23.0325.01000
Sixty-eighth
Legislative Assembly SENATE BILL NO. 2172
of North Dakota
Introduced by
Senators Klein, Larsen, Vedaa
Representatives Kasper, Louser
1 A BILL for an Act to create and enact a new chapter to title 26.1 of the North Dakota Century
2 Code, relating to the interstate insurance product regulation compact.
3 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
4 SECTION 1. A new chapter to title 26.1 of the North Dakota Century Code is created and
5 enacted as follows:
6 ARTICLE I - PURPOSES
7 The purposes of this compact are, through means of joint and cooperative action among the
8 compacting states:
9 1. To promote and protect the interest of consumers of individual and group annuity, life
10 insurance, disability income, and long-term care insurance products;
11 2. To develop uniform standards for insurance products covered under the compact;
12 3. To establish a central clearinghouse to receive and provide prompt review of insurance
13 products covered under the compact and, in certain cases, advertisements related
14 thereto, submitted by insurers authorized to do business in one or more compacting
15 states;
16 4. To give appropriate regulatory approval to those product filings and advertisements
17 satisfying the applicable uniform standard;
18 5. To improve coordination of regulatory resources and expertise between state
19 insurance departments regarding the setting of uniform standards and review of
20 insurance products covered under the compact;
21 6. To create the interstate insurance product regulation commission; and
22 7. To perform these and such other related functions as may be consistent with the state
23 regulation of the business of insurance.
24 ARTICLE II - DEFINITIONS
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1 For purposes of this compact:
2 1. "Advertisement" means any material designed to create public interest in a product, or
3 induce the public to purchase, increase, modify, reinstate, borrow on, surrender,
4 replace, or retain a policy, as more specifically defined in the rules and operating
5 procedures of the commission.
6 2. "Bylaws" mean those bylaws established by the commission for its governance, or for
7 directing or controlling the commission's actions or conduct.
8 3. "Compacting state" means any state which has enacted this compact legislation and
9 which has not withdrawn pursuant to subsection 1 of article XIV, or been terminated
10 pursuant to subsection 2 of article XIV.
11 4. "Commission" means the "interstate insurance product regulation commission"
12 established by this compact.
13 5. "Commissioner" means the chief insurance regulatory official of a state including, but
14 not limited to commissioner, superintendent, director, or administrator.
15 6. "Domiciliary state" means the state in which an insurer is incorporated or organized;
16 or, in the case of an alien insurer, its state of entry.
17 7. "Insurer" means any entity licensed by a state to issue contracts of insurance for any
18 of the lines of insurance covered by this chapter.
19 8. "Member" means the person chosen by a compacting state as its representative to the
20 commission, or his or her designee.
21 9. "Noncompacting state" means any state which is not at the time a compacting state.
22 10. "Operating procedures" mean procedures promulgated by the commission
23 implementing a rule, uniform standard, or a provision of this compact.
24 11. "Product" means the form of a policy or contract, including any application,
25 endorsement, or related form which is attached to and made a part of the policy or
26 contract, and any evidence of coverage or certificate, for an individual or group
27 annuity, life insurance, disability income, or long-term care insurance product that an
28 insurer is authorized to issue.
29 12. "Rule" means a statement of general or particular applicability and future effect
30 promulgated by the commission, including a uniform standard developed pursuant to
31 article VII of this compact, designed to implement, interpret, or prescribe law or policy,
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1 or describing the organization, procedure, or practice requirements of the commission,
2 which shall have the force and effect of law in the compacting states.
3 13. "State" means any state, district, or territory of the United States of America.
4 14. "Third-party filer" means an entity that submits a product filing to the commission on
5 behalf of an insurer.
6 15. "Uniform standard" means a standard adopted by the commission for a product line,
7 pursuant to article VII of this compact, and shall include all of the product requirements
8 in aggregate; provided, that each uniform standard shall be construed, whether
9 express or implied, to prohibit the use of any inconsistent, misleading, or ambiguous
10 provisions in a product and the form of the product made available to the public shall
11 not be unfair, inequitable, or against public policy as determined by the commission.
