California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 3.5 - Minimum Reserve Standards for Valuation of Disability Insurance Contracts › Section 2315 - Specific Standards for Morbidity, Interest and Mortality

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Morbidity
(1) Minimum morbidity standards for valuation
				  of specified individual contract benefits:
(A)
				  Disability Income Benefits Due to Accident or Sickness.
1. Contract Reserves For contracts issued on
				  or after January 1, 1965 and prior to January 1, 1995: use either the 1964
				  Commissioners Disability Table or the 1985 Tables described below.
For contracts issued on or after January 1, 1995: The 1985
					 Commissioners Individual Disability Tables A (85CIDA); or The 1985
					 Commissioners Individual Disability Tables B (85CIDB). 85 CIDA, also called the
					 Basic Valuation Table, is found in Transactions of the Society of Actuaries,
					 Volume XXXVII, pages 449-460. 85CIDB, also called the "83c Table", is found in
					 Proceedings of the NAIC, 1985, Volume 1, pages 494-540.
Each insurer shall elect, with respect to all individual
					 contracts issued in any one statement year, either Tables A or Tables B as the
					 minimum standard. The insurer may elect to use the other tables with respect to
					 any subsequent statement year.
2. Claim Reserves
(i) For claims incurred on or after January
				  1, 2005:
The 1985 Commissioners Individual Disability Tables A
					 (85CIDA) in 1985 Transactions of the Society of Actuaries, Volume XXXVII, pages
					 455-463, incorporated by reference herein, with claim termination rates
					 multiplied by the following adjustment factors:
Duration
2315
Adjusted Termination Rates 
								*
____________________________________________________________________________________
Week 1
0.366
0.04831
2
0.366
0.04172
3
0.366
0.04063
4
0.366
0.04355
5
0.365
0.04088
6
0.365
0.04271
7
0.365
0.04380
8
0.365
0.04344
9
0.370
0.04292
10
0.370
0.04107
11
0.370
0.03848
12
0.370
0.03478
13
0.370
0.03034
____________________________________________________________________________________
Month 4
0.391
0.08758
5
0.371
0.07346
6
0.435
0.07531
7
0.500
0.07245
8
0.564
0.06655
9
0.613
0.05520
10
0.663
0.04705
11
0.712
0.04486
12
0.756
0.04309
13
0.800
0.04080
14
0.844
0.03882
15
0.888
0.03730
16
0.932
0.03448
17
0.976
0.03026
18
1.020
0.02856
19
1.049
0.02518
20
1.078
0.02264
21
1.107
0.02104
22
1.136
0.01932
23
1.165
0.01865
24
1.195
0.01792
____________________________________________________________________________________
Year 3
1.369
0.16839
4
1.204
0.10114
5
1.199
0.07434
6 and later
1.000
**
____________________________________________________________________________________
*
The adjusted termination rates
					 derived from the application of the adjustment factors to the DTS Valuation
					 Table termination rates shown in exhibits 3a, 3b, 3c, 4, and 5 (1985
					 Transactions of the Society of Actuaries (TSA), Volume XXXVII, pp. 457-463,
					 465, incorporated by reference herein, are displayed. The adjustment factors
					 for age, elimination period, class, sex, and cause displayed in exhibits 3a,
					 3b, 3c, and 4 should be applied to the adjusted termination rates shown in this
					 table.
**
Applicable DTS Valuation Table
					 duration rate from exhibits 3c and 4 (1985 TSA Volume XXXVII, pp. 462-463),
					 incorporated by reference herein.
The 85CIDA tables so adjusted for the computation of claim
					 reserves shall be known as 85CIDC (The 1985 Commissioners Individual Disability
					 Tables C, which is the 85CIDA tables in 1985 Transactions of the Society of
					 Actuaries, Volume XXXVII, pp. 455-463, so adjusted, incorporated by reference
					 herein.).
(ii) For claims
				  incurred prior to January 1, 2005:
Each insurer may elect which of the following to use as the
					 minimum standard for claims incurred prior to January 1, 2005:
(I) The minimum morbidity standard in effect
				  for contract reserves on currently issued contracts, as of the date the claim
				  is incurred, or
(II) The standard
				  as defined in Item (i), applied to all open claims.
(III) Once an insurer elects to calculate
				  reserves for all open claims on the standard defined in Item (i), all future
				  valuations must be on that basis.