Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS 304.12-010, 304.12-020
NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110(1)
authorizes the Executive Director of the Office of Insurance to promulgate
administrative regulations necessary for or as an aid to the effectuation of
any provision of the Kentucky Insurance Code, KRS Chapter 304. This
administrative regulation provides illustration formats, prescribes standards
to be followed if illustrations are used, and specifies the disclosures that
are required in connection with illustrations for life insurance
policies.
Section 1. Definitions.
(1) "Actuarial Standards Board" means the
board established by the American Academy of Actuaries to develop and
promulgate standards of actuarial practice.
(2) "Agent" is defined by KRS 304.9-020(1).
(3) "Basic
illustration" means a ledger or proposal used in the sale of a life insurance
policy that shows both guaranteed and non-guaranteed elements and is given to
the applicant or policy owner no later than the time of delivery of the
policy.
(4) "Contract premium"
means the gross premium required to be paid under a fixed premium policy,
including the premium for a rider for which benefits are shown in the
illustration.
(5) "Currently
payable scale" means a scale of non-guaranteed elements in effect for a policy
form as of the preparation date of the illustration or declared to become
effective within the next ninety-five (95) days.
(6) "Disciplined current scale" means a scale
of non-guaranteed elements constituting a limit on illustrations currently
being illustrated by an insurer that is reasonably based on actual recent
historical experience.
(7)
"Executive director" is defined by KRS 304.1-050(1).
(8) "Generic name" means a short title
descriptive of the policy being illustrated.
(9) "Guaranteed elements" means the premiums,
benefits, values, credits or charges under a policy of life insurance that are
guaranteed and determined at issue.
(10) "Illustrated scale" means a scale of
non-guaranteed elements currently being illustrated and not more favorable to
the policy owner than the lesser of:
(a) The
disciplined current scale; or
(b)
The currently payable scale.
(11) "Illustration" means a presentation or
depiction that includes non-guaranteed elements of a policy of life insurance
over a period of years and that is either a basic illustration, supplemental
illustration, or in force illustration.
(12) "Illustration actuary" means an actuary
meeting the requirements of Section 12 of this administrative regulation who
certifies to illustrations based on the standard of practice promulgated by the
Actuarial Standards Board.
(13) "In
force illustration" means an illustration furnished after the policy has been
in force for one (1) year or more.
(14) "Lapse-supported illustration" means an
illustration of a policy form failing the test of self-supporting illustration,
under a modified persistency rate assumption using persistency rates underlying
the disciplined current scale for the first five (5) years and 100 percent
policy persistency thereafter.
(15)
"Minimum assumed expenses" means the minimum expenses that may be used in the
calculation of the disciplined current scale for a policy form.
(16) "Nonguaranteed elements" means the
premiums, benefits, values, credits, or charges under a policy of life
insurance that are not guaranteed or not determined at issue.
(17) "Nonterm group life" means a group
policy or individual policies of life insurance issued to members of an
employer group or other permitted group if:
(a) Every plan of coverage was selected by
the employer or other group representative;
(b) Some portion of the premium is paid by
the group or through payroll deduction; and
(c) Group underwriting or simplified
underwriting is used.
(18) "Policy owner" means the owner named in
the policy or the certificate holder in the case of a group policy.
(19) "Premium outlay" means the amount of
premium assumed to be paid by the policy owner or other premium payer
out-of-pocket.
(20)
"Self-supporting illustration" means an illustration of a policy form for which
it shall be demonstrated that, if using experience assumptions underlying the
disciplined current scale, for all illustrated points in time on or after the
15th policy anniversary or the 20th policy anniversary for
second-or-later-to-die policies or upon policy expiration if sooner, the
accumulated value of all policy cash flows equals or exceeds the total policy
owner value available.
(21)
"Supplemental illustration" means an illustration furnished in addition to a
basic illustration.
Section
2. Applicability and Scope. This administrative regulation shall
apply to all group and individual life insurance policies sold and certificates
issued on or after the effective date of this administrative regulation except:
(1) Variable life insurance;
(2) Individual and group annuity
contracts;
(3) Credit life
insurance; and
(4) Life insurance
policies, if illustrated death benefits on any individual do not exceed 10,000
dollars at any time.
Section
3. Disciplined Current Scale.
(1)
A disciplined current scale shall be certified annually by an illustration
actuary designated by the insurer.
