Full Text of HB0938 095th General Assembly
HB0938enr 95TH GENERAL ASSEMBLY
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| AN ACT concerning insurance.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Insurance Code is amended by | 5 |
| changing Sections 223 and 531.09 as follows:
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| (215 ILCS 5/223) (from Ch. 73, par. 835)
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| Sec. 223. Director to value policies - Legal standard of | 8 |
| valuation.
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| (1) The Director shall annually value, or cause to be | 10 |
| valued, the
reserve liabilities (hereinafter called reserves) | 11 |
| for all outstanding
life insurance policies and annuity and | 12 |
| pure endowment contracts of
every life insurance company doing | 13 |
| business in this State, except that
in the case of an alien | 14 |
| company, such valuation shall be limited to its
United States | 15 |
| business, and may certify the amount of any such reserves,
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| specifying the mortality table or tables, rate or rates of | 17 |
| interest, and
methods (net level premium method or other) used | 18 |
| in the calculation of
such reserves. Other assumptions may be | 19 |
| incorporated into the reserve calculation to the extent | 20 |
| permitted by the National Association of Insurance | 21 |
| Commissioners' Accounting Practices and Procedures Manual. In | 22 |
| calculating such reserves, he may use group methods
and | 23 |
| approximate averages for fractions of a year or otherwise. In |
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| lieu
of the valuation of the reserves herein required of any | 2 |
| foreign or alien
company, he may accept any valuation made, or | 3 |
| caused to be made, by the
insurance supervisory official of any | 4 |
| state or other jurisdiction when
such valuation complies with | 5 |
| the minimum standard herein provided and if
the official of | 6 |
| such state or jurisdiction accepts as sufficient and
valid for | 7 |
| all legal purposes the certificate of valuation of the
Director | 8 |
| when such certificate states the valuation to have been made in
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| a specified manner according to which the aggregate reserves | 10 |
| would be at
least as large as if they had been computed in the | 11 |
| manner prescribed by
the law of that state or jurisdiction.
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| Any such company which at any time has adopted any standard | 13 |
| of
valuation producing greater aggregate reserves than those | 14 |
| calculated
according to the minimum standard herein provided | 15 |
| may, with the approval
of the Director, adopt any lower | 16 |
| standard of valuation, but not lower
than the minimum herein | 17 |
| provided, however, that, for the purposes of this
subsection, | 18 |
| the holding of additional reserves previously determined by a
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| qualified actuary to be necessary to render the opinion | 20 |
| required by
subsection (1a) shall not be deemed to be the | 21 |
| adoption of a higher standard
of valuation. In the valuation of | 22 |
| policies the
Director shall give no consideration to, nor make | 23 |
| any deduction because
of, the existence or the possession by | 24 |
| the company of
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| (a) policy liens created by any agreement given or | 26 |
| assented to by
any assured subsequent to July 1, 1937, for |
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| which liens such assured has
not received cash or other | 2 |
| consideration equal in value to the amount of
such liens, | 3 |
| or
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| (b) policy liens created by any agreement entered into | 5 |
| in violation
of section 232 unless the agreement imposing | 6 |
| or creating such liens has
been approved by a Court in a | 7 |
| proceeding under Article XIII, or in the
case of a foreign | 8 |
| or alien company has been approved by a court in a
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| rehabilitation or liquidation proceeding or by the | 10 |
| insurance official of
its domiciliary state or country, in | 11 |
| accordance with the laws thereof.
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| (1a) This subsection shall become operative at the end of | 13 |
| the first
full calendar year following the effective date of | 14 |
| this amendatory Act of 1991.
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| (A) General.
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| (1) Every life insurance company doing business in | 17 |
| this State shall
annually submit the opinion of a | 18 |
| qualified actuary as to whether the
reserves and | 19 |
| related actuarial items held in support of the policies | 20 |
| and
contracts specified by the Director by regulation | 21 |
| are computed
appropriately, are based on assumptions | 22 |
| that satisfy contractual
provisions, are consistent | 23 |
| with prior reported amounts and comply with
applicable | 24 |
| laws of this State. The Director by regulation shall | 25 |
| define the
specifics of this opinion and add any other | 26 |
| items deemed to be necessary to
its scope.
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| (2) The opinion shall be submitted with the annual | 2 |
| statement reflecting
the valuation of reserve | 3 |
| liabilities for each year ending on or after December | 4 |
| 31, 1992.
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| (3) The opinion shall apply to all business in | 6 |
| force including
individual and group health insurance | 7 |
| plans, in form and substance
acceptable to the Director | 8 |
| as specified by regulation.
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| (4) The opinion shall be based on standards adopted | 10 |
| from time to time by
the Actuarial Standards Board and | 11 |
| on additional standards as the Director
may by | 12 |
| regulation prescribe.
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| (5) In the case of an opinion required to be | 14 |
| submitted by a foreign or
alien company, the Director | 15 |
| may accept the opinion filed by that company
with the | 16 |
| insurance supervisory official of another state if the | 17 |
| Director
determines that the opinion reasonably meets | 18 |
| the requirements applicable to
a company domiciled in | 19 |
| this State.
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| (6) For the purpose of this Section, "qualified | 21 |
| actuary" means a member
in good standing of the | 22 |
| American Academy of Actuaries who meets the
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| requirements set forth in its regulations.
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| (7) Except in cases of fraud or willful misconduct, | 25 |
| the qualified
actuary shall not be liable for damages | 26 |
| to any person (other than the
insurance company and the |
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| Director) for any act, error, omission, decision
or | 2 |
| conduct with respect to the actuary's opinion.
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| (8) Disciplinary action by the Director against | 4 |
| the company or the
qualified actuary shall be defined | 5 |
| in regulations by the Director.
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| (9) A memorandum, in form and substance acceptable | 7 |
| to the Director as
specified by regulation, shall be | 8 |
| prepared to support each actuarial opinion.
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| (10) If the insurance company fails to provide a | 10 |
| supporting memorandum
at the request of the Director | 11 |
| within a period specified by regulation or
the Director | 12 |
| determines that the supporting memorandum provided by | 13 |
| the
insurance company fails to meet the standards | 14 |
| prescribed by the regulations
or is otherwise | 15 |
| unacceptable to the Director, the Director may engage a
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| qualified actuary at the expense of the company to | 17 |
| review the opinion and
the basis for the opinion and | 18 |
| prepare the supporting memorandum as is
required by the | 19 |
| Director.
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| (11) Any memorandum in support of the opinion, and | 21 |
| any other material
provided by the company to the | 22 |
| Director in connection therewith, shall be
kept | 23 |
| confidential by the Director and shall not be made | 24 |
| public and shall
not be subject to subpoena, other than | 25 |
| for the purpose of defending an
action seeking damages | 26 |
| from any person by reason of any action required by
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| this Section or by regulations promulgated hereunder; | 2 |
| provided, however,
that the memorandum or other | 3 |
| material may otherwise be released by the
Director (a) | 4 |
| with the written consent of the company or (b) to the | 5 |
| American
Academy of Actuaries upon request stating | 6 |
| that the memorandum or other
material is required for | 7 |
| the purpose of professional disciplinary
proceedings | 8 |
| and setting forth procedures satisfactory to the | 9 |
| Director for
preserving the confidentiality of the | 10 |
| memorandum or other material. Once
any portion of the | 11 |
| confidential memorandum is cited by the company in its
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| marketing or is cited before any governmental agency | 13 |
| other than a state
insurance department or is released | 14 |
| by the company to the news media, all
portions of the | 15 |
| confidential memorandum shall be no longer | 16 |
| confidential.
