IA

104TH CONGRESS

2D SESSION H. J. RES. 189

Granting the consent of Congress to the Interstate Insurance Receivership

Compact.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 4, 1996

Mr. MOORHEAD introduced the following joint resolution; which was referred

to the Committee on the Judiciary

JOINT RESOLUTION

Granting the consent of Congress to the Interstate Insurance

Receivership Compact.

1 Resolved by the Senate and House of Representatives

2 of the United States of America in Congress assembled,

3 SECTION 1. CONGRESSIONAL CONSENT.

4 The consent of Congress is given to the Interstate

5 Insurance Receivership Compact among the States of

6 California, Illinois, Michigan, Nebraska, New Hampshire,

7 and Wisconsin. In addition, consent is given to any other

8 State to enter into this compact. The compact reads sub9 stantially as follows:
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1 ‘‘INTERSTATE INSURANCE RECEIVERSHIP

2 COMPACT

3 ‘‘ARTICLE I. PURPOSES

4 ‘‘The purposes of this Compact are, through means

5 of joint and cooperative action among the Compacting

6 States:

7 ‘‘1. To promote, develop and facilitate orderly,

8 efficient, cost effective and uniform Insurer Receiv9 ership laws and operations;

10 ‘‘2. To coordinate interaction between Insurer

11 Receivership and Guaranty Association operations;

12 ‘‘3. To create the Interstate Insurance Receiv13 ership Commission; and

14 ‘‘4. To perform these and such other related

15 functions as may be consistent with the State regu16 lation of the business of insurance pursuant to the

17 McCarran-Ferguson Act.

18 ‘‘ARTICLE II. DEFINITIONS

19 ‘‘For the purposes of this Compact:

20 ‘‘1. ‘By-laws’ means those by-laws prescribed by

21 the Commission for its governance, or for directing

22 or controlling the Commission’s actions or conduct.

23 ‘‘2. ‘Compacting State’ means any State which

24 has enacted enabling legislation for this Compact.
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1 ‘‘3. ‘Commission’ means the ‘Interstate Insur2 ance Receivership Commission’ established by this

3 Compact.

4 ‘‘4. ‘Commissioner’ means the chief insurance

5 regulatory official of a State.

6 ‘‘5. ‘Deputy Receiver’ means any person ap7 pointed or retained by a Receiver and who is the Re8 ceiver’s duly authorized representative for admin9 istering one or more Estates.

10 ‘‘6. ‘Domiciliary State’ means the State in

11 which an Insurer is incorporated or organized; or, in

12 the case of an alien Insurer, its State of entry; or

13 in the case of an unauthorized Insurer not incor14 porated, organized, or entered in any State, a State

15 where the Insurer is engaged in or doing business.

16 ‘‘7. ‘Estate’ means the assets and liabilities of

17 any Insurer in Receivership.

18 ‘‘8. ‘Guaranty Association’ means an insurance

19 guaranty fund or association or any similar entity

20 now or hereafter created by statute in a Compacting

21 State, other than a Receivership, to pay or assume,

22 in whole or in part, the contractual claim obligations

23 of insolvent Insurers.

24 ‘‘9. ‘Insurer’ means any person or entity that

25 has done, purports to do, is doing or is licensed to
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1 do any insurance or reinsurance business, or is or

2 has been subject to the authority of, or to liquida3 tion, rehabilitation, supervision, conservation or an4 cillary receivership by, any Commissioner.

5 ‘‘DRAFTING NOTE: It is intended that the definition

6 of ‘Insurer’ be construed broadly to enable the Commis7 sion to place into receivership in accordance with applica8 ble State insurance receivership laws any person or entity

9 engaged in insurance business without a license, certificate

10 of authority or other required authorization to conduct

11 such business in a Compacting State.

12 ‘‘10. ‘Member’ means the Commissioner of a

13 Compacting State or his or her designee, who shall

14 be a person officially connected with the Commis15 sioner and who is wholly or principally employed by

16 said Commissioner.

17 ‘‘11. ‘Non-compacting State’ means any State

18 which has not enacted enabling legislation for this

19 Compact.

20 ‘‘12. ‘Operating Procedures’ means those proce21 dures promulgated by the Commission implementing

22 a Rule, an existing law in a Compacting State, or

23 a provision of this Compact.

24 ‘‘13. ‘Publication’ means the act of publishing

25 in the official State publication in a Compacting
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1 State or in such other publication as may be estab2 lished by the Commission.

3 ‘‘14. ‘Receiver’ means receiver, liquidator,

4 rehabilitator, conservator or ancillary receiver as the

5 context requires.

6 ‘‘15. ‘Receivership’ means any liquidation, reha7 bilitation, conservation or ancillary receivership pro8 ceeding as the context requires.

9 ‘‘16. ‘Rules’ means acts of the Commission,

10 duly promulgated pursuant to Article VII of this

11 Compact, substantially affecting interested parties in

12 addition to the Commission, which shall have the

13 force and effect of law in the Compacting States.

14 ‘‘17. ‘State’ means any State, district or terri15 tory of the United States of America.

16 ‘‘ARTICLE III. ESTABLISHMENT OF THE COMMISSION

17 AND VENUE

18 ‘‘1. The Compacting States hereby create and estab19 lish an entity known as the ‘Interstate Insurance Receiver20 ship Commission.’

21 ‘‘2. The Commission is a body corporate of each Com22 pacting State.

23 ‘‘3. The Commission is a not-for-profit entity, sepa24 rate and distinct from the Compacting States.
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1 ‘‘4. The Commission is solely responsible for its liabil2 ities except as otherwise provided in this Compact.

