CSHB 439(L&C) am: "An Act relating to authorizing the state to join with other states in entering into the Interstate Insurance Product Regulation Compact."

00 CS FOR HOUSE BILL NO. 439(L&C) am 01 "An Act relating to authorizing the state to join with other states in entering into the 02 Interstate Insurance Product Regulation Compact." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 21.42 is amended by adding new sections to read: 05 Article 2. Compact Concerning Annuity, Life, Disability, and Long-term Care 06 Insurance. 07 Sec. 21.42.700. Interstate Insurance Product Regulation Compact. The 08 Interstate Insurance Product Regulation Compact contained in this section is enacted 09 into law and entered into on behalf of the state with other states joining in it in a form 10 substantially as set out in this section. The director of the division of insurance is 11 designated as the representative of this state to the commission created by the 12 compact. 13 INTERSTATE INSURANCE PRODUCT REGULATION COMPACT 14 ARTICLE I. PURPOSES

01 The purposes of this Compact are, through means of joint and cooperative 02 action among the Compacting States: 03 (1) To promote and protect the interest of consumers of individual and 04 group annuity, life insurance, disability income and long-term care insurance products; 05 (2) To develop uniform standards for insurance products covered 06 under the Compact; 07 (3) To establish a central clearinghouse to receive and provide prompt 08 review of insurance products covered under the Compact and, in certain cases, 09 advertisements related thereto, submitted by insurers authorized to do business in one 10 or more Compacting States; 11 (4) To give appropriate regulatory approval to those product filings 12 and advertisements satisfying the applicable uniform standard; 13 (5) To improve coordination of regulatory resources and expertise 14 between state insurance departments regarding the setting of uniform standards and 15 review of insurance products covered under the Compact; 16 (6) To create the Interstate Insurance Product Regulation Commission; 17 and 18 (7) To perform these and such other related functions as may be 19 consistent with the state regulation of the business of insurance. 20 ARTICLE II. DEFINITIONS 21 For purposes of this Compact: 22 (1) "Advertisement" means any material designed to create public 23 interest in a Product, or induce the public to purchase, increase, modify, reinstate, 24 borrow on, surrender, replace or retain a policy, as more specifically defined in the 25 Rules and Operating Procedures of the Commission. 26 (2) "Bylaws" mean those bylaws established by the Commission for its 27 governance, or for directing or controlling the Commission's actions or conduct. 28 (3) "Compacting State" means any State which has enacted this 29 Compact legislation and which has not withdrawn pursuant to Article XIV, Section 1, 30 or been terminated pursuant to Article XIV, Section 2. 31 (4) "Commission" means the "Interstate Insurance Product Regulation

01 Commission" established by this Compact. 02 (5) "Commissioner" means the chief insurance regulatory official of a 03 State including, but not limited to commissioner, superintendent, director or 04 administrator. 05 (6) "Domiciliary State" means the state in which an Insurer is 06 incorporated or organized; or, in the case of an alien Insurer, its state of entry. 07 (7) "Insurer" means any entity licensed by a State to issue contracts of 08 insurance for any of the lines of insurance covered by this Act. 09 (8) "Member" means the person chosen by a Compacting State as its 10 representative to the Commission, or his or her designee. 11 (9) "Non-compacting State" means any State which is not at the time a 12 Compacting State. 13 (10) "Operating Procedures" mean procedures promulgated by the 14 Commission implementing a Rule, Uniform Standard or a provision of this Compact. 15 (11) "Product" means the form of a policy or contract, including any 16 application, endorsement, or related form which is attached to and made a part of the 17 policy or contract, and any evidence of coverage or certificate, for an individual or 18 group annuity, life insurance, disability income or long-term care insurance product 19 that an Insurer is authorized to issue. 20 (12) "Rule" means a statement of general or particular applicability 21 and future effect promulgated by the Commission, including a Uniform Standard 22 developed pursuant to Article VII of this Compact, designed to implement, interpret, 23 or prescribe law or policy or describing the organization, procedure, or practice 24 requirements of the Commission, which shall have the force and effect of law in the 25 Compacting States. 26 (13) "State" means any state, district or territory of the United States of 27 America. 28 (14) "Third-Party Filer" means an entity that submits a Product filing 29 to the Commission on behalf of an Insurer. 30 (15) "Uniform Standard" means a standard adopted by the 31 Commission for a Product line, pursuant to Article VII of this Compact, and shall

