By Counts H.B. No. 914
74R3978 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the adoption of the Interstate Insurance Receivership
1-3 Compact by this state.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. The Insurance Code is amended by adding Chapter
1-6 29 to read as follows:
1-7 CHAPTER 29. INTERSTATE INSURANCE RECEIVERSHIP COMPACT
1-8 Art. 29.01. EXECUTION OF INTERSTATE COMPACT. This state
1-9 enters into a compact with all other states legally joining in this
1-10 compact in substantially the following form:
1-11 ARTICLE I. PURPOSES
1-12 The purposes of this Compact are, through means of joint and
1-13 cooperative action among the Compacting States:
1-14 1. To promote, develop and facilitate orderly,
1-15 efficient, cost effective and uniform Insurer Receiverships laws
1-16 and operations;
1-17 2. To coordinate interaction between Insurer
1-18 Receivership and Guaranty Fund operations;
1-19 3. To create the Interstate Insurance Receivership
1-20 Commission; and
1-21 4. To perform these and such other related functions
1-22 as may be consistent with the state regulation of the business of
1-23 insurance pursuant to the McCarran-Ferguson Act.
1-24 ARTICLE II. DEFINITIONS
2-1 For the purposes of this Compact:
2-2 1. "By-laws" mean those by-laws established by the
2-3 Commission for its governance, directing or controlling the
2-4 Commission's actions or conduct.
2-5 2. "Compacting State" means any State which has
2-6 enacted the enabling legislation for this Compact.
2-7 3. "Commission" means the "Interstate Insurance
2-8 Receivership Commission" established by this Compact.
2-9 4. "Commissioner" means the chief insurance regulatory
2-10 official of a State.
2-11 5. "Deputy Receiver" means any person appointed or
2-12 retained by a Receiver and who is the Receiver's duly authorized
2-13 representative for administering one or more Estates.
2-14 6. "Domiciliary State" means the state in which an
2-15 Insurer is incorporated or organized; or, in the case of an alien
2-16 Insurer, its state of entry; or in the case of an unauthorized
2-17 Insurer not incorporated, organized, or entered in any State, a
2-18 state where the Insurer is engaged in or doing business.
2-19 7. "Estate" means any Insurer in Receivership.
2-20 8. "Guaranty Association" means an insurance guaranty
2-21 fund or association or any similar entity now or hereafter created
2-22 by statute in a Compacting State, other than a Receivership, to pay
2-23 or assume, in whole or in part, the contractual claim obligations
2-24 of insolvent Insurers.
2-25 9. "Insurer" means any person who has done, purports
2-26 to do, is doing or is licensed to do any insurance or reinsurance
2-27 business, or is or has been subject to the authority of, or to
3-1 liquidation, rehabilitation, supervision, conservation or ancillary
3-2 receivership by, any Commissioner.
3-3 10. "Member" means the Commissioner of a Compacting
3-4 State or his or her designee who shall be a person officially
3-5 connected with the Commissioner and who is wholly or principally
3-6 employed by said Commissioner.
3-7 11. "Non-compacting State" means any State which has
3-8 not enacted the enabling legislation for this Compact.
3-9 12. "Operating Procedures" mean procedures established
3-10 by the Commission implementing a Rule, an existing law in a
3-11 Compacting State, or a provision of this Compact.
3-12 13. "Publication" means the act of publishing in the
3-13 official state publication in a Compacting State or in such other
3-14 publication as may be established by the Commission.
3-15 14. "Receiver" means receiver, liquidator,
3-16 rehabilitator, conservator or ancillary receiver as the context
3-17 requires.
3-18 15. "Receivership" means any liquidation,
3-19 rehabilitation, conservation or ancillary receivership proceeding
3-20 as the context requires.
3-21 16. "Rules" means acts of the Commission duly adopted
3-22 pursuant to Article VII of this Compact substantially affecting
3-23 interested parties in addition to the Commission, which shall have
3-24 the force and effect of law in the Compacting States.
3-25 17. "State" means any state, district or territory of
3-26 the United States of America.
3-27 ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE
4-1 1. The Compacting States hereby create and establish
4-2 an entity known as the "Interstate Insurance Receivership
4-3 Commission."
4-4 2. The Commission is a body corporate of each
4-5 Compacting State.
4-6 3. The Commission is a not-for-profit entity, separate
4-7 and distinct from the Compacting States.
4-8 4. The Commission is solely responsible for its
4-9 liabilities except as otherwise provided in this Compact.
4-10 5. Except as otherwise specifically provided in state
4-11 or federal law in the jurisdiction where the Commission's principal
4-12 office is located or where the Commission is acting as Receiver,
4-13 venue is proper and judicial proceedings by or against the
4-14 Commission shall be brought in a court of competent jurisdiction
4-15 where the Commission's principal office is located.
