October 22, 2007 - Introduced by Senators Breske, Schultz, Olsen, Lehman,
Cowles, Grothman and
Roessler, cosponsored by Representatives F. Lasee,
Nygren, Albers, A. Ott, Hahn and Bies. Referred to Committee on
Transportation, Tourism and Insurance.
SB294,2,2
1An Act to repeal 612.51 (1) and 628.347 (1) (c);
to renumber and amend 631.20
2(6) (a);
to amend 40.55 (1), 100.205 (6) (intro.), 605.03 (1) (a), 607.02 (1),
3628.347 (title), 628.347 (1) (b), 628.347 (2) (a), 628.347 (2) (b) 1., 628.347 (2) (b)
42., 628.347 (2) (b) 3., 628.347 (2) (b) 4., 628.347 (2) (c) (intro.), 628.347 (3) (f) 2.,
5628.347 (5) (a), 628.347 (5) (b), 628.347 (5) (c), 628.347 (6) (b), 628.347 (6) (c),
6628.347 (7), 628.347 (8) (a), 631.01 (4m), 631.20 (1) (a), 631.20 (2) (intro.), 631.20
7(3), 631.20 (6) (title), 631.20 (6) (b), 631.21 (1) (intro.), 631.23 (1) (intro.), 631.36
8(1) (a), 632.32 (4) (intro.), 632.45 (2), 646.35 (6) (bm) and 893.80 (8); and
to
9create 14.82, 601.58, 631.20 (1) (c), 631.20 (1g), 631.20 (1m), 631.20 (6) (a) 2.
10and 631.20 (6) (c) of the statutes;
relating to: the Interstate Insurance Product
11Regulation Compact, the Interstate Insurance Product Regulation
1Commission, filing insurance policy forms with the commissioner of insurance,
2suitability of annuity contracts, and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Interstate Insurance Product Regulation Compact
This bill enacts the Interstate Insurance Product Regulation Compact
(compact). The stated purposes of the compact include promoting and protecting the
interests of consumers of annuity, life insurance, disability income, and long-term
care insurance products (insurance products); developing uniform standards for
insurance products; establishing a central clearinghouse for review of insurance
products, and advertisements related to insurance products, that are filed with the
Interstate Insurance Product Regulation Commission (commission); and giving
regulatory approval to insurance products and related advertisements filed with the
commission. The compact accomplishes its purposes through the commission, which
is created in the bill. Each compacting state has one member on the commission, with
one vote. Under the bill, the commissioner of insurance (commissioner), or his or her
designee, is the commission member from this state.
The commission is a body politic and corporate. The bill specifies, among other
things, all of the following related to the commission: its organization, including
required management and legislative committees; its powers, including rule
making; meeting, voting, and notice requirements; requirements related to record
keeping and confidentiality of its records; liability, and immunity from liability, of its
members; monitoring and enforcement of compliance by the compacting states with
its rules, standards, bylaws, and operating procedures; the financing of its
operations, including the imposition of fees; auditing requirements; and reporting
requirements.
One of the most important functions of the commission is establishing uniform
standards for insurance products, which have the force and effect of law in the states
that enact the compact for products filed with the commission. The uniform
standards relate to the form of a policy or contract, including an application and
evidence of coverage, for an insurance product and are intended to prohibit the use
of inconsistent, misleading, or ambiguous provisions in insurance products. Before
adopting a uniform standard, the commission must give written notice to the
legislative committees of the compacting states with jurisdiction over insurance
matters. A uniform standard becomes effective 90 days after it is promulgated by the
commission, or at a later date determined by the commission. However, a compacting
state may opt out of a uniform standard, by legislation or administrative rule, in
accordance with procedures outlined in the bill. In addition, when enacting the
compact a compacting state may prospectively opt out of all uniform standards
established by the commission relating to long-term care insurance products; under
this bill, however, Wisconsin does not prospectively opt out of those uniform
standards.
