NEBRASKA

DOCUMENT: 44-6501

HEADING Chapter 44. Insurance.
CATCHLINE Interstate Insurance Receivership Compact.
LAW 44-6501. The State of Nebraska ratifies the following
Interstate Insurance Receivership Compact:

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

ARTICLE II.
DEFINITIONS
For the purposes of this Compact:
1. "By-laws" mean those by-laws established by the
Commission for its governance, or for directing or controlling
the Commission's actions or conduct.
2. "Compacting State" means any State which has
enacted the enabling legislation for this Compact.
3. "Commission" means the "Interstate Insurance
Receivership Commission" established by this Compact.
4. "Commissioner" means the chief insurance regulatory
official of a State.
5. "Deputy Receiver" means any person appointed or
retained by a Receiver and who is the Receiver's duly authorized
representative for administering one or more Estates.
6. "Domiciliary State" means the state in which an
Insurer is incorporated or organized; or, in the case of an alien
Insurer, its state of entry; or in the case of an unauthorized
Insurer not incorporated, organized, or entered in any State, a
state where the Insurer is engaged in or doing business.
7. "Estate" means the assets and liabilities of any
Insurer in Receivership.
8. "Guaranty Association" means an insurance guaranty
fund or association or any similar entity now or hereafter
created by statute in a Compacting State, other than a
Receivership, to pay or assume, in whole or in part, the
contractual claim obligations of insolvent Insurers.
9. "Insurer" means any person who has done, purports
to do, is doing or is licensed to do any insurance or reinsurance
business, or is or has been subject to the authority of, or to
liquidation, rehabilitation, supervision, conservation or
ancillary receivership by, any Commissioner.
10. "Member" means the Commissioner of a Compacting
State or his or her designee, who shall be a person officially
connected with the Commissioner and who is wholly or principally
employed by said Commissioner.
11. "Non-compacting State" means any State which has
not enacted the enabling legislation for this Compact.
12. "Operating Procedures" mean procedures promulgated
by the Commission implementing a Rule, an existing law in a
Compacting State, or a provision of this Compact.
13. "Publication" means the act of publishing in the
official state publication in a Compacting State or in such other
publication as may be established by the Commission.
14. "Receiver" means receiver, liquidator,
rehabilitator, conservator or ancillary receiver as the context
requires.
15. "Receivership" means any liquidation,
rehabilitation, conservation or ancillary receivership proceeding
as the context requires.
16. "Rules" means acts of the Commission, duly
promulgated pursuant to Article VII of this Compact,
substantially affecting interested parties in addition to the
Commission, which shall have the force and effect of law in the
Compacting States.
17. "State" means any state, district or territory of
the United States of America.

