[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.J. Res. 189 Introduced in House (IH)]







104th CONGRESS
  2d Session
H. J. RES. 189

     Granting the consent of Congress to the Interstate Insurance 
                         Receivership Compact.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 4, 1996

   Mr. Moorhead introduced the following joint resolution; which was 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                            JOINT RESOLUTION


 
     Granting the consent of Congress to the Interstate Insurance 
                         Receivership Compact.

    Resolved by the Senate and House of Representatives of the United 
States of America in Congress assembled,

SECTION 1. CONGRESSIONAL CONSENT.

    The consent of Congress is given to the Interstate Insurance 
Receivership Compact among the States of California, Illinois, 
Michigan, Nebraska, New Hampshire, and Wisconsin. In addition, consent 
is given to any other State to enter into this compact. The compact 
reads substantially as follows:

              ``INTERSTATE INSURANCE RECEIVERSHIP COMPACT

                         ``Article I. Purposes

    ``The purposes of this Compact are, through means of joint and 
cooperative action among the Compacting States:
            ``1. To promote, develop and facilitate orderly, efficient, 
        cost effective and uniform Insurer Receivership laws and 
        operations;
            ``2. To coordinate interaction between Insurer Receivership 
        and Guaranty Association operations;
            ``3. To create the Interstate Insurance Receivership 
        Commission; and
            ``4. To perform these and such other related functions as 
        may be consistent with the State regulation of the business of 
        insurance pursuant to the McCarran-Ferguson Act.

                       ``Article II. Definitions

    ``For the purposes of this Compact:
            ``1. `By-laws' means those by-laws prescribed by the 
        Commission for its governance, or for directing or controlling 
        the Commission's actions or conduct.
            ``2. `Compacting State' means any State which has enacted 
        enabling legislation for this Compact.
            ``3. `Commission' means the `Interstate Insurance 
        Receivership Commission' established by this Compact.
            ``4. `Commissioner' means the chief insurance regulatory 
        official of a State.
            ``5. `Deputy Receiver' means any person appointed or 
        retained by a Receiver and who is the Receiver's duly 
        authorized representative for administering one or more 
        Estates.
            ``6. `Domiciliary State' means the State in which an 
        Insurer is incorporated or organized; or, in the case of an 
        alien Insurer, its State of entry; or in the case of an 
        unauthorized Insurer not incorporated, organized, or entered in 
        any State, a State where the Insurer is engaged in or doing 
        business.
            ``7. `Estate' means the assets and liabilities of any 
        Insurer in Receivership.
            ``8. `Guaranty Association' means an insurance guaranty 
        fund or association or any similar entity now or hereafter 
        created by statute in a Compacting State, other than a 
        Receivership, to pay or assume, in whole or in part, the 
        contractual claim obligations of insolvent Insurers.
            ``9. `Insurer' means any person or entity that has done, 
        purports to do, is doing or is licensed to do any insurance or 
        reinsurance business, or is or has been subject to the 
        authority of, or to liquidation, rehabilitation, supervision, 
        conservation or ancillary receivership by, any Commissioner.
    ``Drafting Note: It is intended that the definition of `Insurer' be 
construed broadly to enable the Commission to place into receivership 
in accordance with applicable State insurance receivership laws any 
person or entity engaged in insurance business without a license, 
certificate of authority or other required authorization to conduct 
such business in a Compacting State.
            ``10. `Member' means the Commissioner of a Compacting State 
        or his or her designee, who shall be a person officially 
        connected with the Commissioner and who is wholly or 
        principally employed by said Commissioner.
            ``11. `Non-compacting State' means any State which has not 
        enacted enabling legislation for this Compact.
            ``12. `Operating Procedures' means those procedures 
        promulgated by the Commission implementing a Rule, an existing 
        law in a Compacting State, or a provision of this Compact.
            ``13. `Publication' means the act of publishing in the 
        official State publication in a Compacting State or in such 
other publication as may be established by the Commission.
            ``14. `Receiver' means receiver, liquidator, rehabilitator, 
        conservator or ancillary receiver as the context requires.
            ``15. `Receivership' means any liquidation, rehabilitation, 
        conservation or ancillary receivership proceeding as the 
        context requires.
            ``16. `Rules' means acts of the Commission, duly 
        promulgated pursuant to Article VII of this Compact, 
        substantially affecting interested parties in addition to the 
        Commission, which shall have the force and effect of law in the 
        Compacting States.
            ``17. `State' means any State, district or territory of the 
        United States of America.

