2025 -- H 6385

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LC002933

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

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A N   A C T

RELATING TO STATUTES AND STATUTORY CONSTRUCTION

     Introduced By: Representative Christopher R. Blazejewski

     Date Introduced: June 04, 2025

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

     ARTICLE I--STATUTORY REENACTMENT

     SECTION 1. It is the express intention of the General Assembly to reenact the entirety of

Title 25, chapters 1 through 18.9 of Title 27, and chapters 1 through 46 of Title 42 of the General

Laws of Rhode Island, including every chapter and section therein, and any chapters and sections

thereof not included in this act may be, and are hereby, reenacted as if fully set forth herein.

     SECTION 2. Sections 27-1-46 and 27-1-47 of the General Laws in Chapter 27-1 entitled

"Domestic Insurance Companies" are hereby amended to read as follows:

     27-1-46. Information security program.

     (a) Commensurate with the size and complexity of an insurer, the nature and scope of an

insurer’s activities, including its use of third-party service providers, and the sensitivity of the

nonpublic information used by the insurer or in the insurer’s possession, custody, or control, each

domestic insurance company shall develop, implement, and maintain a comprehensive written

information security program, based on the insurer’s risk assessment and that contains

administrative, technical, and physical safeguards for the protection of nonpublic information and

the insurer’s information system. For purposes of this chapter, “information security program”

means the administrative, technical, and physical safeguards that an insurer uses to access, collect,

distribute, process, protect, store, use, transmit, dispose of, or otherwise handle, nonpublic

information. “Publicly available information” means any information that a licensee has a

reasonable basis to believe is lawfully made available to the general public from: federal, state, or

local government records; widely distributed media; or disclosures to the general public that are

required to be made by federal, state, or local law. “Nonpublic information” means information

that is not publicly available information and is:

     (1) Business-related information of a licensee, the tampering with which, or unauthorized

disclosure, access, or use of which, would cause a material adverse impact to the business,

operations, or security of the licensee;

     (2) Any information concerning a consumer which, because of name, number, personal

mark, or other identifier, can be used to identify such consumer, in combination with any one or

more of the following data elements:

     (i) Social security number;

     (ii) Driver’s license number or non-driver identification card number;

     (iii) Account number, credit, or debit card number;

     (iv) Any security code, access code, or password that would permit access to a consumer’s

financial account; or

     (v) Biometric records;

     (3) Any information or data, except age or gender, in any form or medium created by or

derived from a healthcare provider or a consumer and that relates to:

     (i) The past, present, or future physical, mental, behavioral health, or medical condition of

any consumer or a member of the consumer’s family;

     (ii) The provision of health care to any consumer; or

     (iii) Payment for the provision of health care to any consumer.

     (b) Objectives of information security program. An insurer’s information security

program shall be designed to:

     (1) Protect the security and confidentiality of nonpublic information and the security of the

information system;

     (2) Protect against any threats or hazards to the security or integrity of nonpublic

information and the information system;

     (3) Protect against unauthorized access to or use of nonpublic information, and minimize

the likelihood of harm to any consumer. For purposes of this section, “consumer” means an

individual, including, but not limited to, applicants, policyholders, insureds, beneficiaries,

claimants, and certificate holders, who is a resident of this state and whose nonpublic information

is in an insurer’s possession, custody, or control; and

     (4) Define and periodically reevaluate a schedule for retention of nonpublic information

and a mechanism for its destruction when no longer needed.

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     (c) Risk assessment. The insurer shall:

     (1) Designate one or more employees, an affiliate, or an outside vendor designated to act

on behalf of the insurer who is responsible for the information security program;

     (2) Identify reasonably foreseeable internal or external threats that could result in

unauthorized access, transmission, disclosure, misuse, alteration, or destruction of nonpublic

information, including the security of information systems and nonpublic information that are

accessible to, or held by, third-party service providers. “Third-party service providers” means a

person, not otherwise defined as a licensee, that contracts with a licensee to maintain, process, store,

or otherwise is permitted access to nonpublic information through its provision of services to the

licensee. Third-party service providers does not include licensed insurance producers;

     (3) Assess the likelihood and potential damage of these threats, taking into consideration

the sensitivity of the nonpublic information;

     (4) Assess the sufficiency of policies, procedures, information systems, and other

safeguards in place to manage these threats, including consideration of threats in each relevant area

of the insurer’s operations, including:

     (i) Employee training and management;

     (ii) Information systems, including network and software design, as well as information

classification, governance, processing, storage, transmission, and disposal; and

     (iii) Detecting, preventing, and responding to attacks, intrusions, or other systems failures;

and

     (5) Implement information safeguards to manage the threats identified in its ongoing

assessment, and no less than annually, assess the effectiveness of the safeguards’ key controls,

systems, and procedures.

     (d) Risk management. Based on its risk assessment, the insurer shall:

     (1) Design its information security program to mitigate the identified risks, commensurate

with the size and complexity of the insurer’s activities, including its use of third-party service

providers, and the sensitivity of the nonpublic information used by the insurer or in the insurer’s

possession, custody, or control;

     (2) Determine which security measures listed below are appropriate and implement such

security measures:

     (i) Place access controls on information systems, including controls to authenticate and

permit access only to authorized individuals to protect against the unauthorized acquisition of

nonpublic information. “Authorized individual” means an individual known to and screened by the

insurer, and determined to be necessary and appropriate to have access to the nonpublic information

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held by the insurer, and the insurer’s information systems;

     (ii) Identify and manage the data, personnel, devices, systems, and facilities that enable the

organization to achieve business purposes in accordance with their relative importance to business

objectives and the organization’s risk strategy;

     (iii) Restrict access at physical locations containing nonpublic information only to

authorized individuals;

     (iv) Protect, by encryption or other appropriate means, all nonpublic information while

being transmitted over an external network and all nonpublic information stored on a laptop

computer or other portable computing or storage device or media;

     (v) Adopt secure development practices for in-house developed applications utilized by the

insurer and procedures for evaluating, assessing, or testing the security of externally developed

applications utilized by the insurer;

     (vi) Modify the information system in accordance with the insurer’s information security

program;

     (vii) Utilize effective controls, which may include multi-factor authentication procedures

for any individual accessing nonpublic information;

     (viii) Regularly test and monitor systems and procedures to detect actual and attempted

attacks on, or intrusions into, information systems;

     (ix) Include audit trails within the information security program designed to detect and

respond to cybersecurity events and designed to reconstruct material financial transactions

sufficient to support normal operations and obligations of the insurer;

     (x) Implement measures to protect against destruction, loss, or damage of nonpublic

information due to environmental hazards, such as fire and water damage or other catastrophes or

technological failures; and

     (xi) Develop, implement, and maintain procedures for the secure disposal of nonpublic

information in any format;

     (3) Include cybersecurity risks in the insurer’s enterprise risk management process;

     (4) Stay informed regarding emerging threats or vulnerabilities and utilize reasonable

security measures when sharing information relative to the character of the sharing and the type of

information shared; and

     (5) Provide its personnel with cybersecurity awareness training that is updated as necessary

to reflect risks identified by the insurer in the risk assessment.

     (e) Oversight by board of directors. If the insurer has a board of directors, the board or

an appropriate committee of the board shall, at a minimum:

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     (1) Require the insurer’s executive management or its designees to develop, implement,

and maintain the insurer’s information security program;

     (2) Require the insurer’s executive management or its designees to report in writing at least

annually, the following information:

     (i) The overall status of the information security program and the insurer’s compliance with

this chapter; and

     (ii) Material matters related to the information security program, addressing issues such as

risk assessment, risk management and control decisions, third-party service provider arrangements,

results of testing, cybersecurity events or violations and management’s responses thereto, or

recommendations for changes in the information security program; and

     (3) If executive management delegates any of its responsibilities pursuant to this section,

it shall oversee the development, implementation, and maintenance of the insurer’s information

security program prepared by the designee(s) and shall receive a report from the designee(s)

complying with the requirements of the report to the board of directors.

     (f) Oversight of third-party service provider arrangements.

     (1) An insurer shall exercise due diligence in selecting its third-party service provider; and

     (2) An insurer shall take reasonable steps to request a third-party service provider to

implement appropriate administrative, technical, and physical measures to protect and secure the

information systems and nonpublic information that are accessible to, or held by, the third-party

service provider.

     (g) Program adjustments. The insurer shall monitor, evaluate, and adjust, as appropriate,

the information security program consistent with any relevant changes in technology, the sensitivity

of its nonpublic information, internal or external threats to information, and the insurer’s own

changing business arrangements, such as mergers and acquisitions, alliances and joint ventures,

outsourcing arrangements, and changes to information systems.

     (h) Incident response plan.

     (1) As part of its information security program, each insurer shall establish a written

incident response plan designed to promptly respond to, and recover from, any cybersecurity event

that compromises the confidentiality, integrity, or availability of nonpublic information in its

possession, the insurer’s information systems, or the continuing functionality of any aspect of the

insurer’s business or operations.

     (2) Such incident response plan shall address the following areas:

     (i) The internal process for responding to a cybersecurity event;

     (ii) The goals of the incident response plan;

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     (iii) The definition of clear roles, responsibilities, and levels of decision-making authority;

     (iv) External and internal communications and information sharing;

     (v) Identification of requirements for the remediation of any identified weaknesses in

information systems and associated controls;

     (vi) Documentation and reporting regarding cybersecurity events and related incident

response activities; and

     (vii) The evaluation and revision as necessary of the incident response plan following a

cybersecurity event.

     (3) If the insurer learns that a cybersecurity event has or may have occurred, the insurer, or

an outside vendor and/or service provider designated to act on behalf of the insurer, shall conduct

a prompt investigation. For purposes of this section, “cybersecurity event” means an event resulting

in unauthorized access to, disruption or misuse of an information system or nonpublic information

stored on such information system. This does not include the unauthorized acquisition of encrypted

nonpublic information if the encryption, process, or key is not also acquired, released, or used

without authorization. This also does not include an event with regard to which the insurer has

determined that the nonpublic information accessed by an unauthorized person has not been used

or released and has been returned or destroyed.

     (i) During the investigation, the insurer, or an outside vendor and/or service provider

designated to act on behalf of the insurer, shall, at a minimum, determine as much of the following

information as possible:

     (A) Whether a cybersecurity event has occurred;

     (B) Assess the nature and scope of the cybersecurity event;

     (C) Identify any nonpublic information that may have been involved in the cybersecurity

event; and

     (D) Perform or oversee reasonable measures to restore the security of the information

systems compromised in the cybersecurity event in order to prevent further unauthorized

acquisition, release, or use of nonpublic information in the insurer’s possession, custody, or control.

     (ii) If the insurer learns that a cybersecurity event has or may have occurred in a system

maintained by a third-party service provider, and it has or may have impacted the insurer’s

nonpublic information, the insurer shall make reasonable efforts to complete the steps set forth in

subsection (a) subsection (h)(3)(i) of this section or make reasonable efforts to confirm and

document that the third-party service provider has completed those steps.