4-16 ARTICLE IV. POWERS OF THE COMMISSION
4-17 The Commission shall have the following powers:
4-18 1. To promulgate Rules which shall be binding in the
4-19 Compacting States to the extent and in the manner provided in this
4-20 Compact;
4-21 2. To prescribe Operating Procedures which shall be
4-22 binding in the Compacting States to the extent and in the manner
4-23 provided in this Compact;
4-24 3. To oversee, supervise and coordinate the activities
4-25 of Receivers in Compacting States;
4-26 4. To act as Receiver of Insurers organized under the
4-27 laws of, engaged in or doing the business of insurance, in a
5-1 Compacting State upon the request of the Commissioner of such State
5-2 or when grounds for Receivership by the Commission exist under
5-3 Article IX of this Compact;
5-4 5. To act as Deputy Receiver of Insurers organized
5-5 under the laws of, engaged in or doing the business of insurance,
5-6 in a Non-compacting State in accordance with Article IX of this
5-7 Compact;
5-8 6. To act as ancillary Receiver in a Compacting State
5-9 of an Insurer domiciled in a Non-compacting State;
5-10 7. To monitor the activities and functions of Guaranty
5-11 Associations in the Compacting States;
5-12 8. To delegate its operating authority or functions,
5-13 provided, that its rulemaking authority under Article VII of this
5-14 Compact shall not be delegated;
5-15 9. To bring or prosecute legal proceedings or actions
5-16 in its name as the Commission, or in the name of the Commission
5-17 acting as Receiver;
5-18 10. To bring or prosecute legal proceedings or actions
5-19 on behalf of an Estate or its policyholders and creditors,
5-20 provided, that any Guaranty Association's standing to sue or be
5-21 sued under applicable law shall not be affected;
5-22 11. To issue subpoenas requiring the attendance and
5-23 testimony of witnesses and the production of evidence;
5-24 12. To establish and maintain offices;
5-25 13. To purchase and maintain insurance and bonds;
5-26 14. To borrow, accept or contract for services of
5-27 personnel, including, but not limited to, Members and their staff,
6-1 and the use of property, real, personal or mixed;
6-2 15. To elect or appoint such officers, attorneys,
6-3 employees or agents, and to fix their compensation, define their
6-4 duties and determine their qualifications; and to establish the
6-5 Commission's personnel policies and programs relating to, among
6-6 other things, conflicts of interest, rates of compensation and
6-7 qualifications of personnel;
6-8 16. To accept any and all donations and grants of
6-9 money, equipment, supplies, materials and services, and to receive,
6-10 utilize and dispose of the same;
6-11 17. To lease, purchase, accept gifts or donations of,
6-12 or otherwise to own, hold, improve or use, any property, real,
6-13 personal or mixed;
6-14 18. To sell, convey, mortgage, pledge, lease,
6-15 exchange, abandon or otherwise dispose of any property, real,
6-16 personal or mixed;
6-17 19. To enforce compliance with Commission Rules,
6-18 Operating Procedures and By-laws;
6-19 20. To provide for dispute resolution among Compacting
6-20 States, and Receivers;
6-21 21. To represent and advise Compacting States on
6-22 issues relating to Insurers domiciled or doing business in
6-23 Non-compacting jurisdictions consistent with the purposes of this
6-24 Compact;
6-25 22. To provide advice and training to Receivership
6-26 personnel of Compacting States, and to be a resource for Compacting
6-27 States by maintaining a reference library of relevant materials;
7-1 23. To establish a budget and make expenditures;
7-2 24. To borrow money;
7-3 25. To appoint committees including, but not limited
7-4 to, an industry advisory committee and an executive committee of
7-5 Members;
7-6 26. To provide and receive information relating to
7-7 Receiverships and Guaranty Associations, and to cooperate with law
7-8 enforcement agencies;
7-9 27. To adopt and use a corporate seal; and
7-10 28. To perform such other functions as may be
7-11 necessary or appropriate to achieve the purposes of this Compact as
7-12 may be consistent with the state regulation of the business of
7-13 insurance pursuant to the McCarran-Ferguson Act.
7-14 ARTICLE V. ORGANIZATION OF THE COMMISSION
7-15 Section A. Membership, Voting and By-laws
7-16 1. Each Compacting State shall have and be limited to
7-17 one Member. Each Member shall be qualified under or pursuant to
7-18 the applicable law of the Compacting State. Each Compacting State
7-19 retains the discretionary right to determine the due election or
7-20 appointment and qualification of its own Commissioner, and to fill
7-21 all vacancies of its Member.
7-22 2. Each Member shall be entitled to one vote.
7-23 3. The Commission shall, by a majority of the Members,
7-24 adopt By-laws to govern its conduct as may be necessary or
7-25 appropriate to carry out the purposes of the Compact, including,
7-26 but not limited to:
7-27 a. establishing the fiscal year of the
8-1 Commission;
8-2 b. providing reasonable standards and procedures
8-3 (i) for the establishment of committees, and (ii) governing any
8-4 general or specific delegation of any authority or function of the
8-5 Commission;
8-6 c. providing reasonable procedures for calling
8-7 and conducting meetings of the Commission, and ensuring reasonable
8-8 notice of each such meeting;
8-9 d. establishing the titles and responsibilities
8-10 of the officers of the Commission;
8-11 e. providing reasonable standards and procedures
8-12 for the establishment of the personnel policies and programs of the
8-13 Commission. Notwithstanding any civil service or other similar
8-14 laws of any Compacting State, the By-laws shall exclusively govern
8-15 the personnel policies and programs of the Commission; and
8-16 f. providing a mechanism for winding up the
8-17 operations of the Commission and the equitable return of any
8-18 surplus funds that may exist after the termination of the Compact
8-19 after the payment and/or reserving of all of its debts and
8-20 obligations.
