2005 Legislation
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HOUSE BILL NO. 120 – Insurance Product Regulatn Compact


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Bill Status

H0120...........................................................by BUSINESS
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
         Effective: 07/01/05

Bill Text

  ]]]]              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
 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
 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.
 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:
  2                                      ARTICLE I
  3                                       PURPOSES
  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
  8    products;
  9        (2)  To develop uniform standards for insurance products covered under the
 10    compact;
 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";
 21    and
 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
 25                                     DEFINITIONS
 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-
 33    duct.
 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
 42    administrator.
 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
 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;
 46             and
 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
 22        commission.
 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-
 35        tives.
 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
 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
 31    promulgated.
 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
 23    provisions.
 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-
  1        mission.
  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
 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
  5                                       FINANCE
  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
 19    compact.
 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
 40    confidential.
 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
 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
 18        law.
 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
 25        section.
 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-
 45        pact.
 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
 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 / Fiscal Impact

                     STATEMENT  OF  PURPOSE

                            RS 14450

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

                         FISCAL  IMPACT
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
Phone:    334-4214