BILL NUMBER: SB 1449	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Calderon

                        FEBRUARY 24, 2012

   An act to add Article 8 (commencing with Section 10198.95) to
Chapter 1 of Part 2 of Division 2 of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1449, as introduced, Calderon. Insurance: interstate compact.
   Existing law provides for the Insurance Commissioner to approve
various products and related forms and filings.
   This bill would enact the Interstate Insurance Regulation Compact,
and would provide that California shall join a joint public agency
known as the "Interstate Insurance Product Regulation Commission."
The commission would 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. The products covered by the commission
would be life insurance, annuities, disability insurance, and
long-term care insurance. The bill would also provide that the
commission would not be the exclusive entity for receipt and review
of insurance product filings. The bill would authorize the state to
opt out as to a particular uniform standard. Nothing contained in the
compact would prohibit any insurer from filing its product in any
state wherein the insurer is licensed to conduct the business of
insurance, and any of these filings would be subject to the laws of
the state where filed. This bill would state the commission's
purposes, and detail its operations, as specified, including
developing uniform standards for insurance products covered under the
compact. The commissioner would be designated to serve as California'
s representative to the commission.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 8 (commencing with Section 10198.95) is added
to Chapter 1 of Part 2 of Division 2 of the Insurance Code, to read:

      Article 8.  Interstate Insurance Product Regulation Compact


   10198.95.  The Interstate Insurance Product Regulation Compact as
contained in this Section is hereby enacted into law and entered into
on behalf of this state with any and all other states legally
joining into it in a form substantially as follows:

      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 consists 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.

  SEC. 2.  Pursuant to terms and conditions of this Act, the State of
California seeks to join with other States and establish the
Interstate Insurance Product Regulation Compact, and thus become a
member of the Interstate Insurance Product Regulation Commission. The
California Insurance Commissioner is hereby designated to serve as
the representative of this State to the Commission.