     (iii) The insurer shall maintain records concerning all cybersecurity events for a period of

at least five (5) years from the date of the cybersecurity event. The insurer shall produce those

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records upon demand of the commissioner pursuant to chapter 13.1 of this title or other statutory

authority.

     (i) Annually, each insurer domiciled in this state shall submit to the commissioner a written

statement by April 15 certifying that the insurer is in compliance with the requirements set forth in

this section. Each insurer shall maintain for examination by the department all records, schedules,

and data supporting this certificate for a period of five (5) years. To the extent an insurer has

identified areas, systems, or processes that require material improvement, updating, or redesign,

the insurer shall document the identification and the remedial efforts planned and underway to

address such areas, systems, or processes. This documentation must be available for inspection by

the commissioner pursuant to a request under chapter 13.1 of this title or other statutory authority.

     (j) If an insurer domiciled in this state has an information security program that is prepared

for and in compliance with Pub. L. No. 104-191, 110 Stat. 1936, enacted August 21, 1996 (Health

Insurance Portability and Accountability Act) and related privacy, security, and breach notification

regulations pursuant to Code of Federal Regulations, Parts 160 and 164, and Pub. L. No. 111-5,

123 Stat. 226, enacted February 17, 2009 (Health Information Technology), insurers can rely on

that plan to certify their compliance with subsection (i) of this section.

     27-1-47. Notification of a cybersecurity event.

     (a) Each domestic insurer shall notify the commissioner as promptly as possible but in no

event later than three (3) business days from a determination that a cybersecurity event has occurred

when either of the following criteria has been met:

     (1) A cybersecurity event impacting the insurer of which notice is required to be provided

to any government body, self-regulatory agency, or any other supervisory body pursuant to any

state or federal law; or

     (2) A cybersecurity event that has a reasonable likelihood of materially harming:

     (i) Any consumer residing in this state; or

     (ii) Any material part of the normal operation(s) of the insurer.

     (b) The insurer shall provide any information required by this section in electronic form as

directed by the commissioner. The insurer shall have a continuing obligation to update and

supplement initial and subsequent notifications to the commissioner concerning the cybersecurity

event. The insurer shall provide as much of the following information as possible. The insurer

should indicate whether it is making claims under chapter 2 of title 38 to any of the information

provided. The following information shall be provided:

     (1) Date of the cybersecurity event;

     (2) Description of how the information was exposed, lost, stolen, or breached, including

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the specific roles and responsibilities of third-party service providers, if any;

     (3) How the cybersecurity event was discovered;

     (4) Whether any lost, stolen, or breached information has been recovered and if so, how

this recovery was achieved;

     (5) The identity of the source of the cybersecurity event;

     (6) Whether the insurer has filed a police report or has notified any regulatory, government,

or law enforcement agencies and, if so, when such notification was provided;

     (7) Description of the specific types of information acquired without authorization.

Specific types of information consisting of particular data elements including, for example, types

of medical information, types of financial information, or types of information allowing

identification of the consumer;

     (8) The period during which the information system was compromised by the cybersecurity

event;

     (9) The number of total consumers in this state affected by the cybersecurity event. The

insurer shall provide the best estimate in the initial report to the commissioner and update this

estimate with each subsequent report to the commissioner pursuant to this section;

     (10) The results of any internal review identifying a lapse in either automated controls or

internal procedures, or confirming that all automated controls or internal procedures were followed;

     (11) Description of efforts being undertaken to remediate the situation that permitted the

cybersecurity event to occur;

     (12) A copy of the insurer privacy policy and a statement outlining the steps the insurer

will take to investigate and notify consumers affected by the cybersecurity event; and

     (13) Name of a contact person who is both familiar with the cybersecurity event and

authorized to act for the insurer.

     (c) An insurer shall comply with chapter 49.3 of title 11, as applicable, and provide a copy

of the notice sent to consumers under that chapter to the commissioner, when an insurer is required

to notify the commissioner.

     (d) Notice regarding cybersecurity events of third-party service providers.

     (1) In the case of a cybersecurity event involving an insurer’s nonpublic information in a

system maintained by a third-party service provider, of which the insurer has become aware, the

insurer shall treat that event as it would under subsection (a) of this section;

     (2) The computation of the insurer’s deadlines shall begin on the day after the third-party

service provider notifies the insurer of the cybersecurity event or the insurer otherwise has actual

knowledge of the cybersecurity event, whichever is sooner;

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     (3) Nothing in this chapter shall prevent or abrogate an agreement between an insurer and

another insurer, a third-party service provider, or any other party to fulfill any of the investigation

requirements or notice requirements imposed under this section.

     (e) Notice regarding cybersecurity events of reinsurers to insurers.

     (1)(i) In the case of a cybersecurity event involving nonpublic information that is used by

the insurer that is acting as an assuming insurer or in the possession, custody, or control of an

insurer that is acting as an assuming insurer and that does not have a direct contractual relationship

with the affected consumers, the assuming insurer shall notify its affected ceding insurers and the

commissioner of its state of domicile within seventy-two (72) hours of making the determination

that a cybersecurity event has occurred;

     (ii) The ceding insurers that have a direct contractual relationship with affected consumers

shall fulfill the consumer notification requirements imposed under chapter 49.3 of title 11 (“Identity

Theft Protection Act of 2015”), and any other notification requirements relating to a cybersecurity

event imposed under this section.

     (2)(i) In the case of a cybersecurity event involving nonpublic information that is in the

possession, custody, or control of a third-party service provider of an insurer that is an assuming

insurer, the assuming insurer shall notify its affected ceding insurers and the commissioner of its

state of domicile within seventy-two (72) hours of receiving notice from its third-party service

provider that a cybersecurity event has occurred;

     (ii) The ceding insurers that have a direct contractual relationship with affected consumers

shall fulfill the consumer notification requirements imposed under chapter 49.3 of title 11 and any

other notification requirements relating to a cybersecurity event imposed under this section.

     (f) Notice regarding cybersecurity events of insurers to producers of record.

     (1) In the case of a cybersecurity event involving nonpublic information that is in the

possession, custody, or control of an insurer that is an insurer or its third-party service provider

and for which a consumer accessed the insurer’s services through an independent insurance

producer, the insurer shall notify the producers of record of all affected consumers as soon as

practicable as directed by the commissioner.

     (2) The insurer is excused from this obligation for those instances in which it does not have

the current producer of record information for any individual consumer.

     SECTION 3. Section 27-1.1-3 of the General Laws in Chapter 27-1.1 entitled "Credit for

Reinsurance Act" is hereby amended to read as follows:

     27-1.1-3. Qualified United States financial institutions.

     (a) For the purposes of § 27-1.1-2(3), “qualified United States financial institution” means

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an institution that:

     (1) Is organized, or in the case of a U.S. office of a foreign banking organization is licensed,

under the laws of the United States or any of its states;

     (2) Is regulated, supervised, and examined by United States federal or state authorities

having regulatory authority over banks and trust companies; and

     (3) Has been determined by either the commissioner, or the securities valuation office

Securities Valuation Office of the National Association of Insurance Commissioners, to meet

those such standards of financial condition and that standing as are considered necessary and

appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable

to the commissioner.

     (b) “Qualified United States financial institution” means, for the purposes of those

provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust,

an institution that:

     (1) Is organized, or in the case of a United States branch or agency office of a foreign

banking organization is licensed, under the laws of the United States or any of its states and has

been granted authority to operate with fiduciary powers; and

     (2) Is regulated, supervised, and examined by federal or state authorities having regulatory

authority over banks and trust companies.

     SECTION 4. Section 27-2.5-2 of the General Laws in Chapter 27-2.5 entitled "Interstate

Compact on Insurance Product Regulations" is hereby amended to read as follows:

     27-2.5-2. Compact enacted.

     The interstate compact on insurance product regulation is hereby enacted into law and

entered into with all other jurisdictions legally joining therein in form substantially as follows:

     Preamble

     This act is intended to help states join together to establish an interstate compact to regulate

designated insurance products.

     Pursuant to terms and conditions of this act, the state of Rhode Island seeks to join with

other states and establish the Interstate Insurance Product Regulation Compact, and thus become a

member of the Interstate Insurance Product Regulation Commission. The Rhode Island Insurance

Commissioner is hereby designated to serve as the representative of this state to the commission.

     Interstate Insurance Product Regulation Compact

     ARTICLE I.

     PURPOSES

     The purposes of this compact are, through means of joint and cooperative action among

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the compacting states:

     (1) To promote and protect the interest of consumers of individual and group annuity, life

insurance, disability income and long-term care insurance products;

     (2) To develop uniform standards for insurance products covered under the compact;

     (3) To establish a central clearinghouse to receive and provide prompt review of insurance

products covered under the compact and, in certain cases, advertisements related thereto, submitted

by insurers authorized to do business in one or more compacting states;

     (4) To give appropriate regulatory approval to those product filings and advertisements

satisfying the applicable uniform standard;

     (5) To improve coordination of regulatory resources and expertise between state insurance

departments regarding the setting of uniform standards and review of insurance products covered

under the compact;

     (6) To create the Interstate insurance product regulation commission; and

     (7) To perform these and such other related functions as may be consistent with the state

regulation of the business of insurance.

     ARTICLE II.

     DEFINITIONS

     For purposes of this compact:

     (1) “Advertisement” means any material designed to create public interest in a product, or

induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a

policy, as more specifically defined in the rules and operating procedures of the commission.

     (2) “Bylaws” mean those bylaws established by the commission for its governance, or for

directing or controlling the commissions’ commission’s actions or conduct.

     (3) “Compacting state” means any state which has enacted this compact legislation and

which has not withdrawn pursuant to Article XIV, Section 1, or been terminated pursuant to Article

XIV, Section 2.

     (4) “Commission” means the “Interstate Insurance Product Regulation Commission”

established by this compact.

     (5) “Commissioner” means the chief insurance regulatory official of a state including, but

not limited to, commissioner, superintendent, director or administrator.

     (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.

     (7) “Insurer” means any entity licensed by a state to issue contracts of insurance for any of

the lines of insurance covered by this act.

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     (8) “Member” means the person chosen by a compacting state as its representative to the

commission, or his or her designee.

     (9) “Noncompacting state” means any state which is not at the time a compacting state.

     (10) “Operating procedures” mean procedures promulgated by the commission

implementing a rule, uniformed uniform standard or a provision of this compact.

     (11) “Product” means the form of a policy or contract, including any application,

endorsement, or related from form which is attached to and made a part of the policy or contract,

and any evidence of coverage of or certificate, for an individual or group annuity, life insurance,

disability income or long-term care insurance product that an insurer is authorized to issue.

     (12) “Rule” means a statement of general or particular applicability and future effect

promulgated by the commission, including a uniform standard developed pursuant to Article VII

of this compact, designed to implement, interpret, or prescribe law or policy or describing the

organization, procedure, or practice requirements of the commission, which shall have the force

and effect of law in the compacting states.

     (13) “State” means any state, district or territory of the United States of America.

     (14) “Third-party filer” means an entity that submits a product filing to the commission on

behalf of an insurer.

