Chapter 601

601.58(4)(p) (p) To remit filing fees to compacting states as may be set forth in the bylaws, rules, or operating procedures.

601.58(4)(q) (q) To enforce compliance by compacting states with rules, uniform standards, operating procedures, and bylaws.

601.58(4)(r) (r) To provide for dispute resolution among compacting states.

601.58(4)(s) (s) To advise compacting states on issues relating to insurers domiciled or doing business in noncompacting jurisdictions, consistent with the purposes of this compact.

601.58(4)(t) (t) To provide advice and training to those personnel in state insurance departments responsible for product review, and to be a resource for state insurance departments.

601.58(4)(u) (u) To establish a budget and make expenditures.

601.58(4)(v) (v) To borrow money.

601.58(4)(w) (w) To appoint committees, including advisory committees comprising members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and such other interested persons as may be designated in the bylaws.

601.58(4)(x) (x) To provide and receive information from, and to cooperate with, law enforcement agencies.

601.58(4)(y) (y) To adopt and use a corporate seal.

601.58(4)(z) (z) To perform such other functions as may be necessary or appropriate to achieve the purposes of this compact consistent with the state regulation of the business of insurance.

601.58(5) (5) Article V — Organization of the Commission.

601.58(5)(a) (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. Any member may be removed or suspended from office as provided by the law of the state from which he or she shall be appointed. Any vacancy occurring in the commission shall be filled in accordance with the laws of the compacting state wherein the vacancy exists. Nothing herein shall be construed to affect the manner in which a compacting state determines the election or appointment and qualification of its own commissioner.

601.58(5)(b) (b) Each member shall be entitled to one vote and shall have an opportunity to participate in the governance of the commission in accordance with the bylaws. Notwithstanding any provision herein to the contrary, no action of the commission with respect to the promulgation of a uniform standard shall be effective unless two-thirds of the members vote in favor thereof.

601.58(5)(c) (c) 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, and exercise the powers, of the compact, including, but not limited to:

601.58(5)(c)1. 1. Establishing the fiscal year of the commission.

601.58(5)(c)2. 2. Providing reasonable procedures for appointing and electing members, as well as holding meetings, of the management committee.

601.58(5)(c)3. 3. Providing reasonable standards and procedures for all of the following:

601.58(5)(c)3.a. a. The establishment and meetings of other committees.

601.58(5)(c)3.b. b. Governing any general or specific delegation of any authority or function of the commission.

601.58(5)(c)4. 4. Providing reasonable procedures for calling and conducting meetings of the commission that consist of a majority of commission members, ensuring reasonable advance notice of each such meeting, and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public’s interest, the privacy of individuals, and insurers’ proprietary information, including trade secrets. The commission may meet in camera only after a majority of the entire membership votes to close a meeting en toto or in part. As soon as practicable, the commission must make public all of the following:

601.58(5)(c)4.a. a. A copy of the vote to close the meeting revealing the vote of each member with no proxy votes allowed.

601.58(5)(c)4.b. b. Votes taken during such meeting.

601.58(5)(c)5. 5. Establishing the titles, duties, and authority, and reasonable procedures for the election, of the officers of the commission.

601.58(5)(c)6. 6. 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.

601.58(5)(c)7. 7. Promulgating a code of ethics to address permissible and prohibited activities of commission members and employees.

601.58(5)(c)8. 8. Providing a mechanism for winding up the operations of the commission and the equitable disposition of any surplus funds that may exist after the termination of the compact after the payment or reserving of all of its debts and obligations.

601.58(5)(d) (d) The commission shall publish its bylaws in a convenient form and file a copy thereof and a copy of any amendment thereto, with the appropriate agency or officer in each of the compacting states.

601.58(5)(e) (e) A management committee comprising no more than 14 members shall be established as follows:

601.58(5)(e)1. 1. One member from each of the 6 compacting states with the largest premium volume for individual and group annuities, life insurance, disability income, and long-term care insurance products, determined from the records of the National Association of Insurance Commissioners for the prior year.

601.58(5)(e)2. 2. Four members from those compacting states with at least 2 percent of the market based on the premium volume described in subd. 1., other than the 6 compacting states with the largest premium volume, selected on a rotating basis as provided in the bylaws.

601.58(5)(e)3. 3. Four members from those compacting states with less than 2 percent of the market, based on the premium volume described in subd. 1., with one selected from each of the 4 zone regions of the National Association of Insurance Commissioners as provided in the bylaws.

601.58(5)(f) (f) The management committee shall have such authority and duties as may be set forth in the bylaws, including, but not limited to, all of the following:

601.58(5)(f)1. 1. Managing the affairs of the commission in a manner consistent with the bylaws and purposes of the commission.

