Current through Register Vol. 46, No. 39, September 25, 2024
(a)
Basic reserves.
(1) Basic
reserves actually held shall never be less than the greatest of:
(i) the tabular cost of insurance (i.e., the
valuation mortality rate multiplied by the death benefit and discounted using
the valuation interest rate) for:
(a) the
balance of the policy year, if mean reserves are used, based on the 1980 CSO
table with or without 10-year select mortality factors and the valuation
interest rate used for basic reserves; or
(b) the balance of the current modal period
or to the paid-to-date, if later, if mid-terminal reserves are used, based on
the 1980 CSO table with or without 10-year select mortality factors and the
valuation interest rate used for basic reserves; or
(ii) the unitary reserves; or
(iii) for policies issued after the relevant
dates of section
98.2(d) and
subject to section
98.6 of this Part, basic segmented
reserves.
The balance referred to in subparagraph (i) of this
paragraph may be exact for each policy or an average based on an assumed
average anniversary date.
(2) Special optional minimum mortality
standard for basic reserves for policies issued before January 1, 2000. At the
election of the company for policies issued on or after the relevant date of
section 98.2(d) of this
Part, but before January 1, 2000, under any one or more specified plans of life
insurance, the minimum mortality standard for basic unitary and basic segmented
reserves (but not for tabular cost of insurance) may be calculated using the
1980 CSO tables without 10-year select mortality factors and:
(i) 150 percent of the base valuation
selection factors shown in Appendix 23 to this Part, infra, but round the
result to the nearest integer (e.g., 52.7 percent becomes 53 percent) and set
equal to 100 percent any factor that exceeds 100 percent; or
(ii) alternative sets of mortality select
factors subject to the approval of the superintendent so long as:
(a) such sets of factors do not exceed 15
years;
(b) such sets of factors do
not decrease with duration;
(c)
each factor is not less than the corresponding factor in accordance with
subparagraph (i) of this paragraph; and
(d) each factor is not greater than 100
percent.
(3)
Special optional minimum mortality standard for basic reserves for policies
issued on January 1, 2000 or later. At the election of the company for policies
issued on or after January 1, 2000, under any one or more specified plans of
life insurance, the minimum mortality standard for basic reserves (but not for
tabular cost of insurance) may be calculated using the 1980 CSO tables without
10-year select mortality factors and the select mortality factors shown in
Appendix 24, infra to this Part.
(4) Basic reserves for indeterminate premium
policies shall be based on the guaranteed gross premium scale.
(5) Reserve for immediate payment of claims.
(i) Reserves based on either fully continuous
functions or on semi-continuous functions where the death portion reflects
approximately one half of one year's interest at the valuation rate of interest
are considered as making appropriate provision for immediate payment of
claims.
(ii) Where basic reserves
are based on curtate functions with no provision for immediate payment of
claims:
(a) For any policy where the contract
or company practice calls for payment of death claims immediately upon receipt
of due proof of death of the insured, the death portion of curtate reserves
shall be increased by one-third of one year's interest at the valuation rate of
interest. Approximations may be used to split the total curtate reserves into
the death portion and the pure endowment portion.
(b) For any policy where the contract or
company practice provides for payment of interest on the death proceeds from
date of death to date of payment, the death portion of curtate reserves shall
be increased by one-half of one year's interest at the valuation rate of
interest. Approximations may be used to split the total curtate reserves into
the death portion and the pure endowment portion.
(iii) The reserve for immediate payment of
claims shall be considered a part of basic reserves.
(b)
Deficiency
reserves.
(1) This subdivision shall
apply to any policy for which the gross premium at any future duration is less
than the corresponding modified net premium calculated on the basis of the
commissioners reserve valuation method, and using the maximum allowable
valuation interest rate and the minimum mortality standards allowable for
deficiency reserve purposes.
(2)
Deficiency reserves shall be calculated for each policy subject to this
subdivision as the excess, if greater than zero, of quantity A, as defined in
paragraph (3) of this subdivision, over basic reserves.
