Section 3.28.630. 2001 CSO Preferred Class Structure Mortality Tables.

	(a)  At the election of an insurer, for each calendar year of issue, for any one or more specified plans of insurance and subject to the conditions set out in (b) and (c) of this section, the insurer may substitute, as the minimum valuation standard for policies issued on or after January 1, 2007, the 2001 CSO Preferred Class Structure Mortality Tables, which are adopted by reference, for the 2001 CSO smoker and nonsmoker mortality tables specified in 3 AAC 28.620. For policies issued on or after January 1, 2005 and before January 1, 2007, with the approval of the director and subject to the conditions in this section, an insurer may substitute the 2001 CSO Preferred Class Structure Mortality Tables for the 2001 CSO smoker or nonsmoker mortality tables specified in 3 AAC 28.620 as the minimum valuation standard. The insurer may not elect to use the 2001 CSO Preferred Class Structure Mortality Tables unless the insurer demonstrates that at least 20 percent of the business to be valued on those tables is in one or more preferred classes.  
	(b)  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 in place of the nonsmoker mortality table found in the 2001 CSO Mortality Tables 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 10 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; and  
		(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.  
	(c)  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 in place of the smoker mortality table found in the 2001 CSO Mortality Tables 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 10 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; and   
		(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 corresponding to the valuation table being used for that class.  
	(d)  Unless exempted by the director, an insurer using the 2001 CS0 Preferred Class Structure Mortality Tables shall annually file with the director, with the National Association of Insurance Commissioners, or with a statistical agent designated by the National Association of Insurance Commissioners and acceptable to the director, statistical reports showing mortality and other information that the director considers necessary or expedient for the administration of the provisions of this section. The director either will establish the form of the reports or will require the insurer to use a form established by the National Association of Insurance Commissioners or by a statistical agent designated by the National Association of Insurance Commissioners and acceptable to the director.  
	(e)  An insurer may not use the CSO 2001 Preferred Class Structure Mortality Tables for the valuation of life insurance policies issued before January 1, 2007 in any statutory financial statement in which an insurer reports, with respect to any policy or portion of a policy coinsured, either  
		(1) in cases where the mode of payment of the reinsurance premium is less frequent than the mode of payment of the policy premium, a reserve credit that exceeds, by more than Y, the gross reserve calculated before reinsurance; for purposes of this paragraph, Y is the amount of the gross reinsurance premium that  
			(A) provides coverage for the period from the next policy premium due date to the earlier of the end of the policy year or the next reinsurance premium due date; and  
			(B) would be refunded to the ceding entity upon the termination of the policy; or  
		(2) in cases where the mode of payment of the reinsurance premium is more frequent than the mode of payment of the policy premium, a reserve credit that is less than the gross reserve, calculated before reinsurance, by an amount that is less than Z; for purposes of this paragraph, Z is the amount of the gross reinsurance premium that the ceding entity would need to pay the assuming insurer to provide reinsurance coverage from the period of the next reinsurance premium due date to the next policy premium due date minus any liability established for the proportionate amount not remitted to the reinsurer.  
	(f)  For purposes of applying (e) of this section, for both the reserve credit and the gross reserve before reinsurance, the reserve for the mean reserve method is the mean reserve minus the deferred premium asset, and the reserve for the mid-terminal reserve must include the unearned premium reserve. An insurer may estimate and adjust its accounting on an aggregate basis in order to meet the conditions to use the 2001 CSO Preferred Class Structure Mortality Tables.  

Authorities

21.06.090;21.18.110;21.18.160;21.45.300

Notes

Authority

AS 21.06.090 AS 21.18.110 AS 21.18.160 AS 21.45.300 Editor's note: The 2001 CSO Preferred Class Structure Mortality Tables referenced in 3 AAC 28.630 may be obtained from the Society of Actuaries, 475 N. Martingale Road, Suite 600, Schaumburg, Illinois 60173; telephone number [phone].

History

Eff. 12/28/2008, Register 188; am 1/1/2011, Register 196

References

3.28.630