As Reported by the Senate Insurance, Commerce and Labor Committee

126th General Assembly Regular Session 2005-2006

S. B. No. 268

Senators Stivers, Schuler, Mumper 

---

A BILL

To amend section 3901.48 and to enact section 3915.16

1

of the Revised Code to adopt the Interstate

2

Insurance Product Regulation Compact.

3

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That section 3901.48 be amended and section	4
3915.16 of the Revised Code be enacted to read as follows:	5

Sec. 3901.48.  (A) The original work papers of a certified	6
public accountant performing an audit of an insurance company or	7
health insuring corporation doing business in this state that is	8
required by rule or by any section of the Revised Code to file an	9
audited financial report with the superintendent of insurance	10
shall remain the property of the certified public accountant. Any	11
copies of these work papers voluntarily given to the	12
superintendent shall be the property of the superintendent. The	13
original work papers or any copies of them, whether in possession	14
of the certified public accountant or the department of insurance,	15
are confidential and privileged and are not a public record as	16
defined in section 149.43 of the Revised Code. The original work	17
papers and any copies of them are not subject to subpoena and	18
shall not be made public by the superintendent or any other	19
person.	20

(B) The work papers of the superintendent or of the person	21
appointed by the superintendent, resulting from the conduct of an	22
examination made pursuant to section 3901.07 of the Revised Code	23
or from the conduct of a financial analysis of any entity subject	24
to examination by the superintendent, including but not limited to	25
any insurance company, health insuring corporation, fraternal	26
benefit society, or multiple employer welfare arrangement, are	27
confidential and privileged and are not a public record as defined	28
in section 149.43 of the Revised Code. The original work papers	29
and any copies of them are not subject to subpoena and shall not	30
be made public by the superintendent or any other person.	31

(C) The work papers of the superintendent or of any person	32
appointed by the superintendent, resulting from the conduct of a	33
performance regulation examination made pursuant to authority	34
granted under section 3901.011 of the Revised Code or from the	35
conduct of a market analysis or investigation of any entity	36
subject to examination by the superintendent, including, but not	37
limited to, any insurance company, health insuring corporation,	38
fraternal benefit society, or multiple employer welfare	39
arrangement, are confidential and privileged and are not a public	40
record as defined in section 149.43 of the Revised Code. The	41
original work papers and any copies of them are not subject to	42
subpoena and shall not be made public by the superintendent or any	43
other person.	44

(D) Notwithstanding divisions (A), (B), and (C) of this	45
section, the superintendent may do either of the following:	46

(1) Share work papers that are the subject of this section	47
with the chief deputy rehabilitator, the chief deputy liquidator,	48
other deputy rehabilitators and liquidators, and any other person	49
employed by, or acting on behalf of, the superintendent pursuant	50
to Chapter 3901. or 3903. of the Revised Code, with other local,	51
state, federal, and international regulatory and law enforcement	52
agencies, with local, state, and federal prosecutors, and with the	53
national association of insurance commissioners and its affiliates	54
and subsidiaries, and with the interstate insurance product	55
regulation commission described in section 3915.16 of the Revised	56
Code, provided that the recipient agrees to maintain the	57
confidential or privileged status of the confidential or	58
privileged work paper and has authority to do so;	59

(2) Disclose work papers that are the subject of this section	60
in the furtherance of any regulatory or legal action brought by or	61
on behalf of the superintendent or the state, resulting from the	62
exercise of the superintendent's official duties.	63

(E) Notwithstanding divisions (A), (B), (C), and (D) of this	64
section, the superintendent may authorize the national association	65
of insurance commissioners and its affiliates and subsidiaries or	66
the interstate insurance product regulation commission described	67
in section 3915.16 of the Revised Code by agreement to share	68
confidential or privileged work papers received pursuant to	69
division (D)(1) of this section with local, state, federal, and	70
international regulatory and law enforcement agencies and with	71
local, state, and federal prosecutors, provided that the recipient	72
agrees to maintain the confidential or privileged status of the	73
confidential or privileged work paper and has authority to do so.	74

(F) Notwithstanding divisions (A), (B), (C), and (D) of this	75
section, the chief deputy rehabilitator, the chief deputy	76
liquidator, and other deputy rehabilitators and liquidators may	77
disclose work papers that are the subject of this section in the	78
furtherance of any regulatory or legal action brought by or on	79
behalf of the superintendent, the rehabilitator, the liquidator,	80
or the state resulting from the exercise of the superintendent's	81
official duties in any capacity.	82

(G) Nothing in this section shall prohibit the superintendent	83
from receiving work papers in accordance with section 3901.045 of	84
the Revised Code.	85

(H) The superintendent may enter into agreements governing	86
the sharing and use of work papers consistent with the	87
requirements of this section.	88

(I)(1) No waiver of any applicable privilege or claim of	89
confidentiality in the work papers, or copies thereof, that are	90
the subject of this section shall occur as a result of sharing or	91
receiving work papers as authorized in divisions (D)(1), (E), and	92
(G) of this section.	93

(2) The disclosure of work papers in connection with a	94
regulatory or legal action pursuant to divisions (D)(2) and (F) of	95
this section does not prohibit an insurer or any other person from	96
taking steps to limit the dissemination of the work papers to	97
persons not involved in or the subject of the regulatory or legal	98
action on the basis of any recognized privilege arising under any	99
other section of the Revised Code or the common law.	100

Sec. 3915.16.  The "Interstate Insurance Product Regulation	101
Compact" is intended to help states join together to establish an	102
interstate compact to regulate designated insurance products.	103
Pursuant to terms and conditions of this section, the state of	104
Ohio seeks to join with other states and establish the interstate	105
insurance product regulation commission, and thus become a member	106
of the interstate insurance product regulation commission.	107