(3) Quantity A shall be determined by
recalculating the basic reserves for the policy:
(i) using:
(a) the commissioners reserve valuation
method;
(b) the maximum allowable
valuation interest rate; and
(c)
the minimum mortality standards allowable for calculating deficiency reserves;
and
(ii) replacing the
modified net premium by the gross premium for the policy in each contract year
for which the modified net premium exceeds the gross premium.
(4) Special optional minimum
mortality standards for deficiency reserves for policies issued before January
1, 2000. At the election of the company, for policies issued after the relevant
date of section
98.2(d) of this
Part, but before January 1, 2000, under any one or more specified plans of
insurance, the minimum mortality standard for quantity A may be calculated
using the 1980 CSO tables without 10-year select mortality factors; and
(i) 120 percent of the base valuation
selection factors shown in Appendix 23 infra, to this Part, but round the
result to the nearest integer and set equal to 100 percent any factor that
exceeds 100 percent; or
(ii) 150
percent of the base valuation selection factors shown in Appendix 23 infra, to
this Part, but round the result to the nearest integer and set equal to 100
percent any factor that exceeds 100 percent; or
(iii) alternative sets of mortality factors
subject to the approval of the superintendent so long as:
(a) such sets of factors do not exceed 15
years;
(b) such sets of factors do
not decrease with duration;
(c)
each factor is not less than the corresponding factor in accordance with
subparagraph (i) of this paragraph; and
(d) each factor is not greater than 100
percent.
(5)
Special optional minimum mortality standard for deficiency reserves for
policies issued on or after January 1, 2000. At the election of the company,
for policies issued on or after January 1, 2000 under any one or more specified
plans of insurance, the minimum mortality standard for quantity A may be
calculated using the 1980 CSO tables without 10-year select mortality factors
and the select mortality factors shown in the Appendix 24 infra. For all such
specified plans of insurance on which the company made this election, the
company may choose to multiply the resulting mortality rates in the first
segment by X percent (X which refers to a percentage is not the same as x which
refers to issue age), subject to the following conditions:
(i) X may vary by policy year, policy form,
underwriting classification, issue age, or any other policy factor expected to
affect mortality experience;
(ii) X
is such that, when using the valuation interest rate used for basic reserves,
the actuarial present value of future death benefits calculated using the
mortality rates resulting from the application of X is greater than or equal
to:
(a) except for a varying premium term
life insurance policy or a universal life policy that guarantees that coverage
will remain in force as long as the accumulation of premiums paid satisfies the
secondary guarantee requirement, issued on or after January 1, 2015 and prior
to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2020
if optionally elected under section
100.11(b) or
100.12(b) of this
Title (Insurance Regulation 179), respectively, as provided in clause (b) of
this subparagraph, the actuarial present value of future death benefits
calculated using anticipated mortality experience without recognition of
mortality improvement beyond the valuation date; or
(b) for a varying premium term life insurance
policy or a universal life policy that guarantees that coverage will remain in
force as long as the accumulation of premiums paid satisfies the secondary
guarantee requirement, issued on or after January 1, 2015 and prior to January
1, 2017, or on or after January 1, 2015 and prior to January 1, 2020 if
optionally elected under section
100.11(b) or
100.12(b) of this
Title (Insurance Regulation 179), respectively, the actuarial present value of
future death benefits calculated using anticipated mortality experience with
recognition of mortality improvement beyond the valuation date as specified in
section 100.11 or
100.12 of this Title (Insurance
Regulation 179) as applicable;
(iii)
(a)
Except for a varying premium term life insurance policy or a universal life
policy that guarantees that coverage will remain in force as long as the
accumulation of premiums paid satisfies the secondary guarantee requirement,
issued on or after January 1, 2015 and prior to January 1, 2017, or on or after
January 1, 2015 and prior to January 1, 2020 if optionally elected under
section 100.11(b) or
100.12(b) of this
Title (Insurance Regulation 179), respectively, as provided in clause (b) of
this subparagraph, X is such that the mortality rates resulting from the
application of X are at least as great as the anticipated mortality experience,
without recognition of mortality improvement beyond the valuation date, in each