8-21 Section B. Officers and Personnel
8-22 1. The Commission shall, by a majority of the Members,
8-23 elect annually from among its Members a chairperson and a vice
8-24 chairperson, each of whom shall have such authorities and duties as
8-25 may be specified in the By-laws. The chairperson or, in his or her
8-26 absence or disability, a Member designated in accordance with the
8-27 By-laws, shall preside at all meetings of the Commission. The
9-1 officers so elected shall serve without compensation or
9-2 remuneration from the Commission; provided that, subject to the
9-3 availability of budgeted funds, the officers shall be reimbursed
9-4 for any actual and necessary expenses incurred by them in the
9-5 performance of their duties and responsibilities as officers of the
9-6 Commission.
9-7 2. The Commission may, by a majority of the Members,
9-8 appoint or retain an executive director for such period, upon such
9-9 terms and conditions and for such compensation as the Commission
9-10 may deem appropriate. The executive director shall serve as
9-11 secretary to the Commission, but shall not be a Member of the
9-12 Commission. The executive director shall hire and supervise such
9-13 other staff as may be authorized by the Commission.
9-14 Section C. Corporate Records of the Commission
9-15 The Commission shall maintain its corporate books and records
9-16 in accordance with the By-laws.
9-17 Section D. Qualified Immunity and Indemnification
9-18 1. The Members, officers, executive director and
9-19 employees of the Commission shall be immune from suit and
9-20 liability, either personally or in their official capacity, for any
9-21 claim for damage to or loss of property or personal injury or other
9-22 civil liability caused or arising out of any actual or alleged act,
9-23 error or omission that occurred, or that the defendant had a
9-24 reasonable basis for believing occurred, within the scope of
9-25 Commission employment, duties or responsibilities; provided that,
9-26 nothing in this paragraph shall be construed to protect any such
9-27 person from suit and/or liability for any damage, loss, injury or
10-1 liability caused by the intentional or willful and wanton
10-2 misconduct of any such person, or to protect the Commission acting
10-3 as Receiver under Article IX of this Compact.
10-4 2. The Commission shall defend any Commissioner of a
10-5 Compacting State, or his or her representatives or employees, or
10-6 the Commission's representatives or employees, in any civil action
10-7 or any counterclaim seeking to impose liability, arising out of any
10-8 actual or alleged act, error or omission that occurred within the
10-9 scope of Commission employment, duties or responsibilities, or that
10-10 the defendant had a reasonable basis for believing occurred within
10-11 the scope of Commission employment, duties or responsibilities;
10-12 provided, that the actual or alleged act, error or omission did not
10-13 result from gross negligence or intentional wrongdoing on the part
10-14 of such person.
10-15 3. The Commission shall indemnify and hold the
10-16 Commissioner of a Compacting State, or his or her representatives
10-17 or employees, or the Commission's representatives or employees,
10-18 harmless in the amount of any settlement or judgment obtained
10-19 against such persons arising out of any actual or alleged act,
10-20 error or omission that occurred within the scope of Commission
10-21 employment, duties or responsibilities, or that such persons had a
10-22 reasonable basis for believing occurred within the scope of
10-23 Commission employment, duties or responsibilities, provided, that
10-24 the actual or alleged act, error or omission did not result from
10-25 gross negligence or intentional wrongdoing on the part of such
10-26 person.
10-27 ARTICLE VI. MEETINGS AND ACTS OF THE COMMISSION
11-1 1. The Commission shall meet and take such actions as
11-2 are consistent with the provisions of this Compact.
11-3 2. Except as otherwise provided in this Compact and
11-4 unless a greater percentage is required by the By-laws, in order to
11-5 constitute an act of the Commission, such act shall have been taken
11-6 at a meeting of the Commission and shall have received an
11-7 affirmative vote of a majority of the Members.
11-8 3. Each Member of the Commission shall have the right
11-9 and power to cast a vote to which that Compacting State is entitled
11-10 and to participate in the business and affairs of the Commission.
11-11 A Member shall vote in person and shall not delegate his or her
11-12 vote to another Member. The By-laws may provide for Members'
11-13 participation in meetings by telephone or other means of
11-14 telecommunications.
11-15 4. The Commission shall meet at least once during each
11-16 calendar year. The chairperson of the Commission may call
11-17 additional meetings at any time and, upon the request of a majority
11-18 of the Members, shall call additional meetings.
11-19 5. The Commission's Rules shall establish conditions
11-20 and procedures under which the Commission shall make its
11-21 information and official records available to the public for
11-22 inspection or copying. The Commission may exempt from disclosure
11-23 any information or official records to the extent they would
11-24 adversely affect personal privacy rights or proprietary interests.
11-25 In adopting Rules, the Commission may consider any special
11-26 circumstances pertaining to Insurer insolvencies, but shall be
11-27 guided by the principles embodied in state and federal freedom of
12-1 information laws. The Commission may establish additional Rules
12-2 under which it may make available to law enforcement agencies
12-3 records and information otherwise exempt from disclosure, and may
12-4 enter into agreements with law enforcement agencies to receive or
12-5 exchange information or records subject to nondisclosure and
12-6 confidentiality provisions.
