CHAPTER 5001. INTERSTATE INSURANCE PRODUCT REGULATION COMPACT

State Codes and Statutes

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INSURANCE CODE

TITLE 15. INTERSTATE INSURANCE COMPACTS

Sec. 5001.001. ADOPTION OF COMPACT; REPRESENTATIVE TO

COMMISSION. Pursuant to the terms and conditions of this

chapter, the state joins with other states that have adopted the

Interstate Insurance Product Regulation Compact to establish and

become a member of the Interstate Insurance Product Regulation

Commission. The commissioner is the state's representative to

that commission.

Added by Acts 2005, 79th Leg., Ch.

1132, Sec. 1, eff. September 1, 2005.

Sec. 5001.002. TERMS OF COMPACT.

ARTICLE I. PURPOSES

The purposes of this Compact are, through means of joint and

cooperative action among the Compacting States:

1. To promote and protect the interest of consumers of

individual and group annuity, life insurance, disability income

and long-term care insurance products;

2. To develop uniform standards for insurance products covered

under the Compact;

3. To establish a central clearinghouse to receive and provide

prompt review of insurance products covered under the Compact and

in certain cases, advertisements related thereto, submitted by

insurers authorized to do business in one or more Compacting

States;

4. To give appropriate regulatory approval to those product

filings and advertisements satisfying the applicable uniform

standard;

5. To improve coordination of regulatory resources and expertise

between state insurance departments regarding the setting of

uniform standards and review of insurance products covered under

the Compact;

6. To create the Interstate Insurance Product Regulation

Commission; and

7. To perform these and such other related functions as may be

consistent with the state regulation of the business of

insurance.

ARTICLE II. DEFINITIONS

For purposes of this Compact:

1. "Advertisement" means any material designed to create public

interest in a Product, or induce the public to purchase,

increase, modify, reinstate, borrow on, surrender, replace or

retain a policy, as more specifically defined in the Rules and

Operating Procedures of the Commission.

2. "Bylaws" mean those bylaws established by the Commission for

its governance, or for directing or controlling the Commission's

actions or conduct.

3. "Compacting State" means any State which has enacted this

Compact legislation and which has not withdrawn pursuant to

Article XIV, Section 1, or been terminated pursuant to Article

XIV, Section 2.

4. "Commission" means the "Interstate Insurance Product

Regulation Commission" established by this Compact.

5. "Commissioner" means the chief insurance regulatory official

of a State including, but not limited to commissioner,

superintendent, director or administrator.

6. "Domiciliary State" means the state in which an Insurer is

incorporated or organized; or, in the case of an alien Insurer,

its state of entry.

7. "Insurer" means any entity licensed by a State to issue

contracts of insurance for any of the lines of insurance covered

by this Act.

8. "Member" means the person chosen by a Compacting State as its

representative to the Commission, or his or her designee.

9. "Non-compacting State" means any State which is not at the

time a Compacting State.

10. "Operating Procedures" mean procedures promulgated by the

Commission implementing a Rule, Uniform Standard or a provision

of this Compact.

11. "Product" means the form of a policy or contract, including

any application, endorsement, or related form which is attached

to and made a part of the policy or contract, and any evidence of

coverage or certificate, for an individual or group annuity, life

insurance, disability income or long-term care insurance product

that an Insurer is authorized to issue.

12. "Rule" means a statement of general or particular

applicability and future effect promulgated by the Commission,

including a Uniform Standard developed pursuant to Article VII of

this Compact, designed to implement, interpret, or prescribe law

or policy or describing the organization, procedure, or practice

requirements of the Commission, which shall have the force and

effect of law in the Compacting States.

13. "State" means any state, district or territory of the United

States of America.

14. "Third-Party Filer" means an entity that submits a Product

filing to the Commission on behalf of an Insurer.

15. "Uniform Standard" means a standard adopted by the

Commission for a Product line, pursuant to Article VII of this

Compact, and shall include all of the Product requirements in

aggregate; provided, that each Uniform Standard shall be

construed, whether express or implied, to prohibit the use of any

inconsistent, misleading or ambiguous provisions in a Product and

the form of the Product made available to the public shall not be

unfair, inequitable or against public policy as determined by the

Commission.

ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE

1. The Compacting States hereby create and establish a joint

public agency known as the "Interstate Insurance Product

Regulation Commission." Pursuant to Article IV, the Commission

will have the power to develop Uniform Standards for Product

lines, receive and provide prompt review of Products filed

therewith, and give approval to those Product filings satisfying

applicable Uniform Standards; provided, it is not intended for

the Commission to be the exclusive entity for receipt and review

of insurance product filings. Nothing herein shall prohibit any

Insurer from filing its product in any State wherein the Insurer

is licensed to conduct the business of insurance; and any such

filing shall be subject to the laws of the State where filed.

