New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IV - Financial Condition Of Insurer and Reports to Superintendent › Subchapter B - Life Insurers › Part 100 - Recognition of The 2001 Cso Mortality Table and the 2017 Cso Mortality Table for Use in Determining Minimum Reserve Liabilities And Nonforfeiture Benefits and Recognition and Application of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities › Section 100.10 - Application of the 2001 cso preferred class structure mortality table and the 2017 CSO Preferred Class Structure Mortality Table

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Selection of a table within the 2001 CSO
				  Preferred Class Structure Mortality Table or the 2017 CSO Preferred Class
				  Structure Mortality Table.
(1) The election
				  of the 2001 CSO Preferred Class Structure Mortality Table or the 2017 CSO
				  Preferred Class Structure Mortality Table is on a policy form and calendar year
				  of issue basis. Once a calendar year cohort of policy forms is placed on the
				  2001 CSO Preferred Class Structure Mortality Table basis or the 2017 CSO
				  Preferred Class Structure Mortality Table basis, it shall not subsequently
				  revert back to the respective standard mortality table basis without the prior
				  approval of the superintendent. Such change would be considered a basis change
				  for annual statement reporting purposes. For those calendar years of issue in
				  which an insurer chooses to use the 2001 CSO Preferred Class Structure
				  Mortality Table or the 2017 CSO Preferred Class Structure Mortality Table, it
				  shall use the entire 2001 CSO Preferred Class Structure Mortality Table or the
				  entire 2017 CSO Preferred Class Structure Mortality Table, respectively, for
				  the chosen policy forms, i.e ., an insurer shall not use the 2001 CSO Preferred
				  Class Structure Mortality Table or the 2017 CSO Preferred Class Structure
				  Mortality Table for the preferred classes and use the respective standard
				  mortality table for the non-preferred class(es). Additionally, if the insurer
				  sells two similar policy forms in the same market, the appointed actuary shall
				  use the same version of the table for both forms and shall not use the 2001 CSO
				  Preferred Class Structure Mortality Table or the 2017 CSO Preferred Class
				  Structure Mortality Table on one policy form and the respective standard
				  mortality table on the other policy form. For example, it would be unacceptable
				  to put preferred lives under one policy form and non-preferred lives under the
				  other policy form.
(2) In order to
				  choose the proper table of mortality rates within the 2001 CSO Preferred Class
				  Structure Mortality Table or the 2017 CSO Preferred Class Structure Mortality
				  Table and to develop the preferred class actuarial certification required by
				  section
				  100.9 
				  of this Part, the following requirements apply:
(i) Creation of classes:
(a) The appointed actuary shall reflect the
				  composition and characteristics of the policies issued under a plan of
				  insurance in the determination of the appropriate classes that will be
				  applicable under that plan. The policies that comprise classes shall have
				  similar underwriting or mortality experience characteristics. When classes are
				  similar across various plans of insurance, these classes may be combined into a
				  single aggregate class. Multiple underwriting classes on a policy form can be
				  mapped into the same table within the 2001 CSO Preferred Class Structure
				  Mortality Table or the 2017 CSO Preferred Class Structure Mortality Table, if,
				  in aggregate, the underwriting classes can be shown to have anticipated
				  mortality no greater than the Valuation Basic Table associated with the table
				  selected. However, the appointed actuary shall not combine classes that are
				  expected to have dissimilar anticipated mortality as a means to produce
				  reserves that are materially lower than those developed if the classes were not
				  combined.
(b) With respect to
				  reinsurance, anticipated mortality shall be assessed and classes shall be
				  created on a gross basis. To the extent that anticipated mortality on
				  reinsurance ceded or assumed is dissimilar from that on direct business, the
				  appointed actuary shall create separate class to properly reflect the
				  anticipated mortality.
(c) If, due
				  to differences in actual experience by policy form and underwriting class,
				  groupings of classes are changed from those used in the prior valuation, the
				  change and the effect of the change shall be disclosed to the superintendent in
				  the actuarial certification.
(d)
				  Separate classes shall be established for a single policy form if there are
				  significant anticipated mortality differences for different cohorts of insured
				  lives, such as age groups or policy sizes. For instance, if an insurer has
				  different underwriting thresholds for policies with face amounts of $1 million
				  or more, it may be appropriate to have a class for policies with face amounts
				  of less than $1 million and a separate class for policies with face amounts
				  greater than or equal to $1 million.
(e) If a class of business is assigned to a
				  different table within the 2001 CSO Preferred Class Structure Mortality Table
				  or the 2017 CSO Preferred Class Structure Mortality Table from that used in the
				  prior valuation, the change is not considered a basis change, and the reserve
				  change must be accounted for in the calculation of gain from
				  operations.
(ii)
				  Deriving anticipated mortality:
(a) If
				  relevant insurer experience for a particular class is available and has full
				  credibility, the appointed actuary shall use that experience as the basis for
				  deriving anticipated mortality.
(b)
				  In situations where relevant insurer experience for a particular class is
				  available but does not have full credibility, the appointed actuary shall
				  derive the anticipated mortality by blending the relevant insurer experience
				  for the class with actual relevant, credible experience and past trends in
				  experience of other similar classes, either in the same insurer, in other
				  insurers (including reinsurers), or from other sources, generally in that order
				  of preference, provided that the appointed actuary submits underwriting-based
				  justification as part of the annual actuarial report required by this Part. The
				  blending process shall be based on a credibility methodology that is recognized
				  by the actuarial profession and is acceptable to the superintendent.
(c) In situations where relevant insurer
				  experience for a particular class is not available (e.g. a new product), the
				  appointed actuary shall derive the anticipated mortality using actual relevant
				  credible experience and past trends in experience of other similar classes
				  either in the same insurer, in other insurers (including reinsurers), or from
				  other sources, generally in that order of preference, provided that the
				  appointed actuary submits to the superintendent underwriting-based
				  justification.
(d)
				  Underwriting-based justification shall include an analysis of the relationship
				  between the underwriting-based criteria for the class where no experience data
				  is available or does not have full credibility and the underwriting-based
				  criteria that underlie the actual relevant credible experience data.
(e) If no sufficient underwriting-based nor
				  experienced-based justification is made to derive anticipated mortality for a
				  class, the insurer shall not use the 2001 CSO Preferred Class Structure
				  Mortality Table nor the 2017 CSO Preferred Class Structure Mortality Table for
				  valuation.
(iii)
				  Periodic assessment of anticipated mortality. The appointed actuary shall
				  annually review relevant emerging experience and underwriting methods for the
				  purpose of assessing the appropriateness of anticipated mortality for each
				  class and, in aggregate, for all classes combined. If the results of
				  statistical or other testing indicate that previously anticipated mortality for
				  a given class is inadequate, then the appointed actuary shall set a new
				  anticipated mortality for each class, the appointed actuary shall analyze the
				  appropriateness of the anticipated mortality assumptions at the aggregate
				  level. If the analysis at the aggregate level indicates that aggregate
				  anticipated mortality is inadequate, then the appointed actuary shall adjust
				  the anticipated mortality assumption for one or more of the classes until the
				  appointed actuary is satisfied that the anticipated mortality assumptions are
				  adequate at the aggregate level.
(iv) The superintendent may require an
				  insurer to change the valuation mortality table if it is determined by the
				  superintendent that inadequate justification of anticipated mortality is
				  provided by the insurer.
Communications and disclosures.
(1) The appointed actuary shall annually file
				  with the superintendent an actuarial certification that, as of the valuation
				  date, the anticipated mortality experience for each class of business, other
				  than the residual standard class, meets the criteria described in section
				  100.9 
				  of this Part.