374.352. Compact.

MISSOURI STATUTES AND CODES

Compact.

374.352. The State of Missouri ratifies, approves, and adopts thefollowing interstate compact:

ARTICLE I. PURPOSES

The purposes of this Compact are, through means of joint andcooperative action among the Compacting States:

1. To promote and protect the interest of consumers of individual andgroup annuity, life insurance, disability income and long-term careinsurance products;

2. To develop uniform standards for insurance products covered underthe Compact;

3. To establish a central clearinghouse to receive and provide promptreview of insurance products covered under the Compact and, in certaincases, advertisements related thereto, submitted by insurers authorized todo business in one or more Compacting States;

4. To give appropriate regulatory approval to those product filingsand advertisements satisfying the applicable uniform standard;

5. To improve coordination of regulatory resources and expertisebetween state insurance departments regarding the setting of uniformstandards 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 beconsistent 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 publicinterest in a Product, or induce the public to purchase, increase, modify,reinstate, borrow on, surrender, replace or retain a policy, as morespecifically defined in the Rules and Operating Procedures of theCommission.

2. "Bylaws" mean those bylaws established by the Commission for itsgovernance, or for directing or controlling the Commission's actions orconduct.

3. "Compacting State" means any State which has enacted this Compactlegislation and which has not withdrawn pursuant to Article XIV, Section 1,or been terminated pursuant to Article XIV, Section 2.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 RegulationCommission" established by this Compact.

5. "Commissioner" means the chief insurance regulatory official of aState including, but not limited to commissioner, superintendent, directoror administrator.

6. "Domiciliary State" means the state in which an Insurer isincorporated or organized; or, in the case of an alien Insurer, its stateof entry.

7. "Insurer" means any entity licensed by a State to issue contractsof insurance for any of the lines of insurance covered by this Act*.

8. "Member" means the person chosen by a Compacting State as itsrepresentative to the Commission, or his or her designee.

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

10. "Operating Procedures" mean procedures promulgated by theCommission implementing a Rule, Uniform Standard or a provision of thisCompact.

11. "Product" means the form of a policy or contract, including anyapplication, endorsement, or related form which is attached to and made apart of the policy or contract, and any evidence of coverage orcertificate, for an individual or group annuity, life insurance, disabilityincome or long-term care insurance product that an Insurer is authorized toissue.

12. "Rule" means a statement of general or particular applicabilityand future effect promulgated by the Commission, including a UniformStandard developed pursuant to Article VII of this Compact, designed toimplement, interpret, or prescribe law or policy or describing theorganization, procedure, or practice requirements of the Commission, whichshall have the force and effect of law in the Compacting States.

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

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

15. "Uniform Standard" means a standard adopted by the Commission fora Product line, pursuant to Article VII of this Compact, and shall includeall of the Product requirements in aggregate; provided, that each UniformStandard shall be construed, whether express or implied, to prohibit theuse of any inconsistent, misleading or ambiguous provisions in a Productand the form of the Product made available to the public shall not beunfair, inequitable or against public policy as determined by theCommission.

ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE

1. The Compacting States hereby create and establish a joint publicagency known as the "Interstate Insurance Product Regulation Commission."Pursuant to Article IV, the Commission will have the power to developUniform Standards for Product lines, receive and provide prompt review ofProducts filed therewith, and give approval to those Product filingssatisfying applicable Uniform Standards; provided, it is not intended forthe Commission to be the exclusive entity for receipt and review ofinsurance product filings. Nothing herein shall prohibit any Insurer fromfiling its product in any State wherein the Insurer is licensed to conductthe business of insurance; and any such filing shall be subject to the lawsof the State where filed.