2. The Commission is a body corporate and politic, and an

instrumentality of the Compacting States.

3. The Commission is solely responsible for its liabilities

except as otherwise specifically provided in this Compact.

4. Venue is proper and judicial proceedings by or against the

Commission shall be brought solely and exclusively in a Court of

competent jurisdiction where the principal office of the

Commission is located.

ARTICLE IV. POWERS OF THE COMMISSION

The Commission shall have the following powers:

1. To promulgate Rules, pursuant to Article VII of this Compact,

which shall have the force and effect of law and shall be binding

in the Compacting States to the extent and in the manner provided

in this Compact;

2. To exercise its rule-making authority and establish

reasonable Uniform Standards for Products covered under the

Compact, and Advertisement related thereto, which shall have the

force and effect of law and shall be binding in the Compacting

States, but only for those Products filed with the Commission,

provided, that a Compacting State shall have the right to opt out

of such Uniform Standard pursuant to Article VII, to the extent

and in the manner provided in this Compact, and, provided

further, that any Uniform Standard established by the Commission

for long-term care insurance products may provide the same or

greater protections for consumers as, but shall not provide less

than, those protections set forth in the National Association of

Insurance Commissioners' Long-Term Care Insurance Model Act and

Long-Term Care Insurance Model Regulation, respectively, adopted

as of 2001. The Commission shall consider whether any subsequent

amendments to the NAIC Long-Term Care Insurance Model Act or

Long-Term Care Insurance Model Regulation adopted by the NAIC

require amending of the Uniform Standards established by the

Commission for long-term care insurance products;

3. To receive and review in an expeditious manner Products filed

with the Commission, and rate filings for disability income and

long-term care insurance Products, and give approval of those

Products and rate filings that satisfy the applicable Uniform

Standard, where such approval shall have the force and effect of

law and be binding on the Compacting States to the extent and in

the manner provided in the Compact;

4. To receive and review in an expeditious manner Advertisement

relating to long-term care insurance products for which Uniform

Standards have been adopted by the Commission, and give approval

to all Advertisement that satisfies the applicable Uniform

Standard. For any product covered under this Compact, other than

long-term care insurance products, the Commission shall have the

authority to require an insurer to submit all or any part of its

Advertisement with respect to that product for review or approval

prior to use, if the Commission determines that the nature of the

product is such that an Advertisement of the product could have

the capacity or tendency to mislead the public. The actions of

Commission as provided in this section shall have the force and

effect of law and shall be binding in the Compacting States to

the extent and in the manner provided in the Compact;

5. To exercise its rule-making authority and designate Products

and Advertisement that may be subject to a self-certification

process without the need for prior approval by the Commission;

6. To promulgate Operating Procedures, pursuant to Article VII

of this Compact, which shall be binding in the Compacting States

to the extent and in the manner provided in this Compact;

7. To bring and prosecute legal proceedings or actions in its

name as the Commission; provided, that the standing of any state

insurance department to sue or be sued under applicable law shall

not be affected;

8. To issue subpoenas requiring the attendance and testimony of

witnesses and the production of evidence;

9. To establish and maintain offices;

10. To purchase and maintain insurance and bonds;

11. To borrow, accept or contract for services of personnel,

including, but not limited to, employees of a Compacting State;

12. To hire employees, professionals or specialists, and elect

or appoint officers, and to fix their compensation, define their

duties and give them appropriate authority to carry out the

purposes of the Compact, and determine their qualifications; and

to establish the Commission's personnel policies and programs

relating to, among other things, conflicts of interest, rates of

compensation and qualifications of personnel;

13. To accept any and all appropriate donations and grants of

money, equipment, supplies, materials and services, and to

receive, utilize and dispose of the same; provided that at all

times the Commission shall strive to avoid any appearance of

impropriety;

14. To lease, purchase, accept appropriate gifts or donations

of, or otherwise to own, hold, improve or use, any property,

real, personal or mixed; provided that at all times the

Commission shall strive to avoid any appearance of impropriety;

15. To sell, convey, mortgage, pledge, lease, exchange, abandon

or otherwise dispose of any property, real, personal or mixed;

16. To remit filing fees to Compacting States as may be set

forth in the Bylaws, Rules or Operating Procedures;

17. To enforce compliance by Compacting States with Rules,

Uniform Standards, Operating Procedures and Bylaws;

