senate Bill S4869

2011-2012 Legislative Session

Establishes the surplus lines insurance multi-state compliance compact with respect to surplus lines insurance and premium tax allocation

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to insurance
returned to senate
died in assembly
Jun 14, 2011 referred to insurance
delivered to assembly
passed senate
Jun 01, 2011 advanced to third reading
May 25, 2011 2nd report cal.
May 24, 2011 1st report cal.861
May 09, 2011 reported and committed to finance
Apr 27, 2011 referred to insurance

Votes

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May 24, 2011 - Finance committee Vote

S4869
26
1
committee
26
Aye
1
Nay
8
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Finance committee vote details

May 9, 2011 - Insurance committee Vote

S4869
14
1
committee
14
Aye
1
Nay
3
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Insurance committee vote details

Insurance Committee Vote: May 9, 2011

nay (1)
aye wr (3)

S4869 - Bill Details

See Assembly Version of this Bill:
A7786
Current Committee:
Senate Insurance
Law Section:
Insurance Law

S4869 - Bill Texts

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BILL NUMBER:S4869

TITLE OF BILL:
An act
to amend the insurance law and the tax law, in relation to
establishing the
surplus lines insurance multi-state compliance compact with respect to
surplus lines
insurance and premium tax allocation

PURPOSE:
To streamline regulatory compliance and tax allocation in connection
with multi-state placements of excess line insurance.

SUMMARY OF PROVISIONS:
Section one of the bill sets forth a series of legislative findings
that provide the foundation rationale for the bill.

Section two of the bill adds a new Article 29 to the Insurance Law
establishing a surplus lines insurance multi-state compliance compact
Specifically, section two sets forth the following:

* Provides a title to the compact;

* Enumerates the purposes of a compact;

* Contains a definitions section specifying the meanings of the
terminology used in the enabling legislation;

* Creates a commission empowered to adopt rules and procedures in
connection with financing, administering, operating and enforcing
compliance with the provisions of the compact;

* Specifically grants the commission the authority to establish
mandatory rules and procedures;

* Delineates the various powers of the commission;

* Sets forth the organization of the commission;

* Sets forth the requirements regarding commission meetings,
activities revolving around such meetings, and disclosure parameters
in connection with such meetings;

* Describes the required rulemaking function and process of the
commission;

* Establishes procedures dealing with commission records;

* Provides for a dispute resolution system to settle issues subject to
the compact that may arise between two or more compacting states;

* Provides that the commission shall not be authorized to regulate
insurance in the compacting states, and further provides that any
compacting state may appeal a commission determination to a review
panel appointed by the commission;


* Provides for a compact funding mechanism;

* States that the compact shall become effective and binding upon
legislative enactment of the compact into law by two or more
compacting states;

* Provides for a withdrawal, a default, and a termination process with
respect to a state that may find itself in a situation that may
trigger one of these processes;

* Contains a severability clause; and

* States that nothing within the compact prevents the enforcement of
any of the law of a compacting state, except decisions of the
commission and rules promulgated by the commission, with respect to
excess line insurance of multi-state risks in certain enumerated
circumstances.

Section three of the bill amends Insurance Law Section 2118 to add a
new paragraph stipulating that in the event the compact is enacted
and the commission becomes active, where New York is the home state
of the insured, New York will require the payment of taxes to be
allocated based upon the compact's provisions to all other states
that have adopted the compact, but where a state has not adopted the
compact, New York will apply its state tax to the premiums for the
insured exposures allocated to New York as well as to risk exposures
located in non-compacting states.

Section four of the bill amends Insurance Law Section 9102 to
reiterate New York's exclusive application of its state tax where
risk exposures located in states that have not enacted the compact
are involved.

Section five of the bill amends Tax Law Section 1552 to, again,
establish the rules regarding states that have not joined the compact
and New York's application of its state tax to risks located in such
non-compacting states.

Finally, section six of the bill establishes an effective date of
October 19, 2011.

JUSTIFICATION:
Last year Congress enacted the Dodd Frank Wall Street Reform and
Consumer Protection Act. A component of this law intended to regulate
the tax allocation aspect of multi-state excess line placements was
the Nonadmitted Reinsurance Reform Act of 2010 ("NRRA"). The NRRA
preempted state law in connection with certain aspects of excess line
insurance placements. Congress, however, expressed its intent within
the NRRA to permit the individual states to establish an interstate
compact to regulate and facilitate the reporting, payment, collection
and allocation of excess line placement premium taxes. This bill sets
forth the structure for a premium tax allocation and distribution
system as envisioned by Congress.

LEGISLATIVE HISTORY:
New bill.


FISCAL IMPLICATIONS:
The compact will maintain the tax allocation structure for excess line
risks insured, and revenue to New York desired from such placements.

EFFECTIVE DATE:
This act shall take effect October 19, 2011.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4869

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             April 27, 2011
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law and the tax law, in relation to estab-
  lishing the surplus lines  insurance  multi-state  compliance  compact
  with respect to surplus lines insurance and premium tax allocation

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Legislative findings. The legislature finds, with regard to
non-admitted insurance policies with risk exposures located in  multiple
states,  the  111th  United  States  Congress has stipulated in title V,
subtitle B, the Non-Admitted and Reinsurance Reform Act of 2010  of  the
Dodd-Frank  Wall  Street Reform and Consumer Protection Act (hereinafter
the NRRA) that:
  1. The placement of non-admitted insurance shall  be  subject  to  the
statutory  and  regulatory  requirements  solely  of  the insured's home
state, and
  2. Any law, regulation, provision or action of any state that  applies
or  purports to apply to non-admitted insurance sold to, solicited by or
negotiated with an insured whose home state is another  state  shall  be
preempted  with  respect to such application; except that any state law,
rule or regulation that restricts the placement of workers' compensation
insurance or excess  insurance  for  self-funded  workers'  compensation
plans with a non-admitted insurer shall not be preempted.
  The  legislature  finds further that in compliance with NRRA, no state
other than the home state of an insured  may  require  any  premium  tax
payment for non-admitted insurance; and no state other than an insured's
home state may require a surplus lines broker to be licensed in order to
sell,  solicit  or negotiate non-admitted insurance with respect to such
insured.
  The legislature finds further that the NRRA intends  that  the  states
may  enter  into a compact or otherwise establish procedures to allocate

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10246-02-1

S. 4869                             2

among the states the premium taxes paid to an insured's home state;  and
that  each state adopt nationwide uniform requirements, form, and proce-
dures, such as an interstate compact, that provide  for  the  reporting,
payment,  collection  and  allocation  of premium taxes for non-admitted
insurance.
  The legislature finds further that after the expiration  of  the  two-
year period beginning on the effective date of the NRRA, a state may not
collect  any  fees relating to licensing of an individual or entity as a
surplus lines licensee in the state unless the state has  in  effect  at
such  time  laws  or  regulations  that provide for participation by the
state in the national insurance producer database of the National  Asso-
ciation  of  Insurance Commissioners (hereinafter the NAIC) or any other
equivalent uniform national database for the licensure of surplus  lines
licensees and the renewal of such licenses.
  The  legislature  recognizes  that a need exists for a system of regu-
lation that will provide for surplus lines insurance to be  placed  with
reputable  and  financially  sound  non-admitted  insurers and that will
permit orderly access to surplus  lines  insurance  in  this  state  and
encourage  insurers to make new and innovative types of insurance avail-
able to consumers in this state.
  The legislature finds that protecting the revenue of  this  state  and
other  compacting states may be accomplished by facilitating the payment
and collection of premium tax on non-admitted  insurance  and  providing
for  allocation of premium tax for non-admitted insurance of multi-state
risks among the states in accordance with uniform allocation formulas.
  The legislature finds that the efficiency of the surplus lines  market
may  be  improved  by  eliminating  duplicative and inconsistent tax and
regulatory requirements among the states and by promoting and protecting
the interests of surplus lines licensees who assist  such  insureds  and
non-admitted  insurers,  thereby  ensuring the continued availability of
non-admitted insurance to consumers.
  Regulatory compliance with respect to  non-admitted  insurance  place-
ments may be streamlined by providing for exclusive single-state regula-
tory compliance for non-admitted insurance of multi-state risks, thereby
providing certainty regarding such compliance to all persons who have an
interest  in  such  transactions, including but not limited to insureds,
regulators, surplus  lines  licensees,  other  insurance  producers  and
surplus lines insurers.
  The  legislature  finds  that coordination of regulatory resources and
expertise between state insurance departments and other state  agencies,
as well as state surplus lines stamping offices, with respect to non-ad-
mitted insurance will be improved.
  S  2.  The insurance law is amended by adding a new article 29 to read
as follows:
                                ARTICLE 29
         SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT
SECTION 2901. SHORT TITLE.
        2902. PURPOSES.
        2903. DEFINITIONS.
        2904. ESTABLISHMENT OF THE COMMISSION AND VENUE.
        2905. AUTHORITY TO ESTABLISH MANDATORY RULES.
        2906. POWERS OF THE COMMISSION.
        2907. ORGANIZATION OF THE COMMISSION.
        2908. MEETINGS AND ACTS OF THE COMMISSION.
        2909. RULEMAKING FUNCTIONS OF THE COMMISSION.
        2910. COMMISSION RECORDS AND ENFORCEMENT.

S. 4869                             3

        2911. DISPUTE RESOLUTION.
        2912. REVIEW OF COMMISSION DECISIONS.
        2913. FINANCE.
        2914. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT.
        2915. WITHDRAWAL, DEFAULT AND TERMINATION.
        2916. SEVERABILITY AND CONSTRUCTION.
        2917. BINDING EFFECT OF COMPACT AND OTHER LAWS.
  S  2901.  SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT".
  S 2902. PURPOSES. THE PURPOSES OF THIS COMPACT ARE:
  (A) TO IMPLEMENT THE EXPRESS PROVISIONS OF THE NON-ADMITTED AND  REIN-
SURANCE REFORM ACT OF 2010 (HEREINAFTER THE NRRA).
  (B)  TO  PROTECT  THE  PREMIUM  TAX  REVENUES OF THE COMPACTING STATES
THROUGH FACILITATING THE  PAYMENT  AND  COLLECTION  OF  PREMIUM  TAX  ON
NON-ADMITTED  INSURANCE;  AND TO PROTECT THE INTERESTS OF THE COMPACTING
STATES BY SUPPORTING THE CONTINUED AVAILABILITY  OF  SUCH  INSURANCE  TO
CONSUMERS; AND TO PROVIDE FOR ALLOCATION OF PREMIUM TAX FOR NON-ADMITTED
INSURANCE  OF  MULTI-STATE  RISKS  AMONG  THE  STATES IN ACCORDANCE WITH
UNIFORM ALLOCATION FORMULAS TO BE DEVELOPED, ADOPTED, AND IMPLEMENTED BY
THE COMMISSION.
  (C) TO STREAMLINE AND IMPROVE THE  EFFICIENCY  OF  THE  SURPLUS  LINES
MARKET  BY  ELIMINATING  DUPLICATIVE AND INCONSISTENT TAX AND REGULATORY
REQUIREMENTS AMONG THE STATES; AND PROMOTE AND PROTECT THE  INTEREST  OF
SURPLUS  LINES  LICENSEES  WHO  ASSIST  SUCH  INSUREDS AND SURPLUS LINES
INSURERS, THEREBY ENSURING THE CONTINUED AVAILABILITY OF  SURPLUS  LINES
INSURANCE TO CONSUMERS.
  (D)  TO  STREAMLINE REGULATORY COMPLIANCE WITH RESPECT TO NON-ADMITTED
INSURANCE PLACEMENTS BY PROVIDING FOR EXCLUSIVE SINGLE-STATE  REGULATORY
COMPLIANCE  FOR  NON-ADMITTED INSURANCE OF MULTI-STATE RISKS, IN ACCORD-
ANCE WITH RULES TO BE  ADOPTED  BY  THE  COMMISSION,  THEREBY  PROVIDING
CERTAINTY  REGARDING SUCH COMPLIANCE TO ALL PERSONS WHO HAVE AN INTEREST
IN SUCH TRANSACTIONS, INCLUDING BUT NOT LIMITED TO INSUREDS, REGULATORS,
SURPLUS LINES LICENSEES, OTHER INSURANCE  PRODUCERS  AND  SURPLUS  LINES
INSURERS.
  (E)  TO  ESTABLISH  A  CLEARINGHOUSE  FOR RECEIPT AND DISSEMINATION OF
PREMIUM TAX AND CLEARINGHOUSE TRANSACTION DATA RELATED  TO  NON-ADMITTED
INSURANCE  OF  MULTI-STATE RISKS, IN ACCORDANCE WITH RULES TO BE ADOPTED
BY THE COMMISSION.
  (F) TO IMPROVE COORDINATION  OF  REGULATORY  RESOURCES  AND  EXPERTISE
BETWEEN STATE INSURANCE DEPARTMENTS AND OTHER STATE AGENCIES, AS WELL AS
STATE  SURPLUS  LINES  STAMPING  OFFICES,  WITH  RESPECT TO NON-ADMITTED
INSURANCE.
  (G) TO ADOPT UNIFORM RULES TO PROVIDE FOR PREMIUM TAX PAYMENT, REPORT-
ING, ALLOCATION, DATA  COLLECTION  AND  DISSEMINATION  FOR  NON-ADMITTED
INSURANCE  OF  MULTI-STATE  RISKS  AND SINGLE-STATE RISKS, IN ACCORDANCE
WITH RULES TO BE ADOPTED BY THE COMMISSION, THEREBY PROMOTING THE  OVER-
ALL EFFICIENCY OF THE NON-ADMITTED INSURANCE MARKET.
  (H)  TO  ADOPT  UNIFORM  MANDATORY  RULES  WITH  RESPECT TO REGULATORY
COMPLIANCE REQUIREMENTS FOR:
  (1) FOREIGN INSURER ELIGIBILITY REQUIREMENTS; AND
  (2) SURPLUS LINES POLICYHOLDER NOTICES.
  (I) TO ESTABLISH THE SURPLUS LINES  INSURANCE  MULTI-STATE  COMPLIANCE
COMPACT COMMISSION.
  (J)  TO COORDINATE REPORTING OF CLEARINGHOUSE TRANSACTION DATA ON NON-
ADMITTED INSURANCE OF MULTI-STATE  RISKS  AMONG  COMPACTING  STATES  AND
CONTRACTING STATES.

