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.
Resolved by the Senate and House of Representatives
of the United States of America in Congress assembled,
SECTION 1. CONGRESSIONAL CONSENT.
The consent of Congress is given to the Interstate
Insurance Receivership Compact among the States of
California, Illinois, Michigan, Nebraska, New Hampshire,
and Wisconsin. In addition, consent is given to any other
State to enter into this compact. The compact reads sub-
stantially as follows:
•HJ 189 IH
‘‘INTERSTATE INSURANCE RECEIVERSHIP
COMPACT
‘‘ARTICLE I. PURPOSES
‘‘The purposes of this Compact are, through means
of joint and cooperative action among the Compacting
States:
‘‘1. To promote, develop and facilitate orderly,
efficient, cost effective and uniform Insurer Receiv-
ership laws and operations;
‘‘2. To coordinate interaction between Insurer
Receivership and Guaranty Association operations;
‘‘3. To create the Interstate Insurance Receiv-
ership Commission; and
‘‘4. To perform these and such other related
functions as may be consistent with the State regu-
lation of the business of insurance pursuant to the
McCarran-Ferguson Act.
‘‘ARTICLE II. DEFINITIONS
‘‘For the purposes of this Compact:
‘‘1. ‘By-laws’ means those by-laws prescribed by
the Commission for its governance, or for directing
or controlling the Commission’s actions or conduct.
‘‘2. ‘Compacting State’ means any State which
has enacted enabling legislation for this Compact.
•HJ 189 IH
‘‘3. ‘Commission’ means the ‘Interstate Insur-
ance Receivership Commission’ established by this
Compact.
‘‘4. ‘Commissioner’ means the chief insurance
regulatory official of a State.
‘‘5. ‘Deputy Receiver’ means any person ap-
pointed or retained by a Receiver and who is the Re-
ceiver’s duly authorized representative for admin-
istering one or more Estates.
‘‘6. ‘Domiciliary State’ means the State in
which an Insurer is incorporated or organized; or, in
the case of an alien Insurer, its State of entry; or
in the case of an unauthorized Insurer not incor-
porated, organized, or entered in any State, a State
where the Insurer is engaged in or doing business.
‘‘7. ‘Estate’ means the assets and liabilities of
any Insurer in Receivership.
‘‘8. ‘Guaranty Association’ means an insurance
guaranty fund or association or any similar entity
now or hereafter created by statute in a Compacting
State, other than a Receivership, to pay or assume,
in whole or in part, the contractual claim obligations
of insolvent Insurers.
‘‘9. ‘Insurer’ means any person or entity that
has done, purports to do, is doing or is licensed to
•HJ 189 IH
do any insurance or reinsurance business, or is or
has been subject to the authority of, or to liquida-
tion, rehabilitation, supervision, conservation or an-
cillary receivership by, any Commissioner.
‘‘DRAFTING NOTE: It is intended that the definition
of ‘Insurer’ be construed broadly to enable the Commis-
sion to place into receivership in accordance with applica-
ble State insurance receivership laws any person or entity
engaged in insurance business without a license, certificate
of authority or other required authorization to conduct
such business in a Compacting State.
‘‘10. ‘Member’ means the Commissioner of a
Compacting State or his or her designee, who shall
be a person officially connected with the Commis-
sioner and who is wholly or principally employed by
said Commissioner.
‘‘11. ‘Non-compacting State’ means any State
which has not enacted enabling legislation for this
Compact.
‘‘12. ‘Operating Procedures’ means those proce-
dures promulgated by the Commission implementing
a Rule, an existing law in a Compacting State, or
a provision of this Compact.
‘‘13. ‘Publication’ means the act of publishing
in the official State publication in a Compacting
•HJ 189 IH
State or in such other publication as may be estab-
lished by the Commission.
‘‘14. ‘Receiver’ means receiver, liquidator,
rehabilitator, conservator or ancillary receiver as the
context requires.
‘‘15. ‘Receivership’ means any liquidation, reha-
bilitation, conservation or ancillary receivership pro-
ceeding as the context requires.
‘‘16. ‘Rules’ means acts of the Commission,
duly promulgated pursuant to Article VII of this
Compact, substantially affecting interested parties in
addition to the Commission, which shall have the
force and effect of law in the Compacting States.
‘‘17. ‘State’ means any State, district or terri-
tory of the United States of America.
‘‘ARTICLE III. ESTABLISHMENT OF THE COMMISSION
AND VENUE
‘‘1. The Compacting States hereby create and estab-
lish an entity known as the ‘Interstate Insurance Receiver-
ship Commission.’
‘‘2. The Commission is a body corporate of each Com-
pacting State.
‘‘3. The Commission is a not-for-profit entity, sepa-
rate and distinct from the Compacting States.
