Current through all regulations passed and filed through September 16, 2024
(A) Purpose
The purpose of this rule is to provide authorized companies an
alternative to rule
3901-6-11
of the Administrative Code, by recognizing, permitting and prescribing the use
of mortality tables that reflect differences in mortality between preferred and
standard lives in determining minimum reserve liabilities in accordance with
sections
3903.723
and
3915.071 of the Revised Code and
rule
3901-6-10
of the Administrative Code (valuation of insurance policies).
(B) Authority
This rule is promulgated
pursuant to the authority vested in the
superintendent under sections
3901.041,
3903.723
and
3915.071 of the Revised Code
.
(C)
Definitions
(1) "2001 CSO mortality table"
means that mortality table, consisting of separate rates of mortality for male
and female lives, developed by the American academy of actuaries CSO task
force from the valuation basic mortality table developed by the society of
actuaries individual life insurance valuation mortality task force, and adopted
by the national association of insurance commissioners (NAIC) in December 2002.
The 2001 CSO mortality table is included in the "Proceedings of the NAIC" (2nd
quarter 2002) and supplemented by the 2001 CSO preferred class structure
mortality table defined in paragraph (C)(6) of this rule. Unless the context
indicates otherwise, the "2001 CSO mortality table" includes both the ultimate
form of that table and the select and ultimate form of that table and includes
both the smoker and nonsmoker mortality tables and the composite mortality
tables. It also includes both the age-nearest-birthday and age-last-birthday
bases of the mortality tables.
Mortality tables in the 2001 CSO mortality table
include the following:
(2) "2001
CSO mortality table (F)" means that mortality table consisting of the rates of
mortality for female lives from the 2001 CSO mortality table
(3) "2001 CSO mortality table (M)" means that
mortality table consisting of the rates of mortality for male lives from the
2001 CSO mortality table.
(4)
"Composite mortality tables" means mortality tables with rates of mortality
that do not distinguish between smokers and nonsmokers.
(5) "Smoker and nonsmoker mortality tables"
means mortality tables with separate rates of mortality for smokers and
nonsmokers.
(6) "2001 CSO preferred
class structure mortality table" means mortality tables with separate rates of
mortality for super preferred nonsmokers, preferred nonsmokers, residual
standard nonsmokers, preferred smokers, and residual standard smoker splits of
the 2001 CSO nonsmoker and smoker tables as adopted by the NAIC at the
September 2006 national meeting and published in the NAIC proceedings (3rd
quarter 2006). Unless the context indicates otherwise, the "2001 CSO preferred
class structure mortality table" includes both the ultimate form of that table
and the select and ultimate form of that table. It includes both the smoker and
nonsmoker mortality tables. It includes both the male and female mortality
tables and the gender composite mortality tables. It also includes both the
age-nearest-birthday and age-last-birthday bases of the mortality
table.
(7) "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, which are its members or subscribers; and a history of
and means for aggregation of data and accurate promulgation of the experience
modifications in a timely manner.
(D) 2001 CSO preferred class structure table
At the election of the company, for each calendar year of
issue, for any one or more specified plans of insurance and subject to
satisfying the conditions stated in this rule, the 2001 CSO preferred class
structure mortality table may be substituted in place of the 2001 CSO smoker or
nonsmoker mortality table as the minimum valuation standard for policies issued
on or after January 1, 2007, or, with the consent of the superintendent, on or
after September 18, 2003. No such election shall be made until the company
demonstrates at least twenty per cent of the business to be valued on this
table is in one or more of the preferred classes. A table from the 2001 CSO
preferred class structure mortality table used in place of a 2001 CSO mortality
table, pursuant to the requirements of this rule, will be treated as part of
the 2001 CSO mortality table only for purposes of reserve valuation pursuant to
the requirements of rule
3901-6-11
of the Administrative Code, (Recognition of the 2001 CSO mortality table for
use in determining minimum reserve liabilities and nonforfeiture
benefits).
(E) Conditions
(1) 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:
(a) The present value of death benefits over
the next ten 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.
(b) 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.
(2) 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:
(a) The
present value of death benefits over the next ten 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 basic
table corresponding to the valuation table being used for that class.
(b) 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 basic table.
(3) 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.
(F)
Severability
If any
paragraph, term or provision of this rule is adjudged invalid for any reason,
the judgment shall not affect, impair or invalidate any other paragraph, term
or provision of this rule, but the remaining paragraphs, terms and provisions
shall be and continue in full force and effect.
Effective: 10/29/2015
Five Year
Review (FYR) Dates: 08/14/2015 and
08/31/2020
Promulgated
Under: 119.03
Statutory
Authority: 3901.041
Rule
Amplifies: 3901.19 to
3901.221
Prior
Effective Dates: 1/1/2007, 1/21/2009 (Emer.),
4/24/2009
