Rules & Regulations of the State of Tennessee
Title 0780 - Commerce and Insurance
Subtitle 0780-01 - Insurance Division
Chapter 0780-01-04 - Credit Life Insurance and Credit Accident and Health Insurance
Section 0780-01-04-.10 - FINANCIAL STATEMENT RESERVES

Universal Citation: TN Comp Rules and Regs 0780-01-04-.10

Current through September 24, 2024

(1) In order to assume that sufficient funds will be made available to make the refunds as required and to guarantee promised benefits to policyholders, aggregate reserves shall be at least equal to the sum of the following:

(a) For Single Premium Credit Life Insurance:
1. If ages are available, the net single premiums for the remaining benefits, calculated by a seriatim method using the 1960 Commissioner's Standard Group Table and interest of not more than 31/2%. It is recommended that companies using this standard accumulate an additional reserve to assure adequacy of funds for refunds and excess claims on terminated group policies or agency agreements. Approximate methods of calculating this reserve liability may be approved by the Commissioner provided:
(i) The actuarial derivation establishes clearly that the method produces at least the minimum reserve; and

(ii) The assumptions on which the approximation is based are checked for accuracy and validity against the current business of the insurer at least annually.

Approval of such methods shall be obtained prior to their use and the annual verification of assumptions shall be filed with the Commissioner; or

2. If ages are not available, the gross unearned premium, on the "Rule of 78" or pro-rata basis as specified for refunds, calculated exactly.

(b) For Credit Life Insurance on the outstanding balance plan:

Reserves shall be equal to the gross unearned premium calculated upon a pro-rata basis.

(c) For Credit Accident and Health Insurance:

Reserves shall be not less than the sum of all gross unearned premiums, calculated as prescribed for premium refunds when the insurance is on the single premium basis, or on a pro-rata basis if on the outstanding balance plan.

(2) If, on December 31, 1969, the reserves maintained on such business by any company are on a lower basis than described above, the Commissioner, upon written request of such company may approve a plan for the systematic accumulation of such reserves. Such plan shall be accomplished within such time as the Commissioner may deem proper.

(3) REPEALED

Authority: T.C.A. §§ 45-5-403, 56-7-901 and 56-8-110.

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