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

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

ARTICLE V.
ORGANIZATION OF THE COMMISSION
Section A. Membership, Voting and By-laws
1. Each Compacting State shall have and be limited to
one Member. Each Member shall be qualified to serve in such
capacity under or pursuant to the applicable law of the
Compacting State. Each Compacting State retains the
discretionary right to determine the due election or appointment
and qualification of its own Commissioner, and to fill all
vacancies of its Member.
2. Each Member shall be entitled to one vote.
3. The Commission shall, by a majority of the Members,
prescribe By-laws to govern its conduct as may be necessary or
appropriate to carry out the purposes of the Compact, including,
but not limited to:
a. establishing the fiscal year of the Commission;
b. providing reasonable standards and procedures: (i)
for the establishment of committees, and (ii) governing any
general or specific delegation of any authority or function of
the Commission;
c. providing reasonable procedures for calling and
conducting meetings of the Commission, and ensuring reasonable
notice of each such meeting;
d. establishing the titles and responsibilities of the
officers of the Commission;
e. providing reasonable standards and procedures for
the establishment of the personnel policies and programs of the
Commission. Notwithstanding any civil service or other similar
laws of any Compacting State, the By-laws shall exclusively
govern the personnel policies and programs of the Commission; and
f. providing a mechanism for winding up the operations
of the Commission and the equitable return of any surplus funds
that may exist after the termination of the Compact after the
payment and/or reserving of all of its debts and obligations.
Section B. Officers and Personnel
1. The Commission shall, by a majority of the Members,
elect annually from among its Members a chairperson and a vice
chairperson, each of whom shall have such authorities and duties
as may be specified in the By-laws. The chairperson or, in his
or her absence or disability, a Member designated in accordance
with the By-laws, shall preside at all meetings of the
Commission. The officers so elected shall serve without
compensation or remuneration from the Commission; PROVIDED THAT,
subject to the availability of budgeted funds, the officers shall
be reimbursed for any actual and necessary costs and expenses
incurred by them in the performance of their duties and
responsibilities as officers of the Commission.
2. The Commission may, by a majority of the Members,
appoint or retain an executive director for such period, upon
such terms and conditions and for such compensation as the
Commission may deem appropriate. The executive director shall
serve as secretary to the Commission, but shall not be a Member
of the Commission. The executive director shall hire and
supervise such other staff as may be authorized by the
Commission.
Section C. Corporate Records of the Commission
The Commission shall maintain its corporate books and
records in accordance with the By-laws.
Section D. Qualified Immunity, Defense and
Indemnification
1. The Members, officers, executive director and
employees of the Commission shall be immune from suit and
liability, either personally or in their official capacity, for
any claim for damage to or loss of property or personal injury or
other civil liability caused or arising out of any actual or
alleged act, error or omission that occurred, or that such person
had a reasonable basis for believing occurred within the scope of
Commission employment, duties or responsibilities; PROVIDED, that
nothing in this paragraph shall be construed to protect any such
person from suit and/or liability for any damage, loss, injury or
liability caused by the intentional or willful and wanton
misconduct of any such person, or to protect the Commission
acting as Receiver under Article IX of this Compact.
2. The Commission shall defend any Commissioner of a
Compacting State, or his or her representatives or employees, or
the Commission's representatives or employees, in any civil
action seeking to impose liability, arising out of any actual or
alleged act, error or omission that occurred within the scope of
Commission employment, duties or responsibilities, or that the
defendant had a reasonable basis for believing occurred within
the scope of Commission employment, duties or responsibilities;
PROVIDED, that the actual or alleged act, error or omission did
not result from gross negligence or intentional wrongdoing on the
part of such person.
3. The Commission shall indemnify and hold the
Commissioner of a Compacting State, or his or her representatives
or employees, or the Commission's representatives or employees,
harmless in the amount of any settlement or judgment obtained
against such persons arising out of any actual or alleged act,
error or omission that occurred within the scope of Commission
employment, duties or responsibilities, or that such persons had
a reasonable basis for believing occurred within the scope of
Commission employment, duties or responsibilities, provided, that
the actual or alleged act, error or omission did not result from
gross negligence or intentional wrongdoing on the part of such
person.
4. The costs and expenses of defense and
indemnification of the Commission acting as Receiver of an Estate
shall be paid as administrative expenses from the assets of that
Estate unless such costs and expenses are covered by insurance
maintained by the Commission.

