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AB1180 Summary:

BILL NOA01180
 
SAME ASSAME AS S03507
 
SPONSORSimotas
 
COSPNSRStirpe, Rivera, Steck, Crespo, Hevesi, Raia, Quart, Kolb
 
MLTSPNSR
 
Add Art 82 8201 - 8218, Ins L
 
Establishes the "Interstate insurance product regulation compact" to regulate certain insurance products among member states and to promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products.
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AB1180 Actions:

BILL NOA01180
 
01/14/2019referred to insurance
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AB1180 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1180
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 14, 2019
                                       ___________
 
        Introduced  by  M. of A. SIMOTAS, STIRPE, RIVERA, STECK, CRESPO, HEVESI,
          RAIA, QUART, KOLB -- read once and referred to the Committee on Insur-
          ance
 
        AN ACT to amend the insurance  law,  in  relation  to  establishing  the
          interstate  insurance  product  regulation compact to regulate certain
          insurance products

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Legislative findings and intent.  An interstate compact is
     2  a contract between the states that allows them to  cooperate  on  multi-
     3  state or national issues while still retaining state control. Interstate
     4  compacts  are  specifically  mentioned in the U.S. Constitution and have
     5  been historically used to address border disputes and water rights.  The
     6  use  of interstate compacts has expanded significantly in recent decades
     7  to cover tax, motor vehicle licensing, environmental, emergency  manage-
     8  ment and other issues. Over 200 interstate compacts currently exist, and
     9  on  average  every state belongs to at least 25 compacts. The Interstate
    10  Insurance Product Regulation Compact, which to date has been adopted  by
    11  44  member  states, representing approximately two-thirds of the premium
    12  volume in the nation, created the  Interstate  Insurance  Product  Regu-
    13  lation  Commission (IIPRC). The IIPRC provides the States with a vehicle
    14  to (1) develop uniform national product standards  that  will  afford  a
    15  high  level  of  protection  to  consumers of life insurance, annuities,
    16  disability income and long-term care insurance products; (2) establish a
    17  central point of filing for these insurance products; and (3) thoroughly
    18  review product filings and make regulatory decisions  according  to  the
    19  uniform  product  standards.  The  IIPRC  is  an important modernization
    20  initiative that benefits state insurance regulators, consumers, and  the
    21  insurance  industry.  The Compact enhances the efficiency and effective-
    22  ness of the way insurance products are  filed,  reviewed,  and  approved
    23  allowing insurance customers to have faster access to competitive insur-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01469-01-9

        A. 1180                             2
 
     1  ance  products  in  an  ever-changing  global  marketplace.  The Compact
     2  promotes uniformity through application  of  uniform  product  standards
     3  embedded  with strong consumer protections.  The state of New York seeks
     4  to  join with other states as a member of the Interstate Insurance Prod-
     5  uct Regulation Compact and Commission.
     6    § 2. The insurance law is amended by adding a new article 82  to  read
     7  as follows:
 
     8                                 ARTICLE 82
     9               INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
 
    10  Section 8201. Short title.
    11          8202. Purpose.
    12          8203. Definitions.
    13          8204. Establishment of the commission and venue.
    14          8205. Powers of the commission.
    15          8206. Organization of the commission.
    16          8207. Meetings and acts of the commission.
    17          8208. Rules  and  operating procedures; rule making functions of
    18                  the commission and opting out of uniform standards.
    19          8209. Commission records and enforcement.
    20          8210. Dispute resolution.
    21          8211. Product filing and approval.
    22          8212. Review of commission decisions regarding filings.
    23          8213. Finance.
    24          8214. Compacting states, effective date and amendment.
    25          8215. Withdrawal, default and termination.
    26          8216. Severability and construction.
    27          8217. Binding effect of compact and other laws.
    28          8218. Exempt products.
    29    § 8201. Short title. This article shall be known and may be  cited  as
    30  the "interstate insurance product regulation compact".
    31    §  8202.  Purpose.  The purposes of this compact are, through means of
    32  joint and cooperative action among the compacting states:
    33    (a) to promote and protect the interest of consumers of individual and
    34  group annuity, life insurance,  disability  income  and  long-term  care
    35  insurance products;
    36    (b)  to  develop  uniform  standards  for  products  covered under the
    37  compact;
    38    (c) to establish a central clearinghouse to receive and provide prompt
    39  review of products covered under the  compact  and,  in  certain  cases,
    40  advertisements  related  thereto, submitted by insurers authorized to do
    41  business in one or more compacting states;
    42    (d) to give appropriate regulatory approval to those  product  filings
    43  and advertisements satisfying the applicable uniform standard;
    44    (e)  to  improve  coordination  of  regulatory resources and expertise
    45  between state insurance departments regarding  the  setting  of  uniform
    46  standards and review of insurance products covered under the compact;
    47    (f)  to create the interstate insurance product regulation commission;
    48  and
    49    (g) to perform such other related functions as may be consistent  with
    50  the state regulation of the business of insurance.
    51    § 8203. Definitions. As used in this article:
    52    (a)  "Advertisement"  means  any  material  designed  to create public
    53  interest in a product, or induce the public to purchase, increase, modi-
    54  fy, reinstate, borrow on, surrender, replace or retain a policy, as more

