A contract may not be delivered or issued for delivery in
this state unless the contract satisfies the requirements of subrule 96.6(1)
and the issuing insurer has satisfied the requirements of subrule 96.6(2) with
respect to the contract.
(1) The
contract shall:
a. Provide that the assets to
which the contract pertains and for which a contract value record is
established will be maintained in a segregated portfolio of a permitted
custodial institution;
b. Grant the
insurer the right to perform audits and inspections of assets held in the
segregated portfolio from time to time upon reasonable notice to the permitted
custodial institution;
c. Provide
that the insurer will receive prior notice of and the right to approve any
appointment or change of investment manager;
d. Give a description of how the contract
value record will be determined and, where applicable, adjusted by a crediting
rate formula;
e. State the maximum
rate period between crediting rate formula recalculations that will be
permitted, if any;
f. Provide the
insurer with the right to refuse to recognize any new deposits to the
segregated portfolio unless there is a written agreement between the insurer
and the contract holder as to the permissible levels and timing of new
deposits;
g. Clearly identify all
circumstances under which insurer payments or advances to the contract holder
are to be made;
h. Clearly identify
the types of withdrawals made on a market value basis;
i. Provide either a fixed maturity schedule
or a settlement option permitting the contract holder to receive the contract
value record over time, provided that no unilateral contract termination event
has occurred; and
j. Include a
provision stating, or substantially similar to, the following:
No waiver of remedies by the insurer that is a party to this
contract, following the breach of any contractual provision of the contract, or
of the investment guidelines applicable to it, or the failure to enforce the
provisions or guidelines, which constitutes grounds for termination of the
contract for cause by the insurer, and which breach or failure is not cured
within 30 days following the insurer's discovery of it, shall be effective
against an insurance commissioner in any future rehabilitation or insolvency
proceedings against the insurer unless approved in advance, in writing, by the
commissioner
(2)
An insurer will satisfy the filing and approval requirements of this rule with
respect to a contract if the insurer has filed the form of the contract with
the commissioner, the form is accompanied by the items specified in paragraphs
96.6(2)
"a, " "b " and
"c, " and the form has
been approved or has not been disapproved within the 30-day period following
the date of filing, in which event the form of contract shall be deemed
approved. Notwithstanding the foregoing, the requirement for filing and
approval of the form of contract may be waived at the discretion of the
commissioner.
a. The form of contract filed
for approval shall be accompanied by a statement that the contract meets the
conditions of subrule 96.6(1).
b.
The form of contract filed for approval shall be accompanied by a statement:
(1) Specifying the range of variation of
variable contract provisions, if any, that could have a material effect on the
risk assumed by the insurer under the contract, including withdrawal
methodology, crediting rate formula and termination events;
(2) Describing how the fair market value will
be determined;
(3) Describing the
crediting rate formula, if any, and how it will operate to take into account
the difference between the market value record and the contract value record
over time; and
(4) Listing events
that give the insurer the right to terminate the contract
immediately.
c. If the
plan of operation pertaining to the class of contracts to which the contract
belongs:
(1) Has been affirmatively approved
by the insurance commissioner of the state in which the issuing insurer is
domiciled, the form of contract filed for approval shall be accompanied by a
statement verifying the receipt of approval and indicating that the approval
was an affirmative approval.
(2)
Has been deemed approved in the state in which the issuing insurer is
domiciled, the form of contract filed for approval shall be accompanied by a
statement indicating that the issuing insurer has met the requirements for
deemed approval.
(3) Has not been
approved, either affirmatively or by deemer, in the state in which the issuing
insurer is domiciled, the form of contract filed for approval shall be
accompanied by a statement of this fact, together with a plan of operation
pertaining to the contract.