S. 4869                             4

  (K)  TO  PERFORM  THESE  AND  SUCH  OTHER  RELATED FUNCTIONS AS MAY BE
CONSISTENT WITH THE PURPOSES OF THE SURPLUS LINES INSURANCE  MULTI-STATE
COMPLIANCE COMPACT.
  S  2903.  DEFINITIONS.  FOR THE PURPOSES OF THIS COMPACT THE FOLLOWING
DEFINITIONS SHALL APPLY:
  (A) "ADMITTED INSURER" MEANS AN INSURER THAT IS LICENSED OR AUTHORIZED
TO TRANSACT THE BUSINESS OF INSURANCE UNDER THE LAW OF THE  HOME  STATE;
FOR  PURPOSES  OF  THIS  COMPACT  "ADMITTED INSURER" SHALL NOT INCLUDE A
DOMESTIC SURPLUS LINES INSURER AS MAY BE  DEFINED  BY  APPLICABLE  STATE
LAW.
  (B)  "AFFILIATE"  MEANS,  WITH  RESPECT TO AN INSURED, ANY ENTITY THAT
CONTROLS, IS CONTROLLED BY OR IS UNDER COMMON CONTROL WITH THE INSURED.
  (C) "ALLOCATION FORMULA" MEANS THE UNIFORM METHODS PROMULGATED BY  THE
COMMISSION  BY  WHICH INSURED RISK EXPOSURES WILL BE APPORTIONED TO EACH
STATE FOR THE PURPOSE OF CALCULATING PREMIUM TAXES DUE.
  (D) "BYLAWS" MEANS THOSE BYLAWS ESTABLISHED BY THE COMMISSION FOR  ITS
GOVERNANCE  OR  FOR DIRECTING OR CONTROLLING THE COMMISSION'S ACTIONS OR
CONDUCT.
  (E) "CLEARINGHOUSE" MEANS THE COMMISSION'S  OPERATIONS  INVOLVING  THE
ACCEPTANCE,  PROCESSING  AND  DISSEMINATION AMONG THE COMPACTING STATES,
CONTRACTING STATES, SURPLUS LINES LICENSEES, INSUREDS AND OTHER  PERSONS
OF  PREMIUM  TAX  AND  CLEARINGHOUSE  TRANSACTION  DATA FOR NON-ADMITTED
INSURANCE OF MULTI-STATE RISKS IN ACCORDANCE WITH THIS COMPACT AND RULES
TO BE ADOPTED BY THE COMMISSION.
  (F) "CLEARINGHOUSE TRANSACTION DATA" MEANS THE  INFORMATION  REGARDING
NON-ADMITTED  INSURANCE  OF  MULTI-STATE  RISKS REQUIRED TO BE REPORTED,
ACCEPTED, COLLECTED, PROCESSED AND DISSEMINATED BY SURPLUS LINES  LICEN-
SEES FOR SURPLUS LINES INSURANCE AND INSUREDS FOR INDEPENDENTLY PROCURED
INSURANCE  UNDER THIS COMPACT AND RULES TO BE ADOPTED BY THE COMMISSION.
CLEARINGHOUSE  TRANSACTION  DATA   INCLUDES   INFORMATION   RELATED   TO
SINGLE-STATE  RISKS  IF A STATE ELECTS TO HAVE THE CLEARINGHOUSE COLLECT
TAXES ON SINGLE-STATE RISKS FOR SUCH STATE.
  (G) "COMPACTING STATE" MEANS ANY STATE WHICH HAS ENACTED THIS  COMPACT
LEGISLATION  AND  WHICH  HAS NOT WITHDRAWN PURSUANT TO SUBSECTION (A) OF
SECTION TWENTY-NINE HUNDRED FIFTEEN OF THIS ARTICLE OR  BEEN  TERMINATED
PURSUANT  TO  SUBSECTION  (B)  OF SECTION TWENTY-NINE HUNDRED FIFTEEN OF
THIS ARTICLE.
  (H) "COMMISSION" MEANS THE SURPLUS LINES INSURANCE MULTI-STATE COMPLI-
ANCE COMPACT COMMISSION ESTABLISHED BY THIS COMPACT.
  (I) "COMMISSIONER" MEANS THE CHIEF INSURANCE REGULATORY OFFICIAL OF  A
STATE  INCLUDING,  BUT  NOT  LIMITED  TO,  COMMISSIONER, SUPERINTENDENT,
DIRECTOR OR ADMINISTRATOR OR THEIR DESIGNEES.
  (J) "CONTRACTING STATE" MEANS ANY STATE WHICH  HAS  NOT  ENACTED  THIS
COMPACT  LEGISLATION  BUT  HAS  ENTERED INTO A WRITTEN CONTRACT WITH THE
COMMISSION TO UTILIZE THE SERVICES  OF  AND  FULLY  PARTICIPATE  IN  THE
CLEARINGHOUSE.
  (K)  "CONTROL"  MEANS  ONE  ENTITY  HAS  POWER  OVER  ANOTHER. FOR THE
PURPOSES OF THIS ARTICLE, AN ENTITY HAS CONTROL OVER ANOTHER ENTITY IF:
  (1) THE ENTITY DIRECTLY OR INDIRECTLY OR ACTING THROUGH  ONE  OR  MORE
OTHER PERSONS OWN, CONTROLS OR HAS THE POWER TO VOTE TWENTY-FIVE PERCENT
OR MORE OF ANY CLASS OF VOTING SECURITIES OF THE OTHER ENTITY; OR
  (2)  SUCH  ENTITY CONTROLS IN ANY MANNER THE ELECTION OF A MAJORITY OF
THE DIRECTORS OR TRUSTEES OF THE OTHER ENTITY.
  (L) "HOME STATE" SHALL HAVE TWO MEANINGS DEPENDING ON CONTEXT:
  (1) EXCEPT AS PROVIDED IN PARAGRAPH TWO OF THIS SUBSECTION,  THE  TERM
"HOME STATE" MEANS, WITH RESPECT TO AN INSURED:

S. 4869                             5

  (A)  THE  STATE  IN  WHICH AN INSURED MAINTAINS ITS PRINCIPAL PLACE OF
BUSINESS OR, IN THE CASE OF AN INDIVIDUAL,  THE  INDIVIDUAL'S  PRINCIPAL
RESIDENCE; OR
  (B)  IF  ONE HUNDRED PERCENT OF THE INSURED RISK IS LOCATED OUT OF THE
STATE REFERRED TO IN SUBPARAGRAPH (A) OF THIS PARAGRAPH,  THE  STATE  TO
WHICH  THE GREATEST PERCENTAGE OF THE INSURED'S TAXABLE PREMIUM FOR THAT
INSURANCE CONTRACT IS ALLOCATED.
  (2) IF MORE THAN ONE  INSURED  FROM  AN  AFFILIATED  GROUP  ARE  NAMED
INSUREDS  ON  A  SINGLE  NON-ADMITTED INSURANCE CONTRACT, THE TERM "HOME
STATE" MEANS THE HOME STATE, AS DETERMINED PURSUANT TO PARAGRAPH ONE  OF
THIS  SUBSECTION,  OF  THE  MEMBER  OF THE AFFILIATED GROUP THAT HAS THE
LARGEST PERCENTAGE OF PREMIUM ATTRIBUTED  TO  IT  UNDER  SUCH  INSURANCE
CONTRACT.
  (M)  "INDEPENDENTLY PROCURED INSURANCE" MEANS INSURANCE PROCURED BY AN
INSURED DIRECTLY FROM A SURPLUS  LINES  INSURER  OR  OTHER  NON-ADMITTED
INSURER AS PERMITTED BY THE LAWS OF THE HOME STATE.
  (N)  "INSURER  ELIGIBILITY REQUIREMENTS" MEANS THE CRITERIA, FORMS AND
PROCEDURES ESTABLISHED TO QUALIFY AS A SURPLUS LINES INSURER  UNDER  THE
LAW  OF THE HOME STATE PROVIDED THAT SUCH CRITERIA, FORMS AND PROCEDURES
ARE CONSISTENT WITH THE EXPRESS PROVISIONS OF THE NRRA ON AND AFTER JULY
TWENTY-FIRST, TWO THOUSAND ELEVEN.
  (O) "MEMBER" MEANS THE PERSON OR PERSONS CHOSEN BY A COMPACTING  STATE
AS ITS REPRESENTATIVE OR REPRESENTATIVES TO THE COMMISSION PROVIDED THAT
EACH COMPACTING STATE SHALL BE LIMITED TO ONE VOTE.
  (P)  "MULTI-STATE  RISK"  MEANS  A RISK WITH INSURED EXPOSURES IN MORE
THAN ONE STATE.
  (Q) "NON-COMPACTING STATE" MEANS ANY STATE WHICH HAS NOT ADOPTED  THIS
COMPACT.
  (R)  "NON-ADMITTED  INSURANCE" MEANS SURPLUS LINES INSURANCE AND INDE-
PENDENTLY PROCURED INSURANCE.
  (S) "NON-ADMITTED INSURER" MEANS AN INSURER THAT IS NOT AUTHORIZED  OR
ADMITTED TO TRANSACT THE BUSINESS OF INSURANCE UNDER THE LAW OF THE HOME
STATE.
  (T)  "NRRA" MEANS THE NON-ADMITTED AND REINSURANCE REFORM ACT OF 2010,
FOUND IN TITLE V, SUBTITLE B  OF  THE  FEDERAL  DODD-FRANK  WALL  STREET
REFORM AND CONSUMER PROTECTION ACT.
  (U) "POLICYHOLDER NOTICE" MEANS THE DISCLOSURE NOTICE OR STAMP THAT IS
REQUIRED  TO BE FURNISHED TO THE APPLICANT OR POLICYHOLDER IN CONNECTION
WITH A SURPLUS LINES INSURANCE PLACEMENT.
  (V) "PREMIUM TAX" MEANS WITH RESPECT TO  NON-ADMITTED  INSURANCE,  ANY
TAX,  FEE,  ASSESSMENT  OR  OTHER  CHARGE IMPOSED BY A GOVERNMENT ENTITY
DIRECTLY OR INDIRECTLY BASED ON ANY PAYMENT MADE  AS  CONSIDERATION  FOR
SUCH  INSURANCE,  INCLUDING  PREMIUM DEPOSITS, ASSESSMENTS, REGISTRATION
FEES AND ANY OTHER COMPENSATION GIVEN IN CONSIDERATION FOR A CONTRACT OF
INSURANCE.
  (W) "PRINCIPAL PLACE OF BUSINESS" MEANS WITH  RESPECT  TO  DETERMINING
THE HOME STATE OF THE INSURED, THE STATE WHERE THE INSURED MAINTAINS ITS
HEADQUARTERS AND WHERE THE INSURED'S HIGH-LEVEL OFFICERS DIRECT, CONTROL
AND COORDINATE THE BUSINESS ACTIVITIES OF THE INSURED.
  (X)  "PURCHASING GROUP" MEANS ANY GROUP FORMED PURSUANT TO THE LIABIL-
ITY RISK RETENTION ACT WHICH HAS AS ONE OF ITS PURPOSES THE PURCHASE  OF
LIABILITY  INSURANCE ON A GROUP BASIS, PURCHASES SUCH INSURANCE ONLY FOR
ITS GROUP MEMBERS AND ONLY TO COVER THEIR SIMILAR OR  RELATED  LIABILITY
EXPOSURE  AND  IS COMPOSED OF MEMBERS WHOSE BUSINESSES OR ACTIVITIES ARE
SIMILAR OR RELATED WITH RESPECT TO THE LIABILITY TO  WHICH  MEMBERS  ARE