The "Interstate Insurance Product Regulation Compact" is	108
hereby enacted into law and entered into with all other states	109
which have legally joined in the compact:	110

"Interstate Insurance Product Regulation Compact"

111

Article I. Purposes

112

The purposes of this Compact are, through means of joint and	113
cooperative action among the Compacting States:	114

1. To promote and protect the interest of consumers of	115
individual and group annuity, life insurance, disability income	116
and long-term care insurance products;	117

2. To develop uniform standards for insurance products	118
covered under the Compact;	119

3. To establish a central clearinghouse to receive and	120
provide prompt review of insurance products covered under the	121
Compact and, in certain cases, advertisements related thereto,	122
submitted by insurers authorized to do business in one or more	123
Compacting States;	124

4. To give appropriate regulatory approval to those product	125
filings and advertisements satisfying the applicable uniform	126
standard;	127

5. To improve coordination of regulatory resources and	128
expertise between state insurance departments regarding the	129
setting of uniform standards and review of insurance products	130
covered under the Compact;	131

6. To create the Interstate Insurance Product Regulation	132
Commission; and	133

7. To perform these and such other related functions as may	134
be consistent with the state regulation of the business of	135
insurance.	136

Article II. Definitions

137

For purposes of this Compact:

138

1. "Advertisement" means any material designed to create	139
public interest in a Product, or induce the public to purchase,	140
increase, modify, reinstate, borrow on, surrender, replace or	141
retain a policy, as more specifically defined in the Rules and	142
Operating Procedures of the Commission.	143

2. "Bylaws" means those bylaws established by the Commission	144
for its governance, or for directing or controlling the	145
Commission's actions or conduct.	146

3. "Compacting State" means any State which has enacted this	147
Compact legislation and which has not withdrawn pursuant to	148
Article XIV, Section 1, or been terminated pursuant to Article	149
XIV, Section 2.	150

4. "Commission" means the "Interstate Insurance Product	151
Regulation Commission" established by this Compact.	152

5. "Commissioner" means the chief insurance regulatory	153
official of a State including, but not limited to commissioner,	154
superintendent, director or administrator.	155

6. "Domiciliary State" means the state in which an Insurer is	156
incorporated or organized; or, in the case of an alien Insurer,	157
its state of entry.	158

7. "Insurer" means any entity licensed by a State to issue	159
contracts of insurance for any of the lines of insurance covered	160
by this Act.	161

8. "Member" means the person chosen by a Compacting State as	162
its representative to the Commission, or his or her designee. The	163
superintendent of insurance or the superintendent's designee shall	164
serve as the member to the Commission for the state of Ohio.	165

9. "Non-compacting State" means any State which is not at the	166
time a Compacting State.	167

10. "Operating Procedures" means procedures promulgated by	168
the Commission implementing a Rule, Uniform Standard or a	169
provision of this Compact.	170

11. "Product" means the form of a policy or contract,	171
including any application, endorsement, or related form which is	172
attached to and made a part of the policy or contract, and any	173
evidence of coverage or certificate, for an individual or group	174
annuity, life insurance, disability income or long-term care	175
insurance product that an Insurer is authorized to issue.	176

12. "Rule" means a statement of general or particular	177
applicability and future effect promulgated by the Commission,	178
including a Uniform Standard developed pursuant to Article VII of	179
this Compact, designed to implement, interpret, or prescribe law	180
or policy or describing the organization, procedure, or practice	181
requirements of the Commission, which shall have the force and	182
effect of law in the Compacting States.	183

13. "State" means any state, district or territory of the	184
United States of America.	185

14. "Third-Party Filer" means an entity that submits a	186
Product filing to the Commission on behalf of an Insurer.	187

15. "Uniform Standard" means a standard adopted by the	188
Commission for a Product line, pursuant to Article VII of the	189
Compact, and shall include all of the Product requirements in	190
aggregate; provided, that each Uniform Standard shall be	191
construed, whether express or implied, to prohibit the use of any	192
inconsistent, misleading or ambiguous provisions in a Product and	193
the form of the Product made available to the public shall not be	194
unfair, inequitable, or against public policy as determined by the	195
Commission.	196

Article III. Establishment of the Commission and Venue

197

1. The Compacting States hereby create and establish a joint	198
public agency known as the "Interstate Insurance Product	199
Regulation Commission." Pursuant to Article IV, the Commission	200
will have the power to develop Uniform Standards for Product	201
lines, receive and provide prompt review of Products filed	202
therewith, and give approval to those Product filings satisfying	203
applicable Uniform Standards; provided, it is not intended for the	204
Commission to be the exclusive entity for receipt and review of	205
insurance product filings. Nothing herein shall prohibit any	206
Insurer from filing its product in any State wherein the Insurer	207
is licensed to conduct the business of insurance; and any such	208
filing shall be subject to the laws of the State where filed.	209

2. The Commission is a body corporate and politic, and an	210
instrumentality of the Compacting States.	211

3. The Commission is solely responsible for its liabilities	212
except as otherwise specifically provided in this Compact.	213

4. Venue is proper and judicial proceedings by or against the	214
Commission shall be brought solely and exclusively in a Court of	215
competent jurisdiction where the principal office of the	216
Commission is located.	217

Article IV. Powers of the Commission

218

The Commission shall have the following powers:

219

1. To promulgate Rules, pursuant to Article VII of this	220
Compact, which shall have the force and effect of law and shall be	221
binding in the Compacting States to the extent and in the manner	222
provided in this Compact;	223