12 ARTICLE III - ESTABLISHMENT OF THE COMMISSION AND VENUE
13 1. The compacting states hereby create and establish a joint public agency known as the
14 "interstate insurance product regulation commission". Pursuant to article IV, the
15 commission will have the power to develop uniform standards for product lines,
16 receive and provide prompt review of products filed therewith, and give approval to
17 those product filings satisfying applicable uniform standards, provided, it is not
18 intended for the commission to be the exclusive entity for receipt and review of
19 insurance product filings. Nothing herein shall prohibit any insurer from filing its
20 product in any state wherein the insurer is licensed to conduct the business of
21 insurance; and any such filing shall be subject to the laws of the state where filed.
22 2. The commission is a body corporate and politic, and an instrumentality of the
23 compacting states.
24 3. The commission is solely responsible for its liabilities except as otherwise specifically
25 provided in this compact.
26 4. Venue is proper and judicial proceedings by or against the commission shall be
27 brought solely and exclusively in a court of competent jurisdiction where the principal
28 office of the commission is located.
29 ARTICLE IV - POWERS OF THE COMMISSION
30 The commission shall have the following powers:
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1 1. To promulgate rules, pursuant to article VII of this compact, which shall have the force
2 and effect of law and shall be binding in the compacting states to the extent and in the
3 manner provided in this compact;
4 2. To exercise its rulemaking authority and establish reasonable uniform standards for
5 products covered under the compact, and advertisement related thereto, which shall
6 have the force and effect of law and shall be binding in the compacting states, but only
7 for those products filed with the commission, provided, that a compacting state shall
8 have the right to opt-out of such uniform standard pursuant to article VII, to the extent
9 and in the manner provided in this compact, and, provided further, that any uniform
10 standard established by the commission for long-term care insurance products may
11 provide the same or greater protections for consumers as, but shall not provide less
12 than, those protections set forth in the national association of insurance
13 commissioners' long-term care insurance model act and long-term care insurance
14 model regulation, respectively, adopted as of 2001. The commission shall consider
15 whether any subsequent amendments to the national association of insurance
16 commissioners' long-term care insurance model act or long-term care insurance
17 model regulation adopted by the national association of insurance commissioners
18 require amending of the uniform standards established by the commission for
19 long-term care insurance products;
20 3. To receive and review in an expeditious manner products filed with the commission,
21 and rate filings for disability income and long-term care insurance products, and give
22 approval of those products and rate filings that satisfy the applicable uniform standard,
23 where such approval shall have the force and effect of law and be binding on the
24 compacting states to the extent and in the manner provided in the compact;
25 4. To receive and review in an expeditious manner advertisement relating to long-term
26 care insurance products for which uniform standards have been adopted by the
27 commission, and give approval to all advertisement that satisfies the applicable
28 uniform standard. For any product covered under this compact, other than long-term
29 care insurance products, the commission shall have the authority to require an insurer
30 to submit all or any part of its advertisement with respect to that product for review or
31 approval prior to use, if the commission determines that the nature of the product is
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1 such that an advertisement of the product could have the capacity or tendency to
2 mislead the public. The actions of the commission as provided in this section shall
3 have the force and effect of law and shall be binding in the compacting states to the
4 extent and in the manner provided in the compact;
5 5. To exercise its rulemaking authority and designate products and advertisement that
6 may be subject to a self-certification process without the need for prior approval by the
7 commission;
8 6. To promulgate operating procedures, pursuant to article VII of this compact, which
9 shall be binding in the compacting states to the extent and in the manner provided in
10 this compact;
11 7. To bring and prosecute legal proceedings or actions in its name as the commission,
12 provided, that the standing of any state insurance department to sue or be sued under
13 applicable law shall not be affected;
14 8. To issue subpoenas requiring the attendance and testimony of witnesses and the
15 production of evidence;
16 9. To establish and maintain offices;
17 10. To purchase and maintain insurance and bonds;
18 11. To borrow, accept, or contract for services of personnel, including, but not limited to,