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

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

ARTICLE VIII.
OVERSIGHT AND DISPUTE RESOLUTION BY THE COMMISSION
Section A. Oversight
1. The Commission shall oversee the administration and
operations of Receiverships in Compacting States, and shall
monitor Receiverships being administered in Non-compacting States
which may significantly affect Compacting States.
2. To aid its monitoring, oversight and coordination
responsibilities, the Commission shall establish Operating
Procedures requiring each Member to submit written reports to the
Commission as follows:
a. An initial report to the Commission upon a finding
or other official action by the Compacting State that grounds
exist for Receivership of an Insurer doing business in more than
one State. Thereafter, reports shall be submitted periodically
and as otherwise required pursuant to the Commission's Operating
Procedures. The Commission shall be entitled to receive notice
of, and shall have standing to appear in, Compacting States'
Receiverships; and
b. An initial report of the status of an Insurer
within a reasonable time after the initiation of a Receivership.
3. The Commission shall promulgate Operating
Procedures requiring Receivers to submit to the Commission
periodic written reports and such additional information and
documentation as the Commission may reasonably request. Each
Compacting State's Receivers shall establish the capability to
obtain and provide all records, data and information required by
the Commission in accordance with the Commission's Operating
Procedures.
4. Except as to privileged records, data and
information, the laws of any Compacting State pertaining to
confidentiality or nondisclosure shall not relieve any Compacting
State Commissioner of the responsibility to disclose any relevant
records, data or information to the Commission; PROVIDED, that
disclosure to the Commission shall not be deemed to waive or
otherwise affect any confidentiality requirement; AND FURTHER
PROVIDED, that the Commission shall be subject to the Compacting
State's laws pertaining to confidentiality and nondisclosure with
respect to all records, data and information in its possession.
5. The courts and executive agencies in each
Compacting State shall enforce this Compact and shall take all
actions necessary and appropriate to effectuate the Compact's
purposes and intent. In any Receivership or other judicial or
administrative proceeding in a Compacting State pertaining to the
subject matter of this Compact which may affect the powers,
responsibilities or actions of the Commission, the Commission
shall be entitled to receive all service of process in any such
proceeding, and shall have standing to intervene in the
Receivership or proceeding for all purposes.
6. The Commission shall analyze and correlate records,
data, information and reports received from Receivers and
Guaranty Associations, and shall make recommendations for
improving their performance to the Compacting States. The
Commission shall include summary information and data regarding
its oversight functions in its annual report.
Section B. Dispute Resolution
1. The Commission shall attempt, upon the request of a
Member, to resolve any disputes or other issues which are subject
to this Compact and which may arise among Compacting States and
Non-compacting States.
2. The Compacting States shall report to the
Commission on issues or activities of concern to them, and
cooperate with and support the Commission in the discharge of its
duties and responsibilities.
3. The Commission shall promulgate an Operating
Procedure providing for binding dispute resolution for disputes
among Receivers.
4. The Commission shall facilitate voluntary dispute
resolution for disputes among Guaranty Associations and
Receivers.

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

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

ARTICLE XI.
COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT
1. Any State is eligible to become a Compacting State.
2. The Compact shall become effective and binding upon
legislative enactment of the Compact into law by two Compacting
States. Thereafter, it shall become effective and binding as to
any other Compacting State upon enactment of the Compact into law
by that State.
3. Amendments to the Compact may be proposed by the
Commission for enactment by the Compacting States. No amendment
shall become effective and binding upon the Commission and the
Compacting States unless and until it is enacted into law by
unanimous consent of the Compacting States.

