uniform standard does not
11 provide reasonable protections to the citizens of the state, given the condi-
12 tions in the state. The commissioner shall make specific findings of fact and
13 conclusions of law, based on a preponderance of the evidence, detailing the
14 conditions in the state which warrant a departure from the uniform standard
15 and determining that the uniform standard would not reasonably protect the
16 citizens of the state. The commissioner must consider and balance the follow-
17 ing factors and find that the conditions in the state and needs of the citi-
18 zens of the state outweigh: (i) the intent of the legislature to participate
19 in, and the benefits of, an interstate agreement to establish national uniform
20 consumer protections for the products subject to this act; and (ii) the pre-
21 sumption that a uniform standard adopted by the commission provides reasonable
22 protections to consumers of the relevant product.
23 Notwithstanding the foregoing, a compacting state may, at the time of its
24 enactment of this compact, prospectively opt out of all uniform standards
25 involving long-term care insurance products by expressly providing for such
26 opt out in the enacted compact, and such an opt out shall not be treated as a
27 material variance in the offer or acceptance of any state to participate in
28 this compact. Such an opt out shall be effective at the time of enactment of
29 this compact by the compacting state and shall apply to all existing uniform
30 standards involving long-term care insurance products and those subsequently
32 (5) Effect of Opt Out. If a compacting state elects to opt out of a uni-
33 form standard, the uniform standard shall remain applicable in the compacting
34 state electing to opt out until such time as the opt out legislation is
35 enacted into law or the regulation opting out becomes effective.
36 Once the opt out of a uniform standard by a compacting state becomes
37 effective as provided under the laws of that state, the uniform standard shall
38 have no further force and effect in that state unless and until the legisla-
39 tion or regulation implementing the opt out is repealed or otherwise becomes
40 ineffective under the laws of the state. If a compacting state opts out of a
41 uniform standard after the uniform standard has been made effective in that
42 state, the opt out shall have the same prospective effect as provided under
43 article XIV of this compact for withdrawals.
44 (6) Stay of Uniform Standard. If a compacting state has formally initi-
45 ated the process of opting out of a uniform standard by regulation, and while
46 the regulatory opt out is pending, the compacting state may petition the com-
47 mission, at least fifteen (15) days before the effective date of the uniform
48 standard, to stay the effectiveness of the uniform standard in that state. The
49 commission may grant a stay if it determines the regulatory opt out is being
50 pursued in a reasonable manner and there is a likelihood of success. If a stay
51 is granted or extended by the commission, the stay or extension thereof may
52 postpone the effective date by up to ninety (90) days, unless affirmatively
53 extended by the commission; provided, a stay may not be permitted to remain in
54 effect for more than one (1) year unless the compacting state can show
55 extraordinary circumstances which warrant a continuance of the stay including,
1 but not limited to, the existence of a legal challenge which prevents the com-
2 pacting state from opting out. A stay may be terminated by the commission upon
3 notice that the rulemaking process has been terminated.
4 (7) Not later than thirty (30) days after a rule or operating procedure
5 is promulgated, any person may file a petition for judicial review of the rule
6 or operating procedure; provided, that the filing of such a petition shall not
7 stay or otherwise prevent the rule or operating procedure from becoming effec-
8 tive unless the court finds that the petitioner has a substantial likelihood
9 of success. The court shall give deference to the actions of the commission
10 consistent with applicable law and shall not find the rule or operating proce-
11 dure to be unlawful if the rule or operating procedure represents a reasonable
12 exercise of the commission's authority.
