2023 New York Laws › ISC - Insurance › Article 45 - Fraternal Benefit Societies › 4517 - Standard of Valuation Reserves.

§ 4517. Standard of valuation reserves. (a) The legal minimum standard
of valuation for all life insurance certificates issued by an authorized
society prior to January first, nineteen hundred fifty-seven shall be in
accordance  with  provisions  of  law  applicable thereto as of December
thirty-first, nineteen hundred fifty-six, including  the  setting  aside
and maintenance of the required statutory contingency reserve on such of
its  certificates  as  are valued on an interest assumption in excess of
three and one-half percent per annum.  The  legal  minimum  standard  of
valuation  for  all  annuity  contracts,  and  disability  benefits  and
accident and sickness benefits in all certificates and  contracts  shall
be  in  accordance  with  the provisions of law applicable thereto as of
December thirty-first, nineteen hundred fifty-six.
(b) In every valuation report of every authorized society and in every
valuation of reserves made or caused to be made by the superintendent or
accepted by him in lieu of such valuation, the reserve liability on  all
certificates  issued  on  and  after  January  first,  nineteen  hundred
fifty-seven shall be determined on a basis of the net tabular  value  of
the reserves on such certificates, not including any value for the right
to make extra payments or to require additional insurance contributions.
Such  tabular  values  shall  not  be  less  than the reserve determined
according to the commissioners reserve valuation method  as  defined  in
this  subsection.  If  the  premium charged is less than the tabular net
premium according to the basis of valuation used, an additional  reserve
equal  to  the  present  value  of  the  deficiency in such premiums, as
determined in the manner prescribed in section four thousand two hundred
eighteen of this chapter, shall be set up and maintained as a liability;
provided that, in the case of any society which is not  qualifying  with
the  provisions  of  section  four thousand five hundred fifteen of this
article, the deficiency reserve shall be determined on the basis of  the
difference  between  the  net  insurance  contribution,  as  in practice
actually collected for life insurance  benefits,  and  the  tabular  net
premium.   The reserve liability shall be properly adjusted in the event
that the mid-year or tabular values are not appropriate.
(1) Reserves according to the commissioners reserve valuation  method,
for  the life insurance and endowment benefits of certificates providing
for a uniform amount of insurance and requiring the payment  of  uniform
premiums  shall be the excess, if any, of the present value, at the date
of valuation, of such future guaranteed benefits provided  for  by  such
certificates,  over  the  then  present value of any future modified net
premiums therefor. The modified net premiums for  any  such  certificate
shall be such uniform percentage of the respective contract premiums for
such  benefits  that  the  present  value,  at  the date of issue of the
certificate, of all such modified net premiums shall be equal to the sum
of the  then  present  value  of  such  benefits  provided  for  by  the
certificate and the excess of:
(A)  a  net  level  premium equal to the present value, at the date of
issue, of such benefits provided for after the first  certificate  year,
divided by the present value, at the date of issue, of an annuity of one
dollar per annum payable on the first and each subsequent anniversary of
such  certificate  on  which a premium falls due; provided however, that
such net level annual premium shall not  exceed  the  net  level  annual
premium  on  the  nineteen year premium whole life plan for insurance of
the same amount at an age one year higher than the age at issue of  such
certificate, over
(B)  a net one-year term premium for such benefits provided for in the
first certificate year.
(2) Reserves according to the commissioners reserve  valuation  method
for  (i)  life  insurance  certificates providing for varying amounts of