Under current law, except for certain very limited types of insurance, all
insurance forms must be filed with and approved by the commissioner before they
may be used in this state. Under the bill, an important function of the commission
is receiving and reviewing insurance products, rate filings for disability income and
long-term care insurance products, and advertisements relating to long-term care
insurance products for which the commission has developed uniform standards,
which are voluntarily filed with the commission by insurers seeking the approval of
the commission. The commission may approve those insurance products, rate
filings, and advertisements that satisfy applicable uniform standards adopted by the
commission. The approval has the force and effect of law in the compacting states,
and any insurance product that is approved by the commission may be sold in any
of the compacting states. In addition, if the commission determines that the
advertisement of an insurance product, other than a long-term care insurance
product, could have the capacity or tendency to mislead the public, the commission
may require an insurer to submit its advertisement for that insurance product for
the commission's review or approval before the advertisement may be used. The
commission may also designate products and advertisement that may be
self-certified without prior approval by the commission.
The bill provides that the compact becomes effective and binding when two
states enact it, except that the commission becomes effective for purposes of adopting
uniform standards and reviewing and approving insurance products only after 26
states, or states representing greater than 40 percent of the premium volume for
insurance products, become compacting states. In general, only states that enact the
compact are subject to its provisions and the authority of the commission. The bill
provides that a state may withdraw from the compact by repealing its enacting
statute. A compacting state may be terminated from the compact if it defaults in the
performance of any of its obligations or responsibilities under the compact.
Insurance form filing with the commissioner
Under current law, with a few exceptions, no insurance policy or group
certificate form may be used unless it has been filed with and approved by the
commissioner. Any form that has not been disapproved in 30 days after filing is
approved. The statutes set out the grounds on which the commissioner may
disapprove a form. The commissioner may order that the use of a form be
discontinued if, after a hearing, the commissioner finds that an approved form would
now be disapproved if newly filed. Penalties may not be imposed against an insurer
for using a form that does not comply with a statute or rule if the statute or rule was
in effect when the form was approved. However, penalties may be imposed against
an insurer for using a form that does not comply with a statute or rule if the statute
or rule takes effect after the date on which the form was approved.
This bill provides that, with a number of specified exceptions, a form first used
on or after the effective date of the provision (which is approximately three months
after the bill is passed and published) that has not already been filed by that date
may be used without approval by the commissioner. The specified exceptions, which
must still be filed and approved before use, include forms for long-term care
insurance, worker's compensation policies, Medicare replacement or supplement
policies, health care liability insurance, policies under the Health Insurance
Risk-Sharing Plan, rustproofing warranty insurance, and warranty contracts;
forms ordered to be filed by the commissioner or required to be filed by a rule of the
commissioner; forms that include appraisal or arbitration provisions not specifically
authorized by rule; and forms containing certain clauses that require explicit
approval. For forms that do not have to be filed and approved before use, however,
the insurer must still file the form with the commissioner 30 days before use and
certify that the form complies with the statutes related to insurance and any rules
promulgated under those statutes. The commissioner may still, after a hearing,
order the discontinuance of the use of a form that did not require approval before use
if there are grounds for disapproval. Any form that was approved by, or self-certified
to and not disapproved by, the commission is not subject to any requirement for filing
with the commissioner.
The bill provides that penalties may not be imposed against an insurer for the
use of a form solely based on a finding of the commissioner that the content of the
form is misleading. The bill also provides that, if an insurer uses a form that was filed
but not approved before use and that violates a statute related to insurance or any
rules promulgated under those statutes, the insurer violates that statute or rule and
is subject to penalties.
Suitability of annuity contracts
Under current law, an insurance intermediary, or insurer if no intermediary is
involved, is prohibited from making a recommendation to a person who is 65 years
old or older (senior consumer) about purchasing or exchanging an annuity unless the
intermediary or insurer has reasonable grounds to believe that the recommendation
is suitable for the senior consumer based on facts disclosed by the senior consumer.
Before making a recommendation, the intermediary or insurer must make
reasonable efforts to obtain information from the senior consumer about his or her
financial status, tax status, and investment objectives. The bill makes these
provisions apply to all consumers, not just to those who are 65 years old or older.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB294, s. 1
1Section
1. 14.82 of the statutes is created to read:
SB294,5,5
214.82 Interstate insurance product regulation commission. There is
3created an interstate insurance product regulation commission as specified in s.