01 include all of the Product requirements in aggregate; provided, that each Uniform 02 Standard shall be construed, whether express or implied, to prohibit the use of any 03 inconsistent, misleading or ambiguous provisions in a Product and the form of the 04 Product made available to the public shall not be unfair, inequitable or against public 05 policy as determined by the Commission. 06 ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE 07 (1) The Compacting States hereby create and establish a joint public 08 agency known as the "Interstate Insurance Product Regulation Commission." Pursuant 09 to Article IV, the Commission will have the power to develop Uniform Standards for 10 Product lines, receive and provide prompt review of Products filed therewith, and give 11 approval to those Product filings satisfying applicable Uniform Standards; provided, it 12 is not intended for the Commission to be the exclusive entity for receipt and review of 13 insurance product filings. Nothing herein shall prohibit any Insurer from filing its 14 product in any State wherein the Insurer is licensed to conduct the business of 15 insurance; and any such filing shall be subject to the laws of the State where filed. 16 (2) The Commission is a body corporate and politic, and an 17 instrumentality of the Compacting States. 18 (3) The Commission is solely responsible for its liabilities except as 19 otherwise specifically provided in this Compact. 20 (4) Venue is proper and judicial proceedings by or against the 21 Commission shall be brought solely and exclusively in a Court of competent 22 jurisdiction where the principal office of the Commission is located. 23 ARTICLE IV. POWERS OF THE COMMISSION 24 The Commission shall have the following powers: 25 (1) To promulgate Rules, pursuant to Article VII of this Compact, 26 which shall have the force and effect of law and shall be binding in the Compacting 27 States to the extent and in the manner provided in this Compact; 28 (2) To exercise its rule-making authority and establish reasonable 29 Uniform Standards for Products covered under the Compact, and Advertisement 30 related thereto, which shall have the force and effect of law and shall be binding in the 31 Compacting States, but only for those Products filed with the Commission, provided,

01 that a Compacting State shall have the right to opt out of such Uniform Standard 02 pursuant to Article VII, to the extent and in the manner provided in this Compact, and, 03 provided further, that any Uniform Standard established by the Commission for long- 04 term care insurance products may provide the same or greater protections for 05 consumers as, but shall not provide less than, those protections set forth in the 06 National Association of Insurance Commissioners' Long-Term Care Insurance Model 07 Act and Long-Term Care Insurance Model Regulation, respectively, adopted as of 08 2001. The Commission shall consider whether any subsequent amendments to the 09 NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance Model 10 Regulation adopted by the NAIC require amending of the Uniform Standards 11 established by the Commission for long-term care insurance products; 12 (3) To receive and review in an expeditious manner Products filed with 13 the Commission, and rate filings for disability income and long-term care insurance 14 Products, and give approval of those Products and rate filings that satisfy the 15 applicable Uniform Standard, where such approval shall have the force and effect of 16 law and be binding on the Compacting States to the extent and in the manner provided 17 in the Compact; 18 (4) To receive and review in an expeditious manner Advertisement 19 relating to long-term care insurance products for which Uniform Standards have been 20 adopted by the Commission, and give approval to all Advertisement that satisfies the 21 applicable Uniform Standard. For any product covered under this Compact, other than 22 longterm care insurance products, the Commission shall have the authority to require 23 an insurer to submit all or any part of its Advertisement with respect to that product 24 for review or approval prior to use, if the Commission determines that the nature of 25 the product is such that an Advertisement of the product could have the capacity or 26 tendency to mislead the public. The actions of the Commission as provided in this 27 section shall have the force and effect of law and shall be binding in the Compacting 28 States to the extent and in the manner provided in the Compact; 29 (5) To exercise its rule-making authority and designate Products and 30 Advertisement that may be subject to a self-certification process without the need for 31 prior approval by the Commission.

01 (6) To promulgate Operating Procedures, pursuant to Article VII of 02 this Compact, which shall be binding in the Compacting States to the extent and in the 03 manner provided in this Compact; 04 (7) To bring and prosecute legal proceedings or actions in its name as 05 the Commission; provided, that the standing of any state insurance department to sue 06 or be sued under applicable law shall not be affected; 07 (8) To issue subpoenas requiring the attendance and testimony of 08 witnesses and the production of evidence; 09 (9) To establish and maintain offices; 10 (10) To purchase and maintain insurance and bonds; 11 (11) To borrow, accept or contract for services of personnel, including, 12 but not limited to, employees of a Compacting State; 13 (12) To hire employees, professionals or specialists, and elect or 14 appoint officers, and to fix their compensation, define their duties and give them 15 appropriate authority to carry out the purposes of the Compact, and determine their 16 qualifications; and to establish the Commission's personnel policies and programs 17 relating to, among other things, conflicts of interest, rates of compensation and 18 qualifications of personnel; 19 (13) To accept any and all appropriate donations and grants of money, 20 equipment, supplies, materials and services, and to receive, utilize and dispose of the 21 same; provided that at all times the Commission shall strive to avoid any appearance 22 of impropriety; 23 (14) To lease, purchase, accept appropriate gifts or donations of, or 24 otherwise to own, hold, improve or use, any property, real, personal or mixed; 25 provided that at all times the Commission shall strive to avoid any appearance of 26 impropriety; 27 (15) To sell, convey, mortgage, pledge, lease, exchange, abandon or 28 otherwise dispose of any property, real, personal or mixed; 29 (16) To remit filing fees to Compacting States as may be set forth in 30 the Bylaws, Rules or Operating Procedures; 31 (17) To enforce compliance by Compacting States with Rules,