        ``Article III. Establishment of the Commission and Venue

    ``1. The Compacting States hereby create and establish an entity 
known as the `Interstate Insurance Receivership Commission.'
    ``2. The Commission is a body corporate of each Compacting State.
    ``3. The Commission is a not-for-profit entity, separate and 
distinct from the Compacting States.
    ``4. The Commission is solely responsible for its liabilities 
except as otherwise provided in this Compact.
    ``5. Except as otherwise specifically provided in State or Federal 
law in the jurisdiction where the Commission's principal office is 
located or where the Commission is acting as Receiver, venue is proper, 
and judicial proceedings by or against the Commission shall be brought 
in a court of competent jurisdiction where the Commission's principal 
office is located.

                 ``Article IV. Powers of the Commission

    ``The Commission shall have the following powers:
            ``1. To promulgate Rules which shall have the force and 
        effect of statutory law and shall be binding in the Compacting 
        States to the extent and in the manner provided in this 
        Compact;
            ``2. To promulgate Operating Procedures which shall be 
        binding in the Compacting States to the extent and in the 
        manner provided in this Compact;
            ``3. To oversee, supervise and coordinate the activities of 
        Receivers in Compacting States;
            ``4. To act as Receiver of Insurers organized under the 
        laws of, engaged in or doing the business of insurance in, a 
        Compacting State upon the request of the Commissioner of such 
        State or when grounds for Receivership by the Commission exist 
        under Article IX of this Compact;
            ``5. To act as Deputy Receiver of Insurers organized under 
        the laws of, engaged in or doing the business of insurance in, 
        a Non-compacting State in accordance with Article IX of this 
        Compact;
            ``6. To act as ancillary Receiver in a Compacting State of 
        an Insurer domiciled in a Non-compacting State;
            ``7. To monitor the activities and functions of Guaranty 
        Associations in the Compacting States;
            ``8. To delegate its operating authority or functions; 
        provided, that its rulemaking authority under Article VII of 
        this Compact shall not be delegated;
            ``9. To bring or prosecute legal proceedings or actions in 
        its name as the Commission, or in the name of the Commission 
        acting as Receiver;
            ``10. To bring or prosecute legal proceedings or actions as 
        Receiver on behalf of an Estate or its policyholders and 
        creditors; provided, that any Guaranty Association's standing 
        to sue or be sued under applicable law shall not be affected;
            ``11. To issue subpoenas requiring the attendance and 
        testimony of witnesses and the production of evidence;
            ``12. To establish and maintain offices;
            ``13. To purchase and maintain insurance and bonds;
            ``14. To borrow, accept or contract for services of 
        personnel, including, but not limited to, Members and their 
        staff;
            ``15. To elect or appoint such officers, attorneys, 
        employees or agents, and to fix their compensation, define 
        their duties and determine their qualifications; and to 
        establish the Commission's personnel policies and programs 
        relating to, among other things, conflicts of interest, rates 
        of compensation and qualifications of personnel;
            ``16. To accept any and all donations and grants of money, 
        equipment, supplies, materials and services, and to receive, 
        utilize and dispose of the same;
            ``17. To lease, purchase, accept gifts or donations of, or 
        otherwise to own, hold, improve or use, any property, real, 
        personal or mixed;
            ``18. To sell, convey, mortgage, pledge, lease, exchange, 
        abandon or otherwise dispose of any property, real, personal or 
        mixed;
            ``19. To enforce compliance with Commission Rules, 
        Operating Procedures and By-laws;
            ``20. To provide for dispute resolution among Compacting 
        States and Receivers;
            ``21. To represent and advise Compacting States on issues 
        relating to Insurers domiciled or doing business in Non-
        compacting jurisdictions, consistent with the purposes of this 
        Compact;
            ``22. To provide advice and training to Receivership 
        personnel of Compacting States, and to be a resource for 
        Compacting States by maintaining a reference library of 
        relevant materials;
            ``23. To establish a budget and make expenditures;
            ``24. To borrow money;
            ``25. To appoint committees including, but not limited to, 
        an industry advisory committee and an executive committee of 
        Members;
            ``26. To provide and receive information relating to 
        Receiverships and Guaranty Associations, and to cooperate with 
        law enforcement agencies;
            ``27. To adopt and use a corporate seal; and
            ``28. To perform such other functions as may be necessary 
        or appropriate to achieve the purposes of this Compact as may 
        be consistent with the State regulation of the business of 
        insurance pursuant to the McCarran-Ferguson Act.

