AB992: Bill Text

AB992,9,17 (v) To borrow money.

AB992,9,19 (w) To appoint committees including, but not limited to, an industry advisory committee and an executive committee of members.

AB992,9,21 (x) To provide and receive information relating to receiverships and guaranty associations, and to cooperate with law enforcement agencies.

AB992,9,22 (y) To adopt and use a corporate seal.

AB992,9,25 (z) To perform such other functions as may be necessary or appropriate to achieve the purposes of this compact as may be consistent with the state regulation of the business of insurance pursuant to the McCarran-Ferguson act.

AB992,10,6 (5) Article V — Organization of the Commission. (a) Each compacting state shall have one member. Each member shall be qualified to serve in such capacity under the applicable law of the compacting state. Each compacting state retains the discretionary right to determine the due election or appointment and qualification of its own commissioner, and to fill all vacancies of its member. Each member shall be entitled to one vote.

AB992,10,9 (b) 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 of the compact, including, but not limited to, all of the following:

AB992,10,10 1. Establishing the fiscal year of the commission.

AB992,10,13 2. Providing reasonable standards and procedures for the establishment of committees and governing any general or specific delegation of any authority or function of the commission.

AB992,10,15 3. Providing reasonable procedures for calling and conducting meetings of the commission, and ensuring reasonable notice of each such meeting.

AB992,10,16 4. Establishing the titles and responsibilities of the officers of the commission.

AB992,10,20 5. 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.

AB992,10,23 6. Providing a mechanism for winding up the operations of the commission and the equitable return of any surplus funds that may exist after the dissolution of the compact after the payment or reserving of all of its debts and obligations.

AB992,11,7 (c) The commission shall, by a majority of the members, elect annually from among its members a chairperson and a vice chairperson, each of whom shall have such authorities and duties as may be specified in the bylaws. The chairperson or, in his or her absence or disability, a member designated in accordance with the bylaws, shall preside at all meetings of the commission. The officers so elected shall serve without compensation or remuneration from the commission; provided that, subject to the availability of budgeted funds, the officers shall be reimbursed for any actual and necessary costs and expenses incurred by them in the performance of their duties and responsibilities as officers of the commission.

AB992,11,13 (d) The commission may, by a majority of the members, appoint or retain an executive director for such period, upon such terms and conditions and for such compensation as the commission determines 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.

AB992,11,15 (e) The commission shall maintain its corporate books and records in accordance with the bylaws.

AB992,11,25 (f) The members, officers, executive director and employes 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 or arising out of or relating to any actual or alleged act, error or omission that occurred, or that such person 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 or liability for any damage, loss, injury or liability caused by the intentional or wilful and wanton misconduct of any such person, or to protect the commission acting as receiver under sub. (9).

AB992,12,8 (g) The commission shall defend any commissioner of a compacting state, or his or her representatives or employes, or the commission's representatives or employes, in any civil action seeking to impose liability, arising out of or relating to 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 gross negligence or intentional wrongdoing on the part of such person.

AB992,12,17 (h) The commission shall indemnify and hold the commissioner of a compacting state, or his or her representatives or employes, or the commission's representatives or employes, harmless in the amount of any settlement or judgment obtained against such person arising out of or relating to 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 gross negligence or intentional wrongdoing on the part of such person.

AB992,12,21 (i) The costs and expenses of defense and indemnification of the commission acting as receiver of an estate shall be paid as administrative expenses from the assets of that estate unless such costs and expenses are covered by insurance maintained by the commission.

AB992,12,24 (6) Article VI — Meetings and Acts of the Commission. (a) The commission shall meet and take such actions as are consistent with the provisions of this compact.

AB992,13,4 (b) Except as otherwise provided in this compact and unless a greater percentage is required by the bylaws, in order to constitute an act of the commission, such act shall have been taken at a meeting of the commission and shall have received an affirmative vote of a majority of the members.

AB992,13,9 (c) 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 and may not delegate his or her vote to another member. The bylaws may provide for members' participation in meetings by telephone or other means of telecommunication.