•HJ 189 IH
‘‘12. To establish and maintain offices;
‘‘13. To purchase and maintain insurance and
bonds;
‘‘14. To borrow, accept or contract for services
of personnel, including, but not limited to, Members
and their staff;
‘‘15. To elect or appoint such officers, attor-
neys, employees or agents, and to fix their com-
pensation, define their duties and determine their
qualifications; and to establish the Commission’s
personnel policies and programs relating to, among
other things, conflicts of interest, rates of compensa-
tion and qualifications of personnel;
‘‘16. To accept any and all donations and
grants of money, equipment, supplies, materials and
services, and to receive, utilize and dispose of the
same;
‘‘17. To lease, purchase, accept gifts or dona-
tions of, or otherwise to own, hold, improve or use,
any property, real, personal or mixed;
‘‘18. To sell, convey, mortgage, pledge, lease,
exchange, abandon or otherwise dispose of any prop-
erty, real, personal or mixed;
‘‘19. To enforce compliance with Commission
Rules, Operating Procedures and By-laws;
•HJ 189 IH
‘‘20. To provide for dispute resolution among
Compacting States and Receivers;
‘‘21. To represent and advise Compacting
States on issues relating to Insurers domiciled or
doing business in Non-compacting jurisdictions, con-
sistent with the purposes of this Compact;
‘‘22. To provide advice and training to Receiv-
ership personnel of Compacting States, and to be a
resource for Compacting States by maintaining a
reference library of relevant materials;
‘‘23. To establish a budget and make expendi-
tures;
‘‘24. To borrow money;
‘‘25. To appoint committees including, but not
limited to, an industry advisory committee and an
executive committee of Members;
‘‘26. To provide and receive information relat-
ing to Receiverships and Guaranty Associations, and
to cooperate with law enforcement agencies;
‘‘27. To adopt and use a corporate seal; and
‘‘28. To perform such other functions as may
be necessary or appropriate to achieve the purposes
of this Compact as may be consistent with the State
regulation of the business of insurance pursuant to
the McCarran-Ferguson Act.
•HJ 189 IH
‘‘ARTICLE V. ORGANIZATION OF THE COMMISSION
‘‘SECTION A. MEMBERSHIP, VOTING AND BY-LAWS
‘‘1. Each Compacting State shall have and be limited
to one Member. Each Member shall be qualified to serve
in such capacity under or pursuant to the applicable law
of the Compacting State. Each Compacting State retains
the discretionary right to determine the due election or
appointment and qualification of its own Commissioner,
and to fill all vacancies of its Member.
‘‘2. Each Member shall be entitled to one vote.
‘‘3. The Commission shall, by a majority of the Mem-
bers, prescribe By-laws to govern its conduct as may be
necessary or appropriate to carry out the purposes of the
Compact, including, but not limited to:
‘‘a. establishing the fiscal year of the Commis-
sion;
‘‘b. providing reasonable standards and proce-
dures: (i) for the establishment of committees, and
(ii) governing any general or specific delegation of
any authority or function of the Commission;
‘‘c. providing reasonable procedures for calling
and conducting meetings of the Commission, and en-
suring reasonable notice of each such meeting;
‘‘d. establishing the titles and responsibilities of
the officers of the Commission;
•HJ 189 IH
‘‘e. providing reasonable standards and proce-
dures for the establishment of the personnel policies
and programs of the Commission. Notwithstanding
any civil service or other similar laws of any Com-
pacting State, the By-laws shall exclusively govern
the personnel policies and programs of the Commis-
sion; and
‘‘f. providing a mechanism for winding up the
operations of the Commission and the equitable re-
turn of any surplus funds that may exist after the
dissolution of the Compact after the payment and/
or reserving of all of its debts and obligations.
‘‘SECTION B. OFFICERS AND PERSONNEL
‘‘1. The Commission shall, by a majority of the Mem-
bers, elect annually from among its members a chair-
person and a vice chairperson, each of whom shall have
such authorities and duties as may be specified in the By-
laws. The chairperson or, in his or her absence or disabil-
ity, a Member designated in accordance with the By-laws,
shall preside at all meetings of the Commission. The offi-
cers so elected shall serve without compensation or remu-
neration from the Commission; provided that, subject to
the availability of budgeted funds, the officers shall be re-
imbursed for any actual and necessary costs and expenses
•HJ 189 IH
incurred by them in the performance of their duties and
responsibilities as officers of the Commission.
‘‘2. The Commission may, by a majority of the Mem-
bers, appoint or retain an executive director for such pe-
riod, upon such terms and conditions and for such com-
pensation as the Commission may deem appropriate. The
executive director shall serve as secretary to the Commis-
sion, but shall not be a Member of the Commission. The
executive director shall hire and supervise such other staff
as may be authorized by the Commission.
