New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IV - Financial Condition Of Insurer and Reports to Superintendent
Subchapter B - Life Insurers
Part 94 - Valuation Of Individual And Group Accident And Health Insurance Reserves
Section 94.10 - Specific standards for morbidity, interest and mortality

Universal Citation: 11 NY Comp Codes Rules and Regs § 94.10

Current through Register Vol. 46, No. 39, September 25, 2024

(a) Morbidity.

(1) Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows:

(i) Disability income benefits due to accident or sickness.

(a) Contract reserves. In establishing contract reserves:

(1) For contracts issued prior to January 1, 1965: The minimum standard is the standard used prior to that date provided it puts a sound value on the liabilities under the policy. Otherwise the 64CDT shall be used;

(2) for contracts issued on or after January 1, 1965 and prior to January 1, 1989: 64CDT shall be used; and

(3) for contracts issued on or after January 1, 1989 and prior to January 1, 2020, or prior to an earlier date if elected under subclause (4) of this clause: 85CIDA or 85CIDB shall be used. Each insurer shall elect, with respect to all individual policies issued in any one statement year, whether it will use 85CIDA or 85CIDB as the minimum standard.

(4) An insurer may elect to apply the minimum reserve standards in subclause (5) of this clause for contracts issued on or after January 1, 2017 and prior to January 1, 2020, provided such standards are applied to all contracts issued on or after the date elected.

(5) For contracts issued on or after January 1, 2020, the insurer shall use the 2013 Individual Disability Income Valuation Table (2013 IDI Valuation Table)1, which was adopted by the NAIC in 2016, with modifiers as determined in accordance with the standards of valuation of individual disability income reserves governed by Part 83 of this Title (Insurance Regulation 172).

(6) Within three years of January 1, 2020, or an earlier date that an insurer begins to use the 2013 IDI Valuation Table under subclause (4) of this clause, the insurer may elect to apply that morbidity standard for all policies issued subject to other valuation tables, provided that the insurer:

(i) applies the morbidity standard to all in force policies and incurred claims;

(ii) elects or has elected to apply the 2013 IDI Valuation Table to all claims incurred regardless of incurred date;

(iii) maintains policy records on policies issued prior to January 1, 2020 that include all data elements needed to utilize the 2013 IDI Valuation Table; and

(iv) once the insurer elects to calculate reserves for all in force policies based on the current morbidity standard, the insurer makes all future valuations on that basis.

(b) Claim reserves.

(1) For claims incurred on or after January 1, 2001 and prior to January 1, 2020, an insurer shall use the 85CIDA with claim termination rates multiplied by the following adjustment factor:

Duration	Adjustment Factor	Adjusted Termination Rates*
Week 1	0.366	0.04831
2	0.366	0.04172
3	0.366	0.04063
4	0.366	0.04355
5	0.365	0.04088
6	0.365	0.04271
7	0.365	0.04380
8	0.365	0.04344
9	0.370	0.04292
10	0.370	0.04107
11	0.370	0.03848
12	0.370	0.03478
13	0.370	0.03034
Month 4	0.391	0.08758
5	0.371	0.07346
6	0.435	0.07531
7	0.500	0.07245
8	0.564	0.06655
9	0.613	0.05520
10	0.663	0.04705
11	0.712	0.04486
12	0.756	0.04309
13	0.800	0.04080
14	0.844	0.03882
15	0.888	0.03730
16	0.932	0.03448
17	0.976	0.03026
18	1.020	0.02856
19	1.049	0.02518
20	1.078	0.02264
21	1.107	0.02104
22	1.136	0.01932
23	1.165	0.01865
24	1.195	0.01792
Year 3	1.369	0.16839
4	1.204	0.10114
5	1.199	0.07434
6 and later	1.000	**

*The adjusted termination rates derived from the application of the adjustment factors to the DTS Valuation termination rates shown in exhibits 3a, 3b, 3c, 4, and 5 (Transactions of the Society of Actuaries (TSA) XXXVII, pp. 457-465) is displayed. The adjustment factors for age, elimination period, class, sex, and cause displayed in exhibits 3a, 3b, 3c, and 4 are applied to the adjusted termination rates shown in this table.

