N.Y. ISC Law § 4517 — New York Code / Act ISC / Article 45 / Section 4517
Standard of valuation reserves
Status: in_force

§ 4517. Standard of valuation reserves. (a) The legal minimum standard\nof valuation for all life insurance certificates issued by an authorized\nsociety prior to January first, nineteen hundred fifty-seven shall be in\naccordance with provisions of law applicable thereto as of December\nthirty-first, nineteen hundred fifty-six, including the setting aside\nand maintenance of the required statutory contingency reserve on such of\nits certificates as are valued on an interest assumption in excess of\nthree and one-half percent per annum. The legal minimum standard of\nvaluation for all annuity contracts, and disability benefits and\naccident and sickness benefits in all certificates and contracts shall\nbe in accordance with the provisions of law applicable thereto as of\nDecember thirty-first, nineteen hundred fifty-six.\n  (b) In every valuation report of every authorized society and in every\nvaluation of reserves made or caused to be made by the superintendent or\naccepted by him in lieu of such valuation, the reserve liability on all\ncertificates issued on and after January first, nineteen hundred\nfifty-seven shall be determined on a basis of the net tabular value of\nthe reserves on such certificates, not including any value for the right\nto make extra payments or to require additional insurance contributions.\nSuch tabular values shall not be less than the reserve determined\naccording to the commissioners reserve valuation method as defined in\nthis subsection. If the premium charged is less than the tabular net\npremium according to the basis of valuation used, an additional reserve\nequal to the present value of the deficiency in such premiums, as\ndetermined in the manner prescribed in section four thousand two hundred\neighteen of this chapter, shall be set up and maintained as a liability;\nprovided that, in the case of any society which is not qualifying with\nthe provisions of section four thousand five hundred fifteen of this\narticle, the deficiency reserve shall be determined on the basis of the\ndifference between the net insurance contribution, as in practice\nactually collected for life insurance benefits, and the tabular net\npremium.  The reserve liability shall be properly adjusted in the event\nthat the mid-year or tabular values are not appropriate.\n  (1) Reserves according to the commissioners reserve valuation method,\nfor the life insurance and endowment benefits of certificates providing\nfor a uniform amount of insurance and requiring the payment of uniform\npremiums shall be the excess, if any, of the present value, at the date\nof valuation, of such future guaranteed benefits provided for by such\ncertificates, over the then present value of any future modified net\npremiums therefor. The modified net premiums for any such certificate\nshall be such uniform percentage of the respective contract premiums for\nsuch benefits that the present value, at the date of issue of the\ncertificate, of all such modified net premiums shall be equal to the sum\nof the then present value of such benefits provided for by the\ncertificate and the excess of:\n  (A) a net level premium equal to the present value, at the date of\nissue, of such benefits provided for after the first certificate year,\ndivided by the present value, at the date of issue, of an annuity of one\ndollar per annum payable on the first and each subsequent anniversary of\nsuch certificate on which a premium falls due; provided however, that\nsuch net level annual premium shall not exceed the net level annual\npremium on the nineteen year premium whole life plan for insurance of\nthe same amount at an age one year higher than the age at issue of such\ncertificate, over\n  (B) a net one-year term premium for such benefits provided for in the\nfirst certificate year.\n  (2) Reserves according to the commissioners reserve valuation method\nfor (i) life insurance certificates providing for varying amounts of\nbenefits or requiring the payment of varying premiums, (ii) annuity and\npure endowment benefits, (iii) disability and accidental death benefits\nin all certificates and contracts, and (iv) all other benefits, except\nlife insurance and endowment benefits, shall be calculated by a method\nconsistent with the principles of this subsection (b), except that any\nextra premiums charged because of impairments or special hazards shall\nbe disregarded in the determination of modified net premiums.