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| (B) Actuarial analysis of reserves and assets | 18 |
| supporting those reserves.
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| (1) Every life insurance company, except as | 20 |
| exempted by or under
regulation, shall also annually | 21 |
| include in the opinion required by
paragraph (A)(1) of | 22 |
| this subsection (1a), an opinion of the same qualified
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| actuary as to whether the reserves and related | 24 |
| actuarial items held in
support of the policies and | 25 |
| contracts specified by the Director by
regulation, | 26 |
| when considered in light of the assets held by the |
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| company with
respect to the reserves and related | 2 |
| actuarial items including, but not
limited to, the | 3 |
| investment earnings on the assets and the | 4 |
| considerations
anticipated to be received and retained | 5 |
| under the policies and contracts,
make adequate | 6 |
| provision for the company's obligations under the | 7 |
| policies
and contracts including, but not limited to, | 8 |
| the benefits under and
expenses associated with the | 9 |
| policies and contracts.
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| (2) The Director may provide by regulation for a | 11 |
| transition period for
establishing any higher reserves | 12 |
| which the qualified actuary may deem
necessary in order | 13 |
| to render the opinion required by this Section.
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| (2) This subsection shall apply to only those policies and | 15 |
| contracts
issued prior to the operative date of section 229.2 | 16 |
| (the Standard
Non-forfeiture Law).
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| (a) Except as otherwise in this Article provided, the | 18 |
| legal minimum
standard for valuation of contracts issued | 19 |
| before January 1, 1908, shall
be the Actuaries or Combined | 20 |
| Experience Table of Mortality with interest
at 4% per annum | 21 |
| and for valuation of contracts issued on or after that
date | 22 |
| shall be the American Experience Table of Mortality with | 23 |
| either
Craig's or Buttolph's Extension for ages under 10 | 24 |
| and with interest at 3
1/2% per annum. The legal minimum | 25 |
| standard for the valuation of group
insurance policies | 26 |
| under which premium rates are not guaranteed for a
period |
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| in excess of 5 years shall be the American Men Ultimate | 2 |
| Table of
Mortality with interest at 3 1/2% per annum. Any | 3 |
| life company may, at
its option, value its insurance | 4 |
| contracts issued on or after January 1,
1938, in accordance | 5 |
| with their terms on the basis of the American Men
Ultimate | 6 |
| Table of Mortality with interest not higher than 3 1/2% per | 7 |
| annum.
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| (b) Policies issued prior to January 1, 1908, may | 9 |
| continue to be
valued according to a method producing | 10 |
| reserves not less than those
produced by the full | 11 |
| preliminary term method. Policies issued on and
after | 12 |
| January 1, 1908, may be valued according to a method | 13 |
| producing
reserves not less than those produced by the | 14 |
| modified preliminary term
method hereinafter described in | 15 |
| paragraph (c). Policies issued on and
after January 1, | 16 |
| 1938, may be valued either according to a method
producing | 17 |
| reserves not less than those produced by such modified
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| preliminary term method or by the select and ultimate | 19 |
| method on the
basis that the rate of mortality during the | 20 |
| first 5 years after the
issuance of such contracts | 21 |
| respectively shall be calculated according to
the | 22 |
| following percentages of rates shown by the American | 23 |
| Experience
Table of Mortality:
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| (i) first insurance year 50% thereof;
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| (ii) second insurance year 65% thereof;
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| (iii) third insurance year 75% thereof;
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| (iv) fourth insurance year 85% thereof;
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| (v) fifth insurance year 95% thereof;
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| (c) If the premium charged for the first policy year | 4 |
| under a limited
payment life preliminary term policy | 5 |
| providing for the payment of all
premiums thereon in less | 6 |
| than 20 years from the date of the policy or
under an | 7 |
| endowment preliminary term policy, exceeds that charged | 8 |
| for the
first policy year under 20 payment life preliminary | 9 |
| term policies of the
same company, the reserve thereon at | 10 |
| the end of any year, including the
first, shall not be less | 11 |
| than the reserve on a 20 payment life
preliminary term | 12 |
| policy issued in the same year at the same age,
together | 13 |
| with an amount which shall be equivalent to the | 14 |
| accumulation of
a net level premium sufficient to provide | 15 |
| for a pure endowment at the
end of the premium payment | 16 |
| period, equal to the difference between the
value at the | 17 |
| end of such period of such a 20 payment life preliminary
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| term policy and the full net level premium reserve at such | 19 |
| time of such
a limited payment life or endowment policy. | 20 |
| The premium payment period
is the period during which | 21 |
| premiums are concurrently payable under such
20 payment | 22 |
| life preliminary term policy and such limited payment life | 23 |
| or
endowment policy.
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| (d) The legal minimum standard for the valuations of | 25 |
| annuities
issued on and after January 1, 1938, shall be the | 26 |
| American Annuitant's
Table with interest not higher than 3 |
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| 3/4% per annum, and all annuities
issued before that date | 2 |
| shall be valued on a basis not lower than that
used for the | 3 |
| annual statement of the year 1937; but annuities deferred
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| 10 or more years and written in connection with life | 5 |
| insurance shall be
valued on the same basis as that used in | 6 |
| computing the consideration or
premiums therefor, or upon | 7 |
| any higher standard at the option of the company.
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| (e) The Director may vary the standards of interest and | 9 |
| mortality as
to contracts issued in countries other than | 10 |
| the United States and may
vary standards of mortality in | 11 |
| particular cases of invalid lives and
other extra hazards.
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| (f) The legal minimum standard for valuation of waiver | 13 |
| of premium
disability benefits or waiver of premium and | 14 |
| income disability benefits
issued on and after January 1, | 15 |
| 1938, shall be the Class (3) Disability
Table (1926) | 16 |
| modified to conform to the contractual waiting period, with
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| interest at not more than 3 1/2% per annum; but in no event | 18 |
| shall the
values be less than those produced by the basis | 19 |
| used in computing
premiums for such benefits. The legal | 20 |
| minimum standard for the valuation
of such benefits issued | 21 |
| prior to January 1, 1938, shall be such as to
place an | 22 |
| adequate value, as determined by sound insurance | 23 |
| practices, on
the liabilities thereunder and shall be such | 24 |
| that the value of the
benefits under each and every policy | 25 |
| shall in no case be less than the
value placed upon the | 26 |
| future premiums.
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| (g) The legal minimum standard for the valuation of | 2 |
| industrial
policies issued on or after January 1, 1938, | 3 |
| shall be the American
Experience Table of Mortality or the | 4 |
| Standard Industrial Mortality Table
or the Substandard | 5 |
| Industrial Mortality Table with interest at 3 1/2%
per | 6 |
| annum by the net level premium method, or in accordance | 7 |
| with their
terms by the modified preliminary term method | 8 |
| hereinabove described.
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| (h) Reserves for all such policies and contracts may be | 10 |
| calculated,
at the option of the company, according to any | 11 |
| standards which produce
greater aggregate reserves for all | 12 |
| such policies and contracts than the
minimum reserves | 13 |
| required by this subsection.
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| (3) This subsection shall apply to only those policies and | 15 |
| contracts
issued on or after January 1, 1948 or such earlier | 16 |
| operative date of
Section 229.2 (the Standard Non-forfeiture | 17 |
| Law) as shall have been
elected by the insurance company | 18 |
| issuing such policies or contracts.