     (15) “Uniform standard” means a standard adopted by the commission for a product line,

pursuant to Article VII of this compact, and shall include all of the product requirements in

aggregate; provided, that each uniform standard shall be construed, whether express or implied, to

prohibit the use of any inconsistent, misleading or ambiguous provisions in a product and the form

of the product made available to the public shall not be unfair, inequitable or against public policy

as determined by the commission.

     ARTICLE III.

     ESTABLISHMENT OF THE COMMISSION AND VENUE

     (1) The compacting states hereby create and establish a joint public agency known as the

“Interstate Insurance Product Regulation Commission.” Pursuant to Article IV, the commission

will have the power to develop uniform standards for product lines, receive and provide prompt

review of products filed therewith, and give approval to those product filings satisfying applicable

uniform standards; provided, it is not intended for the commission to be the exclusive entity for

receipt and review of insurance product filings. Nothing herein shall prohibit any insurer from filing

its product in any state wherein the insurer is licensed to conduct the business of insurance; and any

such filing shall be subject to the laws of the state where filed.

     (2) The commission is a body corporate and politic, and an instrumentality of the

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compacting states.

     (3) The commission is a not-for-profit entity, separate and distinct from the individual

compacting states.

     (4) The commission is solely responsible for its liabilities except as otherwise specifically

provided in this compact.

     (5) Venue is proper and judicial proceedings by or against the commission shall be brought

solely and exclusively in a court of competent jurisdiction where the principal office of the

commission is located.

     ARTICLE IV.

     POWERS OF THE COMMISSION

     The commission shall have the following powers:

     (1) To promulgate rules, pursuant to Article VII of this compact, which shall have the force

and effect of law and shall be binding in the compacting states to the extent and in the manner

provided in this compact;

     (2) To exercise its rule-making authority and establish reasonable uniform standards for

products covered under the compact, and advertisement related thereto, which shall have the force

and effect of law and shall be binding in the compacting states, but only for those products filed

with the commission, provided, that a compacting state shall have the right to opt out of such

uniform standard pursuant to Article VII, to the extent and in the manner provided in this compact

and, provided, further, that any uniform standard established by the commission for long-term care

insurance products may provide the same or greater protections for consumers as, but shall not

provide less than, those protections set forth in the National Association of Insurance

Commissioners’ Long-Term Care Insurance Model Act and Long-Term Care Insurance Model

Regulation, respectively, adopted as of 2001. The commission shall consider whether any

subsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care

Insurance Model Regulation adopted by the NAIC require amending of the uniform standards

established by the commission for long-term care insurance products;

     (3) To receive and review in an expeditious manner products filed with the commission,

and rate filings for disability income and long-term care insurance products, and give approval of

those products and rate filings that satisfy the applicable uniform standard, where such approval

shall have the force and effect of law and be binding on the compacting states to the extent and in

the manner provided in the compact;

     (4) To receive and review in an expeditious manner advertisement relating to long-term

care insurance products for which uniform standards have been adopted by the commission, and

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give approval to all advertisement that satisfies the applicable uniform standard. For any product

covered under this compact, other than long-term care insurance products, the commission shall

have the authority to require an insurer to submit all or any part of its advertisement with respect

to that product for review or approval prior to use, if the commission determines that the nature of

the product is such that an advertisement of the product could have the capacity or tendency to

mislead the public. The actions of the commission as provided in this section shall have the force

and effect of law and shall be binding in the compacting states to the extent and in the manner

provided in the compact;

     (5) To exercise its rule-making authority and designate products and advertisement that

may be subject to a self-certification process without the need for prior approval by the commission;

     (6) To promulgate operating procedures, pursuant to Article VII of the compact, which

shall be binding in the compacting states to the extent and in the manner provided in this compact;

     (7) To bring and prosecute legal proceedings or actions in its name as the commission;

provided, that the standing of any state insurance department to sue or be sued under applicable

law shall not be affected;

     (8) To issue subpoenas requiring the attendance and testimony of witnesses and the

production of evidence;

     (9) To establish and maintain offices;

     (10) To purchase and maintain insurance and bonds;

     (11) To borrow, accept or contract for services of personnel, including, but not limited to,

employees of a compacting state;

     (12) To hire employees, professionals or specialists, and elect or appoint officers, and to

fix their compensation, define their duties and give them appropriate authority to carry out the

purposes of the compact, and determine their qualifications; and to establish the commission’s

personnel policies and programs relating to, among other things, conflicts of interest, rates of

compensation and qualifications of personnel;

     (13) To accept any and all appropriate donations and grants of money, equipment, supplies,

materials, and services, and to receive, utilize and dispose of the same; provided, that at all times

the commission shall strive to avoid any appearance of impropriety;

     (14) To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold,

improve or use, any property, real, personal or mixed; provided, that at all times the commission

shall strive to avoid any appearance of impropriety;

     (15) To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose of

any property, real, personal or mixed;

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     (16) To remit filing fees to compacting states as may be set forth in the bylaws, rules or

operating procedures;

     (17) To enforce compliance by compacting states with rules, uniform standards, operating

procedures and bylaws;

     (18) To provide for dispute resolution among compacting states;

     (19) To advise compacting states on issues relating to insurers domiciled or doing business

in noncompacting jurisdictions, consistent with the purposes of the compact;

     (20) To provide advice and training to those personnel in state insurance departments

responsible for product review, and to be a resource for state insurance departments;

     (21) To establish a budget and make expenditures;

     (22) To borrow money;

     (23) To appoint committees including advisory committees comprising members, state

insurance regulators, state legislators or their representatives, insurance industry and consumer

representatives, and such other interested persons as may be designated in the bylaws;

     (24) To provide and receive information from, and to cooperate with law enforcement

agencies;

     (25) To adopt and use a corporate seal; and

     (26) To perform such other functions as may be necessary or appropriate to achieve the

purposes of this compact consistent with the state regulation of the business of insurance.

     ARTICLE V.

     ORGANIZATION OF THE COMMISSION

     (1) Membership, voting and bylaws.

     (a) Each compacting state shall have [be] and be limited to one member. Each member

shall be qualified to serve in that capacity pursuant to applicable law of the compacting state. Any

member may be removed or suspended from office as provided by the law of the state from which

he or she shall be appointed. Any vacancy occurring in the commission shall be filled in accordance

with the laws of the compacting state wherein the vacancy exists. Nothing herein shall be construed

to affect the manner in which a compacting state determines the election or appointment and

qualification of its own commissioner.

     (b) Each member shall be entitled to one vote and shall have an opportunity to participate

in the governance of the commission in accordance with the bylaws. Notwithstanding any provision

herein to the contrary, no action of the commission with respect to the promulgation of a uniform

standard shall be effective unless two-thirds (⅔) of the members vote in favor thereof.

     (c) The commission shall, by a majority of the members, prescribe bylaws to govern its

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conduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, of

the compact, including, but not limited to:

     (i) Establishing the fiscal year of the commission;

     (ii) Providing reasonable procedures for appointing and electing members, as well as

holding meetings, of the management committee;

     (iii) Providing reasonable standards and procedures: (i) for the establishment and meetings

of other committees; and (ii) governing any general or specific delegation of any authority or

function of the commission;

     (iv) Providing reasonable procedures for calling and conducting meetings of the

commission that consists of a majority of commission members, ensuring reasonable advance

notice of each such meeting and providing for the rights of citizens to attend such meeting with

enumerated exceptions designed to protect the public’s interest, the privacy of individuals, and

insurers’ proprietary information, including trade secrets. The commission may meet in camera

only after a majority of the entire membership votes to close a meeting en toto or in part. As soon

as practicable, the commission must make public: (i) a copy of the vote to close the meeting

revealing the vote of each member with no proxy votes allowed; and (ii) votes taken during such

meeting;

     (v) Establishing the titles, duties and authority and reasonable procedures for the election

of the officers of the commission;

     (vi) Providing reasonable standards and procedures for the establishment of the personnel

policies and programs of the commission. Notwithstanding any civil service or other similar laws

of any compacting state, the bylaws shall exclusively govern the personnel policies and programs

of the commission;

     (vii) Promulgating a code of ethics to address permissible and prohibited activities of

commission members and employees; and

     (viii) Providing a mechanism for winding up the operations of the commission and the

equitable disposition of any surplus funds that may exist after the termination of the compact after

the payment and/or reserving of all of its debts and obligations.

     (d) The commission shall publish its bylaws in a convenient form and file a copy thereof

and a copy of any amendment thereto, with the appropriate agency or officer in each of the

compacting states.

     (2) Management committee, officers and personnel.

     (a) A management committee comprising no more than fourteen (14) members shall be

established as follows:

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     (i) One member from each of the six (6) compacting states with the largest premium

volume for individual and group annuities, life, disability income and long-term care insurance

products, determined from the records of the NAIC for the prior year;

     (ii) Four (4) members from those compacting states with at least two percent (2%) of the

market based on the premium volume described above, other than the six (6) compacting states

with the largest premium volume, selected on a rotating basis as provided in the bylaws, and;

     (iii) Four (4) members from those compacting states with less than two percent (2%) of the

market, based on the premium volume described above, with one selected form [from] from each

of the four (4) zone regions of the NAIC as provided in the bylaws.

     (b) The management committee shall have such authority and duties as may be set forth in

the bylaws, including, but not limited to:

     (i) Managing the affairs of the commission in a manner consistent with the bylaws and

purposes of the commission;

     (ii) Establishing and overseeing an organizational structure within, and appropriate

procedures for, the commission to provide for the creation of uniform standards and other rules,

receipt and review of product filings, administrative and technical support functions, review of

decisions regarding the disapproval of a product filing, and the review of elections made by a

compacting state to opt out of a uniform standard; provided, that a uniform standard shall not be

submitted to the compacting states for adoption unless approved by two-thirds (⅔) of the members

of the management committee;

     (iii) Overseeing the offices of the commission; and

     (iv) planning, implementing, and coordinating communications and activities with other

state, federal and local government organizations in order to advance the goals of the commission.

     (c) The commission shall elect annually officers from the management committee, with

each having such authority and duties, as may be specified in the bylaws.

     (d) The management committee may, subject to the approval of the commission, appoint

or retain an executive director for such period, upon such terms and conditions and for such

compensation as the commission may deem appropriate. The executive director shall serve as

secretary to the commission, 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.

     (3) Legislative and advisory committees.

     (a) A legislative committee comprising state legislators or their designees shall be

established to monitor the operations of, and make recommendations to, the commission, including

the management committee; provided, that the manner of selection and term of any legislative

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committee member shall be as set forth in the bylaws. Prior to the adoption by the commission of

any uniform standard, revision to the bylaws, annual budget or other significant matter as may be

provided in the bylaws, the management committee shall consult with and report to the legislative

committee.

     (b) The commission shall establish two (2) advisory committees, one of which shall

comprise consume [consumer] consumer representatives independent of the insurance industry,

and the other comprising insurance industry representatives.

     (c) The commission may establish additional advisory committees as its bylaws may

provide for the carrying out of its functions.