13 ARTICLE VIII
14 COMMISSION RECORDS AND ENFORCEMENT
15 (1) The commission shall promulgate rules establishing conditions and
16 procedures for public inspection and copying of its information and official
17 records, except such information and records involving the privacy of individ-
18 uals' and insurers' trade secrets. The commission may promulgate additional
19 rules under which it may make available to federal and state agencies, includ-
20 ing law enforcement agencies, records and information otherwise exempt from
21 disclosure, and may enter into agreements with such agencies to receive or
22 exchange information or records subject to nondisclosure and confidentiality
24 (2) Except as to privileged records, data and information, the laws of
25 any compacting state pertaining to confidentiality or nondisclosure shall not
26 relieve any compacting state commissioner of the duty to disclose any relevant
27 records, data or information to the commission; provided, that disclosure to
28 the commission shall not be deemed to waive or otherwise affect any confiden-
29 tiality requirement; and further provided, that, except as otherwise expressly
30 provided in this act, the commission shall not be subject to the compacting
31 state's laws pertaining to confidentiality and nondisclosure with respect to
32 records, data and information in its possession. Confidential information of
33 the commission shall remain confidential after such information is provided to
34 any commissioner.
35 (3) The commission shall monitor compacting states for compliance with
36 duly adopted bylaws, rules, including uniform standards, and operating proce-
37 dures. The commission shall notify any noncomplying compacting state in writ-
38 ing of its noncompliance with commission bylaws, rules or operating proce-
39 dures. If a noncomplying compacting state fails to remedy its noncompliance
40 within the time specified in the notice of noncompliance, the compacting state
41 shall be deemed to be in default as set forth in article XIV of this compact.
42 (4) The commissioner of any state in which an insurer is authorized to do
43 business, or is conducting the business of insurance, shall continue to exer-
44 cise his or her authority to oversee the market regulation of the activities
45 of the insurer in accordance with the provisions of the state's law. The
46 commissioner's enforcement of compliance with the compact is governed by the
47 following provisions:
48 (a) With respect to the commissioner's market regulation of a product or
49 advertisement that is approved or certified to the commission, the content
50 of the product or advertisement shall not constitute a violation of the
51 provisions, standards or requirements of the compact except upon a final
52 order of the commission, issued at the request of a commissioner after
53 prior notice to the insurer and an opportunity for hearing before the com-
2 (b) Before a commissioner may bring an action for violation of any provi-
3 sion, standard or requirement of the compact relating to the content of an
4 advertisement not approved or certified to the commission, the commission,
5 or an authorized commission officer or employee, must authorize the
6 action. However, authorization pursuant to this paragraph does not require
7 notice to the insurer, opportunity for hearing or disclosure of requests
8 for authorization or records of the commission's action on such requests.
9 ARTICLE IX
10 DISPUTE RESOLUTION
11 The commission shall attempt, upon the request of a member, to resolve any
12 disputes or other issues that are subject to this compact and which may arise
13 between two (2) or more compacting states, or between compacting states and
14 noncompacting states, and the commission shall promulgate an operating proce-
15 dure providing for resolution of such disputes.
16 ARTICLE X
17 PRODUCT FILING AND APPROVAL
18 (1) Insurers and third-party filers seeking to have a product approved by
19 the commission shall file the product with, and pay applicable filing fees to,
20 the commission. Nothing in this act shall be construed to restrict or other-
21 wise prevent an insurer from filing its product with the insurance department
22 in any state wherein the insurer is licensed to conduct the business of insur-
23 ance, and such filing shall be subject to the laws of the states where filed.
24 (2) The commission shall establish appropriate filing and review proces-
25 ses and procedures pursuant to commission rules and operating procedures. Not-
26 withstanding any provision herein to the contrary, the commission shall pro-
27 mulgate rules to establish conditions and procedures under which the commis-
28 sion will provide public access to product filing information. In establishing
29 such rules, the commission shall consider the interests of the public in hav-
30 ing access to such information, as well as protection of personal medical and
31 financial information and trade secrets, that may be contained in a product
32 filing or supporting information.
33 (3) Any product approved by the commission may be sold or otherwise
34 issued in those compacting states for which the insurer is legally authorized
35 to do business.
