South Carolina Code of Regulations › Chapter 69 - DEPARTMENT OF INSURANCE › Section 69-57.3 - Preneed Life Insurance Minimum Standards for Determining Reserve Liabilities and Nonforfeiture Values

Current through Register Vol. 48, No. 6, June 28, 2024
Section 1.
		  Authority
Section 2.
		  Scope
Section 3. Purpose
Section 4. Definitions
Section 5. Minimum Valuation Mortality
		  Standards
Section 6. Minimum
		  Valuation Interest Rate Standards
Section
		  7. Minimum Valuation Method Standards
Section 8. Transition Rules
Section 9. Effective Date
Section 1. Authority
This regulation is promulgated by the Director of Insurance
			 pursuant to South Carolina Code Sections
			 38-9-180
			 and
			 38-63-510
			 et seq. as well as Regulation
			 69-57.
Section 2. Scope
This rule applies to preneed insurance contracts, as defined in
			 section
			 4 of this regulation, and to similar
			 policies and certificates.
Section
		  3. Purpose
The purpose of this regulation is to establish for preneed
			 insurance products minimum mortality standards for reserves and nonforfeiture
			 values, and to require the use of the 1980 Commissioners Standard Ordinary
			 (CSO) Life Valuation Mortality Table for use in determining the minimum
			 standard of valuation of reserves and the minimum standard nonforfeiture values
			 for preneed insurance products.
Section
		  4. Definitions
A. "2001 CSO
		  Mortality Table" means that mortality table, consisting of separate rates of
		  mortality for males and female lives, developed by the American Academy of
		  Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by
		  the Society of Actuaries Individual Life Insurance Valuation Mortality Task
		  Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table
		  is included in the Proceedings of the NAIC (2nd
		  Quarter 2002). Unless the context indicates otherwise, the "2001 CSO Mortality
		  Table" includes both the ultimate form of that table and the select and
		  ultimate form of that table and includes both the smoker and nonsmoker
		  mortality tables and the composite mortality tables. It also includes both the
		  age-nearest-birthday and age-last-birthday bases of the mortality
		  tables.
B. "Ultimate 1980 CSO"
		  means the Commissioners' 1980 Standard Ordinary Life Valuation Mortality Tables
		  (1980 CSO) without ten-year (10-year) selection factors, incorporated into the
		  1980 amendments to the NAIC Standard Valuation Law approved in December
		  1983.
C. "Preneed insurance" means
		  any life insurance policy or certificate, which has for its purpose the
		  furnishing or performance of funeral services, or the furnishing or delivery of
		  personal property, merchandise, services of any nature in connection with the
		  final disposition of a dead human body, to be furnished or delivered at a time
		  determinable by the death of the person whose body is to be disposed of, but
		  does not mean the furnishing of a cemetery lot, crypt, niche, mausoleum, grave
		  marker or monument.
Section
		  5. Minimum Valuation Mortality Standards
For preneed insurance contracts, as defined in section
			 4C, and similar policies and contracts, the
			 minimum mortality standard for determining reserve liabilities and
			 nonforfeiture values for both male and female insureds shall be the Ultimate
			 1980 CSO.
Section 6.
		  Minimum Valuation Interest Rate Standards
A.
		  The interest rates used in determining the minimum standard for valuation of
		  preneed insurance shall be the calendar year statutory valuation interest rates
		  as defined in South Carolina Code Section
		  38-9-180.
B. The interest rates used in determining the
		  minimum standard for nonforfeiture values for preneed insurance shall be the
		  calendar year statutory nonforfeiture interest rates as defined in South
		  Carolina Code Section
		  38-63-510
		  et seq.
Section 7.
		  Minimum Valuation Method Standards
A. The
		  method used in determining the standard for the minimum valuation of reserves
		  of preneed insurance shall be the method defined in South Carolina Code Section
		  38-9-180.
B. The method used in determining the
		  standard for the minimum nonforfeiture values for preneed insurance shall be
		  the method defined in South Carolina Code Section
		  38-63-510
		  et seq.
Section 8.
		  Transition Rules
A. For preneed insurance
		  policies issued on or after the effective date of this regulation and before
		  January
		  1, 2012, the 2001 CSO may be used as the
		  minimum standard for reserves and minimum standard for nonforfeiture benefits
		  for both male and female insureds.
B. If an insurer elects to use the 2001 CSO
		  as a minimum standard for any policy issued on or after the effective date of
		  this regulation and before January 1, 2012, the insurer shall provide, as a
		  part of the actuarial opinion memorandum submitted in support of the company's
		  asset adequacy testing, an annual written notification to the domiciliary
		  commissioner. The notification shall include:
(1) A complete list of all preneed policy
		  forms that use the 2001 CSO as a minimum standard;
(2) A certification signed by the appointed
		  actuary stating that the reserve methodology employed by the company in
		  determining reserves for the preneed policies issued after the effective date
		  and using the 2001 CSO as a minimum standard, develops adequate reserves. (For
		  the purpose of this certification, the preneed insurance policies using the
		  2001 CSO as a minimum standard cannot be aggregated with any other policies);
		  and
(3) Supporting information
		  regarding the adequacy of reserves for preneed insurance policies issued after
		  the effective date of this regulation and using the 2001 CSO as a minimum
		  standard for reserves.
C. Preneed insurance policies issued on or
		  after January 1, 2012, must use the Ultimate 1980 CSO in the calculation of minimum
		  nonforfeiture values and minimum reserves.
Section 9. Effective Date
This regulation is applicable to preneed insurance policies and
			 certificates and similar contracts and certificates, as specified in section 2,
			 issued on or after January
			 1, 2009.