Ins 2.80 NoteNote: Without this exemption, companies issuing certain n-year renewable term policies could be forced to hold reserves higher than n-year term reserves, even though in many cases gross premiums are well above valuation mortality rates.
Ins 2.80(5)(m)(m) Unitary basic reserves and unitary deficiency reserves need not be calculated for a juvenile policy if, based upon the initial current premium scale at issue, all of the following conditions are met: Ins 2.80(5)(m)2.2. Until the insured reaches the end of the juvenile period, which shall occur at or before age 25, the gross premiums and death benefits are level, and there are no cash surrender values. Ins 2.80(5)(m)3.3. After the end of the juvenile period, gross premiums are level for the remainder of the premium-paying period, and death benefits are level for the remainder of the life of the policy. Ins 2.80 NoteNote: The jumping juvenile policy described has traditionally been valued in two segments. This exemption will allow that practice to continue without requiring the calculation of reserves on a unitary basis. However, within each segment, both basic and deficiency reserves shall comply with the segmented reserve requirements.
Ins 2.80(6)(6) 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. Ins 2.80(6)(a)(a) Policies with a secondary guarantee include any of the following: Ins 2.80(6)(a)1.1. A policy with a guarantee that the policy will remain in force at the original schedule of benefits subject only to the payment of specified premiums. Ins 2.80(6)(a)2.2. A policy in which the minimum premium at any duration is less than the corresponding one-year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation table with or without 10-year select mortality factors. Ins 2.80(6)(b)(b) A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in pars. (g) and (h) shall be recalculated from issue to reflect these changes. Ins 2.80(6)(c)(c) Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed. Ins 2.80(6)(d)(d) For purposes of this subsection, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors, including mortality charges, loads and expense charges, and the interest crediting rate, which are all guaranteed at issue. Ins 2.80(6)(e)(e) The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in sub. (4) (a) 2. and sub. (4) (b) 2. and 3. may not be used to calculate the one-year valuation premiums. Ins 2.80(6)(f)(f) The 1-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund. Ins 2.80(6)(g)(g) Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments shall be determined according to the contract segmentation method. Ins 2.80(6)(h)(h) Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in sub. (5) (b), (c), (d), and (e) with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force. Ins 2.80(6)(i)(i) The minimum reserves during the secondary guarantee period are the greater of the following: Ins 2.80(6)(i)1.1. The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees. Ins 2.80(6)(i)2.2. The minimum reserves required by other rules governing universal life plans. Ins 2.80 NoteNote: The tables at pages 21 through 43 of the national association of insurance commissioners valuation of life insurance policies model regulation updated and published by the national association of insurance commissioners model regulation service in April 1999 contains tables of select mortality factors that are the bases to which the respective percentage of sub. (4) (a) 2., (b) 2., and 3. are applied. The 6 tables of select mortality factors include: (1) male aggregate, (2) male nonsmoker, (3) male smoker, (4) female aggregate, (5) female nonsmoker, and (6) female smoker. These tables apply to both age last birthday and age nearest birthday mortality tables.
Ins 2.80 NoteFor sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are 80% of the appropriate male table in the tables at pages 18 through 35 of the national association of insurance commissioners valuation of life insurance policies model regulation updated and published by the national association of insurance commissioners model regulation service in April 1999, plus 20% of the appropriate female table in the tables at pages 18 through 35 of the national association of insurance commissioners valuation of life insurance policies model regulation updated and published by the national association of insurance commissioners model regulation service in April 1999.