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| (a) Except as otherwise provided in subsections (4), | 20 |
| (6), and (7),
the minimum standard for the valuation of all | 21 |
| such policies
and contracts shall be the Commissioners | 22 |
| Reserve valuation method defined
in paragraphs (b) and (f) | 23 |
| of this subsection and in subsection 5, 3 1/2%
interest for | 24 |
| such policies issued prior to September 8, 1977, 5 1/2%
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| interest for single premium life insurance policies and 4 | 26 |
| 1/2% interest for
all other such policies issued on or |
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| after September 8, 1977, and the following
tables:
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| (i) The Commissioners 1941 Standard Ordinary | 3 |
| Mortality Table for all
Ordinary policies of life | 4 |
| insurance issued on the standard basis,
excluding any | 5 |
| disability and accidental death benefits in such | 6 |
| policies,
for such policies issued prior to the | 7 |
| operative date of subsection (4a)
of Section 229.2 | 8 |
| (Standard Non-forfeiture Law); and the Commissioners
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| 1958 Standard Ordinary Mortality Table for such | 10 |
| policies issued on or
after such operative date but | 11 |
| prior to the operative date of subsection
(4c) of | 12 |
| Section 229.2 provided that for any category of such
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| policies issued on female risks all modified net | 14 |
| premiums and present
values referred to in this Act | 15 |
| may, prior to September 8, 1977, be
calculated | 16 |
| according to an age not more than 3 years younger than
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| the actual age of the insured and, after September 8, | 18 |
| 1977,
calculated according to an age not more than 6 | 19 |
| years younger than the actual
age of the insured; and | 20 |
| for such policies issued on or after the operative
date | 21 |
| of subsection (4c) of Section 229.2, (i)
the | 22 |
| Commissioners 1980 Standard Ordinary Mortality Table, | 23 |
| or (ii) at the
election of the company for any one or | 24 |
| more specified plans of life insurance,
the | 25 |
| Commissioners 1980 Standard Ordinary Mortality Table | 26 |
| with Ten-Year
Select Mortality Factors, or (iii) any |
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| ordinary mortality table adopted
after 1980 by the | 2 |
| National Association of Insurance Commissioners and
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| approved by regulations promulgated by the Director | 4 |
| for use in determining
the minimum standard of | 5 |
| valuation for such policies.
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| (ii) For all Industrial Life Insurance policies | 7 |
| issued on the
standard basis, excluding any disability | 8 |
| and accidental death benefits
in such policies--the | 9 |
| 1941 Standard Industrial Mortality Table for such
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| policies issued prior to the operative date of | 11 |
| subsection 4 (b) of
Section 229.2 (Standard | 12 |
| Non-forfeiture Law); and for such policies issued
on or | 13 |
| after such operative date the Commissioners 1961
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| Standard Industrial Mortality Table or any industrial | 15 |
| mortality table
adopted after 1980 by the National | 16 |
| Association of Insurance Commissioners
and approved by | 17 |
| regulations promulgated by the Director for use in | 18 |
| determining
the minimum standard of valuation for such | 19 |
| policies.
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| (iii) For Individual Annuity and Pure Endowment | 21 |
| contracts, excluding
any disability and accidental | 22 |
| death benefits in such policies--the 1937
Standard | 23 |
| Annuity Mortality Table--or, at the option of the | 24 |
| company, the
Annuity Mortality Table for 1949, | 25 |
| Ultimate, or any modification of
either of these tables | 26 |
| approved by the Director.
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| (iv) For Group Annuity and Pure Endowment | 2 |
| contracts, excluding any
disability and accidental | 3 |
| death benefits in such policies--the Group
Annuity | 4 |
| Mortality Table for 1951, any modification of such | 5 |
| table
approved by the Director, or, at the option of | 6 |
| the company, any of the
tables or modifications of | 7 |
| tables specified for Individual Annuity and
Pure | 8 |
| Endowment contracts.
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| (v) For Total and Permanent Disability Benefits in | 10 |
| or supplementary
to Ordinary policies or contracts for | 11 |
| policies or contracts issued on or
after January 1, | 12 |
| 1966, the tables of Period 2 disablement rates and the
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| 1930 to 1950 termination rates of the 1952 Disability | 14 |
| Study of the
Society of Actuaries, with due regard to | 15 |
| the type of benefit, or any tables
of disablement rates | 16 |
| and termination rates adopted after 1980 by the | 17 |
| National
Association of Insurance Commissioners and | 18 |
| approved by regulations promulgated
by the Director | 19 |
| for use in determining the minimum standard of | 20 |
| valuation
for such policies; for policies or contracts | 21 |
| issued on or after January 1,
1961, and prior to | 22 |
| January 1, 1966, either such tables or, at the option | 23 |
| of
the company, the Class (3) Disability Table (1926); | 24 |
| and for policies issued
prior to January 1, 1961, the | 25 |
| Class (3) Disability Table (1926). Any such
table | 26 |
| shall, for active lives, be combined with a mortality |
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| table permitted
for calculating the reserves for life | 2 |
| insurance policies.
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| (vi) For Accidental Death benefits in or | 4 |
| supplementary to
policies--for policies issued on or | 5 |
| after January 1, 1966, the 1959
Accidental Death | 6 |
| Benefits Table or any accidental death benefits table
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| adopted after 1980 by the National Association of | 8 |
| Insurance Commissioners
and approved by regulations | 9 |
| promulgated by the Director for use in
determining the | 10 |
| minimum standard of valuation for such policies;
for | 11 |
| policies issued on or after January 1, 1961, and prior | 12 |
| to January 1,
1966, any of such tables or, at the | 13 |
| option of the company, the
Inter-Company Double | 14 |
| Indemnity Mortality Table; and for policies issued
| 15 |
| prior to January 1, 1961, the Inter-Company Double | 16 |
| Indemnity Mortality
Table. Either table shall be | 17 |
| combined with a mortality table permitted for
| 18 |
| calculating the reserves for life insurance policies.
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| (vii) For Group Life Insurance, life insurance | 20 |
| issued on the
substandard basis and other special | 21 |
| benefits--such tables as may be
approved by the | 22 |
| Director.
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| (b) Except as otherwise provided in paragraph (f) of | 24 |
| subsection (3),
subsection (5), and subsection (7) | 25 |
| reserves according to the Commissioners
reserve valuation | 26 |
| method, for the life insurance and endowment benefits of
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| policies providing for a uniform amount of insurance and | 2 |
| requiring the
payment of uniform premiums shall be the | 3 |
| excess, if any, of the present
value, at the date of | 4 |
| valuation, of such future guaranteed benefits
provided for | 5 |
| by such policies, over the then present value of any future
| 6 |
| modified net premiums therefor. The modified net premiums | 7 |
| for any such
policy shall be such uniform percentage of the | 8 |
| respective contract premiums
for such benefits that the | 9 |
| present value, at the date of issue of the
policy, of all | 10 |
| such modified net premiums shall be equal to the sum of the
| 11 |
| then present value of such benefits provided for by the | 12 |
| policy and the
excess of (A) over (B), as follows:
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| (A) A net level annual premium equal to the present | 14 |
| value, at the
date of issue, of such benefits provided | 15 |
| for after the first policy
year, divided by the present | 16 |
| value, at the date of issue, of an annuity
of one per | 17 |
| annum payable on the first and each subsequent | 18 |
| anniversary of
such policy on which a premium falls | 19 |
| due; provided, however, that such
net level annual | 20 |
| premium shall not exceed the net level annual premium
| 21 |
| on the 19 year premium whole life plan for insurance of | 22 |
| the same amount
at an age one year higher than the age | 23 |
| at issue of such policy.
