This chapter shall be known as the “Standard Valuation Law for Life Insurance and Annuities”.
(a) The Insurance Commissioner shall annually value, or cause to be valued, the reserve liabilities, hereinafter called “reserves”, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this state. The commissioner may certify the amount of the reserves, specifying the mortality table or tables, rate or rates of interest, and methods, which may be net level premium method or other used in the calculation of the reserves. In calculating the reserves, the commissioner may use group methods and approximate averages for fractions of a year or otherwise.
(b) In lieu of the valuation of the reserves required by this section of any foreign or alien insurer, the commissioner may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when that valuation complies with the minimum standard provided in this section and if the official of the state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when the certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.
(a) Except as otherwise provided in §§ 23-84-104 and 23-84-105, the minimum standard for the valuation of all policies and contracts issued prior to the operative date of § 23-81-213(a) shall be provided by the laws in effect immediately prior to January 1, 1960.
(b) Except as otherwise provided in §§ 23-84-104 and 23-84-105, the minimum standard for the valuation of all policies and contracts issued on or after the operative date of § 23-81-213(a) shall be the Insurance Commissioner's reserve valuation methods defined in §§ 23-84-106, 23-84-107, and 23-84-110, three and one-half percent (3.5%) interest, or in the case of policies and contracts, other than annuity and pure endowment contracts, five and one-half percent (5.5%) interest for single premium life insurance policies and four and one-half percent (4.5%) interest for all other policies issued on and after March 18, 1977, and the following tables:
(1) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in the policies:
(A) The commissioner's 1941 Standard Ordinary Mortality Table for policies issued prior to the operative date of § 23-81-213(b);
(B)(i) For policies issued on or after the operative date of § 23-81-213(b) and prior to the operative date of § 23-81-213(d), the commissioner's 1958 Standard Ordinary Mortality Table.
(ii) For any category of policies issued on female risks under this subdivision (b)(1)(B), all modified net premiums and present values referred to in this chapter may be calculated according to an age not more than six (6) years younger than the actual age of the insured; or
(C) For policies issued on or after the operative date of § 23-81-213(d):
(i) The commissioner's 1980 Standard Ordinary Mortality Table;
(ii) At the election of the insurer, for any one (1) or more specified plans of life insurance, the commissioner's 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; or
(iii) Any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the commissioner for the use in determining the minimum standard of valuation for the policies;
(2) For all industrial life insurance policies issued on the standard basis excluding any disability and accidental death benefits in such policies, the 1941 Standard Industrial Mortality Table for policies issued prior to the operative date of § 23-81-213(c) and, for policies issued on or after the operative date, the commissioner's 1961 Standard Industrial Mortality Table, or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations promulgated by the commissioner for use in determining the minimum standard of valuation for the policies;
(3) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies, the 1937 Standard Annuity Mortality Table, or, at the option of the insurer, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the commissioner;
(4) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies, the Group Annuity Mortality Table for 1951, any modification of the table approved by the commissioner, or, at the option of the insurer, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts;
(5) For total and permanent disability benefits in or supplementary to ordinary policies or contracts, for policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit, or any tables of disablement rates and termination rates adopted after 1980 by the National Association of Insurance Commissioners that are approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for the policies and, for policies or contracts issued on or after January 1, 1961, and prior to January 1, 1966, either such tables, or, at the option of the insurer, the Class (3) Disability Table (1926) and, for policies issued prior to January 1, 1961, the Class (3) Disability Table (1926). Any table, for active lives, shall be combined with a mortality table permitted for calculating the reserves for life insurance policies;
(6) For accidental death benefits in or supplementary to policies, for policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for the policies and, for policies issued on or after January 1, 1961, and prior to January 1, 1966, either such table, or, at the option of the insurer, the Inter-Company Double Indemnity Mortality Table and, for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies; and
(7) For group life insurance, life insurance issued on the substandard basis, and other special benefits, such tables as may be approved by the commissioner.