3 ‘‘5. Except as otherwise specifically provided in State

4 or Federal law in the jurisdiction where the Commission’s

5 principal office is located or where the Commission is act6 ing as Receiver, venue is proper, and judicial proceedings

7 by or against the Commission shall be brought in a court

8 of competent jurisdiction where the Commission’s prin9 cipal office is located.

10 ‘‘ARTICLE IV. POWERS OF THE COMMISSION

11 ‘‘The Commission shall have the following powers:

12 ‘‘1. To promulgate Rules which shall have the

13 force and effect of statutory law and shall be binding

14 in the Compacting States to the extent and in the

15 manner provided in this Compact;

16 ‘‘2. To promulgate Operating Procedures which

17 shall be binding in the Compacting States to the ex18 tent and in the manner provided in this Compact;

19 ‘‘3. To oversee, supervise and coordinate the ac20 tivities of Receivers in Compacting States;

21 ‘‘4. To act as Receiver of Insurers organized

22 under the laws of, engaged in or doing the business

23 of insurance in, a Compacting State upon the re24 quest of the Commissioner of such State or when
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1 grounds for Receivership by the Commission exist

2 under Article IX of this Compact;

3 ‘‘5. To act as Deputy Receiver of Insurers orga4 nized under the laws of, engaged in or doing the

5 business of insurance in, a Non-compacting State in

6 accordance with Article IX of this Compact;

7 ‘‘6. To act as ancillary Receiver in a Compact8 ing State of an Insurer domiciled in a Non-compact9 ing State;

10 ‘‘7. To monitor the activities and functions of

11 Guaranty Associations in the Compacting States;

12 ‘‘8. To delegate its operating authority or func13 tions; provided, that its rulemaking authority under

14 Article VII of this Compact shall not be delegated;

15 ‘‘9. To bring or prosecute legal proceedings or

16 actions in its name as the Commission, or in the

17 name of the Commission acting as Receiver;

18 ‘‘10. To bring or prosecute legal proceedings or

19 actions as Receiver on behalf of an Estate or its pol20 icyholders and creditors; provided, that any Guar21 anty Association’s standing to sue or be sued under

22 applicable law shall not be affected;

23 ‘‘11. To issue subpoenas requiring the attend24 ance and testimony of witnesses and the production

25 of evidence;
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1 ‘‘12. To establish and maintain offices;

2 ‘‘13. To purchase and maintain insurance and

3 bonds;

4 ‘‘14. To borrow, accept or contract for services

5 of personnel, including, but not limited to, Members

6 and their staff;

7 ‘‘15. To elect or appoint such officers, attor8 neys, employees or agents, and to fix their com9 pensation, define their duties and determine their

10 qualifications; and to establish the Commission’s

11 personnel policies and programs relating to, among

12 other things, conflicts of interest, rates of compensa13 tion and qualifications of personnel;

14 ‘‘16. To accept any and all donations and

15 grants of money, equipment, supplies, materials and

16 services, and to receive, utilize and dispose of the

17 same;

18 ‘‘17. To lease, purchase, accept gifts or dona19 tions of, or otherwise to own, hold, improve or use,

20 any property, real, personal or mixed;

21 ‘‘18. To sell, convey, mortgage, pledge, lease,

22 exchange, abandon or otherwise dispose of any prop23 erty, real, personal or mixed;

24 ‘‘19. To enforce compliance with Commission

25 Rules, Operating Procedures and By-laws;
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1 ‘‘20. To provide for dispute resolution among

2 Compacting States and Receivers;

3 ‘‘21. To represent and advise Compacting

4 States on issues relating to Insurers domiciled or

5 doing business in Non-compacting jurisdictions, con6 sistent with the purposes of this Compact;

7 ‘‘22. To provide advice and training to Receiv8 ership personnel of Compacting States, and to be a

9 resource for Compacting States by maintaining a

10 reference library of relevant materials;

11 ‘‘23. To establish a budget and make expendi12 tures;

13 ‘‘24. To borrow money;

14 ‘‘25. To appoint committees including, but not

15 limited to, an industry advisory committee and an

16 executive committee of Members;

17 ‘‘26. To provide and receive information relat18 ing to Receiverships and Guaranty Associations, and

19 to cooperate with law enforcement agencies;

20 ‘‘27. To adopt and use a corporate seal; and

21 ‘‘28. To perform such other functions as may

22 be necessary or appropriate to achieve the purposes

23 of this Compact as may be consistent with the State

24 regulation of the business of insurance pursuant to

25 the McCarran-Ferguson Act.
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1 ‘‘ARTICLE V. ORGANIZATION OF THE COMMISSION

2 ‘‘SECTION A. MEMBERSHIP, VOTING AND BY-LAWS

3 ‘‘1. Each Compacting State shall have and be limited

4 to one Member. Each Member shall be qualified to serve

5 in such capacity under or pursuant to the applicable law

6 of the Compacting State. Each Compacting State retains

7 the discretionary right to determine the due election or

8 appointment and qualification of its own Commissioner,

9 and to fill all vacancies of its Member.

10 ‘‘2. Each Member shall be entitled to one vote.