(2) Further guidance in determining the
disciplined current scale as contained in standards established by the
Actuarial Standards Board may be relied upon if the standards:
(a) Are consistent with this administrative
regulation;
(b) Limit a disciplined
current scale to reflect only actions that have already been taken or events
that have already occurred;
(c) Do
not permit a disciplined current scale to include projected trends of
improvements in experience or assumed improvements in experience beyond the
illustration date; and
(d) Do not
permit assumed expenses to be less than minimum assumed expenses.
Section 4. Minimum
Assumed Expenses.
(1) Each year, the insurer
shall choose to designate the method of determining assumed expenses for all
policy forms from the following:
(a) Fully
allocated expenses;
(b) Marginal
expenses; and
(c) A generally
recognized expense table based on fully allocated expenses representing a
significant portion of insurance companies.
(2)
(a)
Marginal expenses may be used only if they are greater than a generally
recognized expense table.
(b) If an
approved and generally recognized expense table is unavailable, fully allocated
expenses shall be used.
Section 5. Self-supporting Illustration. For
a self-supporting illustration, the policy owner value shall include cash
surrender values and other illustrated benefit amounts available at the policy
owner's election.
Section 6.
Supplemental Illustration. A supplemental illustration may be presented in a
format differing from the basic illustration, but shall only depict a scale of
nonguaranteed elements permitted in a basic illustration.
Section 7. Policies to Be Illustrated.
(1) Each insurer marketing policies to which
this administrative regulation applies shall notify the executive director as
to whether a policy form is to be marketed with or without an illustration.
(a)
1. For
policy forms actively marketed on the effective date of this administrative
regulation, the insurer shall identify in writing those forms and whether or
not an illustration will be used with them.
2. Written identification shall be submitted
to the executive director on or before April 1, 2008.
(b)
1. For
policy forms filed after the effective date of this administrative regulation,
the identification shall be made with submission of the policy form.
2. Previous identification may be changed by
notice to the executive director.
(2) If the insurer identifies a policy as one
to be marketed without an illustration, any use of an illustration for a policy
using that form prior to the first policy anniversary shall be
prohibited.
(3) If a policy form is
identified by the insurer as one to be marketed with an illustration, a basic
illustration prepared in accordance with this administrative regulation and
delivered no later than the time of delivery of the policy shall be required.
(a) A basic illustration shall not be
required to be provided to individual members of a group or to individuals
insured under multiple lives coverage issued to a single applicant unless the
coverage is marketed to these individuals.
(b) The illustration furnished to an
applicant for a group life insurance policy or policies issued to a single
applicant on multiple lives may be either:
1.
An individual or composite illustration representative of the coverage on the
lives of members of the group; or
2. An individual or composite illustration
representative of the multiple lives covered.
(4)
(a)
Potential enrollees of a nonterm group life insurance policy subject to this
administrative regulation shall be furnished a quotation with the enrollment
materials.
(b) The quotation shall
show potential policy values for sample ages and policy years on a guaranteed
and nonguaranteed basis appropriate to the group and the coverage.
(c) The quotation shall not be considered an
illustration for purposes of this administrative regulation, but information
provided shall be consistent with the illustrated scale.
(d) A basic illustration shall be provided at
delivery of the certificate to enrollees for a non-term group life insurance
policy who enroll for more than the minimum premium necessary to provide pure
death benefit protection.
(e) An
insurer shall make a basic illustration available to an enrollee of a non-term
group life insurance policy upon request of the enrollee.
Section 8. General Rules and
Prohibitions.
(1) An illustration used in the
sale of a life insurance policy shall:
(a)
Satisfy the applicable requirements of this administrative
regulation;
(b) Be clearly labeled
"life insurance illustration"; and
(c) Contain the following basic information:
1. Name of insurer;
2. Name and business address of the agent, if
any;
3. Name, age, and gender of
the proposed insured, unless a composite illustration is permitted pursuant to
subsection (3)(b) of this section;
4. Underwriting, rating, or rating
classification upon which the illustration is based;
5. Generic name of the insurance policy; the
company product name, if different; and the form number;
6. Initial death benefit; and
7. Dividend option election or application of
non-guaranteed elements, if applicable.