              ``Article V. Organization of the Commission

              ``section a. membership, voting and by-laws

    ``1. Each Compacting State shall have and be limited to one Member. 
Each Member shall be qualified to serve in such capacity under or 
pursuant to the applicable law of the Compacting State. Each Compacting 
State retains the discretionary right to determine the due election or 
appointment and qualification of its own Commissioner, and to fill all 
vacancies of its Member.
    ``2. Each Member shall be entitled to one vote.
    ``3. The Commission shall, by a majority of the Members, prescribe 
By-laws to govern its conduct as may be necessary or appropriate to 
carry out the purposes of the Compact, including, but not limited to:
            ``a. establishing the fiscal year of the Commission;
            ``b. providing reasonable standards and procedures: (i) for 
        the establishment of committees, and (ii) governing any general 
        or specific delegation of any authority or function of the 
        Commission;
            ``c. providing reasonable procedures for calling and 
        conducting meetings of the Commission, and ensuring reasonable 
        notice of each such meeting;
            ``d. establishing the titles and responsibilities of the 
        officers of the Commission;
            ``e. 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 By-laws shall exclusively 
        govern the personnel policies and programs of the Commission; 
        and
            ``f. providing a mechanism for winding up the operations of 
        the Commission and the equitable return of any surplus funds 
        that may exist after the dissolution of the Compact after the 
        payment and/or reserving of all of its debts and obligations.

                  ``section b. officers and personnel

    ``1. The Commission shall, by a majority of the Members, elect 
annually from among its members a chairperson and a vice chairperson, 
each of whom shall have such authorities and duties as may be specified 
in the By-laws. The chairperson or, in his or her absence or 
disability, a Member designated in accordance with the By-laws, shall 
preside at all meetings of the Commission. The officers so elected 
shall serve without compensation or remuneration from the Commission; 
provided that, subject to the availability of budgeted funds, the 
officers shall be reimbursed for any actual and necessary costs and 
expenses incurred by them in the performance of their duties and 
responsibilities as officers of the Commission.
    ``2. The Commission may, by a majority of the Members, 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.

            ``section c. corporate records of the commission

    ``The Commission shall maintain its corporate books and records in 
accordance with the By-laws.

      ``section d. qualified immunity, defense and indemnification

    ``1. The Members, officers, executive director and employees of the 
Commission shall be immune from suit and liability, either personally 
or in their official capacity, for any claim for damage to or loss of 
property or personal injury or other civil liability caused or arising 
out of or relating to any actual or alleged act, error or omission that 
occurred, or that such person had a reasonable basis for believing 
occurred within the scope of Commission 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 any such person, or to protect the Commission 
acting as Receiver under Article IX of this Compact.
    ``2. The Commission shall defend any Commissioner of a Compacting 
State, or his or her representatives or employees, or the Commission's 
representatives or employees, in any civil action seeking to impose 
liability, arising out of or relating to any actual or alleged act, 
error or omission that occurred within the scope of Commission 
employment, duties or responsibilities, or that such person had a 
reasonable basis for believing occurred within the scope of Commission 
employment, duties or responsibilities; provided, that the actual or 
alleged act, error or omission did not result from gross negligence or 
intentional wrongdoing on the part of such person.
    ``3. The Commission shall indemnify and hold the Commissioner of a 
Compacting State, or his or her representatives or employees, or the 
Commission's representatives or employees, harmless in the amount of 
any settlement or judgment obtained against such person arising out of 
or relating to any actual or alleged act, error or omission that 
occurred within the scope of Commission employment, duties or 
responsibilities, or that such person had a reasonable basis for 
believing occurred within the scope of Commission employment, duties or 
responsibilities; provided, that the actual or alleged act, error or 
omission did not result from gross negligence or intentional wrongdoing 
on the part of such person.
    ``4. The costs and expenses of defense and indemnification of the 
Commission acting as Receiver of an Estate shall be paid as 
administrative expenses from the assets of that Estate unless such 
costs and expenses are covered by insurance maintained by the 
Commission.