\n  (c) (1) The minimum standard for the valuation of life insurance and\nannuity certificates issued on and after January first, nineteen hundred\nfifty-seven, but prior to July first, nineteen hundred seventy-two,\nshall be three percent interest and for life insurance and annuity\ncertificates issued on and after July first, nineteen hundred\nseventy-two, but prior to January first, nineteen hundred eighty, shall\nbe three and one-half percent interest, and the following tables:\n  (A) for certificates of life insurance issued prior to January first,\nnineteen hundred seventy-five -- American Men Ultimate Table of\nMortality, with Bowerman's or Davis' Extension thereof or, with the\nconsent of the superintendent, the Commissioners 1941 Standard Ordinary\nMortality Table, the Commissioners 1958 Standard Ordinary Mortality\nTable or the Commissioners 1941 Standard Industrial Table of Mortality;\nprovided that for any category of ordinary insurance issued on female\nrisks, all modified net premiums and present values may be calculated\naccording to an age not more than three years younger than the actual\nage of the insured; and for certificates issued on and after January\nfirst, nineteen hundred seventy-five, -- the Commissioners 1941 Standard\nOrdinary Mortality Table, the Commissioners 1958 Standard Ordinary\nMortality Table or the Commissioners 1961 Standard Industrial Table of\nMortality;\n  (B) for annuity certificates, including life annuities provided or\navailable under optional modes of settlement in such certificates -- the\n1937 Standard Annuity Table or, at the option of the society, the\nAnnuity Mortality Table for 1949, Ultimate, or any modification of\neither table approved by the superintendent;\n  (C) for disability benefits issued in connection with life benefit\ncertificates -- Hunter's Disability Table, which, for active lives,\nshall be combined with a mortality table permitted for calculating the\nreserves on life insurance certificates, except that the table known as\nClass III Disability Table (1926) modified to conform to the contractual\nwaiting period, or, at the option of the society, the tables of Period 2\ndisablement rates and the 1930 to 1950 termination rates of the 1952\nDisability Study of the Society of Actuaries, with due regard to the\ntype of benefits, shall be used in computing reserves for disability\nbenefits under a contract which presumes that total disability shall be\nconsidered to be permanent after a specified period; and\n  (D) for accidental death benefits issued in connection with life\nbenefit certificate -- the Inter-Company Double Indemnity Mortality\nTable or, at the option of the society, the 1959 Accidental Death\nBenefits Table.  Either such table shall be combined with a mortality\ntable permitted for calculating the reserves for life insurance\ncertificates.\n  (2) The minimum standard for the valuation of life insurance and\nannuity certificates issued on and after January first, nineteen hundred\neighty, shall be subject to the requirements and exceptions of section\nfour thousand two hundred seventeen of this chapter, provided that a\nsociety may also elect to use the Commissioners 1941 Standard Ordinary\nMortality Table or the Commissioners 1961 Standard Industrial Table.\n  (3)  The superintendent may, in his discretion, accept other standards\nfor valuation if he finds that the reserves produced thereby will not be\nless in the aggregate than reserves computed in accordance with the\nminimum valuation standard herein prescribed. The superintendent may, in\nhis discretion, vary the standards of mortality applicable to all\ncertificates of insurance on substandard lives or other extrahazardous\nlives by any society authorized to do business in this state. Whenever\nthe mortality experience under all certificates valued on the same\nmortality table is in excess of the expected mortality according to such\ntable for a period of three consecutive years, the superintendent may\nrequire additional reserves when deemed necessary in his judgment on\naccount of such certificates.\n  (4)  Any society, with the consent of the superintendent and under any\nconditions he may impose, may establish and maintain reserves on its\ncertificates in excess of the reserves required thereunder, but the\ncontractual rights of any insured member shall not be affected thereby.\n  (d) Every society shall maintain reserves for all individual accident\nand health insurance certificates which shall place a sound value on its\nliabilities under such certificates and which shall not be less than the\nreserves according to the standards set forth in regulations issued by\nthe superintendent and, in no event, less than the pro rata gross\nunearned premium reserve for such certificates.  Prior to the issuance\nof any regulation provided for in this subsection the superintendent\nshall give at least ten days notice thereof to each society licensed to\nwrite accident and health insurance in this state, by ordinary mail\naddressed to its principal place of business, and provide an opportunity\nfor hearing on such proposed action.\n  (e) All of the foregoing valuations, in any valuation report filed by\na society as required by the provisions of this article, shall either be\ncertified by a competent actuary, or, at the request and expense of the\nsociety be verified by an actuary of the insurance department of the\nstate, province or country in which the society is domiciled.\n  (f) Any authorized society which issues certificates or other\nobligations providing for benefits in case of death or disability\nresulting solely from accident, or in case of temporary disability\nresulting from sickness, or hospital expense or surgical and medical\nexpense benefits shall maintain reserves for unearned premiums and for\ndisabled lives in accordance with standards prescribed from time to time\nby the superintendent, which standards shall conform as nearly as\npracticable to those required for similar reserves of accident and\nhealth insurance companies under the laws of this state.\n