        A. 1180                             3
 
     1  specifically defined in  the  rules  and  operating  procedures  of  the
     2  commission.
     3    (b) "By-laws" mean those by-laws established by the commission for its
     4  governance  or  for directing or controlling the commission's actions or
     5  conduct.
     6    (c) "Compacting state" means any state which has enacted this  compact
     7  legislation  and  which has not withdrawn or been terminated pursuant to
     8  section eight thousand two hundred fifteen of this article.
     9    (d) "Commission" means the "interstate  insurance  product  regulation
    10  commission" established by the compact.
    11    (e)  "Commissioner" means the chief insurance regulatory official of a
    12  state including, but not limited to commissioner, superintendent, direc-
    13  tor or administrator.
    14    (f) "Domiciliary state" means the state in which an insurer is  incor-
    15  porated  or  organized or, in the case of an alien insurer, its state of
    16  entry.
    17    (g) "Insurer" means any entity licensed by a state to issue  contracts
    18  of insurance for any of the lines of insurance covered by this article.
    19    (h)  "Member"  means  the  person, or his or her designee, chosen by a
    20  compacting state for service on the commission.
    21    (i) "Non-compacting state" means any state which is not at the time  a
    22  compacting state.
    23    (j)  "Operating procedures" mean procedures promulgated by the commis-
    24  sion implementing a rule,  uniform  standard  or  a  provision  of  this
    25  compact.
    26    (k)  "Product"  means  the  form  of the contract, policy application,
    27  endorsements, certificate forms, evidence of coverage forms and  related
    28  forms  for  an  individual  or group annuity, life insurance, disability
    29  income or long-term care insurance product, which an insurer is  author-
    30  ized to issue.
    31    (l)  "Rule"  means  a statement of general or particular applicability
    32  and future effect promulgated by the  commission,  including  a  uniform
    33  standard  developed pursuant to section eight thousand two hundred eight
    34  of this article, designed to implement, interpret, or prescribe  law  or
    35  policy  or  describing the organization, procedure, or practice require-
    36  ments of the commission, which shall have the force and effect of law in
    37  the compacting states.
    38    (m) "State" means any state,  district  or  territory  of  the  United
    39  States of America.
    40    (n)  "Third-party filer" means an entity that submits a product filing
    41  to the commission on behalf of an insurer.
    42    (o) "Uniform standard" means a standard adopted by the commission  for
    43  a  product line, pursuant to section eight thousand two hundred eight of
    44  this article and shall include all of the product requirements in aggre-
    45  gate; provided, that each uniform standard shall be  construed,  whether
    46  express  or implied, to prohibit the use of any inconsistent, misleading
    47  or ambiguous provisions in a product and the form of such  product  made
    48  available  to  the  public  shall  not be unfair, inequitable or against
    49  public policy as determined by the commission.
    50    § 8204. Establishment of the commission and venue. (a) The  compacting
    51  states  hereby  establish a joint public agency known as the "interstate
    52  insurance product regulation  commission".  Pursuant  to  section  eight
    53  thousand  two  hundred  eight of this article, the commission shall have
    54  the power to develop uniform standards for product  lines,  receive  and
    55  provide  prompt review of products filed therewith, and give approval to
    56  those product filings satisfying applicable uniform standards; provided,

        A. 1180                             4
 
     1  however, that it is not intended for the commission to be the  exclusive
     2  entity  for  receipt and review of insurance product filings. Nothing in
     3  this section shall prohibit any insurer from filing its product  in  any
     4  state wherein such insurer is licensed to conduct the business of insur-
     5  ance  and  such  filing  shall be subject to the laws of the state where
     6  filed.
     7    (b) The commission is a body corporate and politic, and an  instrumen-
     8  tality of the compacting states.
     9    (c)  The  commission is a not-for-profit entity, separate and distinct
    10  from the individual compacting states.
    11    (d) The commission is solely responsible for  its  liabilities  unless
    12  otherwise  specifically  provided  in  this  compact, except that, in no
    13  event shall the obligations of the commission be the debt of  the  state
    14  of  New York nor shall any revenues or property of the state of New York
    15  be liable therefor.
    16    (e) Venue in proper and judicial proceedings by or against the commis-
    17  sion shall be brought solely and exclusively in  a  court  of  competent
    18  jurisdiction where the principal office of the commission is located.
    19    §  8205.  Powers  of the commission. (a) The commission shall have the
    20  following powers:
    21    (1) to promulgate  rules,  pursuant  to  section  eight  thousand  two
    22  hundred  eight of this article, which shall have the force and effect of
    23  law and shall be binding in the compacting states to the extent  and  in
    24  the manner provided in this article;
    25    (2)  to  exercise  its  rule making authority and establish reasonable
    26  uniform standards for products covered under the compact, and advertise-
    27  ment related thereto, which shall have the force and effect of  law  and
    28  shall  be  binding  in the compacting states, but only for such products
    29  filed with the commission; provided, however, that  a  compacting  state
    30  shall  have  the  right  to opt out of such uniform standard pursuant to
    31  section eight thousand two hundred eight of this article to  the  extent
    32  and  in  the  manner provided in this article, and provided further that
    33  any uniform standard established by the commissioner for long-term  care
    34  insurance  products  may  provide  the  same  or greater protections for
    35  consumers as, but shall not provide less  than,  those  protections  set
    36  forth  in  the National Association of Insurance Commissioners' (herein-
    37  after referred to as the "NAIC") Long-Term Care Insurance Model Act  and
    38  Long-Term  Care  Insurance Model Regulation, respectively, adopted as of
    39  2001. The commission shall consider whether any subsequent amendments to
    40  the NAIC Long-Term Care Insurance Model Act or Long-Term Care  Insurance
    41  Model  Regulation  adopted  by  the NAIC require amending of the uniform
    42  standards  established  by  the  commission  for   long-term   insurance
    43  products;
    44    (3) to receive and review in an expeditious manner products filed with
    45  the  commission,  including rate filings for disability income and long-
    46  term care insurance products, and give approval of  those  products  and
    47  rate  filings  that  satisfy the applicable uniform standard, where such
    48  approval shall have the force and effect of law and be  binding  on  the
    49  compacting  states  to  the  extent  and  in  the manner provided in the
    50  compact;
    51    (4) to receive and  review  in  an  expeditious  manner  advertisement
    52  relating  to  long-term care insurance products for which uniform stand-
    53  ards have been adopted by the commission,  and  give  approval  of  such
    54  advertisement  that  satisfies  the applicable uniform standard. For any
    55  product covered under this article, other than long-term care  insurance
    56  products,  the commission shall have the authority to require an insurer