     (4) Corporate records of the commission.

     The commission shall maintain its corporate books and records in accordance with the

bylaws.

     (5) Qualified immunity, defense and indemnification.

     (a) The members, officers, executive director, employees and representatives 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 by

or arising out of any actual or alleged act, error or omission that occurred, or that the person against

whom the claim is made had a reasonable basis for believing occurred within the scope of

commission employment, duties or responsibilities; provided, that nothing in this paragraph shall

be construed to protect any such person from suit and/or liability for any damage, loss, injury or

liability caused by the intentional or willful and wanton misconduct of that person.

     (b) The commission shall defend any member, officer, executive director, employee or

representative of the commission in any civil action seeking to impose liability arising out of any

actual or alleged act, error or omission that occurred within the scope of commission employment,

duties or responsibilities, or that the person against whom the claim is made had a reasonable basis

for believing occurred within the scope of commission employment, duties or responsibilities;

provided, that nothing herein shall be construed to prohibit that person from retaining his or her

own counsel; and provided, further, that the actual or alleged act, error or omission did not result

form [from] from that person’s intentional or willful and wanton misconduct.

     (c) The commission shall indemnify and hold harmless any member, officer, executive

director, employee or representative of the commission for the amount of any settlement or

judgment obtained against that person arising out of 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,

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duties or responsibilities, provided, that the actual or alleged act, error or omission did not result

from the intentional or willful and wanton misconduct of that person.

     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 and the bylaws.

     (2) Each member of the commission shall have the right and power to cast a vote to which

that compacting state is entitle [entitled] entitled and to participate in the business and affairs of

the commission. A member shall vote in person or by such other means as provided in the bylaws.

The bylaws may provide for members’ participation in meetings by telephone or other means of

communication.

     (3) The commission shall meet at least once during each calendar year. Additional meetings

shall be held as set forth in the bylaws.

     ARTICLED VII.

     RULES AND OPERATING PROCEDURES: RULEMAKING FUNCTIONS OF THE

COMMISSION AND OPTING OUT OF UNIFORM STANDARDS

     (1) Rulemaking authority. The commission shall promulgate reasonable rules, including

uniform standards, and operating procedures in order to effectively and efficiently achieve the

purposes of this compact. Notwithstanding the foregoing, in the event the commission exercises its

rulemaking authority in a manner that is beyond the scope of the purposes of this act, or the powers

granted hereunder, then such an action by the commission shall be invalid and have no force and

effect.

     (2) Rulemaking procedure. Rules and operating procedures shall be made pursuant to a

rulemaking process that conforms to the Model State Administrative Procedure Act of 1981 as

amended, as may be appropriate to the operations of the commission. Before the commission adopts

a uniform standard, the commission shall give written notice to the relevant state legislative

committee(s) in each compacting state responsible for insurance issues of its intention to adopt the

uniform standard. The commission in adopting a uniform standard shall consider fully all submitted

materials and issue a concise explanation of its decision.

     (3) Effective date and opt out of a uniform standard. A uniform standard shall become

effective ninety (90) days after its promulgation by the commission or such later date as the

commission may determine; provided, however, that a compacting state may opt out of a uniform

standard as provided in this Article. “Opt out” shall be defined as any action by a compacting state

to decline to adopt or participate in a promulgated uniform standard. All other rules and operating

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procedures, and amendments thereto, shall become effective as of the date specified in each rule,

operating procedure or amendment.

     (4) Opt out procedure. A compacting state may opt out of a uniform standard, either by

legislation or regulation duly promulgated by the insurance department under the Compacting

State’s Administrative Procedure Act. If a compacting state elects to opt out of a uniform standard

by regulation, it must: (a) give written notice to the commission no later than ten (10) business days

after the uniform standard is promulgated, or at the time the state becomes a compacting state; and

(b) find that the uniform standard does not provide reasonable protections to the citizens of the

state, given the conditions in the state. The commissioner shall make specific findings of fact and

conclusions of law, based on a preponderance of the evidence, detailing the conditions in the state

which warrant a departure from the uniform standard and determining that the uniform standard

would not reasonably protect the citizens of the state. The commissioner must consider and balance

the following factors and find that the conditions in the state and needs of the citizens of the state

outweigh: (i) the intent of the legislature to participate in, and the benefits of, an interstate

agreement to establish national uniform consumer protections for the products subject to this act;

and (ii) the presumption that a uniform standard adopted by the commission provides reasonable

protections to consumers of the relevant product.

     Notwithstanding the foregoing, a compacting state, may, at the time of its enactment of this

compact, prospectively opt out of all uniform standards involving long-term care insurance

products by expressly providing for such opt out in the enacted compact, and such an opt out shall

not be treated as a material variance in the offer or acceptance of any state to participate in this

compact. Such an opt out shall be effective at the time of enactment of this compact by the

compacting state and shall apply to all existing uniform standards involving long-term care

insurance products and those subsequently promulgated.

     (5) Effect of opt out. If a compacting state elects to opt out of a uniform standard, the

uniform standard shall remain applicable in the compacting state electing to opt out until such time

the opt out legislation is enacted into law or the regulation opting out becomes effective.

     Once the opt out of a uniform standard by a compacting state becomes effective as provided

under the laws of that state, the uniform standard shall have no further force and effect in that state

unless and until the legislation or regulation implementing the opt out is repealed or otherwise

becomes ineffective under the laws of the state. If a compacting state opts out of a uniform standard

after the uniform standard has been made effective in that state, the opt out shall have the same

prospective effect as provided under Article XIV for withdrawals.

     (6) Stay of uniform standard. If a compacting state has formally initiated the process of

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opting out of a uniform standard by regulation, and while the regulatory opt out is pending, the

compacting state may petition the commission, at least fifteen (15) days before the effective date

of the uniform standard, to stay the effectiveness of the uniform standard in that state. The

commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable

manner and there is a likelihood of success. If a stay is granted or extended by the commission, the

stay or extension thereof may postpone the effective date by up to ninety (90) days, unless

affirmatively extended by the commission; provided, a stay may not be permitted to remain in

effect for more than one (1) year unless the compacting state can show extraordinary circumstances

which warrant a continuance of the stay, including, but not limited to, the existence of a legal

challenge which prevents the compacting state from opting out. A stay may be terminated by the

commission upon notice that the rulemaking process has been terminated.

     (7) Not later than thirty (30) days after a rule or operating procedure is promulgated any

person may file a petition for judicial review of the rule or operating procedure; provided, that the

filing of such a petition shall not stay or otherwise prevent the rule or operating procedure from

becoming effective unless the court finds that the petitioner has a substantial likelihood of success.

The court shall give deference to the actions of the commission consistent with applicable law and

shall not find the rule or operating procedure to be unlawful if the rule or operating procedure

represents a reasonable exercise of the commission’s authority.

     ARTICLE VIII.

     COMMISSION RECORDS AND ENFORCEMENT

     (1) The commission shall promulgate rules establishing conditions and procedures for

public inspection and copying of its information and official records, except such information and

records involving the privacy of individuals and insurers’ trade secrets. The commission may

promulgate additional rules under which it may make available to federal and state agencies

including law enforcement agencies, records and information otherwise exempt from disclosure

and may enter into agreements with such agencies to receive or exchange information or records

subject to nondisclosure and confidentiality provisions.

     (2) Except as to privileged records, data and information, the laws of any compacting state

pertaining to confidentiality or nondisclosure shall not relieve any compacting state commissioner

of the duty to disclose 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 confidentiality

requirement; and further provided, that, except as otherwise expressly provided in this act, the

commission shall not be subject to the compacting state’s laws pertaining to confidentiality and

nondisclosure with respect to records, data and information in its possession. Confidential

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information of the commission shall remain confidential after such information is provided to any

commissioner.

     (3) The commission shall monitor compacting states for compliance with duly adopted

bylaws, rules, including uniform standards, and operating procedures. The commission shall notify

any noncomplying compacting state in writing of its noncompliance with commission bylaws, rules

or operating procedures. If a noncomplying compacting state fails to remedy its noncompliance

within the time specified in the notice of noncompliance, the compacting state shall be deemed to

be in default as set forth in Article XIV.

     (4) The commissioner of any state in which an insurer is authorized to do business, or is

conducting the business of insurance, shall continue to exercise his or her authority to oversee the

market regulation of the activities of the insurer in accordance with the provisions of the state’s

law. The commissioner’s enforcement of compliance with the compact is governed by the state

following provisions:

     (a) With respect to the commissioner’s market regulation of a product or advertisement

that is approved or certified to the commission, the content of the product or advertisement shall

not constitute a violation of the provisions, standards or requirements of the compact except upon

a final order of the commission, issued at the request of a commissioner after prior notice to the

insurer and an opportunity for hearing before the commission.

     (b) Before a commissioner may bring an action for violation of any provision, standard or

requirement of the compact relating to the content of an advertisement not approved or certified to

the commission, the commission, or an authorized commission officer or employee, must authorize

the section action. However, authorization pursuant to this paragraph does not require notice to the

insurer, opportunity for hearing or disclosure of requests for authorization or records of the

commission’s action on such requests.

     ARTICLE IX.

     DISPUTE RESOLUTION

     The commission shall attempt, upon the request of a member, to resolve any disputes or

other issues that are subject to this compact and which may arise between two (2) or more

compacting states, or between compacting states and noncompacting states, and the commission

shall promulgate an operating procedure providing for resolution of such disputes.

     ARTICLE X.

     PRODUCT FILING AND APPROVAL

     (1) Insurers and third-party filers seeking to have a product approved by the commission

shall file the product with, and pay applicable filing fees to, the commission. Nothing in this act

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shall be construed to restrict or otherwise prevent an insurer from filing its product with the

insurance department in any state wherein the insurer is licensed to conduct the business of

insurance, and such filing shall be subject to the laws of the states where filed.

     (2) The commission shall establish appropriate filing and review processes and procedures

pursuant to commission rules and operating procedures. Notwithstanding any provision herein to

the contrary, the commission shall promulgate rules to establish conditions and procedures under

which the commission will provide public access to product filing information. In establishing such

rules, the commission shall consider the interests of the public in having access to such information,

as well as protection of personal medical and financial information and trade secrets, that may be

contained in a product filing or supporting information.

     (3) Any product approved by the commission may be sold or otherwise issued in those

compacting states for which the insurer is legally authorized to do business.

     ARTICLE XI.

     REVIEW OF COMMISSION DECISIONS REGARDING FILINGS

     (1) Not later than thirty (30) days after the commission has given notice of a disapproved

product or advertisement filed with the commission, the insurer or third party filer whose filing was

disapproved may appeal the determination to a review panel appointed by the commission. The

commission shall promulgate rules to establish procedures for appointing such review panels and

provide for notice and hearing. An allegation that the commission, in disapproving a product or

advertisement filed with the commission, acted arbitrarily, capriciously, or in a manner that is an

abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in

accordance with Article III, Section 5.

     (2) The commission shall have authority to monitor, review and reconsider products and

advertisement subsequent to their filing or approval upon a finding that the product does not meet

the relevant uniform standard. Where appropriate, the commission may withdraw or modify its

approval after proper notice and hearing, subject to the appeal process in section 1 above.

