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INTERSTATE COMPACT

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Title: INTERSTATE COMPACT


1
INTERSTATE COMPACT
  • Jeanne Daharsh
  • Nebraska Department of Insurance
  • May 20, 2005

2
Purpose of Compact
  • Speed-to-market
  • Improve coordination among states
  • Uniform product standards
  • Central clearinghouse for product review
  • Regulatory approval of filings

3
State Status
  • Adopted in 14 states with 13.8 of the premium
    volume (2003)
  • CO, HI, IA, ID, KS, MD, ME, NE NH, RI, UT, VA,
    WA, WV
  • Under consideration in 15 states
  • AL, CT, FL, IL, IN, KY, MI, MT, NC, NJ, NM, NY,
    PA, TX, VT
  • http//www.naic.org/compact/

4
Status in Nebraska
  • Part of LB119
  • Introduced to Legislature 1/6/05
  • Hearing 1/18/05
  • Signed by Governor 3/9/05
  • Effective 90 days after end of legislative
    session (9/05)
  • See Slip Law at http//www.unicam.state.ne.us/

5
Impact on Companies
  • Operational when 26 states or states with more
    than 40 of the premium volume (life, annuity,
    DI, LTC)
  • Companies have option of filing with compact or
    with states
  • If filed and approved by Compact, form is
    available for use in all compacting states where
    company is licensed

6
Products Covered
  • Life Variable Life
  • Annuity Variable Annuity
  • Long Term Care
  • Disability Income
  • Disability Income Rates
  • LTC Rates (initial rates, not rate increases)
  • Advertising (LTC others are file use)

7
Commission
  • Fulfills Compacts objectives
  • Each compacting state has 1 member
  • Usually director/commissioner of insurance or
    designee

8
Commission Powers
  • Promulgate rules
  • Establish uniform product standards
  • Review product filings
  • Appoint committees
  • Hire employees

9
Commission Committees
  • Legislative
  • Management
  • Consumer Advisory
  • Insurance Industry Advisory

10
Legislative Committee
  • Comprised of 8 state legislators (or designees)
    from compacting states
  • 2 from each of the 4 zones
  • Monitors operations of Commission
  • Makes recommendations to Commission
  • 2 year term

11
Management Committee
  • 14 members
  • Based on premium volume (annuity, life, DI, LTC)
  • 1 each from 6 states with largest premium volume
  • 4 from other states with at least 2 of market
    share
  • 4 from other states with less than 2 of market
    share with one from each zone

12
Management Committee (cont.)
  • Duties
  • Oversee Commission
  • Submit standards to compacting states after
    approved by 2/3 of Committee
  • Appoint or retain an Executive Director
  • Report to and consult with Legislative Committee
  • Receive and review product filings


13
Management Committee (cont.)
  • Officers
  • Chair, Vice-chair, Secretary, Treasurer
  • Each serves 1 year
  • May have Executive Director who serves as
    Secretary
    (not a commission member)
  • Executive Director
  • Manages office
  • Hires and supervises Compact employees
  • Prepares budget


14
Consumer Advisory Committee
  • 8 consumer representatives
  • Independent of the insurance industry
  • Members serve for 2 years

15
Insurance Industry Advisory Committee
  • 8 industry representatives
  • Represent small, medium, and large insurers
  • At least 2 representatives are producers
  • Insurance companies that have filed, or intend to
    file, products for approval
  • Members serve for 2 years

16
Uniform Product Standards
  • States may opt out of a Uniform Standard
  • Decline to adopt or participate
  • Opt out via legislation or regulation
  • Must find that uniform standard does not provide
    reasonable protection to citizens of the state

17
Uniform Product Standards (cont.)
  • Standards adopted for
  • individual variable non-variable annuities
  • individual whole life term life
  • individual endowment
  • individual joint life
  • individual variable life
  • individual long term care
  • individual disability income
  • http//www.naic.org/committee_activities/executive
    /interstate_compact.htm

18
Sources
  • November 4, 2004 Commission Bylaws
  • Nebraska LB119 Slip Law

19
Questions??
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