‘‘SECTION C. CORPORATE RECORDS OF THE COMMISSION
‘‘The Commission shall maintain its corporate books
and records in accordance with the By-laws.
‘‘SECTION D. QUALIFIED IMMUNITY, DEFENSE AND
INDEMNIFICATION
‘‘1. The Members, officers, executive director and em-
ployees of the Commission shall be immune from suit and
liability, either personally or in their official capacity, for
any claim for damage to or loss of property or personal
injury or other civil liability caused or arising out of or
relating to any actual or alleged act, error or omission that
occurred, or that such person had a reasonable basis for
believing occurred within the scope of Commission employ-
ment, duties or responsibilities; provided, that nothing in
this paragraph shall be construed to protect any such per-
•HJ 189 IH
son from suit and/or liability for any damage, loss, injury
or liability caused by the intentional or willful and wanton
misconduct of any such person, or to protect the Commis-
sion acting as Receiver under Article IX of this Compact.
‘‘2. The Commission shall defend any Commissioner
of a Compacting State, or his or her representatives or
employees, or the Commission’s representatives or employ-
ees, in any civil action seeking to impose liability, arising
out of or relating to any actual or alleged act, error or
omission that occurred within the scope of Commission
employment, duties or responsibilities, or that such person
had a reasonable basis for believing occurred within the
scope of Commission employment, duties or responsibil-
ities; provided, that the actual or alleged act, error or
omission did not result from gross negligence or inten-
tional wrongdoing on the part of such person.
‘‘3. The Commission shall indemnify and hold the
Commissioner of a Compacting State, or his or her rep-
resentatives or employees, or the Commission’s represent-
atives or employees, harmless in the amount of any settle-
ment or judgment obtained against such person arising
out of or relating to any actual or alleged act, error or
omission that occurred within the scope of Commission
employment, duties or responsibilities, or that such person
had a reasonable basis for believing occurred within the
•HJ 189 IH
scope of Commission employment, duties or responsibil-
ities; provided, that the actual or alleged act, error or
omission did not result from gross negligence or inten-
tional wrongdoing on the part of such person.
‘‘4. The costs and expenses of defense and indem-
nification of the Commission acting as Receiver of an Es-
tate shall be paid as administrative expenses from the as-
sets of that Estate unless such costs and expenses are cov-
ered by insurance maintained by the Commission.
‘‘ARTICLE VI. MEETINGS AND ACTS OF THE
COMMISSION
‘‘1. The Commission shall meet and take such actions
as are consistent with the provisions of this Compact.
‘‘2. Except as otherwise provided in this Compact and
unless a greater percentage is required by the By-laws,
in order to constitute an act of the Commission, such act
shall have been taken at a meeting of the Commission and
shall have received an affirmative vote of a majority of
the Members.
‘‘3. Each Member of the Commission shall have the
right and power to cast a vote to which that Compacting
State is entitled and to participate in the business and
affairs of the Commission. A Member shall vote in person
and shall not delegate his or her vote to another Member.
The By-laws may provide for Members’ participation in
•HJ 189 IH
meetings by telephone or other means of telecommuni-
cation.
‘‘4. The Commission shall meet at least once during
each calendar year. The chairperson of the Commission
may call additional meetings at any time and, upon the
request of a majority of the Members, shall call additional
meetings.
‘‘5. The Commission’s Rules shall establish condi-
tions and procedures under which the Commission shall
make its information and official records available to the
public for inspection or copying. The Commission may ex-
empt from disclosure any information or official records
to the extent disclosure would adversely affect personal
privacy rights or proprietary interests. In promulgating
such Rules, the Commission may consider any special cir-
cumstances pertaining to Insurer insolvencies, but shall be
guided by the principles embodied in State and Federal
freedom of information laws. The Commission may pro-
mulgate additional Rules under which it may make avail-
able to law enforcement agencies records and information
otherwise exempt from disclosure, and may enter into
agreements with law enforcement agencies to receive or
exchange information or records subject to nondisclosure
and confidentiality provisions.
•HJ 189 IH
‘‘6. Public notice shall be given of all meetings and
all meetings shall be open to the public, except as set forth
in the Rules or as otherwise provided in this Compact.
The Commission shall promulgate Rules consistent with
the principles contained in the ‘Government in Sunshine
Act,’ 5 U.S.C. Section 552b, as may be amended. The
Commission and any of its committees may close a meet-
ing to the public where it determines by two-thirds vote
that an open meeting would be likely to:
‘‘a. relate solely to the Commission’s internal
personnel practices and procedures;
‘‘b. disclose matters specifically exempted from
disclosure by statute;
‘‘c. disclose trade secrets or commercial or fi-
nancial information which is privileged or confiden-
tial;
‘‘d. involve accusing any person of a crime, or
formally censuring any person;
‘‘e. disclose information of a personal nature
where disclosure would constitute a clearly unwar-
ranted invasion of personal privacy;
‘‘f. disclose investigatory records compiled for
law enforcement purposes;
‘‘g. disclose information contained in or related
to examination, operating or condition reports pre-
•HJ 189 IH
pared by, on behalf or for the use of, the Commis-
sion with respect to a regulated entity for the pur-
pose of regulation or supervision of such entity;
‘‘h. disclose information, the premature disclo-
sure of which would significantly endanger the sta-
bility of a regulated entity;
‘‘i. specifically relate to the Commission’s issu-
ance of a subpoena, or its participation in a civil ac-
tion or proceeding.
