Current through Register Vol. 46, No. 39, September 25, 2024
(a) An
insurer shall obtain an actuarial memorandum signed and dated by a qualified
actuary:
(1) prior to the issuance of any
policy of a new policy form;
(2)
prior to the issuance of any policy of a policy form for which the
non-guaranteed elements have been changed for only new issues; and
(3) prior to any change to the non-guaranteed
elements of an existing policy other than a change in a credited interest rate
or an index account parameter based entirely on changes in the insurer's
expected investment income or hedging costs.
(b) The actuarial memorandum shall contain
the following as applicable:
(1) sufficient
detail of the pricing assumptions by duration of the current scale of
non-guaranteed elements and the anticipated experience factors on which they
are based. The information shall include:
(i)
premium;
(ii) gross investment
returns;
(iii) investment
expenses;
(iv) investment
defaults;
(v) credited rates and
index account parameters;
(vi)
policyholder behavior assumptions including option elections and
persistency;
(vii) benefits
paid;
(viii) mortality
rates;
(ix) morbidity
rates;
(x) insurance expenses,
including the allocation of tax, sale, maintenance, service and overhead
expenses;
(xi) profit
margins;
(xii) policy expense
charges; and
(xiii) policy benefit
charges;
(2) a
description of the experience or other information used to determine the
anticipated experience factors, including a description of the reasoning and
analysis that led from the information to the anticipated experience
factors;
(3) a description of the
processes and methods used in the determination of non-guaranteed elements for
a pricing cell from the anticipated experience factors;
(4) any formula used to determine index
account parameters and a description of the index formula;
(5) the investment strategy, which shall
include:
(i) a description of the method used
for the allocation of investment income, specifying how trading gains and
losses due to interest rate changes are allocated; and
(ii) a description of the methods used to
assess deductions from gross earned rates for default, investment expenses and
risk items; and
(6) a
statement signed and dated by a qualified actuary that the anticipated
experience factors in the actuarial memorandum are reasonable assumptions and
are the basis for determining the scale of non-guaranteed elements, and that
the actuary is familiar with the current requirements in this State for
non-guaranteed elements.
(c) An insurer shall have procedures in place
to require a qualified actuary acting on the insurer's behalf to notify the
insurer of any action specified in sections
48.1(p)(4), (5),
and (6) of this Part. The insurer shall notify the superintendent of the action
taken against the actuary as soon as practicable.
(d) An insurer shall file any adverse change
in the current scale of non-guaranteed elements applicable to existing life
insurance policies or applicable group life insurance certificates with the
superintendent at least 120 days prior to implementation. The filing shall
include:
(1) the actuarial memorandum required
by subdivision (a) of this section;
(2) a tabulation of all proposed changes in
the current scale of non-guaranteed elements by pricing cell giving the current
scale of non-guaranteed elements, the proposed current scale of non-guaranteed
elements, and the changes in the non-guaranteed elements;
(3) a tabulation of all changes in the
anticipated experience factors and profit margins by pricing cell giving the
prior anticipated experience factors and profit margins, the current
anticipated experience factors and profit margins, and the changes in the
anticipated experience factors and profit margins;
(4) a narrative description of experience or
other rationale that explain the changes in anticipated experience factors;
and
(5) for pricing cells, a
narrative description of any changes in the methods or procedures for
determining non-guaranteed elements from the anticipated experience
factors.
(e) By May 1 of
each year, the insurer shall file with the superintendent a listing of any
adverse change in the current scale of non-guaranteed elements of any existing
policy that occurred in the prior calendar year. The filing shall include a
statement signed and dated by a qualified actuary that all changes were in
compliance with this Part.
(f) An
insurer shall provide all records required by this Part to the Superintendent
upon request.
(g) The insurer shall
maintain in its records, for six years after the termination of the last policy
subject to the board-approved criteria, the written documentation of the
determination of non-guaranteed elements required by this Part. The insurer
shall maintain the written documentation in accordance with section
243.3 of this Title (Insurance
Regulation 152).