4601.58 (3). The member of the commission representing this state shall be the
5commissioner of insurance or his or her designated representative, who must be an
1official or employee of the office of the commissioner of insurance. The commission
2member shall serve without compensation but shall be reimbursed from the
3appropriation under s. 20.145 (1) (g) for actual and necessary expenses incurred in
4the performance of his or her duties. The commission has the powers and duties
5granted and imposed under s. 601.58.
SB294, s. 2
6Section
2. 40.55 (1) of the statutes is amended to read:
SB294,5,147
40.55
(1) Except as provided in sub. (5), the state shall offer, through the group
8insurance board, to eligible employees under s. 40.02 (25) (bm) and to state
9annuitants long-term care insurance policies which have been
approved for sale in
10this state by filed with the office of the commissioner of insurance and which have
11been approved for offering under contracts established by the group insurance board
12if the insurer requests that the policy be offered and the state shall also allow an
13eligible employee or a state annuitant to purchase those policies for his or her spouse
14or parent.
SB294, s. 3
15Section
3. 100.205 (6) (intro.) of the statutes is amended to read:
SB294,5,1916
100.205
(6) (intro.) Every warrantor shall purchase a policy of insurance
17covering the financial integrity of its warranties. The policy of insurance shall be on
18a form approved by the commissioner of insurance
under s. 631.20 and shall have the
19following minimum provisions:
SB294, s. 4
20Section
4. 601.58 of the statutes is created to read:
SB294,5,24
21601.58 Interstate insurance product regulation compact. The interstate
22insurance product regulation compact is hereby enacted into law and entered into
23by this state with all other jurisdictions legally joining therein, in substantially the
24following form:
SB294,6,2
1(1) Article I - Purposes. Through means of joint and cooperative action among
2the compacting states, the purposes of this compact include all of the following:
SB294,6,43
(a) To promote and protect the interest of consumers of individual and group
4annuity, life insurance, disability income, and long-term care insurance products.
SB294,6,65
(b) To develop uniform standards for insurance products covered under the
6compact.
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(c) To establish a central clearinghouse to receive and provide prompt review
8of insurance products covered under the compact and, in certain cases,
9advertisements related thereto, submitted by insurers authorized to do business in
10one or more compacting states.
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(d) To give appropriate regulatory approval to those product filings and
12advertisements satisfying the applicable uniform standard.
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(e) To improve coordination of regulatory resources and expertise between state
14insurance departments regarding the setting of uniform standards and review of
15insurance products covered under the compact.
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(f) To create the interstate insurance product regulation commission.
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(g) To perform these and such other related functions as may be consistent with
18the state regulation of the business of insurance.
SB294,6,19
19(2) Article II - Definitions. In this compact:
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(a) "Advertisement" means any material designed to create public interest in
21a product or to induce the public to purchase, increase, modify, reinstate, borrow on,
22surrender, replace, or retain a policy, as more specifically defined in the rules and
23operating procedures of the commission.
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(b) "Bylaws" mean those bylaws established by the commission for its
25governance, or for directing or controlling the commission's actions or conduct.
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1(c) "Commission" means the interstate insurance product regulation
2commission established by this compact.
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(d) "Commissioner" means the chief insurance regulatory official of a state,
4including, but not limited to, commissioner, superintendent, director, or
5administrator.
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(e) "Compacting state" means any state that has enacted this compact
7legislation and that has not withdrawn under sub. (14) (a) or been terminated under
8sub. (14) (g).
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(f) "Domiciliary state" means the state in which an insurer is incorporated or
10organized; or, in the case of an alien insurer, its state of entry.
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(g) "Insurer" means any entity licensed by a state to issue contracts of
12insurance for any of the lines of insurance covered by this section.
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(h) "Member" means the person chosen by a compacting state as its
14representative to the commission, or his or her designee.
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(i) "Noncompacting state" means any state that is not at the time a compacting
16state.
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(j) "Operating procedures" mean procedures promulgated by the commission
18implementing a rule, a uniform standard, or a provision of this compact.
SB294,7,2319
(k) "Product" means the form of a policy or contract, including any application,
20endorsement, or related form that is attached to and made a part of the policy or
21contract, and any evidence of coverage or certificate, for an individual or group
22annuity, life insurance, disability income, or long-term care insurance product that
23an insurer is authorized to issue.