           ``Article VI. Meetings and Acts of the Commission

    ``1. The Commission shall meet and take such actions as are 
consistent with the provisions of this Compact.
    ``2. Except as otherwise provided in this Compact and unless a 
greater percentage is required by the By-laws, in order to constitute 
an act of the Commission, such act shall have been taken at a meeting 
of the Commission and shall have received an affirmative vote of a 
majority of the Members.
    ``3. Each Member of the Commission shall have the right and power 
to cast a vote to which that Compacting State is entitled and to 
participate in the business and affairs of the Commission. A Member 
shall vote in person and shall not delegate his or her vote to another 
Member. The By-laws may provide for Members' participation in meetings 
by telephone or other means of telecommunication.
    ``4. The Commission shall meet at least once during each calendar 
year. The chairperson of the Commission may call additional meetings at 
any time and, upon the request of a majority of the Members, shall call 
additional meetings.
    ``5. The Commission's Rules shall establish conditions and 
procedures under which the Commission shall make its information and 
official records available to the public for inspection or copying. The 
Commission may exempt from disclosure any information or official 
records to the extent disclosure would adversely affect personal 
privacy rights or proprietary interests. In promulgating such Rules, 
the Commission may consider any special circumstances pertaining to 
Insurer insolvencies, but shall be guided by the principles embodied in 
State and Federal freedom of information laws. The Commission may 
promulgate additional Rules under which it may make available to law 
enforcement agencies records and information otherwise exempt from 
disclosure, and may enter into agreements with law enforcement agencies 
to receive or exchange information or records subject to nondisclosure 
and confidentiality provisions.
    ``6. Public notice shall be given of all meetings and all meetings 
shall be open to the public, except as set forth in the Rules or as 
otherwise provided in this Compact. The Commission shall promulgate 
Rules consistent with the principles contained in the `Government in 
Sunshine Act,' 5 U.S.C. Section 552b, as may be amended. The Commission 
and any of its committees may close a meeting to the public where it 
determines by two-thirds vote that an open meeting would be likely to:
            ``a. relate solely to the Commission's internal personnel 
        practices and procedures;
            ``b. disclose matters specifically exempted from disclosure 
        by statute;
            ``c. disclose trade secrets or commercial or financial 
        information which is privileged or confidential;
            ``d. involve accusing any person of a crime, or formally 
        censuring any person;
            ``e. disclose information of a personal nature where 
        disclosure would constitute a clearly unwarranted invasion of 
        personal privacy;
            ``f. disclose investigatory records compiled for law 
        enforcement purposes;
            ``g. disclose information contained in or related to 
        examination, operating or condition reports prepared by, on 
behalf or for the use of, the Commission with respect to a regulated 
entity for the purpose of regulation or supervision of such entity;
            ``h. disclose information, the premature disclosure of 
        which would significantly endanger the stability of a regulated 
        entity;
            ``i. specifically relate to the Commission's issuance of a 
        subpoena, or its participation in a civil action or proceeding.
    ``7. For every meeting closed pursuant to this provision, the 
Commission's chief legal officer shall publicly certify that, in his or 
her opinion, the meeting may be closed to the public, and shall 
reference each relevant exemptive provision. The Commission shall keep 
minutes which shall fully and clearly describe all matters discussed in 
any meeting and shall provide a full and accurate summary of any 
actions taken, and the reasons therefor, including a description of 
each of the views expressed on any item and the record of any rollcall 
vote (reflected in the vote of each Member on the question). All 
documents considered in connection with any action shall be identified 
in such minutes.

         ``Article VII. Rulemaking Functions of the Commission

    ``1. The Commission shall promulgate Rules and Operating Procedures 
in order to effectively and efficiently achieve the purposes of this 
Compact; provided, that the Commission shall not promulgate any Rules: 
(i) directly relating to Guaranty Associations, including, but not 
limited to, Rules governing coverage, funding, or assessment 
mechanisms; or (ii) (except pursuant to Rules promulgated under Article 
VII(3) of this Compact) altering the statutory priorities for 
distributing assets out of an Estate.
    ``Drafting Note: The general intent is not to regulate, restrict, 
or otherwise affect the operations of Guaranty Associations. Any 
Commission Rules that would materially affect Guaranty Associations 
will be promulgated under Article VII(3) of the Compact.
    ``2. Rulemaking shall occur pursuant to the criteria set forth in 
this Article and the Rules and Operating Procedures promulgated 
pursuant thereto. Such rulemaking shall substantially conform to the 
principles of the Federal Administrative Procedure Act, 5 U.S.C.S. 
Section 551 et seq., and the Federal Advisory Committee Act, 5 U.S.C.S. 
app. 2, Section 1 et seq., as may be amended.
    ``3. Other than the promulgation of such Rules as are necessary for 
the orderly operation of the Commission, the first Rule to be 
considered by the Commission shall be uniform provisions governing 
Insurer Receiverships including, but not limited to, provisions 
requiring Compacting States to implement, execute, and administer in a 
fair, just, effective and efficient manner Rules and Operating 
Procedures relating to Receiverships. The Commission shall within three 
years of the adoption of this Compact by two or more States, promulgate 
such uniform provisions through the rulemaking process. Such uniform 
provisions shall become law in all of the Compacting States upon 
legislative enactment in a majority of the Compacting States.
    ``4. All Rules and amendments shall become binding as of the date 
specified in each Rule or amendment; provided, that if a Compacting 
State expressly rejects such Rule or amendment through legislative 
enactment as of the expiration of the second full calendar year after 
such Rule is promulgated, such Rule or amendment shall have no further 
force or effect in the rejecting Compacting State. If a majority of 
Compacting States reject a Rule, then such Rule shall have no further 
force or effect in any Compacting State.
    ``5. When promulgating a Rule or Operating Procedure, the 
Commission shall: (a) effect Publication of the proposed rulemaking, 
stating with particularity the text of the Rule or Operating Procedure 
which is proposed and the reason for the proposed Rule or Operating 
Procedure; (b) allow persons to submit written data, facts, opinions 
and arguments, which information the Commission shall make publicly 
available; (c) provide an opportunity for an informal hearing; and (d) 
promulgate a final Rule or Operating Procedure and its effective date, 
if appropriate, based on the rulemaking record.
    ``6. Not later than sixty days after a Rule or Operating Procedure 
is promulgated, any interested person may file a petition in a court of 
competent jurisdiction where the Commission's principal office is 
located for judicial review of such Rule or Operating Procedure. If the 
court finds that the Commission's action is not supported by 
substantial evidence in the rulemaking record, the court shall hold the 
Rule unlawful and set it aside.

