SB 1071 - This act creates the Interstate Insurance Product Regulation Compact. The act provides for the promotion and protection of the interests of consumers of individual and group annuity, life insurance, disability income, and long-term care insurance products. The act creates the Interstate Insurance Product Regulation Commission to develop uniform standards for insurance products covered under the Compact, to establish a central clearing house to receive and provide prompt review of insurance products covered under the Compact, to provide appropriate regulatory approval, and to improve coordination of regulatory resources and expertise between state insurance departments. The Interstate Product Regulation Compact establishes a mechanism for developing uniform national product standards for life insurance, annuities, disability income insurance, and long-term care insurance products. It also creates a single point to file products for regulatory review and, if necessary, approval. In the event of approval, an insurer would be able to sell its products in multiple states without separate filings in each state.
The act provides the statutory framework for states to enter into an interstate insurance product regulation compact. The Compact would establish a single point of filing for certain insurance products and rate filings which would be subject to uniform national standards. Those states that are members of the Compact would develop the uniform standards that apply to products filed with the Commission. Product standards would be developed through a rulemaking process which would require the approval of two-thirds of the commission management committee and two-thirds of the commission members. Unless a state opts-out, approval of a product by the Compact would be the same as approval by a member state. The act would, however, allow companies the option to continue to file products in the individual states through the existing form filing processes. The act also provides that individual states will continue to regulate market activities and allow for coordination among states and the Commission to determine instances of violations of uniform standards subject to the final order of the Commission. If a state disagrees with a product standard developed by the Commission, it may opt-out of the uniform standard either by regulation or legislation. For long-term care insurance, states may opt-out at the time of joining the Compact. In order to opt-out by regulation, a state must show that the uniform standard does not provide reasonable protections to the citizens of the state and that the needs of the state outweigh the Legislature's intent to participate in and receive the benefits of the Compact. The Compact would become effective when two states enact compact legislation. The Commission becomes operational if twenty-six states or states representing forty percent of the premium for life, annuities, disability income insurance and long-term care join the Compact. Operations of the Commission would be financed initially through contributions and other sources of funding and over time through the filing fees paid by insurers. All states joining the Compact would be involved in setting up and overseeing the activities of the Compact, including developing product standards and the rules and operating procedures of the Commission. The Commission would make an annual report to the legislature and governor of each state joining the Compact. In addition to opting out of particular product standards, each state has the right to withdraw from the Compact, by enacting a statute repealing this act.