South Carolina Code of Regulations › Chapter 69 - DEPARTMENT OF INSURANCE › Section 69-57.2 - Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities

Current through Register Vol. 48, No. 6, June 28, 2024
Section 1.
		  Authority
Section 2.
		  Purpose
Section 3.
		  Definitions
Section 4. 2001 CSO
		  Preferred Class Structure Table
Section
		  5. Conditions
Section
		  6. Separability
Section
		  7. Effective Date
Section 1.
		  Authority
This regulation is promulgated by the Director of Insurance
			 pursuant to South Carolina Code of Laws Section
			 38-90-180,
			 the Standard Valuation Law, and Sections
			 5A and 5B of South Carolina Regulation
			 Regulation
			 69-57,
			 Valuation of Life Insurance Policies.
Section 2. Purpose
The purpose of this regulation is to recognize, permit and
			 prescribe the use of mortality tables that reflect differences in mortality
			 between preferred and standard lives in determining minimum reserve liabilities
			 in accordance with South Carolina Code of Laws Section
			 38-90-180,
			 the Standard Valuation Law, and Sections 5A and 5B of South Carolina Regulation
			 Regulation
			 69-57,Valuation
			 of Life Insurance Policies.
Section
		  3. Definitions
A. "2001 CSO
		  Mortality Table" means that mortality table, consisting of separate rates of
		  mortality for male 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) and supplemented by the 2001 CSO Preferred Class Structure
		  Mortality Table defined below in Subsection B. 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. Mortality tables in the 2001 CSO Mortality Table include the
		  following:
(1) "2001 CSO Mortality Table (F)"
		  means that mortality table consisting of the rates of mortality for female
		  lives from the 2001 CSO Mortality Table.
(2) "2001 CSO Mortality Table (M)" means that
		  mortality table consisting of the rates of mortality for male lives from the
		  2001 CSO Mortality Table.
(3)
		  "Composite mortality tables" means mortality tables with rates of mortality
		  that do not distinguish between smokers and nonsmokers.
(4) "Smoker and nonsmoker mortality tables"
		  means mortality tables with separate rates of mortality for smokers and
		  nonsmokers.
B. "2001 CSO
		  Preferred Class Structure Mortality Table" means mortality tables with separate
		  rates of mortality for super preferred nonsmokers, preferred nonsmokers,
		  residual standard nonsmokers, preferred smokers, and residual standard smoker
		  splits of the 2001 CSO Nonsmoker and Smoker Tables, as adopted by the NAIC at
		  the September, 2006 national meeting and published in the NAIC Proceedings
		  {3rd Quarter 2006}. Unless the context indicates
		  otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes
		  both the ultimate form of that table and the select and ultimate form of that
		  table. It includes both the smoker and nonsmoker mortality tables. It includes
		  both the male and female mortality tables and the gender composite mortality
		  tables. It also includes both the age-nearest-birthday and age-last-birthday
		  bases of the mortality table.
C.
		  "Statistical agent" means an entity with proven systems for protecting the
		  confidentiality of individual insured and insurer information; demonstrated
		  resources for and history of ongoing electronic communications and data
		  transfer ensuring data integrity with insurers, which are its members or
		  subscribers; and a history of and means for aggregation of data and accurate
		  promulgation of the experience modifications in a timely manner.
Section 4. 2001 CSO Preferred
		  Class Structure Table
At the election of the company, for each calendar year of issue,
			 for any one or more specified plans of insurance and subject to satisfying the
			 conditions stated in this regulation, the 2001 CSO Preferred Class Structure
			 Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker
			 Mortality Table as the minimum valuation standard for policies issued on or
			 after January 1, 2007. No such election shall be made until the company
			 demonstrates at least 20% of the business to be valued on this table is in one
			 or more of the preferred classes. A table from the 2001 CSO Preferred Class
			 Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant
			 to the requirements of this rule, will be treated as part of the 2001 CSO
			 Mortality Table only for purposes of reserve valuation pursuant to the
			 requirements of the NAIC model regulation, "Recognition of the 2001 CSO
			 Mortality Table For Use In Determining Minimum Reserve Liabilities And
			 Nonforfeiture Benefits Model Regulation."
Section 5. Conditions
A. For each plan of insurance with separate
		  rates for preferred and standard nonsmoker lives, an insurer may use the super
		  preferred nonsmoker, preferred nonsmoker, and residual standard nonsmoker
		  tables to substitute for the nonsmoker mortality table found in the 2001 CSO
		  Mortality Table to determine minimum reserves. At the time of election and
		  annually thereafter, except for business valued under the residual standard
		  nonsmoker table, the appointed actuary shall certify that:
(1) The present value of death benefits over
		  the next ten years after the valuation date, using the anticipated mortality
		  experience without recognition of mortality improvement beyond the valuation
		  date for each class, is less than the present value of death benefits using the
		  valuation basic table corresponding to the valuation table being used for that
		  class.
(2) The present value of
		  death benefits over the future life of the contracts, using anticipated
		  mortality experience without recognition of mortality improvement beyond the
		  valuation date for each class, is less than the present value of death benefits
		  using the valuation basic table corresponding to the valuation table being used
		  for that class.
B. For
		  each plan of insurance with separate rates for preferred and standard smoker
		  lives, an insurer may use the preferred smoker and residual standard smoker
		  tables to substitute for the smoker mortality table found in the 2001 CSO
		  Mortality Table to determine minimum reserves. At the time of election and
		  annually thereafter, for business valued under the preferred smoker table, the
		  appointed actuary shall certify that:
(1) The
		  present value of death benefits over the next ten years after the valuation
		  date, using the anticipated mortality experience without recognition of
		  mortality improvement beyond the valuation date for each class, is less than
		  the present value of death benefits using the preferred smoker valuation basic
		  table corresponding to the valuation table being used for that class.
(2) The present value of death benefits over
		  the future life of the contracts, using anticipated mortality experience
		  without recognition of mortality improvement beyond the valuation date for each
		  class, is less than the present value of death benefits using the preferred
		  smoker valuation basic table.
C. Unless exempted by the Director, every
		  authorized insurer using the 2001 CSO Preferred Class Structure Table shall
		  annually file with the Director, with the NAIC, or with a statistical agent
		  designated by the NAIC and acceptable to the Director, statistical reports
		  showing mortality and such other information as the Director may deem necessary
		  or expedient for the administration of the provisions of this regulation. The
		  form of the reports shall be established by the Director or the Director may
		  require the use of a form established by the NAIC or by a statistical agent
		  designated by the NAIC and acceptable to the Director.
Section 6. Separability
If any provision of this regulation or its application to any
			 person or circumstance is for any reason held to be invalid, the remainder of
			 the regulation and the application of the provision to other persons or
			 circumstances shall not be affected.
Section 7. Effective Date
The effective date of this regulation is January
			 1, 2007.