R590. Insurance, Administration.R590-251. Preneed Life Insurance Minimum Standards to Determine Reserve Liabilities and Nonforfeiture Values.
R590-251-1. Authority.
This rule is promulgated by the commissioner pursuant to Sections 31A-2-201, 31A-17-402, and 31A-22-408.
R590-251-2. Purpose and Scope.
(1) The purpose of this rule is to:
(a) establish minimum mortality standards for reserves and nonforfeiture values for a preneed life insurance product; and
(b) require the use of the Ultimate 1980 CSO to determine:
(i) the minimum standard of valuation of reserve liabilities; and
(ii) the minimum standard for nonforfeiture values.
(2) This rule applies to preneed insurance contracts and similar policies and certificates issued on or after January 1, 2009.
R590-251-3. Definitions.
Terms used in this rule are defined in Section 31A-1-301. Additional terms are defined as follows:
(1)(a) "2001 CSO Mortality Table" means the 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.
(b) Unless otherwise indicated, the "2001 CSO Mortality Table" includes:
(i) the ultimate form of the table;
(ii) the select and ultimate form of the table;
(iii) the smoker and nonsmoker mortality tables;
(iv) the composite mortality tables; and
(v) the age-nearest-birthday and age-last-birthday bases of the mortality tables.
(2) "Goods and services" include embalming, cremation, body preparation, viewing or visitation, coffin or urn, memorial stone, and transportation of the deceased.
(3)(a) "Preneed insurance" means a life insurance policy or certificate that is issued in combination with a prearrangement agreement for goods and services provided at the time of or immediately following the death of the insured.
(b) The status of the policy or contract as preneed insurance is determined at the time of issue.
(4) "Ultimate 1980 CSO" means the Commissioners' 1980 Standard Ordinary Life Valuation Mortality Tables without 10-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law approved in December 1983.
R590-251-4. Minimum Standards.
(1) Mortality Standards. The mortality standard used to determine reserve liabilities and nonforfeiture values for both male and female insureds is the Ultimate 1980 CSO.
(2) Interest Rate Standards.
(a) The interest rates used to determine the minimum standard for valuation are the calendar year statutory valuation interest rates defined in Section 31A-17-506.
(b) The interest rates used to determine the minimum standard for nonforfeiture values are the calendar year statutory nonforfeiture interest rates defined in Section 31A-22-408.
(3) Valuation and Nonforfeiture Method Standards.
(a) The method used to determine the minimum standard for valuation of reserves of preneed insurance is the method defined in Title 31A, Chapter 17, Part 5, Standard Valuation Law.
(b) The method used to determine the minimum nonforfeiture values for preneed insurance is the method defined in Section 31A-22-408.
R590-251-5. Transition Rules.
(1) Preneed policies subject to this rule issued before January 1, 2012, may use the 2001 CSO Mortality Table as the minimum mortality standard for reserves and minimum standard for nonforfeiture values for both male and female insureds.
(2)(a) If an insurer elects to use the 2001 CSO Mortality Table as a minimum standard for a policy subject to this rule issued before January 1, 2012, the insurer shall provide, as a part of the actuarial opinion memorandum submitted in support of the insurer's asset adequacy testing, an annual written notification to the commissioner of its domiciliary state.
(b) The notification shall include:
(i) a complete list of all policy forms that use the 2001 CSO Mortality Table as a minimum mortality standard;
(ii) a certification signed by the appointed actuary stating that the reserve methodology used by the insurer to determine reserve liabilities for the policies subject to this rule and using the 2001 CSO Mortality Table as a minimum mortality standard, develop adequate reserves; and