        A. 1180                             5
 
     1  to submit all or any part of its  advertisement  with  respect  to  that
     2  product for review or approval prior to use if the commission determines
     3  that  the  nature  of  the  product is such that an advertisement of the
     4  product  could  have the capacity or tendency to mislead the public. The
     5  actions of the commission as provided in this  section  shall  have  the
     6  force and effect of law and shall be binding in the compacting states to
     7  the extent and in the manner provided in the compact;
     8    (5)  to  exercise  rule  making  authority  and designate products and
     9  advertisement that may be subject to a self-certification process  with-
    10  out the need for prior approval by the commission;
    11    (6)  to  promulgate  operating  procedures,  pursuant to section eight
    12  thousand two hundred eight of this article, which shall  be  binding  in
    13  the  compacting  states  to the extent and in the manner provided in the
    14  compact;
    15    (7) to bring and prosecute legal proceedings or actions in its name as
    16  the commission; provided, that  the  standing  of  any  state  insurance
    17  department to sue or be sued under applicable law shall not be affected;
    18    (8)  to  issue  subpoenas  requiring  the  attendance and testimony of
    19  witnesses and the production of evidence;
    20    (9) to establish and maintain offices;
    21    (10) to purchase and maintain insurance and bonds;
    22    (11) to borrow, accept or contract for services of personnel,  includ-
    23  ing, but not limited to, employees of a compacting state;
    24    (12) to hire employees and elect or appoint officers, and to fix their
    25  compensation, define their duties and give them appropriate authority to
    26  carry  out  the  purposes of the compact, and determine their qualifica-
    27  tions; and to establish the commission's personnel policies and programs
    28  relating to, among other things, conflicts of interest, rates of compen-
    29  sation and qualifications of personnel;
    30    (13) to accept any and all appropriate donations and grants of  money,
    31  equipment, supplies, materials and services, and to receive, utilize and
    32  dispose  of  the  same;  provided that at all times the commission shall
    33  strive to avoid any appearance of impropriety;
    34    (14) to lease, purchase, accept appropriate gifts or donations of,  or
    35  otherwise  to own, hold, improve or use, any property, real, personal or
    36  mixed; provided that at all times the commission shall strive  to  avoid
    37  any appearance of impropriety;
    38    (15)  to  sell,  convey, mortgage, pledge, lease, exchange, abandon or
    39  otherwise dispose of any property, real, personal or mixed;
    40    (16) to remit filing fees to compacting states as may be set forth  in
    41  the by-laws, rules or operating procedures;
    42    (17)  to  enforce  compliance by compacting states with rules, uniform
    43  standards, operating procedures and by-laws;
    44    (18) to provide for dispute resolution among compacting states;
    45    (19) to advise compacting states on issues relating to insurers  domi-
    46  ciled or doing business in non-compacting jurisdictions, consistent with
    47  the purposes of the compact;
    48    (20) to provide advice and training to those personnel in state insur-
    49  ance  departments  responsible  for product review, and to be a resource
    50  for state insurance departments;
    51    (21) to establish a budget and make expenditures;
    52    (22) to borrow money;
    53    (23) to appoint committees, including advisory  committees  comprising
    54  members,  state  insurance regulators, state legislators or their repre-
    55  sentatives, insurance industry and consumer  representatives,  and  such
    56  other interested persons as may be designated in the by-laws;

        A. 1180                             6

     1    (24)  to  provide  and receive information from, and to cooperate with
     2  law enforcement agencies;
     3    (25) to adopt and use a corporate seal; and
     4    (26)  to perform such other functions as may be necessary or appropri-
     5  ate to achieve the purposes of this compact consistent  with  the  state
     6  regulation of the business of insurance.
     7    (b)  All donations, grants of money, equipment, supplies, materials or
     8  services, purchases, gifts, donations, conveyances, mortgages,  pledges,
     9  leases  and  exchanges, as authorized by subsection (a) of this section,
    10  received by or on behalf of the  commission  shall  be  limited  to  the
    11  direct  funding  of  the lawful and authorized operations of the commis-
    12  sion.
    13    § 8206. Organization of the  commission.  (a)  Each  compacting  state
    14  shall  have  and be limited to one member. The superintendent, or his or
    15  her designated representative,  shall  be  New  York's  member  of  such
    16  commission.  Each  member  shall  be qualified to serve in such capacity
    17  pursuant to applicable law of the compacting state. Any  member  may  be
    18  removed  or  suspended  from  office as provided by the law of the state
    19  from which he or she shall be appointed. Any vacancy  occurring  in  the
    20  commission shall be filled in accordance with the laws of the compacting
    21  state  wherein such vacancy exists. Nothing herein shall be construed to
    22  affect the manner in which a compacting state determines the election or
    23  appointment and qualification of its own superintendent.
    24    (b) Each member shall be entitled to one vote and shall have an oppor-
    25  tunity to participate in the governance of the commission in  accordance
    26  with  the  by-laws. Notwithstanding any provision of this article to the
    27  contrary, no action of the commission with respect to  the  promulgation
    28  of  a  uniform  standard  shall  be  effective  unless two-thirds of the
    29  members vote in favor thereof.
    30    (c) The commission shall, by a  majority  of  the  members,  prescribe
    31  by-laws  to  govern  its  conduct  as may be necessary or appropriate to
    32  carry out the purposes, and exercise the powers, of the compact, includ-
    33  ing, but not limited to:
    34    (1) establishing the fiscal year of the commission;
    35    (2) providing  reasonable  procedures  for  holding  meetings  of  the
    36  management committee;
    37    (3)  providing  reasonable standards and procedures for the establish-
    38  ment of other committees, and governing any general or  specific  deleg-
    39  ation of any authority or function of the commission;
    40    (4)  providing  reasonable procedures for calling and conducting meet-
    41  ings of the commission that consist of a majority of commission members,
    42  ensuring reasonable advance notice of each such meeting,  and  providing
    43  for  the  right  of citizens to attend each such meeting with enumerated
    44  exceptions designed to protect the public's  interest,  the  privacy  of
    45  individuals  and  insurers'  proprietary  information,  including  trade
    46  secrets. The commission may meet in camera only after a majority of  the
    47  entire  membership  votes to close a meeting in toto or in part. As soon
    48  as practicable, the commission must make public a copy of  the  vote  to
    49  close  the meeting revealing the vote of each member with no proxy votes
    50  allowed, and votes taken during such meeting;
    51    (5) establishing the  titles,  duties  and  authority  and  reasonable
    52  procedures for the election of the officers of the commission;
    53    (6)  providing  reasonable standards and procedures for the establish-
    54  ment of the personnel policies and programs of the commission.  Notwith-
    55  standing any civil service or  other  similar  laws  of  any  compacting