Ins 2.80 NoteSection Ins 2.20 allows the use of sex-blended mortality table for the purposes of determining nonforfeiture values, but sex-blended tables are not allowed for the purposes of valuing minimum reserve liabilities under s. Ins 2.80 or s. 623.06, Stats. Ins 2.80 NoteNote: Copies of the tables at pages 21 through 43 of the national association of insurance commissioners valuation of life insurance policies model regulation updated and published by the national association of insurance commissioners model regulation service in April 1999 for use with s. Ins 2.80, Wis. Adm. Code, are available from the Office of the Commissioner of Insurance, P.O. Box 1768, Madison WI 53707-7873 or from the OCI website: http://oci.wi.gov, at information for companies, OCI rule-making information. Ins 2.80 HistoryHistory: Cr. Register, March, 1998, No. 507, eff. 1-1-99; r. and recr. Register, June, 1999, No. 522, eff. 7-1-99; CR 04-071: cr. (2) (e), am. (4) (b) 3. (intro.), r. Appendix I, Register December 2004 No. 588, eff. 1-1-05; CR 14-008: r. (4) (b) 3. b., c., am. (4) (b) 3. g., i. Register August 2014 No. 704, eff. 9-1-14. Ins 2.81Ins 2.81 Recognition of the 2001 CSO mortality table for use in determining minimum reserve liabilities and nonforfeiture benefits. Ins 2.81(1)(1) Authority. This section is promulgated by the commissioner of insurance pursuant to s. 623.06 (2) (am) 3, Stats., standard valuation law, and s. 632.43 (6m) (e) 3. f., Stats., standard nonforfeiture law for life insurance. Ins 2.81(2)(2) Purpose. The purpose of this section is to recognize, permit and prescribe the use of: the 2001 commissioners’ standard ordinary CSO mortality table in accordance with s. 623.06 (2) (am) 3., Stats., standard valuation law, and s. 632.43 (6m) (e) 3. f., Stats., standard nonforfeiture law for life insurance; the 2001 CSO mortality table in s. Ins 2.20 unisex nonforfeiture values in certain life insurance policies, s. Ins 2.35 smoker and nonsmoker mortality tables for minimum reserve liabilities and minimum nonforfeiture benefits, and s. Ins 2.80 valuation of life insurance policies; mortality tables that reflect differences in mortality between preferred and standard lives in determining minimum reserve liabilities in accordance with s. 623.06 (2) (am) 3., Stats., standard valuation law, and s. Ins 2.80 valuation of life insurance policies; and the 1980 commissioners’ standard ordinary CSO mortality table for determining the minimum standard of valuation of reserves and the minimum standard nonforfeiture values for funeral policies. Ins 2.81(3)(a)(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) and is supplemented by the 2001 CSO preferred class structure mortality table and may be obtained from the office. 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. Ins 2.81 NoteNote: The 2001 CSO mortality table may be obtained from the website of the Office of the Commissioner of Insurance (http://oci.wi.gov) or by writing to the Office. Ins 2.81(3)(b)(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. Ins 2.81(3)(c)(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. Ins 2.81(3)(cm)(cm) “2001 CSO preferred class structure mortality table” means mortality tables with separate rates for super preferred nonsmokers, preferred nonsmokers, residual standard nonsmokers, preferred smokers, and residual standard smoker splits of the 2001 CSO nonsmoker and smoker tables as adopted by the NAIC at the September, 2006 national meeting and published in the Proceedings of the NAIC (3rd Quarter 2006). Unless the context indicates otherwise, the “2001 CSO preferred class structure mortality table” includes both the ultimate form of that table and the select and ultimate form of that table. It includes both the smoker and nonsmoker mortality tables. It includes both the male and female mortality tables and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table. Ins 2.81 NoteNote: The 2001 CSO preferred class structure mortality table may be obtained from the website of the Office of the Commissioner of Insurance (http://oci.wi.gov) or by writing to the Office. Ins 2.81(3)(e)(e) “Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers. Ins 2.81(3)(f)(f) “NAIC” means the national association of insurance commissioners. Ins 2.81(3)(g)(g) “Office” means the office of the commissioner of insurance. Ins 2.81(3)(h)(h) “Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers. Ins 2.81(3)(i)(i) “Statistical agent” means an entity with proven systems for protecting the confidentiality of individual insured and insurer information, demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers, and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner. Ins 2.81(3)(j)(j) “Ultimate 1980 CSO” means the commissioners 1980 standard ordinary mortality table without 10-year select mortality factors, incorporated into the standard valuation law as provided in s. 623.06 (2) (am) 1., Stats. Ins 2.81 NoteNote: The Ultimate 1980 CSO mortality table may be obtained from the website of the Office of the Commissioner of Insurance (http://oci.wi.gov) or by writing to the Office. Ins 2.81(4)(a)(a) Except as provided in sub. (8), at the election of the company for any one or more specified plans of insurance and subject to the conditions stated in this section, the 2001 CSO mortality table may be used as the minimum standard for policies issued on or after January 1, 2005 and before the date specified in par. (b) to which s. 623.06 (2) (am) 3. or 632.43 (6m) (e) 3. f., Stats., or s. Ins 2.20, 2.35, or 2.80 are applicable. If the company elects to use the 2001 CSO mortality table, it shall do so for both valuation and nonforfeiture purposes. Ins 2.81(4)(c)(c) At the election of the insurer, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this paragraph and sub. (5) (e) 1. to 3., the 2001 CSO preferred class structure mortality table may be elected in place of the smoker mortality table found in the 2001 CSO mortality table or the nonsmoker mortality table found in the 2001 CSO mortality table or both as the minimum valuation standard for policies issued on or after January 1, 2007. For policies issued on or after January 1, 2005, and prior to January 1, 2007, the 2001 CSO preferred class structure mortality table may be elected in place of the smoker and nonsmoker mortality tables found in the 2001 CSO mortality table with the consent of the commissioner and subject to the conditions of sub. (5) (e) 1. to 4. In considering a request by a foreign insurer for such consent, the commissioner may rely on the consent of the commissioner of the foreign company’s state of domicile. No such election may be made until the insurer demonstrates to the commissioner in a form acceptable to the commissioner that at least 20% of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO preferred class structure mortality table used in place of a 2001 CSO mortality table, pursuant to the requirements of this section, will be treated as part of the 2001 CSO mortality table only for purposes of reserve valuation. Ins 2.81 NoteNote: There is no new Commissioners Extended Term (CET) table being proposed to replace the 1980 CET Table. Therefore, the new minimum basis for the computation of values related to extended term benefits will be the 2001 CSO Mortality Table.