2. To exercise its rule-making authority and establish	224
reasonable Uniform Standards for Products covered under the	225
Compact, and Advertisement related thereto, which shall have the	226
force and effect of law and shall be binding in the Compacting	227
States, but only for those Products filed with the Commission,	228
provided, that a Compacting State shall have the right to opt out	229
of such Uniform Standard pursuant to Article VII, to the extent	230
and in the manner provided in this Compact, and, providedfurther,	231
that any Uniform Standard established by the Commission for	232
long-term care insurance products may provide the same or greater	233
protections for consumers as, but shall not provide less than,	234
those protections set forth in the National Association of	235
Insurance Commissioners' Long-term Care Insurance Model Act and	236
Long-Term Care Insurance Model Regulation, respectively, adopted	237
as of 2001. The Commission shall consider whether any subsequent	238
amendments to the NAIC Long-Term Care Insurance Model Act or	239
Long-Term Care Insurance Model Regulation adopted by the NAIC	240
require amending of the Uniform Standards established by the	241
Commission for long-term care insurance products;	242

3. To receive and review in an expeditious manner Products	243
filed with the Commission, and rate filings for disability income	244
and long-term care insurance Products, and give approval of those	245
Products and rate filings that satisfy the applicable Uniform	246
Standard, where such approval shall have the force and effect of	247
law and be binding on the Compacting States to the extent and in	248
the manner provided in the Compact;	249

4. To receive and review in an expeditious manner	250
Advertisement relating to long-term care insurance products for	251
which Uniform Standards have been adopted by the Commission and	252
give approval to all Advertisement that satisfies the applicable	253
Uniform Standard. For any product covered under this Compact,	254
other than long-term care insurance products, the Commission shall	255
have the authority to require an insurer to submit all or any part	256
of its Advertisement with respect to that product for review or	257
approval prior to use, if the Commission determines that the	258
nature of the product is such that an Advertisement of the product	259
could have the capacity or tendency to mislead the public. The	260
actions of the Commission as provided in this section shall have	261
the force and effect of law and shall be binding in the Compacting	262
States to the extent and in the manner provided in the Compact;	263

5. To exercise its rule-making authority and designate	264
Products and Advertisement that may be subject to a	265
self-certification process without the need for prior approval by	266
the Commission;	267

6. To promulgate Operating Procedures, pursuant to Article	268
VII of this Compact, which shall be binding in the Compacting	269
States to the extent and in the manner provided in this Compact;	270

7. To bring and prosecute legal proceedings or actions in its	271
name as the Commission; provided, that the standing of any state	272
insurance department to sue or be sued under applicable law shall	273
not be affected;	274

8. To issue subpoenas requiring the attendance and testimony	275
of witnesses and the production of evidence;	276

9. To establish and maintain offices;

277

10. To purchase and maintain insurance and bonds;

278

11. To borrow, accept or contract for services of personnel,	279
including, but not limited to, employees of a Compacting State;	280

12. To hire employees, professionals or specialists, and	281
elect or appoint officers, and to fix their compensation, define	282
their duties and give them appropriate authority to carry out the	283
purposes of the Compact, and determine their qualifications; and	284
to establish the Commission's personnel policies and programs	285
relating to, among other things, conflicts of interest, rates of	286
compensation and qualifications of personnel;	287

13. To accept any and all appropriate donations and grants of	288
money, equipment, supplies, materials and services, and to	289
receive, utilize and dispose of the same; provided that at all	290
times the Commission shall strive to avoid any appearance of	291
impropriety;	292

14. To lease, purchase, accept appropriate gifts or donations	293
of, or otherwise to own, hold, improve or use, any property, real,	294
personal or mixed; provided that at all times the Commission shall	295
strive to avoid any appearance of impropriety;	296

15. To sell, convey, mortgage, pledge, lease, exchange,	297
abandon or otherwise dispose of any property, real, personal or	298
mixed;	299

16. To remit filing fees to Compacting States as may be set	300
forth in the Bylaws, Rules or Operating Procedures;	301

17. To enforce compliance by Compacting States with Rules,	302
Uniform Standards, Operating Procedures and Bylaws;	303

18. To provide for dispute resolution among Compacting	304
States;	305

19. To advise Compacting States on issues relating to	306
Insurers domiciled or doing business in Non-compacting	307
jurisdictions, consistent with the purposes of this Compact;	308

20. To provide advice and training to those personnel in	309
state insurance departments responsible for product review, and to	310
be a resource for state insurance departments;	311

21. To establish a budget and make expenditures;

312

22. To borrow money;

313

23. To appoint committees, including advisory committees	314
comprising members, state insurance regulators, state legislators	315
or their representatives, insurance industry and consumer	316
representatives, and such other interested persons as may be	317
designated in the Bylaws;	318

24. To provide and receive information from, and to cooperate	319
with law enforcement agencies;	320

25. To adopt and use a corporate seal; and

321

26. To perform such other functions as may be necessary or	322
appropriate to achieve the purposes of this Compact consistent	323
with the state regulation of the business of insurance.	324

Article V. Organization of the Commission

325

1. Membership, Voting and Bylaws

326

a. Each Compacting State shall have and be limited to one	327
member. Each member shall be qualified to serve in that capacity	328
pursuant to applicable law of the Compacting State. Any member may	329
be removed or suspended from office as provided by the law of the	330
State from which he or she shall be appointed. Any vacancy	331
occurring in the Commission shall be filled in accordance with the	332
laws of the Compacting State wherein the vacancy exists. Nothing	333
herein shall be construed to affect the manner in which a	334
Compacting State determines the election or appointment and	335
qualification of its own Commissioner.	336

b. Each member shall be entitled to one vote and shall have	337
an opportunity to participate in the governance of the Commission	338
in accordance with the Bylaws. Notwithstanding any provision	339
herein to the contrary, no action of the Commission with respect	340
to the promulgation of a Uniform Standard shall be effective	341
unless two-thirds (2/3) of the members vote in favor thereof.	342

c. The Commission shall, by a majority of the members,	343
prescribe Bylaws to govern its conduct as may be necessary or	344
appropriate to carry out the purposes, and exercise the powers, of	345
the Compact, including, but not limited to:	346

i. Establishing the fiscal year of the Commission;