        A. 1180                             7
 
     1  state,  the  by-laws shall exclusively govern the personnel policies and
     2  programs of the commission;
     3    (7) promulgating a code of ethics to address permissible and prohibit-
     4  ed activities of commission members and employees; and
     5    (8) providing a mechanism for winding up the operations of the commis-
     6  sion  and  the equitable disposition of any surplus funds that may exist
     7  after the termination of the compact after the payment and/or  reserving
     8  of all of its debts and obligations.
     9    (d)  The commission shall publish its by-laws in a convenient form and
    10  file a copy thereof and a copy of any amendment thereto, with the appro-
    11  priate agency or officer in each of the compacting states.
    12    (e) A management committee comprising no more  than  fourteen  members
    13  shall be established as follows:
    14    (1) one member from each of the six compacting states with the largest
    15  premium  volume  for  individual  and  group annuities, life, disability
    16  income and  long-term  care  insurance  products,  determined  from  the
    17  records of the NAIC as of December thirty-first of the prior year;
    18    (2)  four  members  from  those  compacting  states  with at least two
    19  percent of the market based on the premium volume described in paragraph
    20  one of this subsection, other than six compacting states with the  larg-
    21  est  premium  volume,  selected  on  a rotating basis as provided in the
    22  by-laws; and
    23    (3) four members from those  compacting  states  with  less  than  two
    24  percent  of  the  market, based on the premium volume described in para-
    25  graph one of this subsection, with one selected from each  of  the  four
    26  zone regions of the NAIC as provided in the by-laws.
    27    (f)  The  management committee shall have such authority and duties as
    28  may be set forth in the by-laws, including but not limited to:
    29    (1) managing the affairs of the commission in a manner consistent with
    30  the by-laws and purposes of the commission;
    31    (2) establishing and overseeing an  organizational  structure  within,
    32  and  appropriate  procedures  for,  the  commission  to  provide for the
    33  creation of uniform standards and other rules,  receipt  and  review  of
    34  product  filings, administrative and technical support functions, review
    35  of decisions regarding the disapproval of  a  product  filing,  and  the
    36  review  of  elections made by a compacting state to opt out of a uniform
    37  standard; provided that a uniform standard shall not be submitted to the
    38  compacting states for adoption unless  approved  by  two-thirds  of  the
    39  members of the management committee;
    40    (3) overseeing the offices of the commission; and
    41    (4) planning, implementing, and coordinating communications and activ-
    42  ities  with  other  state, federal and local government organizations in
    43  order to advance the goals of the commission.
    44    (g) The commission shall elect annually officers from  the  management
    45  committee,  with each having such authority and duties, as may be speci-
    46  fied in the by-laws.
    47    (h) The management committee may,  subject  to  the  approval  of  the
    48  commission,  appoint  or  retain  an executive director for such period,
    49  upon such terms and conditions and for such compensation as the  commis-
    50  sion  may deem appropriate. The executive director shall serve as secre-
    51  tary to the commission, but shall not be a member of the commission. The
    52  executive director shall hire and supervise such other staff as  may  be
    53  authorized by the commission.
    54    (i)  A  legislative  committee  comprising  state legislators or their
    55  designees shall be established to monitor the operations  of,  and  make
    56  recommendations   to,  the  commission;  provided  that  the  manner  of

        A. 1180                             8
 
     1  selection and term of any legislative committee member shall be  as  set
     2  forth  in  the  by-laws.  Prior to the adoption by the commission of any
     3  uniform standard, revision  to  the  by-laws,  annual  budget  or  other
     4  significant  matter  as  may  be provided in the by-laws, the management
     5  committee shall consult with and report to the legislative committee.
     6    (j) The commission shall establish two  advisory  committees,  one  of
     7  which  shall comprise consumer representatives independent of the insur-
     8  ance industry and the  other  comprising  insurance  industry  represen-
     9  tatives.
    10    (k) The commission may establish additional advisory committees as its
    11  by-laws may provide for the carrying out of its functions.
    12    (l)  The  commission shall maintain its corporate books and records in
    13  accordance with the by-laws.
    14    (m) The members, officers, executive director, employees and represen-
    15  tatives of the commission shall  be  immune  from  suit  and  liability,
    16  either  personally  or  in their official capacity, for any action taken
    17  reasonably and in good faith which results in a claim for damage  to  or
    18  loss  of  property or personal injury or other civil liability caused by
    19  or arising out of any actual or alleged  act,  error  or  omission  that
    20  occurred,  or  that  such  person  had  a reasonable basis for believing
    21  occurred within the scope of commission employment, duties or  responsi-
    22  bilities;  provided,  that nothing in this section shall be construed to
    23  protect any such person from suit and/or liability for any damage, loss,
    24  injury or liability caused by the  intentional  or  willful  and  wanton
    25  misconduct of that person.
    26    (n)  The commission shall defend any member, officer, executive direc-
    27  tor, employee or representative of the commission in  any  civil  action
    28  seeking  to  impose  liability arising out of any actual or alleged act,
    29  error or omission that occurred within the scope of  commission  employ-
    30  ment, duties or responsibilities, or that the defendant had a reasonable
    31  basis  for believing occurred within the scope of commission employment,
    32  duties or responsibilities; provided, that nothing in this section shall
    33  be construed to prohibit that person from retaining his or her own coun-
    34  sel; and provided further, that the actual  or  alleged  act,  error  or
    35  omission  did  not  result from that person's intentional or willful and
    36  wanton misconduct.
    37    (o) The commission shall indemnify and hold harmless any member, offi-
    38  cer, executive director, employee or representative  of  the  commission
    39  for  the  amount  of  any  settlement  or judgment obtained against such
    40  persons arising out of any actual or alleged act, error or omission that
    41  occurred within the scope of commission employment, duties or  responsi-
    42  bilities,  or  that  such  person  had  a reasonable basis for believing
    43  occurred within the scope of commission employment, duties or  responsi-
    44  bilities,  provided,  that  the actual or alleged act, error or omission
    45  did not result from the intentional or willful and wanton misconduct  of
    46  any such person.
    47    §  8207. Meetings and acts of the commission. (a) The commission shall
    48  meet and take such actions as are consistent with the provisions of this
    49  compact and the by-laws.
    50    (b) Each member of the commission shall have the right  and  power  to
    51  cast  a  vote  to which that compacting state is entitled and to partic-
    52  ipate in the business and affairs of the commission. A member shall vote
    53  in person or by such other means as provided in the by-laws. The by-laws
    54  may provide for members' participation in meetings by telephone or other
    55  means of communication.

