Ins 3.17(6)(c)1. 1. The insurer may use any generally accepted or reasonable actuarial method or combination of methods to estimate all claim liabilities.

Ins 3.17(6)(c)2. 2. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. The insurer may also employ approximations based on groupings and averages. The insurer shall, however, determine adequacy of the claim reserves in the aggregate.

Ins 3.17(7) (7) Premium reserves.

Ins 3.17(7)(a) (a) General premium reserve requirements are:

Ins 3.17(7)(a)1. 1. Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation;

Ins 3.17(7)(a)2. 2. If premiums due and unpaid are carried as an asset, the insurer shall treat the premiums as premiums in force, subject to unearned premium reserve determination. The insurer shall carry as an offsetting liability the value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums; and

Ins 3.17(7)(a)3. 3. Insurers may appropriately discount to the valuation date the gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation. The insurer shall hold this discounted premium either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum.

Ins 3.17(7)(b) (b) Minimum standards for unearned premium reserves are as follows:

Ins 3.17(7)(b)1. 1. The minimum unearned premium reserve with respect to any contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with the premium determined on the basis of:

Ins 3.17(7)(b)1.a. a. The valuation net modal premium on the contract reserve basis applying to the contract; or

Ins 3.17(7)(b)1.b. b. The gross modal premium for the contract if no contract reserve applies.

Ins 3.17(7)(b)2. 2. However, the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements may not be less than the gross modal unearned premium reserve on all of the contracts, as of the date of valuation. To the extent not provided for elsewhere in this section, this reserve may not be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve.

Ins 3.17(7)(c) (c) General premium reserve methods are as follows:

Ins 3.17(7)(c)1. 1. In computing premium reserves, the insurer may employ suitable approximations and estimates; including, but not limited to, groupings, averages and aggregate estimation.

Ins 3.17(7)(c)2. 2. The insurer shall periodically test the approximations or estimates to determine their continuing adequacy and reliability.

Ins 3.17(8) (8) Contract reserves.

Ins 3.17(8)(a) (a) General contract reserve requirements are:

Ins 3.17(8)(a)1. 1. Contract reserves are required, unless otherwise specified in subd. 2. for:

Ins 3.17(8)(a)1.a. a. All individual and group contracts with which level premiums are used; or

Ins 3.17(8)(a)1.b. b. All individual and group contracts with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. The insurer shall determine the values specified in this subparagraph on the basis specified in par. (b);

Ins 3.17(8)(a)2. 2. Contracts not requiring a contract reserve are:

Ins 3.17(8)(a)2.a. a. Contracts which cannot be continued after one year from issue; or

Ins 3.17(8)(a)2.b. b. Contracts already in force on the effective date of these standards for which no contract reserve was required under the immediately preceding standards;

Ins 3.17(8)(a)3. 3. The contract reserve is in addition to claim reserves and premium reserves; and

Ins 3.17(8)(a)4. 4. The insurer shall use methods and procedures for contract reserves that are consistent with those for claim reserves for any contract, or else shall make appropriate adjustment when necessary to assure provision for the aggregate liability. The insurer shall use the same definition of the date of incurral in both determinations.

Ins 3.17(8)(b) (b) Except as provided in par. (bm), the basis for determining minimum standards for contract reserves are as follows:

Ins 3.17(8)(b)1. 1. Minimum standards with respect to morbidity are those set forth in Appendix A. Valuation net premiums used under each contract shall have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of insured, contract duration and period for which gross premiums have been calculated. The insurer shall value contracts for which tabular morbidity standards are not specified in Appendix A using tables established for reserve purposes by a qualified actuary meeting the requirements of s. Ins 6.12 and acceptable to the commissioner;

Ins 3.17 Note Note: The consistency between the gross premium structure and the valuation net premium is required only at issue, because the impact on the consistency after issue of regulatory restrictions on premium rate increases is still under study.

Ins 3.17(8)(b)2. 2. The maximum interest rate is specified in Appendix A;