   ``Article VIII. Oversight and Dispute Resolution by the Commission

                         ``section a. oversight

    ``1. The Commission shall oversee the administration and operations 
of Receiverships in Compacting States, and shall monitor Receiverships 
being administered in Non-compacting States which may significantly 
affect Compacting States.
    ``2. To aid its monitoring, oversight and coordination 
responsibilities, the Commission shall establish Operating Procedures 
requiring each Member to submit written reports to the Commission as 
follows:
            ``a. An initial report to the Commission upon a finding or 
        other official action by the Compacting State that grounds 
        exist for Receivership of an Insurer doing business in more 
        than one State. Thereafter, reports shall be submitted 
        periodically and as otherwise required pursuant to the 
        Commission's Operating Procedures. The Commission shall be 
        entitled to receive notice of, and shall have standing to 
        appear in, Compacting States' Receiverships; and
            ``b. An initial report of the status of an Insurer within a 
        reasonable time after the initiation of a Receivership.
    ``3. The Commission shall promulgate Operating Procedures requiring 
Receivers to submit to the Commission periodic written reports and such 
additional information and documentation as the Commission may 
reasonably request. Each Compacting State's Receivers shall establish 
the capability to obtain and provide all records, data and information 
required by the Commission in accordance with the Commission's 
Operating Procedures.
    ``4. 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 responsibility 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 the Commission 
shall be subject to the Compacting State's laws pertaining to 
confidentiality and nondisclosure with respect to all such records, 
data and information in its possession.
    ``5. The courts and executive agencies in each Compacting State 
shall enforce this Compact and shall take all actions necessary and 
appropriate to effectuate the Compact's purposes and intent. In any 
Receivership or other judicial or administrative proceeding in a 
Compacting State pertaining to the subject matter of this Compact which 
may affect the powers, responsibilities or actions of the Commission, 
the Commission shall be entitled to receive all service of process in 
any such proceeding, and shall have standing to intervene in the 
Receivership or proceeding for all purposes.
    ``6. The Commission shall analyze and correlate records, data, 
information and reports received from Receivers and Guaranty 
Associations, and shall make recommendations for improving their 
performance to the Compacting States. The Commission shall include 
summary information and data regarding its oversight functions in its 
annual report.

                    ``section b. dispute resolution

    ``1. The Commission shall attempt, upon the request of a Member, to 
resolve any disputes or other issues which are subject to this Compact 
and which may arise among Compacting States and Non-compacting States.
    ``2. The Compacting States shall report to the Commission on issues 
or activities of concern to them, and cooperate with and support the 
Commission in the discharge of its duties and responsibilities.
    ``3. The Commission shall promulgate an Operating Procedure 
providing for binding dispute resolution for disputes among Receivers.
    ``4. The Commission shall facilitate voluntary dispute resolution 
for disputes among Guaranty Associations and Receivers.