     ARTICLE XII.

     FINANCE

     (1) The commission shall pay or provide for the payment of the reasonable expenses of its

establishment and organization. To fund the cost of its initial operations, the commission may

accept contributions and other forms of funding from the National Association of Insurance

Commissioners, compacting states and other sources. Contributions and other forms of funding

from other sources shall be of such a nature that the independence of the commission concerning

the performance of its duties shall not be compromised.

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     (2) The commission shall collect a filing fee from each insurer and third party filer filing a

product with the commission to cover the cost of the operations and activities of the commission

and its staff in a total amount sufficient to cover the commission’s annual budget.

     (3) The commission’s budget for a fiscal year shall not be approved until it has been subject

to notice and comment as set forth in Article VII of this compact.

     (4) The commission shall be exempt from all taxation in and by the compacting states.

     (5) The commission shall not pledge the credit of any compacting state, except by and with

the appropriate legal authority of that compacting state.

     (6) The commission shall keep complete and accurate accounts of all its internal receipts,

including grants and donations, and disbursements of all funds under its control. The internal

financial accounts of the commission shall be subject to the accounting procedures established

under its bylaws. The financial accounts and reports including the system of internal controls and

procedures of the commission shall be audited annually by an independent certified public

accountant. Upon the determination of the commission, but no less frequently than every three (3)

years, the review of the independent auditor shall include a management and performance audit of

the commission. The commission shall make an annual report to the governor and legislature of the

compacting states, which shall include a report of the independent audit. The commission’s internal

accounts shall not be confidential and such materials may be shared with the commissioner of any

compacting state upon request; provided, however, that any work papers related to any internal or

independent audit and any information regarding the privacy of individuals and insurers’

proprietary information, including trade secrets, shall remain confidential.

     (7) No compacting state shall have any claim to or ownership of any property held by or

vested in the commission or to any commission funds held pursuant to the provisions of this

compact.

     ARTICLE XIII.

     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; provided, the commission shall become effective for

purposes of adopting uniform standards for, reviewing, and giving approval or disapproval of,

products filed with the commission that satisfy applicable uniform standards only after twenty-six

(26) states are compacting states, or, alternatively, by states representing greater than forty percent

(40%) of the premium volume for life insurance, annuity, disability income and long-term care

insurance products, based on records of the NAIC for the prior year. Thereafter, it shall become

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effective and binding as to any other compacting state upon enactment 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 all compacting states enact the amendment into law.

     ARTICLE XIV.

     WITHDRAWAL, DEFAULT AND TERMINATION

     (1) Withdrawal;

     (a) 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.

     (b) The effective date of withdrawal is the effective date of the repealing statute. However,

the withdrawal shall not apply to any product filings approved or self-certified, or any

advertisement of such products, on the date the repealing statute becomes effective, except by

mutual agreement of the commission and the withdrawing state unless the approval is rescinded by

the withdrawing state as provided in subsection (e) of the this section.

     (c) The commissioner of the withdrawing state shall immediately notify the management

committee in writing upon the introduction of legislation repealing this compact in the withdrawing

state.

     (d) The commission shall notify the other compacting states of the introduction of such

legislation within ten (10) days after its receipt of notice thereof.

     (e) The withdrawing state is responsible for all obligations, duties 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.

The commission’s approval of products and advertisement prior to the effect effective date of

withdrawal shall continue to be effective and be given full force and effect in the withdrawing state,

unless formally rescinded by the withdrawing state in the same manner as provided by the laws of

the withdrawing state for the prospective disapproval of products or advertisement previously

approved under state law.

     (f) Reinstatement following withdrawal of any compacting state shall occur upon the

effective date of the withdrawing state reenacting the compact.

     (2) Default. (a) If the commission determines that any compacting state has at any time

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defaulted (“defaulting state”) in the performance of any of its obligations or responsibilities under

this compact, the bylaws or duly promulgated rules or operating procedures, then, after notice and

hearing as set forth in the bylaws, all rights, privileges and benefits conferred by this compact on

the defaulting state 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 compacting state to perform its

obligations or responsibilities, and any other grounds designated in commission rules. The

commission shall immediately notify the defaulting state in writing of the defaulting state’s

suspension 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 defaulting state fails to

cure the default within the time period specified by the commission, the defaulting state shall be

terminated from the compact and all rights, privileges and benefits conferred by this compact shall

be terminated from the effective date of termination.

     (b) Product approvals by the commission or product self-certifications, or any

advertisement in connection with such product, that are in force on the effective date of termination

shall remain in force in the defaulting state in the same manner as if the defaulting state had

withdrawn voluntarily pursuant to paragraph (1) of the this article.

     (c) Reinstatement following termination of any compacting state requires a reenactment of

the compact.

     (3) Dissolution of compact. (a) The compact dissolves effective upon the date of the

withdrawal or default of the compacting state which reduces membership in the compact to one

compacting state.

     (b) Upon the dissolution of this compact, the compact 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 distributed in accordance with the bylaws.

     ARTICLE XV.

     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 it purposes.

     ARTICLE XVI.

     BINDING EFFECT OF COMPACT AND OTHER LAWS

     (1) Other laws. (a) Nothing herein prevents the enforcement of any other law of a

compacting state, except as provided in paragraph (b) of the article.

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     (b) For any product approved or certified to the commission, the rules, uniform standards

and any other requirements of the commission shall constitute the exclusive provisions applicable

to the content, approval and certification of such products. For advertisement that is subject to the

commission’s authority, any rule, uniform standard or other requirement of the commission which

governs the content of the advertisement shall constitute the exclusive provision that a

commissioner may apply to the content of the advertisement. Notwithstanding the foregoing, no

action taken by the commission shall abrogate or restrict: (i) the access of any person to state courts;

(ii) remedies available under state law related to breach of contract, tort, or other laws not

specifically directed to the content of the product; (iii) state law relating to the construction of

insurance contracts; or (iv) the authority of the attorney general of the state, including, but not

limited to, maintaining any actions or proceedings, as authorized by law.

     (c) All insurance products filed with individual states shall be subject to the laws of those

states.

     (2) Binding effect on of this compact. (a) All lawful actions of the commission, including

all rules and operating procedures promulgated by the commission, are binding upon the

compacting states.

     (b) All agreements between the commission and the compacting states are binding in

accordance with their terms.

     (c) Upon the request of a party to a conflict over the meaning or interpretation of

commission actions, and upon a majority vote of the compacting states, the commission may issue

advisory opinions regarding the meaning or interpretation in dispute.

     (d) In the event any provision of this compact exceeds the constitutional limits imposed on

the legislature of any compacting state, the obligations, duties, powers or jurisdiction sought to be

conferred by that provision upon the commission shall be ineffective as to that compacting state,

and those obligations, duties, powers or jurisdiction shall remain in the compacting state and shall

be exercised by the agency thereof to which those obligations, duties, powers or jurisdiction are

delegated by law in effect at the time this compact becomes effective.

     SECTION 5. Section 27-2.6-3 of the General Laws in Chapter 27-2.6 entitled "Rhode

Island Title Insurers Act" is hereby amended to read as follows:

     27-2.6-3. Definitions.

     As used in this chapter:

     (1) “Abstract of title” or “abstract” means a written history, synopsis or summary of the

recorded instruments affecting the title to real property.

     (2) “Affiliate” means a specific person that directly, or indirectly through one or more

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intermediaries, controls, or is controlled by or is under common control with the person specified.

     (3) “Bona fide employee of the title insurer or title insurance agent” means an individual

who devotes substantially all of his or her time to performing services on behalf of a title insurer

or title insurance agent and whose compensation for those services is in the form of salary or its

equivalent paid by the title insurer or title insurance agent.

     (4) “Commissioner” means the director of the department of business regulation, or his or

her designee or the commissioner, director or superintendent of insurance in any other state.

     (5) “Control” (including the terms “controlling,” “controlled by” and “under common

control with”) means the possession, direct or indirect, of the power to direct or cause the direction

of the management and policies of a person, whether through the ownership of voting securities,

by contract other than a commercial contract for goods or nonmanagement services, or otherwise,

unless the power is the result of an official position or corporate office held by the person. Control

shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power

to vote, or holds proxies representing, ten percent (10%) or more of the voting securities of another

person. This presumption may be rebutted by a showing that control does not exist in fact. The

commissioner may determine, after furnishing all persons in interest notice and opportunity to be

heard and making specific findings of fact to support the determination, that control exists in fact,

notwithstanding the absence of a presumption to that effect.

     (6) “Direct operations” means that portion of a title insurer’s operations which are

attributable to business written by a bona fide employee.

     (7) “Escrow” means written instruments, money or other items deposited by one party with

a depository, escrow agent or escrowee for delivery to another party upon the performance, of a

specified condition or the happening of a certain event.

     (8) “Escrow, settlement or closing fee” means the consideration for supervising or handling

the actual execution, delivery or recording of transfer and lien documents and for disbursing funds.

     (9) “Foreign title insurer” means any title insurer incorporated or organized under the laws

of any other state of the United States, the District of Columbia, or any other jurisdiction of the

United States.

     (10) “Net retained liability” means the total liability retained by a title insurer for a single

risk, after taking into account any ceded liability and collateral, acceptable to the commissioner,

maintained by the insurer.

     (11) “Non-U.S. title insurer” means any title insurer incorporated or organized under the

laws of any foreign nation or any province or territory.

     (12) “Person” means any natural person, partnership, association, cooperative, corporation,

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trust or other legal entity.

     (13) “Producer” means any person, including any officer, director or owner of five percent

(5%) or more of the equity or capital of any person, engaged in this state in the trade, business,

occupation or profession of:

     (i) Buying or selling interests in real property;

     (ii) Making loans secured by interests in real property; or

     (iii) Acting as broker, agent, representative or attorney or of a person who buys or sells

any interest in real property or who lends or borrows money with the interest as security.

     (14) “Qualified financial institution” means an institution that is:

     (i) Organized or (in the case of a United States branch or agency office of a foreign banking

organization) licensed under the laws of the United States or any state and has been granted

authority to operate with fiduciary powers;

     (ii) Regulated, supervised and examined by federal or state authorities having regulatory

authority over banks and trust companies;

     (iii) Insured by the appropriate federal entity; and

     (iv) Qualified under any additional rules established by the commissioner.

     (15) “Security” or “security deposit” means funds or other property received by the title

insurer as collateral to secure an indemnitor’s obligation under an indemnity agreement pursuant

to which the insurer is granted a perfected security interest in the collateral in exchange for agreeing

to provide coverage in a title insurance policy for a specific title exception to coverage.

     (16) “Subsidiary” means an affiliate controlled by a person directly or indirectly through

one or more intermediaries.