12-7 6. Public notice shall be given of all meetings and
12-8 all meetings shall be open to the public, except as set forth in
12-9 the Rules or as otherwise provided in this Compact, and recorded.
12-10 The Commission shall issue Rules consistent with the principles
12-11 contained in the "Government in Sunshine Act," 5 U.S.C. Section
12-12 552(b). The Commission and any of its committees may close a
12-13 meeting to the public where it determines by two-thirds vote that
12-14 an open meeting would be likely to:
12-15 a. relate solely to the Commission's internal
12-16 personnel practices and procedures;
12-17 b. disclose matters specifically exempted from
12-18 disclosure by statute;
12-19 c. disclose trade secrets or commercial or
12-20 financial information which is privileged or confidential;
12-21 d. involve accusing any person of a crime, or
12-22 formally censuring any person;
12-23 e. disclose information of a personal nature
12-24 where disclosure would constitute a clearly unwarranted invasion of
12-25 personal privacy;
12-26 f. disclose investigatory records compiled for
12-27 law enforcement purposes;
13-1 g. disclose information contained in or related
13-2 to examination, operating or condition reports prepared by, or on
13-3 behalf of or for the use of the Commission with respect to a
13-4 regulated entity for the purpose of regulation or supervision of
13-5 such entity;
13-6 h. disclose information, the premature
13-7 disclosure of which would significantly endanger the stability of a
13-8 regulated entity;
13-9 i. specifically relate to the Commission's
13-10 issuance of a subpoena, or its participation in a civil action or
13-11 proceeding.
13-12 7. For every meeting closed pursuant to this
13-13 provision, the Commission's chief legal officer shall publicly
13-14 certify that, in his or her opinion, the meeting may be closed to
13-15 the public, and shall reference each relevant exemptive provision.
13-16 The Commission shall keep minutes which shall fully and clearly
13-17 describe all matters discussed in any meeting and shall provide a
13-18 full and accurate summary of any actions taken, and the reasons
13-19 therefor, including a description of each of the views expressed on
13-20 any item and the record of any rollcall vote (reflected in the vote
13-21 of each Member on the question). All documents considered in
13-22 connection with any action shall be identified in such minutes.
13-23 ARTICLE VII. RULEMAKING FUNCTIONS OF THE COMMISSION
13-24 1. The Commission shall promulgate Rules and Operating
13-25 Procedures in order to effectively and efficiently achieve the
13-26 purposes of this Compact; provided, that the Commission shall not
13-27 promulgate any Rules (i) directly relating to Guaranty
14-1 Associations, including, but not limited to, Rules governing
14-2 coverage, funding, and assessment mechanisms; or (ii) (except
14-3 pursuant to Rules promulgated under Article VII(3) of this Compact)
14-4 altering the statutory priorities for distributing assets out of an
14-5 Estate.
14-6 2. Rulemaking shall occur pursuant to the criteria set
14-7 forth in this Article and the Rules and Operating Procedures
14-8 adopted pursuant thereto. Such rulemaking shall substantially
14-9 conform to the principles of the federal Administrative Procedure
14-10 Act, P.L. 87-554, and the Federal Advisory Committee Act, P.L.
14-11 92-463, as may be amended.
14-12 3. Other than the adoption of such Rules as are
14-13 necessary for the orderly operation of the Commission, the first
14-14 Rule to be considered by the Commission shall be uniform provisions
14-15 governing Insurer Receiverships including, but not limited to,
14-16 provisions requiring Compacting States to implement, execute, and
14-17 administer in a fair, just, effective and efficient manner Rules
14-18 and Operating Procedures relating to Receiverships. The Commission
14-19 shall within three years of the adoption of this Compact by two or
14-20 more States, promulgate such uniform provisions through the
14-21 rulemaking process. Such uniform provisions shall become law in
14-22 all of the Compacting States upon legislative enactment in a
14-23 majority of the Compacting States.
14-24 4. All Rules and amendments shall become binding as of
14-25 the date specified in each Rule or amendment; provided that, if a
14-26 Compacting State expressly rejects such Rule or amendment through
14-27 legislative enactment as of the expiration of the second full
15-1 calendar year, such Rule or amendment shall have no further force
15-2 and effect in the rejecting Compacting State. If a majority of
15-3 Compacting States reject a Rule, then such Rule shall have no
15-4 further force and effect in all Compacting States.
15-5 5. When prescribing a Rule or Operating Procedure, the
15-6 Commission shall (a) effect Publication of proposed rulemaking
15-7 stating with particularity the text of the Rule or Operating
15-8 Procedure which is proposed and the reason for the proposed Rule or
15-9 Operating Procedure; (b) allow persons to submit written data,
15-10 facts, opinions and arguments, which information shall be publicly
15-11 available; (c) provide an opportunity for an informal hearing; and
15-12 (d) promulgate a final Rule or Operating Procedure and its
15-13 effective date, if appropriate, based on the rulemaking record.