18. To provide for dispute resolution among Compacting States;

19. To advise Compacting States on issues relating to Insurers

domiciled or doing business in Non-compacting jurisdictions,

consistent with the purposes of this Compact;

20. To provide advice and training to those personnel in state

insurance departments responsible for product review, and to be a

resource for state insurance departments;

21. To establish a budget and make expenditures;

22. To borrow money;

23. To appoint committees, including advisory committees

comprising Members, state insurance regulators, state legislators

or their representatives, insurance industry and consumer

representatives, and such other interested persons as may be

designated in the Bylaws;

24. To provide and receive information from, and to cooperate

with law enforcement agencies;

25. To adopt and use a corporate seal; and

26. To perform such other functions as may be necessary or

appropriate to achieve the purposes of this Compact consistent

with the state regulation of the business of insurance.

ARTICLE V. ORGANIZATION OF THE COMMISSION

1. Membership, Voting and Bylaws

a. Each Compacting State shall have and be limited to one

Member. Each Member shall be qualified to serve in that capacity

pursuant to applicable law of the Compacting State. Any Member

may be removed or suspended from office as provided by the law of

the State from which he or she shall be appointed. Any vacancy

occurring in the Commission shall be filled in accordance with

the laws of the Compacting State wherein the vacancy exists.

Nothing herein shall be construed to affect the manner in which a

Compacting State determines the election or appointment and

qualification of its own Commissioner.

b. Each Member shall be entitled to one vote and shall have an

opportunity to participate in the governance of the Commission in

accordance with the Bylaws. Notwithstanding any provision herein

to the contrary, no action of the Commission with respect to the

promulgation of a Uniform Standard shall be effective unless

two-thirds (2/3) of the Members vote in favor thereof.

c. The Commission shall, by a majority of the Members, prescribe

Bylaws to govern its conduct as may be necessary or appropriate

to carry out the purposes, and exercise the powers, of the

Compact, including, but not limited to:

i. Establishing the fiscal year of the Commission;

ii. Providing reasonable procedures for appointing and electing

members, as well as holding meetings, of the Management

Committee;

iii. Providing reasonable standards and procedures: (i) for the

establishment and meetings of other committees, and (ii)

governing any general or specific delegation of any authority or

function of the Commission;

iv. Providing reasonable procedures for calling and conducting

meetings of the Commission that consist of a majority of

Commission members, ensuring reasonable advance notice of each

such meeting and providing for the right of citizens to attend

each such meeting with enumerated exceptions designed to protect

the public's interest, the privacy of individuals, and insurers'

proprietary information, including trade secrets. The Commission

may meet in camera only after a majority of the entire membership

votes to close a meeting en toto or in part. As soon as

practicable, the Commission must make public (i) a copy of the

vote to close the meeting revealing the vote of each Member with

no proxy votes allowed, and (ii) votes taken during such meeting;

v. Establishing the titles, duties and authority and reasonable

procedures for the election of the officers of the Commission;

vi. Providing reasonable standards and procedures for the

establishment of the personnel policies and programs of the

Commission. Notwithstanding any civil service or other similar

laws of any Compacting State, the Bylaws shall exclusively govern

the personnel policies and programs of the Commission;

vii. Promulgating a code of ethics to address permissible and

prohibited activities of commission members and employees; and

viii. Providing a mechanism for winding up the operations of the

Commission and the equitable disposition of any surplus funds

that may exist after the termination of the Compact after the

payment and/or reserving of all of its debts and obligations.

d. The Commission shall publish its bylaws in a convenient form

and file a copy thereof and a copy of any amendment thereto, with

the appropriate agency or officer in each of the Compacting

States.

2. Management Committee, Officers and Personnel

a. A Management Committee comprising no more than fourteen (14)

members shall be established as follows:

i. One (1) member from each of the six (6) Compacting States

with the largest premium volume for individual and group

annuities, life, disability income and long-term care insurance

products, determined from the records of the NAIC for the prior

year;

ii. Four (4) members from those Compacting States with at least

two percent (2%) of the market based on the premium volume

described above, other than the six (6) Compacting States with

the largest premium volume, selected on a rotating basis as

provided in the Bylaws; and

iii. Four (4) members from those Compacting States with less

than two percent (2%) of the market, based on the premium volume

described above, with one (1) selected from each of the four (4)

zone regions of the NAIC as provided in the Bylaws.

