Establishes the interstate insurance product regulation compact to regulate certain insurance products among member states

a. to promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products;

b. to develop uniform standards for insurance products covered under the compact;

c. to establish a central clearinghouse to receive and provide prompt review of insurance products covered under the compact and, in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more compacting states;

d. to give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standards;

e. to improve coordination of regulatory resources and expertise among state insurance departments regarding the setting of uniform standards and review of insurance products covered under the compact;

f. to create the interstate insurance product regulation commission; and

g. to perform such other related functions consistent with the state regulation of insurance.

Summary of provisions

Section 1 of the bill provides legislative findings and intent.

Section 2 adds a new Article 82 to the Insurance Law entitled the "Interstate Insurance Product Regulation Compact" (the "Compact"). This Article consists of seventeen new bill sections: Sections 8201-8217

The bill creates an "Interstate Insurance Product Regulation Commission" (the "Commission'') and provides the statutory framework for states to enter into the Compact

The Compact would establish a single point of filing for certain insurance products and rate filings which would be subject to uniform national standards Those states that are members of the Compact would develop the uniform standards that apply to products filed with the Commission Product standards would be developed through a rulemaking process which would require the approval of two-thirds of the commission management committee and two-thirds of the commission members Unless a state opts-out, approval of a product by the Compact would be the same as approval by a member state The bill would,

however, allow companies the option to continue to file products' in the individual states through the existing form filing processes

The bill also provides that individual states will continue to regulate market activities and allows for coordination among states and the Commission to determine instances of violations of uniform standards subject to the final order of the Commission

If a state disagrees with a product standard developed by the Commission, it may opt-out of the uniform standard either by regulation or legislation For long-term care insurance, states may opt-out at the time of the joining the Compact In order to opt-out by regulation, a state must show that the uniform standard does not provide reasonable protections to the citizens of the state and that the needs of the state outweigh the Legislature's intent to participate in and receive the benefits of the Compact

The Compact would become effective when two states enact compact legislation The Commission becomes operational (that is adopting uniform standards, receiving products and giving approvals/disapprovals) if twenty-six states or states representing forty percent of the premium for life, disability income, long-term care insurance or annuities join the Compact.

Operations of the Commission would be financed initially through contributions and other Sources of funding and over time through the filing fees paid by insurers.

All donations, grants of money, equipment, supplies, materials or services, purchases, gifts, donations, conveyances, mortgages, pledges, leases and exchanges, received by or on behalf of the Commission will be limited to the direct funding of the lawful and authorized operations of the Commission.

In addition, the Commission is solely responsible for its liabilities unless otherwise specifically provided in the Compact. However, in no event shall the obligations of the Commission be the debt of the State of New York nor shall any revenues or property of the State of New York be liable therefore.

All states joining the Compact would be involved in setting up and over-seeing the activities of the Compact, including developing product standards and the rules and operating procedures of the Commission.

The Commission would make an annual report to the legislature and governor of each state joining the Compact In addition to opting out of particular product standards, each state has the right to withdraw from the Compact, by enacting a statute repealing this bill.

Section 3 of the bill provides that it will become effective 180 days after it shall have become a law

Justification

In general, interstate compacts are used to establish the framework for cooperative solutions to multi-state challenges. There are over two hundred interstate compacts currently in existence covering a wide variety of subjects. Every state belongs to an average

25 such compacts This bill is based on a Model Act developed by the National Association of Insurance Commissioners (NAIC). The bill provides for a single point of product and rate filings subject to uniform national standards, which provides the following benefits:

a. Regulatory efficiency/effectiveness: more effective use of limited regulatory resources;

b Single, high-quality review of increasingly complex products;

c. Leverage collective expertise of states in setting uniform standards;

d. Opportunity for state regulators to redirect resources to other areas of consumer protection and to oversee innovative product filings;

e. Meet industry's need for single point of filing and enhance their ability to compete more effectively with other financial institutions; and

h. Provide insurance customers with a broader choice of products in a timelier manner.

States would still retain control over the insurance regulatory process even if a state elects to join the compact If a state disagrees with a product standard developed by the Commission, it may opt-out of the uniform standard either by regulation or legislation. The bill would also allow companies to continue to file products in the individual states through the existing form filing process

The Commission has been fully operational since 2006, when it first met the 26-state or 40% premium volume threshold established in this bill Today, there are 44 states that are members of this Compact and over 100 product standards have been reviewed and approved by the Commission Products approved by the Commission are currently being marketed in all 44 states that are members of the Compact. These product standards have upheld, and in some instances, enhanced important consumer protections, while affording the streamlined, multi-state policy form and rate approval process that the Compact intended.

Once New York joins the Compact, the New York Department of Financial Services will automatically become a permanent member of the Management Committee overseeing the Commission and will have a peat deal of input into the inner workings of the Commission and the development of new or refinement of existing policy standards.

Lastly, by joining the Compact and taking advantage of the streamlined, uniform policy form filing process that the Commission affords, the New York Department of Financial Services can adjust staffing priorities so as to spend less time on oversight of the types of common policy form filings that have been developed by the Commission In doing so, the Department staff can spend more time on reviewing more complex or innovative policy form filings that have not yet been approved by the Commission New York could then be at the

fore-front of life insurance product innovation for the nation, leading to the sales of more products, which will benefits consumers.

Legislative history

Similar to S.2895-A of 2014

Fiscal implications

Having New York join the Compact would cause minimal or no fiscal impact to the State, since the Commission is fully operational and is being financed by product filing fees provided by the companies that are using the process.

Effective date

The act shall take effect 180 days after it shall have become a law.