     (17) “Title insurance agent” or “agent” means an authorized person, other than a bona fide

employee of the title insurer who, on behalf of the title insurer, performs the following acts, in

conjunction with the issuance of a title insurance report or policy:

     (i) Determines insurability and issues title insurance reports or policies, or both, based upon

the performance or review of a search or abstract of title; and

     (ii) Performs one or more of the following functions:

     (A) Collects or disburses premiums, escrow or security deposits or other funds;

     (B) Handles escrows, settlements or closings;

     (C) Solicits or negotiates title insurance business; or

     (D) Records closing documents.

     (18) “Title insurance business” or “business of title insurance” means“:

     (i) Issuing as insurer or offering to issue as insurer, a title insurance policy;

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     (ii) Transacting or proposing to transact by a title insurer any of the following activities

when conducted or performed in contemplation of, or in conjunction with, the issuance of a title

insurance policy:

     (A) Soliciting or negotiating the issuance of a title insurance policy;

     (B) Guaranteeing, warranting or otherwise insuring the correctness of title searches for all

instruments affecting titles to real property, any interest in real property, cooperative units and

proprietary leases and for all liens or charges affecting the same;

     (C) Handling of escrows, settlements or closings;

     (D) Executing title insurance policies;

     (E) Effecting contracts of reinsurance.

     (iii) Guaranteeing, warranting or insuring searches or examination of title to real property

or any interest in real property;

     (iv) Guaranteeing or warranting the status of title as to ownership of or liens on real

property and personal property by any person other than the principals to the transaction; or

     (v) Doing or proposing to do any business substantially equivalent to any of the activities

listed in this subsection in a manner designed to evade the provisions of this chapter.

     (19) “Title insurance policy” or “policy” means a contract insuring or indemnifying owners

of, or other persons lawfully interested in, real or personal property or any interest in real property,

against loss or damage arising from any or all of the following conditions existing and not excepted

or excluded:

     (i) Defects in or liens or encumbrances on the insured title;

     (ii) Unmarketability of the insured title;

     (iii) Invalidity, lack of priority or unenforceability of liens or encumbrances on the stated

property;

     (iv) Lack of legal right of access to the land; or

     (v) Unenforceability of rights in title to the land.

     (20) “Title insurer” or “insurer” means a company organized under laws of this state for

the purpose of transacting the business of title insurance and any foreign or non-United States title

insurer licensed in this state to transact the business of title insurance.

     (21) “Title plant” means a set of records consisting of documents, maps, surveys or entries

affecting title to real property or any interest in or encumbrance on the property, which have been

filed or recorded in the jurisdiction for which the title plant is established or maintained.

     SECTION 6. Section 27-2.7-1 and 27-2.7-7 of the General Laws in Chapter 27-2.7 entitled

"Portable Electronics Insurance" are hereby amended to read as follows:

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     27-2.7-1. Definitions.

     For purposes of this section chapter, the following terms shall have the following

meanings:

     (1) “Customer” means a person who purchases portable electronics or services;

     (2) “Department” means the department of business regulation;

     (3) “Enrolled customer” means a customer who elects coverage under a portable

electronics insurance policy issued by a vendor of portable electronics;

     (4) “Insurance commissioner” means the director of the department of business regulation

or his/her designee;

     (5) “Location” means any physical location in the state of Rhode Island or any website,

call center site or similar location directed to residents of the state of Rhode Island;

     (6) “Portable electronics” means electronic devices that are portable in nature, their

accessories and services related to the use of the device;

     (7)(i) “Portable electronics insurance” means insurance providing coverage for the repair

or replacement of portable electronics which may provide coverage for portable electronics against

any one or more of the following causes of loss: loss, theft, inoperability due to mechanical failure,

malfunction, damage or other similar causes of loss.

     (ii) “Portable electronics insurance” does not include:

     (A) A service contract or extended warranty providing coverage limited to the repair,

replacement or maintenance of property for the operational or structural failure of property due to

a defect in materials, workmanship, accidental damage from handling, power surges, or normal

wear and tear;

     (B) A policy of insurance covering a seller’s or a manufacturer’s obligations under a

warranty; or

     (C) A homeowner’s renter’s, private passenger automobile, commercial multi-peril, or

similar policy;

     (8) “Portable electronics transaction” means:

     (i) The sale or lease of portable electronics by a vendor to a customer; or

     (ii) The sale of a service related to the use of portable electronics by a vendor to a customer.

     (9) “Supervising entity” means a business entity that is a licensed insurer or insurance

producer that is authorized by an insurer to supervise the administration of a portable electronics

insurance program.

     (10) “Vendor” means a person in the business of engaging in portable electronics

transactions directly or indirectly.

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     27-2.7-7. Application for license and fees.

     (a) A sworn application for a license under this chapter shall be made to and filed with the

department on forms prescribed and furnished by the department in accordance with the provisions

of § 27-2.4-9(a)(8).

     (b) The application shall:

     (1) Provide the name, residence address, and other information required by the department

for an employee or officer of the vendor that is designated by the applicant as the person responsible

for the vendor’s compliance with the requirements of this chapter. However, if the vendor derives

more than fifty percent (50%) of its revenue from the sale of portable electronics insurance the

information noted above shall be provided for all officers, directors, and shareholder shareholders

of record having beneficial ownership of ten percent (l0%) or more of any class of securities

registered under the federal securities law; and

     (2) The location of the applicant’s home office.

     (c) Any license under this chapter is subject to all applicable provisions of chapter 2.4 of

this title, including, but not limited to, notification of change of address, lapse of license,

notification of administrative actions, assumed names and basis for suspension or revocation of

license; provided however, in the event there is a conflict between the provisions of this chapter

and chapter 2.4 of this title, this chapter shall prevail.

     (d) Any vendor engaging in portable electronics insurance transactions on or before the

effective date of this chapter must apply for licensure within ninety (90) days of the application

being made available by the department. Any applicant commencing operations after the effective

date of this chapter must obtain a license prior to offering portable electronics insurance.

     (e) Initial licenses issued pursuant to this chapter shall be valid for a period of two (2)

calendar years expiring on May 31 of the second (2nd) renewal year. Applicants for an initial

license shall pay the full two (2) year fee regardless of the number of months of the initial licensure.

Renewal licenses shall be effective for twenty-four (24) months effective and expiring on May 31.

     (f) Each vendor of portable electronics licensed under this chapter shall pay to the

department a fee of two hundred dollars ($200) for an initial license and for each renewal thereof.

The department is authorized to institute miscellaneous fees for this license type in accordance with

§ 27-2.4-4.

     SECTION 7. Section 27-4-27 of the General Laws in Chapter 27-4 entitled "Life Insurance

Policies and Reserves" is hereby amended to read as follows:

     27-4-27. Insurable interest.

     (a) Any individual of competent legal capacity may procure or effect an insurance contract

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upon his or her life or body for the benefit of any person. Any life insurance company doing

business within the state may issue policies of insurance predicated upon the life or lives of any

person or persons with the consent of the insured, payable at maturity to any educational, religious,

benevolent, or charitable corporation or association which can legally take and receive testamentary

legacies and which are exempt from taxation under 26 U.S.C. § 501(c), irrespective of a financial

interest on the part of the corporation in the life of the person or persons insured. No person shall

procure or cause to be procured any insurance contract upon the life or body of another individual

unless the benefits under the contract are payable to the individual insured or his or her personal

representatives, or to a person having, at the time when the contract was made, an insurable interest

in the individual insured.

     (b) If the beneficiary, assignee, or other payee under any contract made in violation of this

section receives from the insurer any benefits under that contract accruing upon the death,

disablement, or injury of the individual insured, the individual insured or his or her executor or

administrator may maintain an action to recover the benefits from the person so receiving them.

     (c) “Insurable interest” as to personal insurance means that every individual has an

insurable interest in the life, body, and health of himself or herself and of other persons as follows:

     (1) In the case of individuals related closely by blood or by law, a substantial interest

engendered by love and affection;

     (2) In the case of other persons, a lawful and substantial economic interest in having the

life, health, or bodily safety of the individual insured continue, as distinguished from an interest

which would arise only by, or would be enhanced in value by the death, disablement, or injury of

the individual insured;

     (3) In the case of employees of public and private corporations, with respect to whom the

corporate employer or an employer-sponsored trust is the beneficiary under the insurance contract,

a lawful and substantial economic interest exists in:

     (i) Key employees; and

     (ii) Employees other than those identified in subdivision (c)(3)(i), and former employees

and retirees for the purpose of funding, in the aggregate, all or part of the corporation’s cost for

pre-retirement and post-retirement benefits; provided, (A) that the amount of insurance coverage

on these employees will be limited to an amount commensurate with employer-provided benefits

to those employees, (B) that an insurance program used to finance these employee benefits includes

former employees, retirees, or a broad class of employees selected by objective standards related

to age, service, sex, or category of employment, and (C) that the proceeds created by that insurance

program are used for the sole purpose of funding the corporation’s pre-retirement or post-

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retirement benefit programs; and

     (4) An individual party to a contract or option for the purchase or sale of an interest in a

business, partnership, or firm or of shares of stock of a corporation or of an interest in the shares,

has an insurable interest in the life of each individual party to the contract and for the purposes of

the contract only, in addition to any insurable interest which may exist as to the life of that

individual.

     (d) Insurance effectuated under a group life insurance policy pursuant to the program

described in subdivision (c)(3)(ii) need not comply with the provisions of § 27-4-22 to the extent

the provisions of that section would be inconsistent or would conflict with the purposes expressed

in subdivision (c)(3)(ii).

     (e) An insurer shall be entitled to rely upon all statements, declarations, and representations

made by an applicant for insurance relative to insurable interest of the applicant in the insured, and

no insurer shall incur legal liability except as set forth in the policy by virtue of any untrue

statements, declarations, or representations relied upon in good faith by the insurer.

     SECTION 8. Section 27-4.5-3 and 27-4.5-16 of the General Laws in Chapter 27-4.5

entitled "The Standard Valuation Law" are hereby amended to read as follows:

     27-4.5-3. Actuarial opinion of reserves.

     (a) Actuarial opinion prior to the operative date of the valuation manual:

     (1) General. Every life insurance company doing business in this state shall annually

submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held

in support of the policies and contracts specified by the commissioner of insurance by regulation

are computed appropriately, are based on assumptions which satisfy contractual provisions, are

consistent with prior reported amounts, and comply with applicable laws of this state. The

commissioner of insurance by regulation shall define the specifics of this opinion and add any other

items deemed to be necessary to its scope.

     (2) Actuarial analysis of reserves and assets supporting reserves.

     (i) Every life insurance company, except as exempted by regulation shall also annually

include in the opinion required by subsection (a) above an opinion of the same qualified actuary as

to whether the reserves and related actuarial items held in support of the policies and contracts

specified by the commissioner of insurance by regulation, when considered in light of the assets

held by the company with respect to the reserves and related actuarial items, including, but not

limited to, the investment earnings on the assets and the considerations anticipated to be received

and retained under the policies and contracts, make adequate provision for the company’s

obligations under the policies and contracts, including, but not limited to, the benefits under and

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expenses associated with the policies and contracts.

     (ii) The commissioner of insurance may provide by regulation for a transition period for

establishing any higher reserves that the qualified actuary may deem necessary in order to render

the opinion required by this section.