(2) If an insurer or its agents uses an
illustration in the sale of a life insurance policy, the insurer or its agents
shall not:
(a) Represent the policy as
anything other than a life insurance policy;
(b) Use or describe nonguaranteed elements in
a manner that is misleading or has the capacity to mislead;
(c) State or imply that the payment or amount
of non-guaranteed elements is guaranteed;
(d) Use an illustration that does not comply
with the requirements of this administrative regulation;
(e) Use an illustration that depicts policy
performance at any policy duration more favorable to the policy owner than the
policy performance produced by the insurer's illustrated scale;
(f) Provide an incomplete
illustration;
(g) Represent that
premium payments shall not be required for each year of the policy in order to
maintain the illustrated death benefits, except for policies that do not
require premium payments for each year of the policy in order to maintain the
illustrated death benefit;
(h) Use
the term "vanish" or "vanishing premium," or a similar term that implies that
the policy becomes paid up to describe a plan for using non-guaranteed elements
to pay a portion of future premiums;
(i) Use a lapse-supported illustration,
except for policies that can never develop nonforfeiture values; or
(j) Use an illustration that is not a
self-supporting illustration.
(3) If an interest rate used to determine the
illustrated nonguaranteed elements is shown, it shall not be greater than the
earned interest rate underlying the disciplined current scale.
Section 9. Standards for Basic
Illustrations.
(1) A basic illustration shall
conform with the format requirements established in this subsection.
(a) The illustration shall include the date
on which it was prepared.
(b) Each
page, including any explanatory notes or pages, shall be numbered and show its
relationship to the total number of pages in the illustration.
(c) The assumed dates of payment receipt and
benefit pay-out within a policy year shall be clearly identified.
(d) If the age of the proposed insured is
shown as a component of the tabular detail, the age shall be issue age plus the
number of years the policy is assumed to have been in force.
(e)
1. The
assumed payments on which the illustrated benefits and values are based shall
be identified as premium outlay or contract premium, as applicable.
2. For policies that do not require a
specific contract premium, the illustrated payments shall be identified as
premium outlay.
(f)
Guaranteed death benefits and values available upon surrender, if any, for the
illustrated premium outlay or contract premium shall be shown and clearly
labeled "guaranteed".
(g) If the
illustration shows any nonguaranteed elements, the elements shall:
1. Not be based on a scale more favorable to
the policy owner than the insurer's illustrated scale at any duration;
and
2. Be clearly labeled
"nonguaranteed".
(h) Any
guaranteed elements shall be shown before corresponding non-guaranteed elements
and shall be specifically referred to on any page of an illustration that shows
or describes only the non-guaranteed elements.
(i) The account or accumulation value of a
policy, if shown, shall be identified by the name this value is given in the
policy being illustrated and shown in close proximity to the corresponding
value available upon surrender.
(j)
The value available upon surrender shall be identified by the name this value
is given in the policy being illustrated and shall be the amount available to
the policy owner in a lump sum after deduction of surrender charges, policy
loans and policy loan interest, as applicable.
(k) Illustrations may show policy benefits
and values in graphic or chart form in addition to the tabular form.
(l) An illustration of nonguaranteed elements
shall be accompanied by a statement indicating that:
1. The benefits and values shall not be
guaranteed;
2. The assumptions on
which they shall be based are subject to change by the insurer; and
3. Actual results may be more or less
favorable.
(m) If the
applicant plans to use dividends or policy values, guaranteed or nonguaranteed,
to pay all or a portion of the contract premium or policy charges, or for any
further purpose, the illustration may reflect those plans and the impact on
future policy benefits.
(n)
1. If the illustration shows that the premium
payor may have the option to allow policy charges to be paid using dividends or
another non-guaranteed value, the illustration shall clearly disclose that a
charge continues to be required and that, depending on actual results, the
premium payor may need to continue or resume premium outlays.
2. Similar disclosure as that required by
subparagraph 1 of this paragraph shall be made for premium outlay of lesser
amounts or shorter durations than the contract premium.
3. If a contract premium is due, the premium
outlay display shall not be left blank or show zero unless accompanied by an
asterisk or similar mark to draw attention to the fact that the policy is not
paid up.
(2)
A basic illustration shall include a narrative summary that includes the
following:
(a) A brief description of the
policy being illustrated, including a statement that it is a life insurance
policy;
(b) A brief description of
the premium outlay or contract premium, as applicable, for the policy. For a
policy that does not require payment of a specific contract premium, the
illustration shall show the premium outlay that shall be paid to guarantee
coverage for the term of the contract, subject to maximum premiums allowable to
qualify as a life insurance policy under the applicable provisions of the
Internal Revenue Code;
(c) A brief
description of policy features, riders or options, guaranteed or nonguaranteed,
shown in the basic illustration and the impact they may have on the benefits
and values of the policy;
(d)
Identification and a brief definition of column headings and key terms used in
the illustration; and
(e) A
statement containing the following: "This illustration assumes that the
currently illustrated non-guaranteed elements will continue unchanged for all
years shown. This is not likely to occur, and actual results may be more or
less favorable than those shown."
