Current through Register Vol. 35, No. 6, March 26, 2024
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 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.
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 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 Basis 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 Basis
Table.
C. Unless
exempted by the superintendent, every authorized insurer using the 2001
CSO Preferred Class Structure Table shall annually file with the
superintendent, with the NAIC, or with a statistical agent designated by the
NAIC and acceptable to the superintendent, statistical reports showing
mortality and such other information as the superintendent may deem necessary
or expedient for the administration of the provisions of this rule. The form of
the reports shall be established by the superintendent or the superintendent
may require the use of a form established by the NAIC or by a statistical agent
designated by the NAIC and acceptable to the superintendent.
D. 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) 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.
(3) 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 mid-terminal
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.