AB992,13,12 (d) The commission shall meet at least once during each calendar year. The chairperson of the commission may call additional meetings at any time and, upon the request of a majority of the members, shall call additional meetings.

AB992,13,24 (e) The commission's rules shall establish conditions and procedures under which the commission shall make its information and official records available to the public for inspection or copying. The commission may exempt from disclosure any information or official records to the extent disclosure would adversely affect personal privacy rights or proprietary interests. In promulgating such rules, the commission may consider any special circumstances pertaining to insurer insolvencies, but shall be guided by the principles embodied in state and federal freedom of information laws. The commission may promulgate additional rules under which it may make available to law enforcement agencies records and information otherwise exempt from disclosure, and may enter into agreements with law enforcement agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.

AB992,14,6 (f) Public notice shall be given of all meetings and all meetings shall be open to the public, except as set forth in the rules or as otherwise provided in this compact. The commission shall promulgate rules consistent with the principles contained in the government in sunshine act, 5 USC 552b. The commission and any of its committees may close a meeting to the public if it determines by two-thirds vote that an open meeting would likely do any of the following:

AB992,14,8 1. Relate solely to the commission's internal personnel practices and procedures.

AB992,14,9 2. Disclose matters specifically exempted from disclosure by statute.

AB992,14,11 3. Disclose trade secrets or commercial or financial information which is privileged or confidential.

AB992,14,12 4. Involve accusing any person of a crime or formally censuring any person.

AB992,14,14 5. Disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy.

AB992,14,15 6. Disclose investigatory records compiled for law enforcement purposes.

AB992,14,19 7. Disclose information contained in or related to examination, operating or condition reports prepared by, or on behalf or for the use of, the commission with respect to a regulated entity for the purpose of regulation or supervision of such entity.

AB992,14,21 8. Disclose information, the premature disclosure of which would significantly endanger the stability of a regulated entity.

AB992,14,23 9. Specifically relate to the commission's issuance of a subpoena or its participation in a civil action or proceeding.

AB992,15,7 (g) For every meeting closed under par. (f), the commission's chief legal officer shall publicly certify that, in his or her opinion, the meeting may be closed to the public, and shall reference each relevant exemptive provision. The commission shall keep minutes which shall fully and clearly describe all matters discussed in any meeting and shall provide a full and accurate summary of any actions taken, and the reasons therefor, including a description of each of the views expressed on any item and the record of any rollcall vote, reflected in the vote of each member on the question. All documents considered in connection with any action shall be identified in the minutes.

AB992,15,11 (7) Article VII — Rule-making Functions of the Commission. (a) The commission shall promulgate rules and operating procedures in order to effectively and efficiently achieve the purposes of this compact; provided, that the commission shall not promulgate any rules that do any of the following:

AB992,15,13 1. Alter the statutory priorities for distributing assets out of an estate, except pursuant to rules promulgated under par. (c).

AB992,15,17 2. Directly relate to guaranty associations, including but not limited to rules governing coverage, funding or assessment mechanisms. It is the intent of this compact that the commission not promulgate any rules that regulate, restrict or otherwise affect the operations of guaranty associations.

AB992,15,22 (b) Rule making shall occur according to the criteria set forth in this subsection and the rules and operating procedures promulgated pursuant thereto. Such rule making shall substantially conform to the principles of the federal administrative procedure act, 5 USCS 551, et seq., and the federal advisory committee act, 5 USCS app. 2, section 1, et seq.

AB992,16,6 (c) Other than the promulgation of such rules as are necessary for the orderly operation of the commission, the first rule to be considered by the commission shall be uniform provisions governing insurer receiverships including, but not limited to, provisions requiring compacting states to implement, execute and administer in a fair, just, effective and efficient manner rules and operating procedures relating to receiverships. The commission shall, within 3 years after the adoption of this compact by 2 or more states, promulgate such uniform provisions through the rule-making process. Such uniform provisions shall become law in all of the compacting states upon legislative enactment in a majority of the compacting states.