347

ii. Providing reasonable procedures for appointing and	348
electing members, as well as holding meetings, of the Management	349
Committee;	350

iii. Providing reasonable standards and procedures: (i) for	351
the establishment and meetings of other committees, and (ii)	352
governing any general or specific delegation of any authority or	353
function of the Commission;	354

iv. Providing reasonable procedures for calling and	355
conducting meetings of the Commission that consists of a majority	356
of Commission members, ensuring reasonable advance notice of each	357
such meeting and providing for the right of citizens to attend	358
each such meeting with enumerated exceptions designed to protect	359
the public's interest, the privacy of individuals, and insurers'	360
proprietary information, including trade secrets. The Commission	361
may meet in camera only after a majority of the entire membership	362
votes to close a meeting en toto or in part. As soon as	363
practicable, the Commission must make public (i) a copy of the	364
vote to close the meeting revealing the vote of each member with	365
no proxy votes allowed, and (ii) votes taken during such meeting;	366

v. Establishing the titles, duties and authority and	367
reasonable procedures for the election of the officers of the	368
Commission;	369

vi. Providing reasonable standards and procedures for the	370
establishment of the personnel policies and programs of the	371
Commission. Notwithstanding any civil service or other similar	372
laws of any Compacting State the Bylaws shall exclusively govern	373
the personnel policies and programs of the Commission;	374

vii. Promulgating a code of ethics to address permissible and	375
prohibited activities of commission members and employees; and	376

viii. Providing a mechanism for winding up the operations of	377
the Commission and the equitable disposition of any surplus funds	378
that may exist after the termination of the Compact after the	379
payment and/or reserving of all of its debts and obligations.	380

d. The Commission shall publish its bylaws in a convenient	381
form and file a copy thereof and a copy of any amendments thereto,	382
with the appropriate agency or officer in each of the Compacting	383
States.	384

2. Management Committee, Officers and Personnel

385

a. A Management Committee comprising no more than fourteen	386
(14) members shall be established as follows:	387

i. One (1) member from each of the six (6) Compacting States	388
with the largest premium volume for individual and group	389
annuities, life, disability income and long-term care insurance	390
products, determined from the records of the NAIC for the prior	391
year;	392

ii. Four (4) members from those Compacting States with at	393
least two percent (2%) of the market based on the premium volume	394
described above, other than the six (6) Compacting States with the	395
largest premium volume, selected on a rotating basis as provided	396
in the Bylaws; and	397

iii. Four (4) members from those Compacting States with less	398
than two percent (2%) of the market, based on the premium volume	399
described above, with one (1) selected from each of the four (4)	400
zone regions of the NAIC as provided in the Bylaws.	401

b. The Management Committee shall have such authority and	402
duties as may be set forth in the Bylaws, including but not	403
limited to:	404

i. Managing the affairs of the Commission in a manner	405
consistent with the Bylaws and purposes of the Commission;	406

ii. Establishing and overseeing an organizational structure	407
within, and appropriate procedures for, the Commission to provide	408
for the creation of Uniform Standards and other Rules, receipt and	409
review of product filings, administrative and technical support	410
functions, review of decisions regarding the disapproval of a	411
product filing, and the review of elections made by a Compacting	412
State to opt out of a Uniform Standard; provided that a Uniform	413
Standard shall not be submitted to the Compacting States for	414
adoption unless approved by two-thirds (2/3) of the members of the	415
Management Committee;	416

iii. Overseeing the offices of the Commission; and

417

iv. Planning, implementing, and coordinating communications	418
and activities with other state, federal and local government	419
organizations in order to advance the goals of the Commission.	420

c. The Commission shall elect annually officers from the	421
Management Committee, with each having such authority and duties,	422
as may be specified in the Bylaws.	423

d. The Management Committee may, subject to the approval of	424
the Commission, appoint or retain an executive director for such	425
period, upon such terms and conditions and for such compensation	426
as the Commission may deem appropriate. The executive director	427
shall serve as secretary to the Commission, but shall not be a	428
member of the Commission. The executive director shall hire and	429
supervise such other staff as may be authorized by the Commission.	430

3. Legislative and Advisory Committees

431

a. A legislative committee comprising state legislators or	432
their designees shall be established to monitor the operations of,	433
and make recommendations to, the Commission, including the	434
Management Committee; provided that the manner of selection and	435
term of any legislative committee member shall be as set forth in	436
the Bylaws. Prior to the adoption by the Commission of any Uniform	437
Standard revision to the Bylaws, annual budget or other	438
significant matter as may be provided in the Bylaws, the	439
Management Committee shall consult with and report to the	440
legislative committee.	441

b. The Commission shall establish two (2) advisory	442
committees, one of which shall comprise consumer representatives	443
independent of the insurance industry, and the other comprising	444
insurance industry representatives.	445

c. The Commission may establish additional advisory	446
committees as its Bylaws may provide for the carrying out of its	447
functions.	448

4. Corporate Records of the Commission

449

The Commission shall maintain its corporate books and records	450
in accordance with the Bylaws.	451