(a) Except as provided in § 23-84-105, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this section and for all annuities and pure endowments purchased on or after the operative date under group annuity and pure endowment contracts shall be the Insurance Commissioner's reserve valuation methods defined in §§ 23-84-106 and 23-84-107 and the following tables and interest rates:
(1) For individual single premium immediate annuity contracts excluding any disability and accidental death benefits in the contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for the contracts, or any modification of these tables approved by the commissioner, and seven and one-half percent (7.5%) interest;
(2) For individual annuity and pure endowment contracts other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in the contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for the contracts, or any modification of these tables approved by the commissioner, and five and one-half percent (5.5%) interest for single premium deferred annuity and pure endowment contracts and four and one-half percent (4.5%) interest for all other individual annuity and pure endowment contracts;
(3) For all annuities and pure endowments under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under the contracts, the 1971 Group Annuity Mortality Table or any group annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulations promulgated for the commissioner for use in determining the minimum standard of valuation for the annuities and pure endowments, or any modification of these tables approved by the commissioner, and seven and one-half percent (7.5%) interest.
(b) After March 18, 1977, any insurer may file with the commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1979, which shall be the operative date of this section for the insurer. However, an insurer may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer makes no election, the operative date of this section for the insurer shall be January 1, 1979.
(a) Applicability of this Section. The interest rates used in determining the minimum standard for the valuation of the following shall be the calendar year statutory valuation interest rates as defined in this chapter:
(1) All life insurance policies issued in a particular calendar year, on or after the operative date of § 23-81-213(d);
(2) All individual annuity and pure endowment contracts issued in a particular calendar year on or after the operative date of § 23-81-213(e);
(3) All annuities and pure endowments purchased in a particular calendar year on or after the operative date of § 23-81-213(e), under group annuity and pure endowment contracts; and
(4) The net increase, if any, in a particular calendar year after the operative date of § 23-81-213(e), in amounts held under guaranteed interest contracts.
(b) Calendar Year Statutory Valuation Interest Rates.
(1) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer one-quarter of one percent (0.25%):
(A) For life insurance:
I = .03 + W (R1 - .03) + W/2 (R2 - .09);
(B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:
I = .03 + W (R - .03)
where R1 is the lesser of R and .09, R2
is the greater of R and .09, R is the reference interest rate defined in
subsection (d) of this section, and W is the weighting factor defined in
subsection (c) of this section;
(C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options valued on an issue year basis, except as stated in subdivision (b)(1)(B) of this section, the formula for life insurance stated in subdivision (b)(1)(A) of this section shall apply to annuities and guaranteed interest contracts with guaranteed durations in excess of ten (10) years. The formula for single premium immediate annuities stated in subdivision (b)(1)(B) of this section shall apply to annuities and guaranteed interest contracts with guaranteed duration of ten (10) years or less;
(D) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in subdivision (b)(1)(B) of this section shall apply; and
(E) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in subdivision (b)(1)(B) of this section shall apply.
(2)(A) However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this subdivision (b)(2)(A) differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent (0.5%), the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year.
(B) For purposes of applying subdivision (b)(2)(A) of this section, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 by using the reference interest rate defined for 1979 and shall be determined for each subsequent calendar year regardless of the operative date of § 23-81-213(d).
(c) Weighting Factors.
(1) The weighting factors referred to in the formulas stated in subsection (b) of this section are given in the following tables:
(A) Weighting Factors for Life Insurance:
Guarantee
Duration Weighting
(Years) Factors
10 or less .50
More than 10, but not more than 20 .45
More than 20 .35
(B) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options:
.80
(C) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in subdivision (c)(1)(B) of this section, shall be as specified in tables (i), (ii), and (iii) of this subdivision (c)(1)(C), according to the rules and definitions in tables (iv) and (v) of this subdivision (c)(1)(C):
(i) For annuities and guaranteed interest contracts valued on an issue-year basis:
Guarantee Weighting Factor
Duration for Plan Type
(Years) A B C
5 or less: .80 .60 .50
More than 5, but not more than 10: .75 .60 .50
More than 10, but not more than 20: .65 .50 .45
More than 20: .45 .35 .35
(ii) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in table (i) of this subdivision (c)(1)(C) increased by:
Plan Type
.15 .25 .05
(iii) For annuities and guaranteed interest contracts valued on an issue-year basis, other than those with no cash settlement options which do not guarantee interest on considerations received more than one (1) year after issue or purchase and for annuities and guaranteed interest contracts valued on a change-in-fund basis which do not guarantee interest rates on considerations received more than twelve (12) months beyond the valuation date, the factors shown in table (i) of this subdivision (c)(1)(C) or derived in table (ii) of this subdivision (c)(1)(C) increased by:
Plan Type
.05 .05 .05
(iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guaranteed duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty (20) years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence;
(v) Plan type as used in the tables in this subdivision (c)(1)(C) is defined as follows:
Plan Type A: At any time, a policyholder may withdraw funds only:
(a) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer;
(b) Without such an adjustment but in installments over five (5) years or more;
(c) As an immediate life annuity; or
(d) No withdrawal permitted;
Plan Type B: Before expiration of the interest rate guarantee, a policyholder may withdraw funds only:
(a) With adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer;
(b) Without such an adjustment but in installments over five (5) years or more; or
(c) No withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without such an adjustment in a single sum or installments over less than five (5) years; and
Plan Type C: A policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five (5) years either:
(a)
Without adjustment to reflect changes in interest rates or asset values
since receipt of the funds by the insurer; or
(b) Subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.