01 Uniform Standards, Operating Procedures and Bylaws; 02 (18) To provide for dispute resolution among Compacting States; 03 (19) To advise Compacting States on issues relating to Insurers 04 domiciled or doing business in Non-compacting jurisdictions, consistent with the 05 purposes of this Compact; 06 (20) To provide advice and training to those personnel in state 07 insurance departments responsible for product review, and to be a resource for state 08 insurance departments; 09 (21) To establish a budget and make expenditures; 10 (22) To borrow money; 11 (23) To appoint committees, including advisory committees 12 comprising Members, state insurance regulators, state legislators or their 13 representatives, insurance industry and consumer representatives, and such other 14 interested persons as may be designated in the Bylaws; 15 (24) To provide and receive information from, and to cooperate with 16 law enforcement agencies; 17 (25) To adopt and use a corporate seal; and 18 (26) To perform such other functions as may be necessary or 19 appropriate to achieve the purposes of this Compact consistent with the state 20 regulation of the business of insurance. 21 ARTICLE V. ORGANIZATION OF THE COMMISSION 22 (1) Membership, Voting and Bylaws 23 (a) Each Compacting State shall have and be limited to one 24 Member. Each Member shall be qualified to serve in that capacity pursuant to 25 applicable law of the Compacting State. Any Member may be removed or 26 suspended from office as provided by the law of the State from which he or she 27 shall be appointed. Any vacancy occurring in the Commission shall be filled in 28 accordance with the laws of the Compacting State wherein the vacancy exists. 29 Nothing herein shall be construed to affect the manner in which a Compacting 30 State determines the election or appointment and qualification of its own 31 Commissioner.

01 (b) Each Member shall be entitled to one vote and shall have an 02 opportunity to participate in the governance of the Commission in accordance 03 with the Bylaws. Notwithstanding any provision herein to the contrary, no 04 action of the Commission with respect to the promulgation of a Uniform 05 Standard shall be effective unless two-thirds (2/3) of the Members vote in 06 favor thereof. 07 (c) The Commission shall, by a majority of the Members, 08 prescribe Bylaws to govern its conduct as may be necessary or appropriate to 09 carry out the purposes, and exercise the powers, of the Compact, including, but 10 not limited to: 11 (i) Establishing the fiscal year of the Commission; 12 (ii) Providing reasonable procedures for appointing and 13 electing members, as well as holding meetings, of the Management 14 Committee; 15 (iii) Providing reasonable standards and procedures: (i) 16 for the establishment and meetings of other committees, and (ii) 17 governing any general or specific delegation of any authority or 18 function of the Commission; 19 (iv) Providing reasonable procedures for calling and 20 conducting meetings of the Commission that consists of a majority of 21 Commission members, ensuring reasonable advance notice of each 22 such meeting and providing for the right of citizens to attend each such 23 meeting with enumerated exceptions designed to protect the public's 24 interest, the privacy of individuals, and insurers' proprietary 25 information, including trade secrets. The Commission may meet in 26 camera only after a majority of the entire membership votes to close a 27 meeting en toto or in part. As soon as practicable, the Commission 28 must make public (i) a copy of the vote to close the meeting revealing 29 the vote of each Member with no proxy votes allowed, and (ii) votes 30 taken during such meeting; 31 (v) Establishing the titles, duties and authority and

01 reasonable procedures for the election of the officers of the 02 Commission; 03 (vi) Providing reasonable standards and procedures for 04 the establishment of the personnel policies and programs of the 05 Commission. Notwithstanding any civil service or other similar laws of 06 any Compacting State, the Bylaws shall exclusively govern the 07 personnel policies and programs of the Commission; 08 (vii) Promulgating a code of ethics to address 09 permissible and prohibited activities of commission members and 10 employees; and 11 (viii) Providing a mechanism for winding up the 12 operations of the Commission and the equitable disposition of any 13 surplus funds that may exist after the termination of the Compact after 14 the payment and/or reserving of all of its debts and obligations. 15 (d) The Commission shall publish its bylaws in a convenient 16 form and file a copy thereof and a copy of any amendment thereto, with the 17 appropriate agency or officer in each of the Compacting States. 18 (2) Management Committee, Officers and Personnel 19 (a) A Management Committee comprising no more than 20 fourteen (14) members shall be established as follows: 21 (i) One (1) member from each of the six (6) 22 Compacting States with the largest premium volume for individual and 23 group annuities, life, disability income and long-term care insurance 24 products, determined from the records of the NAIC for the prior year; 25 (ii) Four (4) members from those Compacting States 26 with at least two percent (2%) of the market based on the premium 27 volume described above, other than the six (6) Compacting States with 28 the largest premium volume, selected on a rotating basis as provided in 29 the Bylaws; and 30 (iii) Four (4) members from those Compacting States 31 with less than two percent (2%) of the market, based on the premium