2. The Commission is a body corporate and politic, and aninstrumentality of the Compacting States.

3. The Commission is solely responsible for its liabilities except asotherwise specifically provided in this Compact.

4. Venue is proper and judicial proceedings by or against theCommission shall be brought solely and exclusively in a Court of competentjurisdiction 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 theCompacting States to the extent and in the manner provided in this Compact;

2. To exercise its rulemaking authority and establish reasonableUniform Standards for Products covered under the Compact, and Advertisementrelated thereto, which shall have the force and effect of law and shall bebinding in the Compacting States, but only for those Products filed withthe Commission, provided, that a Compacting State shall have the right toopt out of such Uniform Standard pursuant to Article VII, to the extent andin the manner provided in this Compact, and, provided further, that anyUniform Standard established by the Commission for long-term care insuranceproducts may provide the same or greater protections for consumers as, butshall not provide less than, those protections set forth in the NationalAssociation of Insurance Commissioners' Long-Term Care Insurance Model Actand Long-Term Care Insurance Model Regulation, respectively, adopted as of2001. The Commission shall consider whether any subsequent amendments tothe NAIC Long-Term Care Insurance Model Act or Long-Term Care InsuranceModel Regulation adopted by the NAIC require amending of the UniformStandards established by the Commission for long-term care insuranceproducts;

3. To receive and review in an expeditious manner Products filed withthe Commission, and rate filings for disability income and long-term careinsurance Products, and give approval of those Products and rate filingsthat satisfy the applicable Uniform Standard, where such approval shallhave the force and effect of law and be binding on the Compacting States tothe extent and in the manner provided in the Compact;

4. To receive and review in an expeditious manner Advertisementrelating to long-term care insurance products for which Uniform Standardshave been adopted by the Commission, and give approval to all Advertisementthat satisfies the applicable Uniform Standard. For any product coveredunder this Compact, other than long-term care insurance products, theCommission shall have the authority to require an insurer to submit all orany part of its Advertisement with respect to that product for review orapproval prior to use, if the Commission determines that the nature of theproduct is such that an Advertisement of the product could have thecapacity or tendency to mislead the public. The actions of the Commissionas provided in this section shall have the force and effect of law andshall be binding in the Compacting States to the extent and in the mannerprovided in the Compact;

5. To exercise its rulemaking authority and designate Products andAdvertisement that may be subject to a self-certification process withoutthe need for prior approval by the Commission.

6. To promulgate Operating Procedures, pursuant to Article VII ofthis Compact, which shall be binding in the Compacting States to the extentand in the manner provided in this Compact;

7. To bring and prosecute legal proceedings or actions in its name asthe Commission; provided, that the standing of any state insurancedepartment to sue or be sued under applicable law shall not be affected;

8. To issue subpoenas requiring the attendance and testimony ofwitnesses 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 orappoint officers, and to fix their compensation, define their duties andgive them appropriate authority to carry out the purposes of the Compact,and determine their qualifications; and to establish the Commission'spersonnel policies and programs relating to, among other things, conflictsof 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 anddispose of the same; provided that at all times the Commission shall striveto avoid any appearance of impropriety;

14. To lease, purchase, accept appropriate gifts or donations of, orotherwise to own, hold, improve or use, any property, real, personal ormixed; provided that at all times the Commission shall strive to avoid anyappearance of impropriety;

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

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

17. To enforce compliance by Compacting States with Rules, UniformStandards, Operating Procedures and Bylaws;

18. To provide for dispute resolution among Compacting States;

19. To advise Compacting States on issues relating to Insurersdomiciled or doing business in Non-compacting jurisdictions, consistentwith the purposes of this Compact;

20. To provide advice and training to those personnel in stateinsurance departments responsible for product review, and to be a resourcefor state insurance departments;

21. To establish a budget and make expenditures;

22. To borrow money;

23. To appoint committees, including advisory committees comprisingMembers, state insurance regulators, state legislators or theirrepresentatives, insurance industry and consumer representatives, and suchother interested persons as may be designated in the Bylaws;

24. To provide and receive information from, and to cooperate withlaw enforcement agencies;

25. To adopt and use a corporate seal; and

26. To perform such other functions as may be necessary orappropriate to achieve the purposes of this Compact consistent with thestate 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 toapplicable law of the Compacting State. Any Member may be removed orsuspended from office as provided by the law of the State from which he orshe shall be appointed. Any vacancy occurring in the Commission shall befilled in accordance with the laws of the Compacting State wherein thevacancy exists. Nothing herein shall be construed to affect the manner inwhich a Compacting State determines the election or appointment andqualification of its own Commissioner.