(2)(A)(i) An insurer may elect to value guaranteed
interest contracts with cash settlement options and annuities with cash
settlement options on either an issue-year basis or on a change-in-fund basis.
(ii) Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue-year basis.
(B)
As used in this chapter:
(i) "Issue-year
basis of valuation" means a valuation basis under which the interest rate
used to determine the minimum valuation standard for the entire duration of the
annuity or guaranteed interest contract is the calendar year valuation interest
rate for the year of issue of year of purchase of the annuity or guaranteed
interest contract; and
(ii) "Change-in-fund basis of valuation" means a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
(d) Reference Interest Rate. The reference interest rate referred to in subsection (b) of this section shall be defined as follows:
(1) For all life insurance, the lesser of the average over a period of thirty-six (36) months and the average over a period of twelve (12) months, ending June 30 of the calendar year next preceding the year of issue, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody's Investors Service, Inc.;
(2) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or year of purchase of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody's Investors Service, Inc.;
(3) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year-of-issue basis, except as stated in subdivision (d)(2) of this section, with guarantee duration in excess of ten (10) years, the lesser of the average over a period of thirty-six (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody's Investors Service, Inc.;
(4) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year-of-issue basis, except as stated in subdivision (d)(2) of this section, with guarantee duration of ten (10) years or less, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody's Investors Service, Inc.;
(5)
For other annuities with no cash settlement options and for guaranteed
interest contracts with no cash settlement options, the average over a period
of twelve (12) months, ending on June 30 of the calendar year of issue or
purchase, of Monthly Average of the Composite Yield on Seasoned Corporate Bonds
as published by Moody's Investors Service, Inc.; and
(6) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change-in-fund basis, except as stated in subdivision (d)(2) of this section, the average over a period of twelve (12) months, ending on June 30 of the calendar year of the change in the fund, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by the Moody's Investors Service, Inc.
(e) Alternative Method for Determining Reference Interest Rates. In the event that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds is no longer published by Moody's Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as published by Moody's Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate which is adopted by the National Association of Insurance Commissioners and approved by regulation promulgated by the Insurance Commissioner may be substituted.
(a) Except as otherwise provided in §§ 23-84-107 and 23-84-110, reserves according to the Insurance Commissioner's reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, shall be the excess, if any, of the present value at the date of valuation, of such future guaranteed benefits provided for by the policies, over the then-present value of any future modified net premiums therefor. The modified net premiums for any policy shall be a uniform percentage of the respective contract premiums for the benefits that the present value, at the date of issue of the policy, of all modified net premiums shall be equal to the sum of the then-present value of benefits provided for by the policy and the excess of subdivision (a)(1) of this section over subdivision (a)(2) of this section, as follows:
(1) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one (1) per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan for insurance of the same amount at an age one (1) year higher than the age at issue of the policy; and
(2) A net one-year-term premium for the benefits provided for in the first policy year.
(b)(1) However, for any life insurance policy issued on or after January 1, 1985, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than the excess premium, the reserve according to the commissioner's reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined in this section as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium shall, except as otherwise provided in § 23-84-110, be the greater of the reserve as of the policy anniversary calculated as described in subsection (a) of this section and the reserve as of the policy anniversary calculated as described in subsection (a) of this section, but with:
(A) The value defined in subdivision (a)(1) of this section being reduced by fifteen percent (15%) of the amount of the excess first year premium;
(B) All present values of benefits and premiums being determined without reference to premiums or benefits provided by the policy after the assumed ending date; and
(C) The policy being assumed to mature on that date being considered as an endowment benefit.
(2) In making the comparison in subdivision (b)(1) of this section, the mortality and interest bases stated in §§ 23-84-104 and 23-84-105 shall be used.
