OAR 836-051-0106
Life Insurance Valuation and Nonforfeiture Standards
(1)
The following definitions apply in this rule:(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). 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 the age-last-birthday bases of the mortality tables.(b)
“2001 CSO Mortality Table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.(c)
“2001 CSO Mortality Table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.(d)
“Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.(e)
“Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.(2)
Except as provided in OAR 836-051-0750 (Purpose; Authority; Applicability; and Effective Date) to 836-051-0775 (Transition Rules), the 2001 CSO Mortality Table may be used as follows:(a)
At the election of the insurer for any one or more specified plans of insurance and subject to the conditions stated in this rule, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after January 1, 2004 and before January 1, 2009 and to which ORS 733.306 (Computation of minimum standards for life insurance, industrial insurance, annuities and pure endowment contracts) and 743.215 (Calculation of adjusted premiums), and OAR 836-031-0765 (General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves)(1) and (2), are applicable. If the insurer elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.(b)
Subject to the conditions stated in this rule, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1, 2009, to which ORS 733.306 (Computation of minimum standards for life insurance, industrial insurance, annuities and pure endowment contracts) and 743.215 (Calculation of adjusted premiums), and OAR 836-031-0765 (General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves)(1) and (2), are applicable.(3)
Conditions governing use of tables are as follows:(a)
For each plan of insurance with separate rates for smokers and nonsmokers an insurer may use:(A)
Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;(B)
Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by ORS 733.312 (Amount of required reserves for life insurance policies) and 733.322 (Calculation of reserves for plans for which minimum reserves cannot be determined under ORS 733.312, 733.314 or 733.320) and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or(C)
Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.(b)
For plans of insurance without separate rates for smokers and nonsmokers the composite mortality tables shall be used.(c)
For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the insurer for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of section 4 of this rule, ORS 733.306 (Computation of minimum standards for life insurance, industrial insurance, annuities and pure endowment contracts) and 743.215 (Calculation of adjusted premiums) and OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies)) relative to use of the select and ultimate form.(d)
When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for an insurer, the actuarial opinion in the annual statement filed with the Director shall be based on an asset adequacy analysis as specified in OAR 836-031-0670 (Statement of Actuarial Opinion Based On an Asset Adequacy Analysis). The Director may exempt an insurer from this requirement if it only does business in this state and in no other state.(4)
The 2001 CSO Mortality Table applies to OAR 836-031-0750 (Purpose, Authority and Applicability) to 836-031-0775 (Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies that Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period) as follows:(a)
The 2001 CSO Mortality Table may be used in applying OAR 836-031-0750 (Purpose, Authority and Applicability) to 836-031-0775 (Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies that Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period) in the following manner, subject to the transition dates for use of the 2001 CSO Mortality Table in section (2) of this rule:(A)
OAR 836-031-0755 (Applicability)(1)(b)(B): The net level reserve premium is based on the ultimate mortality rates in the 2001 CSO Mortality Table.(B)
OAR 836-031-0760 (Definitions)(2): All calculations are made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(1)(d). The value of “qx+k+t-1” is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves.(C)
OAR 836-031-0765 (General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves)(1): The 2001 CSO Mortality Table is the minimum standard for basic reserves.(D)
OAR 836-031-0765 (General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves)(2): The 2001 CSO Mortality Table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in OAR 836-031-0765 (General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves)(2)(c). In demonstrating compliance with these conditions, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is explicitly required by rule or necessary to be in compliance with relevant Actuarial Standards of Practice.(E)
OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(3): The valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table.(F)
OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(5)(d): The calculations specified in OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(5) shall use the ultimate mortality rates in the 2001 CSO Mortality Table.(G)
OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(6)(d): The calculations specified in OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(6) shall use the ultimate mortality rates in the 2001 CSO Mortality Table.(H)
OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(7)(b): The calculations specified in OAR 836-031-0770 (Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))(7) shall use the ultimate mortality rates in the 2001 CSO Mortality Table.(I)
OAR 836-031-0775 (Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies that Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period)(1)(a)(B): The one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table.(b)
Nothing in this section shall be construed to expand the applicability of OAR 836-031-0750 (Purpose, Authority and Applicability) to 836-031-0775 (Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies that Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period) to include life insurance policies exempted under 836-031-0755 (Applicability)(1).(5)
The following provisions apply to an insurer’s use of Gender-Blended Tables(a)
For any ordinary life insurance policy delivered or issued for delivery in this state on and after January 1, 2004, that utilizes the same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the insurer for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this section of this rule.(b)
The insurer may choose from among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the NAIC in December 2002.(c)
It shall not, in and of itself, be a violation of ORS 746.015 (Discrimination) for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.
Source:
Rule 836-051-0106 — Life Insurance Valuation and Nonforfeiture Standards, https://secure.sos.state.or.us/oard/view.action?ruleNumber=836-051-0106.