        A. 1180                             9
 
     1    (c) The commission shall meet at least once during each calendar year.
     2  Additional meetings shall be held as set forth in the by-laws.
     3    §  8208.  Rules and operating procedures; rule making functions of the
     4  commission and opting out of uniform standards. (a) The commission shall
     5  promulgate reasonable rules, including uniform standards  and  operating
     6  procedures, in order to effectively and efficiently achieve the purposes
     7  of  the compact. Notwithstanding the foregoing, in the event the commis-
     8  sion exercises its rule making authority in a manner that is beyond  the
     9  scope  of  the  purposes  of this article, or the powers granted in this
    10  section, then such action by the commission shall be invalid and have no
    11  force and effect.
    12    (b) Rules and operating procedures shall be made pursuant  to  a  rule
    13  making  process  that conforms to the state administrative procedure act
    14  of 1981 as amended, as may be  appropriate  to  the  operations  of  the
    15  commission. Before the commission adopts a uniform standard, the commis-
    16  sion shall give written notice to the relevant state legislative commit-
    17  tee  in  each  compacting  state responsible for insurance issues of its
    18  intention to adopt such uniform standard. The commission in  adopting  a
    19  uniform  standard shall consider fully all submitted materials and issue
    20  a concise explanation of its decision.
    21    (c) A uniform standard shall become effective ninety  days  after  its
    22  promulgation  by the commission or such later date as the commission may
    23  determine; provided, however, that a compacting state may opt out  of  a
    24  uniform standard as provided in this article. "Opt out" shall be defined
    25  as  any  action by a compacting state to decline to adopt or participate
    26  in a promulgated uniform standard. All other rules and operating  proce-
    27  dures,  and  amendments  thereto,  shall become effective as of the date
    28  specified in each rule, operating procedure or amendment.
    29    (d) A compacting state may opt out of a uniform  standard,  either  by
    30  legislation  or  regulation duly promulgated by the superintendent under
    31  the state administrative procedure act. If a compacting state elects  to
    32  opt out of a uniform standard by regulation, it must give written notice
    33  to  the  commission  no  later  than ten business days after the uniform
    34  standard is promulgated or at the time the state  becomes  a  compacting
    35  state,  and  find  that the uniform standard does not provide reasonable
    36  protections to the citizens of the state given  the  conditions  in  the
    37  state.  The  superintendent  shall  make  specific  findings of fact and
    38  conclusions of law, based on a preponderance of the evidence,  detailing
    39  the  conditions  in the state which warrant a departure from the uniform
    40  standard and determining that the uniform standard would not  reasonably
    41  protect  the citizens of the state. The superintendent must consider and
    42  balance the following factors and find that the conditions in the  state
    43  and needs of the citizens of the state outweigh:
    44    (1)  the intent of the legislature to participate in, and the benefits
    45  of, an interstate  agreement  to  establish  national  uniform  consumer
    46  protections for the products subject to this article; and
    47    (2)  the presumption that a uniform standard adopted by the commission
    48  provides reasonable protections to consumers of the relevant product.
    49    Notwithstanding the foregoing, a compacting state may, at the time  of
    50  its enactment of the compact, prospectively opt out of all uniform stan-
    51  dards  involving  the  long-term  care  insurance  products by expressly
    52  providing for such opt out in the enacted  compact,  and  such  opt  out
    53  shall  not  be treated as a material variance in the offer or acceptance
    54  of any state to participate in the compact. Such an  opt  out  shall  be
    55  effective  at  the  time  of  enactment of the compact by the compacting