b. The Management Committee shall have such authority and duties

as may be set forth in the Bylaws, including but not limited to:

i. Managing the affairs of the Commission in a manner consistent

with the Bylaws and purposes of the Commission;

ii. Establishing and overseeing an organizational structure

within, and appropriate procedures for, the Commission to provide

for the creation of Uniform Standards and other Rules, receipt

and review of product filings, administrative and technical

support functions, review of decisions regarding the disapproval

of a product filing, and the review of elections made by a

Compacting State to opt out of a Uniform Standard; provided that

a Uniform Standard shall not be submitted to the Compacting

States for adoption unless approved by two-thirds (2/3) of the

members of the Management Committee;

iii. Overseeing the offices of the Commission; and

iv. Planning, implementing, and coordinating communications and

activities with other state, federal and local government

organizations in order to advance the goals of the Commission.

c. The Commission shall elect annually officers from the

Management Committee, with each having such authority and duties,

as may be specified in the Bylaws.

d. The Management Committee may, subject to the approval of the

Commission, appoint or retain an executive director for such

period, upon such terms and conditions and for such compensation

as the Commission may deem appropriate. The executive director

shall serve as secretary to the Commission, but shall not be a

Member of the Commission. The executive director shall hire and

supervise such other staff as may be authorized by the

Commission.

3. Legislative and Advisory Committees

a. A legislative committee comprising state legislators or their

designees shall be established to monitor the operations of, and

make recommendations to, the Commission, including the Management

Committee; provided that the manner of selection and term of any

legislative committee member shall be as set forth in the Bylaws.

Prior to the adoption by the Commission of any Uniform Standard,

revision to the Bylaws, annual budget or other significant matter

as may be provided in the Bylaws, the Management Committee shall

consult with and report to the legislative committee.

b. The Commission shall establish two (2) advisory committees,

one of which shall comprise consumer representatives independent

of the insurance industry, and the other comprising insurance

industry representatives.

c. The Commission may establish additional advisory committees

as its Bylaws may provide for the carrying out of its functions.

4. Corporate Records of the Commission

The Commission shall maintain its corporate books and records in

accordance with the Bylaws.

5. Qualified Immunity, Defense and Indemnification

a. The Members, officers, executive director, employees and

representatives of the Commission shall be immune from suit and

liability, either personally or in their official capacity, for

any claim for damage to or loss of property or personal injury or

other civil liability caused by or arising out of any actual or

alleged act, error or omission that occurred, or that the person

against whom the claim is made had a reasonable basis for

believing occurred within the scope of Commission employment,

duties or responsibilities; provided, that nothing in this

paragraph shall be construed to protect any such person from suit

and/or liability for any damage, loss, injury or liability caused

by the intentional or willful and wanton misconduct of that

person.

b. The Commission shall defend any Member, officer, executive

director, employee or representative of the Commission in any

civil action seeking to impose liability arising out of any

actual or alleged act, error or omission that occurred within the

scope of Commission employment, duties or responsibilities, or

that the person against whom the claim is made had a reasonable

basis for believing occurred within the scope of Commission

employment, duties or responsibilities; provided, that nothing

herein shall be construed to prohibit that person from retaining

his or her own counsel; and provided further, that the actual or

alleged act, error or omission did not result from that person's

intentional or willful and wanton misconduct.

c. The Commission shall indemnify and hold harmless any Member,

officer, executive director, employee or representative of the

Commission for the amount of any settlement or judgment obtained

against that person arising out of any actual or alleged act,

error or omission that occurred within the scope of Commission

employment, duties or responsibilities, or that such person had a

reasonable basis for believing occurred within the scope of

Commission employment, duties or responsibilities, provided, that

the actual or alleged act, error or omission did not result from

the intentional or willful and wanton misconduct of that person.

ARTICLE VI. MEETINGS AND ACTS

OF THE COMMISSION

1. The Commission shall meet and take such actions as are

consistent with the provisions of this Compact and the Bylaws.

2. Each Member of the Commission shall have the right and power

to cast a vote to which that Compacting State is entitled and to

participate in the business and affairs of the Commission. A

Member shall vote in person or by such other means as provided in

the Bylaws. The Bylaws may provide for Members' participation in

meetings by telephone or other means of communication.

3. The Commission shall meet at least once during each calendar

year. Additional meetings shall be held as set forth in the

Bylaws.

ARTICLE VII. RULES AND OPERATING PROCEDURES:

RULEMAKING FUNCTIONS OF THE COMMISSION

AND OPTING OUT OF UNIFORM STANDARDS

1. Rulemaking Authority. The Commission shall promulgate

reasonable Rules, including Uniform Standards, and Operating

Procedures in order to effectively and efficiently achieve the

purposes of this Compact. Notwithstanding the foregoing, in the

event the Commission exercises its rulemaking authority in a

manner that is beyond the scope of the purposes of this Act, or

the powers granted hereunder, then such an action by the

Commission shall be invalid and have no force and effect.

