(a) A contract may
not be delivered or issued for delivery in this state unless the contract
satisfies the requirements of this subsection and the issuing insurance company
has satisfied the requirements of subsection (b) of this section with respect
to the contract. The contract shall:
(1)
Provide that the assets to which the contract pertains and for which a contract
value record is established will be maintained in a segregated portfolio of a
permitted custodial institution;
(2) Grant the insurance company the right to
perform audits and inspections of assets held in the segregated portfolio from
time to time upon reasonable notice to the permitted custodial
institution;
(3) Provide that the
insurance company will receive prior notice of and the right to approve any
appointment or change of investment managers;
(4) Give a description of how the contract
value record will be determined, and, where applicable, adjusted by a crediting
rate formula;
(5) State the maximum
rate period between crediting rate formula recalculations that shall be
permitted, if any;
(6) Provide the
insurance company with the right to refuse to recognize any new deposits to the
segregated portfolio unless there is a written agreement between the insurance
company and the contract holder as to the permissible levels and timing of new
deposits;
(7) Clearly identify all
circumstances under which insurance company payments or advances to the
contract holder are to be made;
(8)
Clearly identify the types of withdrawals made on a market value
basis;
(9) Provide either a fixed
maturity schedule or a settlement option that permits the contract holder to
receive the contract value record over time, provided that no unilateral
contract termination event has occurred; and
(10) Include a provision stating, or
substantially similar to, the following:
"No waiver of remedies by the insurance company that is a party
to this agreement, following the breach of any contractual provision of the
agreement or of the investment guidelines applicable to it, or failure to
enforce the provisions or guidelines, which constitutes grounds for termination
of this agreement for cause by the insurance company, and is not cured within
30 days following the insurance company's discovery of it, shall be effective
against the insurance commissioner in any future rehabilitation or insolvency
proceedings against the insurance company unless approved in advance in writing
by the insurance commissioner."
(b) An insurance company satisfies the filing
and approval requirements of this section with respect to a contract if the
insurance company has filed the form of the contract with the insurance
commissioner and it is accompanied by the items specified in subdivisions (1)
to (3), inclusive, of this subsection, and the form has been approved or has
not been disapproved within the thirty-day period following the date of filing,
in which event the form of contract shall be deemed approved. Notwithstanding
the provisions of this section, the requirement for filing and approval of the
form of contract may be waived at the discretion of the insurance commissioner.
(1) The form of contract filed for approval
shall be accompanied by a statement that the contract meets the conditions of
subsection (a) of this section.
(2)
The form of contract filed for approval shall be accompanied by a statement:
(A) Specifying the range of variation of
variable contract provisions, if any, that could have a material effect on the
risk assumed by the insurance company under the contract, including withdrawal
methodology, crediting rate formula, and termination events;
(B) Describing how the fair market value
shall be determined, including a description of the rules for valuing
securities and other assets that are not publicly traded;
(C) Describing the crediting rate formula, if
any, and how it shall operate to take into account the difference between the
market value record and the contract value record over time; and
(D) Listing events that give the insurance
company the right to terminate the contract immediately.
(3)
(A) In
the case where the plan of operation pertaining to the class of contracts to
which the contract belongs has been affirmatively approved by the insurance
commissioner of the state in which the issuing insurance company is domiciled,
the form of contract filed for approval shall be accompanied by a statement
indicating the receipt of approval, and that the approval was an affirmative
approval.
(B) In the case where the
plan of operation pertaining to the class of contracts to which the contract
belongs has been deemed approved in the state in which the issuing insurance
company is domiciled, the form of contract filed for approval shall be
accompanied by a statement indicating that the issuing insurance company has
met the requirements for deemed approval.
(C) In the case where the plan of operation
pertaining to the class of contracts to which the contract belongs has not been
approved in the state in which the issuing insurance company is domiciled, the
form of contract filed for approval shall be accompanied by a statement of this
fact, together with a plan of operation pertaining to the contract.