S. 4869                             6

EXPOSED  BY  VIRTUE  OF  ANY RELATED, SIMILAR OR COMMON BUSINESS, TRADE,
PRODUCT, SERVICES, PREMISES OR OPERATIONS AND IS DOMICILED IN ANY STATE.
  (Y)  "RULE"  MEANS  A STATEMENT OF GENERAL OR PARTICULAR APPLICABILITY
AND FUTURE EFFECT PROMULGATED BY THE COMMISSION 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.
  (Z)  "SINGLE-STATE  RISK"  MEANS A RISK WITH INSURED EXPOSURES IN ONLY
ONE STATE.
  (AA) "STATE" MEANS ANY STATE, DISTRICT  OR  TERRITORY  OF  THE  UNITED
STATES OF AMERICA.
  (BB)  "STATE TRANSACTION DOCUMENTATION" MEANS THE INFORMATION REQUIRED
UNDER THE LAWS OF THE HOME STATE TO BE FILED BY SURPLUS LINES  LICENSEES
IN  ORDER  TO  REPORT SURPLUS LINES INSURANCE AND VERIFY COMPLIANCE WITH
SURPLUS LINES LAWS AND BY INSUREDS  IN  ORDER  TO  REPORT  INDEPENDENTLY
PROCURED INSURANCE.
  (CC)  "SURPLUS  LINES INSURANCE" MEANS INSURANCE PROCURED BY A SURPLUS
LINES LICENSEE FROM A SURPLUS LINES INSURER OR OTHER NON-ADMITTED INSUR-
ER AS PERMITTED UNDER THE LAW OF THE HOME STATE.  FOR  THE  PURPOSES  OF
THIS  COMPACT  "SURPLUS  LINES  INSURANCE"  SHALL  ALSO MEAN EXCESS LINE
INSURANCE AS THAT TERM IS USED PURSUANT  TO  SECTION  TWO  THOUSAND  ONE
HUNDRED FIVE OF THIS CHAPTER.
  (DD)  "SURPLUS  LINES  INSURER"  MEANS A NON-ADMITTED INSURER ELIGIBLE
UNDER THE LAW OF THE HOME STATE TO ACCEPT BUSINESS FROM A SURPLUS  LINES
LICENSEE.    FOR  THE  PURPOSES  OF THIS COMPACT "SURPLUS LINES INSURER"
SHALL ALSO MEAN AN INSURER WHICH IS PERMITTED  TO  WRITE  SURPLUS  LINES
INSURANCE UNDER THE LAWS OF THE STATE WHERE SUCH INSURER IS DOMICILED.
  (EE) "SURPLUS LINES LICENSEE" MEANS AN INDIVIDUAL, FIRM OR CORPORATION
LICENSED  UNDER  THE LAW OF THE HOME STATE TO PLACE SURPLUS LINES INSUR-
ANCE.
  S 2904. ESTABLISHMENT OF THE COMMISSION AND VENUE. (A) THE  COMPACTING
STATES  HEREBY  CREATE  AND ESTABLISH A JOINT PUBLIC AGENCY KNOWN AS THE
"SURPLUS LINES INSURANCE MULTI-STATE COMPLIANCE COMPACT COMMISSION."
  (B) PURSUANT TO SECTION TWO THOUSAND NINE HUNDRED FIVE OF  THIS  ARTI-
CLE,  THE  COMMISSION WILL HAVE THE POWER TO ADOPT MANDATORY RULES WHICH
ESTABLISH EXCLUSIVE HOME STATE AUTHORITY REGARDING  NON-ADMITTED  INSUR-
ANCE  OF  MULTI-STATE  RISKS,  ALLOCATION FORMULAS, CLEARINGHOUSE TRANS-
ACTION DATA, A CLEARINGHOUSE FOR RECEIPT AND DISTRIBUTION  OF  ALLOCATED
PREMIUM  TAX  AND  CLEARINGHOUSE TRANSACTION DATA AND UNIFORM RULEMAKING
PROCEDURES AND RULES FOR THE PURPOSE OF FINANCING, ADMINISTERING,  OPER-
ATING  AND ENFORCING COMPLIANCE WITH THE PROVISIONS OF THIS COMPACT, ITS
BYLAWS AND RULES.
  (C) PURSUANT TO SECTION TWO THOUSAND NINE HUNDRED FIVE OF  THIS  ARTI-
CLE,  THE COMMISSION WILL HAVE THE POWER TO ADOPT MANDATORY RULES ESTAB-
LISHING FOREIGN INSURER  ELIGIBILITY  REQUIREMENTS  AND  A  CONCISE  AND
OBJECTIVE  POLICYHOLDER  NOTICE  REGARDING THE NATURE OF A SURPLUS LINES
PLACEMENT.
  (D) THE COMMISSION IS A BODY CORPORATE AND POLITIC AND  AN  INSTRUMEN-
TALITY OF THE COMPACTING STATES.
  (E)  THE  COMMISSION IS SOLELY RESPONSIBLE FOR ITS LIABILITIES, EXCEPT
AS OTHERWISE SPECIFICALLY PROVIDED IN THIS COMPACT.
  (F) VENUE IS PROPER AND JUDICIAL PROCEEDINGS BY OR AGAINST THE COMMIS-
SION SHALL BE BROUGHT SOLELY AND EXCLUSIVELY IN  A  COURT  OF  COMPETENT
JURISDICTION  WHERE  THE  PRINCIPAL OFFICE OF THE COMMISSION IS LOCATED.
THE COMMISSION MAY WAIVE VENUE AND JURISDICTIONAL DEFENSES TO THE EXTENT

S. 4869                             7

IT ADOPTS OR CONSENTS TO PARTICIPATE IN ALTERNATIVE  DISPUTE  RESOLUTION
PROCEEDINGS.
  S  2905.  AUTHORITY TO ESTABLISH MANDATORY RULES. THE COMMISSION SHALL
ADOPT MANDATORY RULES WHICH ESTABLISH:
  (A) ALLOCATION FORMULAS FOR EACH TYPE OF NON-ADMITTED INSURANCE COVER-
AGE, WHICH ALLOCATION FORMULAS MUST BE USED BY EACH COMPACTING STATE AND
CONTRACTING STATE IN ACQUIRING PREMIUM TAX AND CLEARINGHOUSE TRANSACTION
DATA FROM SURPLUS LINES LICENSEES AND  INSUREDS  FOR  REPORTING  TO  THE
CLEARINGHOUSE  CREATED BY THE COMPACT COMMISSION. SUCH ALLOCATION FORMU-
LAS WILL BE ESTABLISHED WITH INPUT FROM SURPLUS LINES LICENSEES  AND  BE
BASED UPON READILY AVAILABLE DATA WITH SIMPLICITY AND UNIFORMITY FOR THE
SURPLUS LINES LICENSEE AS A MATERIAL CONSIDERATION.
  (B)  UNIFORM CLEARINGHOUSE TRANSACTION DATA REPORTING REQUIREMENTS FOR
ALL INFORMATION REPORTED TO THE CLEARINGHOUSE.
  (C) METHODS BY WHICH COMPACTING STATES AND CONTRACTING STATES  REQUIRE
SURPLUS  LINES  LICENSEES  AND INSUREDS TO PAY PREMIUM TAX AND TO REPORT
CLEARINGHOUSE TRANSACTION DATA TO THE CLEARINGHOUSE, INCLUDING  BUT  NOT
LIMITED  TO  PROCESSING  CLEARINGHOUSE  TRANSACTION  DATA  THROUGH STATE
STAMPING AND SERVICE OFFICES,  STATE  INSURANCE  DEPARTMENTS,  OR  OTHER
STATE-DESIGNATED AGENCIES OR ENTITIES.
  (D)  THAT NON-ADMITTED INSURANCE OF MULTI-STATE RISKS SHALL BE SUBJECT
TO ALL OF THE REGULATORY  COMPLIANCE  REQUIREMENTS  OF  THE  HOME  STATE
EXCLUSIVELY. HOME STATE REGULATORY COMPLIANCE REQUIREMENTS APPLICABLE TO
SURPLUS LINES INSURANCE SHALL INCLUDE, BUT NOT BE LIMITED TO:
  (1)  PERSONS  REQUIRED  TO  BE  LICENSED TO SELL, SOLICIT OR NEGOTIATE
SURPLUS LINES INSURANCE;
  (2) INSURER ELIGIBILITY REQUIREMENTS OR  OTHER  APPROVED  NON-ADMITTED
INSURER REQUIREMENTS;
  (3) DILIGENT SEARCH; AND
  (4) STATE TRANSACTION DOCUMENTATION AND CLEARINGHOUSE TRANSACTION DATA
REGARDING  THE  PAYMENT  OF PREMIUM TAX AS SET FORTH IN THIS COMPACT AND
RULES TO BE ADOPTED BY THE COMMISSION. HOME STATE REGULATORY  COMPLIANCE
REQUIREMENTS  APPLICABLE  TO INDEPENDENTLY PROCURED INSURANCE PLACEMENTS
SHALL INCLUDE, BUT  NOT  BE  LIMITED  TO,  PROVIDING  STATE  TRANSACTION
DOCUMENTATION  AND  CLEARINGHOUSE TRANSACTION DATA REGARDING THE PAYMENT
OF PREMIUM TAX AS SET FORTH IN THIS COMPACT AND RULES TO BE  ADOPTED  BY
THE COMMISSION.
  (E)  THAT  EACH  COMPACTING STATE AND CONTRACTING STATE MAY CHARGE ITS
OWN RATE OF TAXATION ON THE PREMIUM ALLOCATED TO SUCH STATE BASED ON THE
APPLICABLE ALLOCATION FORMULA PROVIDED THAT THE  STATE  ESTABLISHES  ONE
SINGLE  RATE OF TAXATION APPLICABLE TO ALL NON-ADMITTED INSURANCE TRANS-
ACTIONS AND NO OTHER TAX, FEE ASSESSMENT OR OTHER CHARGE BY ANY  GOVERN-
MENTAL  OR  QUASI-GOVERNMENTAL AGENCY BE PERMITTED.  NOTWITHSTANDING THE
FOREGOING, STAMPING OFFICE FEES MAY BE CHARGED AS A SEPARATE, ADDITIONAL
COST UNLESS SUCH FEES ARE INCORPORATED INTO A  STATE'S  SINGLE  RATE  OF
TAXATION.
  (F) THAT ANY CHANGE IN THE RATE OF TAXATION BY ANY COMPACTING STATE OR
CONTRACTING  STATE  BE  RESTRICTED  TO CHANGES MADE PROSPECTIVELY ON NOT
LESS THAN NINETY DAYS ADVANCE NOTICE TO THE COMPACT COMMISSION.
  (G) THAT EACH COMPACTING STATE AND  CONTRACTING  STATE  SHALL  REQUIRE
PREMIUM TAX PAYMENTS EITHER ANNUALLY, SEMI-ANNUALLY OR QUARTERLY UTILIZ-
ING  ONE  OR  MORE OF THE FOLLOWING DATES ONLY: MARCH FIRST, JUNE FIRST,
SEPTEMBER FIRST AND DECEMBER FIRST.
  (H) THAT EACH COMPACTING STATE  AND  CONTRACTING  STATE  PROHIBIT  ANY
OTHER STATE AGENCY OR POLITICAL SUBDIVISION FROM REQUIRING SURPLUS LINES
LICENSEES  TO  PROVIDE  CLEARINGHOUSE  TRANSACTION DATA AND STATE TRANS-

