Section 9. Effective Date
Section 1. Authority
This regulation is promulgated by the Director of Insurance
pursuant to South Carolina Code Sections
38-9-180
and
38-63-510
et seq. as well as Regulation
69-57.
Section 2. Scope
This rule applies to preneed insurance contracts, as defined in
section
4 of this regulation, and to similar
policies and certificates.
Section
3. Purpose
The purpose of this regulation is to establish for preneed
insurance products minimum mortality standards for reserves and nonforfeiture
values, and to require the use of the 1980 Commissioners Standard Ordinary
(CSO) Life Valuation Mortality Table for use in determining the minimum
standard of valuation of reserves and the minimum standard nonforfeiture values
for preneed insurance products.
Section
4. Definitions
A. "2001 CSO
Mortality Table" means that mortality table, consisting of separate rates of
mortality for males and female lives, developed by the American Academy of
Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by
the Society of Actuaries Individual Life Insurance Valuation Mortality Task
Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table
is included in the Proceedings of the NAIC (2nd
Quarter 2002). Unless the context indicates otherwise, the "2001 CSO Mortality
Table" includes both the ultimate form of that table and the select and
ultimate form of that table and includes both the smoker and nonsmoker
mortality tables and the composite mortality tables. It also includes both the
age-nearest-birthday and age-last-birthday bases of the mortality
tables.
B. "Ultimate 1980 CSO"
means the Commissioners' 1980 Standard Ordinary Life Valuation Mortality Tables
(1980 CSO) without ten-year (10-year) selection factors, incorporated into the
1980 amendments to the NAIC Standard Valuation Law approved in December
1983.
C. "Preneed insurance" means
any life insurance policy or certificate, which has for its purpose the
furnishing or performance of funeral services, or the furnishing or delivery of
personal property, merchandise, services of any nature in connection with the
final disposition of a dead human body, to be furnished or delivered at a time
determinable by the death of the person whose body is to be disposed of, but
does not mean the furnishing of a cemetery lot, crypt, niche, mausoleum, grave
marker or monument.
Section
5. Minimum Valuation Mortality Standards
For preneed insurance contracts, as defined in section
4C, and similar policies and contracts, the
minimum mortality standard for determining reserve liabilities and
nonforfeiture values for both male and female insureds shall be the Ultimate
1980 CSO.
Section 6.
Minimum Valuation Interest Rate Standards
A.
The interest rates used in determining the minimum standard for valuation of
preneed insurance shall be the calendar year statutory valuation interest rates
as defined in South Carolina Code Section
38-9-180.
B. The interest rates used in determining the
minimum standard for nonforfeiture values for preneed insurance shall be the
calendar year statutory nonforfeiture interest rates as defined in South
Carolina Code Section
38-63-510
et seq.
Section 7.
Minimum Valuation Method Standards
A. The
method used in determining the standard for the minimum valuation of reserves
of preneed insurance shall be the method defined in South Carolina Code Section
38-9-180.
B. The method used in determining the
standard for the minimum nonforfeiture values for preneed insurance shall be
the method defined in South Carolina Code Section
38-63-510
et seq.
Section 8.
Transition Rules
A. For preneed insurance
policies issued on or after the effective date of this regulation and before
January
1, 2012, the 2001 CSO may be used as the
minimum standard for reserves and minimum standard for nonforfeiture benefits
for both male and female insureds.
B. If an insurer elects to use the 2001 CSO
as a minimum standard for any policy issued on or after the effective date of
this regulation and before January 1, 2012, the insurer shall provide, as a
part of the actuarial opinion memorandum submitted in support of the company's
asset adequacy testing, an annual written notification to the domiciliary
commissioner. The notification shall include:
(1) A complete list of all preneed policy
forms that use the 2001 CSO as a minimum standard;
(2) A certification signed by the appointed
actuary stating that the reserve methodology employed by the company in
determining reserves for the preneed policies issued after the effective date
and using the 2001 CSO as a minimum standard, develops adequate reserves. (For
the purpose of this certification, the preneed insurance policies using the
2001 CSO as a minimum standard cannot be aggregated with any other policies);
and
(3) Supporting information
regarding the adequacy of reserves for preneed insurance policies issued after
the effective date of this regulation and using the 2001 CSO as a minimum
standard for reserves.
C. Preneed insurance policies issued on or
after January 1, 2012, must use the Ultimate 19
80 CSO in the calculation of minimum
nonforfeiture values and minimum reserves.
Section 9. Effective Date
This regulation is applicable to preneed insurance policies and
certificates and similar contracts and certificates, as specified in section 2,
issued on or after January
1, 2009.