‘‘7. For every meeting closed pursuant to this provi-
sion, the Commission’s chief legal officer shall publicly cer-
tify that, in his or her opinion, the meeting may be closed
to the public, and shall reference each relevant exemptive
provision. The Commission shall keep minutes which shall
fully and clearly describe all matters discussed in any
meeting and shall provide a full and accurate summary
of any actions taken, and the reasons therefor, including
a description of each of the views expressed on any item
and the record of any rollcall vote (reflected in the vote
of each Member on the question). All documents consid-
ered in connection with any action shall be identified in
such minutes.
•HJ 189 IH
‘‘ARTICLE VII. RULEMAKING FUNCTIONS OF THE
COMMISSION
‘‘1. The Commission shall promulgate Rules and Op-
erating Procedures in order to effectively and efficiently
achieve the purposes of this Compact; provided, that the
Commission shall not promulgate any Rules: (i) directly
relating to Guaranty Associations, including, but not lim-
ited to, Rules governing coverage, funding, or assessment
mechanisms; or (ii) (except pursuant to Rules promul-
gated under Article VII(3) of this Compact) altering the
statutory priorities for distributing assets out of an Es-
tate.
‘‘DRAFTING NOTE: The general intent is not to regu-
late, restrict, or otherwise affect the operations of Guar-
anty Associations. Any Commission Rules that would ma-
terially affect Guaranty Associations will be promulgated
under Article VII(3) of the Compact.
‘‘2. Rulemaking shall occur pursuant to the criteria
set forth in this Article and the Rules and Operating Pro-
cedures promulgated pursuant thereto. Such rulemaking
shall substantially conform to the principles of the Federal
Administrative Procedure Act, 5 U.S.C.S. Section 551 et
seq., and the Federal Advisory Committee Act, 5 U.S.C.S.
app. 2, Section 1 et seq., as may be amended.
•HJ 189 IH
‘‘3. Other than the promulgation of such Rules as
are necessary for the orderly operation of the Commission,
the first Rule to be considered by the Commission shall
be uniform provisions governing Insurer Receiverships in-
cluding, but not limited to, provisions requiring Compact-
ing States to implement, execute, and administer in a fair,
just, effective and efficient manner Rules and Operating
Procedures relating to Receiverships. The Commission
shall within three years of the adoption of this Compact
by two or more States, promulgate such uniform provi-
sions through the rulemaking process. Such uniform provi-
sions shall become law in all of the Compacting States
upon legislative enactment in a majority of the Compact-
ing States.
‘‘4. All Rules and amendments shall become binding
as of the date specified in each Rule or amendment; pro-
vided, that if a Compacting State expressly rejects such
Rule or amendment through legislative enactment as of
the expiration of the second full calendar year after such
Rule is promulgated, such Rule or amendment shall have
no further force or effect in the rejecting Compacting
State. If a majority of Compacting States reject a Rule,
then such Rule shall have no further force or effect in any
Compacting State.
•HJ 189 IH
‘‘5. When promulgating a Rule or Operating Proce-
dure, the Commission shall: (a) effect Publication of the
proposed rulemaking, stating with particularity the text
of the Rule or Operating Procedure which is proposed and
the reason for the proposed Rule or Operating Procedure;
(b) allow persons to submit written data, facts, opinions
and arguments, which information the Commission shall
make publicly available; (c) provide an opportunity for an
informal hearing; and (d) promulgate a final Rule or Op-
erating Procedure and its effective date, if appropriate,
based on the rulemaking record.
‘‘6. Not later than sixty days after a Rule or Operat-
ing Procedure is promulgated, any interested person may
file a petition in a court of competent jurisdiction where
the Commission’s principal office is located for judicial re-
view of such Rule or Operating Procedure. If the court
finds that the Commission’s action is not supported by
substantial evidence in the rulemaking record, the court
shall hold the Rule unlawful and set it aside.
‘‘ARTICLE VIII. OVERSIGHT AND DISPUTE RESOLUTION
BY THE COMMISSION
‘‘SECTION A. OVERSIGHT
‘‘1. The Commission shall oversee the administration
and operations of Receiverships in Compacting States, and
shall monitor Receiverships being administered in Non-
•HJ 189 IH
compacting States which may significantly affect Com-
pacting States.