36 ARTICLE XI
37 REVIEW OF COMMISSION DECISIONS REGARDING FILINGS
38 (1) Not later than thirty (30) days after the commission has given notice
39 of a disapproved product or advertisement filed with the commission, the
40 insurer or third-party filer whose filing was disapproved may appeal the
41 determination to a review panel appointed by the commission. The commission
42 shall promulgate rules to establish procedures for appointing such review
43 panels and provide for notice and hearing. An allegation that the commission,
44 in disapproving a product or advertisement filed with the commission, acted
45 arbitrarily, capriciously, or in a manner that is an abuse of discretion or
46 otherwise not in accordance with the law, is subject to judicial review in
47 accordance with article III, section (4) of this compact.
48 (2) The commission shall have authority to monitor, review and reconsider
49 products and advertisement subsequent to their filing or approval upon a find-
1 ing that the product does not meet the relevant uniform standard. Where appro-
2 priate, the commission may withdraw or modify its approval after proper notice
3 and hearing, subject to the appeal process in section (1) above.
4 ARTICLE XII
6 (1) The commission shall pay or provide for the payment of the reasonable
7 expenses of its establishment and organization. To fund the cost of its ini-
8 tial operations, the commission may accept contributions and other forms of
9 funding from the national association of insurance commissioners, compacting
10 states and other sources. Contributions and other forms of funding from other
11 sources shall be of such a nature that the independence of the commission con-
12 cerning the performance of its duties shall not be compromised.
13 (2) The commission shall collect a filing fee from each insurer and
14 third-party filer filing a product with the commission to cover the cost of
15 the operations and activities of the commission and its staff in a total
16 amount sufficient to cover the commission's annual budget.
17 (3) The commission's budget for a fiscal year shall not be approved until
18 it has been subject to notice and comment as set forth in article VII of this
20 (4) The commission shall be exempt from all taxation in and by the com-
21 pacting states.
22 (5) The commission shall not pledge the credit of any compacting state,
23 except by and with the appropriate legal authority of that compacting state.
24 (6) The commission shall keep complete and accurate accounts of all its
25 internal receipts, including grants and donations, and disbursements of all
26 funds under its control. The internal financial accounts of the commission
27 shall be subject to the accounting procedures established under its bylaws.
28 The financial accounts and reports including the system of internal controls
29 and procedures of the commission shall be audited annually by an independent
30 certified public accountant. Upon the determination of the commission, but no
31 less frequently than every three (3) years, the review of the independent
32 auditor shall include a management and performance audit of the commission.
33 The commission shall make an annual report to the governor and legislature of
34 the compacting states, which shall include a report of the independent audit.
35 The commission's internal accounts shall not be confidential and such mate-
36 rials may be shared with the commissioner of any compacting state upon
37 request, provided however, that any work papers related to any internal or
38 independent audit and any information regarding the privacy of individuals'
39 and insurers' proprietary information, including trade secrets, shall remain
41 (7) No compacting state shall have any claim to or ownership of any prop-
42 erty held by or vested in the commission or to any commission funds held pur-
43 suant to the provisions of this compact.
44 ARTICLE XIII
45 COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT
46 (1) Any state is eligible to become a compacting state.
47 (2) The compact shall become effective and binding upon legislative
48 enactment of the compact into law by two (2) compacting states; provided, the
49 commission shall become effective for purposes of adopting uniform standards
50 for reviewing, and giving approval or disapproval of, products filed with the
51 commission that satisfy applicable uniform standards only after twenty-six
1 (26) states are compacting states or, alternatively, by states representing
2 greater than forty percent (40%) of the premium volume for life insurance,
3 annuity, disability income and long-term care insurance products, based on
4 records of the NAIC for the prior year. Thereafter, it shall become effective
5 and binding as to any other compacting state upon enactment of the compact
6 into law by that state.
7 (3) Amendments to the compact may be proposed by the commission for
8 enactment by the compacting states. No amendment shall become effective and
9 binding upon the commission and the compacting states unless and until all
10 compacting states enact the amendment into law.