b. Each Member shall be entitled to one vote and shall have anopportunity to participate in the governance of the Commission inaccordance with the Bylaws. Notwithstanding any provision herein to thecontrary, no action of the Commission with respect to the promulgation of aUniform Standard shall be effective unless two-thirds (2/3) of the Membersvote in favor thereof.

c. The Commission shall, by a majority of the Members, prescribeBylaws to govern its conduct as may be necessary or appropriate to carryout the purposes, and exercise the powers, of the Compact, including, butnot limited to:

i. Establishing the fiscal year of the Commission;

ii. Providing reasonable procedures for appointing and electingmembers, as well as holding meetings, of the Management Committee;

iii. Providing reasonable standards and procedures: (i) for theestablishment and meetings of other committees, and (ii) governing anygeneral or specific delegation of any authority or function of theCommission;

iv. Providing reasonable procedures for calling and conductingmeetings of the Commission that consists of a majority of Commissionmembers, ensuring reasonable advance notice of each such meeting andproviding for the right of citizens to attend each such meeting withenumerated exceptions designed to protect the public's interest, theprivacy of individuals, and insurers' proprietary information, includingtrade secrets. The Commission may meet in camera only after a majority ofthe entire membership votes to close a meeting en toto or in part. As soonas practicable, the Commission must make public (i) a copy of the vote toclose the meeting revealing the vote of each Member with no proxy votesallowed, and (ii) votes taken during such meeting;

v. Establishing the titles, duties and authority and reasonableprocedures for the election of the officers of the Commission;

vi. Providing reasonable standards and procedures for theestablishment of the personnel policies and programs of the Commission.Notwithstanding any civil service or other similar laws of any CompactingState, the Bylaws shall exclusively govern the personnel policies andprograms of the Commission;

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

viii. Providing a mechanism for winding up the operations of theCommission and the equitable disposition of any surplus funds that mayexist after the termination of the Compact after the payment and/orreserving of all of its debts and obligations.

d. The Commission shall publish its bylaws in a convenient form andfile a copy thereof and a copy of any amendment thereto, with theappropriate 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 thelargest premium volume for individual and group annuities, life, disabilityincome and long-term care insurance products, determined from the recordsof the NAIC for the prior year;

ii. Four (4) members from those Compacting States with at least twopercent (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 twopercent (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 asprovided in the Bylaws.

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

i. Managing the affairs of the Commission in a manner consistent withthe Bylaws and purposes of the Commission;

ii. Establishing and overseeing an organizational structure within,and appropriate procedures for, the Commission to provide for the creationof Uniform Standards and other Rules, receipt and review of productfilings, administrative and technical support functions, review ofdecisions regarding the disapproval of a product filing, and the review ofelections made by a Compacting State to opt out of a Uniform Standard;provided that a Uniform Standard shall not be submitted to the CompactingStates for adoption unless approved by two-thirds (2/3) of the members ofthe Management Committee;

iii. Overseeing the offices of the Commission; and

iv. Planning, implementing, and coordinating communications andactivities with other state, federal and local government organizations inorder to advance the goals of the Commission.

c. The Commission shall elect annually officers from the ManagementCommittee, with each having such authority and duties, as may be specifiedin the Bylaws.

d. The Management Committee may, subject to the approval of theCommission, appoint or retain an executive director for such period, uponsuch terms and conditions and for such compensation as the Commission maydeem appropriate. The executive director shall serve as secretary to theCommission, but shall not be a Member of the Commission. The executivedirector shall hire and supervise such other staff as may be authorized bythe Commission.