15-14 6. Not later than sixty days after a Rule or Operating
15-15 Procedure is promulgated, any interested person may file a petition
15-16 in a court of competent jurisdiction where the Commission's
15-17 principal office is located for judicial review of such Rule or
15-18 Operating Procedure. If the court finds that the Commission's
15-19 action is not supported by substantial evidence in the rulemaking
15-20 record, the court shall hold the Rule unlawful and set it aside.
15-21 ARTICLE VIII. OVERSIGHT AND DISPUTE RESOLUTION BY THE COMMISSION
15-22 Section A. Oversight
15-23 1. The Commission shall oversee the administration and
15-24 operations of Receiverships, and shall monitor Receiverships being
15-25 administered in Non-compacting States which may significantly
15-26 affect Compacting States.
15-27 2. To aid its monitoring, oversight and coordination
16-1 responsibilities, the Commission shall establish Operating
16-2 Procedures requiring each Member to submit written reports to the
16-3 Commission as follows:
16-4 a. An initial report to the Commission upon a
16-5 finding or other official action by the Compacting State that
16-6 grounds for Receivership of a multi-state Insurer exist.
16-7 Thereafter, reports shall be submitted periodically and as
16-8 otherwise required pursuant to the Commission's Operating
16-9 Procedures. The Commission shall be entitled to receive notice of,
16-10 and shall have standing to appear in, Compacting States'
16-11 Receiverships; and
16-12 b. An initial report of the status of an Insurer
16-13 within a reasonable time after the initiation of a Receivership.
16-14 3. The Commission shall establish Operating Procedures
16-15 requiring Receivers to submit to the Commission periodic written
16-16 reports and such additional information and documentation as the
16-17 Commission may reasonably request. Each Compacting State's
16-18 Receivers shall establish the capability to obtain and provide all
16-19 records, data and information required by the Commission in
16-20 accordance with the Commission's Operating Procedures.
16-21 4. Except as to privileged records, data and
16-22 information, the laws of any Compacting State pertaining to
16-23 confidentiality or nondisclosure shall not relieve any Compacting
16-24 State Commissioner of the responsibility to disclose any relevant
16-25 records, data or information to the Commission; provided that,
16-26 disclosure to the Commission shall not be deemed to waive or
16-27 otherwise affect any confidentiality requirement; and further
17-1 provided that, the Commission shall be subject to the Compacting
17-2 State's laws pertaining to confidentiality and nondisclosure with
17-3 respect to all records, data and information in its possession.
17-4 5. The courts and executive agencies in each
17-5 Compacting State shall enforce this Compact and shall take all
17-6 actions necessary and appropriate to effectuate the Compact's
17-7 purposes and intent. In any Receivership or other judicial or
17-8 administrative proceeding in a Compacting State pertaining to the
17-9 subject matter of this Compact which may affect the powers,
17-10 responsibilities or actions of the Commission, the Commission shall
17-11 be entitled to receive all service of process in any such
17-12 proceeding, and shall have standing to intervene in the
17-13 Receivership or proceeding for all purposes.
17-14 6. The Commission shall analyze and correlate records,
17-15 data, information and reports received from Receivers and Guaranty
17-16 Associations, and shall make recommendations for improving their
17-17 performance to the Compacting States. The Commission shall include
17-18 summary information and data regarding its oversight functions in
17-19 its annual report.
17-20 Section B. Dispute Resolution
17-21 1. The Commission shall attempt, upon the request of a
17-22 Member, to resolve any disputes or other issues which are subject
17-23 to this Compact and which may arise among Compacting States and
17-24 Non-compacting States.
17-25 2. The Compacting States shall report to the
17-26 Commission on issues or activities of concern to them, and
17-27 cooperate with and support the Commission in the discharge of its
18-1 duties and responsibilities.
18-2 3. The Commission shall promulgate an Operating
18-3 Procedure providing for binding dispute resolution for disputes
18-4 among Receivers.
18-5 4. The Commission shall facilitate voluntary dispute
18-6 resolution for disputes among Guaranty Associations and Receivers.
18-7 ARTICLE IX. RECEIVERSHIP FUNCTIONS OF THE COMMISSION
18-8 1. The Commission has authority to act as Receiver of
18-9 any Insurer domiciled, engaged in or doing business in a Compacting
18-10 State upon the request of the Commissioner of such Compacting
18-11 State, or as otherwise provided in this Compact.
18-12 a. The Commission as Receiver shall have all
18-13 powers and duties pursuant to the Receivership laws of the
18-14 Domiciliary State.
18-15 b. The Commission as Receiver shall maintain
18-16 accounts of receipts and disbursements of the Estates consistent
18-17 with the accounting practices and procedures set forth in the
18-18 By-laws.
18-19 c. The Commission as Receiver shall cause an
18-20 annual audit of its Estates to be conducted by an independent
18-21 certified public accountant unless the Estate lacks sufficient
18-22 assets to conduct such audit.
18-23 d. The Commission as Receiver is authorized to
18-24 delegate its Receivership duties and functions, and to effectuate
18-25 such delegation through contracts with others.
18-26 2. The Commission shall act as Receiver of any Insurer
18-27 domiciled or doing business in a Compacting State in the event that
19-1 the Member acting as Receiver in that Compacting State fails to
19-2 comply with duly-adopted Commission Rules or Operating Procedures.