Ins 2.81(5)(a)(a) For each plan of insurance with separate rates for smokers and nonsmokers an insurer may use: Ins 2.81(5)(a)1.1. Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits; Ins 2.81(5)(a)2.2. Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by s. 623.06 (7), Stats., and composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or Ins 2.81(5)(a)3.3. Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits. Ins 2.81(5)(b)(b) For plans of insurance without separate rates for smokers and nonsmokers the composite mortality tables shall be used. Ins 2.81(5)(c)(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 company for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of sub. (6) and s. Ins 2.80 relative to use of the select and ultimate form. Ins 2.81(5)(d)(d) When the 2001 CSO mortality table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the commissioner shall be based on an asset adequacy analysis as specified in s. Ins 50.75 (1). The commissioner may exempt a company from this requirement if it only does business in this state and in no other state. Ins 2.81(5)(e)(e) The following conditions are applicable for plans of insurance using the 2001 CSO preferred class structure mortality table: Ins 2.81(5)(e)1.1. 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 to substitute for the nonsmoker mortality table found in the 2001 CSO mortality table 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 both of the following are true: Ins 2.81(5)(e)1.a.a. 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 Ins 2.81(5)(e)1.b.b. 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. Ins 2.81(5)(e)2.2. 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 to substitute for the smoker mortality table found in the 2001 CSO mortality table 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 both of the following are true: Ins 2.81(5)(e)2.a.a. 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 Ins 2.81(5)(e)2.b.b. 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. Ins 2.81(5)(e)3.3. Unless exempted by the commissioner under s. 600.13, Stats., every insurer using the 2001 CSO preferred class structure mortality table shall annually file with the commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the commissioner, statistical reports showing mortality and such other information as the commissioner may deem necessary or expedient for the administration of the provisions of this section. The form of the reports shall be established by the commissioner or the commissioner may require the use of a form acceptable to the commissioner established by the NAIC or by a statistical agent designated by the NAIC. Ins 2.81 NoteNote: The form for the annual report required under s. Ins 2.81 (5) (e) 3. may be obtained from the website of the Office of the Commissioner of Insurance (http://oci.wi.gov) or by writing to the office. Ins 2.81(5)(e)4.4. The use of the 2001 CSO preferred class structure mortality table for the valuation of policies issued prior to January 1, 2007 is not permitted in any statutory financial statement in which a company reports, with respect to any policy or portion of a policy coinsured, as specified under subd. 4. a. or b.: Ins 2.81(5)(e)4.a.a. 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 the amount specified in this subdivision paragraph as Y, the gross reserve calculated before reinsurance. Y is the amount of the gross reinsurance premium that provides coverage for the period from the next policy premium due date to the end of the policy year or the next reinsurance premium due date whichever is earlier, and that would be refunded to the ceding entity upon the termination of the policy. Ins 2.81(5)(e)4.b.b. 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 the amount specified in this subdivision paragraph as Z. Z is the amount of the gross reinsurance premium that the ceding entity would need to pay the assuming company 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. Ins 2.81(5)(e)5.5. For purposes of the condition described in subd. 4., both the reserve credit and the gross reserve before reinsurance for the mean reserve method shall be defined as the mean reserve minus the deferred premium asset, and for the mid-terminal reserve method shall include the unearned premium reserve. A company may estimate and adjust its accounting on an aggregate basis in order to meet the conditions to use the 2001 CSO preferred class structure table. Ins 2.81(6)(6) Applicability of the 2001 cso mortality table to s. ins 2.80, valuation of life insurance policies. Ins 2.81(6)(a)(a) The 2001 CSO mortality table may be used in applying s. Ins 2.80 in the following manner, subject to the transition dates for use of the 2001 CSO mortality table in sub. (4): Ins 2.81(6)(a)2.2. Section Ins 2.80 (3) (b): All calculations are made using the 2001 CSO mortality table, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in subd. 4. 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. Ins 2.81(6)(a)4.4. Section Ins 2.80 (4) (b): 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 subd. 3. In demonstrating compliance with those 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 law or necessary to be in compliance with relevant actuarial standards of practice. Ins 2.81(6)(a)5.5. Section Ins 2.80 (5) (f): The valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO mortality table. Ins 2.81(7)(a)(a) For any ordinary life insurance policy delivered or issued for delivery in this state on and after January 1, 2005, 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 company 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 subsection of the regulation. Ins 2.81(7)(b)(b) The company 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. Ins 2.81 NoteNote: The blended tables may be obtained from the website of the Office of the Commissioner of Insurance (http://oci.wi.gov) or by writing to the Office. Ins 2.81(7)(c)(c) It shall not, in and of itself, be a violation of s. 628.34, Stats., for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.