19 employees of a compacting state;
20 12. To hire employees, professionals, or specialists, and elect or appoint officers, and to
21 fix their compensation, define their duties, and give them appropriate authority to carry
22 out the purposes of the compact, and determine their qualifications; and to establish
23 the commission's personnel policies and programs relating to, among other things,
24 conflicts of interest, rates of compensation, and qualifications of personnel;
25 13. To accept any and all appropriate donations and grants of money, equipment,
26 supplies, materials, and services, and to receive, utilize, and dispose of the same,
27 provided that at all times the commission shall strive to avoid any appearance of
28 impropriety;
29 14. To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold,
30 improve, or use any property, real, personal, or mixed, provided that at all times the
31 commission shall strive to avoid any appearance of impropriety;
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1 15. To sell, convey, mortgage, pledge, lease, exchange, abandon, or otherwise dispose of
2 any property, real, personal, or mixed;
3 16. To remit filing fees to compacting states as may be set forth in the bylaws, rules, or
4 operating procedures;
5 17. To enforce compliance by compacting states with rules, uniform standards, operating
6 procedures, and bylaws;
7 18. To provide for dispute resolution among compacting states;
8 19. To advise compacting states on issues relating to insurers domiciled or doing business
9 in noncompacting jurisdictions, consistent with the purposes of this compact;
10 20. To provide advice and training to those personnel in state insurance departments
11 responsible for product review, and to be a resource for state insurance departments;
12 21. To establish a budget and make expenditures;
13 22. To borrow money;
14 23. To appoint committees, including advisory committees comprising members, state
15 insurance regulators, state legislators or their representatives, insurance industry and
16 consumer representatives, and such other interested persons as may be designated in
17 the bylaws;
18 24. To provide and receive information from, and to cooperate with, law enforcement
19 agencies;
20 25. To adopt and use a corporate seal; and
21 26. To perform such other functions as may be necessary or appropriate to achieve the
22 purposes of this compact consistent with the state regulation of the business of
23 insurance.
24 ARTICLE V - ORGANIZATION OF THE COMMISSION
25 1. Membership, voting, and bylaws.
26 a. Each compacting state shall have and be limited to one member. Each member
27 shall be qualified to serve in that capacity pursuant to applicable law of the
28 compacting state. Any member may be removed or suspended from office as
29 provided by the law of the state from which he or she shall be appointed. Any
30 vacancy occurring in the commission shall be filled in accordance with the laws of
31 the compacting state wherein the vacancy exists. Nothing herein shall be
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1 construed to affect the manner in which a compacting state determines the
2 election or appointment and qualification of its own commissioner.
3 b. Each member shall be entitled to one vote and shall have an opportunity to
4 participate in the governance of the commission in accordance with the bylaws.
5 Notwithstanding any provision herein to the contrary, no action of the commission
6 with respect to the promulgation of a uniform standard shall be effective unless
7 two-thirds of the members vote in favor thereof.
8 c. The commission shall, by a majority of the members, prescribe bylaws to govern
9 its conduct as may be necessary or appropriate to carry out the purposes, and
10 exercise the powers, of the compact, including, but not limited to:
11 (1) Establishing the fiscal year of the commission;
12 (2) Providing reasonable procedures for appointing and electing members, as
13 well as holding meetings, of the management committee;
14 (3) Providing reasonable standards and procedures:
15 a. For the establishment and meetings of other committees; and
16 b. Governing any general or specific delegation of any authority or
17 function of the commission;
18 (4) Providing reasonable procedures for calling and conducting meetings of the
19 commission that consists of a majority of commission members, ensuring
20 reasonable advance notice of each such meeting and providing for the right
21 of citizens to attend each such meeting with enumerated exceptions
22 designed to protect the public's interest, the privacy of individuals, and
23 insurers' proprietary information, including trade secrets. The commission
24 may meet in camera only after a majority of the entire membership votes to
25 close a meeting en toto or in part. As soon as practicable, the commission
26 must make public:
27 a. A copy of the vote to close the meeting revealing the vote of each
28 member with no proxy votes allowed; and
29 b. Votes taken during such meeting;
30 (5) Establishing the titles, duties, and authority and reasonable procedures for
31 the electi