‘‘2. To aid its monitoring, oversight and coordination
responsibilities, the Commission shall establish Operating
Procedures requiring each Member to submit written re-
ports to the Commission as follows:
‘‘a. An initial report to the Commission upon a
finding or other official action by the Compacting
State that grounds exist for Receivership of an In-
surer doing business in more than one State. There-
after, reports shall be submitted periodically and as
otherwise required pursuant to the Commission’s
Operating Procedures. The Commission shall be en-
titled to receive notice of, and shall have standing to
appear in, Compacting States’ Receiverships; and
‘‘b. An initial report of the status of an Insurer
within a reasonable time after the initiation of a Re-
ceivership.
‘‘3. The Commission shall promulgate Operating Pro-
cedures requiring Receivers to submit to the Commission
periodic written reports and such additional information
and documentation as the Commission may reasonably re-
quest. Each Compacting State’s Receivers shall establish
the capability to obtain and provide all records, data and
•HJ 189 IH
information required by the Commission in accordance
with the Commission’s Operating Procedures.
‘‘4. Except as to privileged records, data and infor-
mation, the laws of any Compacting State pertaining to
confidentiality or nondisclosure shall not relieve any Com-
pacting State Commissioner of the responsibility to dis-
close any relevant records, data or information to the
Commission; provided, that disclosure to the Commission
shall not be deemed to waive or otherwise affect any con-
fidentiality requirement; and further provided, that the
Commission shall be subject to the Compacting State’s
laws pertaining to confidentiality and nondisclosure with
respect to all such records, data and information in its
possession.
‘‘5. The courts and executive agencies in each Com-
pacting State shall enforce this Compact and shall take
all actions necessary and appropriate to effectuate the
Compact’s purposes and intent. In any Receivership or
other judicial or administrative proceeding in a Compact-
ing State pertaining to the subject matter of this Compact
which may affect the powers, responsibilities or actions of
the Commission, the Commission shall be entitled to re-
ceive all service of process in any such proceeding, and
shall have standing to intervene in the Receivership or pro-
ceeding for all purposes.
•HJ 189 IH
‘‘6. The Commission shall analyze and correlate
records, data, information and reports received from Re-
ceivers and Guaranty Associations, and shall make rec-
ommendations for improving their performance to the
Compacting States. The Commission shall include sum-
mary information and data regarding its oversight func-
tions in its annual report.
‘‘SECTION B. DISPUTE RESOLUTION
‘‘1. The Commission shall attempt, upon the request
of a Member, to resolve any disputes or other issues which
are subject to this Compact and which may arise among
Compacting States and Non-compacting States.
‘‘2. The Compacting States shall report to the Com-
mission on issues or activities of concern to them, and co-
operate with and support the Commission in the discharge
of its duties and responsibilities.
‘‘3. The Commission shall promulgate an Operating
Procedure providing for binding dispute resolution for dis-
putes among Receivers.
‘‘4. The Commission shall facilitate voluntary dispute
resolution for disputes among Guaranty Associations and
Receivers.
•HJ 189 IH
‘‘ARTICLE IX. RECEIVERSHIP FUNCTIONS OF THE
COMMISSION
‘‘1. The Commission has authority to act as Receiver
of any Insurer domiciled, engaged in or doing business in
a Compacting State upon the request of the Commissioner
of such Compacting State, or as otherwise provided in this
Compact.
‘‘a. The Commission as Receiver shall have all
powers and duties pursuant to the Receivership laws
of the Domiciliary State.
‘‘b. The Commission shall maintain accounts of
receipts and disbursements of the Estates for which
it is acting as Receiver, consistent with the account-
ing practices and procedures set forth in the By-
laws.
‘‘c. The Commission shall cause an annual
audit of each Estate for which it is acting as Re-
ceiver to be conducted by an independent certified
public accountant. The costs and expenses of such
audit shall be paid as administrative expenses from
the assets of the Estate. The Commission shall not
cause an annual audit to be conducted of any Estate
which lacks sufficient assets to conduct such audit.
‘‘d. The Commission as Receiver is authorized
to delegate its Receivership duties and functions,
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and to effectuate such delegation through contracts
with others.
‘‘2. The Commission shall act as Receiver of any In-
surer domiciled or doing business in a Compacting State
in the event that the Member acting as Receiver in that
Compacting State fails to comply with duly promulgated
Commission Rules or Operating Procedures. The Commis-
sion shall notify such Member in writing of his or her non-
compliance with Commission Rules or Operating Proce-
dures. If the Member acting as Receiver fails to remedy
such noncompliance within ten days after receipt of such
notification, the Commission may petition the supervising
court before which such Receivership is pending for an
order substituting and appointing the Commission as Re-
ceiver of the Estate.
