Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
304.6-130,
304.6-140,
304.6-160,
304.6-170,
304.6-171,
304.6-180
NECESSITY, FUNCTION AND CONFORMITY:
KRS
304.2-110(1) authorizes the
Commissioner of the Department of Insurance to promulgate administrative
regulations necessary for the effectuation of any provision of the Kentucky
Insurance Code, KRS Chapter 304.
KRS
304.6-140(2)(a) provides
that the commissioner may promulgate by administrative regulation any mortality
table adopted by the National Association of Insurance Commissioners for use in
determining the minimum standard for valuation of policies. This administrative
regulation establishes the use of mortality tables that reflect differences in
mortality between preferred and standard lives in determining minimum reserve
liabilities in accordance with
KRS 304.6-140
and
806 KAR
6:075.
Section
1. Definitions.
(1) "2001 CSO
Mortality Table" means a mortality table that:
(a) Consists of separate rates of mortality
for male and female lives;
(b) Was
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
National Association of Insurance Commissioners in December 2002;
(c) Is published in the Proceedings of the
NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO Preferred Class
Structure Mortality Table; and
(d)
Includes, unless the context indicates otherwise, both:
1. The ultimate form and the select and
ultimate form of the table;
2. The
smoker and nonsmoker mortality tables and the composite mortality tables;
and
3. The age-nearest-birthday and
the age-last-birthday bases of the mortality tables.
(2) "2001 CSO Preferred Class
Structure Mortality Table" means a mortality table 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 described in the report dated
January 13, 2006, and adopted by the National Association of Insurance
Commissioners at the September 2006 meeting. Unless the context indicates
otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes:
(a) The ultimate form and the select and
ultimate form of the table;
(b) The
smoker and nonsmoker mortality tables;
(c) The male and female mortality tables and
the gender composite mortality table; and
(d) The age-nearest-birthday and
age-last-birthday bases of the table.
(3) "Composite mortality tables" means the
mortality tables with rates of mortality that do not distinguish between
smokers and nonsmokers.
(4)
"Commissioner" is defined in
KRS
304.1-050(1).
(5) "CSO" means Commissioners Standard
Ordinary.
(6) "Smoker and nonsmoker
mortality tables" means mortality tables with separate rates of mortality for
smokers and nonsmokers.
Section
2. 2001 CSO Preferred Class Structure Table.
(1) At the election of the insurer for any
one (1) or more specified plan of insurance and subject to the conditions
stated in this administrative regulation, the 2001 CSO Preferred Class
Structure Mortality Table may be substituted in place of the 2001 CSO Smoker
and Nonsmoker Mortality Table as the minimum valuation standard for policies
issued on or after January 1, 2007, to which
KRS 304.6-140
and
806 KAR
6:075 apply.
(2) An election shall not be made until the
insurer can demonstrate at least twenty (20) percent of the business to be
valued on this table is in one (1) or more of the preferred classes.
(3) 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 administrative regulation, shall be treated as part
of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant
to the requirements of
806
KAR 6:110.
Section 3. Conditions.
(1)
(a) For
each policy 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.
(b) At 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 (10) 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; and
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.
(2)
(a) For
each policy 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.
(b) At 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 (10) 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; and
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.
Section 4. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) "2001 CSO Mortality Table",
published in the proceedings of the National Association of Insurance
Commissioners, Section Quarter 2002; and
(b) "2001 CSO Preferred Class Structure
Mortality Table", published in the proceedings of the National Association of
Insurance Commissioners, Third Quarter 2006.
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law, at the Department of
Insurance, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday 8
a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
304.2-110,
304.6-140(2)(a)