benefits or requiring the payment of varying premiums, (ii) annuity  and
pure  endowment benefits, (iii) disability and accidental death benefits
in all certificates and contracts, and (iv) all other  benefits,  except
life  insurance  and endowment benefits, shall be calculated by a method
consistent with the principles of this subsection (b), except  that  any
extra  premiums  charged because of impairments or special hazards shall
be disregarded in the determination of modified net premiums.
(c) (1) The minimum standard for the valuation of life  insurance  and
annuity certificates issued on and after January first, nineteen hundred
fifty-seven,  but  prior  to  July  first, nineteen hundred seventy-two,
shall be three percent interest  and  for  life  insurance  and  annuity
certificates   issued   on   and  after  July  first,  nineteen  hundred
seventy-two, but prior to January first, nineteen hundred eighty,  shall
be three and one-half percent interest, and the following tables:
(A)  for certificates of life insurance issued prior to January first,
nineteen  hundred  seventy-five  --  American  Men  Ultimate  Table   of
Mortality,  with  Bowerman's  or  Davis'  Extension thereof or, with the
consent of the superintendent, the Commissioners 1941 Standard  Ordinary
Mortality  Table,  the  Commissioners  1958  Standard Ordinary Mortality
Table or the Commissioners 1941 Standard Industrial Table of  Mortality;
provided  that  for  any category of ordinary insurance issued on female
risks, all modified net premiums and present values  may  be  calculated
according  to  an  age not more than three years younger than the actual
age of the insured; and for certificates issued  on  and  after  January
first, nineteen hundred seventy-five, -- the Commissioners 1941 Standard
Ordinary  Mortality  Table,  the  Commissioners  1958  Standard Ordinary
Mortality Table or the Commissioners 1961 Standard Industrial  Table  of
Mortality;
(B)  for  annuity  certificates,  including life annuities provided or
available under optional modes of settlement in such certificates -- the
1937 Standard Annuity Table or,  at  the  option  of  the  society,  the
Annuity  Mortality  Table  for  1949,  Ultimate,  or any modification of
either table approved by the superintendent;
(C) for disability benefits issued in  connection  with  life  benefit
certificates  --  Hunter's  Disability  Table,  which, for active lives,
shall be combined with a mortality table permitted for  calculating  the
reserves  on life insurance certificates, except that the table known as
Class III Disability Table (1926) modified to conform to the contractual
waiting period, or, at the option of the society, the tables of Period 2
disablement rates and the 1930 to 1950 termination  rates  of  the  1952
Disability  Study  of  the  Society of Actuaries, with due regard to the
type of benefits, shall be used in  computing  reserves  for  disability
benefits  under a contract which presumes that total disability shall be
considered to be permanent after a specified period; and
(D) for accidental death  benefits  issued  in  connection  with  life
benefit  certificate  --  the  Inter-Company  Double Indemnity Mortality
Table or, at the option  of  the  society,  the  1959  Accidental  Death
Benefits  Table.    Either such table shall be combined with a mortality
table  permitted  for  calculating  the  reserves  for  life   insurance
certificates.
(2)  The  minimum  standard  for  the  valuation of life insurance and
annuity certificates issued on and after January first, nineteen hundred
eighty, shall be subject to the requirements and exceptions  of  section
four  thousand  two  hundred  seventeen of this chapter, provided that a
society may also elect to use the Commissioners 1941  Standard  Ordinary
Mortality Table or the Commissioners 1961 Standard Industrial Table.
(3)  The superintendent may, in his discretion, accept other standards
for valuation if he finds that the reserves produced thereby will not be

less  in  the  aggregate  than  reserves computed in accordance with the
minimum valuation standard herein prescribed. The superintendent may, in
his discretion, vary  the  standards  of  mortality  applicable  to  all
certificates  of  insurance on substandard lives or other extrahazardous
lives by any society authorized to do business in this  state.  Whenever
the  mortality  experience  under  all  certificates  valued on the same
mortality table is in excess of the expected mortality according to such
table for a period of three consecutive years,  the  superintendent  may
require  additional  reserves  when  deemed necessary in his judgment on
account of such certificates.
(4)  Any society, with the consent of the superintendent and under any
conditions he may impose, may establish and  maintain  reserves  on  its
certificates  in  excess  of  the  reserves required thereunder, but the
contractual rights of any insured member shall not be affected thereby.
(d) Every society shall maintain reserves for all individual  accident
and health insurance certificates which shall place a sound value on its
liabilities under such certificates and which shall not be less than the
reserves  according  to the standards set forth in regulations issued by
the superintendent and, in no  event,  less  than  the  pro  rata  gross
unearned  premium  reserve for such certificates.  Prior to the issuance
of any regulation provided for in  this  subsection  the  superintendent
shall  give at least ten days notice thereof to each society licensed to
write accident and health insurance in  this  state,  by  ordinary  mail
addressed to its principal place of business, and provide an opportunity
for hearing on such proposed action.
(e)  All of the foregoing valuations, in any valuation report filed by
a society as required by the provisions of this article, shall either be
certified by a competent actuary, or, at the request and expense of  the
society  be  verified  by  an actuary of the insurance department of the
state, province or country in which the society is domiciled.
(f)  Any  authorized  society  which  issues  certificates  or   other
obligations  providing  for  benefits  in  case  of  death or disability
resulting solely from accident,  or  in  case  of  temporary  disability
resulting  from  sickness,  or  hospital expense or surgical and medical
expense benefits shall maintain reserves for unearned premiums  and  for
disabled lives in accordance with standards prescribed from time to time
by  the  superintendent,  which  standards  shall  conform  as nearly as
practicable to those required  for  similar  reserves  of  accident  and
health insurance companies under the laws of this state.