S. 4869                             8

ACTION DOCUMENTATION OTHER THAN TO THE INSURANCE DEPARTMENT OR TAX OFFI-
CIALS OF THE HOME STATE OR ONE SINGLE DESIGNATED AGENT THEREOF.
  (I)  THE  OBLIGATION OF THE HOME STATE BY ITSELF, THROUGH A DESIGNATED
AGENT, SURPLUS LINES STAMPING OR SERVICE OFFICE,  TO  COLLECT  CLEARING-
HOUSE  TRANSACTION  DATA  FROM SURPLUS LINES LICENSEES AND FROM INSUREDS
FOR INDEPENDENTLY PROCURED INSURANCE, WHERE APPLICABLE, FOR REPORTING TO
THE CLEARINGHOUSE.
  (J) A METHOD FOR THE CLEARINGHOUSE TO PERIODICALLY REPORT TO  COMPACT-
ING STATES, CONTRACTING STATES, SURPLUS LINES LICENSEES AND INSUREDS WHO
INDEPENDENTLY  PROCURE  INSURANCE  ALL PREMIUM TAXES OWED TO EACH OF THE
COMPACTING STATES AND CONTRACTING STATES, THE DATES UPON  WHICH  PAYMENT
OF  SUCH  PREMIUM  TAXES  ARE  DUE  AND A METHOD TO PAY THEM THROUGH THE
CLEARINGHOUSE.
  (K) THAT EACH SURPLUS LINES LICENSEE IS REQUIRED TO BE  LICENSED  ONLY
IN  THE  HOME STATE OF EACH INSURED FOR WHOM SURPLUS LINES INSURANCE HAS
BEEN PROCURED.
  (L) THAT A POLICY CONSIDERED TO BE  SURPLUS  LINES  INSURANCE  IN  THE
INSURED'S  HOME STATE SHALL BE CONSIDERED SURPLUS LINES INSURANCE IN ALL
COMPACTING STATES AND CONTRACTING STATES AND TAXED AS  A  SURPLUS  LINES
TRANSACTION  IN  ALL STATES TO WHICH A PORTION OF THE RISK IS ALLOCATED.
EACH COMPACTING STATE AND CONTRACTING STATE SHALL REQUIRE  EACH  SURPLUS
LINES  LICENSEE  TO  PAY TO EVERY OTHER COMPACTING STATE AND CONTRACTING
STATE PREMIUM TAXES ON EACH MULTI-STATE RISK THROUGH  THE  CLEARINGHOUSE
AT  SUCH  TAX  RATE  CHARGED ON SURPLUS LINES TRANSACTIONS IN SUCH OTHER
COMPACTING STATES AND CONTRACTING STATES ON THE PORTION OF THE  RISK  IN
EACH  SUCH  COMPACTING  STATE AND CONTRACTING STATE AS DETERMINED BY THE
APPLICABLE UNIFORM ALLOCATION FORMULA ADOPTED BY THE COMMISSION. A POLI-
CY CONSIDERED TO BE INDEPENDENTLY PROCURED INSURANCE  IN  THE  INSURED'S
HOME  STATE  SHALL BE CONSIDERED INDEPENDENTLY PROCURED INSURANCE IN ALL
COMPACTING STATES AND CONTRACTING  STATES.  EACH  COMPACTING  STATE  AND
CONTRACTING  STATE SHALL REQUIRE THE INSURED TO PAY EVERY OTHER COMPACT-
ING STATE AND CONTRACTING STATE  THE  INDEPENDENTLY  PROCURED  INSURANCE
PREMIUM  TAX ON EACH MULTI-STATE RISK THROUGH THE CLEARINGHOUSE PURSUANT
TO THE UNIFORM ALLOCATION FORMULA ADOPTED BY THE COMMISSION.
  (M) UNIFORM FOREIGN INSURER ELIGIBILITY REQUIREMENTS AS AUTHORIZED  BY
THE NRRA.
  (N) A UNIFORM POLICYHOLDER NOTICE.
  (O)  UNIFORM  TREATMENT  OF  PURCHASING  GROUP SURPLUS LINES INSURANCE
PLACEMENTS.
  S 2906. POWERS OF  THE  COMMISSION.  THE  COMMISSION  SHALL  HAVE  THE
FOLLOWING POWERS:
  (A)  TO PROMULGATE RULES AND OPERATING PROCEDURES, PURSUANT TO SECTION
TWO THOUSAND NINE HUNDRED NINE OF THIS ARTICLE,  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 ARTICLE;
  (B) TO BRING AND PROSECUTE LEGAL PROCEEDINGS OR ACTIONS IN THE NAME OF
THE  COMMISSION,  PROVIDED  THAT  THE  STANDING  OF  ANY STATE INSURANCE
DEPARTMENT TO SUE OR BE SUED UNDER APPLICABLE LAW SHALL NOT BE AFFECTED;
  (C) TO ISSUE SUBPOENAS  REQUIRING  THE  ATTENDANCE  AND  TESTIMONY  OF
WITNESSES  AND THE PRODUCTION OF EVIDENCE, PROVIDED HOWEVER, THE COMMIS-
SION IS NOT EMPOWERED TO DEMAND OR SUBPOENA RECORDS OR DATA FROM NON-AD-
MITTED INSURERS;
  (D) TO ESTABLISH AND MAINTAIN OFFICES, INCLUDING  THE  CREATION  OF  A
CLEARINGHOUSE  FOR  THE  RECEIPT OF PREMIUM TAX AND CLEARINGHOUSE TRANS-
ACTION DATA  REGARDING  NON-ADMITTED  INSURANCE  OF  MULTI-STATE  RISKS,
SINGLE-STATE  RISKS  FOR  STATES  WHICH  ELECT  TO REQUIRE SURPLUS LINES

S. 4869                             9

LICENSEES TO PAY PREMIUM TAX ON SINGLE-STATE RISKS THROUGH THE CLEARING-
HOUSE AND TAX REPORTING FORMS;
  (E) TO PURCHASE AND MAINTAIN INSURANCE AND BONDS;
  (F)  TO  BORROW, ACCEPT OR CONTRACT FOR SERVICES OF PERSONNEL, INCLUD-
ING, BUT NOT LIMITED TO, EMPLOYEES OF A  COMPACTING  STATE  OR  STAMPING
OFFICE,  PURSUANT TO AN OPEN, TRANSPARENT, OBJECTIVE COMPETITIVE PROCESS
AND PROCEDURE ADOPTED BY THE COMMISSION;
  (G) 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, PURSUANT TO  AN  OPEN,  TRANSPARENT,
OBJECTIVE  COMPETITIVE  PROCESS AND PROCEDURE ADOPTED BY THE COMMISSION;
AND TO ESTABLISH THE COMMISSION'S PERSONNEL POLICIES AND PROGRAMS RELAT-
ING TO CONFLICTS OF INTEREST, RATES OF COMPENSATION  AND  QUALIFICATIONS
OF PERSONNEL AND OTHER RELATED PERSONNEL MATTERS;
  (H)  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
AVOID ANY APPEARANCE OF IMPROPRIETY AND/OR CONFLICT OF INTEREST;
  (I) 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 AVOID ANY APPEAR-
ANCE OF IMPROPRIETY AND/OR CONFLICT OF INTEREST;
  (J) TO SELL, CONVEY, MORTGAGE, PLEDGE,  LEASE,  EXCHANGE,  ABANDON  OR
OTHERWISE DISPOSE OF ANY PROPERTY, REAL, PERSONAL OR MIXED;
  (K)  TO  PROVIDE FOR TAX AUDIT RULES AND PROCEDURES FOR THE COMPACTING
STATES WITH RESPECT TO THE ALLOCATION OF PREMIUM TAXES, INCLUDING:
  (1) MINIMUM AUDIT STANDARDS, INCLUDING SAMPLING METHODS;
  (2) REVIEW OF INTERNAL CONTROLS;
  (3) COOPERATION AND SHARING OF AUDIT RESPONSIBILITIES BETWEEN COMPACT-
ING STATES;
  (4) HANDLING OF REFUNDS OR CREDITS DUE  TO  OVERPAYMENTS  OR  IMPROPER
ALLOCATION OF PREMIUM TAXES;
  (5)  TAXPAYER  RECORDS  TO  BE  REVIEWED INCLUDING A MINIMUM RETENTION
PERIOD; AND
  (6) AUTHORITY OF COMPACTING STATES TO REVIEW,  CHALLENGE  OR  RE-AUDIT
TAXPAYER RECORDS.
  (L)  TO ENFORCE COMPLIANCE BY COMPACTING STATES AND CONTRACTING STATES
WITH RULES AND BYLAWS PURSUANT TO THE AUTHORITY SET FORTH IN SECTION TWO
THOUSAND NINE HUNDRED SEVENTEEN OF THIS ARTICLE;
  (M) TO PROVIDE FOR DISPUTE  RESOLUTION  AMONG  COMPACTING  STATES  AND
CONTRACTING STATES;
  (N)  TO ADVISE COMPACTING STATES AND CONTRACTING STATES ON TAX-RELATED
ISSUES RELATING TO INSURERS, INSUREDS, SURPLUS LINES  LICENSEES,  AGENTS
OR  BROKERS  DOMICILED  OR  DOING  BUSINESS  IN  NON-COMPACTING  STATES,
CONSISTENT WITH THE PURPOSES OF THIS COMPACT;
  (O) TO MAKE AVAILABLE ADVICE AND TRAINING TO THOSE PERSONNEL IN  STATE
STAMPING OFFICES, STATE INSURANCE DEPARTMENTS OR OTHER STATE DEPARTMENTS
FOR  RECORD  KEEPING,  TAX  COMPLIANCE  AND TAX ALLOCATIONS; AND TO BE A
RESOURCE FOR STATE INSURANCE DEPARTMENTS AND OTHER STATE DEPARTMENTS;
  (P) TO ESTABLISH A BUDGET AND MAKE EXPENDITURES;
  (Q) TO BORROW MONEY;
  (R) TO APPOINT AND OVERSEE COMMITTEES, INCLUDING  ADVISORY  COMMITTEES
COMPRISED  OF  MEMBERS, STATE INSURANCE REGULATORS, STATE LEGISLATORS OR
THEIR REPRESENTATIVES, INSURANCE INDUSTRY AND  CONSUMER  REPRESENTATIVES