5. Qualified Immunity, Defense and Indemnification

452

a. The members, officers, executive director, employees and	453
representatives of the Commission shall be immune from suit and	454
liability, either personally or in their official capacity, for	455
any claim for damage to or loss of property or personal injury or	456
other civil liability caused by or arising out of any actual or	457
alleged act, error or omission that occurred, or that the person	458
against whom the claim is made had a reasonable basis for	459
believing occurred within the scope of Commission employment,	460
duties or responsibilities; provided, that nothing in this	461
paragraph shall be construed to protect any such person from suit	462
and/or liability for any damage, loss, injury or liability caused	463
by intentional or willful and wanton misconduct of that person.	464

b. The Commission shall defend any member, officer, executive	465
director, employee or representative of the Commission in any	466
civil action seeking to impose liability arising out of any actual	467
or alleged act, error or omission that occurred within the scope	468
of Commission employment, duties or responsibilities, or that the	469
person against whom the claim is made had a reasonable basis for	470
believing occurred within the scope of Commission employment,	471
duties or responsibilities; provided, that nothing herein shall be	472
construed to prohibit that person from retaining his or her own	473
counsel; and provided further, that the actual or alleged act,	474
error or omission did not result from that person's intentional or	475
willful and wanton misconduct.	476

c. The Commission shall indemnify and hold harmless any	477
member, officer, executive director, employee or representative of	478
the Commission for the amount of any settlement or judgment	479
obtained against that person arising out of any actual or alleged	480
act, error or omission that occurred within the scope of	481
Commission employment, duties or responsibilities, or that such	482
person had a reasonable basis for believing occurred with the	483
scope of Commission employment, duties or responsibilities,	484
provided, that the actual or alleged act, error or omission did	485
not result from the intentional or willful and wanton misconduct	486
of that person.	487

Article VI. Meetings and Acts of the Commission

488

1. The Commission shall meet and take such actions as are	489
consistent with the provisions of this Compact and Bylaws.	490

2. Each member of the Commission shall have the right and	491
power to cast a vote to which that Compacting State is entitled	492
and to participate in the business and affairs of the Commission.	493
A member shall vote in person or by such other means as provided	494
in the Bylaws. The Bylaws may provide for members' participation	495
in meetings by telephone or other means of communication.	496

3. The Commission shall meet at least once during each	497
calendar year. Additional meetings shall be held as set forth in	498
the Bylaws.	499

Article VII. Rules and Operating Procedures: Rulemaking Functions	500
of the Commission and Opting Out of Uniform Standards	501

1. Rulemaking Authority. The Commission shall promulgate	502
reasonable Rules, including Uniform Standards, and Operating	503
Procedures in order to effectively and efficiently achieve the	504
purposes of this Compact. Notwithstanding the foregoing, in the	505
event the Commission exercises its rulemaking authority in a	506
manner that is beyond the scope of the purposes of this Act, or	507
the powers granted hereunder, then such an action by the	508
Commission shall be invalid and have no force and effect.	509

2. Rulemaking Procedure. Rules and Operating Procedures shall	510
be made pursuant to a rulemaking process that conforms to the	511
Model State Administrative Procedure Act of 1981 as amended, as	512
may be appropriate to the operations of the Commission. Before the	513
Commission adopts a Uniform Standard, the Commission shall give	514
written notice to the relevant state legislative committee(s) in	515
each Compacting State responsible for insurance issues of its	516
intention to adopt the Uniform Standard. The Commission in	517
adopting a Uniform Standard shall consider fully all submitted	518
materials and issue a concise explanation of its decision.	519

3. Effective Date and Opt Out of a Uniform Standard. A	520
Uniform Standard shall become effective ninety (90) days after its	521
promulgation by the Commission or such later date as the	522
Commission may determine; provided, however, that a Compacting	523
State may opt out of a Uniform Standard as provided in this	524
Article. "Opt out" shall be defined as any action by a Compacting	525
State to decline to adopt or participate in a promulgated Uniform	526
Standard. All other Rules and Operating Procedures, and amendments	527
thereto, shall become effective as of the date specified in each	528
Rule, Operating Procedure or amendment.	529

4. Opt Out Procedure. A Compacting State may opt out of a	530
Uniform Standard, either by legislation or regulation duly	531
promulgated by the Insurance Department under the Compacting	532
State's Administrative Procedure Act. If a Compacting State elects	533
to opt out of a Uniform Standard by regulation, it must (a) give	534
written notice to the Commission no later than ten (10) business	535
days after the Uniform Standard is promulgated, or at the time the	536
State becomes a Compacting State and (b) find that the Uniform	537
Standard does not provide reasonable protections to the citizens	538
of the State, given the conditions in the State. The Commissioner	539
shall make specific findings of fact and conclusions of law, based	540
on a preponderance of the evidence, detailing the conditions in	541
the State which warrant a departure from the Uniform Standard and	542
determining that the Uniform Standard would not reasonably protect	543
the citizens of the State. The Commissioner must consider and	544
balance the following factors and find that the conditions in the	545
State and needs of the citizens of the State outweigh: (i) the	546
intent of the legislature to participate in, and the benefits of,	547
an interstate agreement to establish national uniform consumer	548
protections for the Products subject to this Act; and (ii) the	549
presumption that a Uniform Standard adopted by the Commission	550
provides reasonable protections to consumers of the relevant	551
Product.	552

Notwithstanding the foregoing, a Compacting State may, at the	553
time of its enactment of this Compact, prospectively opt out of	554
all Uniform Standards involving long-term care insurance products	555
by expressly providing for such opt out in the enacted Compact,	556
and such an opt out shall not be treated as a material variance in	557
the offer or acceptance of any State to participate in this	558
Compact. Such an opt out shall be effective at the time of	559
enactment of this Compact by the Compacting State and shall apply	560
to all existing Uniform Standards involving long-term care	561
insurance products and those subsequently promulgated.	562

