What's happening
This bill allows New York to join the Interstate Insurance Product Regulation Compact, creating uniform national standards for certain insurance products.
Why it matters
Greater consumer protections and faster access to insurance products. By adopting uniform national standards for life, annuities, disability income, and long-term care insurance, the bill aims to ensure consumers are safeguarded while also enabling insurers to bring new products to market more quickly and efficiently.
State flexibility and oversight maintained. While New York would adopt national standards via the Compact, the bill preserves the state’s right to “opt out” of specific standards if they are deemed inadequate for New York consumers. State regulators also maintain enforcement authority and the ability to withdraw from the Compact entirely.
Streamlined and centralized regulatory process. Insurers could use a single point of filing for product approval across multiple states, reducing regulatory duplication and administrative costs. This is especially significant for companies operating in several states, potentially lowering costs for consumers and increasing market competition.
Checks and balances in the Compact’s governance. The Compact creates a commission with representation from each member state, includes consumer and industry advisory committees, requires public transparency for most actions, and mandates regular audits and reports, helping to ensure accountability and ongoing evaluation of consumer protections.
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Who cares
Headline styles
Join Interstate Insurance Compact
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to insurance
- Returned to senate
- Died in assembly
- Referred to insurance
- Delivered to assembly
- Passed senateVote 56–5
- Advanced to third reading
- 2nd report cal.
- 1st report cal.599
- Reported and committed to finance
- Referred to insurance
Full text
15 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
426
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to establishing the interstate insurance product regulation compact to regulate certain insurance products
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Legislative findings and intent. An interstate compact is a contract between the states that allows them to cooperate on multistate or national issues while still retaining state control. Interstate compacts are specifically mentioned in the U.S. Constitution and have been historically used to address border disputes and water rights. The use of interstate compacts has expanded significantly in recent decades to cover tax, motor vehicle licensing, environmental, emergency management and other issues. Over 200 interstate compacts currently exist, and on average every state belongs to at least 25 compacts. The Interstate Insurance Product Regulation Compact, which to date has been adopted by 44 member states, representing approximately two-thirds of the premium volume in the nation, created the Interstate Insurance Product Regulation Commission (IIPRC). The IIPRC provides the States with a vehicle to (1) develop uniform national product standards that will afford a high level of protection to consumers of life insurance, annuities, disability income and long-term care insurance products; (2) establish a central point of filing for these insurance products; and (3) thoroughly review product filings and make regulatory decisions according to the uniform product standards. The IIPRC is an important modernization initiative that benefits state insurance regulators, consumers, and the insurance industry. The Compact enhances the efficiency and effectiveness of the way insurance products are filed, reviewed, and approved allowing insurance customers to have faster access to competitive insur-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04581-02-7
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ance products in an ever-changing global marketplace. The Compact promotes uniformity through application of uniform product standards embedded with strong consumer protections. The state of New York seeks to join with other states as a member of the Interstate Insurance Product Regulation Compact and Commission.
§ 2. The insurance law is amended by adding a new article 82 to read as follows:
ARTICLE 82
INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
Section 8201. Short title.
8202. Purpose.
8203. Definitions.
8204. Establishment of the commission and venue.
8205. Powers of the commission.
8206. Organization of the commission.
8207. Meetings and acts of the commission.
8208. Rules and operating procedures; rule making functions of
the commission and opting out of uniform standards.
8209. Commission records and enforcement.
8210. Dispute resolution.
8211. Product filing and approval.
8212. Review of commission decisions regarding filings.
8213. Finance.
8214. Compacting states, effective date and amendment.
8215. Withdrawal, default and termination.
8216. Severability and construction.
8217. Binding effect of compact and other laws.
§ 8201. Short title. This article shall be known and may be cited as the "interstate insurance product regulation compact".
§ 8202. Purpose. The purposes of this compact are, through means of joint and cooperative action among the compacting 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 products covered under the compact;
(c) to establish a central clearinghouse to receive and provide prompt review of 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 standard;
(e) to improve coordination of regulatory resources and expertise between 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 as may be consistent with the state regulation of the business of insurance.
§ 8203. Definitions. As used in this article:
(a) "Advertisement" means any material designed to create public interest in a product, or induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy, as more
S. 426 3
specifically defined in the rules and operating procedures of the commission.
(b) "By-laws" mean those by-laws established by the commission for its governance or for directing or controlling the commission's actions or conduct.
(c) "Compacting state" means any state which has enacted this compact legislation and which has not withdrawn or been terminated pursuant to section eight thousand two hundred fifteen of this article.
(d) "Commission" means the "Interstate insurance product regulation commission" established by the compact.
(e) "Commissioner" means the chief insurance regulatory official of a state including, but not limited to commissioner, superintendent, director or administrator.
(f) "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an alien insurer, its state of entry.
(g) "Insurer" means any entity licensed by a state to issue contracts of insurance for any of the lines of insurance covered by this article.
(h) "Member" means the person, or his or her designee, chosen by a compacting state for service on the commission.
(i) "Non-compacting state" means any state which is not at the time a compacting state.
(j) "Operating procedures" mean procedures promulgated by the commission implementing a rule, uniform standard or a provision of this compact.