S. 4869                            10

AND  SUCH  OTHER INTERESTED PERSONS AS MAY BE DESIGNATED IN THIS COMPACT
AND THE BYLAWS;
  (S)  TO  ESTABLISH  AN  EXECUTIVE COMMITTEE OF NOT LESS THAN SEVEN NOR
MORE THAN FIFTEEN REPRESENTATIVES, WHICH SHALL INCLUDE OFFICERS  ELECTED
BY  THE COMMISSION AND SUCH OTHER REPRESENTATIVES AS PROVIDED FOR HEREIN
AND DETERMINED BY THE BYLAWS.  REPRESENTATIVES OF THE EXECUTIVE  COMMIT-
TEE  SHALL  SERVE  A  ONE  YEAR  TERM.  REPRESENTATIVES OF THE EXECUTIVE
COMMITTEE SHALL BE ENTITLED TO ONE VOTE EACH.  THE  EXECUTIVE  COMMITTEE
SHALL HAVE THE POWER TO ACT ON BEHALF OF THE COMMISSION, WITH THE EXCEP-
TION  OF  RULEMAKING,  DURING  PERIODS  WHEN  THE  COMMISSION  IS NOT IN
SESSION. THE EXECUTIVE COMMITTEE SHALL OVERSEE THE DAY TO DAY ACTIVITIES
OF THE ADMINISTRATION OF THE COMPACT, INCLUDING THE  ACTIVITIES  OF  THE
OPERATIONS  COMMITTEE  CREATED  UNDER  THIS  ARTICLE  AND COMPLIANCE AND
ENFORCEMENT OF THE PROVISIONS OF THE COMPACT, ITS BYLAWS AND  RULES  AND
SUCH OTHER DUTIES AS PROVIDED HEREIN AND AS DEEMED NECESSARY;
  (T)  TO  ESTABLISH  AN OPERATIONS COMMITTEE OF NOT LESS THAN SEVEN AND
NOT MORE THAN  FIFTEEN  REPRESENTATIVES  TO  PROVIDE  ANALYSIS,  ADVICE,
DETERMINATIONS  AND  RECOMMENDATIONS  REGARDING TECHNOLOGY, SOFTWARE AND
SYSTEMS INTEGRATION TO BE ACQUIRED BY  THE  COMMISSION  AND  TO  PROVIDE
ANALYSIS,  ADVICE,  DETERMINATIONS  AND  RECOMMENDATIONS  REGARDING  THE
ESTABLISHMENT OF MANDATORY RULES TO BE ADOPTED BY THE COMMISSION;
  (U) TO ENTER INTO CONTRACTS WITH CONTRACTING STATES SO THAT  CONTRACT-
ING  STATES  CAN  UTILIZE  THE  SERVICES OF AND FULLY PARTICIPATE IN THE
CLEARINGHOUSE SUBJECT TO THE TERMS AND  CONDITIONS  SET  FORTH  IN  SUCH
CONTRACTS;
  (V) TO ADOPT AND USE A CORPORATE SEAL; AND
  (W) TO PERFORM SUCH OTHER FUNCTIONS AS MAY BE NECESSARY OR APPROPRIATE
TO  ACHIEVE THE PURPOSES OF THIS COMPACT CONSISTENT WITH THE STATE REGU-
LATION OF THE BUSINESS OF INSURANCE.
  S 2907. ORGANIZATION OF THE COMMISSION. (A) (1) EACH COMPACTING  STATE
SHALL  HAVE AND BE LIMITED TO ONE MEMBER. EACH STATE SHALL DETERMINE THE
QUALIFICATIONS AND THE METHOD BY WHICH IT SELECTS A MEMBER AND SET FORTH
THE SELECTION PROCESS IN THE ENABLING PROVISION OF THE LEGISLATION WHICH
ENACTS THIS COMPACT. IN THE ABSENCE OF SUCH A PROVISION THE MEMBER SHALL
BE APPOINTED BY THE GOVERNOR OF SUCH 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.
  (2) EACH MEMBER SHALL BE ENTITLED TO ONE VOTE AND SHALL OTHERWISE HAVE
AN OPPORTUNITY TO PARTICIPATE IN THE GOVERNANCE  OF  THE  COMMISSION  IN
ACCORDANCE WITH THE BYLAWS.
  (3) THE COMMISSION SHALL, BY A MAJORITY VOTE OF THE MEMBERS, PRESCRIBE
BYLAWS TO GOVERN ITS CONDUCT AS MAY BE NECESSARY OR APPROPRIATE TO CARRY
OUT  THE  PURPOSES AND EXERCISE THE POWERS OF THE COMPACT INCLUDING, BUT
NOT LIMITED TO:
  (A) ESTABLISHING THE FISCAL YEAR OF THE COMMISSION;
  (B) PROVIDING  REASONABLE  PROCEDURES  FOR  HOLDING  MEETINGS  OF  THE
COMMISSION, THE EXECUTIVE COMMITTEE, AND THE OPERATIONS COMMITTEE;
  (C) PROVIDING REASONABLE STANDARDS AND PROCEDURES:
  (I) FOR THE ESTABLISHMENT AND MEETINGS OF COMMITTEES, AND
  (II)  GOVERNING ANY GENERAL OR SPECIFIC DELEGATION OF ANY AUTHORITY OR
FUNCTION OF THE COMMISSION;
  (D) PROVIDING REASONABLE PROCEDURES FOR CALLING AND  CONDUCTING  MEET-
INGS OF THE COMMISSION THAT CONSIST OF A MAJORITY OF COMMISSION MEMBERS,
ENSURING  REASONABLE  ADVANCE  NOTICE OF EACH SUCH MEETING AND PROVIDING

S. 4869                            11

FOR THE RIGHT OF CITIZENS TO ATTEND EACH SUCH  MEETING  WITH  ENUMERATED
EXCEPTIONS  DESIGNED  TO  PROTECT  THE PUBLIC'S INTEREST, THE PRIVACY OF
INDIVIDUALS AND  INSURERS'  AND  SURPLUS  LINES  LICENSEES'  PROPRIETARY
INFORMATION,  INCLUDING TRADE SECRETS. THE COMMISSION MAY MEET IN CAMERA
ONLY AFTER A MAJORITY OF THE ENTIRE MEMBERSHIP VOTES TO CLOSE A  MEETING
IN  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;
  (E) ESTABLISHING THE  TITLES,  DUTIES  AND  AUTHORITY  AND  REASONABLE
PROCEDURES FOR THE ELECTION OF THE OFFICERS OF THE COMMISSION;
  (F)  PROVIDING  REASONABLE STANDARDS AND PROCEDURES FOR THE ESTABLISH-
MENT OF THE PERSONNEL POLICIES AND PROGRAMS OF THE COMMISSION.  NOTWITH-
STANDING  ANY  CIVIL  SERVICE  OR  OTHER  SIMILAR LAWS OF ANY COMPACTING
STATE, THE BYLAWS SHALL EXCLUSIVELY GOVERN THE  PERSONNEL  POLICIES  AND
PROGRAMS OF THE COMMISSION;
  (G) PROMULGATING A CODE OF ETHICS TO ADDRESS PERMISSIBLE AND PROHIBIT-
ED ACTIVITIES OF COMMISSION MEMBERS AND EMPLOYEES; AND
  (H) PROVIDING A MECHANISM FOR WINDING UP THE OPERATIONS OF THE COMMIS-
SION  AND  THE  EQUITABLE DISPOSITION OF ANY EXCESS FUNDS THAT MAY EXIST
AFTER THE TERMINATION OF THE COMPACT AFTER THE PAYMENT AND/OR  RESERVING
OF ALL OF ITS DEBTS AND OBLIGATIONS;
  (4)  THE  COMMISSION SHALL PUBLISH ITS BYLAWS IN A CONVENIENT FORM AND
FILE A COPY THEREOF AND A COPY OF ANY AMENDMENT THERETO WITH THE  APPRO-
PRIATE AGENCY OR OFFICER IN EACH OF THE COMPACTING STATES.
  (B)  (1)  AN EXECUTIVE COMMITTEE OF THE COMMISSION ("EXECUTIVE COMMIT-
TEE") SHALL BE ESTABLISHED. ALL  ACTIONS  OF  THE  EXECUTIVE  COMMITTEE,
INCLUDING  COMPLIANCE  AND  ENFORCEMENT  ARE  SUBJECT  TO THE REVIEW AND
RATIFICATION OF THE COMMISSION AS PROVIDED IN THE BYLAWS. THE  EXECUTIVE
COMMITTEE  SHALL  HAVE  NO  MORE THAN FIFTEEN REPRESENTATIVES OR ONE FOR
EACH STATE IF THERE ARE LESS THAN FIFTEEN COMPACTING STATES,  WHO  SHALL
SERVE FOR A TERM AND BE ESTABLISHED IN ACCORDANCE WITH THE BYLAWS.
  (2)  THE  EXECUTIVE  COMMITTEE SHALL HAVE SUCH AUTHORITY AND DUTIES AS
MAY BE SET FORTH IN THE BYLAWS, INCLUDING BUT NOT LIMITED TO:
  (A) MANAGING THE AFFAIRS OF THE COMMISSION IN A MANNER CONSISTENT WITH
THE BYLAWS AND PURPOSES OF THE COMMISSION;
  (B) ESTABLISHING AND OVERSEEING AN ORGANIZATIONAL STRUCTURE WITHIN AND
APPROPRIATE PROCEDURES FOR THE COMMISSION TO PROVIDE FOR THE CREATION OF
RULES AND OPERATING PROCEDURES;
  (C) OVERSEEING THE OFFICES OF THE COMMISSION; AND
  (D) PLANNING, IMPLEMENTING AND COORDINATING COMMUNICATIONS AND  ACTIV-
ITIES  WITH  OTHER  STATE, FEDERAL AND LOCAL GOVERNMENT ORGANIZATIONS IN
ORDER TO ADVANCE THE GOALS OF THE COMMISSION.
  (3) THE COMMISSION SHALL ANNUALLY ELECT OFFICERS  FROM  THE  EXECUTIVE
COMMITTEE,  WITH  EACH HAVING SUCH AUTHORITY AND DUTIES AS MAY BE SPECI-
FIED IN THE BYLAWS.
  (4) THE EXECUTIVE 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  COMMIS-
SION  MAY DEEM APPROPRIATE. THE EXECUTIVE DIRECTOR SHALL SERVE AS SECRE-
TARY TO THE COMMISSION BUT SHALL NOT BE A MEMBER OF THE COMMISSION.  THE
EXECUTIVE DIRECTOR SHALL HIRE AND SUPERVISE SUCH OTHER PERSONS AS MAY BE
AUTHORIZED BY THE COMMISSION.
  (C)  (1)  AN OPERATIONS COMMITTEE SHALL BE ESTABLISHED. ALL ACTIONS OF
THE OPERATIONS COMMITTEE ARE SUBJECT TO THE REVIEW AND OVERSIGHT OF  THE