AB992,16,13 (d) All rules and amendments shall become binding as of the date specified in the rule or amendment; provided, that if a compacting state expressly rejects a rule or amendment through legislative enactment as of the expiration of the 2nd full calendar year after the rule is promulgated, the rule or amendment shall have no further force or effect in the rejecting compacting state. If a majority of compacting states reject a rule, then the rule shall have no further force or effect in any compacting state.

AB992,16,15 (e) When promulgating a rule or operating procedure, the commission shall do all of the following:

AB992,16,18 1. Publish the proposed rule or operating procedure, stating with particularity the text of the rule or operating procedure which is proposed and the reason for the proposed rule or operating procedure.

AB992,16,20 2. Allow persons to submit written data, facts, opinions and arguments, which information the commission shall make publicly available.

AB992,16,21 3. Provide an opportunity for an informal hearing.

AB992,16,23 4. Promulgate a final rule or operating procedure and its effective date, if appropriate, based on the rule-making record.

AB992,17,4 (f) Not later than 60 days after a rule or operating procedure is promulgated, any interested person may file a petition in a court of competent jurisdiction where the commission's principal office is located for judicial review of the rule or operating procedure. If the court finds that the commission's action is not supported by substantial evidence in the rule-making record, the court shall hold the rule unlawful and set it aside.

AB992,17,8 (8) Article VIII — Oversight and Dispute Resolution by the Commission. (a) The commission shall oversee the administration and operations of receiverships in compacting states, and shall monitor receiverships being administered in noncompacting states which may significantly affect compacting states.

AB992,17,11 (b) To aid its monitoring, oversight and coordination responsibilities, the commission shall establish operating procedures requiring each member to submit to the commission the following written reports:

AB992,17,17 1. An initial report upon a finding or other official action by the compacting state that grounds exist for receivership of an insurer doing business in more than one state. Thereafter, reports shall be submitted periodically and as otherwise required pursuant to the commission's operating procedures. The commission shall be entitled to receive notice of, and shall have standing to appear in, compacting states' receiverships.

AB992,17,19 2. An initial report of the status of an insurer within a reasonable time after the initiation of a receivership.

AB992,17,25 (c) The commission shall promulgate operating procedures requiring receivers to submit to the commission periodic written reports and such additional information and documentation as the commission may reasonably request. Each compacting state's receivers shall establish the capability to obtain and provide all records, data and information required by the commission in accordance with the commission's operating procedures.

AB992,18,8 (d) 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 responsibility 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 the commission shall be subject to the compacting state's laws pertaining to confidentiality and nondisclosure with respect to all such records, data and information in its possession.

AB992,18,16 (e) The courts and executive agencies in each compacting state shall enforce this compact and shall take all actions necessary and appropriate to effectuate the compact's purposes and intent. In any receivership or other judicial or administrative proceeding in a compacting state pertaining to the subject matter of this compact which may affect the powers, responsibilities or actions of the commission, the commission shall be entitled to receive all service of process in any such proceeding, and shall have standing to intervene in the receivership or proceeding for all purposes.

AB992,18,21 (f) The commission shall analyze and correlate records, data, information and reports received from receivers and guaranty associations, and shall make recommendations for improving their performance to the compacting states. The commission shall include summary information and data regarding its oversight functions in its annual report.

AB992,18,24 (g) The commission shall attempt, upon the request of a member, to resolve any disputes or other issues which are subject to this compact and which may arise among compacting states and noncompacting states.

AB992,19,3 (h) The compacting states shall report to the commission on issues or activities of concern to them, and cooperate with and support the commission in the discharge of its duties and responsibilities.

AB992,19,5 (i) The commission shall promulgate an operating procedure providing for binding dispute resolution for disputes among receivers.

AB992,19,7 (j) The commission shall facilitate voluntary dispute resolution for disputes among guaranty associations and receivers.