11 ‘‘3. The Commission shall, by a majority of the Mem12 bers, prescribe By-laws to govern its conduct as may be

13 necessary or appropriate to carry out the purposes of the

14 Compact, including, but not limited to:

15 ‘‘a. establishing the fiscal year of the Commis16 sion;

17 ‘‘b. providing reasonable standards and proce18 dures: (i) for the establishment of committees, and

19 (ii) governing any general or specific delegation of

20 any authority or function of the Commission;

21 ‘‘c. providing reasonable procedures for calling

22 and conducting meetings of the Commission, and en23 suring reasonable notice of each such meeting;

24 ‘‘d. establishing the titles and responsibilities of

25 the officers of the Commission;
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1 ‘‘e. providing reasonable standards and proce2 dures for the establishment of the personnel policies

3 and programs of the Commission. Notwithstanding

4 any civil service or other similar laws of any Com5 pacting State, the By-laws shall exclusively govern

6 the personnel policies and programs of the Commis7 sion; and

8 ‘‘f. providing a mechanism for winding up the

9 operations of the Commission and the equitable re10 turn of any surplus funds that may exist after the

11 dissolution of the Compact after the payment and/

12 or reserving of all of its debts and obligations.

13 ‘‘SECTION B. OFFICERS AND PERSONNEL

14 ‘‘1. The Commission shall, by a majority of the Mem15 bers, elect annually from among its members a chair16 person and a vice chairperson, each of whom shall have

17 such authorities and duties as may be specified in the By18 laws. The chairperson or, in his or her absence or disabil19 ity, a Member designated in accordance with the By-laws,

20 shall preside at all meetings of the Commission. The offi21 cers so elected shall serve without compensation or remu22 neration from the Commission; provided that, subject to

23 the availability of budgeted funds, the officers shall be re24 imbursed for any actual and necessary costs and expenses
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1 incurred by them in the performance of their duties and

2 responsibilities as officers of the Commission.

3 ‘‘2. The Commission may, by a majority of the Mem4 bers, appoint or retain an executive director for such pe5 riod, upon such terms and conditions and for such com6 pensation as the Commission may deem appropriate. The

7 executive director shall serve as secretary to the Commis8 sion, but shall not be a Member of the Commission. The

9 executive director shall hire and supervise such other staff

10 as may be authorized by the Commission.

11 ‘‘SECTION C. CORPORATE RECORDS OF THE COMMISSION

12 ‘‘The Commission shall maintain its corporate books

13 and records in accordance with the By-laws.

14 ‘‘SECTION D. QUALIFIED IMMUNITY, DEFENSE AND

15 INDEMNIFICATION

16 ‘‘1. The Members, officers, executive director and em17 ployees of the Commission shall be immune from suit and

18 liability, either personally or in their official capacity, for

19 any claim for damage to or loss of property or personal

20 injury or other civil liability caused or arising out of or

21 relating to any actual or alleged act, error or omission that

22 occurred, or that such person had a reasonable basis for

23 believing occurred within the scope of Commission employ24 ment, duties or responsibilities; provided, that nothing in

25 this paragraph shall be construed to protect any such per-
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1 son from suit and/or liability for any damage, loss, injury

2 or liability caused by the intentional or willful and wanton

3 misconduct of any such person, or to protect the Commis4 sion acting as Receiver under Article IX of this Compact.

5 ‘‘2. The Commission shall defend any Commissioner

6 of a Compacting State, or his or her representatives or

7 employees, or the Commission’s representatives or employ8 ees, in any civil action seeking to impose liability, arising

9 out of or relating to any actual or alleged act, error or

10 omission that occurred within the scope of Commission

11 employment, duties or responsibilities, or that such person

12 had a reasonable basis for believing occurred within the

13 scope of Commission employment, duties or responsibil14 ities; provided, that the actual or alleged act, error or

15 omission did not result from gross negligence or inten16 tional wrongdoing on the part of such person.

17 ‘‘3. The Commission shall indemnify and hold the

18 Commissioner of a Compacting State, or his or her rep19 resentatives or employees, or the Commission’s represent20 atives or employees, harmless in the amount of any settle21 ment or judgment obtained against such person arising

22 out of or relating to any actual or alleged act, error or

23 omission that occurred within the scope of Commission

24 employment, duties or responsibilities, or that such person

25 had a reasonable basis for believing occurred within the
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1 scope of Commission employment, duties or responsibil2 ities; provided, that the actual or alleged act, error or

3 omission did not result from gross negligence or inten4 tional wrongdoing on the part of such person.

5 ‘‘4. The costs and expenses of defense and indem6 nification of the Commission acting as Receiver of an Es7 tate shall be paid as administrative expenses from the as8 sets of that Estate unless such costs and expenses are cov9 ered by insurance maintained by the Commission.

10 ‘‘ARTICLE VI. MEETINGS AND ACTS OF THE

11 COMMISSION

12 ‘‘1. The Commission shall meet and take such actions

13 as are consistent with the provisions of this Compact.

14 ‘‘2. Except as otherwise provided in this Compact and

15 unless a greater percentage is required by the By-laws,

16 in order to constitute an act of the Commission, such act

17 shall have been taken at a meeting of the Commission and

18 shall have received an affirmative vote of a majority of

19 the Members.

20 ‘‘3. Each Member of the Commission shall have the

21 right and power to cast a vote to which that Compacting

22 State is entitled and to participate in the business and

23 affairs of the Commission. A Member shall vote in person

24 and shall not delegate his or her vote to another Member.

25 The By-laws may provide for Members’ participation in
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1 meetings by telephone or other means of telecommuni2 cation.

3 ‘‘4. The Commission shall meet at least once during

4 each calendar year. The chairperson of the Commission

5 may call additional meetings at any time and, upon the

6 request of a majority of the Members, shall call additional

7 meetings.