01 volume described above, with one (1) selected from each of the four (4) 02 zone regions of the NAIC as provided in the Bylaws. 03 (b) The Management Committee shall have such authority and 04 duties as may be set forth in the Bylaws, including but not limited to: 05 (i) managing the affairs of the Commission in a manner 06 consistent with the Bylaws and purposes of the Commission; 07 (ii) establishing and overseeing an organizational 08 structure within, and appropriate procedures for, the Commission to 09 provide for the creation of Uniform Standards and other Rules, receipt 10 and review of product filings, administrative and technical support 11 functions, review of decisions regarding the disapproval of a product 12 filing, and the review of elections made by a Compacting State to opt 13 out of a Uniform Standard; provided that a Uniform Standard shall not 14 be submitted to the Compacting States for adoption unless approved by 15 two-thirds (2/3) of the members of the Management Committee; 16 (iii) overseeing the offices of the Commission; and 17 (iv) planning, implementing, and coordinating 18 communications and activities with other state, federal and local 19 government organizations in order to advance the goals of the 20 Commission. 21 (c) The Commission shall elect annually officers from the 22 Management Committee, with each having such authority and duties, as may 23 be specified in the Bylaws. 24 (d) The Management Committee may, subject to the approval 25 of the Commission, appoint or retain an executive director for such period, 26 upon such terms and conditions and for such compensation as the Commission 27 may deem appropriate. The executive director shall serve as secretary to the 28 Commission, but shall not be a Member of the Commission. The executive 29 director shall hire and supervise such other staff as may be authorized by the 30 Commission. 31 (3) Legislative and Advisory Committees

01 (a) A legislative committee comprising state legislators or their 02 designees shall be established to monitor the operations of, and make 03 recommendations to, the Commission, including the Management Committee; 04 provided that the manner of selection and term of any legislative committee 05 member shall be as set forth in the Bylaws. Prior to the adoption by the 06 Commission of any Uniform Standard, revision to the Bylaws, annual budget 07 or other significant matter as may be provided in the Bylaws, the Management 08 Committee shall consult with and report to the legislative committee. 09 (b) The Commission shall establish two (2) advisory 10 committees, one of which shall comprise consumer representatives 11 independent of the insurance industry, and the other comprising insurance 12 industry representatives. 13 (c) The Commission may establish additional advisory 14 committees as its Bylaws may provide for the carrying out of its functions. 15 (4) Corporate Records of the Commission. The Commission shall 16 maintain its corporate books and records in accordance with the Bylaws. 17 (5) Qualified Immunity, Defense and Indemnification 18 (a) The Members, officers, executive director, employees and 19 representatives of the Commission shall be immune from suit and liability, 20 either personally or in their official capacity, for any claim for damage to or 21 loss of property or personal injury or other civil liability caused by or arising 22 out of any actual or alleged act, error or omission that occurred, or that the 23 person against whom the claim is made had a reasonable basis for believing 24 occurred within the scope of Commission employment, duties or 25 responsibilities; provided, that nothing in this paragraph shall be construed to 26 protect any such person from suit and/or liability for any damage, loss, injury 27 or liability caused by the intentional or willful and wanton misconduct of that 28 person. 29 (b) The Commission shall defend any Member, officer, 30 executive director, employee or representative of the Commission in any civil 31 action seeking to impose liability arising out of any actual or alleged act, error

01 or omission that occurred within the scope of Commission employment, duties 02 or responsibilities, or that the person against whom the claim is made had a 03 reasonable basis for believing occurred within the scope of Commission 04 employment, duties or responsibilities; provided, that nothing herein shall be 05 construed to prohibit that person from retaining his or her own counsel; and 06 provided further, that the actual or alleged act, error or omission did not result 07 from that person's intentional or willful and wanton misconduct. 08 (c) The Commission shall indemnify and hold harmless any 09 Member, officer, executive director, employee or representative of the 10 Commission for the amount of any settlement or judgment obtained against 11 that person arising out of any actual or alleged act, error or omission that 12 occurred within the scope of Commission employment, duties or 13 responsibilities, or that such person had a reasonable basis for believing 14 occurred within the scope of Commission employment, duties or 15 responsibilities, provided, that the actual or alleged act, error or omission did 16 not result from the intentional or willful and wanton misconduct of that person. 17 ARTICLE VI. MEETINGS AND ACTS OF THE COMMISSION 18 (1) The Commission shall meet and take such actions as are consistent 19 with the provisions of this Compact and the Bylaws. 20 (2) Each Member of the Commission shall have the right and power to 21 cast a vote to which that Compacting State is entitled and to participate in the business 22 and affairs of the Commission. A Member shall vote in person or by such other means 23 as provided in the Bylaws. The Bylaws may provide for Members' participation in 24 meetings by telephone or other means of communication. 25 (3) The Commission shall meet at least once during each calendar 26 year. Additional meetings shall be held as set forth in the Bylaws. 27 ARTICLE VII. RULES AND OPERATING PROCEDURES: RULEMAKING FUNCTIONS 28 OF THE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS 29 (1) Rulemaking Authority. The Commission shall promulgate 30 reasonable Rules, including Uniform Standards, and Operating Procedures in order to 31 effectively and efficiently achieve the purposes of this Compact. Notwithstanding the

