Insurance Compact Enabling Act

The Insurance Compact Enabling Act was considered by ALEC's Commerce, Insurance and Economic Development Task Force at the States and Nation Policy Summit on December 3, 2010. This bill was part of the ALEC task force agenda between 2010 and 2012, but due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law.

ALEC Draft Bill Text

SUMMARY

This Act allows a state, along with party states, to exercise sovereign police powers and solemnly agree to the following Interstate Insurance Compact.

MODEL LEGISLATION

Section 1. Findings and Declaration of Policy.

A. {Insert state} and the party states find public health, safety, and morals, as well as individual liberty and economic development, are best served by open and competitive insurance markets and the freedom to sell and purchase insurance products without unreasonable governmental interference.

B. It is the policy of {insert state} and the party states to:

1. Secure the right of any insurance company that is lawfully doing business within the jurisdiction of any compacting state to reciprocal access to any corresponding intrastate insurance market within the jurisdiction of any compacting state; and

2. Secure the right of any person that is domiciled in any compacting state to maintain freedom of choice among insurance policies, as well as the coverage and terms of existing insurance policies, in any and all compacting states.

Section 2. Definitions. As used in this Compact:

A. “State” means a state of the United States.

B. “Insurance policy” means any contract in which one person promises and undertakes, in exchange for consideration of a set or assessed amount of money, to make a payment to either another party or a third-party if a specified event occurs involving a loss, casualty, illness, bodily injury, or death.

C. “Insurance company” means any organization that offers insurance policies.

Section 3. Terms.

A. Any insurance company doing business within the jurisdiction of any compacting state, in compliance with the laws of that state, has the vested right to do business within the jurisdiction of all compacting states under the same terms and conditions.

B. Any insurance company that is doing business within the jurisdiction of any compacting state, in compliance with the laws of that state, shall have unhindered reciprocal access to any corresponding intrastate insurance market within the jurisdiction of any other compacting state.

C. Any person who is domiciled in any compacting state and who has contracted for any insurance policy in compliance with the laws of that state has the vested right to maintain the coverage and terms of that policy in all compacting states regardless of domicile.

SUPPLEMENT TO INSURANCE COMPACT ENABLING ACT: MODEL NOTICE OF CONFIRMATION

WHEREAS, The Interstate Insurance Compact was formed to provide means through which the signing jurisdictions may participate in a reciprocal program to effectuate the stated policies and purposes of the Compact, and

WHEREAS, Authority to enter the Compact is contained in {insert statute}; and

WHEREAS, The Compact will serve to mutually benefit the residents, businesses, and the operation of government in the party jurisdictions.

NOW THEREFORE, In consideration of the mutual and reciprocal benefits to flow therefrom, and pursuant to the authority contained in {insert statutory citation of authority}, the “Interstate Insurance Compact” is hereby confirmed.

FURTHER PROVIDED That the desired date of entry {is/was} {insert date}; and

(Drafting Note: Effective date of entry must be at least 60 days after notification is given to other compact members by the Secretary.)

FURTHER PROVIDED That this jurisdiction agrees to comply with the terms and provisions of the Compact. Authority for administration of this Compact within this jurisdiction is vested in the office of the governor of each signing state, unless a different administrator is designated by the

DATED: {Insert date}

FOR THE STATE OF: {Insert state}

TITLE: {Insert title of compact administrator}

SIGNATURE: {Display signature of compact administrator}

For Secretary Use:

Notice Received {insert date}

Notice sent to Compact members {insert date}

SUPPLEMENT TO INSURANCE COMPACT ENABLING ACT: MODEL INTERSTATE INSURANCE COMPACT

The Party States herewith exercise their sovereign police powers and solemnly agree to the following articles of the Interstate Insurance Compact.

Article I. Findings and Declaration of Policy.

1. The Party States find public health, safety and morals, as well as individual liberty and economic development, are best served by open and competitive insurance markets and the freedom to sell and purchase insurance products without unreasonable governmental interference.

2. It is the policy of each of the Party States to:

A. Secure the right of any insurance company that is lawfully doing business within the jurisdiction of any Compacting state to reciprocal access to any corresponding intrastate insurance market within the jurisdiction of any Compacting state; and

B. Secure the right of any person that is domiciled in any Compacting state to maintain freedom of choice among insurance policies, as well as the coverage and terms of existing insurance policies, in any and all Compacting states.

