006.01 A contract
may not be delivered or issued for delivery in this state unless the contract
satisfies the requirements of Subsection 006.02 of this section and the issuing
insurer has satisfied the requirements of Subsection 006.03 of this section
with respect to the contract.
006.02 The contract shall:
006.02A 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;
006.02B Grant the
insurer 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;
006.02C
Provide the insurer will receive prior notice of and the right to approve any
appointment or change of investment managers;
006.02D Give a description of how the
contract value record will be determined and, where applicable, adjusted by a
crediting rate formula;
006.02E
State the maximum rate period between crediting rate formula recalculations
that will be permitted, if any;
006.02F Provide the insurer with the right to
refuse to recognize any new deposits to the segregated portfolio unless there
is a written agreement between the insurer and the contract holder as to the
permissible levels and timing of new deposits;
006.02G Clearly specify the insurer's
obligations under the contract and identify all circumstances under which
insurer payments or advances to the contract holder are to be made;
006.02H Clearly identify the types of
withdrawals made on a market value basis;
006.02I Provide either a fixed maturity
schedule or a settlement option permitting the contract holder to receive the
contract value record over time, provided that no unilateral contract
termination event has occurred; and
006.02J Include a provision stating, or
substantially similar to, the following:
"No waiver of remedies by the insurer 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 insurer, and is not cured within thirty (30) days
following the insurer's discovery of it, shall be effective against an
insurance director in any future rehabilitation or insolvency proceedings
against the insurer unless approved in advance in writing by the
director."
006.03
An insurer will satisfy the filing and approval requirements of this section
with respect to a contract if the insurer has filed the form of the contract
(including application) with the Director and it is accompanied by the items
specified in 006.03 A, B, C, D and E of this subsection, and the form has been
approved. The contract form may not be used unless approved by the director.
006.03A The form of contract filed for
approval shall be accompanied by a statement that the contract meets the
conditions of Subsection 006.02 of this section.
006.03B The form of contract filed for
approval shall be accompanied by a statement:
006.03B(1) Specifying the range of variation
of variable contract provisions, if any, that could have a material effect on
the risk assumed by the insurer under the contract, including withdrawal
methodology, crediting rate formula and termination events;
006.03B(2) Describing how fair market value
will be determined, including a description of the procedures for valuing
securities and other assets that are not publicly traded;
006.03B(3) Describing the crediting rate
formula, if any, and how it will operate to take into account the difference
between the market value record and the contract value record over time;
and
006.03B(4) Listing events that
give the insurer the right to unilaterally and immediately terminate the
contract.
006.03C In
the case that the plan of operation pertaining to the class of contracts to
which the contract belongs:
00.6.03C(1) Has
been affirmatively approved by the state in which the issuing insurer is
domiciled, the form of contract filed for approval shall be accompanied by a
statement indicating receipt of affirmative approval.
006.03C(2) In the case that 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 insurer is
domiciled, the form of contract filed for approval must be accompanied by a
statement indicating that the issuing insurer has met the requirements for
deemed approval.
006.03C(3) Has not
been affirmatively approved, either affirmatively or by deemer, in the state in
which the issuing insurer is domiciled, the form of contract filed for approval
shall be accompanied by a statement of this fact, together with the plan of
operation pertaining to the contract.
006.04 The Director may disapprove a contract
form filing upon a finding that the form of contract contemplates practices
that are unfair or unreasonable or otherwise inconsistent with the provisions
of Chapter 44 of the Revised Statutes of Nebraska, including the requirements
of this regulation, specifying in what regard the contract form is unfair or
unreasonable or otherwise inconsistent with the provisions of Chapter 44 of the
Revised Statutes of Nebraska.
006.05 The Director may withdraw an approval
of a contract form on any basis that would have justified initial disapproval.
The Director shall notify the insurer in writing of the reason for the
withdrawal of the contract form approval. The insurer may, within 15 days of
the withdrawal of approval, make a written request for a hearing before the
Director to determine the reasonableness of the Director's action. The hearing
shall be held within 30 days of the request.