(c) Reserves according to the commissioner's reserve valuation method for:
(1) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums;
(2) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as now or hereafter amended;
(3) Disability and accidental death benefits in all policies and contracts; and
(4) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts,
shall be calculated by a method consistent with the principles of this section.
(a) This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as now or hereafter amended.
(b)(1) Reserves according to the Insurance Commissioner's annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in the contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of the contract, that become payable prior to the end of the respective contract year.
(2) The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rates specified in the contracts for determining guaranteed benefits.
(3) The valuation considerations are the portions of the respective gross considerations applied under the terms of the contracts to determine nonforfeiture values.
(a) In no event shall an insurer's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after June 17, 1981, be less than the aggregate reserves calculated in accordance with the methods set forth in §§ 23-84-106, 23-84-107, 23-84-110, and 23-84-111, and the mortality tables and rates of interest used in calculating nonforfeiture benefits for the policies.
(b) In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the qualified actuary to be necessary to render the opinion required by § 23-84-112.
(a) Reserves for all policies and contracts issued prior to the applicable operative date of this chapter may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all the policies and contracts than the minimum reserves required by the laws in effect immediately prior to the date.
(b) Reserves for any category of policies, contracts, or benefits as established by the Insurance Commissioner which are issued on or after the applicable operative date of this chapter may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for the category than those calculated according to the minimum standard provided in this chapter, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided therein.
(c)(1) Any insurer which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this chapter may adopt, with the approval of the commissioner, any lower standard of valuation, but not lower than the minimum provided in this chapter.
(2) However, for the purposes of this chapter, the holding of additional reserves previously determined by a qualified actuary to be necessary to render the opinion required by § 23-84-112 shall not be deemed to be the adoption of a higher standard of valuation.
(a) If in any contract year the gross premium charged by any life insurer on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon, but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this section are those standards stated in §§ 23-84-103 and 23-84-104.
(b)(1) However, for any life insurance policy issued on or after January 1, 1985, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value, or a combination thereof, in an amount greater than the excess premium, the provisions of subsection (a) of this section shall be applied as if the method actually used in calculating the reserve for the policy was the method described in § 23-84-106, ignoring subsection (b) of that section.
(2) The minimum reserve at each policy anniversary of the policy shall be the greater of the minimum reserve calculated in accordance with § 23-84-106, including subsection (b) of that section, and the minimum reserve calculated in accordance with this section.
(a) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then-estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in §§ 23-84-106, 23-84-107, and 23-84-110, the reserves which are held under any such plan must be:
(1) Appropriate in relation to the benefits and the pattern of premiums for that plan; and
(2) Computed by a method which is consistent with the principles of this chapter, as determined by regulations promulgated by the Insurance Commissioner.
(b) Notwithstanding any other provisions in the law of this state, any policy, contract, or certificate providing life insurance under any plan must be affirmatively approved by the commissioner before it can be marketed, issued, delivered, or used in this state.
(a) General. Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Insurance Commissioner by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. By regulation, the commissioner shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.
(b) Actuarial Analysis of Reserves and Assets Supporting Such Reserves.
(1) Except as exempted by or pursuant to regulation, every life insurance company shall also annually include in the opinion required by subsection (a) of this section an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.
(2) The commissioner may provide by regulation for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this section.
(c) Requirements for Opinion Under Subsection (b) of this Section. Each opinion required by subsection (b) of this section shall be governed by the following provisions:
(1) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion;
(2) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the commissioner.
(d) Requirement for All Opinions. Every opinion shall be governed by the following provisions:
(1) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995;
(2)
The opinion shall apply to all business in force including individual
and group health insurance plans, in form and substance acceptable to the
commissioner as specified by regulation;
(3)
The opinion shall be based on standards adopted from time to time by the
Actuarial Standards Board and on such additional standards as the commissioner
may by regulation prescribe;
(4) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
(5) For the purposes of this section, “qualified actuary” means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in such regulations;
(6) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision, or conduct with respect to the actuary's opinion;
(7) Disciplinary action by the commissioner against the company or the qualified actuary shall be defined in regulations by the commissioner; and
(8)(A) Any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection therewith, shall be kept confidential by the commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by regulations promulgated under this chapter.
(B) However, the memorandum or other material may otherwise be released by the commissioner:
(i) With the written consent of the company; or
(ii) To the
(C) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
The Insurance Commissioner shall have the authority to promulgate reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this chapter.