Article II. Definitions. As used in this Compact:

1. “State” means a state of the United States.

2. “Insurance policy” means any contract in which one person promises and undertakes, in exchange for consideration of a set or assessed amount of money, to make a payment to either another party or a third-party if a specified event occurs involving a loss, casualty, illness, bodily injury or death.

3. “Insurance company” means any organization that offers insurance policies.

Article III. Terms.

1. Any insurance company doing business within the jurisdiction of any Compacting state, in compliance with the laws of that state, has the vested right to do business within the jurisdiction of all Compacting states under the same terms and conditions.

2. Any insurance company that is doing business within the jurisdiction of any Compacting state, in compliance with the laws of that state, shall have unhindered reciprocal access to any corresponding intrastate insurance market within the jurisdiction of any other Compacting

3. Any person who is domiciled in any Compacting state and who has contracted for any insurance policy in compliance with the laws of that state has the vested right to maintain the coverage and terms of that policy in all Compacting states regardless of domicile.

4. Any person who is domiciled in any Compacting state shall not be prohibited by law from purchasing or selling any insurance policy that is offered in compliance with the laws of any Compacting state.

5. No law or regulation shall compel, directly or indirectly, any person to purchase any insurance policy as a condition of lawful residency.

6. No person shall be required to pay penalties or fines for paying directly for goods or services that might otherwise be paid through an insurance policy.

Article IV. Enforcement.

1. Anyone knowingly interfering with the foregoing terms and conditions shall have committed both a civil rights violation and a criminal offense under the laws of the Party State in which such interference occurs.

2. Redress for any civil rights violation hereunder shall be available in the courts of any Party State both for the victim of such interference and for any taxpaying resident of any Party State, the latter of whom shall be regarded as acting in the public interest on behalf of the Party State in which they reside.

3. Remedies for any civil rights violation hereunder shall include compensatory monetary damages, court costs, litigation expenses, attorney’s fees, as well as declaratory and injunctive relief.

4. Any criminal offense hereunder shall be punishable by a prison sentence of up to five years and a fine of not less than $5,000.

5. The chief law enforcement officer of each Party State shall coordinate criminal offense enforcement efforts under this Article with other Party States.

Article V. Compact Administrator and Interchange of Information.

1. The governor of each Party State, or the governor’s designee, shall be the “Compact Administrator” of this Compact for his or her state. The Compact Administrator shall have the power to formulate all necessary and proper procedures to effectuate this Compact, and to delegate needed tasks to other state agencies.

2. The Compact Administrator of each Party State shall furnish to the Compact Administrator of each other Party State any information or documents reasonably necessary to facilitate the administration of this Compact.

Article VI. Entry Into Force and Withdrawal.

1. This Compact shall enter into force and become effective as to any state when it has enacted the same into law.

2. Any Party State may withdraw from this Compact by enacting a statute repealing the same, but no such withdrawal shall take effect until four years after the executive head of the withdrawing state has given notice of the withdrawal to the executive heads of all other Party States. No withdrawal shall affect the validity or applicability of the Compact to states remaining party to the Compact. Party States shall have the power to rescind any notice of withdrawal within said four year period.

Article VII. Construction and Severability.

This Compact shall be liberally construed so as to effectuate the purposes thereof. If it receives congressional consent, it is intended to Supplement to Insurance Compact Enabling Act: Model Interstate Insurance Compact 2 operate as the Law of the Nation with respect to the Party States and to stop the federal government from engaging in any action inconsistent with the grant of congressional consent. The provisions of this Compact shall be severable; and if any phrase, clause, sentence, or provision of this Compact is declared to be contrary to the constitution of any Party State or of the United States or the applicability thereof to any government, agency, person, or circumstance is held invalid, the validity of the remainder of this Compact and the applicability thereof to any government, agency, person, or circumstance shall not be affected thereby. If this Compact shall be held contrary to the constitution of any state party thereto, the Compact shall remain in full force and effect as to remaining states and in full force and effect as to the state affected as to all severable matters.