11 ARTICLE XIV
12 WITHDRAWAL, DEFAULT AND TERMINATION
13 (1) Withdrawal.
14 (a) Once effective, the compact shall continue in force and remain bind-
15 ing upon each and every compacting state; provided, that a compacting
16 state may withdraw from the compact ("withdrawing state") by enacting a
17 statute specifically repealing the statute which enacted the compact into
19 (b) The effective date of withdrawal is the effective date of the repeal-
20 ing statute. However, the withdrawal shall not apply to any product fil-
21 ings approved or self-certified, or any advertisement of such products, on
22 the date the repealing statute becomes effective, except by mutual agree-
23 ment of the commission and the withdrawing state unless the approval is
24 rescinded by the withdrawing state as provided in paragraph (e) of this
26 (c) The commissioner of the withdrawing state shall immediately notify
27 the management committee in writing upon the introduction of legislation
28 repealing this compact in the withdrawing state.
29 (d) The commission shall notify the other compacting states of the intro-
30 duction of such legislation within ten (10) days after its receipt of
31 notice thereof.
32 (e) The withdrawing state is responsible for all obligations, duties and
33 liabilities incurred through the effective date of withdrawal, including
34 any obligations, the performance of which extends beyond the effective
35 date of withdrawal, except to the extent those obligations may have been
36 released or relinquished by mutual agreement of the commission and the
37 withdrawing state. The commission's approval of products and advertisement
38 prior to the effective date of withdrawal shall continue to be effective
39 and be given full force and effect in the withdrawing state, unless for-
40 mally rescinded by the withdrawing state in the same manner as provided by
41 the laws of the withdrawing state for the prospective disapproval of prod-
42 ucts or advertisement previously approved under state law.
43 (f) Reinstatement following withdrawal of any compacting state shall
44 occur upon the effective date of the withdrawing state reenacting the com-
46 (2) Default.
47 (a) If the commission determines that any compacting state has at any
48 time defaulted ("defaulting state") in the performance of any of its obli-
49 gations or responsibilities under this compact, the bylaws or duly promul-
50 gated rules or operating procedures; then, after notice and hearing as set
51 forth in the bylaws, all rights, privileges and benefits conferred by this
52 compact on the defaulting state shall be suspended from the effective date
53 of default as fixed by the commission. The grounds for default include,
1 but are not limited to, failure of a compacting state to perform its obli-
2 gations or responsibilities, and any other grounds designated in commis-
3 sion rules. The commission shall immediately notify the defaulting state
4 in writing of the defaulting state's suspension pending a cure of the
5 default. The commission shall stipulate the conditions and the time period
6 within which the defaulting state must cure its default. If the defaulting
7 state fails to cure the default within the time period specified by the
8 commission, the defaulting state shall be terminated from the compact and
9 all rights, privileges and benefits conferred by this compact shall be
10 terminated from the effective date of termination.
11 (b) Product approvals by the commission or product self-certifications,
12 or any advertisement in connection with such product, that are in force on
13 the effective date of termination shall remain in force in the defaulting
14 state in the same manner as if the defaulting state had withdrawn volun-
15 tarily pursuant to section (1) of this article.
16 (c) Reinstatement following termination of any compacting state requires
17 a reenactment of the compact.
18 (3) Dissolution of Compact.
19 (a) The compact dissolves effective upon the date of the withdrawal or
20 default of the compacting state which reduces membership in the compact to
21 one (1) compacting state.
22 (b) Upon the dissolution of this compact, the compact becomes null and
23 void and shall be of no further force or effect, and the business and
24 affairs of the commission shall be wound up and any surplus funds shall be
25 distributed in accordance with the bylaws.
26 ARTICLE XV
27 SEVERABILITY AND CONSTRUCTION
28 (1) The provisions of this compact shall be severable; and if any phrase,
29 clause, sentence or provision is deemed unenforceable, the remaining provi-
30 sions of the compact shall be enforceable.
