Section 0780-01-52-.04 - 2001 CSO MORTALITY TABLE(1) Purpose - The purpose of this subchapter is to recognize, permit and prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality Table for use in determining the minimum standard of valuation and non-forfeiture benefits for life insurance policies.(2) Definitions. The following words and terms, when used in this regulation, shall have the following meanings, unless the context clearly indicates otherwise. (a) As used in rule 0780-01-52-.04 "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 National Association of Insurance Commissioners in December 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 non-smoker 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) As used in rule 0780-01-52-.04 "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) As used in rule 0780-01-52-.04 "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) As used in rule 0780-01-52-.04 "Composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and non-smokers.(e) As used in rule 0780-01-52-.04 "Smoker and non-smoker" mortality tables means those mortality tables with separate rates of mortality for smokers and non-smokers.(3) Application. (a) At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in this subchapter, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after January 1, 2004, and before the date specified in subsection (b) of this section to which Tennessee Code Annotated Section 56-1-403 is applicable. If the company elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and non-forfeiture 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 Tennessee Code Annotated Section 56-1-403 is applicable.(c) The minimum basis for computation of values related to extended term benefits will be the 2001 CSO Mortality Table pursuant to the requirements of this subchapter.(d) The Commissioner of Commerce and Insurance adopts by reference the 2001 CSO Mortality Table. The table is available from the Actuarial Section, Tennessee Department of Commerce and Insurance, 500 James Robertson Parkway, Nashville, Tennessee 37243, or on the internet by accessing the department's website at www.state.tn.us/commerce/.(4) Conditions. (a) For each plan of insurance with separate rates for smokers and non-smokers an insurer may use: 1. Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up non-forfeiture benefits;2. Smoker and non-smoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by T.C.A. § 56-1-403(d)(5) and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up non-forfeiture benefits; or3. Smoker and non-smoker mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up non-forfeiture benefits.(b) For plans of insurance without separate rates for smokers and non-smokers 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 non-forfeiture 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.(d) When the 2001 CSO Mortality Table is the minimum reserve standard for any plan of a company, the actuarial opinion in the annual statement filed with the commissioner shall be based on an asset adequacy analysis as specified in the Actuarial Opinion and Memorandum Regulation of the Tennessee Insurance Regulations, rule 0780-01-64. A company shall be exempt from this requirement if it only does business in this state and in no other state to the extent such company has not elected to use the 2001 CSO Mortality Table.(5) Applicability of the 2001 CSO Mortality Table to the Valuation of Life Insurance Policies Appendix A-830 of the National Association of Insurance Commissioners Accounting Practices and Procedures Manual (the "Appendix").(a) Subject to the transition dates set forth in this rule, for any report due after effectiveness hereof and in which the National Association of Insurance Commissioners Accounting Practices and Procedures Manual shall not have been amended to conform the Appendix to the 2001 CSO Mortality Table, the following principles shall apply to use of such Appendix: 1.Paragraph 3(a)(ii)(b) of the Appendix. The net level reserve premium shall be based on the ultimate mortality rates in the 2001 CSO Mortality Table.2.Paragraph 5 of the Appendix. All calculations shall be made using the 2001 CSO Mortality Rate, and, if elected, the optimal minimum mortality standard for deficiency reserves stipulated in subsection (5)(a).4 of this regulation. The value of "qx+k+t-1" shall be 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.Paragraph 16 of the Appendix. The 2001 CSO Mortality Table shall be the minimum standard for basic reserves.4.Paragraph 17 of the Appendix. The 2001 CSO Mortality Table shall be the minimum standard for deficiency reserves. If select mortality rates are used, they shall be multiplied by X percent for durations in the first segment, subject to the conditions specified in Paragraph 17(c)(i) through (viii) of the Appendix. 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.Paragraph 25(a) of the Appendix. 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.Paragraph 25(d) of the Appendix. The calculations specified in Paragraph 25 of the Appendix shall use the ultimate mortality rates in the 2001 CSO Mortality Table.7.Paragraph 26(d) of the Appendix. The calculations specified in Paragraph 26 of the Appendix shall use the ultimate mortality rates in the 2001 CSO Mortality Table.8.Paragraph 27(b) of the Appendix. The calculations specified in Paragraph 27 of the Appendix shall use the ultimate mortality rates in the 2001 CSO Mortality Table.9.Paragraph 29(a)(ii) of the Appendix. 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 the Valuation of Life Insurance Policies Model Regulation to include life insurance policies exempted under Paragraph 3(a) of the Appendix.(6) Gender-Blended Tables. (a) For any ordinary life insurance policy delivered or issued for delivery in this state on and after January 1, 2004, 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.(b) The company may choose from 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. These blended tables are available from the Actuarial Section, Tennessee Department of Commerce and Insurance, 500 James Robertson Parkway, Nashville, Tennessee 37243, or the internet by accessing the department's website at www.state.tn.us/commerce/.(c) It shall not, in and of itself, be a violation of Tennessee Code Annotated Section 56-8104 for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.Tenn. Comp. R. & Regs. 0780-01-52-.04
Original rule filed March 29, 1985; effective July 1, 1985. Amendment filed October 17, 2003; effective December 31, 2003.Authority: T.C.A. §§ 56-1-403, 56-1-403(b)(1)(A)(iii), 56-7-401, 56-7-401(h)(8)(B)(vi), and 56-2-301.