Current through Register Vol. 48, 12, December 27, 2024
Section 4. 2001 CSO
Mortality Table
Section 6. Applicability
of the 2001 CSO Mortality Table to South Carolina Insurance Regulation
69-57
Section 7. Gender-Blended Tables
Section 9. Effective Date
Section 1. Authority
This regulation is promulgated by the Director of Insurance
pursuant to South Carolina Code Sections
38-9-180
and
38-63-510
et seq. as well as Regulation Regulation
69-57,
Valuation of Life Insurance Policies.
Section 2. Purpose
The purpose of this regulation is to recognize, permit and
prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality
Table in accordance with South Carolina Code Section
38-9-180
and Section
38-63-510
et seq. as well Regulation Regulation
69-57,
Valuation of Life Insurance Policies.
Section 3. Definitions
A. "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
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.
B. "2001 CSO Mortality Table (F)" means that
mortality table consisting of the rates of mortality for female lives from the
2001 CSO Mortality Table.
C. "2001
CSO Mortality Table (M)" means that mortality table consisting of the rates of
mortality for male lives from the 2001 CSO Mortality Table.
D. "Composite mortality tables" means
mortality tables with rates of mortality that do not distinguish between
smokers and nonsmokers.
E. "Smoker
and nonsmoker mortality tables" means mortality tables with separate rates of
mortality for smokers and nonsmokers.
Section 4. 2001 CSO Mortality Table
A. At the election of the company for any one
or more specified plans of insurance and subject to the conditions stated in
this regulation, the 2001 CSO Mortality Table may be used as the minimum
standard for policies issued on or after January 1, 2005 and before the date
specified in Subsection B to which South Carolina Code Sections
38-9-180
and
38-63-510
et seq. and South Carolina Insurance Regulation Regulation
69-57
are applicable. If the company elects to use the 2001 CSO Mortality Table, it
shall do so for both valuation and nonforfeiture purposes.
B. Subject to the conditions stated in this
regulation, the 2001 CSO Mortality Table shall be used in determining minimum
standards for policies issued on and after January 1, 2009, to which South
Carolina Code Sections
38-9-180
and
38-63-510
et seq. and Regulation Regulation
69-57
are applicable.
C. The new minimum
basis for the computation of values related to extended term benefits shall be
the 2001 CSO Mortality Table, subject to the transition dates for use of the
2001 CSO Mortality Tables set forth in this section.
Section 5. Conditions
A. For each plan of insurance with separate
rates for smokers and nonsmokers an insurer may use:
(1) Composite mortality tables to determine
minimum reserve liabilities and minimum cash surrender values and amounts of
paid-up nonforfeiture benefits;
(2)
Smoker and nonsmoker mortality tables to determine the valuation net premiums
and additional minimum reserves, if any, required by South Carolina Code
Section
38-9-180
and use composite mortality tables to determine the basic minimum reserves,
minimum cash surrender values and amounts of paid-up nonforfeiture benefits;
or
(3) Smoker and nonsmoker
mortality to determine minimum reserve liabilities and minimum cash surrender
values and amounts of paid-up nonforfeiture benefits.
B. For plans of insurance without separate
rates for smokers and nonsmokers the composite mortality tables shall be
used.
C. For the purpose of
determining minimum reserve liabilities and minimum cash surrender values and
amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of
the company for each plan of insurance, be used in its ultimate or select and
ultimate form, subject to the restrictions of Section 6 and South Carolina
Insurance Regulation Regulation
69-57
relative to use of the select and ultimate form.
D. When the 2001 CSO Mortality Table is the
minimum reserve standard for any plan for a company, the actuarial opinion in
the annual statement filed with the Director shall be based on an asset
adequacy analysis as specified in South Carolina Insurance Regulation
Regulation
69-52.
A Director may exempt a company from this requirement if it only does business
in this state and in no other state.