8 ‘‘5. The Commission’s Rules shall establish condi9 tions and procedures under which the Commission shall

10 make its information and official records available to the

11 public for inspection or copying. The Commission may ex12 empt from disclosure any information or official records

13 to the extent disclosure would adversely affect personal

14 privacy rights or proprietary interests. In promulgating

15 such Rules, the Commission may consider any special cir16 cumstances pertaining to Insurer insolvencies, but shall be

17 guided by the principles embodied in State and Federal

18 freedom of information laws. The Commission may pro19 mulgate additional Rules under which it may make avail20 able to law enforcement agencies records and information

21 otherwise exempt from disclosure, and may enter into

22 agreements with law enforcement agencies to receive or

23 exchange information or records subject to nondisclosure

24 and confidentiality provisions.
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1 ‘‘6. Public notice shall be given of all meetings and

2 all meetings shall be open to the public, except as set forth

3 in the Rules or as otherwise provided in this Compact.

4 The Commission shall promulgate Rules consistent with

5 the principles contained in the ‘Government in Sunshine

6 Act,’ 5 U.S.C. Section 552b, as may be amended. The

7 Commission and any of its committees may close a meet8 ing to the public where it determines by two-thirds vote

9 that an open meeting would be likely to:

10 ‘‘a. relate solely to the Commission’s internal

11 personnel practices and procedures;

12 ‘‘b. disclose matters specifically exempted from

13 disclosure by statute;

14 ‘‘c. disclose trade secrets or commercial or fi15 nancial information which is privileged or confiden16 tial;

17 ‘‘d. involve accusing any person of a crime, or

18 formally censuring any person;

19 ‘‘e. disclose information of a personal nature

20 where disclosure would constitute a clearly unwar21 ranted invasion of personal privacy;

22 ‘‘f. disclose investigatory records compiled for

23 law enforcement purposes;

24 ‘‘g. disclose information contained in or related

25 to examination, operating or condition reports pre-
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1 pared by, on behalf or for the use of, the Commis2 sion with respect to a regulated entity for the pur3 pose of regulation or supervision of such entity;

4 ‘‘h. disclose information, the premature disclo5 sure of which would significantly endanger the sta6 bility of a regulated entity;

7 ‘‘i. specifically relate to the Commission’s issu8 ance of a subpoena, or its participation in a civil ac9 tion or proceeding.

10 ‘‘7. For every meeting closed pursuant to this provi11 sion, the Commission’s chief legal officer shall publicly cer12 tify that, in his or her opinion, the meeting may be closed

13 to the public, and shall reference each relevant exemptive

14 provision. The Commission shall keep minutes which shall

15 fully and clearly describe all matters discussed in any

16 meeting and shall provide a full and accurate summary

17 of any actions taken, and the reasons therefor, including

18 a description of each of the views expressed on any item

19 and the record of any rollcall vote (reflected in the vote

20 of each Member on the question). All documents consid21 ered in connection with any action shall be identified in

22 such minutes.
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1 ‘‘ARTICLE VII. RULEMAKING FUNCTIONS OF THE

2 COMMISSION

3 ‘‘1. The Commission shall promulgate Rules and Op4 erating Procedures in order to effectively and efficiently

5 achieve the purposes of this Compact; provided, that the

6 Commission shall not promulgate any Rules: (i) directly

7 relating to Guaranty Associations, including, but not lim8 ited to, Rules governing coverage, funding, or assessment

9 mechanisms; or (ii) (except pursuant to Rules promul10 gated under Article VII(3) of this Compact) altering the

11 statutory priorities for distributing assets out of an Es12 tate.

13 ‘‘DRAFTING NOTE: The general intent is not to regu14 late, restrict, or otherwise affect the operations of Guar15 anty Associations. Any Commission Rules that would ma16 terially affect Guaranty Associations will be promulgated

17 under Article VII(3) of the Compact.

18 ‘‘2. Rulemaking shall occur pursuant to the criteria

19 set forth in this Article and the Rules and Operating Pro20 cedures promulgated pursuant thereto. Such rulemaking

21 shall substantially conform to the principles of the Federal

22 Administrative Procedure Act, 5 U.S.C.S. Section 551 et

23 seq., and the Federal Advisory Committee Act, 5 U.S.C.S.

24 app. 2, Section 1 et seq., as may be amended.
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1 ‘‘3. Other than the promulgation of such Rules as

2 are necessary for the orderly operation of the Commission,

3 the first Rule to be considered by the Commission shall

4 be uniform provisions governing Insurer Receiverships in5 cluding, but not limited to, provisions requiring Compact6 ing States to implement, execute, and administer in a fair,

7 just, effective and efficient manner Rules and Operating

8 Procedures relating to Receiverships. The Commission

9 shall within three years of the adoption of this Compact

10 by two or more States, promulgate such uniform provi11 sions through the rulemaking process. Such uniform provi12 sions shall become law in all of the Compacting States

13 upon legislative enactment in a majority of the Compact14 ing States.