         ``Article IX. Receivership Functions of the Commission

    ``1. The Commission has authority to act as Receiver of any Insurer 
domiciled, engaged in or doing business in a Compacting State upon the 
request of the Commissioner of such Compacting State, or as otherwise 
provided in this Compact.
            ``a. The Commission as Receiver shall have all powers and 
        duties pursuant to the Receivership laws of the Domiciliary 
        State.
            ``b. The Commission shall maintain accounts of receipts and 
        disbursements of the Estates for which it is acting as 
        Receiver, consistent with the accounting practices and 
        procedures set forth in the By-laws.
            ``c. The Commission shall cause an annual audit of each 
        Estate for which it is acting as Receiver to be conducted by an 
        independent certified public accountant. The costs and expenses 
        of such audit shall be paid as administrative expenses from the 
        assets of the Estate. The Commission shall not cause an annual 
        audit to be conducted of any Estate which lacks sufficient 
        assets to conduct such audit.
            ``d. The Commission as Receiver is authorized to delegate 
        its Receivership duties and functions, and to effectuate such 
        delegation through contracts with others.
    ``2. The Commission shall act as Receiver of any Insurer domiciled 
or doing business in a Compacting State in the event that the Member 
acting as Receiver in that Compacting State fails to comply with duly 
promulgated Commission Rules or Operating Procedures. The Commission 
shall notify such Member in writing of his or her noncompliance with 
Commission Rules or Operating Procedures. If the Member acting as 
Receiver fails to remedy such noncompliance within ten days after 
receipt of such notification, the Commission may petition the 
supervising court before which such Receivership is pending for an 
order substituting and appointing the Commission as Receiver of the 
Estate.
    ``3. The Commission shall not act as Receiver of an Estate which 
appears to lack sufficient assets to fund such Receivership unless the 
Compacting State makes provisions for the payment of the Estate's 
administrative expenses satisfactory to the Commission.
    ``4. The Commission may act as Deputy Receiver for any Insurer 
domiciled or doing business in a Non-compacting State in accordance 
with such State's laws, upon request of that Non-compacting State's 
Commissioner and approval of the Commission.
    ``5. With respect to Receiverships pending in a Compacting State on 
the effective date of the enactment of this Compact by the Compacting 
State:
            ``a. the Commission may act as Receiver of an Insurer upon 
        the request of that Compacting State's Member and approval of 
        the Commission; and
            ``b. the Commission shall oversee, monitor and coordinate 
        the activities of all Receiverships pending in that Compacting 
        State regardless whether the Commission is acting as Receiver 
        of Estates in such State.