601.58(5)(f)2. 2. Establishing and overseeing an organizational structure within, and appropriate procedures for, the commission to provide for the creation of uniform standards and other rules, receipt and review of product filings, administrative and technical support functions, review of decisions regarding the disapproval of a product filing, and the review of elections made by a compacting state to opt out of a uniform standard; provided, that a uniform standard shall not be submitted to the compacting states for adoption unless approved by two-thirds of the members of the management committee.

601.58(5)(f)3. 3. Overseeing the offices of the commission.

601.58(5)(f)4. 4. Planning, implementing, and coordinating communications and activities with other state, federal, and local government organizations in order to advance the goals of the commission.

601.58(5)(g) (g) The commission shall elect annually officers from the management committee, with each having such authority and duties as may be specified in the bylaws.

601.58(5)(h) (h) The management committee may, subject to the approval of the commission, 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 may not be a member of the commission. The executive director shall hire and supervise such other staff as may be authorized by the commission.

601.58(5)(i) (i) A legislative committee comprising state legislators or their designees shall be established to monitor the operations of, and make recommendations to, the commission, including the management committee; provided, that the manner of selection and term of any legislative committee member shall be as set forth in the bylaws. Prior to the adoption by the commission of any uniform standard, revision to the bylaws, annual budget, or other significant matter as may be provided in the bylaws, the management committee shall consult with and report to the legislative committee.

601.58(5)(j) (j) The commission shall establish 2 advisory committees, one of which shall comprise consumer representatives independent of the insurance industry, and the other comprising insurance industry representatives.

601.58(5)(k) (k) The commission may establish additional advisory committees as its bylaws may provide for the carrying out of its functions.

601.58(5)(L) (L) The commission shall maintain its corporate books and records in accordance with the bylaws.

601.58(5)(m) (m) The members, officers, executive director, employees, and representatives 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 by or arising out of or relating to any actual or alleged act, error, or omission that occurred, or that the person against whom the claim is made 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 willful and wanton misconduct of that person.

601.58(5)(n) (n) The commission shall defend any member, officer, executive director, employee, or representative of the commission in any civil action seeking to impose liability arising out of any actual or alleged act, error, or omission that occurred within the scope of commission employment, duties, or responsibilities, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of commission employment, duties, or responsibilities; provided, that nothing herein shall be construed to prohibit that person from retaining his or her own counsel; and provided further, that the actual or alleged act, error, or omission did not result from that person’s intentional or willful and wanton misconduct.

601.58(5)(o) (o) The commission shall indemnify and hold harmless any member, officer, executive director, employee, or representative of the commission for the amount of any settlement or judgment obtained against that person arising out of 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 the intentional or willful and wanton misconduct of that person.

601.58(5)(p) (p) Section 893.80 does not apply to claims against the commission.

601.58(6) (6) Article VI — Meetings and Acts of the Commission.

601.58(6)(a) (a) The commission shall meet and take such actions as are consistent with the provisions of this compact and the bylaws.

601.58(6)(b) (b) 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 or by such other means as provided in the bylaws. The bylaws may provide for members’ participation in meetings by telephone or other means of communication.

601.58(6)(c) (c) The commission shall meet at least once during each calendar year. Additional meetings shall be held as set forth in the bylaws.

601.58(7) (7) Article VII — Rules and Operating Procedures; Rule-making Functions of the Commission and Opting Out of Uniform Standards.

601.58(7)(a) (a) The commission shall promulgate reasonable rules, including uniform standards, and operating procedures in order to effectively and efficiently achieve the purposes of this compact. Notwithstanding the foregoing, in the event the commission exercises its rule-making authority in a manner that is beyond the scope of the purposes of this section, or the powers granted hereunder, then such an action by the commission shall be invalid and have no force and effect.

601.58(7)(b) (b) Rules and operating procedures shall be made pursuant to a rule-making process that conforms to the Model State Administrative Procedure Act of 1981 as amended, as may be appropriate to the operations of the commission. Before the commission adopts a uniform standard, the commission shall give written notice to all relevant state legislative committees in each compacting state responsible for insurance issues of its intention to adopt the uniform standard. The commission in adopting a uniform standard shall consider fully all submitted materials and issue a concise explanation of its decision.

601.58(7)(c) (c) A uniform standard shall become effective 90 days after its promulgation by the commission or such later date as the commission may determine; provided, that a compacting state may opt out of a uniform standard as provided in this subsection. “Opt out” shall be defined as any action by a compacting state to decline to adopt or participate in a promulgated uniform standard. All other rules and operating procedures, and amendments thereto, shall become effective as of the date specified in each rule, operating procedure, or amendment.