S. 4869                            12

COMMISSION  AND  THE  EXECUTIVE  COMMITTEE  AND  MUST BE APPROVED BY THE
COMMISSION. THE EXECUTIVE COMMITTEE WILL ACCEPT THE  DETERMINATIONS  AND
RECOMMENDATIONS  OF  THE OPERATIONS COMMITTEE UNLESS GOOD CAUSE IS SHOWN
WHY  SUCH DETERMINATIONS AND RECOMMENDATIONS SHOULD NOT BE APPROVED. ANY
DISPUTES AS TO WHETHER GOOD CAUSE EXISTS TO REJECT ANY DETERMINATION  OR
RECOMMENDATION  OF  THE  OPERATIONS  COMMITTEE  SHALL BE RESOLVED BY THE
MAJORITY VOTE OF THE COMMISSION. THE OPERATIONS COMMITTEE SHALL HAVE  NO
MORE  THAN  FIFTEEN  REPRESENTATIVES  OR ONE FOR EACH STATE IF THERE ARE
LESS THAN FIFTEEN COMPACTING STATES, WHO SHALL  SERVE  FOR  A  TERM  AND
SHALL  BE ESTABLISHED AS SET FORTH IN THE BYLAWS. THE OPERATIONS COMMIT-
TEE SHALL HAVE RESPONSIBILITY FOR:
  (A) EVALUATING TECHNOLOGY REQUIREMENTS FOR THE CLEARINGHOUSE,  ASSESS-
ING  EXISTING SYSTEMS USED BY STATE REGULATORY AGENCIES AND STATE STAMP-
ING OFFICES TO MAXIMIZE THE EFFICIENCY AND SUCCESSFUL INTEGRATION OF THE
CLEARINGHOUSE TECHNOLOGY SYSTEMS WITH STATE AND  STATE  STAMPING  OFFICE
TECHNOLOGY PLATFORMS AND TO MINIMIZE COSTS TO THE STATES, STATE STAMPING
OFFICES AND THE CLEARINGHOUSE;
  (B)  MAKING  RECOMMENDATIONS  TO  THE EXECUTIVE COMMITTEE BASED ON ITS
ANALYSIS AND DETERMINATION OF THE CLEARINGHOUSE TECHNOLOGY  REQUIREMENTS
AND COMPATIBILITY WITH EXISTING STATE AND STATE STAMPING OFFICE SYSTEMS;
  (C)  EVALUATING  THE MOST SUITABLE PROPOSALS FOR ADOPTION AS MANDATORY
RULES, ASSESSING SUCH PROPOSALS FOR EASE OF INTEGRATION  BY  STATES  AND
LIKELIHOOD  OF  SUCCESSFUL IMPLEMENTATION AND TO REPORT TO THE EXECUTIVE
COMMITTEE ITS DETERMINATIONS AND RECOMMENDATIONS; AND
  (D) SUCH OTHER DUTIES AND RESPONSIBILITIES AS ARE DELEGATED TO  IT  BY
THE BYLAWS, THE EXECUTIVE COMMITTEE OR THE COMMISSION.
  (2)  ALL REPRESENTATIVES OF THE OPERATIONS COMMITTEE SHALL BE INDIVID-
UALS WHO HAVE EXTENSIVE EXPERIENCE  AND/OR  EMPLOYMENT  IN  THE  SURPLUS
LINES  INSURANCE BUSINESS, INCLUDING, BUT NOT LIMITED TO, EXECUTIVES AND
ATTORNEYS EMPLOYED BY SURPLUS LINES INSURERS, SURPLUS  LINES  LICENSEES,
LAW  FIRMS,  STATE  INSURANCE DEPARTMENTS AND/OR STATE STAMPING OFFICES.
OPERATIONS  COMMITTEE  REPRESENTATIVES  FROM  COMPACTING  STATES   WHICH
UTILIZE  THE  SERVICES OF A STATE STAMPING OFFICE MUST APPOINT THE CHIEF
OPERATING OFFICER OR A SENIOR MANAGER OF THE STATE  STAMPING  OFFICE  TO
THE OPERATIONS COMMITTEE.
  (D)  (1)  A  LEGISLATIVE  COMMITTEE  COMPRISED OF STATE LEGISLATORS OR
THEIR DESIGNEES SHALL BE ESTABLISHED TO MONITOR THE  OPERATIONS  OF  AND
MAKE  RECOMMENDATIONS TO THE COMMISSION, INCLUDING THE EXECUTIVE COMMIT-
TEE; PROVIDED THAT THE MANNER OF SELECTION AND TERM OF  ANY  LEGISLATIVE
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 EXECUTIVE COMMITTEE SHALL CONSULT WITH AND REPORT TO THE
LEGISLATIVE COMMITTEE.
  (2) THE COMMISSION MAY ESTABLISH ADDITIONAL ADVISORY COMMITTEES AS ITS
BYLAWS MAY PROVIDE FOR THE CARRYING OUT OF ITS FUNCTIONS.
  (E) THE COMMISSION SHALL MAINTAIN ITS CORPORATE BOOKS AND  RECORDS  IN
ACCORDANCE WITH THE BYLAWS.
  (F)  (1)  THE  MEMBERS,  OFFICERS,  EXECUTIVE  DIRECTOR, EMPLOYEES AND
REPRESENTATIVES OF THE COMMISSION, THE EXECUTIVE COMMITTEE AND ANY OTHER
COMMITTEE 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  LIABIL-
ITY  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

S. 4869                            13

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 OR WANTON MISCONDUCT OF THAT PERSON.
  (2)  THE COMMISSION SHALL DEFEND ANY MEMBER, OFFICER, EXECUTIVE DIREC-
TOR, EMPLOYEE OR REPRESENTATIVE OF THE COMMISSION, THE EXECUTIVE COMMIT-
TEE OR ANY OTHER COMMITTEE 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 FROM THAT PERSON'S INTENTIONAL OR WILL-
FUL OR WANTON MISCONDUCT.
  (3) THE COMMISSION SHALL INDEMNIFY AND HOLD HARMLESS ANY MEMBER, OFFI-
CER,  EXECUTIVE  DIRECTOR, EMPLOYEE OR REPRESENTATIVE OF THE COMMISSION,
EXECUTIVE COMMITTEE OR ANY OTHER COMMITTEE OF  THE  COMMISSION  FOR  THE
AMOUNT  OF ANY SETTLEMENT OR JUDGMENT OBTAINED AGAINST THAT PERSON ARIS-
ING 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, DUTIES OR RESPONSIBILITIES, PROVIDED
THAT THE ACTUAL OR ALLEGED ACT, ERROR OR OMISSION DID  NOT  RESULT  FROM
THE INTENTIONAL OR WILLFUL OR WANTON MISCONDUCT OF THAT PERSON.
  S  2908. MEETINGS AND ACTS OF THE COMMISSION. (A) THE COMMISSION SHALL
MEET AND TAKE SUCH ACTIONS AS ARE CONSISTENT WITH THE PROVISIONS OF THIS
COMPACT AND THE BYLAWS.
  (B) EACH MEMBER OF THE COMMISSION SHALL HAVE THE RIGHT  AND  POWER  TO
CAST  A  VOTE  TO WHICH THAT COMPACTING STATE IS ENTITLED AND TO PARTIC-
IPATE 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.
  (C) THE COMMISSION SHALL MEET AT LEAST ONCE DURING EACH CALENDAR YEAR.
ADDITIONAL MEETINGS SHALL BE HELD AS SET FORTH IN THE BYLAWS.
  (D)  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  OTHER-
WISE PROVIDED IN THE COMPACT.
  (E)  THE  COMMISSION  SHALL  PROMULGATE  RULES CONCERNING ITS MEETINGS
CONSISTENT WITH THE  PRINCIPLES  CONTAINED  IN  THE  GOVERNMENT  IN  THE
SUNSHINE ACT, 5 U.S.C. S 552B, AS MAY BE AMENDED.
  (F)  THE COMMISSION AND ITS COMMITTEES MAY CLOSE A MEETING, OR PORTION
THEREOF, WHERE IT DETERMINES BY MAJORITY VOTE THAT AN OPEN MEETING WOULD
BE LIKELY TO:
  (1) RELATE SOLELY TO THE COMMISSION'S INTERNAL PERSONNEL PRACTICES AND
PROCEDURES;
  (2) DISCLOSE MATTERS SPECIFICALLY EXEMPTED FROM DISCLOSURE BY  FEDERAL
AND STATE STATUTE;
  (3)  DISCLOSE  TRADE  SECRETS  OR  COMMERCIAL OR FINANCIAL INFORMATION
WHICH IS PRIVILEGED OR CONFIDENTIAL;
  (4) INVOLVE ACCUSING A PERSON OF A  CRIME,  OR  FORMALLY  CENSURING  A
PERSON;
  (5)  DISCLOSE  INFORMATION OF A PERSONAL NATURE WHERE DISCLOSURE WOULD
CONSTITUTE A CLEARLY UNWARRANTED INVASION OF PERSONAL PRIVACY;

S. 4869                            14

  (6)  DISCLOSE  INVESTIGATIVE  RECORDS  COMPILED  FOR  LAW  ENFORCEMENT
PURPOSES; OR
  (7)  SPECIFICALLY RELATE TO THE COMMISSION'S ISSUANCE OF A SUBPOENA OR
ITS PARTICIPATION IN A CIVIL ACTION OR OTHER LEGAL PROCEEDING.
  (G) FOR A MEETING,  OR  PORTION  OF  A  MEETING,  CLOSED  PURSUANT  TO
SUBSECTION (F) OF THIS SECTION, THE COMMISSION'S LEGAL COUNSEL OR DESIG-
NEE  SHALL  CERTIFY  THAT  THE MEETING MAY BE CLOSED AND SHALL REFERENCE
EACH RELEVANT EXEMPTIVE PROVISION.   THE COMMISSION SHALL  KEEP  MINUTES
WHICH  SHALL FULLY AND CLEARLY DESCRIBE ALL MATTERS DISCUSSED IN A MEET-
ING AND SHALL PROVIDE A FULL AND ACCURATE SUMMARY OF ACTIONS  TAKEN  AND
THE  REASONS  THEREFORE,  INCLUDING A DESCRIPTION OF THE VIEWS EXPRESSED
AND THE RECORD OF A  ROLL  CALL  VOTE.    ALL  DOCUMENTS  CONSIDERED  IN
CONNECTION  WITH  AN  ACTION  SHALL  BE  IDENTIFIED IN SUCH MINUTES. ALL
MINUTES AND DOCUMENTS OF A  CLOSED  MEETING  SHALL  REMAIN  UNDER  SEAL,
SUBJECT TO RELEASE BY A MAJORITY VOTE OF THE COMMISSION.
  S  2909.  RULEMAKING  FUNCTIONS  OF THE COMMISSION. (A) THE COMMISSION
SHALL PROMULGATE REASONABLE RULES IN ORDER TO EFFECTIVELY AND EFFICIENT-
LY 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 ARTICLE  OR  THE
POWERS GRANTED HEREUNDER, THEN SUCH AN ACTION BY THE COMMISSION SHALL BE
INVALID AND HAVE NO FORCE OR EFFECT.
  (B) RULES SHALL BE MADE PURSUANT TO A RULEMAKING PROCESS THAT SUBSTAN-
TIALLY CONFORMS TO THE MODEL STATE ADMINISTRATIVE PROCEDURE ACT OF 1981,
FOUND  IN  VOLUME  FIFTEEN OF THE UNIFORM LAWS ANNOTATED, AS AMENDED, AS
MAY BE APPROPRIATE TO THE OPERATIONS OF THE COMMISSION.
  (C) ALL RULES AND AMENDMENTS THERETO SHALL BECOME EFFECTIVE AS OF  THE
DATE SPECIFIED IN EACH RULE, OPERATING PROCEDURE OR AMENDMENT.
  (D) NOT LATER THAN THIRTY DAYS AFTER A RULE IS PROMULGATED, ANY PERSON
MAY  FILE  A PETITION FOR JUDICIAL REVIEW OF THE RULE; PROVIDED THAT THE
FILING OF SUCH A PETITION SHALL NOT STAY OR OTHERWISE PREVENT  THE  RULE
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 TO BE UNLAWFUL IF THE RULE REPRESENTS A  REASONABLE  EXER-
CISE OF THE COMMISSION'S AUTHORITY.
  S  2910.  COMMISSION RECORDS AND ENFORCEMENT. (A) 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,
INSURERS, INSUREDS OR SURPLUS LINES LICENSEE TRADE SECRETS. STATE TRANS-
ACTION DOCUMENTATION AND CLEARINGHOUSE TRANSACTION DATA COLLECTED BY THE
CLEARINGHOUSE  SHALL  BE  USED  FOR  ONLY THOSE PURPOSES EXPRESSED IN OR
REASONABLY IMPLIED UNDER THE PROVISIONS OF THIS COMPACT AND THE  COMMIS-
SION SHALL AFFORD THIS DATA THE BROADEST PROTECTIONS AS PERMITTED BY ANY
APPLICABLE  LAW  FOR  PROPRIETARY INFORMATION, TRADE SECRETS OR PERSONAL
DATA. 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.
  (B) 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 MEMBER OF THE  DUTY  TO  DISCLOSE
ANY  RELEVANT  RECORDS,  DATA OR INFORMATION TO THE COMMISSION; PROVIDED