5. Effect of Opt Out. If a Compacting State elects to opt out	563
of a Uniform Standard, the Uniform Standard shall remain	564
applicable in the Compacting State electing to opt out until such	565
time the opt out legislation is enacted into law or the regulation	566
opting out becomes effective.	567

Once the opt out of a Uniform Standard by a Compacting State	568
becomes effective as provided under the laws of that State, the	569
Uniform Standard shall have no further force and effect in that	570
State unless and until the legislation or regulation implementing	571
the opt out is repealed or otherwise becomes ineffective under the	572
laws of the State. If a Compacting State opts out of a Uniform	573
Standard after the Uniform Standard has been made effective in	574
that State, the opt out shall have the same prospective effect as	575
provided under Article XIV for withdrawals.	576

6. Stay of Uniform Standard. If a Compacting State has	577
formally initiated the process of opting out of a Uniform Standard	578
by regulation, and while the regulatory opt out is pending, the	579
Compacting State may petition the Commission, at least fifteen	580
(15) days before the effective date of the Uniform Standard, to	581
stay the effectiveness of the Uniform Standard in that State. The	582
Commission may grant a stay if it determines the regulatory opt	583
out is being pursued in a reasonable manner and there is a	584
likelihood of success. If a stay is granted or extended by the	585
Commission, the stay or extension thereof may postpone the	586
effective date by up to ninety (90) days, unless affirmatively	587
extended by the Commission; provided, a stay may not be permitted	588
to remain in effect for more than one (1) year unless the	589
Compacting State can show extraordinary circumstances which	590
warrant a continuance of the stay, including, but not limited to,	591
the existence of a legal challenge which prevents the Compacting	592
State from opting out. A stay may be terminated by the Commission	593
upon notice that the rulemaking process has been terminated.	594

7. Not later than thirty (30) days after a Rule or Operating	595
Procedure is promulgated, any person may file a petition for	596
judicial review of the Rule or Operating Procedure; provided, that	597
the filing of such a petition shall not stay or otherwise prevent	598
the Rule or Operating Procedure from becoming effective unless the	599
court finds that the petitioner has a substantial likelihood of	600
success. The court shall give deference to the actions of the	601
Commission consistent with applicable law and shall not find the	602
Rule or Operating Procedure to be unlawful if the Rule or	603
Operating Procedure represents a reasonable exercise of the	604
Commission's authority.	605

Article VIII. Commission Records and Enforcement

606

1. The Commission shall promulgate Rules establishing	607
conditions and procedures for public inspection and copying of its	608
information and official records, except such information and	609
records involving the privacy of individuals and insurers' trade	610
secrets. The Commission may promulgate additional Rules under	611
which it may make available to federal and state agencies,	612
including law enforcement agencies, records and information	613
otherwise exempt from disclosure, and may enter into agreements	614
with such agencies to receive or exchange information or records	615
subject to nondisclosure and confidentiality provisions.	616

2. Except as to privileged records, data and information, the	617
laws of any Compacting State pertaining to confidentiality or	618
nondisclosure shall not relieve any Compacting State Commissioner	619
of the duty to disclose any relevant records, data or information	620
to the Commission; provided, that disclosure to the Commission	621
shall not be deemed to waive or otherwise affect any	622
confidentiality requirement; and further provided, that, except as	623
otherwise expressly provided in this Act, the Commission shall not	624
be subject to the Compacting State's laws pertaining to	625
confidentiality and nondisclosure with respect to records, data	626
and information in its possession. Confidential information of the	627
Commission shall remain confidential after such information is	628
provided to any Commissioner.	629

3. The Commission shall monitor Compacting States for	630
compliance with duly adopted Bylaws, Rules, including Uniform	631
Standards, and Operating Procedures. The Commission shall notify	632
any non-complying Compacting State in writing of its	633
non-compliance with Commission Bylaws, Rules or Operating	634
Procedures. If a non-complying Compacting State fails to remedy	635
its noncompliance within the time specified in the notice of	636
noncompliance, the Compacting State shall be deemed to be in	637
default as set forth in Article XIV.	638

4. The Commissioner of any State in which an Insurer is	639
authorized to do business, or is conducting the business of	640
insurance, shall continue to exercise his or her authority to	641
oversee the market regulation of the activities of the Insurer in	642
accordance with the provisions of the State's law. The	643
Commissioner's enforcement of compliance with the Compact is	644
governed by the following provisions:	645

a. With respect to the Commissioner's market regulation of a	646
Product or Advertisement that is approved or certified to the	647
Commission, the content of the Product or Advertisement shall not	648
constitute a violation of the provisions, standards or	649
requirements of the Compact except upon a final order of the	650
Commission, issued at the request of a Commissioner after prior	651
notice to the Insurer and an opportunity for hearing before the	652
Commission.	653

b. Before a Commissioner may bring an action for violation of	654
any provision, standard or requirement of the Compact relating to	655
the content of an Advertisement not approved or certified to the	656
Commission, the Commission, or an authorized Commission officer or	657
employee, must authorize the action. However, authorization	658
pursuant to this paragraph does not require notice to the Insurer,	659
opportunity for hearing or disclosure of requests for	660
authorization or records of the Commission's action on such	661
requests.	662

Article IX. Dispute Resolution

663

The Commission shall attempt, upon the request of a member, to	664
resolve any disputes or other issues that are subject to this	665
Compact and which may arise between two or more Compacting States,	666
or between Compacting States and Non-compacting States, and the	667
Commission shall promulgate an Operating Procedure providing for	668
resolution of such disputes.	669