AB992,19,22 (9) Article IX — Receivership Functions of the Commission. (a) The commission has authority to act as receiver of any insurer domiciled, engaged in or doing business in a compacting state upon the request of the commissioner of such compacting state, or as otherwise provided in this compact. As receiver, the commission shall have all powers and duties pursuant to the receivership laws of the domiciliary state. The commission shall maintain accounts of receipts and disbursements of the estates for which it is acting as receiver, consistent with the accounting practices and procedures set forth in the bylaws. The commission shall cause an annual audit of each estate for which it is acting as receiver to be conducted by an independent certified public accountant. The costs and expenses of such audit shall be paid as administrative expenses from the assets of the estate. The commission may not cause an annual audit to be conducted of any estate which lacks sufficient assets to pay the costs and expenses of such audit. The commission as receiver may delegate its receivership duties and functions, and may contract with others for that purpose.

AB992,20,6 (b) The commission shall act as receiver of any insurer domiciled or doing business in a compacting state in the event that the member acting as receiver in that compacting state fails to comply with duly promulgated commission rules or operating procedures. The commission shall notify the member in writing of his or her noncompliance with commission rules or operating procedures. If the member acting as receiver fails to remedy the noncompliance within 10 days after receipt of the notification, the commission may petition the supervising court before which the receivership is pending for an order substituting and appointing the commission as receiver of the estate.

AB992,20,10 (c) The commission may not act as receiver of an estate that appears to lack sufficient assets to fund such receivership unless the compacting state makes provisions for the payment of the estate's administrative expenses satisfactory to the commission.

AB992,20,13 (d) The commission may act as deputy receiver for any insurer domiciled or doing business in a noncompacting state in accordance with that state's laws, upon request of that noncompacting state's commissioner and approval of the commission.

AB992,20,15 (e) With respect to receiverships pending in a compacting state on the effective date of this paragraph .... [revisor inserts date], all of the following apply:

AB992,20,17 1. The commission may act as receiver of an insurer upon the request of that compacting state's member and approval of the commission.

AB992,20,20 2. The commission shall oversee, monitor and coordinate the activities of all receiverships pending in that compacting state regardless of whether the commission is acting as receiver of estates in that state.

AB992,20,22 (10) Article X — Finance. (a) The commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization.

AB992,21,2 (b) Except as otherwise provided in this compact or by act of the commission, the costs and expenses of each compacting state shall be the sole and exclusive responsibility of the respective compacting state. The commission may pay or provide for actual and necessary costs and expenses for attendance of its members at official meetings of the commission or its designated committees.

AB992,21,7 (c) The commission shall levy on and collect an annual assessment from each compacting state and each insurer authorized to do business in a compacting state and writing direct insurance to cover the cost of the internal operations and activities of the commission and its staff in a total amount sufficient to cover the commission's annual budget. With respect to the assessments, all of the following apply:

AB992,21,23 1. The aggregate annual assessment amount shall be allocated 75% to insurers and 25% to compacting states. The insurers' portion shall be allocated to each insurer by the percentage derived from a fraction, the numerator of which shall be the gross direct written premium received on that insurer's business in all compacting states and the denominator of which shall be the gross direct written premium received by all insurers on business in all compacting states. The compacting states' portion shall be allocated to each compacting state by the percentage derived from a fraction, the numerator of which shall be the gross direct written premium received by all insurers on business in that compacting state and the denominator shall be the gross direct written premium received on all insurers on business in all compacting states. Each compacting state's portion shall be funded as designated by that state's legislature. In no event shall an insurer's assessment be less than $50 or more than $25,000; provided, that affiliated insurers' combined assessments shall not exceed $50,000. Upon the request of an insurer, the commission may exempt or defer the assessment of any insurer, if such assessment would cause the insurer's financial impairment.

AB992,22,2 2. These assessments may not be used to pay any costs or expenses incurred by the commission and its staff acting as receiver of estates. Such costs and expenses shall be paid as administrative expenses from the assets of the estates as provided by law, except as otherwise provided in this compact.