‘‘3. The Commission shall not act as Receiver of an
Estate which appears to lack sufficient assets to fund such
Receivership unless the Compacting State makes provi-
sions for the payment of the Estate’s administrative ex-
penses satisfactory to the Commission.
‘‘4. The Commission may act as Deputy Receiver for
any Insurer domiciled or doing business in a Non-com-
pacting State in accordance with such State’s laws, upon
request of that Non-compacting State’s Commissioner and
approval of the Commission.
•HJ 189 IH
‘‘5. With respect to Receiverships pending in a Com-
pacting State on the effective date of the enactment of
this Compact by the Compacting State:
‘‘a. the Commission may act as Receiver of an
Insurer upon the request of that Compacting State’s
Member and approval of the Commission; and
‘‘b. the Commission shall oversee, monitor and
coordinate the activities of all Receiverships pending
in that Compacting State regardless whether the
Commission is acting as Receiver of Estates in such
State.
‘‘ARTICLE X. FINANCE
‘‘1. The Commission shall pay or provide for the pay-
ment of the reasonable expenses of its establishment and
organization.
‘‘2. Except as otherwise provided in this Compact or
by act of the Commission, the costs and expenses of each
Compacting State shall be the sole and exclusive respon-
sibility of the respective Compacting State. The Commis-
sion may pay or provide for actual and necessary costs
and expenses for attendance of its Members at official
meetings of the Commission or its designated committees.
‘‘3. The Commission shall levy on and collect an an-
nual assessment from each Compacting State and each In-
surer authorized to do business in a Compacting State,
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and writing direct insurance, to cover the cost of the inter-
nal operations and activities of the Commission and its
staff in a total amount sufficient to cover the Commis-
sion’s annual budget.
‘‘a. The aggregate annual assessment amount
shall be allocated seventy-five percent to Insurers,
hereinafter referred to as the ‘Insurers’ Portion,’
and twenty-five percent to Compacting States, here-
inafter referred to as the ‘Compacting States’ Por-
tion.’ The Insurers’ Portion shall be allocated to
each Insurer by the percentage derived from a frac-
tion, the numerator of which shall be the gross di-
rect written premium received on that Insurer’s
business in all Compacting States and the denomina-
tor of which shall be the gross direct written pre-
mium received by all Insurers on business in all
Compacting States. The Compacting States’ Portion
shall be allocated to each Compacting State by the
percentage derived from a fraction, the numerator of
which shall be the gross direct written premium re-
ceived by all Insurers on business in that Compact-
ing State and the denominator shall be the gross di-
rect written premium received on all Insurers on
business in all Compacting States. Each Compacting
State’s Portion shall be funded as designated by
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that State’s legislature. In no event shall an Insur-
er’s assessment be less than $50 or more than
$25,000; provided, that affiliated Insurers’ combined
assessments shall not exceed $50,000. Upon the re-
quest of an Insurer, the Commission may exempt or
defer the assessment of any Insurer, if such assess-
ment would cause the Insurer’s financial impair-
ment.
‘‘b. These assessments shall not be used to pay
any costs or expenses incurred by the Commission
and its staff acting as Receiver of Estates. Such
costs and expenses shall be paid as administrative
expenses from the assets of the Estates as provided
by law, except as otherwise provided in this Com-
pact.
‘‘c. Each Insurer authorized to do business in
a Compacting State shall timely pay assessments to
the Commission. Failure to pay such assessments
shall not be grounds for the revocation, suspension
or denial of an Insurer’s authority to do business,
but shall subject the Insurer to suit by the Commis-
sion for recovery of any assessment due, attorneys’
fees and costs, together with interest from the date
the assessment is due at a rate of 10 percent per
annum, and to civil forfeiture in an amount to be
•HJ 189 IH
determined by the Commissioner of that Compacting
State in which the Insurer received the greatest pre-
mium in the year next preceding the first year for
which the Insurer shall be delinquent in payment of
assessments.
‘‘4. The Commission shall be reimbursed in the fol-
lowing manner for the costs and expenses incurred by the
Commission and its staff acting as Receiver of Estates to
the extent that an Insurer’s assets may be insufficient for
the effective administration of its Estate:
‘‘a. if the Insurer is domiciled in a Compacting
State, the Estate shall be closed unless that Com-
pacting State makes provisions for reimbursing the
Commission; and
‘‘b. if the Insurer is unauthorized to do busi-
ness in a Compacting State or if the Insurer is dom-
iciled in a Non-compacting State and subject to an-
cillary receivership, then the Commission and such
State shall make provisions for reimbursing the
Commission prior to the Commission becoming Re-
ceiver of such Insurer.
‘‘5. To fund the cost of the initial operations of the
Commission until its first annual budget is adopted and
related assessments have been made, contributions from
Compacting States and others may be accepted and a one
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time assessment on Insurers doing a direct insurance busi-
ness in the Compacting States may be made not to exceed
$450 per Insurer.
