§ 2248.14. Minimum Statement Reserves.

(a) Definitions.

(1) The “2001 CSO Male Composite Ultimate Mortality Table” is a table that is part of the “2001 CSO Mortality Table.” The “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 age-last-birthday bases of the mortality tables. The 2001 CSO Mortality Table is incorporated by reference herein.

(2) The “1985 Commissioners Individual Disability Table A,” also called the “Basic Valuation Table” or “85CIDA,” is set forth in Transactions of the Society of Actuaries (1986), Volume XXXVII, at pages 449-460. The “1985 Commissioners Individual Disability Table A” is incorporated by reference herein.

(3) “Policy” means an individual insurance policy or group insurance certificate.

(b) The minimum reserve standards for individual credit insurance policies and roup credit insurance policies are as follows:

(1) General Requirements for Credit Life and Credit Disability Policies

(A) California Code of Regulations, Title 10, Chapter 5, Subchapter 3, Article 12.3 entitled “Valuation of Life Insurance Policies” shall not apply to credit life insurance.

(B) The interest rates used in determining the minimum standard for valuation shall be the calendar year statutory valuation interest rates as defined in Insurance Code Section 10489.4.

(C) The method used in determining the minimum standard for valuation shall be the commissioners reserve valuation method as defined in Insurance Code Section 10489.5.

(D) Where a credit insurance policy provides both life insurance benefits and disability insurance benefits, a reserve must be established separately for all the life insurance benefits and disability insurance benefits.

(E) Claim Reserves. All claim liabilities shall be estimated using actuarial reserving methods that are generally accepted within the actuarial profession for credit life insurance or credit disability insurance.

(2) Credit Life Insurance.

(A) Minimum Reserve Standards for Single Premium Credit Life Insurance Policies.

(1) The minimum standard for both male and female insureds shall be 2001 CSO Male Composite Ultimate Mortality Table.

(2) Where the life insurance policy insures two lives, the minimum standard shall be twice the mortality in the 2001 CSO Male Composite Ultimate Mortality Table based on the age of the older insured.

(3) Credit Disability Insurance.

(A) Minimum Reserve Standards for Single Premium Credit Disability Insurance Policies.

(1) Policy Reserves: Morbidity:

A. For policies issued on or after the effective date of the 2012 amendments to this section:

(i) For plans having less than a thirty-day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by twelve percent (12%).

(ii) For plans having a thirty-day and greater elimination period, the 85CIDA for a fourteen-day elimination period with claim incidence rates increased by twelve percent (12%).

B. For policies issued prior to the effective date of the 2012 amendments to this section, each insurer may elect either Subdivision (i) or (ii), below, to use as the minimum standard. Once an insurer elects to calculate reserves for all policies on the standard defined in Subdivision A, all future valuations must be on that basis.

(i) The minimum morbidity standard in effect for policy reserves on currently issued policies, as of the date the policy was issued, or

(ii) The standard as defined in Subdivision A., applied to all policies.

(2) Policy Reserves: Mortality: For single premium disability insurance policies using the 85CIDA table, no separate mortality shall be assumed.

HISTORY

1. Amendment filed 6-4-79; effective thirtieth day thereafter (Register 79, No. 23).

2. Amendment of subsections (c)(1)(A)1-2, repealer of subsection (c)(1)(A)3 and amendment and redesignation of subsection (c)(1)(A)4 filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15).

3. Amendment filed 12-17-2012; operative 12-17-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 51).

Note

Note: Authority cited: Section 779.21, California Insurance Code. Reference: Section 779.9, Insurance Code.