of the first five years after the valuation date; or
(b) For a varying premium term life insurance
policy or a universal life policy that guarantees that coverage will remain in
force as long as the accumulation of premiums paid satisfies the secondary
guarantee requirement, issued on or after January 1, 2015 and prior to January
1, 2017, or on or after January 1, 2015 and prior to January 1, 2020 if
optionally elected under section
100.11(b) or
100.12(b) of this
Title (Insurance Regulation 179), respectively, X is such that the mortality
rates resulting from the application of X are at least as great as the
anticipated mortality experience, with recognition of mortality improvement
beyond the valuation date, in each of the first five years after the valuation
date, as specified in section 100.11 or
100.12 of this Title (Insurance
Regulation 179) as applicable;
(iv) the appointed actuary shall increase X
at any valuation date where it is necessary to continue to meet all the
requirements of this paragraph;
(v)
the appointed actuary may decrease X at any valuation date as long as X
continues to meet all the requirements of this paragraph;
(vi) the appointed actuary shall specifically
take into account the adverse effect on expected mortality and lapsation of any
anticipated or actual increase in gross premiums;
(vii) if X is less than 100 percent at any
duration for any policy, the following requirements shall be met:
(a) the appointed actuary shall annually
prepare an actuarial opinion and memorandum for the entire company for all
reserves and related actuarial items tabulated in section
95.8(b)(2) of
this Title in conformance with the requirements of section
95.8 of this Title;
(b)
(1) the
appointed actuary shall annually opine separately for:
(i) all policies subject to this Part issued
prior to January 1, 2000; and
(ii)
all policies subject to this Part issued on or after January 1, 2000, as to
whether the mortality rates resulting from the application of X meet the
requirements of this paragraph.
(2) The opinion required by this clause shall
be supported by an actuarial report, subject to appropriate actuarial standards
of practice promulgated by the Actuarial Standards Board of the American
Academy of Actuaries. Except for a varying premium term life insurance policy
or a universal life policy that guarantees that coverage will remain in force
as long as the accumulation of premiums paid satisfies the secondary guarantee
requirement, issued on or after January 1, 2015 and prior to January 1, 2017,
or on or after January 1, 2015 and prior to January 1, 2020 if optionally
elected under section
100.11(b) or
100.12(b) of this
Title (Insurance Regulation 179), respectively, the opinion shall reflect
future mortality, without recognition of mortality improvement beyond the
valuation date, taking into account relevant emerging experience. For a varying
premium term life insurance policy or a universal life policy that guarantees
that coverage will remain in force as long as the accumulation of premiums paid
satisfies the secondary guarantee requirement, issued on or after January 1,
2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to
January 1, 2020 if optionally elected under section
100.11(b) or
100.12(b) of this
Title (Insurance Regulation 179), respectively, the opinion shall reflect
future mortality, with recognition of mortality improvement beyond the
valuation date, as specified in section 100.11 or
100.12 of this Title (Insurance
Regulation 179) as applicable, taking into account relevant emerging
experience.
(6) Approved select mortality factors may be
used for determining quantity A even if such are not used to determine basic
reserves.
(7) Approved
smoker/nonsmoker valuation mortality tables may be used for determining
quantity A so long as actual gross premiums are charged based on smoking
status, even if basic reserves are not determined based on smoking status.
However, this paragraph does not prohibit the use of smoker valuation mortality
tables in calculating reserves for substandard nonsmoker lives if appropriate
and justifiable.
(8) For
indeterminate premium policies, the guaranteed gross premium scale shall be
used for purposes of determining quantity A.
(c)
Policies sold on an age last
birthday basis. In applying the mortality selection factors as derived
from the base valuation selection factors shown in the Appendices to this Part
(see Appendices 23 and 24, infra) to determine reserves for a policy sold on an
age last birthday (ALB) basis, the following methodologies are acceptable:
(1) apply the derived selection factors
directly to the ALB version of the 1980 CSO table without 10-year select
mortality factors; or
(2) apply the
derived selection factors to the age nearest birthday (ANB) version of the 1980
CSO table without 10-year select mortality factors and use the resulting ANB
valuation mortality rates to derive the ALB valuation mortality
rates.