(k) "Product" means the form of the contract, policy application, endorsements, certificate forms, evidence of coverage forms and related forms for an individual or group annuity, life insurance, disability income or long-term care insurance product, which an insurer is authorized to issue.
(l) "Rule" means a statement of general or particular applicability and future effect promulgated by the commission, including a uniform standard developed pursuant to section eight thousand two hundred eight of this article, designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of the commission, which shall have the force and effect of law in the compacting states.
(m) "State" means any state, district or territory of the United States of America.
(n) "Third-party filer" means an entity that submits a product filing to the commission on behalf of an insurer.
(o) "Uniform standard" means a standard adopted by the commission for a product line, pursuant to section eight thousand two hundred eight of this article and shall include all of the product requirements in aggregate; provided, that each uniform standard shall be construed, whether express or implied, to prohibit the use of any inconsistent, misleading or ambiguous provisions in a product and the form of such product made available to the public shall not be unfair, inequitable or against public policy as determined by the commission.
§ 8204. Establishment of the commission and venue. (a) The compacting states hereby establish a joint public agency known as the "Interstate insurance product regulation commission". Pursuant to section eight thousand two hundred eight of this article, the commission shall have the power to develop uniform standards for product lines, receive and provide prompt review of products filed therewith, and give approval to those product filings satisfying applicable uniform standards; provided,
S. 426 4
however, that it is not intended for the commission to be the exclusive entity for receipt and review of insurance product filings. Nothing in this section shall prohibit any insurer from filing its product in any state wherein such insurer is licensed to conduct the business of insurance and such filing shall be subject to the laws of the state where filed.
(b) The commission is a body corporate and politic, and an instrumentality of the compacting states.
(c) The commission is a not-for-profit entity, separate and distinct from the individual compacting states.
(d) The commission is solely responsible for its liabilities unless otherwise specifically provided in this compact, except that, 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 therefor.
(e) Venue in proper and judicial proceedings by or against the commission shall be brought solely and exclusively in a court of competent jurisdiction where the principal office of the commission is located.
§ 8205. Powers of the commission. (a) The commission shall have the following powers:
(1) to promulgate rules, pursuant to section eight thousand two hundred eight of this article, which shall have the force and effect of law and shall be binding in the compacting states to the extent and in the manner provided in this article;
(2) to exercise its rule making authority and establish reasonable uniform standards for products covered under the compact, and advertisement related thereto, which shall have the force and effect of law and shall be binding in the compacting states, but only for such products filed with the commission; provided, however, that a compacting state shall have the right to opt out of such uniform standard pursuant to section eight thousand two hundred eight of this article to the extent and in the manner provided in this article, and provided further that any uniform standard established by the commissioner for long-term care insurance products may provide the same or greater protections for consumers as, but shall not provide less than, those protections set forth in the National Association of Insurance Commissioners' (hereinafter referred to as the "NAIC") Long-Term Care Insurance Model Act and Long-Term Care Insurance Model Regulation, respectively, adopted as of 2001. The commission shall consider whether any subsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance Model Regulation adopted by the NAIC require amending of the uniform standards established by the commission for long-term insurance products;
(3) to receive and review in an expeditious manner products filed with the commission, including rate filings for disability income and longterm care insurance products, and give approval of those products and rate filings that satisfy the applicable uniform standard, where such approval shall have the force and effect of law and be binding on the compacting states to the extent and in the manner provided in the compact;
(4) to receive and review in an expeditious manner advertisement relating to long-term care insurance products for which uniform standards have been adopted by the commission, and give approval of such advertisement that satisfies the applicable uniform standard. For any product covered under this article, other than long-term care insurance products, the commission shall have the authority to require an insurer
S. 426 5
to submit all or any part of its advertisement with respect to that product for review or approval prior to use if the commission determines that the nature of the product is such that an advertisement of the product could have the capacity or tendency to mislead the public. The actions of the commission as provided in this section shall have the force and effect of law and shall be binding in the compacting states to the extent and in the manner provided in the compact;
(5) to exercise rule making authority and designate products and advertisement that may be subject to a self-certification process without the need for prior approval by the commission;
(6) to promulgate operating procedures, pursuant to section eight thousand two hundred eight of this article, which shall be binding in the compacting states to the extent and in the manner provided in the compact;
(7) to bring and prosecute legal proceedings or actions in its name as the commission; provided, that the standing of any state insurance department to sue or be sued under applicable law shall not be affected;
(8) to issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence;
(9) to establish and maintain offices;
(10) to purchase and maintain insurance and bonds;
(11) to borrow, accept or contract for services of personnel, including, but not limited to, employees of a compacting state;
(12) to hire employees and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of the compact, and determine their qualifications; and to establish the commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation and qualifications of personnel;
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to establishing the interstate insurance product regulation compact to regulate certain insurance products
Purpose
Establishes an interstate insurance product regulation compact. The purposes of this compact are, through means of joint and cooperative action among the compacting 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;
Read the full memo (1,321 words)
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 45 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 45 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 great 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 benefit consumers.
Legislative history
S.3287 of 2015-16. 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.
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