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| (B) A net one year term premium for such benefits | 25 |
| provided for in
the first policy year.
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| For any life insurance policy issued on or after |
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| January 1, 1987, for
which the contract premium in the | 2 |
| first policy year exceeds that of the
second year with no | 3 |
| comparable additional benefit being provided in that
first | 4 |
| year, which policy provides an endowment benefit or a cash | 5 |
| surrender
value or a combination thereof in an amount | 6 |
| greater than such excess
premium, the reserve according to | 7 |
| the Commissioners reserve
valuation method as of any policy | 8 |
| anniversary occurring on or before the
assumed ending date, | 9 |
| defined herein as the first policy anniversary on which
the | 10 |
| sum of any endowment benefit and any cash surrender value | 11 |
| then available
is greater than such excess premium, shall, | 12 |
| except as otherwise provided
in paragraph (f) of subsection | 13 |
| (3), be the greater of the reserve as of
such policy | 14 |
| anniversary calculated as described in the preceding part | 15 |
| of
this paragraph (b) and the reserve as of such policy | 16 |
| anniversary calculated
as described in the preceding part | 17 |
| of this paragraph (b) with (i) the value
defined in subpart | 18 |
| A of the preceding part of this paragraph (b) being reduced
| 19 |
| by 15% of the amount of such excess first year premium, | 20 |
| (ii) all present
values of benefits and premiums being | 21 |
| determined without reference to
premiums or benefits | 22 |
| provided for by the policy after the assumed ending
date, | 23 |
| (iii) the policy being assumed to mature on such date as an
| 24 |
| endowment, and (iv) the cash surrender value provided on | 25 |
| such date being
considered as an endowment benefit. In | 26 |
| making the above comparison, the
mortality and interest |
|
|
|
HB0938 Enrolled |
- 18 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| bases stated in paragraph (a) of subsection (3) and
in | 2 |
| subsection 6 shall be used.
| 3 |
| Reserves according to the Commissioners reserve | 4 |
| valuation method for
(i) life insurance policies providing | 5 |
| for a varying amount of insurance
or requiring the payment | 6 |
| of varying premiums, (ii) group annuity and pure
endowment | 7 |
| contracts purchased under a retirement plan or plan of | 8 |
| deferred
compensation, established or maintained by an | 9 |
| employer (including a partnership
or sole proprietorship) | 10 |
| or by an employee organization, or by both, other
than a | 11 |
| plan providing individual retirement accounts or | 12 |
| individual retirement
annuities under Section 408 of the | 13 |
| Internal Revenue Code, as now or hereafter
amended, (iii) | 14 |
| disability and accidental death benefits in all policies
| 15 |
| and contracts, and (iv) all other benefits, except life
| 16 |
| insurance and endowment benefits in life insurance | 17 |
| policies and benefits
provided by all other annuity and | 18 |
| pure endowment contracts, shall be
calculated by a method | 19 |
| consistent with the principles of this paragraph
(b), | 20 |
| except that any extra premiums charged because of | 21 |
| impairments or
special hazards shall be disregarded in the | 22 |
| determination of modified
net premiums.
| 23 |
| (c) In no event shall a company's aggregate reserves | 24 |
| for all life
insurance policies, excluding disability and | 25 |
| accidental death benefits be
less than the aggregate | 26 |
| reserves calculated in accordance with the methods
set |
|
|
|
HB0938 Enrolled |
- 19 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| forth in paragraphs (b), (f), and (g) of subsection (3) and | 2 |
| in
subsection (5) and the mortality table or tables and | 3 |
| rate or rates of
interest used in calculating | 4 |
| non-forfeiture benefits for such policies.
| 5 |
| (d) In no event shall the aggregate reserves for all | 6 |
| policies,
contracts, and benefits be less than the | 7 |
| aggregate reserves determined by
the qualified actuary to | 8 |
| be necessary to render the opinion required by
subsection | 9 |
| (1a).
| 10 |
| (e) Reserves for any category of policies, contracts or | 11 |
| benefits as
established by the Director, may be calculated, | 12 |
| at the option of the
company, according to any standards | 13 |
| which produce greater aggregate
reserves for such category | 14 |
| than those calculated according to the
minimum standard | 15 |
| herein provided, but the rate or rates of interest used
for | 16 |
| policies and contracts, other than annuity and pure | 17 |
| endowment contracts,
shall not be higher than the | 18 |
| corresponding rate or rates of interest
used in calculating | 19 |
| any nonforfeiture benefits provided for therein.
| 20 |
| (f) If in any contract year the gross premium charged | 21 |
| by any life
insurance company on any policy or contract is | 22 |
| less than the valuation net
premium for the policy or | 23 |
| contract calculated by the method used in
calculating the | 24 |
| reserve thereon but using the minimum valuation standards
| 25 |
| of mortality and rate of interest, the minimum reserve | 26 |
| required for such
policy or contract shall be the greater |
|
|
|
HB0938 Enrolled |
- 20 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| of either the reserve calculated
according to the mortality | 2 |
| table, rate of interest, and method actually
used for such | 3 |
| policy or contract, or the reserve calculated by the method
| 4 |
| actually used for such policy or contract but using the | 5 |
| minimum standards
of mortality and rate of interest and | 6 |
| replacing the valuation net premium
by the actual gross | 7 |
| premium in each contract year for which the valuation
net | 8 |
| premium exceeds the actual gross premium. The minimum | 9 |
| valuation
standards of mortality and rate of interest | 10 |
| referred to in this paragraph
(f) are those standards | 11 |
| stated in subsection (6) and paragraph (a) of
subsection | 12 |
| (3).
| 13 |
| For any life insurance policy issued on or after | 14 |
| January 1, 1987, for which
the gross premium in the first | 15 |
| policy year exceeds that of the second year
with no | 16 |
| comparable additional benefit provided in that first year, | 17 |
| which
policy provides an endowment benefit or a cash | 18 |
| surrender value or a combination
thereof in an amount | 19 |
| greater than such excess premium, the foregoing provisions
| 20 |
| of this paragraph (f) shall be applied as if the method | 21 |
| actually used in
calculating the reserve for such policy | 22 |
| were the method described in paragraph
(b) of subsection | 23 |
| (3), ignoring the second paragraph of said paragraph (b).
| 24 |
| The minimum reserve at each policy anniversary of such a | 25 |
| policy shall be
the greater of the minimum reserve | 26 |
| calculated in accordance with paragraph
(b) of subsection |
|
|
|
HB0938 Enrolled |
- 21 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| (3), including the second paragraph of said paragraph
(b), | 2 |
| and the minimum reserve calculated in accordance with this | 3 |
| paragraph (f).
| 4 |
| (g) In the case of any plan of life insurance which | 5 |
| provides for future
premium determination, the amounts of | 6 |
| which are to be determined by the
insurance company based | 7 |
| on then estimates of future experience, or in the
case of | 8 |
| any plan of life insurance or annuity which is of such a | 9 |
| nature that
the minimum reserves cannot be determined by | 10 |
| the methods described in
paragraphs (b) and (f) of | 11 |
| subsection (3) and subsection (5), the reserves
which are | 12 |
| held under any such plan shall:
| 13 |
| (i) be appropriate in relation to the benefits and | 14 |
| the pattern of
premiums for that plan, and
| 15 |
| (ii) be computed by a method which is consistent | 16 |
| with the principles
of this Standard Valuation Law, as | 17 |
| determined by regulations promulgated by
the Director.