3. Legislative and Advisory Committees

a. A legislative committee comprising state legislators or theirdesignees shall be established to monitor the operations of, and makerecommendations to, the Commission, including the Management Committee;provided that the manner of selection and term of any legislative committeemember shall be as set forth in the Bylaws. Prior to the adoption by theCommission of any Uniform Standard, revision to the Bylaws, annual budgetor other significant matter as may be provided in the Bylaws, theManagement Committee shall consult with and report to the legislativecommittee.

b. The Commission shall establish two (2) advisory committees, one ofwhich shall comprise consumer representatives independent of the insuranceindustry, and the other comprising insurance industry representatives.

c. The Commission may establish additional advisory committees as itsBylaws may provide for the carrying out of its functions.

4. Corporate Records of the Commission

The Commission shall maintain its corporate books and records inaccordance with the Bylaws.

5. Qualified Immunity, Defense and Indemnification

a. The Members, officers, executive director, employees andrepresentatives of the Commission shall be immune from suit and liability,either personally or in their official capacity, for any claim for damageto or loss of property or personal injury or other civil liability causedby or arising out of any actual or alleged act, error or omission thatoccurred, or that the person against whom the claim is made had areasonable basis for believing occurred within the scope of Commissionemployment, duties or responsibilities; provided, that nothing in thisparagraph shall be construed to protect any such person from suit and/orliability for any damage, loss, injury or liability caused by theintentional or willful and wanton misconduct of that person.

b. The Commission shall defend any Member, officer, executivedirector, employee or representative of the Commission in any civil actionseeking to impose liability arising out of any actual or alleged act, erroror omission that occurred within the scope of Commission employment, dutiesor responsibilities, or that the person against whom the claim is made hada reasonable basis for believing occurred within the scope of Commissionemployment, duties or responsibilities; provided, that nothing herein shallbe construed to prohibit that person from retaining his or her own counsel;and provided further, that the actual or alleged act, error or omission didnot 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 Commissionfor the amount of any settlement or judgment obtained against that personarising out of any actual or alleged act, error or omission that occurredwithin the scope of Commission employment, duties or responsibilities, orthat such person had a reasonable basis for believing occurred within thescope of Commission employment, duties or responsibilities, provided, thatthe actual or alleged act, error or omission did not result from theintentional 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 consistentwith the provisions of this Compact and the Bylaws.

2. Each Member of the Commission shall have the right and power tocast a vote to which that Compacting State is entitled and to participatein the business and affairs of the Commission. A Member shall vote inperson or by such other means as provided in the Bylaws. The Bylaws mayprovide for Members' participation in meetings by telephone or other meansof 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 reasonableRules, including Uniform Standards, and Operating Procedures in order toeffectively and efficiently achieve the purposes of this Compact.Notwithstanding the foregoing, in the event the Commission exercises itsrulemaking authority in a manner that is beyond the scope of the purposesof this Act*, or the powers granted hereunder, then such an action by theCommission shall be invalid and have no force and effect.

2. Rulemaking Procedure. Rules and Operating Procedures shall bemade pursuant to a rulemaking process that conforms to the Model StateAdministrative Procedure Act of 1981 as amended, as may be appropriate tothe operations of the Commission. Before the Commission adopts a UniformStandard, the Commission shall give written notice to the relevant statelegislative committee(s) in each Compacting State responsible for insuranceissues of its intention to adopt the Uniform Standard. The Commission inadopting a Uniform Standard shall consider fully all submitted materialsand issue a concise explanation of its decision.

3. Effective Date and Opt Out of a Uniform Standard. A UniformStandard shall become effective ninety (90) days after its promulgation bythe Commission or such later date as the Commission may determine;provided, however, that a Compacting State may opt out of a UniformStandard as provided in this Article. "Opt out" shall be defined as anyaction by a Compacting State to decline to adopt or participate in apromulgated Uniform Standard. All other Rules and Operating Procedures,and amendments thereto, shall become effective as of the date specified ineach Rule, Operating Procedure or amendment.