        A. 1180                            10

     1  state and shall apply to all existing uniform standards involving  long-
     2  term care insurance products and those subsequently promulgated.
     3    (e) If a compacting state elects to opt out of a uniform standard, the
     4  uniform  standard shall remain applicable in the compacting state elect-
     5  ing to opt out until such time the opt out legislation is  enacted  into
     6  law or the regulation is promulgated.
     7    (f)  Once  the  opt  out  of  a uniform standard by a compacting state
     8  becomes effective as provided under the laws of that state, the  uniform
     9  standard shall have no further force and effect in that state unless and
    10  until the legislation or regulation implementing the opt out is repealed
    11  or  otherwise  becomes  ineffective  under  the  laws of the state. If a
    12  compacting state opts out of a uniform standard after the uniform stand-
    13  ard has been made effective in that state, the opt out  shall  have  the
    14  same  prospective  effect  as  provided under section eight thousand two
    15  hundred fifteen of this article for withdrawals.
    16    (g) If a compacting state has formally initiated the process of opting
    17  out of a uniform standard by regulation, and while  the  regulatory  opt
    18  out  is  pending,  the  compacting state may petition the commission, at
    19  least fifteen days before the effective date of the uniform standard, to
    20  stay the effectiveness of  the  uniform  standard  in  that  state.  The
    21  commission  may  grant a stay if it determines the regulatory opt out is
    22  being pursued in a reasonable  manner  and  there  is  a  likelihood  of
    23  success. If a stay is granted or extended by the commission, the stay or
    24  extension  thereof may postpone the effective date by up to ninety days,
    25  unless affirmatively extended by the  commission;  provided  however,  a
    26  stay  may  not  be  permitted to remain in effect for more than one year
    27  unless the compacting state can show extraordinary  circumstances  which
    28  warrant  a  continuance  of  the stay including, but not limited to, the
    29  existence of a legal challenge which prevents the compacting state  from
    30  opting  out. A stay may be terminated by the commission upon notice that
    31  the rule making process has been terminated.
    32    (h) Not later than thirty days after a rule or operating procedure  is
    33  promulgated,  any  person may file a petition for judicial review of the
    34  rule or operating procedure; provided, however, that the filing of  such
    35  a  petition  shall  not  stay or otherwise prevent the rule or operating
    36  procedure from becoming effective unless the court finds that the  peti-
    37  tioner  has  a  substantial  likelihood of success. The court shall give
    38  deference to the actions of the commission  consistent  with  applicable
    39  law and shall not find the rule or operating procedure to be unlawful if
    40  the  rule or operating procedure represents a reasonable exercise of the
    41  commission's authority.
    42    § 8209. Commission records and enforcement. (a) The  commission  shall
    43  promulgate  rules  establishing  conditions  and  procedures  for public
    44  inspection and copying of its information and official  records,  except
    45  such  information  and  records involving the privacy of individuals and
    46  insurers' trade secrets. The commission may promulgate additional  rules
    47  under which it may make available to federal and state agencies, includ-
    48  ing  law  enforcement agencies, records and information otherwise exempt
    49  from disclosure, and may enter into agreements  with  such  agencies  to
    50  receive  or exchange information or records subject to nondisclosure and
    51  confidentiality provisions.
    52    (b) Except as to privileged records, data and information, the laws of
    53  any compacting state  pertaining  to  confidentiality  or  nondisclosure
    54  shall  not  relieve  any  compacting  state  commissioner of the duty to
    55  disclose any relevant records, data or information  to  the  commission;
    56  provided  however, that disclosure to the commission shall not be deemed

        A. 1180                            11
 
     1  to waive  or  otherwise  affect  any  confidentiality  requirement;  and
     2  provided  further  that,  except as otherwise expressly provided in this
     3  article, the commission shall not be subject to the laws of any compact-
     4  ing  state  pertaining to confidentiality and nondisclosure with respect
     5  to records, data and information in its possession. Confidential  infor-
     6  mation  of  the commission shall remain confidential after such informa-
     7  tion is provided to any commissioner.
     8    (c) The commission shall monitor compacting states for compliance with
     9  duly adopted by-laws, rules, including uniform standards, and  operating
    10  procedures.  The  commission  shall  notify such noncomplying compacting
    11  state in writing of its noncompliance with commission by-laws, rules  or
    12  operating  procedures.  If  the  noncomplying  compacting state fails to
    13  remedy such noncompliance within the time specified  in  the  notice  of
    14  noncompliance,  the compacting state shall be deemed to be in default as
    15  set forth in section eight thousand two hundred fifteen of this article.
    16    (d) The commissioner of any state in which an insurer is authorized to
    17  do business, or is conducting the business of insurance, shall  continue
    18  to exercise his or her authority to oversee the market regulation of the
    19  activities  of  the  insurer  in  accordance  with the provisions of the
    20  state's law. The  commissioner's  enforcement  of  compliance  with  the
    21  compact is governed by the following provisions:
    22    (1)  with respect to the commissioner's market regulation of a product
    23  or advertisement that is approved or certified by  the  commission,  the
    24  content of the product or advertisement shall not constitute a violation
    25  of  the provisions, standards or requirements of the compact except upon
    26  a final order of the commission, issued at the request of a commissioner
    27  after prior notice to the insurer and an opportunity for hearing  before
    28  the commission.
    29    (2)  before  a  commissioner  may bring an action for violation of any
    30  provision, standard or  requirement  of  the  compact  relating  to  the
    31  content of an advertisement not approved or certified by the commission,
    32  the  commission  or  an  authorized commission officer or employee, must
    33  authorize the action. However, authorization pursuant to this  paragraph
    34  does  not  require  notice  to  the  insurer, opportunity for hearing or
    35  disclosure of requests for authorization or records of the  commission's
    36  action on such requests.
    37    §  8210.  Dispute  resolution.  The commission shall attempt, upon the
    38  request of a member, to resolve any disputes or other  issues  that  are
    39  subject to this compact and which may arise between two or more compact-
    40  ing  states, or between compacting states and non-compacting states, and
    41  the commission shall promulgate an  operating  procedure  providing  for
    42  resolution of such disputes.
    43    §  8211.  Product  filing  and  approval. (a) Insurers and third-party
    44  filers seeking to have a product approved by the commission  shall  file
    45  such  product  with,  and pay applicable filing fees to, the commission.
    46  Nothing in this article shall be  construed  to  restrict  or  otherwise
    47  prevent an insurer from filing its product with the insurance department
    48  in any state wherein such insurer is licensed to conduct the business of
    49  insurance,  and  such  filing shall be subject to the laws of the states
    50  where filed.
    51    (b) The commission shall establish appropriate filing and review proc-
    52  esses and procedures pursuant to commission rules and  operating  proce-
    53  dures.  Notwithstanding  any  provision in this section to the contrary,
    54  the commission shall promulgate rules to establish conditions and proce-
    55  dures under which the commission will provide public access  to  product
    56  filing  information.  In  establishing  such rules, the commission shall