| 18 |
| (4) Except as provided in subsection (6), the minimum | 19 |
| standard for
the valuation of all individual annuity and pure | 20 |
| endowment contracts issued
on or after the operative date of | 21 |
| this subsection, as defined herein, and
for all annuities and | 22 |
| pure endowments purchased on or after such operative
date under | 23 |
| group annuity and pure endowment contracts shall be the
| 24 |
| Commissioners Reserve valuation methods defined in paragraph | 25 |
| (b) of
subsection (3) and subsection (5) and the following | 26 |
| tables and interest rates:
|
|
|
|
HB0938 Enrolled |
- 22 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| (a) For individual single premium immediate annuity | 2 |
| contracts, excluding
any disability and accidental death | 3 |
| benefits in such contracts, the 1971
Individual Annuity | 4 |
| Mortality Table, any individual annuity mortality table
| 5 |
| adopted after 1980 by the National Association of Insurance | 6 |
| Commissioners
and approved by regulations promulgated by | 7 |
| the Director for use in determining
the minimum standard of | 8 |
| valuation for such contracts, or any modification
of those | 9 |
| tables approved by the Director, and 7 1/2% interest.
| 10 |
| (b) For individual and pure endowment contracts other | 11 |
| than single premium
annuity contracts, excluding any | 12 |
| disability and accidental death benefits
in such | 13 |
| contracts, the 1971 Individual Annuity Mortality Table, | 14 |
| any
individual annuity mortality table adopted after 1980 | 15 |
| by the National
Association of Insurance Commissioners and | 16 |
| approved by regulations
promulgated by the Director for use | 17 |
| in determining the minimum standard of
valuation for such | 18 |
| contracts, or any modification of those tables
approved by | 19 |
| the Director, and 5 1/2% interest for single premium | 20 |
| deferred
annuity and pure endowment contracts and 4 1/2% | 21 |
| interest for all other such
individual annuity and pure | 22 |
| endowment contracts.
| 23 |
| (c) For all annuities and pure endowments purchased | 24 |
| under group annuity
and pure endowment contracts, | 25 |
| excluding any disability and accidental death
benefits | 26 |
| purchased under such contracts, the 1971 Group Annuity |
|
|
|
HB0938 Enrolled |
- 23 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| Mortality
Table, any group annuity mortality table adopted | 2 |
| after 1980 by the National
Association of Insurance | 3 |
| Commissioners and approved by regulations promulgated
by | 4 |
| the Director for use in determining the minimum standard of | 5 |
| valuation
for such annuities and pure endowments, or any | 6 |
| modification of those
tables approved by the Director, and | 7 |
| 7 1/2% interest.
| 8 |
| After September 8, 1977, any company may file with the | 9 |
| Director a written
notice of its election to comply with the | 10 |
| provisions of this subsection
after a specified date before | 11 |
| January 1, 1979, which shall be the operative
date of this | 12 |
| subsection for such company; provided, a company may elect a
| 13 |
| different operative date for individual annuity and pure | 14 |
| endowment
contracts from that elected for group annuity and | 15 |
| pure endowment contracts.
If a company makes no election, the | 16 |
| operative date of this subsection for
such company shall be | 17 |
| January 1, 1979.
| 18 |
| (5) This subsection shall apply to all annuity and pure | 19 |
| endowment contracts
other than group annuity and pure endowment | 20 |
| contracts purchased under a
retirement plan or plan of deferred | 21 |
| compensation, established or maintained
by an employer | 22 |
| (including a partnership or sole proprietorship) or by an
| 23 |
| employee organization, or by both, other than a plan providing | 24 |
| individual
retirement accounts or individual retirement | 25 |
| annuities under Section 408
of the Internal Revenue Code, as | 26 |
| now or hereafter amended.
|
|
|
|
HB0938 Enrolled |
- 24 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| Reserves according to the Commissioners annuity reserve | 2 |
| method for
benefits under annuity or pure endowment contracts, | 3 |
| excluding any
disability and accidental death benefits in such | 4 |
| contracts, shall be the
greatest of the respective excesses of | 5 |
| the present values, at the date of
valuation, of the future | 6 |
| guaranteed benefits, including guaranteed
nonforfeiture | 7 |
| benefits, provided for by such contracts at the end of each
| 8 |
| respective contract year, over the present value, at the date | 9 |
| of valuation,
of any future valuation considerations derived | 10 |
| from future gross
considerations, required by the terms of such | 11 |
| contract, that become payable
prior to the end of such | 12 |
| respective contract year. The future guaranteed
benefits shall | 13 |
| be determined by using the mortality table, if any, and the
| 14 |
| interest rate, or rates, specified in such contracts for | 15 |
| determining
guaranteed benefits. The valuation considerations | 16 |
| are the portions of the
respective gross considerations applied | 17 |
| under the terms of such contracts
to determine nonforfeiture | 18 |
| values.
| 19 |
| (6) (a) Applicability of this subsection. (i) The interest | 20 |
| rates used
in determining the minimum standard for the | 21 |
| valuation of
| 22 |
| (A) all life insurance policies issued in a | 23 |
| particular calendar year,
on or after the operative | 24 |
| date of subsection (4c) of Section 229.2 (Standard
| 25 |
| Nonforfeiture Law),
| 26 |
| (B) all individual annuity and pure endowment |
|
|
|
HB0938 Enrolled |
- 25 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| contracts issued in a
particular calendar year ending | 2 |
| on or after December 31, 1983,
| 3 |
| (C) all annuities and pure endowments purchased in | 4 |
| a particular calendar
year ending on or after December | 5 |
| 31, 1983, under group annuity and pure
endowment | 6 |
| contracts, and
| 7 |
| (D) the net increase in a particular calendar year | 8 |
| ending after December
31, 1983, in amounts held under | 9 |
| guaranteed interest contracts
| 10 |
| shall be the calendar year statutory valuation interest | 11 |
| rates, as defined
in this subsection.
| 12 |
| (b) Calendar Year Statutory Valuation Interest Rates.
| 13 |
| (i) The calendar year statutory valuation interest | 14 |
| rates shall be determined
according to the following | 15 |
| formulae, rounding "I" to the nearest .25%.
| 16 |
| (A) For life insurance,
| 17 |
| I = .03 + W (R1 - .03) + W/2 (R2 - .09).
| 18 |
| (B) For single premium immediate annuities and | 19 |
| annuity benefits
involving life contingencies | 20 |
| arising from other annuities with cash
settlement | 21 |
| options and from guaranteed interest contracts | 22 |
| with cash settlement options,
| 23 |
| I = .03 + W (R - .03) or with prior approval of | 24 |
| the Director I = .03 + W (Rq - .03).
| 25 |
| For the purposes of this subparagraph (i), "I" | 26 |
| equals the calendar year
statutory valuation interest |
|
|
|
HB0938 Enrolled |
- 26 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| rate, "R" is the reference interest rate defined
in | 2 |
| this subsection, "R1" is the lesser of R and .09, "R2" | 3 |
| is the greater
of R and .09, "Rq" is the quarterly | 4 |
| reference interest rate defined in
this subsection, | 5 |
| and "W" is the weighting factor defined in this | 6 |
| subsection.
