Current through Reg. 50, No. 13; March 28, 2025
(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; and
(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; and
(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 commissioner,
every insurer using the 2001 CSO Preferred Class Structure Table shall annually
file with the commissioner, with the NAIC, or with a statistical agent
designated by the NAIC and acceptable to the commissioner, statistical reports
showing mortality and such other information as the commissioner may deem
necessary or expedient for the administration of the provisions of this
regulation. The form of the reports shall be established by the commissioner,
or the commissioner may require the use of a form established by the NAIC or by
a statistical agent designated by the NAIC and acceptable to the commissioner.
The form of the statistical reports shall be promulgated by rule. Insurers are
not required to file such statistical reports until such rule has been adopted
by the commissioner. At the commissioner's discretion, the commissioner may
request mortality experience and other information at any time.
(d) The use of the 2001 CSO Preferred Class
Structure Table for the valuation of policies issued prior to January 1, 2007,
shall not be permitted in any statutory financial statement in which a company
reports, with respect to any policy or portion of a policy coinsured, either of
the following:
(1) In cases where the mode of
payment of the reinsurance premium is less frequent than the mode of payment of
the policy premium, a reserve credit that exceeds, by more than the amount
specified in this paragraph as Y, the gross reserve calculated before
reinsurance. Y is the amount of the gross reinsurance premium that:
(A) provides coverage for the period from the
next policy period premium due date to the earlier of the end of the policy
year and the next reinsurance premium due date; and
(B) would be refunded to the ceding entity
upon the termination of the policy.
(2) In cases where the mode of payment of the
reinsurance premium is more frequent than the mode of payment of the policy
premium, a reserve credit that is less than the gross reserve, calculated
before reinsurance, by an amount that is less than the amount specified in this
paragraph as Z. Z is the amount of gross reinsurance premium that the ceding
entity would need to pay the assuming company to provide reinsurance coverage
from the period of the next reinsurance premium due date to the next policy
premium due date minus any liability established for the proportionate amount
not remitted to the reinsurer.
(3)
For purposes of the conditions stated in paragraphs (1) and (2) of this
subsection, the reserve for the mean reserve method shall be defined as the
mean reserve minus the deferred premium asset, and for the mid-terminal reserve
method shall include the unearned premium reserve. A company may estimate and
adjust its accounting on an aggregate basis in order to meet the conditions to
use the 2001 CSO Preferred Class Structure Table.