4. Opt Out Procedure. A Compacting State may opt out of a UniformStandard, either by legislation or regulation duly promulgated by theInsurance Department under the Compacting State's Administrative ProcedureAct. If a Compacting State elects to opt out of a Uniform Standard byregulation, it must (a) give written notice to the Commission no later thanten (10) business days after the Uniform Standard is promulgated, or at thetime the State becomes a Compacting State and (b) find that the UniformStandard does not provide reasonable protections to the citizens of theState, given the conditions in the State. The Commissioner shall makespecific findings of fact and conclusions of law, based on a preponderanceof the evidence, detailing the conditions in the State which warrant adeparture from the Uniform Standard and determining that the UniformStandard would not reasonably protect the citizens of the State. TheCommissioner must consider and balance the following factors and find thatthe conditions in the State and needs of the citizens of the Stateoutweigh: (i) the intent of the legislature to participate in, and thebenefits of, an interstate agreement to establish national uniform consumerprotections for the Products subject to this Act*; and (ii) the presumptionthat a Uniform Standard adopted by the Commission provides reasonableprotections to consumers of the relevant Product. Notwithstanding theforegoing, a Compacting State may, at the time of its enactment of thisCompact, prospectively opt out of all Uniform Standards involving long-termcare insurance products by expressly providing for such opt out in theenacted Compact, and such an opt out shall not be treated as a materialvariance in the offer or acceptance of any State to participate in thisCompact. Such an opt out shall be effective at the time of enactment ofthis Compact by the Compacting State and shall apply to all existingUniform Standards involving long-term care insurance products and thosesubsequently promulgated.

5. Effect of Opt Out. If a Compacting State elects to opt out of aUniform Standard, the Uniform Standard shall remain applicable in theCompacting State electing to opt out until such time the opt outlegislation is enacted into law or the regulation opting out becomeseffective. Once the opt out of a Uniform Standard by a Compacting Statebecomes effective as provided under the laws of that State, the UniformStandard shall have no further force and effect in that State unless anduntil the legislation or regulation implementing the opt out is repealed orotherwise becomes ineffective under the laws of the State. If a CompactingState opts out of a Uniform Standard after the Uniform Standard has beenmade effective in that State, the opt out shall have the same prospectiveeffect as provided under Article XIV for withdrawals.

6. Stay of Uniform Standard. If a Compacting State has formallyinitiated the process of opting out of a Uniform Standard by regulation,and while the regulatory opt out is pending, the Compacting State maypetition the Commission, at least fifteen (15) days before the effectivedate of the Uniform Standard, to stay the effectiveness of the UniformStandard in that State. The Commission may grant a stay if it determinesthe regulatory opt out is being pursued in a reasonable manner and there isa likelihood of success. If a stay is granted or extended by theCommission, the stay or extension thereof may postpone the effective dateby 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 circumstanceswhich warrant a continuance of the stay, including, but not limited to, theexistence of a legal challenge which prevents the Compacting State fromopting out. A stay may be terminated by the Commission upon notice thatthe rulemaking process has been terminated.

7. Not later than thirty (30) days after a Rule or OperatingProcedure is promulgated, any person may file a petition for judicialreview of the Rule or Operating Procedure; provided, that the filing ofsuch a petition shall not stay or otherwise prevent the Rule or OperatingProcedure from becoming effective unless the court finds that thepetitioner has a substantial likelihood of success. The court shall givedeference to the actions of the Commission consistent with applicable lawand shall not find the Rule or Operating Procedure to be unlawful if theRule or Operating Procedure represents a reasonable exercise of theCommission's authority.

ARTICLE VIII. COMMISSION RECORDS AND ENFORCEMENT

1. The Commission shall promulgate Rules establishing conditions andprocedures for public inspection and copying of its information andofficial records, except such information and records involving the privacyof individuals and insurers' trade secrets. The Commission may promulgateadditional Rules under which it may make available to federal and stateagencies, including law enforcement agencies, records and informationotherwise exempt from disclosure, and may enter into agreements with suchagencies to receive or exchange information or records subject tonondisclosure and confidentiality provisions.