01 foregoing, in the event the Commission exercises its rulemaking authority in a manner 02 that is beyond the scope of the purposes of this Act, or the powers granted hereunder, 03 then such an action by the Commission shall be invalid and have no force and effect. 04 (2) Rulemaking Procedure. Rules and Operating Procedures shall be 05 made pursuant to a rulemaking process that conforms to the Model State 06 Administrative Procedure Act of 1981 as amended, as may be appropriate to the 07 operations of the Commission. Before the Commission adopts a Uniform Standard, 08 the Commission shall give written notice to the relevant state legislative committee(s) 09 in each Compacting State responsible for insurance issues of its intention to adopt the 10 Uniform Standard. The Commission in adopting a Uniform Standard shall consider 11 fully all submitted materials and issue a concise explanation of its decision. 12 (3) Effective Date and Opt Out of a Uniform Standard. A Uniform 13 Standard shall become effective ninety (90) days after its promulgation by the 14 Commission or such later date as the Commission may determine; provided, however, 15 that a Compacting State may opt out of a Uniform Standard as provided in this Article. 16 "Opt out" shall be defined as any action by a Compacting State to decline to adopt or 17 participate in a promulgated Uniform Standard. All other Rules and Operating 18 Procedures, and amendments thereto, shall become effective as of the date specified in 19 each Rule, Operating Procedure or amendment. 20 (4) Opt Out Procedure. A Compacting State may opt out of a Uniform 21 Standard, either by legislation or regulation duly promulgated by the Insurance 22 Department under the Compacting State's Administrative Procedure Act. If a 23 Compacting State elects to opt out of a Uniform Standard by regulation, it must (a) 24 give written notice to the Commission no later than ten (10) business days after the 25 Uniform Standard is promulgated, or at the time the State becomes a Compacting 26 State and (b) find that the Uniform Standard does not provide reasonable protections 27 to the citizens of the State, given the conditions in the State. The Commissioner shall 28 make specific findings of fact and conclusions of law, based on a preponderance of the 29 evidence, detailing the conditions in the State which warrant a departure from the 30 Uniform Standard and determining that the Uniform Standard would not reasonably 31 protect the citizens of the State. The Commissioner must consider and balance the

01 following factors and find that the conditions in the State and needs of the citizens of 02 the State outweigh: (i) the intent of the legislature to participate in, and the benefits of, 03 an interstate agreement to establish national uniform consumer protections for the 04 Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted 05 by the Commission provides reasonable protections to consumers of the relevant 06 Product. Notwithstanding the foregoing, a Compacting State may, at the time of its 07 enactment of this Compact, prospectively opt out of all Uniform Standards involving 08 long-term care insurance products by expressly providing for such opt out in the 09 enacted Compact, and such an opt out shall not be treated as a material variance in the 10 offer or acceptance of any State to participate in this Compact. Such an opt out shall 11 be effective at the time of enactment of this Compact by the Compacting State and 12 shall apply to all existing Uniform Standards involving long-term care insurance 13 products and those subsequently promulgated. 14 (5) Effect of Opt Out. If a Compacting State elects to opt out of a 15 Uniform Standard, the Uniform Standard shall remain applicable in the Compacting 16 State electing to opt out until such time the opt out legislation is enacted into law or 17 the regulation opting out becomes effective. Once the opt out of a Uniform Standard 18 by a Compacting State becomes effective as provided under the laws of that State, the 19 Uniform Standard shall have no further force and effect in that State unless and until 20 the legislation or regulation implementing the opt out is repealed or otherwise 21 becomes ineffective under the laws of the State. If a Compacting State opts out of a 22 Uniform Standard after the Uniform Standard has been made effective in that State, 23 the opt out shall have the same prospective effect as provided under Article XIV for 24 withdrawals. 25 (6) Stay of Uniform Standard. If a Compacting State has formally 26 initiated the process of opting out of a Uniform Standard by regulation, and while the 27 regulatory opt out is pending, the Compacting State may petition the Commission, at 28 least fifteen (15) days before the effective date of the Uniform Standard, to stay the 29 effectiveness of the Uniform Standard in that State. The Commission may grant a stay 30 if it determines the regulatory opt out is being pursued in a reasonable manner and 31 there is a likelihood of success. If a stay is granted or extended by the Commission,

01 the stay or extension thereof may postpone the effective date by up to ninety (90) 02 days, unless affirmatively extended by the Commission; provided, a stay may not be 03 permitted to remain in effect for more than one (1) year unless the Compacting State 04 can show extraordinary circumstances which warrant a continuance of the stay, 05 including, but not limited to, the existence of a legal challenge which prevents the 06 Compacting State from opting out. A stay may be terminated by the Commission upon 07 notice that the rulemaking process has been terminated. 08 (7) Not later than thirty (30) days after a Rule or Operating Procedure 09 is promulgated, any person may file a petition for judicial review of the Rule or 10 Operating Procedure; provided, that the filing of such a petition shall not stay or 11 otherwise prevent the Rule or Operating Procedure from becoming effective unless the 12 court finds that the petitioner has a substantial likelihood of success. The court shall 13 give deference to the actions of the Commission consistent with applicable law and 14 shall not find the Rule or Operating Procedure to be unlawful if the Rule or Operating 15 Procedure represents a reasonable exercise of the Commission's authority. 16 ARTICLE VIII. COMMISSION RECORDS AND ENFORCEMENT 17 (1) The Commission shall promulgate Rules establishing conditions 18 and procedures for public inspection and copying of its information and official 19 records, except such information and records involving the privacy of individuals and 20 insurers' trade secrets. The Commission may promulgate additional Rules under which 21 it may make available to federal and state agencies, including law enforcement 22 agencies, records and information otherwise exempt from disclosure, and may enter 23 into agreements with such agencies to receive or exchange information or records 24 subject to nondisclosure and confidentiality provisions. 25 (2) Except as to privileged records, data and information, the laws of 26 any Compacting State pertaining to confidentiality or nondisclosure shall not relieve 27 any Compacting State Commissioner of the duty to disclose any relevant records, data 28 or information to the Commission; provided, that disclosure to the Commission shall 29 not be deemed to waive or otherwise affect any confidentiality requirement; and 30 further provided, that, except as otherwise expressly provided in this Act, the 31 Commission shall not be subject to the Compacting State's laws pertaining to