(d)
Cash
surrender value floor.
(1) The reserve
actually held for each policy, other than a variable life insurance policy,
(including basic reserves, deficiency reserves, and any reserves held for
supplemental benefits that would expire upon contract termination) prior to any
reinsurance reserve credit or other reinsurance adjustment must not be less
than the cash surrender value at the same duration (including the cash
surrender value of the supplemental benefits referred to above) prior to any
deductions for policy loans.
(2)
For variable life insurance, the reserve held for each policy (including basic
reserves, deficiency reserves, and any reserves held for supplemental benefits
that would expire upon contract termination) prior to any reinsurance reserve
credit or other reinsurance adjustment must not be less than the sum of the
cash surrender value prior to any deductions for policy loans (including the
cash surrender value of the supplemental benefits referred to above) plus the
greater of the one year term reserve required by section
98.8(d)(1) of
this Part or the attained age level reserve required by section
98.8(d)(2) of
this Part at the same duration.
(e)
Policies with unusual patterns of
guaranteed cash surrender values.
(1)
For purposes of this subdivision, a policy is considered to have an unusual
pattern of guaranteed cash surrender values if any future guaranteed cash
surrender value exceeds the prior year's guaranteed cash surrender value by
more than the sum of:
(i) 110 percent of the
scheduled gross premium for that year;
(ii) 110 percent of one year's accrued
interest on the sum of the prior year's guaranteed cash surrender value and the
scheduled gross premium using the nonforfeiture interest rate used for
calculating policy guaranteed cash surrender values; and
(iii) five percent of the first policy year's
surrender charge, if any.
This determination is made at policy issue based on policy
guarantees.
(2)
For any policy with an unusual pattern of guaranteed cash surrender values, the
reserves actually held prior to the first unusual guaranteed cash surrender
value shall not be less than the reserves according to the commissioners
reserve valuation method, as defined in section
4217
(c)(6)(A) of the Insurance Law treating the
first unusual guaranteed cash surrender value as a pure endowment and treating
the policy as an n year policy providing term insurance plus a pure endowment
equal to such cash surrender value, where n is the number of years from the
date of issue to the date such cash surrender value is scheduled. The reserves
actually held after the first unusual guaranteed cash surrender value shall not
be less than the reserves according to the net level premium method treating
the first unusual guaranteed cash surrender value, if any, that is scheduled
after the valuation date as a pure endowment and treating the policy as an n
year policy providing term insurance plus a pure endowment equal to such cash
surrender value, where:
(i) n is the number
of years from the date of the last unusual guaranteed cash surrender value
prior to the valuation date to the earlier of:
(a) the date of the first unusual guaranteed
cash surrender value, if any, that is scheduled after the valuation date;
or
(b) the mandatory expiry date of
the policy; and
(ii) the
net level premium for a given year during the n year period is equal to the
product of the net to gross ratio and the respective gross premium;
and
(iii) the net to gross ratio is
equal to clause (a) divided by clause (b) of this subparagraph as follows:
(a) the present value, at the beginning of
the n year period, of death and endowment benefits payable during the n year
period plus the present value, at the beginning of the n year period, of the
next unusual guaranteed cash surrender value, if any, minus the amount of the
last unusual guaranteed cash surrender value, scheduled at the beginning of the
n year period; and
(b) the present
value, at the beginning of the n year period, of the scheduled gross premiums
payable during the n year period.
(3) All present values shall be calculated
using the same valuation mortality and interest rates used to calculate basic
reserves otherwise required in accordance with this Part.
(f)
Special optional exemption for
yearly renewable term reinsurance.
(1)
At the option of the company, for reserves for yearly renewable term (YRT)
reinsurance, the following methodology may be used as an alternative to the
requirements of paragraph (a)(1) and subdivision (b) of this section and
section 98.6 of this Part:
(i) Calculate the valuation net premium for
each future policy year as the tabular cost of insurance for such future
year.
(ii) Basic reserves. Basic
reserves shall never be less than the tabular cost of insurance as specified in
subparagraph (a)(1)(i) of this section.