2. Except as to privileged records, data and information, the laws ofany Compacting State pertaining to confidentiality or nondisclosure shallnot relieve any Compacting State Commissioner of the duty to disclose anyrelevant records, data or information to the Commission; provided, thatdisclosure to the Commission shall not be deemed to waive or otherwiseaffect any confidentiality requirement; and further provided, that, exceptas otherwise expressly provided in this Act*, the Commission shall not besubject to the Compacting State's laws pertaining to confidentiality andnondisclosure with respect to records, data and information in itspossession. Confidential information of the Commission shall remainconfidential after such information is provided to any Commissioner.

3. The Commission shall monitor Compacting States for compliance withduly adopted Bylaws, Rules, including Uniform Standards, and OperatingProcedures. The Commission shall notify any non-complying Compacting Statein writing of its noncompliance with Commission Bylaws, Rules or OperatingProcedures. If a non-complying Compacting State fails to remedy itsnoncompliance within the time specified in the notice of noncompliance, theCompacting State shall be deemed to be in default as set forth in ArticleXIV.

4. The Commissioner of any State in which an Insurer is authorized todo business, or is conducting the business of insurance, shall continue toexercise his or her authority to oversee the market regulation of theactivities of the Insurer in accordance with the provisions of the State'slaw. The Commissioner's enforcement of compliance with the Compact isgoverned by the following provisions:

a. With respect to the Commissioner's market regulation of a Productor Advertisement that is approved or certified to the Commission, thecontent of the Product or Advertisement shall not constitute a violation ofthe provisions, standards or requirements of the Compact except upon afinal order of the Commission, issued at the request of a Commissionerafter prior notice to the Insurer and an opportunity for hearing before theCommission.

b. Before a Commissioner may bring an action for violation of anyprovision, standard or requirement of the Compact relating to the contentof an Advertisement not approved or certified to the Commission, theCommission, or an authorized Commission officer or employee, must authorizethe action. However, authorization pursuant to this paragraph does notrequire notice to the Insurer, opportunity for hearing or disclosure ofrequests for authorization or records of the Commission's action on suchrequests.

ARTICLE IX. DISPUTE RESOLUTION

The Commission shall attempt, upon the request of a Member, to resolveany disputes or other issues that are subject to this Compact and which mayarise between two or more Compacting States, or between Compacting Statesand Non-compacting States, and the Commission shall promulgate an OperatingProcedure providing for resolution of such disputes.

ARTICLE X. PRODUCT FILING AND APPROVAL

1. Insurers and Third-Party Filers seeking to have a Product approvedby the Commission shall file the Product with, and pay applicable filingfees to, the Commission. Nothing in this Act* shall be construed torestrict or otherwise prevent an insurer from filing its Product with theinsurance department in any State wherein the insurer is licensed toconduct the business of insurance, and such filing shall be subject to thelaws of the States where filed.

2. The Commission shall establish appropriate filing and reviewprocesses and procedures pursuant to Commission Rules and OperatingProcedures. Notwithstanding any provision herein to the contrary, theCommission shall promulgate Rules to establish conditions and proceduresunder which the Commission will provide public access to Product filinginformation. In establishing such Rules, the Commission shall consider theinterests of the public in having access to such information, as well asprotection 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 otherwiseissued in those Compacting States for which the Insurer is legallyauthorized to do business.

ARTICLE XI. REVIEW OF COMMISSION

DECISIONS REGARDING FILINGS

1. Not later than thirty (30) days after the Commission has givennotice of a disapproved Product or Advertisement filed with the Commission,the Insurer or Third Party Filer whose filing was disapproved may appealthe determination to a review panel appointed by the Commission. TheCommission shall promulgate Rules to establish procedures for appointingsuch review panels and provide for notice and hearing. An allegation thatthe Commission, in disapproving a Product or Advertisement filed with theCommission, acted arbitrarily, capriciously, or in a manner that is anabuse of discretion or otherwise not in accordance with the law, is subjectto judicial review in accordance with Article III, Section 4.

2. The Commission shall have authority to monitor, review andreconsider Products and Advertisement subsequent to their filing orapproval upon a finding that the product does not meet the relevant UniformStandard. Where appropriate, the Commission may withdraw or modify itsapproval after proper notice and hearing, subject to the appeal process inSection 1 above.

