Current through all regulations passed and filed through September 16, 2024
(A) Purpose
The purpose of this rule is to establish for preneed insurance
products minimum mortality standards for reserves and nonforfeiture values, and
to require the use of the "1980 Commissioners Standard Ordinary (CSO) Life
Valuation Mortality Table" for use in determining the minimum standard of
valuation of reserves and the minimum standard nonforfeiture values for preneed
insurance products.
(B)
Authority
This rule is promulgated pursuant to the authority vested in
the superintendent under sections
3901.041,
3903.72,
3903.721, and
3915.071 of the Revised Code and
rule 3901-6-10 of the Administrative
Code (valuation of life insurance policies).
(C) Scope
This rule applies to preneed insurance contracts, as defined in
paragraph (D)(3) of this rule.
(D) Definitions
(1) The term "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)." 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.
(2) The term "Ultimate 1980
CSO" means the "Commissioners' 1980 Standard Ordinary Life Valuation Mortality
Tables (1980 CSO)" without ten-year selection factors, incorporated into the
1980 amendments to the NAIC Standard Valuation Law approved in December
1983.
(3) For the purposes of this
rule, a preneed insurance contract is any life insurance policy or certificate
that will be marketed and sold solely to fund preneed funeral contracts, as
defined by division (T) of section
4717.01 of the Revised Code.
The status of the policy or contract as preneed
insurance is determined at the time of issue in accordance with the policy form
filing, pursuant to section
3915.14 of the Revised
Code.
(E) Minimum
valuation mortality standards
For preneed insurance contracts, as defined in paragraph (D)(3)
of this rule, the minimum mortality standard for determining reserve
liabilities and nonforfeiture values for both male and female insureds
is
the "Ultimate 1980 CSO."
(F)
Minimum valuation interest rate standards
(1)
The interest rates used in determining the minimum standard for valuation of
preneed insurance
are the calendar year statutory valuation
interest rates as defined in section
3903.724 of the Revised
Code.
(2) The interest rates used
in determining the minimum standard for nonforfeiture values for preneed
insurance
are the calendar year statutory nonforfeiture interest
rates as defined in division (F) of section
3915.071 of the Revised
Code.
(G) Minimum
valuation method standards
(1) The method used
in determining the standard for the minimum valuation of reserves of preneed
insurance
is the method defined in division
(A) of
section
3903.723
of the Revised
Code.
(2) The method used in
determining the standard for the minimum nonforfeiture values for preneed
insurance
is the method defined in section
3915.071 of the Revised
Code.
(H) Transition
rules
(1) For preneed insurance policies
issued on or after the effective date of this rule and before January 1, 2012,
the 2001 CSO may be used as the minimum standard for reserves and minimum
standard for nonforfeiture benefits for both male and female
insureds.
(2) If an insurer elects
to use the 2001 CSO as a minimum standard for any policy issued on or after the
effective date of this rule and before January 1, 2012, the insurer shall
provide, as a part of the actuarial opinion memorandum submitted in support of
the company's asset adequacy testing, an annual written notification to the
domiciliary commissioner. The notification shall include:
(a) A complete list of all preneed policy
forms that use the 2001 CSO as a minimum standard;
(b) A certification signed by the appointed
actuary stating that the reserve methodology employed by the company in
determining reserves for the preneed policies issued after the effective date
and using the 2001 CSO as a minimum standard, develops adequate reserves (for
the purposes of this certification, the preneed insurance policies using the
2001 CSO as a minimum standard cannot be aggregated with any other policies.);
and
(c) Supporting information
regarding the adequacy of reserves for preneed insurance policies issued after
the effective date of this rule and using the 2001 CSO as a minimum standard
for reserves.
(3) Preneed
insurance policies issued on or after January 1, 2012, must use the "Ultimate
1980 CSO" in the calculation of minimum nonforfeiture values and minimum
reserves.
(I)
Severability
If any portion of
this rule or the application thereof to any person or circumstance is held
invalid, the invalidity does not affect other provisions or applications of the
rule or related rules which can be given effect without the invalid portion or
application, and to this end the provisions of this rule are
severable.