19-3 The Commission shall notify such Member in writing of his or her
19-4 noncompliance with Commission Rules or Operating Procedures. If
19-5 the Member acting as Receiver fails to remedy such noncompliance
19-6 within ten days after his or her receipt of such notification, the
19-7 Commission may petition the supervising court before which such
19-8 Receivership is pending for an order substituting and appointing
19-9 the Commission as Receiver of the Estate.
19-10 3. The Commission shall not act as Receiver of an
19-11 Estate which appears to lack sufficient assets to fund such
19-12 Receivership unless the Compacting State makes provisions for the
19-13 payment of the Estate's administrative expenses satisfactory to the
19-14 Commission.
19-15 4. The Commission may act as Deputy Receiver for any
19-16 Insurer domiciled or doing business in a Non-compacting State in
19-17 accordance with such State's laws, upon request of that
19-18 Non-compacting State's Commissioner and approval of the Commission.
19-19 5. With respect to Receiverships pending in a
19-20 Compacting State on the effective date of the enactment of this
19-21 Compact by the Compacting State:
19-22 a. the Commission may act as Receiver of an
19-23 Insurer upon the request of that Compacting State's Member and
19-24 approval of the Commission; and
19-25 b. the Commission shall oversee, monitor and
19-26 coordinate the activities of all Receiverships pending in that
19-27 Compacting State regardless whether the Commission is acting as
20-1 Receiver of Estates in the Compacting State.
20-2 ARTICLE X. FINANCE
20-3 1. The Commission shall pay or provide for the payment
20-4 of the reasonable expenses of its establishment and organization.
20-5 2. Except as otherwise provided in this Compact or by
20-6 act of the Commission, the expenses of each Compacting State shall
20-7 be the sole and exclusive responsibility of the respective
20-8 Compacting State. The Commission may pay or provide for actual and
20-9 necessary expenses for attendance of its Members at official
20-10 meetings of the Commission or its designated committees.
20-11 3. The Commission shall levy on and collect an annual
20-12 assessment from each Compacting State and each Insurer authorized
20-13 to do business in a Compacting State to cover the cost of the
20-14 internal operations and activities of the Commission and its staff
20-15 in a total amount sufficient to cover the Commission's annual
20-16 budget.
20-17 a. The aggregate annual assessment amount shall
20-18 be allocated seventy-five percent to Insurers, hereinafter referred
20-19 to as the "Insurers' Portion," and twenty-five percent to
20-20 Compacting States, hereinafter referred to as the "Compacting
20-21 States' Portion." The Insurers Portion shall be allocated to each
20-22 Insurer by the percentage derived from a fraction, the numerator of
20-23 which shall be the premium received on that Insurer's business in
20-24 all Compacting States and the denominator of which shall be the
20-25 premium received by all Insurers on business in all Compacting
20-26 States. The Compacting States' Portion shall be allocated to each
20-27 Compacting State by the percentage derived from a fraction, the
21-1 numerator of which shall be the premium received by all Insurers on
21-2 business in that Compacting State and the denominator shall be the
21-3 premium received on all Insurers on business in all Compacting
21-4 States. Each Compacting State's Portion shall be funded as
21-5 designated by that State's legislature. In no event shall an
21-6 Insurer's assessment be less than $50 or more than $25,000,
21-7 provided that, affiliated Insurers' combined assessments shall not
21-8 exceed $50,000. Upon the request of an Insurer, the Commission may
21-9 exempt or defer the assessment of any Insurer, if such assessment
21-10 would cause the Insurer's financial impairment.
21-11 b. These assessments shall not be used to pay
21-12 any costs or expenses incurred by the Commission and its staff
21-13 acting as Receiver of Estates. Such costs shall be payable from
21-14 the assets of the Estates as provided by law, except as otherwise
21-15 provided in this Compact.
21-16 c. Each Insurer authorized to do business in a
21-17 Compacting State shall timely pay assessments to the Commission.
21-18 Failure to pay such assessments shall not be grounds for the
21-19 revocation, suspension or denial of an Insurer's authority to do
21-20 business, but shall subject the Insurer to suit by the Commission
21-21 for recovery of any assessment due, attorneys' fees and costs,
21-22 together with interest from the date the assessment is due at a
21-23 rate of 10 percent per annum, and to civil forfeiture in an amount
21-24 to be determined by the Commissioner of that Compacting State in
21-25 which the Insurer received the greatest premium in the year next
21-26 preceding the first year for which the Insurer shall be delinquent
21-27 in payment of assessments.
22-1 4. The Commission shall be reimbursed in the following
22-2 manner for the costs and expenses incurred by the Commission and
22-3 its staff acting as Receiver of Estates to the extent that an
22-4 Insurer's assets may be insufficient for the effective
22-5 administration of its Estate:
22-6 a. if the Insurer is domiciled in a Compacting
22-7 State, the Estate shall be closed unless that Compacting State
22-8 makes provisions for reimbursing the Commission; and
22-9 b. if the Insurer is unauthorized to do business
22-10 in a Compacting State or if the Insurer is domiciled in a
22-11 Non-compacting State and subject to ancillary receivership, then
22-12 the Commission and such State shall agree to provisions for
22-13 reimbursing the Commission prior to the Commission becoming
22-14 Receiver of such Insurer.