‘‘6. The Commission’s adopted budget for a fiscal
year shall not be approved until it has been subject to no-
tice and comment as set forth in Article VII of this Com-
pact. The budget shall determine the amount of the an-
nual assessment. The Commission may accumulate a net
worth not to exceed thirty percent of its then annual cost
of operation to provide for contingencies and events not
contemplated. These accumulated funds shall be held sep-
arately and shall not be used for any other purpose. The
Commission’s budget may include a provision for a con-
tribution to the Commission’s net worth.
‘‘7. The Commission shall be exempt from all tax-
ation in and by the Compacting States.
‘‘8. The Commission shall not pledge the credit of any
Compacting State, except by and with the appropriate
legal authority of that Compacting State.
‘‘9. The Commission shall keep complete and accu-
rate accounts of all its internal receipts (including grants
and donations) and disbursements of all funds, other than
Receivership assets, under its control. The internal finan-
cial accounts of the Commission shall be subject to the
accounting procedures established under its By-laws. The
•HJ 189 IH
financial accounts and reports including the system of in-
ternal controls and procedures of the Commission shall be
audited annually by an independent certified public ac-
countant. Upon the determination of the Commission, but
no less frequently than every three years, the review of
such independent auditor shall include a management and
performance audit of the Commission. The report of such
independent audit shall be made available to the public
and shall be included in and become part of the annual
report of the Commission to the Governors and legisla-
tures of the Compacting States. The Commission’s inter-
nal accounts, any workpapers related to any internal audit
and any workpapers related to the independent audit, shall
be confidential; provided, that such materials shall be
made available: (i) in compliance with the order of any
court of competent jurisdiction; (ii) pursuant to such rea-
sonable Rules as the Commission shall promulgate; and
(iii) to any Commissioner, Governor of a Compacting
State, or their duly authorized representatives.
‘‘10. No Compacting State shall have any claim to
or ownership of any property held by or vested in the Com-
mission or the Commission acting as Receiver or to any
other Commission funds held pursuant to the provisions
of this Compact.
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‘‘ARTICLE XI. COMPACTING STATES, EFFECTIVE DATE
AND AMENDMENT
‘‘1. Any State is eligible to become a Compacting
State.
‘‘2. The Compact shall become effective and binding
upon legislative enactment of the Compact into law by two
Compacting States. Thereafter, it shall become effective
and binding as to any other Compacting State upon enact-
ment of the Compact into law by that State.
‘‘3. Amendments to the Compact may be proposed
by the Commission for enactment by the Compacting
States. No amendment shall become effective and binding
upon the Commission and the Compacting States unless
and until it is enacted into law by unanimous consent of
the Compacting States.
‘‘ARTICLE XII. WITHDRAWAL, DEFAULT AND
TERMINATION
‘‘SECTION A. WITHDRAWAL
‘‘1. Once effective, the Compact shall continue in
force and remain binding upon each and every Compacting
State; provided, that a Compacting State may withdraw
from the Compact (‘Withdrawing State’) by enacting a
statute specifically repealing the statute which enacted the
Compact into law.
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‘‘2. The effective date of withdrawal is the effective
date of the repeal; provided, that the repeal shall not apply
to any Receiverships, for which the Commission is acting
as Receiver, pending on the date of the repeal except by
mutual agreement of the Commission and the Withdraw-
ing State.
‘‘3. The Withdrawing State shall immediately notify
the Chairperson of the Commission in writing upon the
introduction of legislation repealing this Compact in the
Withdrawing State.
‘‘4. The Commission shall notify the other Compact-
ing States of the Withdrawing State’s intent to withdraw
within sixty days of its receipt thereof.
‘‘5. The Withdrawing State is responsible for all as-
sessments, obligations and liabilities incurred through the
effective date of withdrawal, including any obligations, the
performance of which extend beyond the effective date of
withdrawal, except to the extent those obligations may
have been released or relinquished by mutual agreement
of the Commission and the Withdrawing State. Notwith-
standing the foregoing, the Withdrawing State is respon-
sible for the costs and expenses of its Estates subject to
this Compact pending on the date of repeal; the Commis-
sion and the other Estates subject to this Compact shall
not bear any costs and expenses related to the Withdraw-
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ing State’s Estates unless otherwise mutually agreed upon
between the Commission and the Withdrawing State.
‘‘6. Reinstatement following withdrawal of any Com-
pacting State shall occur upon the Withdrawing State re-
enacting the Compact or upon such later date as deter-
mined by the Commission.