15 ‘‘4. All Rules and amendments shall become binding

16 as of the date specified in each Rule or amendment; pro17 vided, that if a Compacting State expressly rejects such

18 Rule or amendment through legislative enactment as of

19 the expiration of the second full calendar year after such

20 Rule is promulgated, such Rule or amendment shall have

21 no further force or effect in the rejecting Compacting

22 State. If a majority of Compacting States reject a Rule,

23 then such Rule shall have no further force or effect in any

24 Compacting State.
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1 ‘‘5. When promulgating a Rule or Operating Proce2 dure, the Commission shall: (a) effect Publication of the

3 proposed rulemaking, stating with particularity the text

4 of the Rule or Operating Procedure which is proposed and

5 the reason for the proposed Rule or Operating Procedure;

6 (b) allow persons to submit written data, facts, opinions

7 and arguments, which information the Commission shall

8 make publicly available; (c) provide an opportunity for an

9 informal hearing; and (d) promulgate a final Rule or Op10 erating Procedure and its effective date, if appropriate,

11 based on the rulemaking record.

12 ‘‘6. Not later than sixty days after a Rule or Operat13 ing Procedure is promulgated, any interested person may

14 file a petition in a court of competent jurisdiction where

15 the Commission’s principal office is located for judicial re16 view of such Rule or Operating Procedure. If the court

17 finds that the Commission’s action is not supported by

18 substantial evidence in the rulemaking record, the court

19 shall hold the Rule unlawful and set it aside.

20 ‘‘ARTICLE VIII. OVERSIGHT AND DISPUTE RESOLUTION

21 BY THE COMMISSION

22 ‘‘SECTION A. OVERSIGHT

23 ‘‘1. The Commission shall oversee the administration

24 and operations of Receiverships in Compacting States, and

25 shall monitor Receiverships being administered in Non-
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1 compacting States which may significantly affect Com2 pacting States.

3 ‘‘2. To aid its monitoring, oversight and coordination

4 responsibilities, the Commission shall establish Operating

5 Procedures requiring each Member to submit written re6 ports to the Commission as follows:

7 ‘‘a. An initial report to the Commission upon a

8 finding or other official action by the Compacting

9 State that grounds exist for Receivership of an In10 surer doing business in more than one State. There11 after, reports shall be submitted periodically and as

12 otherwise required pursuant to the Commission’s

13 Operating Procedures. The Commission shall be en14 titled to receive notice of, and shall have standing to

15 appear in, Compacting States’ Receiverships; and

16 ‘‘b. An initial report of the status of an Insurer

17 within a reasonable time after the initiation of a Re18 ceivership.

19 ‘‘3. The Commission shall promulgate Operating Pro20 cedures requiring Receivers to submit to the Commission

21 periodic written reports and such additional information

22 and documentation as the Commission may reasonably re23 quest. Each Compacting State’s Receivers shall establish

24 the capability to obtain and provide all records, data and
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1 information required by the Commission in accordance

2 with the Commission’s Operating Procedures.

3 ‘‘4. Except as to privileged records, data and infor4 mation, the laws of any Compacting State pertaining to

5 confidentiality or nondisclosure shall not relieve any Com6 pacting State Commissioner of the responsibility to dis7 close any relevant records, data or information to the

8 Commission; provided, that disclosure to the Commission

9 shall not be deemed to waive or otherwise affect any con10 fidentiality requirement; and further provided, that the

11 Commission shall be subject to the Compacting State’s

12 laws pertaining to confidentiality and nondisclosure with

13 respect to all such records, data and information in its

14 possession.

15 ‘‘5. The courts and executive agencies in each Com16 pacting State shall enforce this Compact and shall take

17 all actions necessary and appropriate to effectuate the

18 Compact’s purposes and intent. In any Receivership or

19 other judicial or administrative proceeding in a Compact20 ing State pertaining to the subject matter of this Compact

21 which may affect the powers, responsibilities or actions of

22 the Commission, the Commission shall be entitled to re23 ceive all service of process in any such proceeding, and

24 shall have standing to intervene in the Receivership or pro25 ceeding for all purposes.
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1 ‘‘6. The Commission shall analyze and correlate

2 records, data, information and reports received from Re3 ceivers and Guaranty Associations, and shall make rec4 ommendations for improving their performance to the

5 Compacting States. The Commission shall include sum6 mary information and data regarding its oversight func7 tions in its annual report.

8 ‘‘SECTION B. DISPUTE RESOLUTION

9 ‘‘1. The Commission shall attempt, upon the request

10 of a Member, to resolve any disputes or other issues which

11 are subject to this Compact and which may arise among

12 Compacting States and Non-compacting States.

13 ‘‘2. The Compacting States shall report to the Com14 mission on issues or activities of concern to them, and co15 operate with and support the Commission in the discharge

16 of its duties and responsibilities.

17 ‘‘3. The Commission shall promulgate an Operating

18 Procedure providing for binding dispute resolution for dis19 putes among Receivers.

20 ‘‘4. The Commission shall facilitate voluntary dispute

21 resolution for disputes among Guaranty Associations and

22 Receivers.
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1 ‘‘ARTICLE IX. RECEIVERSHIP FUNCTIONS OF THE

2 COMMISSION

3 ‘‘1. The Commission has authority to act as Receiver

4 of any Insurer domiciled, engaged in or doing business in

5 a Compacting State upon the request of the Commissioner

6 of such Compacting State, or as otherwise provided in this

7 Compact.

8 ‘‘a. The Commission as Receiver shall have all

9 powers and duties pursuant to the Receivership laws

10 of the Domiciliary State.

11 ‘‘b. The Commission shall maintain accounts of

12 receipts and disbursements of the Estates for which

13 it is acting as Receiver, consistent with the account14 ing practices and procedures set forth in the By15 laws.

16 ‘‘c. The Commission shall cause an annual

17 audit of each Estate for which it is acting as Re18 ceiver to be conducted by an independent certified

19 public accountant. The costs and expenses of such

20 audit shall be paid as administrative expenses from

21 the assets of the Estate. The Commission shall not

22 cause an annual audit to be conducted of any Estate

23 which lacks sufficient assets to conduct such audit.