ARTICLE XII. FINANCE

1. The Commission shall pay or provide for the payment of thereasonable expenses of its establishment and organization. To fund thecost of its initial operations, the Commission may accept contributions andother forms of funding from the National Association of InsuranceCommissioners, Compacting States and other sources. Contributions andother forms of funding from other sources shall be of such a nature thatthe independence of the Commission concerning the performance of its dutiesshall not be compromised.

2. The Commission shall collect a filing fee from each Insurer andThird Party Filer filing a product with the Commission to cover the cost ofthe operations and activities of the Commission and its staff in a totalamount sufficient to cover the Commission's annual budget.

3. The Commission's budget for a fiscal year shall not be approveduntil it has been subject to notice and comment as set forth in Article VIIof this Compact.

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

5. The Commission shall not pledge the credit of any CompactingState, except by and with the appropriate legal authority of thatCompacting State.

6. The Commission shall keep complete and accurate accounts of allits internal receipts, including grants and donations, and disbursements ofall funds under its control. The internal financial accounts of theCommission shall be subject to the accounting procedures established underits Bylaws. The financial accounts and reports including the system ofinternal controls and procedures of the Commission shall be auditedannually by an independent certified public accountant. Upon thedetermination of the Commission, but no less frequently than every three(3) years, the review of the independent auditor shall include a managementand performance audit of the Commission. The Commission shall make anAnnual Report to the Governor and legislature of the Compacting States,which shall include a report of the independent audit. The Commission'sinternal accounts shall not be confidential and such materials may beshared with the Commissioner of any Compacting State upon request provided,however, that any work papers related to any internal or independent auditand any information regarding the privacy of individuals and insurers'proprietary information, including trade secrets, shall remainconfidential.

7. No Compacting State shall have any claim to or ownership of anyproperty held by or vested in the Commission or to any Commission fundsheld 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 legislativeenactment of the Compact into law by two Compacting States; provided, theCommission shall become effective for purposes of adopting UniformStandards for, reviewing, and giving approval or disapproval of, Productsfiled with the Commission that satisfy applicable Uniform Standards onlyafter twenty-six (26) States are Compacting States or, alternatively, byStates representing greater than forty percent (40%) of the premium volumefor life insurance, annuity, disability income and long-term care insuranceproducts, based on records of the NAIC for the prior year. Thereafter, itshall become effective and binding as to any other Compacting State uponenactment of the Compact into law by that State.

3. Amendments to the Compact may be proposed by the Commission forenactment by the Compacting States. No amendment shall become effectiveand binding upon the Commission and the Compacting States unless and untilall 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 remainbinding upon each and every Compacting State; provided, that a CompactingState may withdraw from the Compact ("Withdrawing State") by enacting astatute specifically repealing the statute which enacted the Compact intolaw.

b. The effective date of withdrawal is the effective date of therepealing statute. However, the withdrawal shall not apply to any productfilings approved or self-certified, or any Advertisement of such products,on the date the repealing statute becomes effective, except by mutualagreement of the Commission and the Withdrawing State unless the approvalis rescinded by the Withdrawing State as provided in Paragraph e of thissection.

c. The Commissioner of the Withdrawing State shall immediately notifythe Management Committee in writing upon the introduction of legislationrepealing this Compact in the Withdrawing State.

d. The Commission shall notify the other Compacting States of theintroduction of such legislation within ten (10) days after its receipt ofnotice thereof.

e. The Withdrawing State is responsible for all obligations, dutiesand liabilities incurred through the effective date of withdrawal,including any obligations, the performance of which extend beyond theeffective date of withdrawal, except to the extent those obligations mayhave been released or relinquished by mutual agreement of the Commissionand the Withdrawing State. The Commission's approval of Products andAdvertisement prior to the effective date of withdrawal shall continue tobe effective and be given full force and effect in the Withdrawing State,unless formally rescinded by the Withdrawing State in the same manner asprovided by the laws of the Withdrawing State for the prospectivedisapproval of products or advertisement previously approved under statelaw.

f. Reinstatement following withdrawal of any Compacting State shalloccur upon the effective date of the Withdrawing State reenacting theCompact.