22-15 5. To fund the cost of the initial operations of the
22-16 Commission until its first annual budget is adopted and related
22-17 assessments have been made, contributions from Compacting States
22-18 and others may be accepted and an assessment on Insurers doing
22-19 business in the Compacting States may be made not to exceed $450
22-20 per Insurer.
22-21 6. The Commission's adopted budget for a fiscal year
22-22 shall not be approved until it has been subject to notice and
22-23 comment as set forth in Article VII of this Compact. The budget
22-24 shall determine the amount of the annual assessment. The
22-25 Commission may accumulate a net worth not to exceed thirty percent
22-26 of its then annual cost of operation to provide for contingencies
22-27 and events not contemplated. These accumulated funds shall be held
23-1 separately and shall not be used for any other purpose. The
23-2 Commission's budget may include a provision for a contribution to
23-3 the Commission's net worth.
23-4 7. The Commission shall be exempt from all taxation in
23-5 and by the Compacting States.
23-6 8. The Commission shall not pledge the credit of any
23-7 Compacting State, except by and with the appropriate legal
23-8 authority of that Compacting State.
23-9 9. The Commission shall keep complete and accurate
23-10 accounts of all its internal receipts (including grants and
23-11 donations) and disbursements of all funds, other than Receivership
23-12 assets, under its control. The internal financial accounts of the
23-13 Commission shall be subject to the accounting procedures
23-14 established under its By-laws. The financial accounts and reports
23-15 including the system of internal controls and procedures of the
23-16 Commission shall be audited annually by an independent certified
23-17 public accountant. Upon the determination of the Commission, but
23-18 no less frequently than every three years, the review of such
23-19 independent auditor shall include a management and performance
23-20 audit of the Commission. The report of such independent audit
23-21 shall be made available to the public and shall be included in and
23-22 become part of the annual report of the Commission to the Governors
23-23 and legislatures of the Compacting States. The Commission's
23-24 internal accounts, any workpapers related to any internal audit and
23-25 any workpapers related to the independent audit, shall be
23-26 confidential; provided that, such materials shall be made
23-27 available: (i) in compliance with the order of any court of
24-1 competent jurisdiction; (ii) pursuant to such reasonable Rules as
24-2 the Commission shall promulgate; and (iii) to any Commissioner,
24-3 Governor of a Compacting State, or their duly authorized
24-4 representatives.
24-5 10. No Compacting State shall have any claim to or
24-6 ownership of any property held by or vested in the Commission or
24-7 the Commission acting as Receiver or to any other Commission funds
24-8 held pursuant to the provisions of this Compact.
24-9 ARTICLE XI. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT
24-10 1. Any State is eligible to become a Compacting State.
24-11 2. The Compact shall become effective and binding upon
24-12 legislative enactment of the Compact into law by two Compacting
24-13 States. Thereafter, it shall become effective and binding as to
24-14 any other Compacting State upon enactment of the Compact into law
24-15 by that State.
24-16 3. Amendments to the Compact may be proposed by the
24-17 Commission for enactment by the Compacting States. No amendment
24-18 shall become effective and binding upon the Commission and the
24-19 Compacting States unless and until it is enacted into law by
24-20 unanimous consent of the Compacting States.
24-21 ARTICLE XII. WITHDRAWAL, DEFAULT AND TERMINATION
24-22 Section A. Withdrawal
24-23 1. Once effective, the Compact shall continue in force
24-24 and remain binding upon each and every Compacting State; provided
24-25 that, a Compacting State may withdraw from the Compact
24-26 ("Withdrawing State") by enacting a statute specifically repealing
24-27 the statute which enacted the Compact into law.
25-1 2. The effective date of withdrawal is the effective
25-2 date of the repeal; provided that, the repeal shall not apply to
25-3 any Receiverships, as to which the Commission is acting as
25-4 Receiver, pending on the date of the repeal except by mutual
25-5 agreement of the Commission and the Withdrawing State.
25-6 3. The Withdrawing State shall immediately notify the
25-7 Chairperson of the Commission in writing upon the introduction of
25-8 legislation repealing this Compact in the withdrawing State.
25-9 4. The Commission shall notify the other Compacting
25-10 States of the Withdrawing State's intent to withdraw within sixty
25-11 days of its receipt thereof.
25-12 5. The Withdrawing State is responsible for all
25-13 assessments, obligations and liabilities incurred through the
25-14 effective date of withdrawal, including any obligations, the
25-15 performance of which extend beyond the effective date of
25-16 withdrawal, except to the extent those obligations may have been
25-17 released or relinquished by mutual agreement of the Commission and
25-18 the Withdrawing State. Notwithstanding the foregoing, the
25-19 Withdrawing State is responsible for the costs of its Estates
25-20 subject to this Compact pending on the date of repeal; the
25-21 Commission and the other Estates subject to this Compact shall not
25-22 bear any costs related to the Withdrawing States' Estates unless
25-23 otherwise mutually agreed upon between the Commission and the
25-24 Withdrawing State.
25-25 6. Reinstatement following withdrawal of any
25-26 Compacting State shall occur upon the Withdrawing State reenacting
25-27 the Compact or upon such later date as determined by the
26-1 Commission.