01 confidentiality and nondisclosure with respect to records, data and information in its 02 possession. Confidential information of the Commission shall remain confidential 03 after such information is provided to any Commissioner. 04 (3) The Commission shall monitor Compacting States for compliance 05 with duly adopted Bylaws, Rules, including Uniform Standards, and Operating 06 Procedures. The Commission shall notify any non-complying Compacting State in 07 writing of its noncompliance with Commission Bylaws, Rules or Operating 08 Procedures. If a noncomplying Compacting State fails to remedy its noncompliance 09 within the time specified in the notice of noncompliance, the Compacting State shall 10 be deemed to be in default as set forth in Article XIV. 11 (4) The Commissioner of any State in which an Insurer is authorized to 12 do business, or is conducting the business of insurance, shall continue to exercise his 13 or her authority to oversee the market regulation of the activities of the Insurer in 14 accordance with the provisions of the State's law. The Commissioner's enforcement of 15 compliance with the Compact is governed by the following provisions: 16 (a) With respect to the Commissioner's market regulation of a 17 Product or Advertisement that is approved or certified to the Commission, the 18 content of the Product or Advertisement shall not constitute a violation of the 19 provisions, standards or requirements of the Compact except upon a final order 20 of the Commission, issued at the request of a Commissioner after prior notice 21 to the Insurer and an opportunity for hearing before the Commission. 22 (b) Before a Commissioner may bring an action for violation of 23 any provision, standard or requirement of the Compact relating to the content 24 of an Advertisement not approved or certified to the Commission, the 25 Commission, or an authorized Commission officer or employee, must 26 authorize the action. However, authorization pursuant to this paragraph does 27 not require notice to the Insurer, opportunity for hearing or disclosure of 28 requests for authorization or records of the Commission's action on such 29 requests. 30 ARTICLE IX. DISPUTE RESOLUTION 31 The Commission shall attempt, upon the request of a Member, to resolve any

01 disputes or other issues that are subject to this Compact and which may arise between 02 two or more Compacting States, or between Compacting States and Non-compacting 03 States, and the Commission shall promulgate an Operating Procedure providing for 04 resolution of such disputes. 05 ARTICLE X. PRODUCT FILING AND APPROVAL 06 (1) Insurers and Third-Party Filers seeking to have a Product approved 07 by the Commission shall file the Product with, and pay applicable filing fees to, the 08 Commission. Nothing in this Act shall be construed to restrict or otherwise prevent an 09 insurer from filing its Product with the insurance department in any State wherein the 10 insurer is licensed to conduct the business of insurance, and such filing shall be subject 11 to the laws of the States where filed. 12 (2) The Commission shall establish appropriate filing and review 13 processes and procedures pursuant to Commission Rules and Operating Procedures. 14 Notwithstanding any provision herein to the contrary, the Commission shall 15 promulgate Rules to establish conditions and procedures under which the Commission 16 will provide public access to Product filing information. In establishing such Rules, 17 the Commission shall consider the interests of the public in having access to such 18 information, as well as protection of personal medical and financial information and 19 trade secrets, that may be contained in a Product filing or supporting information. 20 (3) Any Product approved by the Commission may be sold or 21 otherwise issued in those Compacting States for which the Insurer is legally 22 authorized to do business. 23 ARTICLE XI. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS 24 (1) Not later than thirty (30) days after the Commission has given 25 notice of a disapproved Product or Advertisement filed with the Commission, the 26 Insurer or Third Party Filer whose filing was disapproved may appeal the 27 determination to a review panel appointed by the Commission. The Commission shall 28 promulgate Rules to establish procedures for appointing such review panels and 29 provide for notice and hearing. An allegation that the Commission, in disapproving a 30 Product or Advertisement filed with the Commission, acted arbitrarily, capriciously, or 31 in a manner that is an abuse of discretion or otherwise not in accordance with the law,