     (3) Requirement for opinion under subdivision (2) above. Each opinion required by

subdivision (2) shall be governed by the following provisions:

     (i) A memorandum, in form and substance acceptable to the commissioner of insurance as

specified by regulation, shall be prepared to support each actuarial opinion; and

     (ii) If the insurance company fails to provide a supporting memorandum at the request of

the commissioner of insurance within a period specified by regulation or the commissioner of

insurance determines that the supporting memorandum provided by the insurance company fails to

meet the standards prescribed by the regulations or is otherwise unacceptable to the commissioner

of insurance, the commissioner of insurance may engage a qualified actuary at the expense of the

company to review the opinion and the basis for the opinion and prepare the supporting

memorandum required by the commissioner of insurance.

     (4) Requirement for all opinions subject to subsection (a). Every opinion required by

subsection (a) shall be governed by the following provisions:

     (i) The opinion shall be submitted with the annual statement reflecting the valuation of the

reserve liabilities for each year ending on or after December 31, 1994;

     (ii) The opinion shall apply to all business in force including individual and group health

insurance plans, in a form and substance acceptable to the commissioner of insurance as specified

by regulation;

     (iii) The opinion shall be based on standards adopted by the actuarial standards board and

on any additional standards as that the commissioner of insurance may by regulation prescribe;

     (iv) In the case of an opinion required to be submitted by a foreign or alien company, the

commissioner of insurance may accept the opinion filed by that company with the insurance

supervisory official of another state if the commissioner of insurance determines that the opinion

reasonably meets the requirements applicable to a company domiciled in this state;

     (v) For the purposes of this section, “qualified actuary” means a member in good standing

of the American Academy of Actuaries who meets the requirements set forth in the regulations;

     (vi) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable

for damages to any person, other than the insurance company and the commissioner of insurance,

for any act, error, omission, decision, or conduct with respect to the actuary’s opinion;

     (vii) Disciplinary action by the commissioner of insurance against the company or the

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qualified actuary shall be defined in regulations by the commissioner of insurance; and

     (viii) Except as provided in paragraphs (xii), (xiii) and (xiv) below, documents, materials

or other information in the possession or control of the department of insurance that are a

memorandum in support of the opinion, and any other material provided by the company to the

commissioner in connection with the memorandum, shall be confidential and privileged, shall not

be subject to chapter 35 of title 42, shall not be subject to subpoena, and shall not be subject to

discovery or admissible in evidence as in any private/civil private civil action. However, the

commissioner is authorized to use the documents, materials or other information in the furtherance

of any regulatory or legal action brought as a part of the commissioner’s official duties.

     (ix) Neither the commissioner nor any person who received documents, materials or other

information while acting under the authority of the commissioner shall be permitted or required to

testify in any private civil action concerning any confidential documents, materials or information

subject to paragraph (viii).

     (x) In order to assist in the performance of the commissioner’s duties, the commissioner:

     (A) May share documents, materials or other information, including the confidential and

privileged documents, materials or information subject to paragraph (viii) with other state, federal

and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with

state, federal and international law enforcement authorities, provided that the recipient agrees to

maintain the confidentiality and privileged status of the document, material or other information;

     (B) May receive documents, materials or information, including otherwise confidential and

privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries,

and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and

shall maintain as confidential or privileged any document, material or information received with

notice or the understanding that it is confidential or privileged under the laws of the jurisdiction

that is the source of the document, material or information; and

     (C) May enter into agreements governing sharing and use of information consistent with

paragraphs (viii) through (x).

     (xi) No waiver of any applicable privilege or claim of confidentiality in the documents,

materials or information shall occur as a result of disclosure to the commissioner under this section

or as a result of sharing as authorized in paragraph (x).

     (xii) A memorandum in support of the opinion, and any other material provided by the

company to the commissioner in connection with the memorandum, may be subject to subpoena

for the purpose of defending an action seeking damages from the actuary submitting the

memorandum by reason of an action required by this section or by regulations promulgated

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hereunder.

     (xiii) The memorandum or other material may otherwise be released by the commissioner

with the written consent of the company or to the American Academy of Actuaries upon request

stating that the memorandum or other material is required for the purpose of professional

disciplinary proceedings and setting forth procedures satisfactory to the commissioner for

preserving the confidentiality of the memorandum or other material.

     (xiv) Once any portion of the confidential memorandum is cited by the company in its

marketing or is cited before a governmental agency other than a state insurance department or is

released by the company to the news media, all portions of the confidential memorandum shall be

no longer confidential.

     (b) Actuarial opinion of reserves after the operative date of the valuation manual.

     (1) General. Every company with outstanding life insurance contracts, accident and health

insurance contracts or deposit-type contracts in this state and subject to regulation by the

commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves

and related actuarial items held in support of the policies and contracts are computed appropriately,

are based on assumptions that satisfy contractual provisions, are consistent with prior reported

amounts and comply with applicable laws of this state. The valuation manual will prescribe the

specifics of this opinion including any items deemed to be necessary to its scope.

     (2) Actuarial analysis of reserves and assets supporting reserves. Every company with

outstanding life insurance contracts, accident and health insurance contracts or deposit-type

contracts in this state and subject to regulation by the commissioner, except as exempted in the

valuation manual, shall also annually include in the opinion required by subdivision (1) of this

section, an opinion of the same appointed actuary as to whether the reserves and related actuarial

items held in support of the policies and contracts specified in the valuation manual, when

considered in light of the assets held by the company with respect to the reserves and related

actuarial items, including, but not limited to, the investment earnings on the assets and the

considerations anticipated to be received and retained under the policies and contracts, make

adequate provision for the company’s obligations under the policies and contracts, including but

not limited to the benefits under and expenses associated with the policies and contracts.

     (3) Requirements for opinions subject to subdivision 27-4.5-3(b)(2). Each opinion required

by subdivision 27-4.5-3(b)(2) shall be governed by the following provisions:

     (i) A memorandum, in form and substance as specified in the valuation manual, and

acceptable to the commissioner, shall be prepared to support each actuarial opinion.

     (ii) If the insurance company fails to provide a supporting memorandum at the request of

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the commissioner within a period specified in the valuation manual or the commissioner determines

that the supporting memorandum provided by the insurance company fails to meet the standards

prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the

commissioner may engage a qualified actuary at the expense of the company to review the opinion

and the basis for the opinion and prepare the supporting memorandum required by the

commissioner.

     (4) Requirement for all opinions subject to subsection 27-4.5-3(b). Every opinion shall be

governed by the following provisions:

     (i) The opinion shall be in form and substance as specified in the valuation manual and

acceptable to the commissioner.

     (ii) The opinion shall be submitted with the annual statement reflecting the valuation of

such reserve liabilities for each year ending on or after the operative date of the valuation manual.

     (iii) The opinion shall apply to all policies and contracts subject to subdivision 27-4.5-

3(b)(2), plus other actuarial liabilities as may be specified in the valuation manual.

     (iv) The opinion shall be based on standards adopted from time to time by the actuarial

standards board or its successor, and on such additional standards as may be prescribed in the

valuation manual.

     (v) In the case of an opinion required to be submitted by a foreign or alien company, the

commissioner may accept the opinion filed by that company with the insurance supervisory official

of another state if the commissioner determines that the opinion reasonably meets the requirements

applicable to a company domiciled in this state.

     (vi) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable

for damages to any person (other than the insurance company and the commissioner) for any act,

error, omission, decision or conduct with respect to the appointed actuary’s opinion.

     (vii) Disciplinary action by the commissioner against the company or the appointed actuary

shall be defined in regulations by the commissioner.

     27-4.5-16. Confidentiality.

     (a) For purposes of this section, “confidential information” shall mean:

     (1) A memorandum in support of an opinion submitted under § 27-4-3 27-4.5-3 and any

other documents, materials, and other information, including, but not limited to, all working papers,

and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any

other person in connection with such memorandum;

     (2) All documents, materials, and other information, including, but not limited to, all

working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the

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commissioner or any other person in the course of an examination made under § 27-4.5-13(f);

provided, however, that if an examination report or other material prepared in connection with an

examination made under chapter 13.1 of title 27 is not held as private and confidential information

under chapter 13.1 of this title, an examination report or other material prepared in connection with

an examination made under § 27-4.5-13(f) of this chapter shall not be “confidential information”

to the same extent as if such examination report or other material had been prepared in accordance

with chapter 13.1 of title 27;

     (3) Any reports, documents, materials, and other information developed by a company in

support of, or in connection with, an annual certification by the company under § 27-4.5-14(b)(2)

evaluating the effectiveness of the company’s internal controls with respect to a principle-based

valuation and any other documents, materials and other information, including, but not limited to,

all working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the

commissioner or any other person in connection with such reports, documents, materials and other

information;

     (4) Any principle-based valuation report developed under § 27-4.5-14(b)(3) and any other

documents, materials, and other information, including, but not limited to, all working papers, and

copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any other

person in connection with such report; and

     (5) Any documents, materials, data, and other information submitted by a company under

§ 27-4.5-15 (collectively, “experience data”) and any other documents, materials, data, and other

information, including, but not limited to, all working papers, and copies thereof, created or

produced in connection with such experience data, in each case that include any potentially

company-identifying or personally identifiable information, that is provided to, or obtained by, the

commissioner (together with any “experience data,” the “experience materials”) and any other

documents, materials, data, and other information, including, but not limited to, all working papers,

and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any

other person in connection with such experience materials.

     (b) Privilege for, and confidentiality of, confidential information.

     (1) Except as provided in this § 27-4.5-16, a company’s confidential information is

confidential by law and privileged and shall not be subject to chapter 2 of title 38, shall not be

subject to subpoena and shall not be subject to discovery or admissible in evidence in any private

civil action; provided, however, that the commissioner is authorized to use the confidential

information in the furtherance of any regulatory or legal action brought against the company as a

part of the commissioner’s official duties.

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     (2) Neither the commissioner, nor any person who received confidential information while

acting under the authority of the commissioner, shall be permitted or required to testify in any

private civil action concerning any confidential information.

     (3) In order to assist in the performance of the commissioner’s duties, the commissioner

may share confidential information:

     (i) With other state, federal, and international regulatory agencies and with the NAIC and

its affiliates and subsidiaries; and

     (ii) In the case of confidential information specified in §§ 27-4.5-16(a)(1) and 27-4.5-

16(a)(4) only, with the actuarial board for counseling and discipline or its successor upon request

stating that the confidential information is required for the purpose of professional disciplinary

proceedings, and with state, federal, and international law enforcement officials; in the case of

subsections (a) and (b), provided, that, such recipient agrees, and has the legal authority to agree,

to maintain the confidentiality and privileged status of such documents, materials, data, and other

information in the same manner, and to the same extent, as required for the commissioner.

     (4) The commissioner may receive documents, materials, data, and other information,

including otherwise confidential and privileged documents, materials, data, or information, from

the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other

foreign or domestic jurisdictions and from the actuarial board for counseling and discipline or its

successor and shall maintain as confidential or privileged any document, material, data, or other

information received with notice or the understanding that it is confidential or privileged under the

laws of the jurisdiction that is the source of the document, material, or other information.