24 ‘‘d. The Commission as Receiver is authorized

25 to delegate its Receivership duties and functions,
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1 and to effectuate such delegation through contracts

2 with others.

3 ‘‘2. The Commission shall act as Receiver of any In4 surer domiciled or doing business in a Compacting State

5 in the event that the Member acting as Receiver in that

6 Compacting State fails to comply with duly promulgated

7 Commission Rules or Operating Procedures. The Commis8 sion shall notify such Member in writing of his or her non9 compliance with Commission Rules or Operating Proce10 dures. If the Member acting as Receiver fails to remedy

11 such noncompliance within ten days after receipt of such

12 notification, the Commission may petition the supervising

13 court before which such Receivership is pending for an

14 order substituting and appointing the Commission as Re15 ceiver of the Estate.

16 ‘‘3. The Commission shall not act as Receiver of an

17 Estate which appears to lack sufficient assets to fund such

18 Receivership unless the Compacting State makes provi19 sions for the payment of the Estate’s administrative ex20 penses satisfactory to the Commission.

21 ‘‘4. The Commission may act as Deputy Receiver for

22 any Insurer domiciled or doing business in a Non-com23 pacting State in accordance with such State’s laws, upon

24 request of that Non-compacting State’s Commissioner and

25 approval of the Commission.
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1 ‘‘5. With respect to Receiverships pending in a Com2 pacting State on the effective date of the enactment of

3 this Compact by the Compacting State:

4 ‘‘a. the Commission may act as Receiver of an

5 Insurer upon the request of that Compacting State’s

6 Member and approval of the Commission; and

7 ‘‘b. the Commission shall oversee, monitor and

8 coordinate the activities of all Receiverships pending

9 in that Compacting State regardless whether the

10 Commission is acting as Receiver of Estates in such

11 State.

12 ‘‘ARTICLE X. FINANCE

13 ‘‘1. The Commission shall pay or provide for the pay14 ment of the reasonable expenses of its establishment and

15 organization.

16 ‘‘2. Except as otherwise provided in this Compact or

17 by act of the Commission, the costs and expenses of each

18 Compacting State shall be the sole and exclusive respon19 sibility of the respective Compacting State. The Commis20 sion may pay or provide for actual and necessary costs

21 and expenses for attendance of its Members at official

22 meetings of the Commission or its designated committees.

23 ‘‘3. The Commission shall levy on and collect an an24 nual assessment from each Compacting State and each In25 surer authorized to do business in a Compacting State,
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1 and writing direct insurance, to cover the cost of the inter2 nal operations and activities of the Commission and its

3 staff in a total amount sufficient to cover the Commis4 sion’s annual budget.

5 ‘‘a. The aggregate annual assessment amount

6 shall be allocated seventy-five percent to Insurers,

7 hereinafter referred to as the ‘Insurers’ Portion,’

8 and twenty-five percent to Compacting States, here9 inafter referred to as the ‘Compacting States’ Por10 tion.’ The Insurers’ Portion shall be allocated to

11 each Insurer by the percentage derived from a frac12 tion, the numerator of which shall be the gross di13 rect written premium received on that Insurer’s

14 business in all Compacting States and the denomina15 tor of which shall be the gross direct written pre16 mium received by all Insurers on business in all

17 Compacting States. The Compacting States’ Portion

18 shall be allocated to each Compacting State by the

19 percentage derived from a fraction, the numerator of

20 which shall be the gross direct written premium re21 ceived by all Insurers on business in that Compact22 ing State and the denominator shall be the gross di23 rect written premium received on all Insurers on

24 business in all Compacting States. Each Compacting

25 State’s Portion shall be funded as designated by
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1 that State’s legislature. In no event shall an Insur2 er’s assessment be less than $50 or more than

3 $25,000; provided, that affiliated Insurers’ combined

4 assessments shall not exceed $50,000. Upon the re5 quest of an Insurer, the Commission may exempt or

6 defer the assessment of any Insurer, if such assess7 ment would cause the Insurer’s financial impair8 ment.

9 ‘‘b. These assessments shall not be used to pay

10 any costs or expenses incurred by the Commission

11 and its staff acting as Receiver of Estates. Such

12 costs and expenses shall be paid as administrative

13 expenses from the assets of the Estates as provided

14 by law, except as otherwise provided in this Com15 pact.

16 ‘‘c. Each Insurer authorized to do business in

17 a Compacting State shall timely pay assessments to

18 the Commission. Failure to pay such assessments

19 shall not be grounds for the revocation, suspension

20 or denial of an Insurer’s authority to do business,

21 but shall subject the Insurer to suit by the Commis22 sion for recovery of any assessment due, attorneys’

23 fees and costs, together with interest from the date

24 the assessment is due at a rate of 10 percent per

25 annum, and to civil forfeiture in an amount to be
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1 determined by the Commissioner of that Compacting

2 State in which the Insurer received the greatest pre3 mium in the year next preceding the first year for

4 which the Insurer shall be delinquent in payment of

5 assessments.