S. 4869                            15

THAT DISCLOSURE TO THE COMMISSION SHALL NOT BE DEEMED TO WAIVE OR OTHER-
WISE AFFECT ANY CONFIDENTIALITY REQUIREMENT AND FURTHER  PROVIDED  THAT,
EXCEPT  AS  OTHERWISE EXPRESSLY PROVIDED IN THIS ARTICLE, THE COMMISSION
SHALL NOT BE SUBJECT TO THE COMPACTING STATE'S LAWS PERTAINING TO CONFI-
DENTIALITY  AND NONDISCLOSURE WITH RESPECT TO RECORDS, DATA AND INFORMA-
TION IN ITS POSSESSION.   CONFIDENTIAL  INFORMATION  OF  THE  COMMISSION
SHALL  REMAIN  CONFIDENTIAL  AFTER  SUCH  INFORMATION IS PROVIDED TO ANY
MEMBER, AND THE COMMISSION SHALL MAINTAIN  THE  CONFIDENTIALITY  OF  ANY
INFORMATION  PROVIDED  BY  A  MEMBER  THAT  IS  CONFIDENTIAL  UNDER THAT
MEMBER'S STATE LAW.
  (C) THE COMMISSION SHALL MONITOR COMPACTING STATES FOR COMPLIANCE WITH
DULY ADOPTED BYLAWS AND RULES. THE COMMISSION SHALL NOTIFY ANY  NON-COM-
PLYING  COMPACTING STATE IN WRITING OF ITS NONCOMPLIANCE WITH COMMISSION
BYLAWS OR RULES.  IF A NON-COMPLYING COMPACTING STATE  FAILS  TO  REMEDY
ITS  NONCOMPLIANCE WITHIN THE TIME SPECIFIED IN THE NOTICE OF NONCOMPLI-
ANCE, THE COMPACTING STATE SHALL BE DEEMED TO BE IN DEFAULT AS SET FORTH
IN SECTION TWO THOUSAND NINE HUNDRED FIFTEEN OF THIS ARTICLE.
  S 2911. DISPUTE RESOLUTION. (A) BEFORE A MEMBER MAY BRING AN ACTION IN
A COURT OF COMPETENT JURISDICTION FOR VIOLATION OF ANY PROVISION, STAND-
ARD OR REQUIREMENT OF THE COMPACT, 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  OR  MORE
COMPACTING  STATES,  CONTRACTING STATES OR NON-COMPACTING STATES AND THE
COMMISSION SHALL PROMULGATE A RULE PROVIDING ALTERNATIVE DISPUTE  RESOL-
UTION PROCEDURES FOR SUCH DISPUTES.
  (B)  THE  COMMISSION SHALL ALSO PROVIDE ALTERNATIVE DISPUTE RESOLUTION
PROCEDURES TO RESOLVE ANY DISPUTES BETWEEN  INSUREDS  OR  SURPLUS  LINES
LICENSEES  CONCERNING  A TAX CALCULATION OR ALLOCATION OR RELATED ISSUES
WHICH ARE THE SUBJECT OF THIS COMPACT.
  (C) ANY ALTERNATIVE DISPUTE RESOLUTION PROCEDURES SHALL BE UTILIZED IN
CIRCUMSTANCES WHERE A DISPUTE ARISES AS TO WHICH STATE  CONSTITUTES  THE
HOME STATE.
  S  2912.  REVIEW  OF  COMMISSION DECISIONS. REGARDING COMMISSION DECI-
SIONS:
  (A) EXCEPT AS NECESSARY FOR PROMULGATING RULES TO FULFILL THE PURPOSES
OF THIS COMPACT, THE COMMISSION SHALL NOT HAVE  AUTHORITY  TO  OTHERWISE
REGULATE INSURANCE IN THE COMPACTING STATES.
  (B)  NOT  LATER THAN THIRTY DAYS AFTER THE COMMISSION HAS GIVEN NOTICE
OF ANY RULE OR ALLOCATION FORMULA, ANY THIRD PARTY FILER  OR  COMPACTING
STATE  MAY  APPEAL  THE DETERMINATION TO A REVIEW PANEL APPOINTED BY THE
COMMISSION. THE COMMISSION SHALL PROMULGATE RULES  TO  ESTABLISH  PROCE-
DURES FOR APPOINTING SUCH REVIEW PANELS AND PROVIDE FOR NOTICE AND HEAR-
ING.  AN  ALLEGATION  THAT  THE  COMMISSION, IN MAKING COMPLIANCE OR TAX
DETERMINATIONS 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 SUBSECTION (F) OF SECTION
TWO THOUSAND NINE HUNDRED FOUR OF THIS ARTICLE.
  (C) THE COMMISSION SHALL HAVE AUTHORITY TO MONITOR, REVIEW AND  RECON-
SIDER  COMMISSION  DECISIONS  UPON  A FINDING THAT THE DETERMINATIONS OR
ALLOCATIONS DO NOT  MEET  THE  RELEVANT  RULE.  WHERE  APPROPRIATE,  THE
COMMISSION  MAY WITHDRAW OR MODIFY ITS DETERMINATION OR ALLOCATION AFTER
PROPER NOTICE AND HEARING, SUBJECT TO THE APPEAL PROCESS  SET  FORTH  IN
SUBSECTION (B) OF THIS SECTION.
  S  2913.  FINANCE.  (A)  THE  COMMISSION  SHALL PAY OR PROVIDE FOR THE
PAYMENT OF THE REASONABLE EXPENSES OF ITS  ESTABLISHMENT  AND  ORGANIZA-
TION.  TO  FUND  THE  COST  OF ITS INITIAL OPERATIONS THE COMMISSION MAY

S. 4869                            16

ACCEPT CONTRIBUTIONS, GRANTS AND OTHER FORMS OF FUNDING FROM  THE  STATE
STAMPING OFFICES, COMPACTING STATES AND OTHER SOURCES.
  (B) THE COMMISSION SHALL COLLECT A FEE PAYABLE BY THE INSURED DIRECTLY
OR  THROUGH  A  SURPLUS  LINES  LICENSEE  ON  EACH TRANSACTION PROCESSED
THROUGH THE COMPACT CLEARINGHOUSE TO COVER THE COST  OF  THE  OPERATIONS
AND  ACTIVITIES OF THE COMMISSION AND ITS STAFF IN A TOTAL AMOUNT SUFFI-
CIENT TO COVER THE COMMISSION'S ANNUAL BUDGET.
  (C) 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 SECTION
TWO THOUSAND NINE HUNDRED NINE OF THIS ARTICLE.
  (D) THE COMMISSION SHALL BE REGARDED AS PERFORMING  ESSENTIAL  GOVERN-
MENTAL FUNCTIONS IN EXERCISING SUCH POWERS AND FUNCTIONS AND IN CARRYING
OUT  THE  PROVISIONS OF THIS COMPACT AND OF ANY LAW RELATING THERETO AND
SHALL NOT BE REQUIRED TO PAY ANY TAXES OR ASSESSMENTS OF  ANY  CHARACTER
LEVIED  BY  ANY  STATE  OR POLITICAL SUBDIVISION THEREOF UPON ANY OF THE
PROPERTY USED BY IT FOR SUCH PURPOSES OR ANY INCOME  OR  REVENUE  THERE-
FROM, INCLUDING ANY PROFIT FROM A SALE OR EXCHANGE.
  (E)  THE  COMMISSION  SHALL KEEP COMPLETE AND ACCURATE ACCOUNTS OF ALL
ITS INTERNAL RECEIPTS, INCLUDING GRANTS AND DONATIONS AND  DISBURSEMENTS
FOR 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  NOT  LESS  FREQUENTLY  THAN  EVERY
THREE  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  MATE-
RIALS  MAY BE SHARED WITH THE COMMISSIONER, THE CONTROLLER OR THE STAMP-
ING OFFICE 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 LICENSEES' AND
INSURERS' PROPRIETARY INFORMATION, INCLUDING TRADE SECRETS, SHALL REMAIN
CONFIDENTIAL.
  (F) 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.
  (G) THE COMMISSION SHALL  NOT  MAKE  ANY  POLITICAL  CONTRIBUTIONS  TO
CANDIDATES  FOR  ELECTED OFFICE, ELECTED OFFICIALS, POLITICAL PARTIES OR
POLITICAL ACTION COMMITTEES. THE COMMISSION SHALL NOT ENGAGE IN LOBBYING
EXCEPT WITH RESPECT TO CHANGES TO THIS COMPACT.
  S 2914. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT. (A) ANY STATE
IS ELIGIBLE TO BECOME A COMPACTING STATE.
  (B) 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 RULES AND
CREATING THE CLEARINGHOUSE WHEN THERE ARE  A  TOTAL  OF  TEN  COMPACTING
STATES AND CONTRACTING STATES OR, ALTERNATIVELY, WHEN THERE ARE COMPACT-
ING  STATES  AND  CONTRACTING  STATES  REPRESENTING  GREATER  THAN FORTY
PERCENT OF THE SURPLUS LINES INSURANCE PREMIUM VOLUME BASED  ON  RECORDS
OF THE PERCENTAGE OF SURPLUS LINES INSURANCE PREMIUM SET FORTH IN APPEN-
DIX  A  OF  SECTION TWO THOUSAND NINE HUNDRED SEVENTEEN OF THIS ARTICLE.
THEREAFTER, IT SHALL BECOME  EFFECTIVE  AND  BINDING  AS  TO  ANY  OTHER
COMPACTING  STATE  UPON ENACTMENT OF THE COMPACT INTO LAW BY THAT STATE.

S. 4869                            17

NOTWITHSTANDING THE FOREGOING, THE CLEARINGHOUSE OPERATIONS AND THE DUTY
TO REPORT CLEARINGHOUSE TRANSACTION DATA SHALL BEGIN  ON  THE  FIRST  OF
JANUARY OR THE FIRST OF JULY NEXT FOLLOWING THE FIRST ANNIVERSARY OF THE
COMMISSION'S  EFFECTIVE  DATE.  FOR STATES WHICH JOIN THE COMPACT SUBSE-
QUENT TO THE EFFECTIVE DATE, A START DATE  FOR  REPORTING  CLEARINGHOUSE
TRANSACTION  DATA  SHALL BE SET BY THE COMMISSION PROVIDED SURPLUS LINES
LICENSEES AND ALL OTHER INTERESTED PARTIES RECEIVE NOT LESS THAN  NINETY
DAYS ADVANCE NOTICE.
  (C)  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.
  S 2915. WITHDRAWAL, DEFAULT AND TERMINATION. (A) (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 SPECIF-
ICALLY REPEALING THE STATUTE WHICH ENACTED THE COMPACT INTO LAW.
  (2) THE EFFECTIVE DATE OF WITHDRAWAL IS  THE  EFFECTIVE  DATE  OF  THE
REPEALING  STATUTE.   HOWEVER, THE WITHDRAWAL SHALL NOT APPLY TO ANY TAX
OR COMPLIANCE DETERMINATIONS APPROVED 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 COMMISSION.
  (3) THE MEMBER OF THE WITHDRAWING STATE SHALL IMMEDIATELY  NOTIFY  THE
EXECUTIVE  COMMITTEE  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
INTRODUCTION  OF  SUCH  LEGISLATION WITHIN TEN DAYS AFTER ITS RECEIPT OF
NOTICE THEREOF.
  (5) 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.  TO THE EXTENT THOSE OBLIGATIONS MAY HAVE
BEEN RELEASED OR RELINQUISHED BY MUTUAL AGREEMENT OF THE COMMISSION  AND
THE  WITHDRAWING  STATE,  THE  COMMISSION'S  DETERMINATIONS PRIOR TO THE
EFFECTIVE DATE OF WITHDRAWAL SHALL CONTINUE TO BE EFFECTIVE AND BE GIVEN
FULL FORCE AND EFFECT IN THE WITHDRAWING STATE, UNLESS FORMALLY RESCIND-
ED BY THE COMMISSION.
  (6) REINSTATEMENT FOLLOWING WITHDRAWAL OF ANY COMPACTING  STATE  SHALL
OCCUR  UPON  THE  EFFECTIVE DATE OF THE WITHDRAWING STATE REENACTING THE
COMPACT.
  (B) (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 BYLAWS OR DULY
PROMULGATED RULES, 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  OBLI-
GATIONS  OR RESPONSIBILITIES AND ANY OTHER GROUNDS DESIGNATED IN COMMIS-
SION 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 SPECI-
FIED  BY  THE  COMMISSION, THE DEFAULTING STATE SHALL BE TERMINATED FROM

