D.C. Mun. Regs. tit. 26, r. 26-A3005

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 26-A3005 - 2001 CSO MORTALITY TABLE FOR DETERMINING MINIMUM RESERVE LIABILITIES AND NONFORFEITURE BENEFITS AFTER JANUARY 1, 2005

3005.1

The regulations in this section shall have the following applicability:

(a) At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in § 3005.2, 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 paragraph (b) and pursuant to D.C. Official Code §§ 31 -4701(c)(2)(A) and 31 -4705 .02(e)(16)(A)(i). 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 § 3005.2 through § 3005.5, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1, 2009 and pursuant to D.C. Official Code §§ 31-4701(c)(2)(A) and 31-4705.02(e)(16)(A)(i).

(c) The 2001 CSO Mortality Table may be applied to Chapter 30 of Title 26, DCMR, in the following manner and subject to the transition dates in this section:

(1) For § 3001.1, the 2001 CSO Mortality Table shall be the minimum standard for basic reserves;

(2) For § 3001.2, the 2001 CSO Mortality Table shall be 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 §§ 3001.2(c)(1) to 3001.2(c)(9). 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;

(3) For § 3000.2(b)(2), the net level reserve premium shall be based on the ultimate mortality rates in the 2001 CSO Mortality Table;

(4) For § 3002.6, the valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table;

(5) For § 3002.10(d), the calculations specified in § 3002.10 shall use the ultimate mortality rates in the 2001 CSO Mortality Table;

(6) For § 3002.11(d), the calculations specified in § 3002.11 shall use the ultimate mortality rates in the 2001 CSO Mortality Table;

(7) For § 3002.12(b), the calculations specified in § 3002.12 shall use the ultimate mortality rates in the 2001 CSO Mortality Table;

(8) For § 3003.1(b), the one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table; and

(9) For § 3004.1, all calculations shall be made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in § 3005.1(c)(4). The value of "qx+k+t-l" 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.

(d) Nothing in this section shall be construed to expand the applicability of Chapter 30 of Title 26, DCMR, to include life insurance policies exempted under § 3000.2.

3005.2

The following conditions shall apply with respect to the use of the 2001 CSO mortality table under § 3005.1:

(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 D.C. Official Code. § 31 -4720 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 in § 3001.

(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 Commissioner shall be based on an asset adequacy analysis as specified in 26 DCMR § 2900 et seq. The Commissioner may exempt a company from this requirement if its business is conducted exclusively in the District.

3005.3

Gender-Blended Tables shall apply in the following circumstances:

(a) For any ordinary life insurance policy delivered or issued for delivery in the District 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 paragraph.

(b) When a company is choosing among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the National Association of Insurance Commissioners in December 2002.

(c) It shall not be a violation of D.C. Official Code § 31-2231.01 et seq. for an insurer to issue the same kind of life insurance policy on both a gender-specific and gender-neutral basis.

3005.4

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 set forth in this section, 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 section, shall be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to this section.

3005.5

The following conditions shall apply to the use of the 2001 CSO Preferred Class Structure Mortality Table:

(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 10 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 (10) 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; and

(c) Unless exempted by the Commissioner, every authorized 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 subsection. 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.

3005.6

If any provision of these regulations 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.

D.C. Mun. Regs. tit. 26, r. 26-A3005

Final Rulemaking published at 47 DCR 2914 (April 28, 2000); Final Rulemaking published at 51 DCR 10218 (November 5, 2004); as Final Rulemaking published at 55 DCR 9734 (ERRATA published at 55 DCR 9999); as Final Rulemaking published at 55 DCR 9734 (September 26, 2008)