(iii) Deficiency reserves.
(a) For each future policy year in which the
valuation net premium exceeds the respective gross premium, calculate the
excess of the valuation net premium over the respective gross
premium.
(b) Deficiency reserves
shall never be less than the sum of the present values, at the date of
valuation, of the excesses determined in accordance with clause (a) of this
subparagraph.
(iv)
Reserves actually held shall never be less than the sum of the basic reserves
and the deficiency reserves, as specified in this paragraph.
(2) In the application of
subparagraphs (1)(ii)-(iii) of this subdivision:
(i) the mortality standard shall be the 1980
CSO table with or without 10-year select mortality factors;
(ii) the special optional minimum mortality
standards for basic reserves and deficiency reserves as defined in this section
shall not be used; and
(iii) the
maximum valuation interest rates shall be used.
(3) If this election is made, the ceding
insurer may not take reserve credit in excess of the reserve set up by the
reinsurer.
(4) If this election is
made for any reinsurance agreement with a given ceding insurer, this election
must be made for all YRT reinsurance agreements effective on or after January
1, 2000 with such ceding insurer.
(5) A reinsurance agreement shall be
considered YRT reinsurance for purposes of this subdivision if the mortality
risk only is reinsured.
(g) Special optional exemption for certain
policies issued prior to the relevant dates of section
98.2(d) of this
Part and requirements for certain 1958 CSO policies.
(1) At the option of the company, for
reserves for policies subject to this Part in accordance with section
98.2(e)(2) of
this Part, issued prior to the relevant date of section
98.2(d) of this
Part, the following methodology may be used as an alternative to the
calculation of unitary reserves as required in paragraph (a)(1) of this
section:
(i) Separate the policy into periods
where a period is defined as the number of successive years for which gross
premiums are level.
(ii) Basic
reserves.
(a) Basic reserves shall never be
less than the present value of guaranteed life insurance and endowment benefits
for the current period less the present value of modified net premiums for such
period.
(b) The commissioners
reserve valuation method may be used for the first period only. For the second
and subsequent periods, the net level premium method shall be used; that is, as
of the beginning of given period, the present value of modified net premiums
shall equal the present value of guaranteed life insurance and endowment
benefits for the period.
(iii) Deficiency reserves.
(a) For each future period (including the
current period) in which the modified net premium exceeds the gross premium,
calculate the present value, at the date of valuation, of the excess of the
modified net premiums for such period over the gross premiums for such
period.
(b) Deficiency reserves
shall never be less than the sum of the present values, at the date of
valuation, of the excesses, determined in accordance with clause (a) of this
subparagraph, for the current period and all future periods.
(iv) Reserves actually held shall
never be less than the sum of the basic reserves and the deficiency reserves,
as specified in this paragraph.
(v)
If this election is made, the methodology in this paragraph shall be applied in
determining reserves for all policies subject to this Part in accordance with
section 98.2(e)(2) of
this Part issued prior to the relevant date of section
98.2(d) of this
Part.
(2) The procedures
of subparagraphs (1)(i) through (iv) of this subdivision shall be applied in
calculating reserves for all non-level premium term life insurance policies for
which basic reserves are calculated using the 1958 CSO table. For deficiency
reserves for such policies, the 1980 CSO table with or without select mortality
factors may be used.
(h)
In determining basic reserves or deficiency reserves under the unitary reserve
method or the segmented reserve method (as described in section
98.6 of this Part), guaranteed
gross premium without policy fee may be used where the calculation involves the
guaranteed gross premium but only if the policy fee is a level dollar amount
for the entire premium paying period of the policy. In testing for the need for
deficiency reserves per paragraph (b)(1) of this section and section
98.6(b)(1) of
this Part, the policy fee may be included even if not included in the actual
calculation of basic reserves.
(i)
The base valuation selection factors shown in the Appendices to this Part (see
Appendices 23 and 24, infra) are sex-distinct. The actual selection factors
used in determining basic reserves or deficiency reserves may be gender-blended
in accordance with the provisions of Part 47 of this Title.
(j)
Special optional exemption for
attained-age-based yearly renewable term life insurance policies.