601.58(7)(d) (d)

601.58(7)(d)1. 1. A compacting state may opt out of a uniform standard either by legislation or regulation duly promulgated by the insurance department under the compacting state’s administrative procedure act. If a compacting state elects to opt out of a uniform standard by regulation, it must give written notice to the commission no later than 10 business days after the uniform standard is promulgated, or at the time the state becomes a compacting state, and find that the uniform standard does not provide reasonable protections to the citizens of the state, given the conditions in the state. The commissioner shall make specific findings of fact and conclusions of law, based on a preponderance of the evidence, detailing the conditions in the state that warrant a departure from the uniform standard and determining that the uniform standard would not reasonably protect the citizens of the state. The commissioner must consider and balance all of the following factors and find that the conditions in the state and needs of the citizens of the state outweigh all of the following factors:

601.58(7)(d)1.a. a. The intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for the products subject to this section.

601.58(7)(d)1.b. b. The presumption that a uniform standard adopted by the commission provides reasonable protections to consumers of the relevant product.

601.58(7)(d)2. 2. Notwithstanding subd. 1., a compacting state may, at the time of its enactment of this compact, prospectively opt out of all uniform standards involving long-term care insurance products by expressly providing for such opt out in the enacted compact, and such an opt out may not be treated as a material variance in the offer or acceptance of any state to participate in this compact. Such an opt out shall be effective at the time of enactment of this compact by the compacting state and shall apply to all existing uniform standards involving long-term care insurance products and those subsequently promulgated.

601.58(7)(e) (e) If a compacting state elects to opt out of a uniform standard, the uniform standard shall remain applicable in the compacting state electing to opt out until such time as the opt out legislation is enacted into law or the regulation opting out becomes effective. Once the opt out of a uniform standard by a compacting state becomes effective as provided under the laws of that state, the uniform standard shall have no further force or effect in that state unless and until the legislation or regulation implementing the opt out is repealed or otherwise becomes ineffective under the laws of the state. If a compacting state opts out of a uniform standard after the uniform standard has been made effective in that state, the opt out shall have the same prospective effect as provided under sub. (14) for withdrawals.

601.58(7)(f) (f) If a compacting state has formally initiated the process of opting out of a uniform standard by regulation, and while the regulatory opt out is pending, the compacting state may petition the commission, at least 15 days before the effective date of the uniform standard, to stay the effectiveness of the uniform standard in that state. The commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable manner and there is a likelihood of success. If a stay is granted or extended by the commission, the stay or extension thereof may postpone the effective date by up to 90 days, unless affirmatively extended by the commission; provided, that a stay may not be permitted to remain in effect for more than one year unless the compacting state can show extraordinary circumstances that warrant a continuance of the stay, including, but not limited to, the existence of a legal challenge that prevents the compacting state from opting out. A stay may be terminated by the commission upon notice that the rule-making process has been terminated.

601.58(7)(g) (g) Not later than 30 days after a rule or operating procedure is promulgated, any person may file a petition for judicial review of the rule or operating procedure; provided, that the filing of such a petition may not stay or otherwise prevent the rule or operating procedure from becoming effective unless the court finds that the petitioner has a substantial likelihood of success. The court shall give deference to the actions of the commission consistent with applicable law and shall not find the rule or operating procedure to be unlawful if the rule or operating procedure represents a reasonable exercise of the commission’s authority.

601.58(8) (8) Article VIII — Commission Records and Enforcement.

601.58(8)(a) (a) The commission shall promulgate rules establishing conditions and procedures for public inspection and copying of its information and official records, except such information and records involving the privacy of individuals and insurers’ trade secrets. The commission may promulgate additional rules under which it may make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure, and may enter into agreements with such agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.

601.58(8)(b) (b) Except as to privileged records, data, and information, the laws of any compacting state pertaining to confidentiality or nondisclosure may not relieve any compacting state commissioner of the duty 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 provided further, that, except as otherwise expressly provided in this section, the commission shall not be subject to the compacting state’s laws pertaining to confidentiality and nondisclosure with respect to records, data, and information in its possession. Confidential information of the commission shall remain confidential after such information is provided to any commissioner.

601.58(8)(c) (c) The commission shall monitor compacting states for compliance with duly adopted bylaws, rules, including uniform standards, and operating procedures. The commission shall notify any noncomplying compacting state in writing of its noncompliance with commission bylaws, rules, or operating procedures. If a noncomplying compacting state fails to remedy its noncompliance within the time specified in the notice of noncompliance, the compacting state shall be deemed to be in default under sub. (14).

601.58(8)(d) (d) The commissioner of any state in which an insurer is authorized to do business, or is conducting the business of insurance, shall continue to exercise his or her authority to oversee the market regulation of the activities of the insurer in accordance with the provisions of the state’s law. The commissioner’s enforcement of compliance with the compact is governed by the following provisions:

601.58(8)(d)1. 1. With respect to the commissioner’s market regulation of a product or advertisement that is approved by or certified to the commission, the content of the product or advertisement shall not constitute a violation of the provisions, standards, or requirements of the compact except upon a final order of the commission, issued at the request of a commissioner after prior notice to the insurer and an opportunity for hearing before the commission.