SB294,8,424
(L) To hire employees, professionals, or specialists, and elect or appoint officers,
25and to fix their compensation, define their duties and give them appropriate
1authority to carry out the purposes of the compact, and determine their
2qualifications; and to establish the commission's personnel policies and programs
3relating to, among other things, conflicts of interest, rates of compensation, and
4qualifications of personnel.
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(m) "State" means any state, district, or territory of the United States of
6America.
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(n) "Third-party filer" means an entity that submits a product filing to the
8commission on behalf of an insurer.
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(o) "Uniform standard" means a standard adopted by the commission for a
10product line, pursuant to sub. (7), and shall include all of the product requirements
11in the aggregate; provided, that each uniform standard shall be construed, whether
12express or implied, to prohibit the use of any inconsistent, misleading, or ambiguous
13provisions in a product and the form of the product made available to the public shall
14not be unfair, inequitable, or against public policy as determined by the commission.
SB294,9,4
15(3) Article III - Establishment of the Commission and Venue. The compacting
16states hereby create the interstate insurance product regulation commission.
17Pursuant to sub. (4), the commission will have the power to develop uniform
18standards for product lines, receive and provide prompt review of products filed
19therewith, and give approval to those product filings satisfying applicable uniform
20standards; provided, that it is not intended for the commission to be the exclusive
21entity for receipt and review of insurance product filings. Nothing herein shall
22prohibit any insurer from filing its product in any state wherein the insurer is
23licensed to conduct the business of insurance, and any such filing shall be subject to
24the laws of the state where filed. The commission is a body corporate and politic, and
25an instrumentality of the compacting states. The commission is solely responsible
1for its liabilities except as otherwise specifically provided in this compact. Venue is
2proper and judicial proceedings by or against the commission shall be brought solely
3and exclusively in a court of competent jurisdiction where the principal office of the
4commission is located.
SB294,9,6
5(4) Article IV - Powers of the Commission. The commission shall have all of
6the following powers:
SB294,9,87
(a) To promulgate rules, pursuant to sub. (7), which shall be binding in the
8compacting states to the extent and in the manner provided in this compact.
SB294,9,249
(b) To exercise its rule-making authority and establish reasonable uniform
10standards for products covered under the compact, and advertisement related
11thereto, which shall have the force and effect of law and shall be binding in the
12compacting states, but only for those products filed with the commission; provided,
13that a compacting state shall have the right to opt out of such uniform standard
14pursuant to sub. (7), to the extent and in the manner provided in this compact; and
15provided further, that any uniform standard established by the commission for
16long-term care insurance products may provide the same or greater protections for
17consumers as, but shall not provide less than, those protections set forth in the
18National Association of Insurance Commissioners' Long-Term Care Insurance
19Model Act and Long-Term Care Insurance Model Regulation, respectively, adopted
20as of 2001. The commission shall consider whether any subsequent amendments to
21the National Association of Insurance Commissioners' Long-Term Care Insurance
22Model Act or Long-Term Care Insurance Model Regulation adopted by the National
23Association of Insurance Commissioners require amending of the uniform standards
24established by the commission for long-term care insurance products.
SB294,10,6
1(c) To receive and review in an expeditious manner products filed with the
2commission, and rate filings for disability income and long-term care insurance
3products, and give approval of those products and rate filings that satisfy the
4applicable uniform standard, where such approval shall have the force and effect of
5law and be binding on the compacting states to the extent and in the manner
6provided in the compact.
SB294,10,177
(d) To receive and review in an expeditious manner advertisement relating to
8long-term care insurance products for which uniform standards have been adopted
9by the commission, and give approval to all advertisement that satisfies the
10applicable uniform standard. For any product covered under this compact, other
11than long-term care insurance products, the commission shall have the authority to
12require an insurer to submit all or any part of its advertisement with respect to that
13product for review or approval prior to use, if the commission determines that the
14nature of the product is such that an advertisement of the product could have the
15capacity or tendency to mislead the public. The actions of the commission as
16provided in this subsection shall have the force and effect of law and shall be binding
17in the compacting states to the extent and in the manner provided in the compact.
SB294,10,2018
(e) To exercise its rule-making authority and designate products and
19advertisement that may be subject to a self-certification process without the need
20for prior approval by the commission.
SB294,10,2321
(f) To promulgate operating procedures, pursuant to sub. (7), that shall be
22binding in the compacting states to the extent and in the manner provided in this
23compact.