31 (2) The provisions of this compact shall be liberally construed to effec-
32 tuate its purposes.
33 ARTICLE XVI
34 BINDING EFFECT OF COMPACT AND OTHER LAWS
35 (1) Other Laws.
36 (a) Nothing herein prevents the enforcement of any other law of a com-
37 pacting state, except as provided in paragraph (b) of this section.
38 (b) For any product approved or certified to the commission, the rules,
39 uniform standards and any other requirements of the commission shall con-
40 stitute the exclusive provisions applicable to the content, approval and
41 certification of such products. For advertisement that is subject to the
42 commission's authority, any rule, uniform standard or other requirement of
43 the commission which governs the content of the advertisement shall con-
44 stitute the exclusive provision that a commissioner may apply to the con-
45 tent of the advertisement. Notwithstanding the foregoing, no action taken
46 by the commission shall abrogate or restrict: (i) the access of any person
47 to state courts; (ii) remedies available under state law related to breach
48 of contract, tort, or other laws not specifically directed to the content
49 of the product; (iii) state law relating to the construction of insurance
50 contracts; or (iv) the authority of the attorney general of the state
51 including, but not limited to, maintaining any actions or proceedings, as
1 authorized by law.
2 (c) All insurance products filed with individual states shall be subject
3 to the laws of those states.
4 (2) Binding Effect of this Compact.
5 (a) All lawful actions of the commission, including all rules and operat-
6 ing procedures promulgated by the commission, are binding upon the com-
7 pacting states.
8 (b) All agreements between the commission and the compacting states are
9 binding in accordance with their terms.
10 (c) Upon the request of a party to a conflict over the meaning or inter-
11 pretation of commission actions, and upon a majority vote of the compact-
12 ing states, the commission may issue advisory opinions regarding the mean-
13 ing or interpretation in dispute.
14 (d) In the event any provision of this compact exceeds the constitutional
15 limits imposed on the legislature of any compacting state, the obliga-
16 tions, duties, powers or jurisdiction sought to be conferred by that pro-
17 vision upon the commission shall be ineffective as to that compacting
18 state, and those obligations, duties, powers or jurisdiction shall remain
19 in the compacting state and shall be exercised by the agency thereof to
20 which those obligations, duties, powers or jurisdiction are delegated by
21 law in effect at the time this compact becomes effective.
STATEMENT OF PURPOSE
This proposal adopts an interstate compact developed by the
National Association of Insurance Commissioners that will allow
states to coordinate the regulation of annuity, life, disability
income and long term care insurance products. The purpose of the
compact, known as the Interstate Insurance Product Regulation
Compact, is to promote greater efficiency and uniformity in
regulation of certain types of financial products by establishing
uniform standards for protection of consumers and allowing insurers
to launch new financial products in all compacting states with a
single filing and approval process. Currently, an insurer seeking
to market a new product nationally must file the product for review
and approval in all fifty states and the District of Columbia, and
the product must be adapted to meet the particular requirements of
each of these jurisdictions. This process is not only expensive
and cumbersome, it also places insurers at a competitive
disadvantage to financial entities likes banks and securities firms
that offer competing products that are regulated under federal law
and, therefore, are not subject to a similar state approval
process. The Compact creates a commission that will develop
uniform standards for products, and will review and approve
proposed products on behalf of all compacting states. The Director
of the Department of Insurance is appointed as Idaho's
representative on the commission. Currently, at least eighteen
other states have adopted or are in the process of adopting this
None. Costs of the Compact Commission will be funded from filing
fees paid by insurers. Since Idaho currently does not charge any
product filing fees, there will also be no loss of fee revenue.
Name: Shad Priest
Agency: Insurance, Dept. of
STATEMENT OF PURPOSE/FISCAL IMPACT H 120