(3)
(a)
Following the narrative summary, a basic illustration shall include a numeric
summary of the death benefits and values and the premium outlay and contract
premium, as applicable.
(b) For a
policy that provides for a contract premium, the guaranteed death benefits and
values shall be based on the contract premium.
(c)
1. The
summary required by paragraph (a) of this subsection for a policy that provides
for a contract premium shall be shown for at least policy years five (5), ten
(10), and twenty (20) and age seventy (70), if applicable, for the bases
established in paragraph (e) of this subsection.
2. If coverage will cease prior to policy
maturity or age 100, the year in which coverage will cease shall also be
shown.
(d)
1. The summary required by paragraph (a) of
this subsection for multiple life insurance policies shall show policy years
five (5), ten (10), and twenty (20), and thirty (30) for each of the bases
established in paragraph (e) of this subsection.
2. If coverage will cease prior to policy
maturity or age 100, the year in which coverage will cease shall also be
shown.
(e) The bases
that shall be illustrated shall include:
1.
Policy guarantees;
2. Insurer's
illustrated scale; and
3. Insurer's
illustrated scale with the non-guaranteed elements reduced as follows:
a. Dividends at fifty (50) percent of the
dividends contained in the illustrated scale used;
b. Nonguaranteed credited interest at rates
that are the average of the guaranteed rates and the rates contained in the
illustrated scale used; and
c. All
nonguaranteed charges, including term insurance charges, mortality, and expense
charges at rates that are the average of the guaranteed rates and the rates
contained in the illustrated scale used.
(4) Statements substantially
similar to the following shall be included on the same page as the numeric
summary and signed by the applicant, or the policy owner if an illustration is
provided upon delivery of the policy.
(a) A
statement to be signed and dated by the applicant or policy owner shall be as
follows: "I have received a copy of this illustration and understand that any
nonguaranteed elements illustrated are subject to change and may be either
higher or lower. The agent has told me they are not guaranteed."
(b) A statement to be signed and dated by the
agent shall be as follows: "I certify that this illustration has been presented
to the applicant and that I have explained that any nonguaranteed elements
illustrated are subject to change. I have not made statements that are
inconsistent with the illustration."
(5)
(a) A
basic illustration shall include the following tabular detail for at least each
policy year from one (1) to ten (10) and for every fifth policy year thereafter
ending at age 100, policy maturity, or final expiration and, except for term
insurance beyond the 20th year, for any year in which the premium outlay and
contract premium, if applicable, will change:
1. The premium outlay and the mode the
applicant plans to pay and the contract premium, as applicable;
2. The corresponding guaranteed death
benefit, as provided in the policy; and
3. The corresponding guaranteed value
available upon surrender, as provided in the policy.
(b) For a policy that provides for a contract
premium, the guaranteed death benefit and value available upon surrender shall
correspond to the contract premium.
(c) Nonguaranteed elements may be shown if
described in the contract.
1. For a policy on
which the insurer intends to credit terminal dividends, the nonguaranteed
elements may be shown in the illustration if the insurer's current practice is
to pay terminal dividends.
2. If
any non-guaranteed elements are shown, they shall be shown at the same
durations as the corresponding guaranteed elements, if any.
3. If a guaranteed benefit or value is not
available at any duration for which a non-guaranteed benefit or value is shown,
a zero shall be displayed in the guaranteed column.
Section 10. Standards
for Supplemental Illustrations.
(1) A
supplemental illustration may be provided if:
(a) It is appended to, accompanied by, or
preceded by a basic illustration that complies with this administrative
regulation;
(b) The nonguaranteed
elements shown are not more favorable to the policy owner than the
corresponding elements based on the scale used in the basic
illustration;
(c) It contains the
same statement required of a basic illustration that nonguaranteed elements are
not guaranteed; and
(d)
1. For a policy with a contract premium, the
contract premium underlying the supplemental illustration is equal to the
contract premium shown in the basic illustration; or
2. For policies that do not require a
contract premium, the premium outlay underlying the supplemental illustration
is equal to the premium outlay shown in the basic illustration.
(2) The supplemental
illustration shall include a notice referring to the basic illustration for
guaranteed elements.
Section
11. Delivery of Illustration and Record Retention.
(1)
(a)
1. If a basic illustration is used by an
agent in the sale of a life insurance policy and the policy is applied for as
illustrated, a copy of that illustration, signed in accordance with this
administrative regulation, shall be submitted to the insurer when the policy
application is submitted.