Article X. Product Filing and Approval

670

1. Insurers and Third-Party Filers seeking to have a Product	671
approved by the Commission shall file the Product with, and pay	672
applicable filing fees to, the Commission. Nothing in this Act	673
shall be construed to restrict or otherwise prevent an insurer	674
from filing its Product with the insurance department in any State	675
wherein the insurer is licensed to conduct the business of	676
insurance, and such filing shall be subject to the laws of the	677
States where filed.	678

2. The Commission shall establish appropriate filing and	679
review processes and procedures pursuant to Commission Rules and	680
Operating Procedures. Notwithstanding any provision herein to the	681
contrary, the Commission shall promulgate Rules to establish	682
conditions and procedures under which the Commission will provide	683
public access to Product filing information. In establishing such	684
Rules, the Commission shall consider the interests of the public	685
in having access to such information, as well as protection of	686
personal medical and financial information and trade secrets, that	687
may be contained in a Product filing or supporting information.	688

3. Any Product approved by the Commission may be sold or	689
otherwise issued in those Compacting States for which the Insurer	690
is legally authorized to do business.	691

Article XI. Review of Commission Decisions Regarding Filings

692

1. Not later than thirty (30) days after the Commission has	693
given notice of a disapproved Product or Advertisement filed with	694
the Commission, the Insurer or Third Party Filer whose filing was	695
disapproved may appeal the determination to a review panel	696
appointed by the Commission. The Commission shall promulgate Rules	697
to establish procedures for appointing such review panels and	698
provide for notice and hearing. An allegation that the Commission,	699
in disapproving a Product or Advertisement filed with the	700
Commission, acted arbitrarily, capriciously, or in a manner that	701
is an abuse of discretion or otherwise not in accordance with the	702
law, is subject to judicial review in accordance with Article III,	703
Section 4.	704

2. The Commission shall have authority to monitor, review and	705
reconsider Products and Advertisement subsequent to their filing	706
or approval upon a finding that the product does not meet the	707
relevant Uniform Standard. Where appropriate, the Commission may	708
withdraw or modify its approval after proper notice and hearing,	709
subject to the appeal process in Section 1 above.	710

Article XII. Finance

711

1. The Commission shall pay or provide for the payment of the	712
reasonable expenses of its establishment and organization. To fund	713
the cost of its initial operations, the Commission may accept	714
contributions and other forms of funding from the National	715
Association of Insurance Commissioners, Compacting States and	716
other sources. Contributions and other forms of funding from other	717
sources shall be of such a nature that the independence of the	718
Commission concerning the performance of its duties shall not be	719
compromised.	720

2. The Commission shall collect a filing fee from each	721
Insurer and Third Party Filer filing a product with the Commission	722
to cover the cost of the operations and activities of the	723
Commission and its staff in a total amount sufficient to cover the	724
Commission's annual budget.	725

3. The Commission's budget for a fiscal year shall not be	726
approved until it has been subject to notice and comment as set	727
forth in Article VII of this Compact.	728

4. The Commission shall be exempt from all taxation in and by	729
the Compacting States.	730

5. The Commission shall not pledge the credit of any	731
Compacting State, except by and with the appropriate legal	732
authority of that Compacting State.	733

6. The Commission shall keep complete and accurate accounts	734
of all its internal receipts, including grants and donations, and	735
disbursements of all funds under its control. The internal	736
financial accounts of the Commission shall be subject to the	737
accounting procedures established under its Bylaws. The financial	738
accounts and reports including the system of internal controls and	739
procedures of the Commission shall be audited annually by an	740
independent certified public accountant. Upon the determination of	741
the Commission, but no less frequently than every three (3) years,	742
the review of the independent auditor shall include a management	743
and performance audit of the Commission. The Commission shall make	744
an Annual Report to the Governor and the legislature of the	745
Compacting States, which shall include a report of the independent	746
audit. The Commission's internal accounts shall not be	747
confidential and such materials may be shared with the	748
Commissioner of any Compacting State upon request provided,	749
however, that any work papers related to any internal or	750
independent audit and any information regarding the privacy of	751
individuals and insurers' proprietary information, including trade	752
secrets, shall remain confidential.	753

7. No Compacting State shall have any claim to or ownership	754
of any property held by or vested in the Commission or to any	755
Commission funds held pursuant to the provisions of this Compact.	756

Article XIII. Compacting States, Effective Date and Amendment

757

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

758

2. The Compact shall become effective and binding upon	759
legislative enactment of the Compact into law by two Compacting	760
States; provided, the Commission shall become effective for	761
purposes of adopting Uniform Standards for, reviewing, and giving	762
approval or disapproval of, Products filed with the Commission	763
that satisfy applicable Uniform Standards only after twenty-six	764
(26) States are Compacting States or, alternatively, by States	765
representing greater than forty percent (40%) of the premium	766
volume for life insurance, annuity, disability income and	767
long-term care insurance products, based on records of the NAIC	768
for the prior year. Therefore, it shall become effective and	769
binding as to any other Compacting State upon enactment of the	770
Compact into law by that State.	771

3. Amendments to the Compact may be proposed by the	772
Commission for enactment by the Compacting States. No amendment	773
shall become effective and binding upon the Commission and the	774
Compacting States unless and until all Compacting States enact the	775
amendment into law.	776