601.58(8)(d)2. 2. Before a commissioner may bring an action for violation of any provision, standard, or requirement of the compact relating to the content of an advertisement not approved by or certified to the commission, the commission, or an authorized commission officer or employee, must authorize the action. However, authorization pursuant to this subdivision does not require notice to the insurer, opportunity for hearing, or disclosure of requests for authorization or records of the commission’s action on such requests.

601.58(9) (9) Article IX — Dispute Resolution. The commission shall attempt, upon the request of a member, to resolve any disputes or other issues that are subject to this compact and that may arise between 2 or more compacting states, or between compacting states and noncompacting states, and the commission shall promulgate an operating procedure providing for resolution of such disputes.

601.58(10) (10) Article X — Product Filing and Approval.

601.58(10)(a) (a) Insurers and 3rd-party filers seeking to have a product approved by the commission shall file the product with, and pay applicable filing fees to, the commission. Nothing in this section shall be construed to restrict or otherwise prevent an insurer from filing its product with the insurance department in any state wherein the insurer is licensed to conduct the business of insurance, and such filing shall be subject to the laws of the states where filed.

601.58(10)(b) (b) The commission shall establish appropriate filing and review processes and procedures pursuant to commission rules and operating procedures. Notwithstanding any provision herein to the contrary, the commission shall promulgate rules to establish conditions and procedures under which the commission will provide public access to product filing information. In establishing such rules, the commission shall consider the interests of the public in having access to such information, as well as protection of personal medical and financial information and trade secrets, that may be contained in a product filing or supporting information.

601.58(10)(c) (c) Any product approved by the commission may be sold or otherwise issued in those compacting states for which the insurer is legally authorized to do business.

601.58(11) (11) Article XI — Review of Commission Decisions Regarding Filings.

601.58(11)(a) (a) Not later than 30 days after the commission has given notice of a disapproved product or advertisement filed with the commission, the insurer or 3rd-party filer whose filing was disapproved may appeal the determination to a review panel appointed by the commission. The commission shall promulgate rules to establish procedures for appointing such review panels and provide for notice and hearing. An allegation that the commission, in disapproving a product or advertisement filed with the commission, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with sub. (3).

601.58(11)(b) (b) The commission shall have authority to monitor, review, and reconsider products and advertisement subsequent to their filing or approval upon a finding that the product does not meet the relevant uniform standard. Where appropriate, the commission may withdraw or modify its approval after proper notice and hearing, subject to the appeal process in par. (a).

601.58(12) (12) Article XII — Finance.

601.58(12)(a) (a) The commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization. To fund the cost of its initial operations, the commission may accept contributions and other forms of funding from the National Association of Insurance Commissioners, compacting states, and other sources. Contributions and other forms of funding from other sources shall be of such a nature that the independence of the commission concerning the performance of its duties shall not be compromised.

601.58(12)(b) (b) The commission shall collect a filing fee from each insurer and 3rd-party filer filing a product with the commission to cover the cost of the operations and activities of the commission and its staff in a total amount sufficient to cover the commission’s annual budget.

601.58(12)(c) (c) The commission’s budget for a fiscal year may not be approved until it has been subject to notice and comment as set forth in sub. (7).

601.58(12)(d) (d) The commission shall be exempt from all taxation in and by the compacting states.

601.58(12)(e) (e) The commission may not pledge the credit of any compacting state, except by and with the appropriate legal authority of that compacting state.

601.58(12)(f) (f) The commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds 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 the independent auditor shall include a management and performance audit of the commission. The commission shall make an annual report to the governor and legislature of each of the compacting states, which shall include a report of the independent audit. The commission’s internal accounts shall not be confidential and such materials may be shared with the commissioner of any compacting state upon request; provided, that any work papers related to any internal or independent audit and any information regarding the privacy of individuals and insurers’ proprietary information, including trade secrets, shall remain confidential.

601.58(12)(g) (g) No compacting state shall have any claim to or ownership of any property held by or vested in the commission or to any commission funds held pursuant to the provisions of this compact.

601.58(13) (13) Article XIII — Compacting States, Effective Date, and Amendment.

601.58(13)(a) (a) Any state is eligible to become a compacting state.

601.58(13)(b) (b) The compact shall become effective and binding upon legislative enactment of the compact into law by 2 compacting states; provided, that the commission shall become effective for purposes of adopting uniform standards for, reviewing, and giving approval or disapproval of, products filed with the commission that satisfy applicable uniform standards only after 26 states are compacting states or, alternatively, only after states representing greater than 40 percent of the premium volume for life insurance, annuity, disability income, and long-term care insurance products, based on records of the National Association of Insurance Commissioners for the prior year, are 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.