| 7 |
| (C) For other annuities with cash settlement | 8 |
| options and guaranteed interest
contracts with | 9 |
| cash settlement options, valued on an issue year | 10 |
| basis, except
as stated in (B), the formula for | 11 |
| life insurance stated in (A) applies to
annuities | 12 |
| and guaranteed interest contracts with guarantee | 13 |
| durations in
excess of 10 years, and the formula | 14 |
| for single premium immediate annuities
stated in | 15 |
| (B) above applies to annuities and guaranteed | 16 |
| interest contracts
with guarantee durations of 10 | 17 |
| years or less.
| 18 |
| (D) For other annuities with no cash | 19 |
| settlement options and for
guaranteed interest | 20 |
| contracts with no cash settlement options, the | 21 |
| formula
for single premium immediate annuities | 22 |
| stated in (B) applies.
| 23 |
| (E) For other annuities with cash settlement | 24 |
| options and
guaranteed interest contracts with | 25 |
| cash settlement options, valued on a
change in fund | 26 |
| basis, the formula for single premium immediate |
|
|
|
HB0938 Enrolled |
- 27 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| annuities
stated in (B) applies.
| 2 |
| (ii) If the calendar year statutory valuation | 3 |
| interest rate for
any life insurance policy issued in | 4 |
| any calendar year determined without
reference to this | 5 |
| subparagraph differs from the corresponding actual | 6 |
| rate
for similar policies issued in the immediately | 7 |
| preceding calendar year by
less than .5%, the calendar | 8 |
| year statutory valuation interest rate for such
life | 9 |
| insurance policy shall be the corresponding actual | 10 |
| rate for the
immediately preceding calendar year. For | 11 |
| purposes of applying this
subparagraph, the calendar | 12 |
| year statutory valuation interest rate for life
| 13 |
| insurance policies issued in a calendar year shall be | 14 |
| determined for 1980,
using the reference interest rate | 15 |
| defined for 1979, and shall be determined
for each | 16 |
| subsequent calendar year regardless of when subsection | 17 |
| (4c) of
Section 229.2 (Standard Nonforfeiture Law) | 18 |
| becomes operative.
| 19 |
| (c) Weighting Factors.
| 20 |
| (i) The weighting factors referred to in the | 21 |
| formulae stated in
paragraph (b) are given in the | 22 |
| following tables.
| 23 |
| (A) Weighting Factors for Life Insurance.
|
|
24 | | Guarantee |
Weighting |
|
25 | | Duration |
Factors |
|
26 | | (Years) |
|
|
|
|
|
|
HB0938 Enrolled |
- 28 - |
LRB095 07026 KBJ 27148 b |
|
| 1 | | 10 or less |
.50 |
|
2 | | More than 10, but not more than 20 |
.45 |
|
3 | | More than 20 |
.35 |
|
4 |
| For life insurance, the guarantee duration is | 5 |
| the maximum number of
years the life insurance can | 6 |
| remain in force on a basis guaranteed in the
policy | 7 |
| or under options to convert to plans of life | 8 |
| insurance with premium
rates or nonforfeiture | 9 |
| values or both which are guaranteed in the original
| 10 |
| policy.
| 11 |
| (B) The weighting factor for single premium | 12 |
| immediate annuities
and for annuity benefits | 13 |
| involving life contingencies arising from other
| 14 |
| annuities with cash settlement options and | 15 |
| guaranteed interest contracts
with cash settlement | 16 |
| options is .80.
| 17 |
| (C) The weighting factors for other annuities | 18 |
| and for guaranteed
interest contracts, except as | 19 |
| stated in (B) of this subparagraph (i), shall
be as | 20 |
| specified in tables (1), (2), and (3) of this | 21 |
| subpart (C), according to
the rules and | 22 |
| definitions in (4), (5) and (6) of this subpart | 23 |
| (C).
| 24 |
| (1) For annuities and guaranteed interest | 25 |
| contracts valued on
an issue year basis.
|
|
26 | | Guarantee |
Weighting Factor |
|
|
|
|
|
HB0938 Enrolled |
- 29 - |
LRB095 07026 KBJ 27148 b |
|
| 1 | | Duration |
for Plan Type |
|
2 | | (Years) |
A B C |
|
3 | | 5 or less ..................................... |
.80 .60 .50 |
|
4 | | More than 5, but not |
|
|
5 | | more than 10 .................................. |
.75 .60 .50 |
|
6 | | More than 10, but not |
|
|
7 | | more than 20 .................................. |
.65 .50 .45 |
|
8 | | More than 20 .................................. |
.45 .35 .35 |
|
9 |
| (2) For annuities and guaranteed interest | 10 |
| contracts valued on a change
in fund basis, the | 11 |
| factors shown in (1) for Plan Types A, B and C are
| 12 |
| increased by .15, .25 and .05, respectively.
| 13 |
| (3) For annuities and guaranteed interest | 14 |
| contracts valued on an issue
year basis, other than | 15 |
| those with no cash settlement options, which do not
| 16 |
| guarantee interest on considerations received more | 17 |
| than one year after
issue or purchase, and for | 18 |
| annuities and guaranteed interest contracts
valued | 19 |
| on a change in fund basis which do not guarantee | 20 |
| interest rates on
considerations received more | 21 |
| than 12 months beyond the valuation date, the
| 22 |
| factors shown in (1), or derived in (2), for Plan | 23 |
| Types A, B and C are
increased by .05.
| 24 |
| (4) For other annuities with cash settlement | 25 |
| options and guaranteed
interest contracts with | 26 |
| cash settlement options, the guarantee duration
is |
|
|
|
HB0938 Enrolled |
- 30 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| the number of years for which the contract | 2 |
| guarantees interest rates
in excess of the | 3 |
| calendar year statutory valuation interest rate | 4 |
| for life
insurance policies with guarantee | 5 |
| durations in excess of 20 years. For
other | 6 |
| annuities with no cash settlement options, and for | 7 |
| guaranteed
interest contracts with no cash | 8 |
| settlement options, the guarantee duration
is the | 9 |
| number of years from the date of issue or date of | 10 |
| purchase to the
date annuity benefits are | 11 |
| scheduled to commence.
| 12 |
| (5) The plan types used in the above tables are | 13 |
| defined as follows.
| 14 |
| Plan Type A is a plan under which the | 15 |
| policyholder may not withdraw
funds, or may | 16 |
| withdraw funds at any time but only (a) with an | 17 |
| adjustment to
reflect changes in interest rates or | 18 |
| asset values since receipt of the
funds by the | 19 |
| insurance company, (b) without such an adjustment | 20 |
| but in
installments over 5 years or more, or (c) as | 21 |
| an immediate life annuity.
| 22 |
| Plan Type B is a plan under which the | 23 |
| policyholder may not withdraw
funds before | 24 |
| expiration of the interest rate guarantee, or may | 25 |
| withdraw
funds before such expiration but only (a) | 26 |
| with an adjustment to reflect
changes in interest |
|
|
|
HB0938 Enrolled |
- 31 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| rates or asset values since receipt of the funds by | 2 |
| the
insurance company, or (b) without such | 3 |
| adjustment but in installments over
5 years or | 4 |
| more. At the end of the interest rate guarantee, | 5 |
| funds may be
withdrawn without such adjustment in a | 6 |
| single sum or installments over less
than 5 years.
| 7 |
| Plan Type C is a plan under which the | 8 |
| policyholder may withdraw funds
before expiration | 9 |
| of the interest rate guarantee in a single sum or
| 10 |
| installments over less than 5 years either (a) | 11 |
| without adjustment to
reflect changes in interest | 12 |
| rates or asset values since receipt of the
funds by | 13 |
| the insurance company, or (b) subject only to a | 14 |
| fixed surrender
charge stipulated in the contract | 15 |
| as a percentage of the fund.
| 16 |
| (6) A company may elect to value guaranteed | 17 |
| interest contracts
with cash settlement options | 18 |
| and annuities with cash settlement options on
| 19 |
| either an issue year basis or on a change in fund | 20 |
| basis. Guaranteed
interest contracts with no cash | 21 |
| settlement options and other annuities with
no | 22 |
| cash settlement options shall be valued on an issue | 23 |
| year basis. As used
in this Section, "issue year | 24 |
| basis of valuation" refers to a valuation
basis | 25 |
| under which the interest rate used to determine the | 26 |
| minimum valuation
standard for the entire duration |
|
|
|
HB0938 Enrolled |
- 32 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| of the annuity or guaranteed interest
contract is | 2 |
| the calendar year valuation interest rate for the | 3 |
| year of issue
or year of purchase of the annuity or | 4 |
| guaranteed interest contract.
