Current through Register Vol. 49, No. 2, February 2024
Section 1.
Authority
This rule is promulgated by the Arkansas Commissioner of
Insurance pursuant to Ark. Code Ann. §
23-61-108, the
Standard Valuation Law for Life Insurance and Annuities, codified at Ark. Code
Ann. §§
23-84-101,
et seq., and the Valuation of Life Insurance Model Regulation,
adopted as Rule and Regulation 47 of the Arkansas Insurance Department.
Section 2.
Purpose
The purpose of this rule is to recognize, permit, and prescribe
the use of mortality tables that reflect differences in mortality between
Preferred and Standard lives in determining minimum reserve liabilities in
accordance with the Standard Valuation Law for Life Insurance and Annuities,
codified at Ark. Code Ann. §§
23-84-101,
et seq., and the Valuation of Life Insurance Model
Regulation, adopted as Rule and Regulation 47 of the Arkansas Insurance
Department.
Section 3.
Definitions
A. "2001 CSO
Mortality Table" means that mortality table, consisting of separate rates of
mortality for male and female lives, developed by the American Academy of
Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by
the Society of Actuaries Individual Life Insurance Valuation Mortality Task
Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table
is included in the
Proceedings of the NAIC (2nd Quarter 2002)
and supplemented by the 2001 CSO Preferred Class Structure Mortality Table
defined below in Subsection B. Unless the context indicates otherwise, the
"2001 CSO Mortality Table" includes both the ultimate form of that table and
the select and ultimate form of that table and includes both the smoker and
nonsmoker mortality tables and the composite mortality tables. It also includes
both the age-nearest-birthday and age-last-birthday bases of the mortality
tables. Mortality tables in the 2001 CSO Mortality Table include the following:
(1) "2001 CSO Mortality Table (F)" means that
mortality table consisting of the rates of mortality for female lives from the
2001 CSO Mortality Table.
(2) "2001
CSO Mortality Table (M)" means that mortality table consisting of the rates of
mortality for male lives from the 2001 CSO Mortality Table.
(3) "Composite mortality tables" means
mortality tables with rates of mortality that do not distinguish between
smokers and nonsmokers.
(4) "Smoker
and nonsmoker mortality tables" means mortality tables with separate rates of
mortality for smokers and nonsmokers.
B. "2001 CSO Preferred Class Structure
Mortality Table" means mortality tables with separate rates of mortality for
Super Preferred Nonsmokers, Preferred Nonsmokers, Residual Standard Nonsmokers,
Preferred Smokers, and Residual Standard Smoker splits of the 2001 CSO
Nonsmoker and Smoker tables as adopted by the NAIC at the September 2006
national meeting and published in the NAIC Proceedings
(3rd Quarter 2006). Unless the context
indicates otherwise, the "2001 CSO Preferred Class Structure Mortality Table"
includes both the ultimate form of that table and the select and ultimate form
of that table. It includes both the smoker and nonsmoker mortality tables. It
includes both the male and female mortality tables and the gender composite
mortality tables. It also includes both the age-nearest-birthday and
age-last-birthday bases of the mortality table.
C. "Statistical agent" means an entity with
proven systems for protecting the confidentiality of individual insured and
insurer information; demonstrated resources for and history of ongoing
electronic communications and data transfer ensuring data integrity with
insurers, which are its members or subscribers; and a history of and means for
aggregation of data and accurate promulgation of the experience modifications
in a timely manner.
Section
4.
2001 CSO Preferred Class Structure Table
At the election of the company, for each calendar year of issue,
for any one or more specified plans of insurance and subject to satisfying the
conditions stated in this rule, the 2001 CSO Preferred Class Structure
Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker
Mortality Table as the minimum valuation standard for policies issued on or
after January 1, 2007. No such election shall be made until the company
demonstrates at least 20% of the business to be valued on this table is in one
or more of the preferred classes. A table from the 2001 CSO Preferred Class
Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant
to the requirements of this rule, will be treated as part of the 2001 CSO
Mortality Table only for purposes of reserve valuation pursuant to the
requirements of Arkansas Insurance Department Rule And Regulation 83,
"Recognition of the 2001 CSO Mortality Table For Use In Determining Minimum
Reserve Liabilities And Nonforfeiture Benefits Model Regulation."
Section 5.
Conditions
A. For each plan of insurance with separate
rates for Preferred and Standard Nonsmoker lives, an insurer may use the Super
Preferred Nonsmoker, Preferred Nonsmoker, and Residual Standard Nonsmoker
tables to substitute for the Nonsmoker mortality table found in the 2001 CSO
Mortality Table to determine minimum reserves. At the time of election and
annually thereafter, except for business valued under the Residual Standard
Nonsmoker Table, the appointed actuary shall certify that:
(1) The present value of death benefits over
the next ten years after the valuation date, using the anticipated mortality
experience without recognition of mortality improvement beyond the valuation
date for each class, is less than the present value of death benefits using the
valuation basic table corresponding to the valuation table being used for that
class.
(2) The present value of
death benefits over the future life of the contracts, using anticipated
mortality experience without recognition of mortality improvement beyond the
valuation date for each class, is less than the present value of death benefits
using the valuation basic table corresponding to the valuation table being used
for that class.
B. For
each plan of insurance with separate rates for Preferred and Standard Smoker
lives, an insurer may use the Preferred Smoker and Residual Standard Smoker
tables to substitute for the Smoker mortality table found in the 2001 CSO
Mortality Table to determine minimum reserves. At the time of election and
annually thereafter, for business valued under the Preferred Smoker Table, the
appointed actuary shall certify that:
(1) The
present value of death benefits over the next ten years after the valuation
date, using the anticipated mortality experience without recognition of
mortality improvement beyond the valuation date for each class, is less than
the present value of death benefits using the Preferred Smoker valuation basis
table corresponding to the valuation table being used for that class.
(2) The present value of death benefits over
the future life of the contracts, using anticipated mortality experience
without recognition of mortality improvement beyond the valuation date for each
class, is less than the present value of death benefits using the Preferred
Smoker valuation basic table.
C. Unless exempted by the commissioner, every
authorized insurer using the 2001 CSO Preferred Class Structure Table shall
annually file with the commissioner, with the NAIC, or with a statistical agent
designated by the NAIC and acceptable to the commissioner, statistical reports
showing mortality and such other information as the commissioner may deem
necessary or expedient for the administration of the provisions of this rule.
The form of the reports shall be established by the commissioner or the
commissioner may require the use of a form established by the NAIC or by a
statistical agent designated by the NAIC and acceptable to the
commissioner.
Section 6.
Separability
If any provision of this rule or its application to any person or
circumstance is for any reason held to be invalid, the remainder of the rule
and the application of the provision to other persons or circumstances shall
not be affected.
Section 7.
Effective Date
The effective date of this regulation is January 1, 2008.
(signed by Julie Benafield Bowman)
____________________________
JULIE BENAFIELD BOWMAN
INSURANCE COMMISSIONER
STATE OF ARKANSAS
(December 13, 2007)
__________________
DATE