01 is subject to judicial review in accordance with Article III, Section 4. 02 (2) The Commission shall have authority to monitor, review and 03 reconsider Products and Advertisement subsequent to their filing or approval upon a 04 finding that the product does not meet the relevant Uniform Standard. Where 05 appropriate, the Commission may withdraw or modify its approval after proper notice 06 and hearing, subject to the appeal process in Section 1 above. 07 ARTICLE XII. FINANCE 08 (1) The Commission shall pay or provide for the payment of the 09 reasonable expenses of its establishment and organization. To fund the cost of its 10 initial operations, the Commission may accept contributions and other forms of 11 funding from the National Association of Insurance Commissioners, Compacting 12 States and other sources. Contributions and other forms of funding from other sources 13 shall be of such a nature that the independence of the Commission concerning the 14 performance of its duties shall not be compromised. 15 (2) The Commission shall collect a filing fee from each Insurer and 16 Third Party Filer filing a product with the Commission to cover the cost of the 17 operations and activities of the Commission and its staff in a total amount sufficient to 18 cover the Commission's annual budget. 19 (3) The Commission's budget for a fiscal year shall not be approved 20 until it has been subject to notice and comment as set forth in Article VII of this 21 Compact. 22 (4) The Commission shall be exempt from all taxation in and by the 23 Compacting States. 24 (5) The Commission shall not pledge the credit of any Compacting 25 State, except by and with the appropriate legal authority of that Compacting State. 26 (6) The Commission shall keep complete and accurate accounts of all 27 its internal receipts, including grants and donations, and disbursements of all funds 28 under its control. The internal financial accounts of the Commission shall be subject to 29 the accounting procedures established under its Bylaws. The financial accounts and 30 reports including the system of internal controls and procedures of the Commission 31 shall be audited annually by an independent certified public accountant. Upon the

01 determination of the Commission, but no less frequently than every three (3) years, the 02 review of the independent auditor shall include a management and performance audit 03 of the Commission. The Commission shall make an Annual Report to the Governor 04 and legislature of the Compacting States, which shall include a report of the 05 independent audit. The Commission's internal accounts shall not be confidential and 06 such materials may be shared with the Commissioner of any Compacting State upon 07 request provided, however, that any work papers related to any internal or independent 08 audit and any information regarding the privacy of individuals and insurers' 09 proprietary information, including trade secrets, shall remain confidential. 10 (7) No Compacting State shall have any claim to or ownership of any 11 property held by or vested in the Commission or to any Commission funds held 12 pursuant to the provisions of this Compact. 13 ARTICLE XIII. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT 14 (1) Any State is eligible to become a Compacting State. 15 (2) The Compact shall become effective and binding upon legislative 16 enactment of the Compact into law by two Compacting States; provided, the 17 Commission shall become effective for purposes of adopting Uniform Standards for, 18 reviewing, and giving approval or disapproval of, Products filed with the Commission 19 that satisfy applicable Uniform Standards only after twenty-six (26) States are 20 Compacting States or, alternatively, by States representing greater than forty percent 21 (40%) of the premium volume for life insurance, annuity, disability income and long- 22 term care insurance products, based on records of the NAIC for the prior year. 23 Thereafter, it shall become effective and binding as to any other Compacting State 24 upon enactment of the Compact into law by that State. 25 (3) Amendments to the Compact may be proposed by the Commission 26 for enactment by the Compacting States. No amendment shall become effective and 27 binding upon the Commission and the Compacting States unless and until all 28 Compacting States enact the amendment into law. 29 ARTICLE XIV. WITHDRAWAL, DEFAULT AND TERMINATION 30 (1) Withdrawal 31 (a) Once effective, the Compact shall continue in force and

01 remain binding upon each and every Compacting State; provided, that a 02 Compacting State may withdraw from the Compact ("Withdrawing State") by 03 enacting a statute specifically repealing the statute which enacted the Compact 04 into law. 05 (b) The effective date of withdrawal is the effective date of the 06 repealing statute. However, the withdrawal shall not apply to any product 07 filings approved or self-certified, or any Advertisement of such products, on 08 the date the repealing statute becomes effective, except by mutual agreement 09 of the Commission and the Withdrawing State unless the approval is rescinded 10 by the Withdrawing State as provided in Paragraph (e) of this section. 11 (c) The Commissioner of the Withdrawing State shall 12 immediately notify the Management Committee in writing upon the 13 introduction of legislation repealing this Compact in the Withdrawing State. 14 (d) The Commission shall notify the other Compacting States 15 of the introduction of such legislation within ten (10) days after its receipt of 16 notice thereof. 17 (e) The Withdrawing State is responsible for all obligations, 18 duties and liabilities incurred through the effective date of withdrawal, 19 including any obligations, the performance of which extend beyond the 20 effective date of withdrawal, except to the extent those obligations may have 21 been released or relinquished by mutual agreement of the Commission and the 22 Withdrawing State. The Commission's approval of Products and 23 Advertisement prior to the effective date of withdrawal shall continue to be 24 effective and be given full force and effect in the Withdrawing State, unless 25 formally rescinded by the Withdrawing State in the same manner as provided 26 by the laws of the Withdrawing State for the prospective disapproval of 27 products or advertisement previously approved under state law. 28 (f) Reinstatement following withdrawal of any Compacting 29 State shall occur upon the effective date of the Withdrawing State reenacting 30 the Compact. 31 (2) Default