Section 6. Applicability of the 2001 CSO
Mortality Table to South Carolina Insurance Regulation Regulation 69-57
A. The 2001 CSO Mortality Table may be used
in applying South Carolina Insurance Regulation Regulation
69-57
in the following manner, subject to the transition dates for use of the 2001
CSO Mortality Table in Section
4 of this regulation unless otherwise
noted, the references in this section are to the South Carolina Insurance
Regulation Regulation
69-57:
(1) Section
3A(2)(b): The net level reserve premium is
based on the ultimate mortality rates in the 2001 CSO Mortality
Table.
(2) Section
4B: All calculations are made using the
2001 CSO Mortality Rate, and, if elected, the optional minimum mortality
standard for deficiency reserves stipulated in Section 6A(4) of this
regulation. The value of "qx+" k+" t-1" is the valuation mortality rate for
deficiency reserves in policy year k+" t, but using the unmodified select
mortality rates if modified select mortality rates are used in the computation
of deficiency reserves.
(3) Section
5A: The 2001 CSO Mortality Table is the
minimum standard for basic reserves.
(4) Section 5B: The 2001 CSO Mortality Table
is the minimum standard for deficiency reserves. If select mortality rates are
used, they may be multiplied by X percent for durations in the first segment,
subject to the conditions specified in Sections 5B(3)(a) to (i). In
demonstrating compliance with those conditions, the demonstrations may not
combine the results of tests that utilize the 1980 CSO Mortality Table with
those tests that utilize the 2001 CSO Mortality Table, unless the combination
is explicitly required by regulation or necessary to be in compliance with
relevant Actuarial Standards of Practice.
(5) Section
6C: The valuation mortality table used in
determining the tabular cost of insurance shall be the ultimate mortality rates
in the 2001 CSO Mortality Table.
(6) Section 6E(4): The calculations specified
in Section 6E shall use the ultimate mortality rates in the 2001 CSO Mortality
Table.
(7) Section 6F(4): The
calculations specified in Section 6F shall use the ultimate mortality rates in
the 2001 CSO Mortality Table.
(8)
Section 6G(2): The calculations specified in Section 6G shall use the ultimate
mortality rates in the 2001 CSO Mortality Table.
(9) Section 7A(1)(b): The one-year valuation
premium shall be calculated using the ultimate mortality rates in the 2001 CSO
Mortality Table.
B.
Nothing in this section shall be construed to expand the applicability of South
Carolina Insurance Regulation Regulation
69-57
to include life insurance policies exempted under Section 3A of South Carolina
Insurance Regulation Regulation 69-57.
Section 7. Gender-Blended Tables
A. For any ordinary life insurance policy
delivered or issued for delivery in this state on and after January 1, 2005,
that utilizes the same premium rates and charges for male and female lives or
is issued in circumstances where applicable law does not permit distinctions on
the basis of gender, a mortality table that is a blend of the 2001 CSO
Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of
the company for each plan of insurance, be substituted for the 2001 CSO
Mortality Table for use in determining minimum cash surrender values and
amounts of paid-up nonforfeiture benefits. No change in minimum valuation
standards is implied by this subsection of the regulation.
B. The company may choose from among the
blended tables developed by the American Academy of Actuaries CSO Task Force
and adopted by the NAIC in December 2002.
C. It shall not, in and of itself, be a
violation of South Carolina Code of Laws Chapter 57 of Title 38 for an insurer to issue the same kind of
policy of life insurance on both a sex-distinct and sex-neutral
basis.
Section 8.
Separability
If any provision of this regulation or its application to any
person or circumstance is for any reason held to be invalid, the remainder of
the regulation and the application of the provision to other persons or
circumstances shall not be affected.
Section 9. Effective Date
This regulation shall be effective January
1, 2005.
Statutory Authority: 1976 Code Sections
38-3-110,
38-9-180,
38-63-510
et seq., 1-23-110 et seq.