AB992,22,11 3. Each insurer authorized to do business in a compacting state shall timely pay assessments to the commission. Failure to pay such assessments shall not be grounds for the revocation, suspension or denial of an insurer's authority to do business, but shall subject the insurer to suit by the commission for recovery of any assessment due, attorneys fees and costs, together with interest from the date the assessment is due at a rate of 10% per year, and to civil forfeiture in an amount to be determined by the commissioner of that compacting state in which the insurer received the greatest premium in the year next preceding the first year for which the insurer is delinquent in payment of assessments.

AB992,22,15 (d) The commission shall be reimbursed in the following manner for the costs and expenses incurred by the commission and its staff acting as receiver of estates to the extent that an insurer's assets may be insufficient for the effective administration of its estate:

AB992,22,17 1. If the insurer is domiciled in a compacting state, the estate shall be closed unless that compacting state makes provisions for reimbursing the commission.

AB992,22,21 2. If the insurer is unauthorized to do business in a compacting state or if the insurer is domiciled in a noncompacting state and subject to ancillary receivership, the commission and such state shall make provisions for reimbursing the commission prior to the commission becoming receiver of such insurer.

AB992,23,2 (e) To fund the cost of the initial operations of the commission until its first annual budget is adopted and related assessments have been made, contributions from compacting states and others may be accepted and a one-time assessment on insurers doing a direct insurance business in the compacting states may be made not to exceed $450 per insurer.

AB992,23,10 (f) The commission's adopted budget for a fiscal year may not be approved until it has been subject to notice and comment as set forth for rules and operating procedures in sub. (7) (e). The budget shall determine the amount of the annual assessment. The commission may accumulate a net worth not to exceed 30% of its then annual cost of operation to provide for contingencies and events not contemplated. These accumulated funds shall be held separately and may not be used for any other purpose. The commission's budget may include a provision for a contribution to the commission's net worth.

AB992,23,12 (g) The commission shall be exempt from all taxation in and by the compacting states.

AB992,23,14 (h) The commission may not pledge the credit of any compacting state, except by and with the appropriate legal authority of that compacting state.

AB992,24,6 (i) The commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds, other than receivership assets, 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 3 years, the review of such independent auditor shall include a management and performance audit of the commission. The report of such independent audit shall be made available to the public and shall be included in and become part of the annual report of the commission to the governors and legislatures of the compacting states. The commission's internal accounts, any workpapers related to any internal audit and any workpapers related to the independent audit, shall be confidential; provided, that such materials shall be made available in compliance with the order of any court of competent jurisdiction, pursuant to such reasonable rules as the commission shall promulgate and to any commissioner or governor of a compacting state, or their duly authorized representatives.

AB992,24,9 (j) No compacting state shall have any claim to or ownership of any property held by or vested in the commission or the commission acting as receiver or to any other commission funds held pursuant to the provisions of this compact.

AB992,24,11 (11) Article XI — Compacting States, Effective Date and Amendment. (a) Any state is eligible to become a compacting state.

AB992,24,15 (b) The compact shall become effective and binding upon legislative enactment of the compact into law by 2 compacting states. Thereafter, it shall become effective and binding as to any other compacting state upon enactment of the compact into law by that state.

AB992,24,19 (c) 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 it is enacted into law by unanimous consent of the compacting states.

AB992,24,23 (12) Article XII — Withdrawal, Default and Termination. (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 by repealing the statute which enacted the compact into law.

AB992,25,2 (b) The effective date of withdrawal is the effective date of the repeal; provided, that the repeal shall not apply to any receiverships for which the commission is acting as receiver that are pending on the date of the repeal except by mutual agreement of the commission and the withdrawing state.

AB992,25,5 (c) The withdrawing state shall immediately notify the chairperson of the commission in writing upon the introduction of legislation repealing this compact in the withdrawing state.

AB992,25,8 (d) The commission shall notify the other compacting states of the withdrawing state's intention to withdraw within 60 days after its receipt of the notice under par. (c).