**Applicable DTS Valuation Table duration rate from exhibits 3c and 4 (TSA XXXVII, pp. 462-463).

The 85CIDA tables so adjusted for the computation of claim reserves shall be known as The Commissioners Individual Disability Tables C (85CIDC).

(2) For claims incurred on or after January 1, 2020, the insurer shall use the 2013 IDI Valuation Table with modifiers as determined in accordance with the standards of valuation of individual disability income reserves governed by Part 83 of this Title (Insurance Regulation 172), including:

(i) the use of the insurer's own experience as determined in accordance with the standards of valuation of individual disability income reserves governed by Part 83 of this Title (Insurance Regulation 172);

(ii) an adjustment to include an own experience measurement margin as determined in accordance with the standards of valuation of individual disability income reserves governed by Part 83 of this Title (Insurance Regulation 172); and

(iii) the application of a credibility factor as determined in accordance with the standards of valuation of individual disability income reserves governed by Part 83 of this Title (Insurance Regulation 172).

(3) For claims incurred prior to January 1, 2001, each insurer may elect one of the following to use as the minimum standard:

(i) the minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the claim is incurred; or

(ii) the standard as defined in subclause (1) or (2) of this clause, applied to all open claims, provided the insurer maintains claim records that include all data elements needed to utilize the standard defined in subclause (1) or (2) of this clause.

Once an insurer elects to calculate reserves for all open claims on the standard defined in subclause (1) or (2) of this clause, all of the insurer's future valuations must be on that basis. This option, with respect to subclause (2) of this clause, may be selected only if the insurer maintains claim records that include all data elements needed to utilize the 2013 IDI Valuation Table.

(4) For policies with an elimination period, the insurer shall consider the duration of disablement as dating from the time that benefits would have begun to accrue had there been no elimination period.

(5) An insurer shall consider a new disability connected directly or indirectly with a previous disability, which had a duration of at least one year and terminated within six months of the new disability, to be a continuation of the previous disability.

(ii) Hospital benefits, surgical benefits and maternity benefits (scheduled benefits or fixed time period benefits only).

(a) Contract reserves. In establishing contract reserves:

(1) for contracts issued on or after January 1, 1955, and before January 1, 1982: The 1956 Intercompany Hospital-Surgical Tables found in Edwin L. Bartleson's and James J. Olsen's paper Reserves for Individual Hospital and Surgical Expense Insurance Transactions of Society of Actuaries 1957, Volume IX, pp. 334 through 417 (56 Hospital/Surgical Tables)[FN7] shall be used; and

(2) for contracts issued on or after January 1, 1982: The 1974 Medical Expense Tables, Table A (page 63), found in Anthony J. Houghton's and Ronald M. Wolf's paper Development of the 1974 Medical Expense Tables Transactions of the Society of Actuaries, Volume XXX, pp. 9 through 123[FN8] shall be used. Refer to the paper, including its discussions, for methods of adjustment for benefits not directly valued in Table A.

Copies of the Reserves for Individual Hospital and Surgical Expense Insurance -- 1956 Hospital Surgical Table and Development of the 1974 Medical Expense Tables as adopted by the Society of Actuaries, 475 N. Martingale Road, Suite 800, Schaumburg, IL 60173-2226, in 1957 and 1978, respectively, are available for public inspection at the Insurance Department offices at One Commerce Plaza, Albany, NY 12257 and at 25 Beaver Street, New York, NY 10004.

(b) Claim reserves. No specific standard is required; subject, however, to all other applicable requirements of this Part.

(iii) Cancer expense benefits (scheduled benefits or fixed time period benefits only).

(a) Contract Reserves. In establishing contract reserves:

(1) For contracts issued on or after January 1, 1986 and prior to January 1, 2019: The 1985 NAIC Cancer Claim Cost Tables, ATTACHMENT FOUR - D, NAIC Proceedings - 1986 Vol. I, pp. 601 through 624 1 shall be used. A copy of such document as adopted by the National Association of Insurance Commissioners, 2301 McGee Street, Suite 800, Kansas City, MO 64108-2662, in 1986 is available for public inspection at the Department of Financial Services' offices at One Commerce Plaza, Albany, New York 12257 and at One State Street, New York, New York 10004.

(2) For contracts issued on or after January 1, 2019:

(i) For first occurrence and hospitalization benefits: The 2016 Cancer Claim Cost Valuation Tables (2016 CCCVT) 2 shall be used.