SB294,11,3
1(g) To bring and prosecute legal proceedings or actions in its name as the
2commission; provided, that the standing of any state insurance department to sue
3or be sued under applicable law shall not be affected.
SB294,11,54
(h) To issue subpoenas requiring the attendance and testimony of witnesses
5and the production of evidence.
SB294,11,66
(i) To establish and maintain offices.
SB294,11,77
(j) To purchase and maintain insurance and bonds.
SB294,11,98
(k) To borrow, accept, or contract for services of personnel, including, but not
9limited to, employees of a compacting state.
SB294,11,1510
(L) To hire employees, professionals, or specialists, and elect or appoint officers,
11and to fix their compensation, define their duties and give them appropriate
12authority to carry out the purposes of the compact, and determine their
13qualifications; and to establish the commission's personnel policies and programs
14relating to, among other things, conflicts of interest, rates of compensation, and
15qualifications of personnel.
SB294,11,1916
(m) To accept any and all appropriate donations and grants of money,
17equipment, supplies, materials, and services, and to receive, utilize, and dispose of
18the same; provided, that at all times the commission shall strive to avoid any
19appearance of impropriety.
SB294,11,2220
(n) To lease, purchase, accept appropriate gifts or donations of, or otherwise
21own, hold, improve, or use, any property, real, personal, or mixed; provided, that at
22all times the commission shall strive to avoid any appearance of impropriety.
SB294,11,2423
(o) To sell, convey, mortgage, pledge, lease, exchange, abandon, or otherwise
24dispose of any property, real, personal, or mixed.
SB294,12,2
1(p) To remit filing fees to compacting states as may be set forth in the bylaws,
2rules, or operating procedures.
SB294,12,43
(q) To enforce compliance by compacting states with rules, uniform standards,
4operating procedures, and bylaws.
SB294,12,55
(r) To provide for dispute resolution among compacting states.
SB294,12,86
(s) To advise compacting states on issues relating to insurers domiciled or doing
7business in noncompacting jurisdictions, consistent with the purposes of this
8compact.
SB294,12,119
(t) To provide advice and training to those personnel in state insurance
10departments responsible for product review, and to be a resource for state insurance
11departments.
SB294,12,1212
(u) To establish a budget and make expenditures.
SB294,12,1313
(v) To borrow money.
SB294,12,1714
(w) To appoint committees, including advisory committees comprising
15members, state insurance regulators, state legislators or their representatives,
16insurance industry and consumer representatives, and such other interested
17persons as may be designated in the bylaws.
SB294,12,1918
(x) To provide and receive information from, and to cooperate with, law
19enforcement agencies.
SB294,12,2020
(y) To adopt and use a corporate seal.
SB294,12,2321
(z) To perform such other functions as may be necessary or appropriate to
22achieve the purposes of this compact consistent with the state regulation of the
23business of insurance.
SB294,13,6
24(5) Article V - Organization of the Commission. (a) Each compacting state
25shall have one member. Each member shall be qualified to serve in such capacity
1under the applicable law of the compacting state. Any member may be removed or
2suspended from office as provided by the law of the state from which he or she shall
3be appointed. Any vacancy occurring in the commission shall be filled in accordance
4with the laws of the compacting state wherein the vacancy exists. Nothing herein
5shall be construed to affect the manner in which a compacting state determines the
6election or appointment and qualification of its own commissioner.
SB294,13,117
(b) Each member shall be entitled to one vote and shall have an opportunity
8to participate in the governance of the commission in accordance with the bylaws.
9Notwithstanding any provision herein to the contrary, no action of the commission
10with respect to the promulgation of a uniform standard shall be effective unless
11two-thirds of the members vote in favor thereof.
SB294,13,1412
(c) The commission shall, by a majority of the members, prescribe bylaws to
13govern its conduct as may be necessary or appropriate to carry out the purposes, and
14exercise the powers, of the compact, including, but not limited to:
SB294,13,1515
1. Establishing the fiscal year of the commission.
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2. Providing reasonable procedures for appointing and electing members, as
17well as holding meetings, of the management committee.
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3. Providing reasonable standards and procedures for all of the following:
SB294,13,1919
a. The establishment and meetings of other committees.