New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter III - Policy and Certificate Provisions › Subchapter A - Life, Accident and Health Insurance › Part 43 - Individual Life Insurance Market-value Adjustment › Section 43.0 - Preamble

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Chapter 365 of
				  the Laws of 1986 amended section 4221  of the Insurance Law, among other
				  things, to provide in subdivision (n)(2) thereof that any policy under which
				  additional amounts are credited pursuant to section 4232 (b)  of the Insurance
				  Law may provide for cash surrender benefits determined in accordance with a
				  market-value adjustment formula; provided, however, that such policy provides
				  for cash surrender benefits determined without adjustment in accordance with
				  such a formula at specified times (not less frequent than once every 10 years
				  after issuance of the policy). The chapter defined market- value adjustment
				  formula to mean a formula which is described in the policy for increasing and
				  decreasing cash surrender values that would otherwise meet the nonforfeiture
				  requirements of section 4221 (n)(1)  of the
				  Insurance Law and which takes into account (1) changes in interest rates on
				  publicly traded debt obligations or other investments or in interest rates
				  provided in, or declared pursuant to, policies of the same class as the policy
				  being surrendered; and (2) the length of time between the date on which the
				  policy is surrendered and the next date on which the policy would have provided
				  cash surrender benefits determined without the use of any market-value
				  adjustment formula. The chapter authorized the superintendent to promulgate
				  reasonable regulations to define permissible forms of market-value adjustment
				  formulae.
(b) The chapter also
				  amended section 4222  of
				  the Insurance Law to provide that the policy loan value for a policy under
				  which any cash surrender value is adjusted in accordance with a market-value
				  adjustment formula shall be a percentage (not less than 75 percent) of the sum
				  of (1) the amount of any loan outstanding; and (2) the remaining portion of the
				  cash surrender value as so adjusted at the time the loan is applied for, but,
				  if the policy so provides, not in excess of such cash surrender value before
				  adjustment.
(c) The chapter also
				  amended section 4217  of the Insurance Law to direct the
				  superintendent, by regulation, to issue guidelines for the determination of the
				  minimum reserve value for any plan or plans of life insurance policies under
				  which cash surrender values and policy loan values are adjusted in accordance
				  with a market-value adjustment formula. The amendment provided that the
				  regulation may require any company issuing or delivering such policies in this
				  State to submit to the superintendent with each annual report an opinion, in
				  form and substance satisfactory to the superintendent, of a qualified actuary
				  that the reserves for all such policies in force at the end of the year, and
				  the assets held by the company in support of such reserves, make good and
				  sufficient provision for the policy liabilities, such opinion to be accompanied
				  by a memorandum, also in form and substance satisfactory to the superintendent,
				  of the qualified actuary describing the calculations made in support of such
				  opinion and the assumptions used in the calculations. The amendment further
				  provided that the regulation may prescribe the calculations required to support
				  such opinions and may provide that if the company has designated particular
				  assets primarily to support reserves for a class or classes of policies,
				  including reserves for policies determined in accordance with the regulation,
				  the opinion of the company's qualified actuary may apply to the policies whose
				  reserves are supported by such assets.
(d) Finally, the chapter provided, in effect,
				  that if the assets supporting the policies are maintained in a separate account
				  at their market value in accordance with section 4240 (a)(5)(iii)  of the
				  Insurance Law, the reserves for the policies may be valued in a consistent
				  manner.
(e) These amendments also
				  apply to certificates of life insurance under which additional amounts are
				  credited pursuant to section 4518  of the Insurance Law.