2. A copy
of the signed illustration shall be provided to the applicant.
(b)
1. If the policy is issued other than as
applied for, a revised basic illustration conforming to the policy as issued
shall be sent with the policy.
2.
The revised illustration shall:
a. Conform to
the requirements of this administrative regulation;
b. Be labeled "Revised Illustration";
and
c. Be signed and dated by the
applicant or policy owner and agent no later than the time the policy is
delivered.
(c) A copy shall be provided to the insurer
and the policy owner.
(2)
(a)
1. If an illustration is not used by an agent
in the sale of a life insurance policy or if the policy is applied for other
than as illustrated, the agent shall certify to that effect in writing on a
form provided by the insurer.
2. On
the same form, the applicant shall acknowledge that an illustration conforming
to the policy applied for was not provided and shall further acknowledge an
understanding that an illustration conforming to the policy as issued shall be
provided no later than the policy's delivery. This form shall be submitted to
the insurer when the policy application is submitted.
(b)
1. If
the policy is issued, a basic illustration conforming to the policy as issued
shall be sent with the policy and signed no later than the time the policy is
delivered.
2. A copy of the basic
illustration shall be provided to the insurer and the policy owner.
(3)
(a) If the basic illustration or revised
illustration is sent to the applicant or policy owner by mail from the insurer,
it shall include instructions for the applicant or policy owner to sign the
duplicate copy of the numeric summary page of the illustration for the policy
issued and return the signed copy to the insurer.
(b) The insurer's obligation under this
subsection shall be satisfied if it demonstrates a diligent effort to secure a
signed copy of the numeric summary page.
(c) The requirement to make a diligent effort
shall be satisfied if the insurer includes in the mailing a self-addressed
postage prepaid envelope with instructions for the return of the signed numeric
summary page.
(4) A copy
of the basic illustration and a revised basic illustration, if any, signed as
applicable, along with a certification that either an illustration was not used
or that the policy was applied for other than as illustrated, shall be retained
by the insurer in accordance with 806 KAR 2:070. A copy of the basic
illustration and the revised illustration shall not be required to be retained
if a policy is not issued.
Section
12. Annual Report; Notice to Policy Owners.
(1) If a policy form is designated as one for
which illustrations shall be used, the insurer shall provide each policy owner
with an annual report on the status of the policy that shall contain, at a
minimum, the information required by this subsection.
(a) For universal life insurance policies,
the report shall include the following:
1. The
beginning and end date of the current report period;
2. The policy value at the end of the
previous report period and at the end of the current report period;
3. The total amounts that have been credited
or debited to the policy value during the current report period, identifying
each by type;
4. The current death
benefit at the end of the current report period on each life covered by the
policy;
5. The net cash surrender
value of the policy as of the end of the current report period;
6. The amount of outstanding loans, if any,
as of the end of the current report period; and
7.
a. For
fixed premium policies, if, assuming guaranteed interest, mortality and expense
loads, and continued scheduled premium payments, the policy's net cash
surrender value will not maintain insurance in force until the end of the next
reporting period, a notice to this effect shall be included in the report;
or
b. For flexible premium
policies, if, assuming guaranteed interest, mortality and expense loads, the
policy's net cash surrender value will not maintain insurance in force until
the end of the next reporting period unless further premium payments are made,
a notice to this effect shall be included in the report.
(b) For all other policies, if
applicable:
1. Current death
benefit;
2. Annual contract
premium;
3. Current cash surrender
value;
4. Current
dividend;
5. Application of current
dividend; and
6. Amount of
outstanding loan.
(c)
Insurers writing life insurance policies that do not build nonforfeiture values
shall only be required to provide an annual report with respect to these
policies for those years if a change has been made to non-guaranteed policy
elements by the insurer.
(2)
(a) If
the annual report does not include an in force illustration, it shall contain
the following notice displayed prominently in accordance with 806 KAR 14:121,
Section 4(3): "IMPORTANT POLICY OWNER NOTICE: You should consider requesting
more detailed information about your policy to understand how it may perform in
the future. You should not consider replacement of your policy or make changes
in your coverage without requesting a current illustration. You may annually
request, without charge, this illustration by calling {insurer's phone number},
writing to {insurer's name} at {insurer's address}, or contacting your agent.
If you do not receive a current illustration of your policy within thirty (30)
days from your request, you should contact your state insurance
department."