2. Rulemaking Procedure. Rules and Operating Procedures shall

be made pursuant to a rulemaking process that conforms to the

Model State Administrative Procedure Act of 1981 as amended, as

may be appropriate to the operations of the Commission. Before

the Commission adopts a Uniform Standard, the Commission shall

give written notice to the relevant state legislative

committee(s) in each Compacting State responsible for insurance

issues of its intention to adopt the Uniform Standard. The

Commission in adopting a Uniform Standard shall consider fully

all submitted materials and issue a concise explanation of its

decision.

3. Effective Date and Opt Out of a Uniform Standard. A Uniform

Standard shall become effective ninety (90) days after its

promulgation by the Commission or such later date as the

Commission may determine; provided, however, that a Compacting

State may opt out of a Uniform Standard as provided in this

Article. "Opt out" shall be defined as any action by a

Compacting State to decline to adopt or participate in a

promulgated Uniform Standard. All other Rules and Operating

Procedures, and amendments thereto, shall become effective as of

the date specified in each Rule, Operating Procedure or

amendment.

4. Opt Out Procedure. A Compacting State may opt out of a

Uniform Standard, either by legislation or regulation duly

promulgated by the Insurance Department under the Compacting

State's Administrative Procedure Act. If a Compacting State

elects to opt out of a Uniform Standard by regulation, it must

(a) give written notice to the Commission no later than ten (10)

business days after the Uniform Standard is promulgated, or at

the time the State becomes a Compacting State and (b) find that

the Uniform Standard does not provide reasonable protections to

the citizens of the State, given the conditions in the State.

The Commissioner shall make specific findings of fact and

conclusions of law, based on a preponderance of the evidence,

detailing the conditions in the State which warrant a departure

from the Uniform Standard and determining that the Uniform

Standard would not reasonably protect the citizens of the State.

The Commissioner must consider and balance the following factors

and find that the conditions in the State and needs of the

citizens of the State outweigh: (i) the intent of the

legislature to participate in, and the benefits of, an interstate

agreement to establish national uniform consumer protections for

the Products subject to this Act; and (ii) the presumption that a

Uniform Standard adopted by the Commission provides reasonable

protections to consumers of the relevant Product.

Notwithstanding the foregoing, a Compacting State may, at the

time of its enactment of this Compact, prospectively opt out of

all Uniform Standards involving long-term care insurance products

by expressly providing for such opt out in the enacted Compact,

and such an opt out shall not be treated as a material variance

in the offer or acceptance of any State to participate in this

Compact. Such an opt out shall be effective at the time of

enactment of this Compact by the Compacting State and shall apply

to all existing Uniform Standards involving long-term care

insurance products and those subsequently promulgated.

5. Effect of Opt Out. If a Compacting State elects to opt out

of a Uniform Standard, the Uniform Standard shall remain

applicable in the Compacting State electing to opt out until such

time the opt out legislation is enacted into law or the

regulation opting out becomes effective.

Once the opt out of a Uniform Standard by a Compacting State

becomes effective as provided under the laws of that State, the

Uniform Standard shall have no further force and effect in that

State unless and until the legislation or regulation implementing

the opt out is repealed or otherwise becomes ineffective under

the laws of the State. If a Compacting State opts out of a

Uniform Standard after the Uniform Standard has been made

effective in that State, the opt out shall have the same

prospective effect as provided under Article XIV for withdrawals.

6. Stay of Uniform Standard. If a Compacting State has formally

initiated the process of opting out of a Uniform Standard by

regulation, and while the regulatory opt out is pending, the

Compacting State may petition the Commission, at least fifteen

(15) days before the effective date of the Uniform Standard, to

stay the effectiveness of the Uniform Standard in that State. The

Commission may grant a stay if it determines the regulatory opt

out is being pursued in a reasonable manner and there is a

likelihood of success. If a stay is granted or extended by the

Commission, the stay or extension thereof may postpone the

effective date by up to ninety (90) days, unless affirmatively

extended by the Commission; provided, a stay may not be permitted

to remain in effect for more than one (1) year unless the

Compacting State can show extraordinary circumstances which

warrant a continuance of the stay, including, but not limited to,

the existence of a legal challenge which prevents the Compacting

State from opting out. A stay may be terminated by the Commission

upon notice that the rulemaking process has been terminated.

7. Not later than thirty (30) days after a Rule or Operating

Procedure is promulgated, any person may file a petition for

judicial review of the Rule or Operating Procedure; provided,

that the filing of such a petition shall not stay or otherwise

prevent the Rule or Operating Procedure from becoming effective

unless the court finds that the petitioner has a substantial

likelihood of success. The court shall give deference to the

actions of the Commission consistent with applicable law and

shall not find the Rule or Operating Procedure to be unlawful if

the Rule or Operating Procedure represents a reasonable exercise

of the Commission's authority.