Article XIV. Withdrawal, Default and Termination

777

1. Withdrawal

778

a. Once effective, the Compact shall continue in force and	779
remain binding upon each and every Compacting State; provided,	780
that a Compacting State may withdraw from the Compact	781
("Withdrawing State") by enacting a statute specifically repealing	782
the statute which enacted the Compact into law.	783

b. The effective date of withdrawal is the effective date of	784
the repealing statute. However, the withdrawal shall not apply to	785
any product filings approved or self-certified, or any	786
Advertisement of such products, on the date the repealing statute	787
becomes effective, except by mutual agreement of the Commission	788
and the Withdrawing State unless the approval is rescinded by the	789
Withdrawing State as provided in Paragraph e of this section.	790

c. The Commissioner of the Withdrawing State shall	791
immediately notify the Management Committee in writing upon the	792
introduction of legislation repealing this Compact in the	793
Withdrawing State.	794

d. The Commission shall notify the other Compacting States of	795
the introduction of such legislation within ten (10) days after	796
its receipt of notice thereof.	797

e. The Withdrawing State is responsible for all obligations,	798
duties and liabilities incurred through the effective date of	799
withdrawal, including any obligations, the performance of which	800
extend beyond the effective date of withdrawal, except to the	801
extent those obligations may have been released or relinquished by	802
mutual agreement of the Commission and the Withdrawing State. The	803
Commission's approval of Products and Advertisement prior to the	804
effective date of withdrawal shall continue to be effective and be	805
given full force and effect in the Withdrawing State, unless	806
formally rescinded by the Withdrawing State in the same manner as	807
provided by the laws of the Withdrawing State for the prospective	808
disapproval of products or advertisement previously approved under	809
state law.	810

f. Reinstatement following withdrawal of any Compacting State	811
shall occur upon the effective date of the Withdrawing State	812
reenacting the Compact.	813

2. Default

814

a. If the Commission determines that any Compacting State has	815
at any time defaulted ("Defaulting State") in the performance of	816
any of its obligations or responsibilities under this Compact, the	817
Bylaws or duly promulgated Rules or Operating Procedures, then,	818
after notice and hearing as set forth in the Bylaws, all rights,	819
privileges and benefits conferred by this Compact on the	820
Defaulting State shall be suspended from the effective date of	821
default as fixed by the Commission. The grounds for default	822
include, but are not limited to, failure of a Compacting State to	823
perform its obligations or responsibilities, and any other grounds	824
designated in Commission Rules. The Commission shall immediately	825
notify the Defaulting State in writing of the Defaulting State's	826
suspension pending a cure of the default. The Commission shall	827
stipulate the conditions and the time period within which the	828
Defaulting State must cure its default. If the Defaulting State	829
fails to cure the default within the time period specified by the	830
Commission, the Defaulting State shall be terminated from the	831
Compact and all rights, privileges and benefits conferred by this	832
Compact shall be terminated from the effective date of	833
termination.	834

b. Product approvals by the Commission or product	835
self-certifications, or any Advertisement in connection with such	836
product, that are in force on the effective date of termination	837
shall remain in force in the Defaulting State in the same manner	838
as if the Defaulting State had withdrawn voluntarily pursuant to	839
Section 1 of this article.	840

c. Reinstatement following termination of any Compacting	841
State requires a reenactment of the Compact.	842

3. Dissolution of Compact

843

a. The Compact dissolves effective upon the date of the	844
withdrawal or default of the Compacting State which reduces	845
membership in the Compact to one Compacting State.	846

b. Upon the dissolution of this Compact, the Compact becomes	847
null and void and shall be of no further force or effect, and the	848
business and affairs of the Commission shall be wound up and any	849
surplus funds shall be distributed in accordance with the Bylaws.	850

Article XV. Severability and Construction

851

1. The provisions of this Compact shall be severable; and if	852
any phrase, clause, sentence or provision is deemed unenforceable,	853
the remaining provisions of the Compact shall be enforceable.	854

2. The provisions of this Compact shall be liberally	855
construed to effectuate its purposes.	856

Article XVI. Binding Effect of Compact and Other Laws

857

1. Other Laws

858

a. Nothing herein prevents the enforcement of any other law	859
of a Compacting State, except as provided in Paragraph b of this	860
section.	861

b. For any Product approved or certified to the Commission,	862
the Rules, Uniform Standards and any other requirements of the	863
Commission shall constitute the exclusive provisions applicable to	864
the content, approval and certification of such Products. For	865
Advertisement that is subject to the Commission's authority, any	866
Rule, Uniform Standard or other requirement of the Commission	867
which governs the content of the Advertisement shall constitute	868
the exclusive provision that a Commissioner may apply to the	869
content of the Advertisement. Notwithstanding the foregoing, no	870
action taken by the Commission shall abrogate or restrict: (i) the	871
access of any person to state courts; (ii) remedies available	872
under state law related to breach of contract, tort, or other laws	873
not specifically directed to the content of the Product; (iii)	874
state law relating to the construction of insurance contracts; or	875
(iv) the authority of the attorney general of the state, including	876
but not limited to maintaining any actions or proceedings, as	877
authorized by law.	878

c. All insurance products filed with individual States shall	879
be subject to the laws of those States.	880

2. Binding Effect of this Compact

881

a. All lawful actions of the Commission, including all Rules	882
and Operating Procedures promulgated by the Commission, are	883
binding upon the Compacting States.	884

b. All agreements between the Commission and the Compacting	885
States are binding in accordance with their terms.	886

c. Upon the request of a party to a conflict over the meaning	887
or interpretation of Commission actions, and upon a majority vote	888
of the Compacting States, the Commission may issue advisory	889
opinions regarding the meaning or interpretation in dispute.	890

d. In the event any provision of this Compact exceeds the	891
constitutional limits imposed on the legislature of any Compacting	892
State, the obligations, duties, powers or jurisdiction sought to	893
be conferred by that provision upon the Commission shall be	894
ineffective as to that Compacting State, and those obligations,	895
duties, powers or jurisdiction shall remain in the Compacting	896
State and shall be exercised by the agency thereof to which those	897
obligations, duties, powers or jurisdiction are delegated by law	898
in effect at the time this Compact becomes effective.	899

Section 2. That existing section 3901.48 of the Revised Code	900
is hereby repealed.	901