6 ‘‘4. The Commission shall be reimbursed in the fol7 lowing manner for the costs and expenses incurred by the

8 Commission and its staff acting as Receiver of Estates to

9 the extent that an Insurer’s assets may be insufficient for

10 the effective administration of its Estate:

11 ‘‘a. if the Insurer is domiciled in a Compacting

12 State, the Estate shall be closed unless that Com13 pacting State makes provisions for reimbursing the

14 Commission; and

15 ‘‘b. if the Insurer is unauthorized to do busi16 ness in a Compacting State or if the Insurer is dom17 iciled in a Non-compacting State and subject to an18 cillary receivership, then the Commission and such

19 State shall make provisions for reimbursing the

20 Commission prior to the Commission becoming Re21 ceiver of such Insurer.

22 ‘‘5. To fund the cost of the initial operations of the

23 Commission until its first annual budget is adopted and

24 related assessments have been made, contributions from

25 Compacting States and others may be accepted and a one
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1 time assessment on Insurers doing a direct insurance busi2 ness in the Compacting States may be made not to exceed

3 $450 per Insurer.

4 ‘‘6. The Commission’s adopted budget for a fiscal

5 year shall not be approved until it has been subject to no6 tice and comment as set forth in Article VII of this Com7 pact. The budget shall determine the amount of the an8 nual assessment. The Commission may accumulate a net

9 worth not to exceed thirty percent of its then annual cost

10 of operation to provide for contingencies and events not

11 contemplated. These accumulated funds shall be held sep12 arately and shall not be used for any other purpose. The

13 Commission’s budget may include a provision for a con14 tribution to the Commission’s net worth.

15 ‘‘7. The Commission shall be exempt from all tax16 ation in and by the Compacting States.

17 ‘‘8. The Commission shall not pledge the credit of any

18 Compacting State, except by and with the appropriate

19 legal authority of that Compacting State.

20 ‘‘9. The Commission shall keep complete and accu21 rate accounts of all its internal receipts (including grants

22 and donations) and disbursements of all funds, other than

23 Receivership assets, under its control. The internal finan24 cial accounts of the Commission shall be subject to the

25 accounting procedures established under its By-laws. The
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1 financial accounts and reports including the system of in2 ternal controls and procedures of the Commission shall be

3 audited annually by an independent certified public ac4 countant. Upon the determination of the Commission, but

5 no less frequently than every three years, the review of

6 such independent auditor shall include a management and

7 performance audit of the Commission. The report of such

8 independent audit shall be made available to the public

9 and shall be included in and become part of the annual

10 report of the Commission to the Governors and legisla11 tures of the Compacting States. The Commission’s inter12 nal accounts, any workpapers related to any internal audit

13 and any workpapers related to the independent audit, shall

14 be confidential; provided, that such materials shall be

15 made available: (i) in compliance with the order of any

16 court of competent jurisdiction; (ii) pursuant to such rea17 sonable Rules as the Commission shall promulgate; and

18 (iii) to any Commissioner, Governor of a Compacting

19 State, or their duly authorized representatives.

20 ‘‘10. No Compacting State shall have any claim to

21 or ownership of any property held by or vested in the Com22 mission or the Commission acting as Receiver or to any

23 other Commission funds held pursuant to the provisions

24 of this Compact.
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1 ‘‘ARTICLE XI. COMPACTING STATES, EFFECTIVE DATE

2 AND AMENDMENT

3 ‘‘1. Any State is eligible to become a Compacting

4 State.

5 ‘‘2. The Compact shall become effective and binding

6 upon legislative enactment of the Compact into law by two

7 Compacting States. Thereafter, it shall become effective

8 and binding as to any other Compacting State upon enact9 ment of the Compact into law by that State.

10 ‘‘3. Amendments to the Compact may be proposed

11 by the Commission for enactment by the Compacting

12 States. No amendment shall become effective and binding

13 upon the Commission and the Compacting States unless

14 and until it is enacted into law by unanimous consent of

15 the Compacting States.

16 ‘‘ARTICLE XII. WITHDRAWAL, DEFAULT AND

17 TERMINATION

18 ‘‘SECTION A. WITHDRAWAL

19 ‘‘1. Once effective, the Compact shall continue in

20 force and remain binding upon each and every Compacting

21 State; provided, that a Compacting State may withdraw

22 from the Compact (‘Withdrawing State’) by enacting a

23 statute specifically repealing the statute which enacted the

24 Compact into law.
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1 ‘‘2. The effective date of withdrawal is the effective

2 date of the repeal; provided, that the repeal shall not apply

3 to any Receiverships, for which the Commission is acting

4 as Receiver, pending on the date of the repeal except by

5 mutual agreement of the Commission and the Withdraw6 ing State.

7 ‘‘3. The Withdrawing State shall immediately notify

8 the Chairperson of the Commission in writing upon the

9 introduction of legislation repealing this Compact in the

10 Withdrawing State.

11 ‘‘4. The Commission shall notify the other Compact12 ing States of the Withdrawing State’s intent to withdraw

13 within sixty days of its receipt thereof.

14 ‘‘5. The Withdrawing State is responsible for all as15 sessments, obligations and liabilities incurred through the

16 effective date of withdrawal, including any obligations, the

17 performance of which extend beyond the effective date of

18 withdrawal, except to the extent those obligations may

19 have been released or relinquished by mutual agreement

20 of the Commission and the Withdrawing State. Notwith21 standing the foregoing, the Withdrawing State is respon22 sible for the costs and expenses of its Estates subject to

23 this Compact pending on the date of repeal; the Commis24 sion and the other Estates subject to this Compact shall

25 not bear any costs and expenses related to the Withdraw-
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1 ing State’s Estates unless otherwise mutually agreed upon

2 between the Commission and the Withdrawing State.