ARTICLE XII.
WITHDRAWAL, DEFAULT AND TERMINATION
Section A. Withdrawal
1. Once effective, the Compact shall continue in force
and remain binding upon each and every Compacting State;
PROVIDED, that a Compacting State may withdraw from the Compact
("Withdrawing State") by enacting a statute specifically
repealing the statute which enacted the Compact into law.
2. The effective date of withdrawal is the effective
date of the repeal; PROVIDED, that the repeal shall not apply to
any Receiverships, for which the Commission is acting as
Receiver, pending on the date of the repeal except by mutual
agreement of the Commission and the Withdrawing State.
3. The Withdrawing State shall immediately notify the
Chairperson of the Commission in writing upon the introduction of
legislation repealing this Compact in the Withdrawing State.
4. The Commission shall notify the other Compacting
States of the Withdrawing State's intent to withdraw within sixty
days of its receipt thereof.
5. The Withdrawing State is responsible for all
assessments, obligations and liabilities incurred through the
effective date of withdrawal, including any obligations, the
performance of which extend beyond the effective date of
withdrawal, except to the extent those obligations may have been
released or relinquished by mutual agreement of the Commission
and the Withdrawing State. Notwithstanding the foregoing, the
Withdrawing State is responsible for the costs and expenses of
its Estates subject to this Compact pending on the date of
repeal; the Commission and the other Estates subject to this
Compact shall not bear any costs and expenses related to the
Withdrawing States' Estates unless otherwise mutually agreed upon
between the Commission and the Withdrawing State.
6. Reinstatement following withdrawal of any
Compacting State shall occur upon the Withdrawing State
reenacting the Compact or upon such later date as determined by
the Commission.
Section B. Default
1. If the Commission determines that any Compacting
State has at any time defaulted ("Defaulting State") in the
performance of any of its obligations or responsibilities under
this Compact, or the By-laws and duly promulgated Rules, all
rights, privileges and benefits conferred by this Compact and any
agreements entered into pursuant to this Compact shall be
suspended from the effective date of default as fixed by the
Commission. The grounds for default include, but are not limited
to, failure of a Compacting State to perform such obligations or
responsibilities and any other grounds designated in Commission
Rules. The Commission shall immediately notify the Defaulting
State in writing of the Defaulting State's suspension pending a
cure of the default. The Commission shall stipulate the
conditions and the time period within which the Defaulting State
must cure its default. If the Defaulting State fails to cure the
default within the time period specified by the Commission, the
Defaulting State shall be terminated from the Compact upon an
affirmative vote of a majority of the Compacting States and all
rights, privileges and benefits conferred by this Compact shall
be terminated from the effective date of termination.
2. Within sixty days of the effective date of
termination of a Defaulting State, the Commission shall notify
the Governor and the Majority and Minority Leaders of the
Defaulting State's legislature of such termination.
3. The termination of a Defaulting State shall apply
to all Receiverships, for which the Commission is acting as
Receiver, pending on the effective date of termination except by
mutual agreement of the Commission and the Defaulting State.
4. The Defaulting State is responsible for all
assessments, obligations and liabilities incurred through the
effective date of termination, and is responsible for the costs
and expenses relating to its Estates subject to this Compact
pending on the date of the termination. The Commission and the
other Estates subject to this Compact shall not bear any costs
relating the Defaulting State's Estates unless otherwise mutually
agreed upon between the Commission and the Defaulting State.
5. Reinstatement following termination of any
Compacting State requires both a reenactment of the Compact by
the Defaulting State and the approval of the Commission pursuant
to the Rules.
Section C. Dissolution of Compact
1. The Compact dissolves effective upon the date of
the withdrawal or default of the Compacting State which reduces
membership in the Compact to one Compacting State.
2. Upon the dissolution of this Compact, the Compact
becomes null and void and shall be of no further force or effect,
and the business and affairs of the Commission shall be wound up
and any surplus funds shall be distributed in accordance with the
By-laws.

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

ARTICLE XIV.
BINDING EFFECT OF COMPACT AND OTHER LAWS
Section A. Other Laws
1. Nothing herein prevents the enforcement of any
other law of a Compacting State that is not inconsistent with
this Compact.
2. All Compacting States' laws conflicting with this
Compact are superseded to the extent of the conflict.
Section B. Binding Effect of this Compact
1. All lawful actions of the Commission, including all
Rules and Operating Procedures promulgated by the Commission, are
binding upon the Compacting States.
2. All agreements between the Commission and the
Compacting States are binding in accordance with their terms.
3. Upon the request of a party to a conflict over
meaning or interpretation of Commission actions, and upon a
majority vote of the Compacting States, the Commission may issue
advisory opinions regarding such meaning or interpretation.
4. In the event any provision of this Compact exceeds
the constitutional limits imposed on the legislature of any
Compacting State, the obligations, duties, powers or jurisdiction
sought to be conferred by such provision upon the Commission
shall be ineffective and such obligations, duties, powers or
jurisdiction shall remain in the Compacting State and shall be
exercised by the agency thereof to which such obligations,
duties, powers or jurisdiction are delegated by law in effect at
the time this Compact becomes effective.