     (5) The commissioner may enter into agreements governing sharing and use of information

consistent with § 27-4.5-16(b).

     (6) No waiver of any applicable privilege or claim of confidentiality in the confidential

information shall occur as a result of disclosure to the commissioner under this section or as a result

of sharing as authorized in § 27-4.5-16(b)(3).

     (7) A privilege established under the law of any state or jurisdiction that is substantially

similar to the privilege established under § 27-4.5-16(b) shall be available and enforced in any

proceeding in, and in any court of, this state.

     (8) In § 27-4.5-16 “regulatory agency,” “law enforcement agency” and the “NAIC”

include, but are not limited to, their employees, agents, consultants, and contractors.

     (c) Notwithstanding § 27-4.5-16(b), any confidential information specified in §§ 27-4.5-

16(a)(1) and 27-4.5-14(a)(4):

     (1) May be subject to subpoena for the purpose of defending an action seeking damages

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from the appointed actuary submitting the related memorandum in support of an opinion submitted

under § 27-4.5-3 or principle-based valuation report developed under § 27-4.5-14(b)(3) by reason

of an action required by this chapter or by regulations promulgated hereunder;

     (2) May otherwise be released by the commissioner with the written consent of the

company; and

     (3) Once any portion of a memorandum in support of an opinion submitted under § 27-4.5-

3 or a principle-based valuation report developed under § 27-4.5-14(b)(3) is cited by the company

in its marketing, or is publicly volunteered to or before a governmental agency other than a state

insurance department, or is released by the company to the news media, all portions of such

memorandum or report shall no longer be confidential.

     SECTION 9. Sections 27-6-8.1 and 27-6-53 of the General Laws in Chapter 27-6 entitled

"Fire and Marine Insurance Rating" are hereby amended to read as follows:

     27-6-8.1. Rating for nonbusiness policies.

     (a) Notwithstanding the requirements of § 27-6-8, a filing made by an insurer under this

section that provides for an overall statewide rate increase or decrease of no more than five percent

(5%) in the aggregate for all coverages that are subject to the filing may take effect the date it is

filed. The five percent (5%) limitation does not apply on an individual insured basis. No more than

one rate filing may be made by an insurer pursuant to the expedited process provided in this

subsection during any twelve (12) month period, unless a rate filing, when combined with any other

rate filing or filings made by an insurer within the preceding twelve (12) months, does not result in

an overall statewide increase or decrease of more than five percent (5%) in the aggregate for all

coverages that are subject to the filing.

     (b) Rate filings falling outside of the limitation provided for in subsection (a) of this section

shall be subject to § 27-6-11, unless those filings are other otherwise exempt from those provisions

pursuant to another section of the insurance code.

     (c) A filing submitted pursuant to subsection (a) of this section is considered to comply

with state law. However, if the commissioner of insurance determines that the filing is inadequate

or unfairly discriminatory, he/she shall issue a written order specifying in detail the provisions of

the insurance code the insurer has violated and the reasons the filing is inadequate or unfairly

discriminatory and stating a reasonable future date on which the filing is to be considered no longer

effective. An order by the commissioner pursuant to this subsection that is issued more than thirty

(30) days from the date on which the commissioner received the rate filing is prospective only and

does not affect any contract issued or made before the effective date of the order. For purposes of

this act, “unfairly discriminatory” means a rate for a risk that is classified in whole or in part on the

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basis of race, color, creed or national origin.

     (d) No rate increase within the limitation specified in subsection (a) of this section may be

implemented with regard to an individual existing policy, unless the increase is applied at the time

of a renewal or conditional renewal of an existing policy and the insurer, at least thirty (30) days in

advance of the end of the insured’s policy period, mails or delivers to the named insured, at the

address shown in the policy, a written notice that clearly and conspicuously discloses its intention

to change the rate. A notice of renewal or conditional renewal that clearly and conspicuously

discloses the renewal premium applicable to the policy shall be deemed to be in compliance with

this subsection.

     27-6-53. Use of credit rating.

     (a) An insurer may use insurance scoring for rating and underwriting of homeowners’

insurance only under the following conditions:

     (1) The insurer demonstrates the predictive nature of their insurance score to the insurance

division.

     (2) An insurer shall, once every two (2) years if requested by an existing customer, obtain

an updated insurance score for the customer. If, after obtaining the insurance score, the customer

has improved his, her or its credit rating, the user of the information shall afford the customer any

decrease in rates that are available due to the improved rating. The user may not increase the rate

of an existing customer based solely on a worsening in the customer’s insurance score unless: (i)

the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if a

subsequent insurance score no sooner than six (6) months later confirms the worsening in score.

Should an existing customer’s score change as the result of an updated credit report, the decrease

or increase in rates must be done at renewal subject to conditions established herein.

     (3) An insurer shall not decline insurance for a new customer based solely on an insurance

score, or absence of an insurance score; and an insurer shall not cancel, nonrenew or increase the

rate of an existing customer based solely on a worsening in a customer’s insurance score unless: (i)

the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if a

subsequent insurance score no sooner than six (6) months later confirms the worsening in score.

Should an existing customer’s score change as the result of an updated credit report, the decrease

or increase in rates must be done at renewal subject to conditions established herein.

     (4) No insurer is obligated to obtain a current credit report or insurance score for an insured

if: the insured is in the most favorably-priced tier of the insurer, within a group of affiliated insures

insurers; or credit was not used for the insured when the policy was initially written. However, the

insurer shall have the discretion to use credit for the insured upon renewal, if consistent with its

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underwriting guidelines. The user may not increase the rate of an existing customer based solely

on a worsening in the customer’s insurance score unless: (i) the worsening is due to a bankruptcy,

tax lien, garnishment, foreclosure or judgment; or (ii) if a subsequent insurance score no sooner

than six (6) months later confirms the worsening in score. Should an existing customer’s score

change as the result of an updated credit report, the decrease or increase in rates must be done at

renewal subject to conditions established herein.

     (5) If a credit bureau determines that disputed information is inaccurate or incorrect and

that information was used in determining an insurance score which resulted in a denial, cancellation

or nonrenewal of or higher premiums or less favorable policy terms for a consumer, the insurer

shall, within thirty (30) days of receiving notice of correction, reissue or re-rate the policy by

refunding the amount of the overpayment of premium based on the corrected insurance score

retroactive to the shorter of the last twelve (12) months of coverage or the actual period of coverage.

An “insurance score” as used in this section shall be defined as a number or rating that is derived

from an algorithm, computer application, model or other process that is based in whole or in part

on credit history.

     (b) Agents shall be held harmless by insurers for all acts, efforts and disclosures in

obtaining an insurance score on the insurer’s behalf. The commissioner is authorized and

empowered to establish rules and regulations to carry out the provisions of this section and to fulfill

the goals of this section.

     (c) Notwithstanding the above, an insurer authorized to do business in Rhode Island that

uses credit information to underwrite or rate risks, shall not use the following as a negative factor

in any insurance scoring methodology or in reviewing credit information for the purpose of

underwriting or rating a policy of personal insurance:

     (1) Credit inquiries not initiated by the consumer or inquiries requested by the consumer

for his or her own credit information;

     (2) Inquiries relating to insurance coverage, if so identified on a consumer’s credit report;

     (3) Collection accounts with a medical industry code, if so identified on the consumer’s

credit report;

     (4) Multiple lender inquiries, if coded by the consumer reporting agency on the consumer’s

credit report as being from the home mortgage industry and made within thirty (30) days of one

another, unless only one inquiry is considered;

     (5) Multiple lender inquiries, if coded by the consumer reporting agency on the consumer’s

credit report as being from the automobile lending industry and made within thirty (30) days of one

another, unless only one inquiry is considered.

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     (d) No consumer reporting agency shall provide or sell data or lists that include any

information that in whole or in part was submitted in conjunction with an insurance inquiry about

a consumer’s credit information or a request for a credit report or insurance score. Such information

includes, but is not limited to, the expiration dates of an insurance policy or any other information

that may identify time periods during which a consumer’s insurance may expire and the terms and

conditions of the consumer’s insurance coverage.

     (e) The restrictions provided in subsection (d) of this section do not apply to data or lists

the consumer reporting agency supplies to the insurance [agent/producer] from whom information

was received, the insurer on whose behalf such [agent/producer] acted, or such insurer’s affiliates

or holding companies.

     (f) Nothing in this section shall be construed to restrict any insurer from being able to obtain

a claims history report or a motor vehicle report.

     SECTION 10. Section 27-7.1-13.1 of the General Laws in Chapter 27-7.1 entitled

"Workers’ Compensation Insurance" is hereby amended to read as follows:

     27-7.1-13.1. False or misleading information.

     No person, firm, corporation, association, or organization shall willfully withhold

information that will affect the rates or premiums chargeable under this chapter or knowingly give

false or misleading information to the director, any statistical agency or advisory organization

designed designated by the director or any insurer.

     SECTION 11. Section 27-9.3-2 of the General Laws in Chapter 27-9.3 entitled "State

Structured Settlement Protection Act" is hereby amended to read as follows:

     27-9.3-2. Definitions.

     For purposes of this chapter:

     (1) “Annuity issuer” means an insurer that has issued a contract to fund periodic payments

under a structured settlement;

     (2) “Dependents” includes a payee’s spouse and minor children and all other persons for

whom the payee is legally obligated to provide support, including alimony;

     (3) “Discounted present value” means the present value of future payments determined by

discounting the payments to the present using the most recently published applicable federal rate

for determining the present value of an annuity, as issued by the United States Internal Revenue

Service;

     (4) “Gross advance amount” means the sum payable to the payee or for the payee’s account

as consideration for a transfer of structured settlement payment rights before any reductions for

transfer expenses or other deductions to be made from the consideration;

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     (5)(6) “Independent Interested parties” means, with respect to any structured settlement,

the payee, any beneficiary irrevocably designated under the annuity contract to receive payments

following the payee’s death, the annuity issuer, the structured settlement obligor, and any other

party that has continuing rights or obligations under the structured settlement;

     (6)(5) “Independent professional advice” means advice of an attorney, certified public

accountant, actuary or other licensed professional adviser;

     (7) “Net advance amount” means the gross advance amount less the aggregate amount of

the actual and estimated transfer expenses required to be disclosed under § 27-9.3-3(5);

     (8) “Payee” means an individual who is receiving tax-free payments under a structured

settlement and proposes to make a transfer of payment rights under the settlement;

     (9) “Periodic payments” includes both recurring payments and scheduled future lump sum

payments;

     (10) “Qualified assignment agreement” means an agreement providing for a qualified

assignment within the meaning of Section 130 of the United States Internal Revenue Code, 26

U.S.C. § 130;

     (11) “Responsible administrative authority” means, with respect to a structured settlement,

any government authority vested by law with exclusive jurisdiction over the settled claim resolved

by the structured settlement;

     (12) “Settled claim” means the original tort claim or workers’ compensation claim resolved