2. Default

a. If the Commission determines that any Compacting State has at anytime defaulted ("Defaulting State") in the performance of any of itsobligations or responsibilities under this Compact, the Bylaws or dulypromulgated Rules or Operating Procedures, then, after notice and hearingas set forth in the Bylaws, all rights, privileges and benefits conferredby this Compact on the Defaulting State shall be suspended from theeffective date of default as fixed by the Commission. The grounds fordefault include, but are not limited to, failure of a Compacting State toperform its obligations or responsibilities, and any other groundsdesignated in Commission Rules. The Commission shall immediately notifythe Defaulting State in writing of the Defaulting State's suspensionpending a cure of the default. The Commission shall stipulate theconditions and the time period within which the Defaulting State must cureits default. If the Defaulting State fails to cure the default within thetime period specified by the Commission, the Defaulting State shall beterminated from the Compact and all rights, privileges and benefitsconferred by this Compact shall be terminated from the effective date oftermination.

b. Product approvals by the Commission or productself-certifications, or any Advertisement in connection with such product,that are in force on the effective date of termination shall remain inforce in the Defaulting State in the same manner as if the Defaulting Statehad withdrawn voluntarily pursuant to Section 1 of this article.

c. Reinstatement following termination of any Compacting Staterequires a reenactment of the Compact.

3. Dissolution of Compact

a. The Compact dissolves effective upon the date of the withdrawal ordefault of the Compacting State which reduces membership in the Compact toone Compacting State.

b. Upon the dissolution of this Compact, the Compact becomes null andvoid and shall be of no further force or effect, and the business andaffairs of the Commission shall be wound up and any surplus funds shall bedistributed in accordance with the Bylaws.

ARTICLE XV. SEVERABILITY AND CONSTRUCTION

1. The provisions of this Compact shall be severable; and if anyphrase, clause, sentence or provision is deemed unenforceable, theremaining provisions of the Compact shall be enforceable.

2. The provisions of this Compact shall be liberally construed toeffectuate 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 aCompacting State, except as provided in Paragraph b of this section.

b. For any Product approved or certified to the Commission, theRules, Uniform Standards and any other requirements of the Commission shallconstitute the exclusive provisions applicable to the content, approval andcertification of such Products. For Advertisement that is subject to theCommission's authority, any Rule, Uniform Standard or other requirement ofthe Commission which governs the content of the Advertisement shallconstitute the exclusive provision that a Commissioner may apply to thecontent of the Advertisement. Notwithstanding the foregoing, no actiontaken by the Commission shall abrogate or restrict: (i) the access of anyperson to state courts; (ii) remedies available under state law related tobreach of contract, tort, or other laws not specifically directed to thecontent of the Product; (iii) state law relating to the construction ofinsurance contracts; or (iv) the authority of the attorney general of thestate, including but not limited to maintaining any actions or proceedings,as authorized by law.

c. All insurance products filed with individual States shall besubject to the laws of those States.

2. Binding Effect of this Compact

a. All lawful actions of the Commission, including all Rules andOperating Procedures promulgated by the Commission, are binding upon theCompacting States.

b. All agreements between the Commission and the Compacting Statesare binding in accordance with their terms.

c. Upon the request of a party to a conflict over the meaning orinterpretation of Commission actions, and upon a majority vote of theCompacting States, the Commission may issue advisory opinions regarding themeaning or interpretation in dispute.

d. In the event any provision of this Compact exceeds theconstitutional limits imposed on the legislature of any Compacting State,the obligations, duties, powers or jurisdiction sought to be conferred bythat provision upon the Commission shall be ineffective as to thatCompacting State, and those obligations, duties, powers or jurisdictionshall remain in the Compacting State and shall be exercised by the agencythereof to which those obligations, duties, powers or jurisdiction aredelegated by law in effect at the time this Compact becomes effective.