                          ``Article X. Finance

    ``1. The Commission shall pay or provide for the payment of the 
reasonable expenses of its establishment and organization.
    ``2. Except as otherwise provided in this Compact or by act of the 
Commission, the costs and expenses of each Compacting State shall be 
the sole and exclusive responsibility of the respective Compacting 
State. The Commission may pay or provide for actual and necessary costs 
and expenses for attendance of its Members at official meetings of the 
Commission or its designated committees.
    ``3. The Commission shall levy on and collect an annual assessment 
from each Compacting State and each Insurer authorized to do business 
in a Compacting State, and writing direct insurance, to cover the cost 
of the internal operations and activities of the Commission and its 
staff in a total amount sufficient to cover the Commission's annual 
budget.
            ``a. The aggregate annual assessment amount shall be 
        allocated seventy-five percent to Insurers, hereinafter 
        referred to as the `Insurers' Portion,' and twenty-five percent 
        to Compacting States, hereinafter referred to as the 
        `Compacting States' Portion.' The Insurers' Portion shall be 
        allocated to each Insurer by the percentage derived from a 
        fraction, the numerator of which shall be the gross direct 
        written premium received on that Insurer's business in all 
        Compacting States and the denominator of which shall be the 
        gross direct written premium received by all Insurers on 
        business in all Compacting States. The Compacting States' 
        Portion shall be allocated to each Compacting State by the 
        percentage derived from a fraction, the numerator of which 
        shall be the gross direct written premium received by all 
        Insurers on business in that Compacting State and the 
        denominator shall be the gross direct written premium received 
        on all Insurers on business in all Compacting States. Each 
        Compacting State's Portion shall be funded as designated by 
        that State's legislature. In no event shall an Insurer's 
        assessment be less than $50 or more than $25,000; provided, 
        that affiliated Insurers' combined assessments shall not exceed 
        $50,000. Upon the request of an Insurer, the Commission may 
        exempt or defer the assessment of any Insurer, if such 
        assessment would cause the Insurer's financial impairment.
            ``b. These assessments shall not be used to pay any costs 
        or expenses incurred by the Commission and its staff acting as 
        Receiver of Estates. Such costs and expenses shall be paid as 
        administrative expenses from the assets of the Estates as 
        provided by law, except as otherwise provided in this Compact.
            ``c. Each Insurer authorized to do business in a Compacting 
        State shall timely pay assessments to the Commission. Failure 
        to pay such assessments shall not be grounds for the 
        revocation, suspension or denial of an Insurer's authority to 
        do business, but shall subject the Insurer to suit by the 
        Commission for recovery of any assessment due, attorneys' fees 
        and costs, together with interest from the date the assessment 
        is due at a rate of 10 percent per annum, and to civil 
        forfeiture in an amount to be determined by the Commissioner of 
        that Compacting State in which the Insurer received the 
        greatest premium in the year next preceding the first year for 
        which the Insurer shall be delinquent in payment of 
        assessments.
    ``4. The Commission shall be reimbursed in the following manner for 
the costs and expenses incurred by the Commission and its staff acting 
as Receiver of Estates to the extent that an Insurer's assets may be 
insufficient for the effective administration of its Estate:
            ``a. if the Insurer is domiciled in a Compacting State, the 
        Estate shall be closed unless that Compacting State makes 
        provisions for reimbursing the Commission; and
            ``b. if the Insurer is unauthorized to do business in a 
        Compacting State or if the Insurer is domiciled in a Non-
        compacting State and subject to ancillary receivership, then 
        the Commission and such State shall make provisions for 
        reimbursing the Commission prior to the Commission becoming 
        Receiver of such Insurer.
    ``5. To fund the cost of the initial operations of the Commission 
until its first annual budget is adopted and related assessments have 
been made, contributions from Compacting States and others may be 
accepted and a one time assessment on Insurers doing a direct insurance 
business in the Compacting States may be made not to exceed $450 per 
Insurer.
    ``6. The Commission's adopted budget for a fiscal year shall not be 
approved until it has been subject to notice and comment as set forth 
in Article VII of this Compact. The budget shall determine the amount 
of the annual assessment. The Commission may accumulate a net worth not 
to exceed thirty percent of its then annual cost of operation to 
provide for contingencies and events not contemplated. These 
accumulated funds shall be held separately and shall not be used for 
any other purpose. The Commission's budget may include a provision for 
a contribution to the Commission's net worth.
    ``7. The Commission shall be exempt from all taxation in and by the 
Compacting States.
    ``8. The Commission shall not pledge the credit of any Compacting 
State, except by and with the appropriate legal authority of that 
Compacting State.
    ``9. The Commission shall keep complete and accurate accounts of 
all its internal receipts (including grants and donations) and 
disbursements of all funds, other than Receivership assets, under its 
control. The internal financial accounts of the Commission shall be 
subject to the accounting procedures established under its By-laws. 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 years, the 
review of such independent auditor shall include a management and 
performance audit of the Commission. The report of such independent 
audit shall be made available to the public and shall be included in 
and become part of the annual report of the Commission to the Governors 
and legislatures of the Compacting States. The Commission's internal 
accounts, any workpapers related to any internal audit and any 
workpapers related to the independent audit, shall be confidential; 
provided, that such materials shall be made available: (i) in 
compliance with the order of any court of competent jurisdiction; (ii) 
pursuant to such reasonable Rules as the Commission shall promulgate; 
and (iii) to any Commissioner, Governor of a Compacting State, or their 
duly authorized representatives.
    ``10. No Compacting State shall have any claim to or ownership of 
any property held by or vested in the Commission or the Commission 
acting as Receiver or to any other Commission funds held pursuant to 
the provisions of this Compact.

     ``Article XI. Compacting States, Effective Date and Amendment

    ``1. Any State is eligible to become a Compacting State.
    ``2. The Compact shall become effective and binding upon 
legislative enactment of the Compact into law by two Compacting States. 
Thereafter, it shall become effective and binding as to any other 
Compacting State upon 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 it is enacted into law by unanimous consent of the 
Compacting States.

           ``Article XII. Withdrawal, Default and Termination

                        ``section a. withdrawal

    ``1. Once effective, the Compact shall continue in force and remain 
binding upon each and every Compacting State; provided, that a 
Compacting State may withdraw from the Compact (`Withdrawing State') by 
enacting a statute specifically repealing the statute which enacted the 
Compact into law.
    ``2. The effective date of withdrawal is the effective date of the 
repeal; provided, that the repeal shall not apply to any Receiverships, 
for which the Commission is acting as Receiver, pending on the date of 
the repeal except by mutual agreement of the Commission and the 
Withdrawing State.
    ``3. The Withdrawing State shall immediately notify the Chairperson 
of the Commission in writing upon the introduction of legislation 
repealing this Compact in the Withdrawing State.
    ``4. The Commission shall notify the other Compacting States of the 
Withdrawing State's intent to withdraw within sixty days of its receipt 
thereof.
    ``5. The Withdrawing State is responsible for all assessments, 
obligations and liabilities incurred through the effective date of 
withdrawal, including any obligations, the performance of which extend 
beyond the effective date of withdrawal, except to the extent those 
obligations may have been released or relinquished by mutual agreement 
of the Commission and the Withdrawing State. Notwithstanding the 
foregoing, the Withdrawing State is responsible for the costs and 
expenses of its Estates subject to this Compact pending on the date of 
repeal; the Commission and the other Estates subject to this Compact 
shall not bear any costs and expenses related to the Withdrawing 
State's Estates unless otherwise mutually agreed upon between the 
Commission and the Withdrawing State.
    ``6. Reinstatement following withdrawal of any Compacting State 
shall occur upon the Withdrawing State reenacting the Compact or upon 
such later date as determined by the Commission.