ARTICLE VIII. COMMISSION RECORDS AND ENFORCEMENT

1. The Commission shall promulgate Rules establishing conditions

and procedures for public inspection and copying of its

information and official records, except such information and

records involving the privacy of individuals and insurers' trade

secrets. The Commission may promulgate additional Rules under

which it may make available to federal and state agencies,

including law enforcement agencies, records and information

otherwise exempt from disclosure, and may enter into agreements

with such agencies to receive or exchange information or records

subject to nondisclosure and confidentiality provisions.

2. Except as to privileged records, data and information, the

laws of any Compacting State pertaining to confidentiality or

nondisclosure shall not relieve any Compacting State Commissioner

of the duty to disclose any relevant records, data or information

to the Commission; provided, that disclosure to the Commission

shall not be deemed to waive or otherwise affect any

confidentiality requirement; and further provided, that, except

as otherwise expressly provided in this Act, the Commission shall

not be subject to the Compacting State's laws pertaining to

confidentiality and nondisclosure with respect to records, data

and information in its possession. Confidential information of

the Commission shall remain confidential after such information

is provided to any Commissioner.

3. The Commission shall monitor Compacting States for compliance

with duly adopted Bylaws, Rules, including Uniform Standards, and

Operating Procedures. The Commission shall notify any

non-complying Compacting State in writing of its noncompliance

with Commission Bylaws, Rules or Operating Procedures. If a

non-complying Compacting State fails to remedy its noncompliance

within the time specified in the notice of noncompliance, the

Compacting State shall be deemed to be in default as set forth in

Article XIV.

4. The Commissioner of any State in which an Insurer is

authorized to do business, or is conducting the business of

insurance, shall continue to exercise his or her authority to

oversee the market regulation of the activities of the Insurer in

accordance with the provisions of the State's law. The

Commissioner's enforcement of compliance with the Compact is

governed by the following provisions:

a. With respect to the Commissioner's market regulation of a

Product or Advertisement that is approved or certified to the

Commission, the content of the Product or Advertisement shall not

constitute a violation of the provisions, standards or

requirements of the Compact except upon a final order of the

Commission, issued at the request of a Commissioner after prior

notice to the Insurer and an opportunity for hearing before the

Commission.

b. Before a Commissioner may bring an action for violation of

any provision, standard or requirement of the Compact relating to

the content of an Advertisement not approved or certified to the

Commission, the Commission, or an authorized Commission officer

or employee, must authorize the action. However, authorization

pursuant to this paragraph does not require notice to the

Insurer, opportunity for hearing or disclosure of requests for

authorization or records of the Commission's action on such

requests.

ARTICLE IX. DISPUTE RESOLUTION

The Commission shall attempt, upon the request of a Member, to

resolve any disputes or other issues that are subject to this

Compact and which may arise between two or more Compacting

States, or between Compacting States and Non-compacting States,

and the Commission shall promulgate an Operating Procedure

providing for resolution of such disputes.

ARTICLE X. PRODUCT FILING AND APPROVAL

1. Insurers and Third-Party Filers seeking to have a Product

approved by the Commission shall file the Product with, and pay

applicable filing fees to, the Commission. Nothing in this Act

shall be construed to restrict or otherwise prevent an insurer

from filing its Product with the insurance department in any

State wherein the insurer is licensed to conduct the business of

insurance, and such filing shall be subject to the laws of the

States where filed.

2. The Commission shall establish appropriate filing and review

processes and procedures pursuant to Commission Rules and

Operating Procedures. Notwithstanding any provision herein to

the contrary, the Commission shall promulgate Rules to establish

conditions and procedures under which the Commission will provide

public access to Product filing information. In establishing

such Rules, the Commission shall consider the interests of the

public in having access to such information, as well as

protection of personal medical and financial information and

trade secrets, that may be contained in a Product filing or

supporting information.

3. Any Product approved by the Commission may be sold or

otherwise issued in those Compacting States for which the Insurer

is legally authorized to do business.

ARTICLE XI. REVIEW OF COMMISSION DECISIONS

REGARDING FILINGS

1. Not later than thirty (30) days after the Commission has

given notice of a disapproved Product or Advertisement filed with

the Commission, the Insurer or Third Party Filer whose filing was

disapproved may appeal the determination to a review panel

appointed by the Commission. The Commission shall promulgate

Rules to establish procedures for appointing such review panels

and provide for notice and hearing. An allegation that the

Commission, in disapproving a Product or Advertisement filed with

the Commission, acted arbitrarily, capriciously, or in a manner

that is an abuse of discretion or otherwise not in accordance

with the law, is subject to judicial review in accordance with

Article III, Section 4.