(1) At the option of the company, for
reserves for attained-age-based yearly renewable term (YRT) life insurance
policies, the methodology described in paragraph (f)(1) of this section may be
used as an alternative to the requirements of paragraph (a)(1) and subdivision
(b) of this section and section
98.6 of this Part.
(2) In applying paragraph (1) of this
subdivision, the mortality standard shall be the 1980 CSO table with or without
10-year select mortality factors. The special optional minimum mortality
standards for basic reserves and deficiency reserves as defined in this section
shall not be used.
(3) If this
election is made, the methodology of paragraph (f)(1) of this section shall be
applied in determining reserves for all attained-age-based YRT life insurance
policies, unless otherwise approved by the superintendent.
(4) A policy shall be considered an
attained-age-based YRT life insurance policy for purposes of this subdivision
if it conforms to subparagraphs (i) and (ii) of this paragraph.
(i) The premium rates (on both the initial
current gross premium scale and the guaranteed gross premium scale) for any
given year are based on the attained age of the insured such that the rate for
any given policy at a given attained age of the insured is independent of the
year the policy was issued. For example, the rate for an insured aged 55 in the
current year would be the same whether the policy was issued at age 25 (30
years ago) or at age 50 (five years ago).
(ii) The premium rate (on both the initial
current premium scale and the guaranteed premium scale) is the same as the
premium rate for policies covering all insureds of the same sex, risk class,
policy form, and attained age.
(5) For policies that become
attained-age-based YRT policies after an initial period of coverage, the
methodology of this subdivision may be used if:
(i) the initial period is constant for all
insureds of the same sex, risk class, and plan of insurance or the initial
period runs to a common attained age for all insureds of the same sex, risk
class and plan of insurance; and
(ii) after the initial period of coverage,
the policy meets the conditions of paragraph (4) of this subdivision.
(k)
Policies
containing market value adjustments. For policies containing market
value adjustments, in addition to the requirements of this Part, the reserve
requirements of Part 43 of this Title shall also apply.
(l) Reserves for policies that have changes
to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or
guaranteed credits that are unilaterally made by the insurer after issue that
are effective for more than one year after the date of the change shall be the
greatest of the following:
(1) reserves
calculated ignoring the guarantee;
(2) reserves assuming the guarantee was made
at issue; and
(3) reserves assuming
that the policy was issued on the date of the guarantee.
(m) The superintendent may require that the
company document the extent of the adequacy of reserves for specified blocks,
including but not limited to policies issued prior to the effective date of
this regulation. This documentation may include a demonstration of the extent
to which aggregation with other blocks of business is relied upon in the
formation of the appointed actuary opinion pursuant to and consistent with the
requirements of Regulation 126.
(n)
Any provision that keeps the death benefit in force beyond the policy year
when, under the other guaranteed terms of the policy, the policy would lapse or
the policy values would be zero, must be valued consistently with the
principles underlying this regulation. The methods of valuation, if other than
those specified in this regulation, must be submitted to the superintendent for
approval.
(o) For any policy which
guarantees renewal, or conversion to another policy, without evidence of
insurability, additional reserves shall be held that account for excess
mortality due to antiselection with appropriate margins to cover expenses and
risk of moderately adverse deviations in experience.
(p) For any policy for which, in the judgment
of the appointed actuary, expected mortality is greater, at any duration, than
the 1980 CSO table without 10-year select mortality factors, additional
reserves shall be held that account for excess mortality with appropriate
margins to cover expenses and risk of moderately adverse deviations in
experience unless not holding such additional reserves is justified by an
acceptable actuarial opinion and memorandum in accordance with sections 95.8
and 95.9 of this Title. The
justification should be discussed in such memorandum.
(q) This subdivision shall apply to policies
assumed under any reinsurance agreement that provides that if reinsurance
premiums are increased there will be a corresponding increase in the expense
allowance.
(1) For such policies, the
reinsurer shall set the guaranteed premium scale to be used for reserve
calculations equal to subparagraph (i) minus subparagraph (ii) of this
paragraph, where:
(i) is the guaranteed
reinsurance premium scale; and
(ii)
is the corresponding guaranteed increase in expense allowance that would be
paid if the guaranteed reinsurance premiums were charged.
