Florida Administrative Code
69 - DEPARTMENT OF FINANCIAL SERVICES
69O - OIR - Insurance Regulation
Chapter 69O-162 - ANNUITY CONTRACTS
Section 69O-162.203 - Adoption of 2001 Commissioners Standard Ordinary (CSO) Preferred Mortality Tables for Determining Reserve Liabilities for Ordinary Life Insurance
Universal Citation: FL Admin Code R 69O-162.203
Current through Reg. 50, No. 187; September 24, 2024
(1) Scope. This rule shall govern mortality tables for use in reserves as set forth in Section 625.121, F.S.
(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 Section 625.121(5)(a)3., F.S., and subsection 69O-164.020(5), F.A.C.
(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 paragraph (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 September 10, 2006, which is
available in the NAIC Proceedings (3rd Quarter 2006) which is adopted herein
and incorporated by reference. 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.
(4) 2001 CSO Preferred Class Structure Table.
(a) 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.
1. On valuation dates beginning with December
31, 2010, for policies issued on or after January 1, 2005 for policies not
issued in this state, and on or after June 8, 2005, for policies issued in this
state, and prior to January 1, 2007 wherever issued, these tables may be
substituted at the option of the insurer and subject to the conditions of
subsection (5), if the Regulatory Asset Adequacy Issues Summary required by
Rule 69O-138.047, F.A.C., includes,
if applicable, the impact of the insufficiency of assets to support the payment
of benefits and expenses and the establishment of statutory reserves during one
or more interim periods.
2. On
valuation dates beginning with December 31, 2010, these tables may be
substituted by an insurer not domiciled in this state at its option to value
the policies identified in subparagraph (a)1. if the insurer provides the
office with a statement from the commissioner of its state of domicile that the
conditions for substituting these tables required by that state have been
met.
(b) 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.
(c) 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 Rule 69O-162.201, F.A.C., Adoption of
2001 Commissioners Standard Ordinary (CSO) Mortality
Tables.
(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 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 Preferred
Smoker valuation basic table.
(c) The use of the 2001 CSO Preferred Class
Structure Table for the valuation of policies issued prior to January 1, 2007
shall not be permitted in any statutory financial statement in which a company
reports, with respect to any policy or portion of a policy coinsured, either of
the following:
1. In cases where the mode of
payment of the reinsurance premium is less frequent than the mode of payment of
the policy premium, a reserve credit that exceeds, by more than the amount
specified in this paragraph as Y, the gross reserve calculated before
reinsurance. Y is the amount of the gross reinsurance premium that (a) provides
coverage for the period from the next policy premium due date to the earlier of
the end of the policy year and the next reinsurance premium due date, and (b)
would be refunded to the ceding entity upon the termination of the
policy.
2.
a. In cases where the mode of payment of the
reinsurance premium is more frequent than the mode of payment of the policy
premium, a reserve credit that is less than the gross reserve, calculated
before reinsurance, by an amount that is less than the amount specified in this
paragraph as Z. Z is the amount of the gross reinsurance premium that the
ceding entity would need to pay the assuming company to provide reinsurance
coverage from the period of the next reinsurance premium due date to the next
policy premium due date minus any liability established for the proportionate
amount not remitted to the reinsurer.
b. For purposes of this condition, the
reserve (i) for the mean reserve method shall be defined as the mean reserve
minus the deferred premium asset, and (ii) for the midterminal reserve method
shall include the unearned premium reserve. A company may estimate and adjust
its accounting on an aggregate basis in order to meet the conditions to use the
2001 CSO Preferred Class Structure
Table.
(6) Effective Date. This rule shall be effective for policies issued on or after January 1, 2007, for valuation dates on or after the date this rule becomes effective.
Rulemaking Authority 624.308(1), 625.121 FS. Law Implemented 624.307(1), 625.121 FS.
New 1-16-08, Amended 5-9-12.
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