                          ``section b. default

    ``1. If the Commission determines that any Compacting State has at 
any time defaulted (`Defaulting State') in the performance of any of 
its obligations or responsibilities under this Compact, the By-laws or 
duly promulgated Rules, all rights, privileges and benefits conferred 
by this Compact and any agreements entered into pursuant to this 
Compact shall be suspended from the effective date of default as fixed 
by the Commission. The grounds for default include, but are not limited 
to, failure of a Compacting State to perform such 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 
upon an affirmative vote of a majority of the Compacting States and all 
rights, privileges and benefits conferred by this Compact shall be 
terminated from the effective date of termination.
    ``2. Within sixty days of the effective date of termination of a 
Defaulting State, the Commission shall notify the Governor and the 
Majority and Minority Leaders of the Defaulting State's legislature of 
such termination.
    ``3. The termination of a Defaulting State shall apply to all 
Receiverships, for which the Commission is acting as Receiver, pending 
on the effective date of termination except by mutual agreement of the 
Commission and the Defaulting State.
    ``4. The Defaulting State is responsible for all assessments, 
obligations and liabilities incurred through the effective date of 
termination, and is responsible for the costs and expenses relating to 
its Estates subject to this Compact pending on the date of the 
termination. The Commission and the other Estates subject to this 
Compact shall not bear any costs or expenses relating to the Defaulting 
State's Estates unless otherwise mutually agreed upon between the 
Commission and the Defaulting State.
    ``5. Reinstatement following termination of any Compacting State 
requires both a reenactment of the Compact by the Defaulting State and 
the approval of the Commission pursuant to the Rules.

                  ``section c. dissolution of compact

    ``1. The Compact dissolves effective upon the date of the 
withdrawal or the termination by default of the Compacting State which 
reduces membership in the Compact to one Compacting State.
    ``2. 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 By-laws.

             ``Article XIII. Severability and Construction

    ``1. The provisions of this Compact shall be severable, and if any 
phrase, clause, sentence or provision is deemed unenforceable, the 
remaining provisions of the Compact shall be enforceable.
    ``2. The provisions of this Compact shall be liberally construed to 
effectuate its purposes.

        ``Article XIV. Binding Effect of Compact and Other Laws

                        ``section a. other laws

    ``1. Nothing herein prevents the enforcement of any other law of a 
Compacting State that is not inconsistent with this Compact.
    ``2. All Compacting States' laws conflicting with this Compact are 
superseded to the extent of the conflict.

              ``section b. binding effect of this compact

    ``1. All lawful actions of the Commission, including all Rules and 
Operating Procedures promulgated by the Commission, are binding upon 
the Compacting States.
    ``2. All agreements between the Commission and the Compacting 
States are binding in accordance with their terms.
    ``3. Upon the request of a party to a conflict over meaning or 
interpretation of Commission actions, and upon a majority vote of the 
Compacting States, the Commission may issue advisory opinions regarding 
such meaning or interpretation.
    ``4. 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 such provision upon the Commission shall be ineffective 
and such obligations, duties, powers or jurisdiction shall remain in 
the Compacting State and shall be exercised by the agency thereof to 
which such obligations, duties, powers or jurisdiction are delegated by 
law in effect at the time this Compact becomes effective.''.

SEC. 2. RIGHT TO ALTER, AMEND, OR REPEAL.

    The right to alter, amend, or repeal this joint resolution is 
hereby expressly reserved. The consent granted by this joint resolution 
shall not be construed as impairing or in any manner affecting any 
right or jurisdiction of the United States in and over the subject of 
the compact.

SEC. 3. SEVERABILITY.

    If any part or application of this compact, or legislation enabling 
the compact, is held invalid, the remainder of the compact or its 
application to other situations or persons shall not be affected.

SEC. 4. INCONSISTENCY OF LANGUAGE.

    The validity of this compact shall not be affected by any 
insubstantial difference in its form or language as adopted by the 
various States.
                                 <all>