        A. 1180                            12

     1  consider the interests of the public in having access to  such  informa-
     2  tion,  as  well as protection of personal medical and financial informa-
     3  tion and trade secrets, that may be contained in  a  product  filing  or
     4  supporting information.
     5    (c)  Any  product  approved by the commission may be sold or otherwise
     6  issued in those compacting  states  in  which  the  insurer  is  legally
     7  authorized to do business.
     8    §  8212.  Review  of  commission  decisions regarding filings. (a) Not
     9  later than thirty days after the commission has given notice of a disap-
    10  proved product or advertisement filed with the commission,  the  insurer
    11  or  third party filer whose filing was disapproved may appeal the deter-
    12  mination to a review panel appointed by the commission.  The  commission
    13  shall  promulgate  rules  to  establish  procedures  for appointing such
    14  review panel and provide for notice and hearing. An allegation that  the
    15  commission,  in  disapproving  a product or advertisement filed with the
    16  commission, acted arbitrarily, capriciously or in a manner  that  is  an
    17  abuse  of discretion or otherwise not in accordance with law, is subject
    18  to judicial review in accordance with subsection (e)  of  section  eight
    19  thousand two hundred four of this article.
    20    (b)  The commission shall have authority to monitor, review and recon-
    21  sider products and advertisement subsequent to their filing or  approval
    22  upon a finding that the product does not meet the relevant uniform stan-
    23  dard.  Where  appropriate,  the  commission  may  withdraw or modify its
    24  approval after proper notice and hearing, subject to the appeal  process
    25  set forth in subsection (a) of this section.
    26    §  8213.  Finance.  (a)  The  commission  shall pay or provide for the
    27  payment of the reasonable expenses of its  establishment  and  organiza-
    28  tion.  To  fund  the  cost of its initial operations, the commission may
    29  accept contributions and other forms of funding from the NAIC,  compact-
    30  ing  states  and other sources. Contributions and other forms of funding
    31  from other sources shall be of such a nature that  the  independence  of
    32  the  commission  concerning  the  performance of its duties shall not be
    33  compromised.
    34    (b) The commission shall collect a filing fee from  each  insurer  and
    35  third party filer filing a product with the commission to cover the cost
    36  of  the  operations  and activities of the commission and its staff in a
    37  total amount sufficient to cover the commission's annual budget.
    38    (c) The commission's budget for a fiscal year shall  not  be  approved
    39  until  it has been subject to notice and comment as set forth in section
    40  eight thousand two hundred eight of this article.
    41    (d) The commission shall be exempt from all taxation  in  and  by  the
    42  compacting states.
    43    (e)  The  commission  shall  not  pledge  the credit of any compacting
    44  state, except by and  with  the  appropriate  legal  authority  of  that
    45  compacting state.
    46    (f)  The  commission  shall keep complete and accurate accounts of all
    47  its internal receipts, including grants and donations and  disbursements
    48  of  all  funds under its control. The internal financial accounts of the
    49  commission shall be subject to  the  accounting  procedures  established
    50  under  its  by-laws.  The  financial  accounts and reports including the
    51  system of internal controls and procedures of the  commission  shall  be
    52  audited annually by an independent certified public accountant. Upon the
    53  determination of the commission, but no less frequently than every three
    54  years, the review of such independent auditor shall include a management
    55  and  performance  audit  of the commission. The commission shall make an
    56  annual report to the governor and legislature of the compacting  states,

        A. 1180                            13
 
     1  which shall include a report of such independent audit. The commission's
     2  internal  accounts  shall  not be confidential and such materials may be
     3  shared with the commissioner  of  any  compacting  state  upon  request,
     4  provided, however, that any work papers related to any internal or inde-
     5  pendent  audit  and any information regarding the privacy of individuals
     6  and insurers' proprietary information, including  trade  secrets,  shall
     7  remain confidential.
     8    (g)  No  compacting  state shall have any claim to or ownership of any
     9  property held by or vested in the commission or to any commission  funds
    10  held pursuant to the provisions of this compact.
    11    § 8214. Compacting states, effective date and amendment. (a) Any state
    12  is eligible to become a compacting state.
    13    (b)  The  compact  shall become effective and binding upon legislative
    14  enactment of the compact into law by  two  compacting  states;  provided
    15  however,  that  the  commission  shall  become effective for purposes of
    16  adopting uniform standards for reviewing, and giving approval or  disap-
    17  proval  of,  products  filed with the commission that satisfy applicable
    18  uniform standards only after twenty-six states are compacting states or,
    19  alternatively, by states representing greater than forty percent of  the
    20  premium  volume for life insurance, annuity, disability income and long-
    21  term care insurance products, based on records of the NAIC for the prior
    22  year. Thereafter, it shall become effective and binding as to any  other
    23  compacting state upon enactment of the compact into law by that state.
    24    (c)  Amendments  to  the compact may be proposed by the commission for
    25  enactment by the compacting states. No amendment shall become  effective
    26  and  binding  upon  the  commission and the compacting states unless and
    27  until all compacting states enact the amendment into law.
    28    § 8215. Withdrawal, default and termination.  (a)(1)  Once  effective,
    29  the  compact  shall  continue  in force and remain binding upon each and
    30  every compacting state; provided that a compacting  state  may  withdraw
    31  from  the  compact  ("withdrawing  state") by enacting a statute specif-
    32  ically repealing the statute which enacted the compact into law.
    33    (2) The effective date of withdrawal is  the  effective  date  of  the
    34  repealing statute.  However, the withdrawal shall not apply to any prod-
    35  uct  filings  approved  or  self-certified, or any advertisement of such
    36  products, on the date the repealing statute becomes effective, except by
    37  mutual agreement of the commission and the withdrawing state unless  the
    38  approval  is rescinded by the withdrawing state as provided in paragraph
    39  five of this subsection.
    40    (3) The commissioner of the withdrawing state shall immediately notify
    41  the management committee in writing upon the introduction of legislation
    42  repealing this compact in the withdrawing state.
    43    (4) The commission shall notify the other  compacting  states  of  the
    44  introduction  of  such  legislation within ten days after its receipt of
    45  notice thereof.
    46    (5) The withdrawing state is responsible for all  obligations,  duties
    47  and  liabilities  incurred  through  the  effective  date of withdrawal,
    48  including any obligations, the performance of which  extend  beyond  the
    49  effective date of withdrawal, except to the extent those obligations may
    50  have been released or relinquished by mutual agreement of the commission
    51  and  the  withdrawing  state.  The commission's approval of products and
    52  advertisement prior to the effective date of withdrawal  shall  continue
    53  to  be  effective  and be given full force and effect in the withdrawing
    54  state, unless formally rescinded by the withdrawing state  in  the  same
    55  manner as provided by the laws of the withdrawing state for the prospec-