"Change in fund | 5 |
| basis of valuation", as used in this Section, | 6 |
| refers to a
valuation basis under which the | 7 |
| interest rate used to determine the minimum
| 8 |
| valuation standard applicable to each change in | 9 |
| the fund held under the
annuity or guaranteed | 10 |
| interest contract is the calendar year valuation
| 11 |
| interest rate for the year of the change in the | 12 |
| fund.
| 13 |
| (d) Reference Interest Rate. (i) The reference | 14 |
| interest rate referred to
in paragraph (b) of this | 15 |
| subsection is defined as follows.
| 16 |
| (A) For all life insurance, the reference interest | 17 |
| rate is the lesser
of the average over a period of 36 | 18 |
| months, and the average over a period
of 12 months, | 19 |
| with both periods ending on June 30, or with prior | 20 |
| approval
of the Director ending on December 31, of the | 21 |
| calendar year next
preceding the year of issue, of | 22 |
| Moody's Corporate Bond Yield Average - Monthly
Average | 23 |
| Corporates, as published by Moody's Investors Service, | 24 |
| Inc.
| 25 |
| (B) For single premium immediate annuities and for | 26 |
| annuity benefits
involving life contingencies arising |
|
|
|
HB0938 Enrolled |
- 33 - |
LRB095 07026 KBJ 27148 b |
|
| 1 |
| from other annuities with cash
settlement options and | 2 |
| guaranteed interest contracts with cash settlement
| 3 |
| options, the reference interest rate is the average | 4 |
| over a period of 12
months, ending on June 30, or with | 5 |
| prior approval of the Director ending on
December 31, | 6 |
| of the calendar year of issue or year of purchase, of | 7 |
| Moody's
Corporate Bond Yield Average - Monthly Average | 8 |
| Corporates, as published by
Moody's Investors Service, | 9 |
| Inc.
| 10 |
| (C) For annuities with cash settlement options and | 11 |
| guaranteed interest
contracts with cash settlement | 12 |
| options, valued on a year of issue basis,
except those | 13 |
| described in (B), with guarantee durations in excess of | 14 |
| 10
years, the reference interest rate is the lesser of | 15 |
| the average over a period
of 36 months and the average | 16 |
| over a period of 12 months, ending on June
30, or with | 17 |
| prior approval of the Director ending on December 31, | 18 |
| of
the calendar year of issue or purchase, of Moody's | 19 |
| Corporate Bond
Yield Average-Monthly Average | 20 |
| Corporates, as published by Moody's Investors
Service, | 21 |
| Inc.
| 22 |
| (D) For other annuities with cash settlement | 23 |
| options and guaranteed
interest contracts with cash | 24 |
| settlement options, valued on a year of issue
basis, | 25 |
| except those described in (B), with guarantee | 26 |
| durations of 10 years
or less, the reference interest |
|
|
|
HB0938 Enrolled |
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LRB095 07026 KBJ 27148 b |
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| 1 |
| rate is the average over a period of 12
months, ending | 2 |
| on June 30, or with prior approval of the Director | 3 |
| ending on
December 31, of the calendar year of issue or | 4 |
| purchase, of Moody's
Corporate Bond Yield | 5 |
| Average-Monthly Average Corporates, as published by
| 6 |
| Moody's Investors Service, Inc.
| 7 |
| (E) For annuities with no cash settlement options | 8 |
| and for guaranteed
interest contracts with no cash | 9 |
| settlement options, the reference interest
rate is the | 10 |
| average over a period of 12 months, ending on June 30, | 11 |
| or with
prior approval of the Director ending on | 12 |
| December 31, of the calendar year
of issue or purchase, | 13 |
| of Moody's Corporate Bond Yield Average-Monthly
| 14 |
| Average Corporates, as published by Moody's Investors | 15 |
| Service, Inc.
| 16 |
| (F) For annuities with cash settlement options and | 17 |
| guaranteed interest
contracts with cash settlement | 18 |
| options, valued on a change in fund basis,
except those | 19 |
| described in (B), the reference interest rate is the | 20 |
| average
over a period of 12 months, ending on June 30, | 21 |
| or with prior approval of
the Director ending on | 22 |
| December 31, of the calendar year of the
change in the | 23 |
| fund, of Moody's Corporate Bond Yield Average-Monthly | 24 |
| Average
Corporates, as published by Moody's Investors | 25 |
| Service, Inc.
| 26 |
| (G) For annuities valued by a formula based on Rq, |
|
|
|
HB0938 Enrolled |
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LRB095 07026 KBJ 27148 b |
|
| 1 |
| the quarterly
reference interest rate is, with the | 2 |
| prior approval of the Director, the
average within each | 3 |
| of the 4 consecutive calendar year quarters
ending on | 4 |
| March 31, June 30, September 30 and December 31 of the | 5 |
| calendar
year of issue or year of purchase of Moody's | 6 |
| Corporate Bond Yield
Average-Monthly Average | 7 |
| Corporates, as published by Moody's Investors
Service, | 8 |
| Inc.
| 9 |
| (e) Alternative Method for Determining Reference | 10 |
| Interest Rates.
In the event that the Moody's Corporate | 11 |
| Bond Yield Average-Monthly Average
Corporates is no longer | 12 |
| published by Moody's Investors Services, Inc., or
in the | 13 |
| event that the National Association of Insurance | 14 |
| Commissioners
determines that Moody's Corporate Bond Yield | 15 |
| Average-Monthly Average
Corporates as published by Moody's | 16 |
| Investors Service, Inc. is no longer
appropriate for the | 17 |
| determination of the reference interest rate, then an
| 18 |
| alternative method for determination of the reference | 19 |
| interest rate, which
is adopted by the National Association | 20 |
| of Insurance Commissioners and
approved by regulations | 21 |
| promulgated by the Director, may be substituted.
| 22 |
| (7) Minimum Standards for Health (Disability, Accident and | 23 |
| Sickness)
Plans. The Director shall promulgate a regulation | 24 |
| containing the minimum
standards applicable to the valuation of | 25 |
| health (disability, sickness and
accident) plans.
| 26 |
| (Source: P.A. 91-357, eff. 7-29-99 .)