(2) Notwithstanding any provision in this
Part to the contrary, this subdivision shall apply to all such policies
effective on or after January 1, 2000 regardless of the date of the reinsurance
agreement.
(r) Where a
rider provides for the waiver of future premiums, and/or mortality and expense
charges, upon the first death of a last survivor base policy the total reserve
for the base policy and rider shall not be less than the greater of:
(1) the sum of the reserve for the base
policy and the reserve for the rider, treating each as if it were a separate
policy; and
(2) the reserve
determined by treating the base policy and the rider as if the combination were
a single policy.
(s) For
a policy which provides for whole life insurance with the amount of death
benefit adjusted periodically with a cost of living index, the value of the
minimum reserve at any time shall be based on the maximum valuation interest
rate for the year of issue and an acceptable mortality table for life insurance
statutory reserves and based on the death benefit and premium pattern adjusted
as provided in the policy by reasonable annual increases based on the index.
The present value of future benefits component shall be further adjusted each
year by the ratio of the then current amount of death benefit to the initially
projected amount of death benefit. If the policy provides for future premiums
and such premiums are also adjusted periodically with a cost of living index,
the present value of future premiums component shall likewise be further
adjusted each year by the ratio of the then current amount of death benefit to
the initially projected amount of death benefit. The assumption as to what is a
reasonable annual increase in death benefits based on the index must not be
less than the maximum valuation interest rate for the year of issue less one
percent.
(t) A nonguaranteed
premium or other policy cost factor for purposes of calculating reserves will
be considered guaranteed if the company is in any way restricted from changing
these premiums or other policy cost factors to recognize changes in actual or
expected company experience related to this policy. Pre-filing of premiums or
other policy cost factors with the superintendent or the insurance supervisor
of another state is not considered to be a restriction for the purpose of this
subdivision.
(u) All applications
of this Part must be consistent with the principles of section
4217 of the
Insurance Law and the principles and concepts of this Part. Section
98.9 of this Part shows examples
of how to apply the principles to certain specified policy designs. An insurer
shall hold additional reserves if the superintendent determines that the
calculated reserves are less than those calculated by a proper interpretation
of this Part.
(v) For policies that
provide long-term care benefits through the acceleration of benefits under
group or individual life policies or riders to such policies, the reserves for
such benefits shall be determined in accordance with Part 94 of this Title
(Regulation 56). The reserves for the life insurance benefits may take into
account the reduction in life insurance benefits due to the payment of
accelerated benefits. However, in no event shall the reserves for the long-term
care benefit and the life insurance benefit be less than the reserves for the
life insurance benefit assuming no long-term care benefit is
available.
(w)
(1) For the purposes of this section,
statistical agent means an entity with proven systems for protecting the
confidentiality of individual insured and insurer information; demonstrated
resources for, and history of, ongoing electronic communications and data
transfer ensuring data integrity with insurers that are the statistical agent's
members or subscribers; and a history of and means for aggregation of data and
accurate promulgation of the experience modifications in a timely
manner.
(2)
(i) This subdivision applies to insurers
where the sum of the premiums received as specified in clauses (a), (b), (c),
(d) of this subparagraph exceed ten million dollars for the previous calendar
year;
(a) direct individual life insurance
premiums;
(b) reinsurance assumed
life insurance premiums;
(c) direct
individually solicited group life insurance premiums; and
(d) reinsurance assumed individually
solicited group life insurance premiums.
(ii) Every insurer subject to this
subdivision shall annually file on or before July 1 with the superintendent, or
at the direction of the superintendent, with either the National Association of
Insurance Commissioners or with a statistical agent designated by the
superintendent, a statistical report, in a form specified by the
superintendent, showing mortality, expenses, lapses, and such other company
experience information as the superintendent may deem necessary or expedient
for the administration of the provisions of the Insurance Law or this Part,
with respect to individual life insurance policies and individually solicited
group life insurance certificates issued on or after January 1, 1990.
