Minimum Standards for Determining Reserve Liabilities and Nonforfeiture Values for Life Insurance Sold with a Preneed Contract

PURPOSE: The purpose of this regulation is to establish 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 insurance products sold in conjunction with a preneed contract. The purpose of this regulation is not to regulate the sale or contract of a preneed arrangement, but rather, to regulate the values of the insurance sold in conjunction with the preneed contract. PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here. (1) Definitions. (A) The term “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 Commissioners’ Standard Ordinary (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 National Association of Insurance Commissioners (NAIC), located at 2301 McGee Street, Suite 800, Kansas City, MO 64108, in December 2002. The 2001 CSO Mortality Table is incorporated by reference and included in the Proceedings of the NAIC (2nd Quarter 2002) and does not include any later amendments. 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-nearestbirthday and age-last-birthday bases of the mortality tables. The 2001 CSO Mortality Table is available for public inspection at the department’s office or by mailing a written request to the Department of Commerce and Insurance, PO Box 690, Jefferson City, MO 65102. (B) The term “Ultimate 1980 CSO” means the Commissioners’ 1980 Standard Ordinary Life Valuation Mortality Tables (1980 CSO) without ten (10) year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law approved in December 1983. The Ultimate 1980 CSO is incorporated by reference, published by the National Association of Insurance Commissioners, located at 2301 McGee Street, Suite 800, Kansas City, MO 64108, and does not include any later amendments. The Ultimate 1980 CSO is available for public inspection at the department’s office or by mailing a written request to the Department of Commerce and Insurance, PO Box 690, Jefferson City, MO 65102. (C) The term “preneed insurance” shall include a life insurance contract sold in conjunction with a preneed contract as defined in section 436.005(5), RSMo. (2) Minimum Valuation Mortality Standards. For preneed insurance contracts 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. (3) 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 the Standard Valuation Law in section 376.380, RSMo. (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 the Standard Nonforfeiture Law in section 376.670, RSMo. (4) 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 the Standard Valuation Law in section 376.380, RSMo. (B) The method used in determining the standard for the minimum nonforfeiture values for preneed insurance shall be the method defined in the Standard Nonforfeiture Law in section 376.670, RSMo. (5) 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 Mortality Table 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 Mortality Table 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 Mortality Table 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 Mortality Table as a minimum standard, develops adequate reserves. For the purposes of this certification, the preneed insurance policies using the 2001 CSO Mortality Table 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 Mortality Table 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. (6) Effective Date. (A) This rule is applicable to preneed insurance policies and certificates and similar contracts and certificates issued on or after January 1, 2009. AUTHORITY: sections 374.045, 376.380, 376.670, and 376.676, RSMo 2000.* Original rule filed May 28, 2008, effective Nov. 30, 2008. Non-substantive change filed Sept. 11, 2019, published Oct. 31, 2019. *Original authority: 374.045, RSMo 1967, amended 1993, 1995; 376.380, RSMo 1939, amended 1943, 1947, 1959, 1961, 1965, 1971, 1975, 1979, 1982, 1993; 376.670, RSMo 1943, amended 1959, 1961, 1965, 1975, 1979, 1982; and 376.676, RSMo 2000.