(ii) For all other benefits: an insurer shall use assumptions based on company experience, relevant industry experience, and actuarial judgment. These assumptions should be appropriate for valuation that considers margin for adverse experience.

(3) An insurer may elect to apply the morbidity standards described in subclause (2) of this clause for contracts issued on or after January 1, 2018 and prior to January 1, 2019, provided the same standards are applied to all contracts issued on or after the date elected.

(b) Claim reserves. No specific standard is required; subject, however, to all other applicable requirements of this Part.

(iv) Accidental death benefits.

(a) Contract reserves. For contracts issued on or after January 1, 1965: The 1959 Accidental Death Benefits Table found in Norman Brodie's and William J. November's paper A New Table for Accidental Death Benefits Transactions of Society of Actuaries 1959, Volume XI, pp. 749 through 763[FN10] (59ADB Table) shall be used. A copy of such document as adopted by the Society of Actuaries, 475 N. Martingale Road, Suite 800, Schaumburg, IL 60173-2226, in 1959 is available for public inspection at the Insurance Department offices at One Commerce Plaza, Albany, NY 12257 and at 25 Beaver Street, New York, NY 10004.

(b) Claim reserves. Actual amount incurred shall be used.

(v) Credit disability.

(a) Contract reserves.

(1) Single premium and level premium credit disability.

(i) For contracts issued on or after January 1, 2001:

(A) For plans having less than a 30-day elimination period, the 1985 Commissioners Individual Disability Tables A (85CIDA) with claim incidence rates increased by 12 percent.

(B) For plans having a 30-day or greater elimination period, the 85CIDA for a 14-day elimination period with claim incidence rates increased by 12 percent.

(ii) For contracts issued prior to January 1, 2001, each insurer may elect either subitem (A) or (B) of this item to use as the minimum standard. Once an insurer elects to calculate reserves for all contracts on the standard defined in item (i) of this subclause, all future valuations must be on that basis:

(A) the minimum morbidity standard in effect for individual disability income contract reserves, on currently issued contracts, as of the date the contract was issued; or

(B) the standard, as defined in item (i) of this subclause, applied to all contracts.

(2) All other credit disability. No specific standard; subject, however, to all other applicable requirements of this Part.

(b) Claim reserves. No specific standard; subject, however, to all other applicable requirements of this Part.

(vi) Long-term care benefits.

(a) Contract reserves. No specific standard shall be required; subject, however, to all other applicable requirements of the Part.

(b) Claim reserves. No specific standard shall be required; subject to all other applicable requirements of this Part.

(vii) Other individual contract benefits.

(a) Contract reserves. For all other individual contract benefits, no specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(b) Claim reserves. For all benefits other than disability, no specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(2) Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows:

(i) Disability income benefits due to accident or sickness.

(a) Contract reserves.

(1) For contracts issued prior to January 1, 1989, contract reserves shall be on the same basis, if any, as that employed by the insurer as of January 1st of the year of issue; and

(2) For contracts issued on or after January 1, 1989, the 1987 Commissioners Group Disability Income Table (87CGDT) shall be used.

(b) Claim reserves for a group disability income contract that is not a group long-term disability contract. In calculating the claim reserve on any valuation date for a claim incurred under a group policy:

(1) for claims incurred prior to January 1, 1989, claim reserves shall be on the same basis, if any, as that employed by the insurer as of January 1st of the year of incurral; and

(2) for claims incurred on or after January 1, 1989, the 1987 Commissioners Group Disability Income Table (87CGDT) shall be used.

(1) For claims incurred prior to January 1, 1989, an insurer's claim reserves shall be on the same basis, if any, as that employed by the insurer as of January 1st of the year of incurral;

(2) for claims incurred on or after January 1, 1989 and prior to January 1, 2017, the insurer shall use the 1987 Commissioners Group Disability Income Table (87CGDT); and

(3) for claims incurred on or after January 1, 2017, the insurer shall use the 2012 Group Long-Term Disability Valuation Table (2012 GLTD Table) noted in section 94.4(b)(1)(ii)(e) of this Part.

(ii) Credit disability.

(a) Contract reserves.

(1) Single premium and level premium credit disability.