2. The Commission shall have authority to monitor, review and

reconsider Products and Advertisement subsequent to their filing

or approval upon a finding that the product does not meet the

relevant Uniform Standard. Where appropriate, the Commission may

withdraw or modify its approval after proper notice and hearing,

subject to the appeal process in Section 1 above.

ARTICLE XII. FINANCE

1. The Commission shall pay or provide for the payment of the

reasonable expenses of its establishment and organization. To

fund the cost of its initial operations, the Commission may

accept contributions and other forms of funding from the National

Association of Insurance Commissioners, Compacting States and

other sources. Contributions and other forms of funding from

other sources shall be of such a nature that the independence of

the Commission concerning the performance of its duties shall not

be compromised.

2. The Commission shall collect a filing fee from each Insurer

and Third Party Filer filing a product with the Commission to

cover the cost of the operations and activities of the Commission

and its staff in a total amount sufficient to cover the

Commission's annual budget.

3. The Commission's budget for a fiscal year shall not be

approved until it has been subject to notice and comment as set

forth in Article VII of this Compact.

4. The Commission shall be exempt from all taxation in and by

the Compacting States.

5. The Commission shall not pledge the credit of any Compacting

State, except by and with the appropriate legal authority of that

Compacting State.

6. The Commission shall keep complete and accurate accounts of

all its internal receipts, including grants and donations, and

disbursements of all funds under its control. The internal

financial accounts of the Commission shall be subject to the

accounting procedures established under its Bylaws. The

financial accounts and reports including the system of internal

controls and procedures of the Commission shall be audited

annually by an independent certified public accountant. Upon the

determination of the Commission, but no less frequently than

every three (3) years, the review of the independent auditor

shall include a management and performance audit of the

Commission. The Commission shall make an Annual Report to the

Governor and legislature of the Compacting States, which shall

include a report of the independent audit. The Commission's

internal accounts shall not be confidential and such materials

may be shared with the Commissioner of any Compacting State upon

request provided, however, that any work papers related to any

internal or independent audit and any information regarding the

privacy of individuals and insurers' proprietary information,

including trade secrets, shall remain confidential.

7. No Compacting State shall have any claim to or ownership of

any property held by or vested in the Commission or to any

Commission funds held pursuant to the provisions of this Compact.

ARTICLE XIII. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT

1. Any State is eligible to become a Compacting State.

2. The Compact shall become effective and binding upon

legislative enactment of the Compact into law by two Compacting

States; provided, the Commission shall become effective for

purposes of adopting Uniform Standards for, reviewing, and giving

approval or disapproval of, Products filed with the Commission

that satisfy applicable Uniform Standards only after twenty-six

(26) States are Compacting States or, alternatively, by States

representing greater than forty percent (40%) of the premium

volume for life insurance, annuity, disability income and

long-term care insurance products, based on records of the NAIC

for the prior year. Thereafter, it shall become effective and

binding as to any other Compacting State upon enactment of the

Compact into law by that State.

3. Amendments to the Compact may be proposed by the Commission

for enactment by the Compacting States. No amendment shall become

effective and binding upon the Commission and the Compacting

States unless and until all Compacting States enact the amendment

into law.

ARTICLE XIV. WITHDRAWAL, DEFAULT AND TERMINATION

1. Withdrawal

a. Once effective, the Compact shall continue in force and

remain binding upon each and every Compacting State; provided,

that a Compacting State may withdraw from the Compact

("Withdrawing State") by enacting a statute specifically

repealing the statute which enacted the Compact into law.

b. The effective date of withdrawal is the effective date of the

repealing statute. However, the withdrawal shall not apply to any

product filings approved or self-certified, or any Advertisement

of such products, on the date the repealing statute becomes

effective, except by mutual agreement of the Commission and the

Withdrawing State unless the approval is rescinded by the

Withdrawing State as provided in Paragraph e of this section.

c. The Commissioner of the Withdrawing State shall immediately

notify the Management Committee in writing upon the introduction

of legislation repealing this Compact in the Withdrawing State.

d. The Commission shall notify the other Compacting States of

the introduction of such legislation within ten (10) days after

its receipt of notice thereof.

e. The Withdrawing State is responsible for all obligations,

duties and liabilities incurred through the effective date of

withdrawal, including any obligations, the performance of which

extend beyond the effective date of withdrawal, except to the

extent those obligations may have been released or relinquished

by mutual agreement of the Commission and the Withdrawing State.