|
|
|
|
HB0938 Enrolled |
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LRB095 07026 KBJ 27148 b |
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| 1 |
| (215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)
| 2 |
| Sec. 531.09. Assessments. | 3 |
| (1) For the purpose of providing the funds
necessary to | 4 |
| carry out the powers and duties of the Association, the board
| 5 |
| of directors shall assess the member insurers, separately for | 6 |
| each account, at such
times and for such amounts as the board | 7 |
| finds necessary. Assessments shall
be due not less than 30 days | 8 |
| after written notice to the member insurers
and shall accrue | 9 |
| interest from the due date at such adjusted rate as is
| 10 |
| established under Section 6621 of Chapter 26 of the United | 11 |
| States Code and
such interest shall be compounded daily.
| 12 |
| (2) There shall be 2 classes of assessments, as follows:
| 13 |
| (a) Class A assessments shall be made for the purpose | 14 |
| of meeting administrative
costs and other general expenses | 15 |
| and examinations conducted under the authority
of the | 16 |
| Director under subsection (5) of Section 531.12.
| 17 |
| (b) Class B assessments shall be made to the extent | 18 |
| necessary to carry
out the powers and duties of the | 19 |
| Association under Section 531.08 with regard
to an impaired | 20 |
| or insolvent domestic insurer or insolvent foreign or alien | 21 |
| insurers.
| 22 |
| (3) (a) The amount of any Class A assessment shall be | 23 |
| determined at the discretion of the board of directors
by the
| 24 |
| Board and such assessments shall
may be authorized and called
| 25 |
| made on a non-pro rata basis. Such assessments shall not exceed |
|
|
|
HB0938 Enrolled |
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LRB095 07026 KBJ 27148 b |
|
| 1 |
| $200
per company in any one calendar year. The amount of any | 2 |
| Class B
assessment shall be allocated for assessment
purposes | 3 |
| among the accounts
and subaccounts pursuant to an allocation | 4 |
| formula which may be based on
the premiums or reserves of the | 5 |
| impaired or insolvent insurer or any other
standard deemed by | 6 |
| the board in its sole discretion as being fair and
reasonable | 7 |
| under the circumstances.
| 8 |
| (b) Class B assessments against member insurers for | 9 |
| each account and
subaccount shall
be in the proportion that | 10 |
| the premiums received on business in this State
by each | 11 |
| assessed member insurer on policies or contracts covered by
| 12 |
| each account or subaccount for the three most recent | 13 |
| calendar years
for which information is available | 14 |
| preceding the year in which the insurer
became impaired or | 15 |
| insolvent, as the case may be, bears to such premiums
| 16 |
| received on business in this State for such calendar years | 17 |
| by all assessed
member insurers.
| 18 |
| (c) Assessments for funds to meet the requirements of | 19 |
| the Association
with respect to an impaired or insolvent | 20 |
| insurer shall not be made until
necessary to implement the | 21 |
| purposes of this Article. Classification
of assessments
| 22 |
| under subsection (2) and computations of assessments under | 23 |
| this subsection
shall be made with a reasonable degree of | 24 |
| accuracy, recognizing that exact
determinations may not | 25 |
| always be possible.
| 26 |
| (4) The Association may abate or defer, in whole or in |
|
|
|
HB0938 Enrolled |
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LRB095 07026 KBJ 27148 b |
|
| 1 |
| part, the assessment
of a member insurer if, in the opinion of | 2 |
| the board, payment of the assessment
would endanger the ability | 3 |
| of the member insurer to fulfill its contractual
obligations. | 4 |
| The total of all assessments upon a member insurer for the
life | 5 |
| and annuity
account and for each subaccount thereunder may not | 6 |
| in any one calendar
year exceed 2% and for the health account | 7 |
| may not in any one calendar
year exceed 2% of such insurer's
| 8 |
| average premiums received in this State on the policies and | 9 |
| contracts
covered by the account or subaccount during the three | 10 |
| calendar years
preceding the year in which the insurer became | 11 |
| an impaired or insolvent
insurer. If a one percent assessment | 12 |
| for any subaccount of the life and
annuity account in any one | 13 |
| year does not provide an amount sufficient to
carry out the | 14 |
| responsibilities of the Association, then pursuant to
| 15 |
| subsection 3(b), the board shall access all subaccounts of the | 16 |
| life and
annuity account for the necessary additional amount, | 17 |
| subject to the maximum
stated in this subsection.
| 18 |
| (5) In the event an assessment against a member insurer is | 19 |
| abated, or deferred,
in whole or in part, because of the | 20 |
| limitations set forth in subsection (4) of this
Section the | 21 |
| amount by which such assessment is abated or deferred, may be
| 22 |
| assessed against the other member insurers in a manner | 23 |
| consistent with the
basis for assessments set forth in this | 24 |
| Section. If the maximum assessment,
together with the other | 25 |
| assets of the Association in either account, does
not provide | 26 |
| in any
one year in either account an amount sufficient to carry |
|
|
|
HB0938 Enrolled |
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LRB095 07026 KBJ 27148 b |
|
| 1 |
| out the
responsibilities
of the Association, the necessary | 2 |
| additional funds may be assessed as soon
thereafter
as | 3 |
| permitted by this Article.
The board may provide in the plan of | 4 |
| operation a method of allocating
funds among claims, whether | 5 |
| relating to one or more impaired or insolvent
insurers, when | 6 |
| the maximum assessment will be insufficient to cover | 7 |
| anticipated
claims.
| 8 |
| (6) The board may, by an equitable method as established in | 9 |
| the
plan of operation, refund to member insurers, in proportion | 10 |
| to the contribution
of each insurer to that account, the amount | 11 |
| by which the assets of the account
exceed the amount the board | 12 |
| finds is necessary to carry out during the coming
year the | 13 |
| obligations of the Association with regard to that account, | 14 |
| including
assets accruing from net realized gains and income | 15 |
| from investments. A
reasonable amount may be retained in any | 16 |
| account to provide funds for the
continuing expenses of the | 17 |
| Association and for future losses if refunds are
impractical.
| 18 |
| (7) An assessment is deemed to occur on the date upon which | 19 |
| the board
votes such assessment. The board may defer calling | 20 |
| the payment of the
assessment or may call for payment in one or | 21 |
| more installments.
| 22 |
| (8) It is proper for any member insurer, in determining its | 23 |
| premium
rates and policyowner dividends as to any kind of | 24 |
| insurance within the scope of
this Article, to consider the | 25 |
| amount reasonably necessary to meet its assessment
obligations | 26 |
| under this Article.
|
|
|
|
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LRB095 07026 KBJ 27148 b |
|
| 1 |
| (9) The Association must issue to each insurer paying a
| 2 |
| Class B assessment
under this Article a certificate of | 3 |
| contribution,
in a form acceptable to the
Director, for the | 4 |
| amount of the assessment so paid. All outstanding certificates
| 5 |
| are of equal
dignity and priority without reference to amounts | 6 |
| or dates of issue. A certificate
of contribution may be shown | 7 |
| by the insurer in its financial statement as an asset
in such | 8 |
| form and for such amount, if any, and period of time as the | 9 |
| Director
may approve, provided the insurer shall in any event | 10 |
| at its option have
the right to show a certificate of | 11 |
| contribution as an admitted asset at
percentages of the | 12 |
| original face amount for calendar years as follows:
| 13 |
| 100% for the calendar year after the year of issuance;
| 14 |
| 80% for the second calendar year after the year of | 15 |
| issuance;
| 16 |
| 60% for the third calendar year after the year of issuance;
| 17 |
| 40% for the fourth calendar year after the year of | 18 |
| issuance;
| 19 |
| 20% for the fifth calendar year after the year of issuance.
| 20 |
| (Source: P.A. 86-753.)
|
|