(i) For contracts issued on or after January 1, 2001:

(A) for plans having less than a 30-day elimination period, the 1985 Commissioners Individual Disability Tables A (85CIDA) with claim incidence rates increased by 12 percent shall be used; and

(B) for plans having a 30-day or greater elimination period, the 85CIDA for a 14-day elimination period with claim incidence rates increased by 12 percent shall be used.

(A) the minimum morbidity standard in effect for individual disability income contract reserves, on currently issued contracts, as of the date the contract was issued; or

(B) the standard, as defined in item (i) of this subclause, applied to all contracts.

(2) All other credit disability. No specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(b) Claim reserves. No specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(iii) Long-term care benefits.

(a) Contract reserves. No specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(b) Claim reserves. No specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(iv) Other group contract benefits.

(a) Contract reserves. For all other group contract benefits, no specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(b) Claim reserves. For all benefits other than disability, no specific standard shall be required; subject, however, to all other applicable requirements of this Part.

(b) Interest.

(1) For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of life insurance policies with guarantee durations in excess of 20 years issued on the same date as the health insurance contract.

(2) For claim reserves on policies that require contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of life insurance with guarantee durations in excess of 20 years issued on the same date as the claim incurral date.

(3) For claim reserves on policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by 100 basis points.

(1) Unless paragraph (3) or (4) of this subdivision applies, the mortality basis used for all individual policies and group certificates, except long-term care insurance individual policies or group certificates issued on or after January 1, 1997, shall be the table specified in the Insurance Law or other Parts of this Title (but without use of selection factors) as the minimum standard permitted, for the valuation of whole life insurance issued on the same date as the health insurance contract. For example: the 1980 Commissioners Standard Ordinary Table found in Report of the Special Committee to Recommend New Mortality Tables for Valuation Transactions of Society of Actuaries 1981, Volume XXXIII, pp. 617 through 669 (80CSO)[FN11] could be used on an optional basis as of January 1, 1981 and therefore for this purpose the appropriate date would be January 1, 1981. A copy of such document as adopted by the Society of Actuaries, 475 N. Martingale Road, Suite 800, Schaumburg, IL 60173-2226, in 1981 is available for public inspection at the Insurance Department offices at One Commerce Plaza, Albany, NY 12257 and at 25 Beaver Street, New York, NY 10004.

(2) For long-term care insurance individual policies or group certificates issued on or after January 1, 1997 and before January 1, 2005, the mortality basis used shall be the 1983 Group Annuity Mortality Table (83GAM), contained in section 99.10(i)(4) (Insurance Regulation 151) of this Title, without projection.

(3) For long-term care insurance individual policies or group certificates issued on or after January 1, 2005, the mortality basis used shall be the 1994 Group Annuity Mortality Static Table. Rates of mortality for such basis are shown in the qx1994 column of the 1994 Group Annuity Reserving Table contained in section 99.10(i)(5) (Insurance Regulation 151) of this Title.

(4) Other mortality tables adopted by the NAIC and promulgated by regulation by the superintendent may be used in the calculation of the minimum reserves if appropriate for the type of benefits and if approved by the superintendent for use by the insurer in calculating such reserves. The request for approval shall include the proposed mortality table and the reason that the standard specified in paragraph (1) of this subdivision is inappropriate.

(5) For single premium and level premium credit insurance using the 85CIDA tables, no separate mortality table shall be assumed.

[FN7] TRANSACTIONS OF SOCIETY OF ACTUARIES 1957, VOLUME IX Published by Society of Actuaries in Schaumburg, Illinois; not copyrighted.

[FN8] TRANSACTIONS OF SOCIETY OF ACTUARIES 1978, VOLUME XXX Published by Society of Actuaries in Schaumburg, Illinois; not copyrighted.

[FN10] TRANSACTIONS OF SOCIETY OF ACTUARIES 1959, VOLUME XI Published by Society of Actuaries in Schaumburg, Illinois; not copyrighted.

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2 2016 Cancer Claim Cost Valuation Tables (2016 CCCVT), published by the National Association of Insurance Commissioners, are hereby incorporated by reference in this Part. The 2016 CCCVT are readily avail- able without charge at the following internet address: www.naic.org/documents/01_naic_2017_cancer_claim_cost_valuation_table.xlsx. The 2016 CCCVT are also available for public inspection and copying at the New York State Department of Financial Services, One State Street, New York, NY 10004.

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