(b) The insurer may
vary the sequential order of the methods for obtaining an in force
illustration.
(3)
(a) Upon the request of the policy owner, the
insurer shall furnish an in force illustration of current and future benefits
and values based on the insurer's present illustrated scale.
(b) This illustration shall comply with the
requirements of Sections 8(1), (2), 9(5)of this administrative
regulation.
(c) A signature or
other acknowledgement of receipt of this illustration shall not be
required.
(4) If an
adverse change in nonguaranteed elements that may affect the policy has been
made by the insurer since the last annual report, the annual report shall
contain a notice of that fact and the nature of the change displayed
prominently in accordance with 806 KAR 14:121, Section 4(3).
Section 13. Annual Certifications.
(1) The board of directors of each insurer
shall appoint one (1) or more illustration actuaries.
(2) The illustration actuary shall certify
that the disciplined current scale used in illustrations is in conformity with
the Actuarial Standard of Practice No. 24 promulgated by the Actuarial
Standards Board, and that the illustrated scale meets the requirements of this
administrative regulation.
(3) The
illustration actuary shall:
(a) Be a member in
good standing of the American Academy of Actuaries;
(b) Be familiar with the standard of practice
regarding life insurance policy illustrations;
(c) Not have been found by the executive
director, following appropriate notice and hearing, to have:
1. Violated any provision of, or any
obligation imposed by, the insurance law or other law in the course of the
actuary's dealings as an illustration actuary;
2. Been found guilty of fraudulent or
dishonest practices;
3.
Demonstrated incompetence, lack of cooperation, or untrustworthiness to act as
an illustration actuary; or
4.
Resigned or been removed as an illustration actuary within the past five (5)
years as a result of acts or omissions indicated in an adverse report on
examination or as a failure to adhere to generally acceptable actuarial
standards;
(d) Notify
the executive director of any action taken by a commissioner of another state
similar to that under paragraph (c) of this subsection;
(e) Disclose in the annual certification if,
since the last certification, a currently payable scale applicable for business
issued within the previous five (5) years and within the scope of the
certification has been reduced for reasons other than changes in the experience
factors underlying the disciplined current scale.
1. If nonguaranteed elements illustrated for
new policies are not consisted with those illustrated for similar in force
policies, this shall be disclosed in the annual certification.
2. If nonguaranteed elements illustrated for
both new and in force policies are not consistent with the non-guaranteed
elements actually being paid, charged, or credited to the same or similar
forms, this shall be disclosed in the annual certification; and
(f) Disclose in the annual
certification which of the following methods were used to allocate overhead
expenses for all illustrations:
1. Fully
allocated expenses;
2. Marginal
expenses; or
3. A generally
recognized expense table based on fully allocated expenses representing a
significant portion of insurance companies and approved by the executive
director.
(4)
(a) The illustration actuary shall file a
certification with the board of directors of the insurer and with the executive
director:
1. Annually for all policy forms for
which illustrations are used; and
2. Before a new policy form is
illustrated.
(b) If an
error in a previous certification is discovered, the illustration actuary shall
notify the board of directors of the insurer and the executive director within
thirty (30) days after discovery of the error.
(5) If an illustration actuary is unable to
certify the scale for any policy form illustration the insurer intends to use,
the actuary shall notify the board of directors of the insurer and the
executive director within thirty (30) days of the inability to
certify.
(6) A responsible officer
of the insurer, other than the illustration actuary, shall certify annually:
(a) That the illustration formats meet the
requirements of this administrative regulation and that the scales used in
illustrations are those scales certified by the illustration actuary;
and
(b) That the insurer has
provided its agents with information about the expense allocation method used
by the company in its illustrations and disclosed as required in subsection
(3)(f) of this section.
(7) The annual certifications shall be
provided to the executive director each year by a date determined by the
insurer.
(8) If an insurer changes
the illustration actuary responsible for all or a portion of the company's
policy forms, the insurer shall notify the executive director of that fact
promptly and disclose the reason for the change.
Section 14. Effective Date. The requirements,
implementation, and enforcement of this administrative regulation shall begin
on January 1, 2008.
Section 15.
Incorporation by Reference.
(1) "Actuarial
Standard of Practice No. 24, Compliance with the NAIC Life Insurance
Illustrations Model Regulation", February 2007, is incorporated by
reference.
(2) This material may be
inspected, copied, or obtained, subject to applicable copyright law, at the
Office of Insurance, 215 West Main Street, Frankfort, Kentucky 40601, Monday
through Friday 8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY: KRS 304.2-110