S. 4869                            18

THE COMPACT AND ALL RIGHTS, PRIVILEGES AND BENEFITS  CONFERRED  BY  THIS
COMPACT SHALL BE TERMINATED FROM THE EFFECTIVE DATE OF TERMINATION.
  (2)  DECISIONS OF THE COMMISSION THAT ARE ISSUED 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
SUBSECTION (A) OF THIS SECTION.
  (3)  REINSTATEMENT  FOLLOWING  TERMINATION  OF  ANY  COMPACTING  STATE
REQUIRES A REENACTMENT OF THE COMPACT.
  (C) (1) THE COMPACT DISSOLVES EFFECTIVE UPON THE  DATE  OF  THE  WITH-
DRAWAL  OR  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 HAVE NO FURTHER FORCE OR  EFFECT  AND  THE  BUSINESS  AND
AFFAIRS  OF  THE COMMISSION SHALL BE WOUND UP AND ANY EXCESS FUNDS SHALL
BE DISTRIBUTED IN ACCORDANCE WITH THE RULES AND BYLAWS.
  S 2916. SEVERABILITY AND CONSTRUCTION.  (A)  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.
  (B)  THE  PROVISIONS  OF  THIS COMPACT SHALL BE LIBERALLY CONSTRUED TO
EFFECTUATE ITS PURPOSES.
  (C) THROUGHOUT THIS COMPACT THE USE OF THE SINGULAR SHALL INCLUDE  THE
PLURAL AND VICE-VERSA.
  (D)  THE  HEADINGS  AND CAPTIONS OF ARTICLES, SECTIONS AND SUBSECTIONS
USED IN THIS COMPACT ARE FOR CONVENIENCE ONLY AND SHALL  BE  IGNORED  IN
CONSTRUING THE SUBSTANTIVE PROVISIONS OF THIS COMPACT.
  S  2917.  BINDING  EFFECT  OF  COMPACT AND OTHER LAWS. (A) (1) NOTHING
HEREIN PREVENTS THE ENFORCEMENT OF ANY OTHER LAW OF A COMPACTING  STATE,
EXCEPT AS PROVIDED IN SUBSECTION (B) OF THIS SECTION.
  (2)  DECISIONS  OF THE COMMISSION AND ANY RULES AND ANY OTHER REQUIRE-
MENTS OF THE COMMISSION SHALL CONSTITUTE THE EXCLUSIVE RULE OR  DETERMI-
NATION  APPLICABLE  TO  THE  COMPACTING  STATES.  ANY  LAW OR REGULATION
REGARDING NON-ADMITTED INSURANCE OF MULTI-STATE RISKS THAT  IS  CONTRARY
TO RULES OF THE COMMISSION IS PREEMPTED WITH RESPECT TO THE FOLLOWING:
  (A) CLEARINGHOUSE TRANSACTION DATA REPORTING REQUIREMENTS;
  (B) ALLOCATION FORMULA;
  (C) CLEARINGHOUSE TRANSACTION DATA COLLECTION REQUIREMENTS;
  (D) PREMIUM TAX PAYMENT TIME FRAMES AND RULES CONCERNING DISSEMINATION
OF  DATA  AMONG  THE  COMPACTING  STATES  FOR  NON-ADMITTED INSURANCE OF
MULTI-STATE RISKS AND SINGLE-STATE RISKS;
  (E) EXCLUSIVE COMPLIANCE WITH SURPLUS LINES LAW OF THE HOME  STATE  OF
THE INSURED;
  (F)  RULES  FOR  REPORTING TO A CLEARINGHOUSE FOR RECEIPT AND DISTRIB-
UTION OF CLEARINGHOUSE TRANSACTION DATA RELATED TO  NON-ADMITTED  INSUR-
ANCE OF MULTI-STATE RISKS;
  (G) UNIFORM FOREIGN INSURERS ELIGIBILITY REQUIREMENTS;
  (H) UNIFORM POLICYHOLDER NOTICE; AND
  (I)  UNIFORM  TREATMENT  OF  PURCHASING  GROUPS PROCURING NON-ADMITTED
INSURANCE.
  (3) EXCEPT AS SET FORTH IN SUBSECTION (B) OF THIS SECTION,  ANY  RULE,
UNIFORM STANDARD OR OTHER REQUIREMENT OF THE COMMISSION SHALL CONSTITUTE
THE  EXCLUSIVE  PROVISION THAT A COMMISSIONER MAY APPLY TO COMPLIANCE OR
TAX DETERMINATIONS.  NOTWITHSTANDING THE FOREGOING, NO ACTION  TAKEN  BY
THE COMMISSION SHALL ABROGATE OR RESTRICT:
  (A) THE ACCESS OF ANY PERSON TO STATE COURTS;

S. 4869                            19

  (B)  THE  AVAILABILITY OF ALTERNATIVE DISPUTE RESOLUTION UNDER SECTION
TWO THOUSAND NINE HUNDRED ELEVEN OF THIS ARTICLE;
  (C)  REMEDIES AVAILABLE UNDER STATE LAW RELATED TO BREACH OF CONTRACT,
TORT OR OTHER LAWS NOT SPECIFICALLY DIRECTED TO COMPLIANCE OR TAX DETER-
MINATIONS;
  (D) STATE LAW RELATING TO THE CONSTRUCTION OF INSURANCE CONTRACTS; OR
  (E) THE AUTHORITY OF THE ATTORNEY GENERAL OF THE STATE, INCLUDING  BUT
NOT  LIMITED TO MAINTAINING ANY ACTIONS OR PROCEEDINGS, AS AUTHORIZED BY
LAW.
  (B) (1) ALL LAWFUL ACTIONS OF  THE  COMMISSION,  INCLUDING  ALL  RULES
PROMULGATED  BY  THE COMMISSION, ARE BINDING UPON THE COMPACTING STATES,
EXCEPT AS PROVIDED HEREIN.
  (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 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. THIS PROVISION MAY  BE  IMPLE-
MENTED BY RULE AT THE DISCRETION OF THE COMMISSION.
  (4)  IN  THE EVENT ANY PROVISION OF THIS COMPACT EXCEEDS THE CONSTITU-
TIONAL 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 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.
                               APPENDIX A
                SURPLUS LINE INSURANCE PREMIUMS BY STATE
                           PREMIUMS BASED ON              SHARE OF TOTAL
STATE                      TAXES PAID                     PREMIUMS
ALABAMA                       445,746,000                 1.47%
ALASKA                         89,453,519                 0.29%
ARIZONA                       663,703,267                 2.18%
ARKANSAS                      201,859,750                 0.66%
CALIFORNIA                  5,622,450,467                 18.49%
COLORADO                      543,781,333                 1.79%
CONNECTICUT                   329,358,800                 1.08%
DELAWARE                       92,835,950                 0.31%
FLORIDA                     2,660,908,760                 8.75%
GEORGIA                       895,643,150                 2.95%
HAWAII                        232,951,489                 0.77%
IDAHO                          74,202,255                 0.24%
ILLINOIS                    1,016,504,629                 3.34%
INDIANA                       412,265,320                 1.36%
IOWA                          135,130,933                 0.44%
KANSAS                        160,279,300                 0.53%
KENTUCKY                      167,996,133                 0.55%
LOUISIANA                     853,173,280                 2.81%
MAINE                          60,111,200                 0.20%
MARYLAND                      434,887,600                 1.43%
MASSACHUSETTS                 708,640,225                 2.33%
MICHIGAN                      703,357,040                 2.31%
MINNESOTA                     393,128,400                 1.29%
MISSISSIPPI                   263,313,175                 0.87%
MISSOURI                      404,489,860                 1.33%

S. 4869                            20

MONTANA                        64,692,873                 0.21%
NEBRASKA                       92,141,167                 0.30%
NEVADA                        354,271,514                 1.17%
NEW HAMPSHIRE                 102,946,250                 0.34%
NEW JERSEY                  1,087,994,033                 3.58%
NEW MEXICO                     67,608,458                 0.22%
NEW YORK                    2,768,618,083                 9.11%
NORTH CAROLINA                514,965,060                 1.69%
NORTH DAKOTA                   36,223,943                 0.12%
OHIO                          342,000,000                 1.12%
OKLAHOMA                      319,526,400                 1.05%
OREGON                        312,702,150                 1.03%
PENNSYLVANIA                  780,666,667                 2.57%
RHODE ISLAND                   71,794,067                 0.24%
SOUTH CAROLINA                412,489,825                 1.36%
SOUTH DAKOTA                   38,702,120                 0.13%
TENNESSEE                     451,775,240                 1.49%
TEXAS                       3,059,170,454                 10.06%
UTAH                          142,593,412                 0.47%
VERMONT                        41,919,433                 0.14%
VIRGINIA                      611,530,667                 2.01%
WASHINGTON                    739,932,050                 2.43%
WEST VIRGINIA                 130,476,250                 0.43%
WISCONSIN                     248,758,333                 0.82%
WYOMING                        40,526,967                 0.13%

TOTAL                      30,400,197,251                 100.00%
  S 3. Subsection (d) of section 2118 of the insurance law is amended by
adding a new paragraph 4 to read as follows:
  (4)  IN  THE EVENT THAT THE SURPLUS LINES INSURANCE MULTISTATE COMPLI-
ANCE COMPACT ("SLIMPACT") IS ENACTED BY THIS STATE  AND  THE  COMMISSION
CREATED THEREUNDER BECOMES ACTIVE PURSUANT TO THE PROVISION OF SLIMPACT,
THEN  THIS STATE, WHEN IT IS THE HOME STATE OF THE INSURED, WILL REQUIRE
THE PAYMENT OF TAXES BE ALLOCATED BASED UPON  SLIMPACT'S  PROVISIONS  TO
ALL  OTHER  STATES  WHICH HAVE ADOPTED SLIMPACT; PROVIDED, HOWEVER, THAT
THIS STATE WILL APPLY ITS STATE TAX TO THE PREMIUM FOR  ALL  RISK  EXPO-
SURES  ALLOCATED  TO  THIS  STATE  AND  TO RISK EXPOSURES LOCATED IN ANY
STATES WHICH HAVE NOT ENACTED SLIMPACT.
  S 4. Section 9102 of the insurance law, as amended by  section  14  of
part I of chapter 61 of the laws of 2011, is amended to read as follows:
  S  9102.  Allocation of premiums.  In determining the amount of direct
premiums taxable in this state, all such premiums written, procured,  or
received  in  this  state  shall  be deemed written on property or risks
located or resident in this state except such  premiums  properly  allo-
cated and reported as taxable premiums of any other state or states.  IN
THE EVENT THAT THE SURPLUS LINES INSURANCE MULTISTATE COMPLIANCE COMPACT
("SLIMPACT")  IS ENACTED BY THIS STATE AND THE COMMISSION CREATED THERE-
UNDER BECOMES ACTIVE PURSUANT TO THE PROVISIONS OF SLIMPACT,  THEN  THIS
STATE,  WHEN  IT  IS  THE  HOME  STATE  OF THE INSURED, WILL REQUIRE THE
PAYMENT OF TAXES BE ALLOCATED BASED UPON SLIMPACT'S  PROVISIONS  TO  ALL
OTHER  STATES  WHICH HAVE ADOPTED SLIMPACT; PROVIDED, HOWEVER, THAT THIS
STATE WILL APPLY ITS STATE TAX TO THE PREMIUM  FOR  ALL  RISK  EXPOSURES
ALLOCATED  TO  THIS  STATE  AND  TO RISK EXPOSURES LOCATED IN ANY STATES
WHICH HAVE NOT ENACTED SLIMPACT.
  S 5. Section 1552 of the tax law, as amended by section 18 of  part  I
of chapter 61 of the laws of 2011, is amended to read as follows:

S. 4869                            21

  S 1552. Allocation.  Where the taxable insurance contract covers risks
located  or  resident both within and without this state and the taxpay-
er's home state is New York, one hundred percent of  premiums  shall  be
allocable  to this state.  IN THE EVENT THAT THE SURPLUS LINES INSURANCE
MULTISTATE  COMPLIANCE COMPACT ("SLIMPACT") IS ENACTED BY THIS STATE AND
THE  COMMISSION  CREATED  THEREUNDER  BECOMES  ACTIVE  PURSUANT  TO  THE
PROVISIONS  OF  SLIMPACT,  THEN THIS STATE, WHEN IT IS THE HOME STATE OF
THE INSURED, WILL REQUIRE THE PAYMENT OF TAXES BE ALLOCATED  BASED  UPON
SLIMPACT'S  PROVISIONS  TO ALL OTHER STATES WHICH HAVE ADOPTED SLIMPACT;
PROVIDED, HOWEVER, THAT THIS STATE WILL  APPLY  ITS  STATE  TAX  TO  THE
PREMIUM FOR ALL RISK EXPOSURES ALLOCATED TO THIS STATE AND TO RISK EXPO-
SURES LOCATED IN ANY STATES WHICH HAVE NOT ENACTED SLIMPACT.
  S  6.  This act shall take effect October 19, 2011; provided, however,
that if the amendments to section 9102 of the insurance law and  section
1552  of  the tax law made by sections 14 and 18 of Part I of chapter 61
of the laws of 2011, respectively, shall not have  taken  effect  on  or
before  such  date,  then  sections four and five of this act shall take
effect on the same date and in the same manner  as  such  sections  take
effect  pursuant  to  section  19 of Part I of chapter 61 of the laws of
2011, takes effect.

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