3 ‘‘6. Reinstatement following withdrawal of any Com4 pacting State shall occur upon the Withdrawing State re5 enacting the Compact or upon such later date as deter6 mined by the Commission.

7 ‘‘SECTION B. DEFAULT

8 ‘‘1. If the Commission determines that any Compact9 ing State has at any time defaulted (‘Defaulting State’)

10 in the performance of any of its obligations or responsibil11 ities under this Compact, the By-laws or duly promulgated

12 Rules, all rights, privileges and benefits conferred by this

13 Compact and any agreements entered into pursuant to

14 this Compact shall be suspended from the effective date

15 of default as fixed by the Commission. The grounds for

16 default include, but are not limited to, failure of a Com17 pacting State to perform such obligations or responsibil18 ities and any other grounds designated in Commission

19 Rules. The Commission shall immediately notify the De20 faulting State in writing of the Defaulting State’s suspen21 sion pending a cure of the default. The Commission shall

22 stipulate the conditions and the time period within which

23 the Defaulting State must cure its default. If the Default24 ing State fails to cure the default within the time period

25 specified by the Commission, the Defaulting State shall
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1 be terminated from the Compact upon an affirmative vote

2 of a majority of the Compacting States and all rights,

3 privileges and benefits conferred by this Compact shall be

4 terminated from the effective date of termination.

5 ‘‘2. Within sixty days of the effective date of termi6 nation of a Defaulting State, the Commission shall notify

7 the Governor and the Majority and Minority Leaders of

8 the Defaulting State’s legislature of such termination.

9 ‘‘3. The termination of a Defaulting State shall apply

10 to all Receiverships, for which the Commission is acting

11 as Receiver, pending on the effective date of termination

12 except by mutual agreement of the Commission and the

13 Defaulting State.

14 ‘‘4. The Defaulting State is responsible for all assess15 ments, obligations and liabilities incurred through the ef16 fective date of termination, and is responsible for the costs

17 and expenses relating to its Estates subject to this Com18 pact pending on the date of the termination. The Commis19 sion and the other Estates subject to this Compact shall

20 not bear any costs or expenses relating to the Defaulting

21 State’s Estates unless otherwise mutually agreed upon be22 tween the Commission and the Defaulting State.

23 ‘‘5. Reinstatement following termination of any Com24 pacting State requires both a reenactment of the Compact
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1 by the Defaulting State and the approval of the Commis2 sion pursuant to the Rules.

3 ‘‘SECTION C. DISSOLUTION OF COMPACT

4 ‘‘1. The Compact dissolves effective upon the date of

5 the withdrawal or the termination by default of the Com6 pacting State which reduces membership in the Compact

7 to one Compacting State.

8 ‘‘2. Upon the dissolution of this Compact, the Com9 pact becomes null and void and shall be of no further force

10 or effect, and the business and affairs of the Commission

11 shall be wound up and any surplus funds shall be distrib12 uted in accordance with the By-laws.

13 ‘‘ARTICLE XIII. SEVERABILITY AND CONSTRUCTION

14 ‘‘1. The provisions of this Compact shall be severable,

15 and if any phrase, clause, sentence or provision is deemed

16 unenforceable, the remaining provisions of the Compact

17 shall be enforceable.

18 ‘‘2. The provisions of this Compact shall be liberally

19 construed to effectuate its purposes.

20 ‘‘ARTICLE XIV. BINDING EFFECT OF COMPACT AND

21 OTHER LAWS

22 ‘‘SECTION A. OTHER LAWS

23 ‘‘1. Nothing herein prevents the enforcement of any

24 other law of a Compacting State that is not inconsistent

25 with this Compact.
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1 ‘‘2. All Compacting States’ laws conflicting with this

2 Compact are superseded to the extent of the conflict.

3 ‘‘SECTION B. BINDING EFFECT OF THIS COMPACT

4 ‘‘1. All lawful actions of the Commission, including

5 all Rules and Operating Procedures promulgated by the

6 Commission, are binding upon the Compacting States.

7 ‘‘2. All agreements between the Commission and the

8 Compacting States are binding in accordance with their

9 terms.

10 ‘‘3. Upon the request of a party to a conflict over

11 meaning or interpretation of Commission actions, and

12 upon a majority vote of the Compacting States, the Com13 mission may issue advisory opinions regarding such mean14 ing or interpretation.

15 ‘‘4. In the event any provision of this Compact ex16 ceeds the constitutional limits imposed on the legislature

17 of any Compacting State, the obligations, duties, powers

18 or jurisdiction sought to be conferred by such provision

19 upon the Commission shall be ineffective and such obliga20 tions, duties, powers or jurisdiction shall remain in the

21 Compacting State and shall be exercised by the agency

22 thereof to which such obligations, duties, powers or juris23 diction are delegated by law in effect at the time this Com24 pact becomes effective.’’.
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1 SEC. 2. RIGHT TO ALTER, AMEND, OR REPEAL.

2 The right to alter, amend, or repeal this joint resolu3 tion is hereby expressly reserved. The consent granted by

4 this joint resolution shall not be construed as impairing

5 or in any manner affecting any right or jurisdiction of the

6 United States in and over the subject of the compact.

7 SEC. 3. SEVERABILITY.

8 If any part or application of this compact, or legisla9 tion enabling the compact, is held invalid, the remainder

10 of the compact or its application to other situations or per11 sons shall not be affected.

12 SEC. 4. INCONSISTENCY OF LANGUAGE.

13 The validity of this compact shall not be affected by

14 any insubstantial difference in its form or language as

15 adopted by the various States.

Æ