26-2 Section B. Default
26-3 1. If the Commission determines that any Compacting
26-4 State has at any time defaulted ("Defaulting State") in the
26-5 performance of any of its obligations or responsibilities under
26-6 this Compact, or the By-laws and duly-adopted Rules, all rights,
26-7 privileges and benefits conferred by this Compact and any
26-8 agreements entered into pursuant to this Compact shall be suspended
26-9 from the effective date of default as fixed by the Commission. The
26-10 grounds for default include, but are not limited to, failure of a
26-11 Compacting State to perform such obligations or responsibilities
26-12 and any other grounds designated in Commission Rules. The
26-13 Commission shall immediately notify the Defaulting State in writing
26-14 of the Defaulting State's suspension pending a cure of the default.
26-15 The Commission shall stipulate the conditions and the time period
26-16 within which the Defaulting State must cure its default. If the
26-17 Defaulting State fails to cure the default within the time period
26-18 specified by the Commission, the Defaulting State shall be
26-19 terminated from the Compact upon an affirmative vote of a majority
26-20 of the Compacting States and all rights, privileges and benefits
26-21 conferred by this Compact shall be terminated from the effective
26-22 date of termination.
26-23 2. Within sixty days of the effective date of
26-24 termination of a Defaulting State, the Commission shall notify the
26-25 Governor and the Majority and Minority Leaders of the Defaulting
26-26 State's legislature of such termination.
26-27 3. The termination of a Defaulting State shall apply
27-1 to all Receiverships, as to which the Commission is acting as
27-2 Receiver, pending on the effective date of termination except by
27-3 mutual agreement of the Commission and the Defaulting State.
27-4 4. The Defaulting State is responsible for all
27-5 assessments, obligations and liabilities incurred through the
27-6 effective date of termination, and is responsible for the costs
27-7 relating to its Estates subject to this Compact pending on the date
27-8 of the termination. The Commission and the other Estates subject
27-9 to this Compact shall not bear any costs relating the Defaulting
27-10 State's Estates unless otherwise mutually agreed upon between the
27-11 Commission and the Defaulting State.
27-12 5. Reinstatement following termination of any
27-13 Compacting State requires both a reenactment of the Compact by the
27-14 Defaulting State and the approval of the Commission pursuant to the
27-15 Rules.
27-16 Section C. Dissolution of Compact
27-17 1. The Compact dissolves effective upon the date of
27-18 the withdrawal or default of the Compacting State which reduces
27-19 membership in the Compact to one Compacting State.
27-20 2. Upon the dissolution of this Compact, the Compact
27-21 becomes null and void and shall be of no further force or effect,
27-22 and the business and affairs of the Commission shall be wound up
27-23 and any surplus funds shall be distributed in accordance with the
27-24 By-laws.
27-25 ARTICLE XIII. SEVERABILITY AND CONSTRUCTION
27-26 1. The provisions of this Compact shall be severable,
27-27 and if any phrase, clause, sentence or provision is deemed
28-1 unenforceable, the remaining provisions of the Compact shall be
28-2 enforceable.
28-3 2. The provisions of this Compact shall be liberally
28-4 construed to effectuate its purposes.
28-5 ARTICLE XIV. BINDING EFFECT OF COMPACT AND OTHER LAWS
28-6 Section A. Other Laws
28-7 1. Nothing herein prevents the enforcement of any
28-8 other law of a Compacting State that is not inconsistent with this
28-9 Compact.
28-10 2. All Compacting States' laws conflicting with this
28-11 Compact are superseded to the extent of the conflict.
28-12 Section B. Binding Effect of this Compact
28-13 1. All lawful actions of the Commission, including all
28-14 Rules and Operating Procedures adopted by the Commission, are
28-15 binding upon the Compacting States.
28-16 2. All agreements between the Commission and the
28-17 Compacting States are binding in accordance with their terms.
28-18 3. Upon the request of a party to a conflict over
28-19 meaning or interpretation of Commission actions, and upon a
28-20 majority vote of the Compacting States, the Commission may issue
28-21 advisory opinions regarding such meaning or interpretation.
28-22 4. In the event any provision of this Compact exceeds
28-23 the constitutional limits imposed on the legislature of any
28-24 Compacting State, the obligations, duties, powers or jurisdiction
28-25 sought to be conferred by such provision upon the Commission shall
28-26 be ineffective and such obligations, duties, powers or jurisdiction
28-27 shall remain in the Compacting State and shall be exercised by the
29-1 agency thereof to which such obligations, duties, powers or
29-2 jurisdiction are delegated by law in effect at the time this
29-3 Compact becomes effective.
29-4 Art. 29.02. FINANCIAL ARRANGEMENTS. The commissioner of
29-5 insurance may make or arrange for any payments necessary to
29-6 discharge the financial obligations imposed on this state by the
29-7 compact or any supplementary agreement entered into under the
29-8 compact, subject to the approval of the comptroller.
29-9 SECTION 2. The importance of this legislation and the
29-10 crowded condition of the calendars in both houses create an
29-11 emergency and an imperative public necessity that the
29-12 constitutional rule requiring bills to be read on three several
29-13 days in each house be suspended, and this rule is hereby suspended,
29-14 and that this Act take effect and be in force from and after its
29-15 passage, and it is so enacted.