The Commission's approval of Products and Advertisement prior to

the effective date of withdrawal shall continue to be effective

and be given full force and effect in the Withdrawing State,

unless formally rescinded by the Withdrawing State in the same

manner as provided by the laws of the Withdrawing State for the

prospective disapproval of products or advertisement previously

approved under state law.

f. Reinstatement following withdrawal of any Compacting State

shall occur upon the effective date of the Withdrawing State

reenacting the Compact.

2. Default

a. If the Commission determines that any Compacting State has at

any time defaulted ("Defaulting State") in the performance of any

of its obligations or responsibilities under this Compact, the

Bylaws or duly promulgated Rules or Operating Procedures, then,

after notice and hearing as set forth in the Bylaws, all rights,

privileges and benefits conferred by this Compact on the

Defaulting State shall be suspended from the effective date of

default as fixed by the Commission. The grounds for default

include, but are not limited to, failure of a Compacting State to

perform its obligations or responsibilities, and any other

grounds designated in Commission Rules. The Commission shall

immediately notify the Defaulting State in writing of the

Defaulting State's suspension pending a cure of the default. The

Commission shall stipulate the conditions and the time period

within which the Defaulting State must cure its default. If the

Defaulting State fails to cure the default within the time period

specified by the Commission, the Defaulting State shall be

terminated from the Compact and all rights, privileges and

benefits conferred by this Compact shall be terminated from the

effective date of termination.

b. Product approvals by the Commission or product

self-certifications, or any Advertisement in connection with such

product, that are in force on the effective date of termination

shall remain in force in the Defaulting State in the same manner

as if the Defaulting State had withdrawn voluntarily pursuant to

Section 1 of this article.

c. Reinstatement following termination of any Compacting State

requires a reenactment of the Compact.

3. Dissolution of Compact

a. The Compact dissolves effective upon the date of the

withdrawal or default of the Compacting State which reduces

membership in the Compact to one Compacting State.

b. Upon the dissolution of this Compact, the Compact becomes

null and void and shall be of no further force or effect, and the

business and affairs of the Commission shall be wound up and any

surplus funds shall be distributed in accordance with the Bylaws.

ARTICLE XV. SEVERABILITY AND CONSTRUCTION

1. The provisions of this Compact shall be severable; and if any

phrase, clause, sentence or provision is deemed unenforceable,

the remaining provisions of the Compact shall be enforceable.

2. The provisions of this Compact shall be liberally construed

to effectuate its purposes.

ARTICLE XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS

1. Other Laws

a. Nothing herein prevents the enforcement of any other law of a

Compacting State, except as provided in Paragraph b of this

section.

b. For any Product approved or certified to the Commission, the

Rules, Uniform Standards and any other requirements of the

Commission shall constitute the exclusive provisions applicable

to the content, approval and certification of such Products. For

Advertisement that is subject to the Commission's authority, any

Rule, Uniform Standard or other requirement of the Commission

which governs the content of the Advertisement shall constitute

the exclusive provision that a Commissioner may apply to the

content of the Advertisement. Notwithstanding the foregoing, no

action taken by the Commission shall abrogate or restrict: (i)

the access of any person to state courts; (ii) remedies available

under state law related to breach of contract, tort, or other

laws not specifically directed to the content of the Product;

(iii) state law relating to the construction of insurance

contracts; or (iv) the authority of the attorney general of the

state, including but not limited to maintaining any actions or

proceedings, as authorized by law.

c. All insurance products filed with individual States shall be

subject to the laws of those States.

2. Binding Effect of this Compact

a. All lawful actions of the Commission, including all Rules and

Operating Procedures promulgated by the Commission, are binding

upon the Compacting States.

b. All agreements between the Commission and the Compacting

States are binding in accordance with their terms.

c. Upon the request of a party to a conflict over the meaning or

interpretation of Commission actions, and upon a majority vote of

the Compacting States, the Commission may issue advisory opinions

regarding the meaning or interpretation in dispute.

d. In the event any provision of this Compact exceeds the

constitutional limits imposed on the legislature of any

Compacting State, the obligations, duties, powers or jurisdiction

sought to be conferred by that provision upon the Commission

shall be ineffective as to that Compacting State, and those

obligations, duties, powers or jurisdiction shall remain in the

Compacting State and shall be exercised by the agency thereof to

which those obligations, duties, powers or jurisdiction are

delegated by law in effect at the time this Compact becomes

effective.

Added by Acts 2005, 79th Leg., Ch.

1132, Sec. 1, eff. September 1, 2005.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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