        A. 1180                            14
 
     1  tive  disapproval of products or advertisement previously approved under
     2  state law.
     3    (6)  Reinstatement  following withdrawal of any compacting state shall
     4  occur upon the effective date of  the  withdrawing  state's  legislation
     5  reenacting the compact.
     6    (b)  (1) If the commission determines that any compacting state has at
     7  any time defaulted ("defaulting state") in the performance of any of its
     8  obligations or responsibilities under this compact, the by-laws or  duly
     9  promulgated  rules or operating procedures, then, after notice and hear-
    10  ing as set forth in the by-laws, all  rights,  privileges  and  benefits
    11  conferred by the compact on the defaulting state shall be suspended from
    12  the  effective  date  of default as fixed by the commission. The grounds
    13  for default include, but are not limited to,  failure  of  a  compacting
    14  state  to  perform  its  obligations  or responsibilities, and any other
    15  grounds designated in commission rules. The commission shall immediately
    16  notify the defaulting state in writing of the defaulting state's suspen-
    17  sion pending a cure of the default. The commission shall  stipulate  the
    18  conditions  and  the  time period within which the defaulting state must
    19  cure its default. If the defaulting state  fails  to  cure  the  default
    20  within the time period specified by the commission, the defaulting state
    21  shall  be  terminated  from  the  compact and all rights, privileges and
    22  benefits conferred by the compact shall be terminated from the effective
    23  date of termination.
    24    (2) Product approvals by the  commission  or  product  self-certifica-
    25  tions, or any advertisement in connection with such product, that are in
    26  force  on the effective date of termination shall remain in force in the
    27  defaulting state in the same manner as if the defaulting state had with-
    28  drawn voluntarily under this section.
    29    (3)  Reinstatement  following  termination  of  any  compacting  state
    30  requires a reenactment of the compact by that state.
    31    (c)(1) The compact dissolves effective upon the date of the withdrawal
    32  or  default  of  the  compacting  state  which reduces membership in the
    33  compact to one compacting state.
    34    (2) Upon the dissolution of the compact, the compact becomes null  and
    35  void  and  shall  be of no further force or effect, and the business and
    36  affairs of the commission shall be wound up and any surplus funds  shall
    37  be distributed in accordance with the by-laws.
    38    §  8216.  Severability  and  construction.  (a)  The provisions of the
    39  compact shall be severable; and  if  any  phrase,  clause,  sentence  or
    40  provision  is  deemed  unenforceable,  the  remaining  provisions of the
    41  compact shall be enforceable.
    42    (b) The provisions of the compact  shall  be  liberally  construed  to
    43  effectuate its purposes.
    44    §  8217. Binding effect of compact and other laws. (a) Nothing in this
    45  section prevents the enforcement of any other law of a compacting state,
    46  except as provided in subsection (b) of this section.
    47    (b) For any product approved  or  certified  to  the  commission,  the
    48  rules,  uniform  standards  and any other requirements of the commission
    49  shall constitute the exclusive provisions  applicable  to  the  content,
    50  approval  and  certification of such products. For advertisement that is
    51  subject to the commission's authority, any  rule,  uniform  standard  or
    52  other  requirement  of  the  commission which governs the content of the
    53  advertisement shall constitute the exclusive provision  that  a  commis-
    54  sioner  may  apply  to the content of the advertisement. Notwithstanding
    55  the foregoing, no action taken  by  the  commission  shall  abrogate  or
    56  restrict:

        A. 1180                            15
 
     1    (1) the access of any person to state courts;
     2    (2)  remedies available under state law related to breach of contract,
     3  tort or other laws not specifically directed to the content of the prod-
     4  uct;
     5    (3) state law relating to the construction of insurance contracts; or
     6    (4) the authority of the attorney general of the state including,  but
     7  not  limited to, maintaining any actions or proceedings as authorized by
     8  law.
     9    (c) All insurance products  filed  with  individual  states  shall  be
    10  subject to the laws of those states.
    11    (d)  All  lawful  actions  of  the commission, including all rules and
    12  operating procedures promulgated by the commission, are binding upon the
    13  compacting states.
    14    (e) All agreements between the commission and  the  compacting  states
    15  are binding in accordance with their terms.
    16    (f)  Upon  the  request  of  a party to a conflict over the meaning or
    17  interpretation of commission actions, and upon a majority  vote  of  the
    18  compacting  states, the commission may issue advisory opinions regarding
    19  the disputed meaning or interpretation.
    20    (g) In the event any provision of this article exceeds  the  constitu-
    21  tional  limits  imposed  on the legislature of any compacting state, the
    22  obligations, duties, powers or jurisdiction sought to  be  conferred  by
    23  that  provision  upon  the  commission  shall  be ineffective as to such
    24  compacting state, and such obligations, duties, powers  or  jurisdiction
    25  shall remain in the compacting state and shall be exercised by the agen-
    26  cy thereof to which such obligations, duties, powers or jurisdiction are
    27  delegated by law in effect at the time the compact becomes effective.
    28    §  8218. Exempt products. In accordance with the provisions of section
    29  eighty-two hundred four of the interstate insurance  product  regulation
    30  compact,  the state of New York opts out of all existing and prospective
    31  uniform standards involving long-term care insurance  products  and  all
    32  existing  uniform standards, including any amendments thereto, involving
    33  annuity products or disability income insurance  products  in  order  to
    34  preserve  the  state's  statutory requirements governing these insurance
    35  products. The department of financial services is authorized  and  shall
    36  by  authority herein promulgate regulations to opt out of future uniform
    37  standards involving annuity  products  or  disability  income  insurance
    38  products.
    39    § 3. This act shall take effect on the one hundred eightieth day after
    40  it shall have become a law.
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