01 (a) If the Commission determines that any Compacting State 02 has at any time defaulted ("Defaulting State") in the performance of any of its 03 obligations or responsibilities under this Compact, the Bylaws or duly 04 promulgated Rules or Operating Procedures, then, after notice and hearing as 05 set forth in the Bylaws, all rights, privileges and benefits conferred by this 06 Compact on the Defaulting State shall be suspended from the effective date of 07 default as fixed by the Commission. The grounds for default include, but are 08 not limited to, failure of a Compacting State to perform its obligations or 09 responsibilities, and any other grounds designated in Commission Rules. The 10 Commission shall immediately notify the Defaulting State in writing of the 11 Defaulting State's suspension pending a cure of the default. The Commission 12 shall stipulate the conditions and the time period within which the Defaulting 13 State must cure its default. If the Defaulting State fails to cure the default 14 within the time period specified by the Commission, the Defaulting State shall 15 be terminated from the Compact and all rights, privileges and benefits 16 conferred by this Compact shall be terminated from the effective date of 17 termination. 18 (b) Product approvals by the Commission or product self- 19 certifications, or any Advertisement in connection with such product, that are 20 in force on the effective date of termination shall remain in force in the 21 Defaulting State in the same manner as if the Defaulting State had withdrawn 22 voluntarily pursuant to Section 1 of this article. 23 (c) Reinstatement following termination of any Compacting 24 State requires a reenactment of the Compact. 25 (3) Dissolution of Compact 26 (a) The Compact dissolves effective upon the date of the 27 withdrawal or default of the Compacting State which reduces membership in 28 the Compact to one Compacting State. 29 (b) Upon the dissolution of this Compact, the Compact 30 becomes null and void and shall be of no further force or effect, and the 31 business and affairs of the Commission shall be wound up and any surplus

01 funds shall be distributed in accordance with the Bylaws. 02 ARTICLE XV. SEVERABILITY AND CONSTRUCTION 03 (1) The provisions of this Compact shall be severable; and if any 04 phrase, clause, sentence or provision is deemed unenforceable, the remaining 05 provisions of the Compact shall be enforceable. 06 (2) The provisions of this Compact shall be liberally construed to 07 effectuate its purposes. 08 ARTICLE XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS 09 (1) Other Laws 10 (a) Nothing herein prevents the enforcement of any other law 11 of a Compacting State, except as provided in Paragraph (b) of this section. 12 (b) For any Product approved or certified to the Commission, 13 the Rules, Uniform Standards and any other requirements of the Commission 14 shall constitute the exclusive provisions applicable to the content, approval and 15 certification of such Products. For Advertisement that is subject to the 16 Commission's authority, any Rule, Uniform Standard or other requirement of 17 the Commission which governs the content of the Advertisement shall 18 constitute the exclusive provision that a Commissioner may apply to the 19 content of the Advertisement. Notwithstanding the foregoing, no action taken 20 by the Commission shall abrogate or restrict: (i) the access of any person to 21 state courts; (ii) remedies available under state law related to breach of 22 contract, tort, or other laws not specifically directed to the content of the 23 Product; (iii) state law relating to the construction of insurance contracts; or 24 (iv) the authority of the attorney general of the state, including but not limited 25 to maintaining any actions or proceedings, as authorized by law. 26 (c) All insurance products filed with individual States shall be 27 subject to the laws of those States. 28 (2) Binding Effect of this Compact 29 (a) All lawful actions of the Commission, including all Rules 30 and Operating Procedures promulgated by the Commission, are binding upon 31 the Compacting States.

01 (b) All agreements between the Commission and the 02 Compacting States are binding in accordance with their terms. 03 (c) Upon the request of a party to a conflict over the meaning 04 or interpretation of Commission actions, and upon a majority vote of the 05 Compacting States, the Commission may issue advisory opinions regarding the 06 meaning or interpretation in dispute. 07 (d) In the event any provision of this Compact exceeds the 08 constitutional limits imposed on the legislature of any Compacting State, the 09 obligations, duties, powers or jurisdiction sought to be conferred by that 10 provision upon the Commission shall be ineffective as to that Compacting 11 State, and those obligations, duties, powers or jurisdiction shall remain in the 12 Compacting State and shall be exercised by the agency thereof to which those 13 obligations, duties, powers or jurisdiction are delegated by law in effect at the 14 time this Compact becomes effective. 15 Sec. 21.42.705. Opt-out duties, guidelines, remedies. (a) As a participant in 16 the Interstate Insurance Product Regulation Compact, it is the policy of the state to opt 17 out, and the director shall opt out, of any Uniform Standard that provides a materially 18 lower level of protection for or materially diminishes the rights of Alaska 19 policyholders or policy applicants under Alaska law. 20 (b) If the director or a court of competent jurisdiction finds that the policy set 21 out in (a) of this section has been violated, notice of the violation shall be given to the 22 legislature, and reasonable and prompt measures shall be taken to opt out of the 23 Uniform Standard that does not comply with the policy statement set out in (a) of this 24 section to the extent that such action is permissible under the Interstate Insurance 25 Product Regulation Compact. 26 * Sec. 2. AS 21.53.010 is amended to read: 27 Sec. 21.53.010. Prohibited sale or advertising. An insurer, hospital or 28 medical service corporation, or [A] fraternal benefit society may not advertise, market, 29 sell, deliver, or offer for delivery a long-term care insurance policy unless the policy 30 complies with this chapter, AS 21.18, AS 21.45, the health insurance requirements 31 imposed under AS 21.51, and, if a group policy, the group health insurance

01 requirements imposed under AS 21.54, or unless it has been approved by and 02 complies with the Interstate Insurance Product Regulation Compact under 03 AS 21.42.700.