‘‘SECTION B. DEFAULT
‘‘1. If the Commission determines that any Compact-
ing State has at any time defaulted (‘Defaulting State’)
in the performance of any of its obligations or responsibil-
ities under this Compact, the By-laws or duly promulgated
Rules, all rights, privileges and benefits conferred by this
Compact and any agreements entered into pursuant to
this Compact shall be suspended from the effective date
of default as fixed by the Commission. The grounds for
default include, but are not limited to, failure of a Com-
pacting State to perform such obligations or responsibil-
ities and any other grounds designated in Commission
Rules. The Commission shall immediately notify the De-
faulting State in writing of the Defaulting State’s suspen-
sion pending a cure of the default. The Commission shall
stipulate the conditions and the time period within which
the Defaulting State must cure its default. If the Default-
ing State fails to cure the default within the time period
specified by the Commission, the Defaulting State shall
•HJ 189 IH
be terminated from the Compact upon an affirmative vote
of a majority of the Compacting States and all rights,
privileges and benefits conferred by this Compact shall be
terminated from the effective date of termination.
‘‘2. Within sixty days of the effective date of termi-
nation of a Defaulting State, the Commission shall notify
the Governor and the Majority and Minority Leaders of
the Defaulting State’s legislature of such termination.
‘‘3. The termination of a Defaulting State shall apply
to all Receiverships, for which the Commission is acting
as Receiver, pending on the effective date of termination
except by mutual agreement of the Commission and the
Defaulting State.
‘‘4. The Defaulting State is responsible for all assess-
ments, obligations and liabilities incurred through the ef-
fective date of termination, and is responsible for the costs
and expenses relating to its Estates subject to this Com-
pact pending on the date of the termination. The Commis-
sion and the other Estates subject to this Compact shall
not bear any costs or expenses relating to the Defaulting
State’s Estates unless otherwise mutually agreed upon be-
tween the Commission and the Defaulting State.
‘‘5. Reinstatement following termination of any Com-
pacting State requires both a reenactment of the Compact
•HJ 189 IH
by the Defaulting State and the approval of the Commis-
sion pursuant to the Rules.
‘‘SECTION C. DISSOLUTION OF COMPACT
‘‘1. The Compact dissolves effective upon the date of
the withdrawal or the termination by default of the Com-
pacting State which reduces membership in the Compact
to one Compacting State.
‘‘2. Upon the dissolution of this Compact, the Com-
pact becomes null and void and shall be of no further force
or effect, and the business and affairs of the Commission
shall be wound up and any surplus funds shall be distrib-
uted in accordance with the By-laws.
‘‘ARTICLE XIII. SEVERABILITY AND CONSTRUCTION
‘‘1. The provisions of this Compact shall be severable,
and if any phrase, clause, sentence or provision is deemed
unenforceable, the remaining provisions of the Compact
shall be enforceable.
‘‘2. The provisions of this Compact shall be liberally
construed to effectuate its purposes.
‘‘ARTICLE XIV. BINDING EFFECT OF COMPACT AND
OTHER LAWS
‘‘SECTION A. OTHER LAWS
‘‘1. Nothing herein prevents the enforcement of any
other law of a Compacting State that is not inconsistent
with this Compact.
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‘‘2. All Compacting States’ laws conflicting with this
Compact are superseded to the extent of the conflict.
‘‘SECTION B. BINDING EFFECT OF THIS COMPACT
‘‘1. All lawful actions of the Commission, including
all Rules and Operating Procedures promulgated by the
Commission, are binding upon the Compacting States.
‘‘2. All agreements between the Commission and the
Compacting States are binding in accordance with their
terms.
‘‘3. Upon the request of a party to a conflict over
meaning or interpretation of Commission actions, and
upon a majority vote of the Compacting States, the Com-
mission may issue advisory opinions regarding such mean-
ing or interpretation.
‘‘4. In the event any provision of this Compact ex-
ceeds the constitutional limits imposed on the legislature
of any Compacting State, the obligations, duties, powers
or jurisdiction sought to be conferred by such provision
upon the Commission shall be ineffective and such obliga-
tions, duties, powers or jurisdiction shall remain in the
Compacting State and shall be exercised by the agency
thereof to which such obligations, duties, powers or juris-
diction are delegated by law in effect at the time this Com-
pact becomes effective.’’.
•HJ 189 IH
SEC. 2. RIGHT TO ALTER, AMEND, OR REPEAL.
The right to alter, amend, or repeal this joint resolu-
tion is hereby expressly reserved. The consent granted by
this joint resolution shall not be construed as impairing
or in any manner affecting any right or jurisdiction of the
United States in and over the subject of the compact.
SEC. 3. SEVERABILITY.
If any part or application of this compact, or legisla-
tion enabling the compact, is held invalid, the remainder
of the compact or its application to other situations or per-
sons shall not be affected.
SEC. 4. INCONSISTENCY OF LANGUAGE.
The validity of this compact shall not be affected by
any insubstantial difference in its form or language as
adopted by the various States.
Æ