Current through Register Vol. 48, 12, December 27, 2024
Section 4. 2001 CSO
Preferred Class Structure Table
Section
7. Effective Date
Section 1.
Authority
This regulation is promulgated by the Director of Insurance
pursuant to South Carolina Code of Laws Section
38-90-180,
the Standard Valuation Law, and Sections
5A and 5B of South Carolina 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 mortality tables that reflect differences in mortality
between preferred and standard lives in determining minimum reserve liabilities
in accordance with South Carolina Code of Laws Section
38-90-180,
the Standard Valuation Law, and Sections 5A and 5B of South Carolina 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) and supplemented by the 2001 CSO Preferred Class Structure
Mortality Table defined below in Subsection B. 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:
(1) "2001 CSO Mortality Table (F)"
means that mortality table consisting of the rates of mortality for female
lives from the 2001 CSO Mortality Table.
(2) "2001 CSO Mortality Table (M)" means that
mortality table consisting of the rates of mortality for male lives from the
2001 CSO Mortality Table.
(3)
"Composite mortality tables" means mortality tables with rates of mortality
that do not distinguish between smokers and nonsmokers.
(4) "Smoker and nonsmoker mortality tables"
means mortality tables with separate rates of mortality for smokers and
nonsmokers.
B. "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.
C.
"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.
Section 4. 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 regulation, 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. No such election shall be made until the company
demonstrates at least 20% 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 the NAIC model regulation, "Recognition of the 2001 CSO
Mortality Table For Use In Determining Minimum Reserve Liabilities And
Nonforfeiture Benefits Model Regulation."
Section 5. Conditions
A. 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:
(1) 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.
(2) 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.
B. 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:
(1) 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.
(2) 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.
C. Unless exempted by the Director, every
authorized insurer using the 2001 CSO Preferred Class Structure Table shall
annually file with the Director, with the NAIC, or with a statistical agent
designated by the NAIC and acceptable to the Director, statistical reports
showing mortality and such other information as the Director may deem necessary
or expedient for the administration of the provisions of this regulation. The
form of the reports shall be established by the Director or the Director may
require the use of a form established by the NAIC or by a statistical agent
designated by the NAIC and acceptable to the Director.
Section 6. 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 7. Effective Date
The effective date of this regulation is January
1, 2007.
Statutory Authority: 1976 Code Sections
38-9-180
and
1-23-10 et
seq.