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More states join anticonsumer insurance regulation 'compact'.

State legislatures around the country continue to embrace--or at least seriously consider the proposed Interstate Insurance Product Regulation Compact, despite widespread opposition by consumer groups and questions about its constitutionality raised by at least 40 state attorneys general.

At press time, 28 states had joined the compact, and lawmakers in 10 others (Alabama, Arkansas, Connecticut, Illinois, Missouri, New Jersey, New Mexico, New York, South Carolina, and Wisconsin) were considering the proposal, drafted by the National Association of Insurance Commissioners. (See Insurance "Compact" Moves Ahead Despite Consumer Objections, TRIAL 10 (Aug. 2006).)

While the compact's purported goal is to provide uniform product standards for certain lines of insurance--including annuities, life insurance, disability income, and long-term-care products--it essentially creates a private corporation, the Interstate Insurance Product Regulation Commission, that replaces a state's insurance regulatory authority; has sweeping legislative, executive, and judicial powers; and acts without accountability.

The compact is blatantly unconstitutional: It violates separation and delegation of powers, state constitutional prohibitions on special legislation, and state constitutional guarantees of complete and equal access to the courts.

One of the most objectionable provisions of the compact is its broad immunity proposal. Every member of the commission and its officers, executive director, employees, and representatives are immune from liability, both personally and in their official capacity.

The compact also:

* allows the insurance commissioners of states that have joined the compact to designate anyone--potentially including bankers, industry CEOs, and other insurance representatives--to be a member of the commission and cast a vote on administrative and policy matters

* lacks statutory standards for public accountability

* designates the location of the commission's principal office in a state as the only venue for judicial proceedings by or against the commission

* creates a cumbersome and complex process for opting out of a uniform standard or law

* circumvents state confidentiality and nondisclosure laws

* provides no assurance of consumer protections.

The model has now been enacted in Puerto Rico and 28 states (Alaska, Colorado, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wyoming).

The compact became operational last year for purposes of adopting uniform product standards and for accepting product filings after 26 states joined it.
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Title Annotation:State report
Publication:Trial
Date:May 1, 2007
Words:376
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