3901-6-11 Recognition of the 2001 CSO mortality table for use in determining minimum reserve liabilities and nonforfeiture benefits.

(A) Purpose

The purpose of this rule is to recognize, permit and prescribe the use of the 2001 commissioners standard ordinary (CSO) mortality table in accordance with section 3903.72 and section 3915.071 of the Revised Code and rule 3901-6-10 of the Administrative Code(valuation of life insurance policies).

(B) Authority

This rule is promulgated pursuant to the authority vested in the superintendent of insurance of the state of Ohio under section 3901.041 , section 3903.72 , and section 3915.071 of the Revised Code and rule 3901-6-10 of the Administrative Code(valuation of life insurance policies).

(C) Definitions

(1) "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 national association of insurance commissioners (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.

(2) "2001 CSO mortality table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO morality table.

(3) "2001 CSO mortality table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO mortality table.

(4) "Composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

(5) "Smoker and nonsmoker mortality tables" means mortality tables with separate rates of mortality for smokers and nonsmokers.

(D) 2001 CSO mortality table

(1) At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in this rule, the 2001 CSO mortality table may be used as the minimum standard for policies issued on or after January 1, 2004 and before the date specified in paragraph (D)(2) of this rule to which division (D)(1)(c) of section 3903.72 and divisions (D) and (I) of section 3915.071 of the Revised Code and paragraphs (E)(1) and (E)(2) of rule 3901-6-10 of the Administrative Code(valuation of life insurance policies) are applicable. If the company elects to use the 2001 CSO mortality table, it shall do so for both valuation and nonforfeiture purposes.

(2) Subject to the conditions stated in this rule, the 2001 CSO mortality table shall be used in determining minimum standards for policies issued on and after January 1, 2009, to which division (D)(1)(c) of section 3903.72 and divisions (D) and (I) of section 3915.071 of the Revised Code and paragraphs (E)(1) and (E)(2) of rule 3901-6-10 of the Administrative Code(valuation of life insurance policies) are applicable.

(E) Conditions

(1) For each plan of insurance with separate rates for smokers and nonsmokers an insurer may use:

(a) Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits:

(b) Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by divisions (F) and (K) of section 3903.72 of the Revised Code and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or

(c) Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

(2) For plans of insurance without separate rates for smokers and nonsmokers the composite mortality tables shall be used.

(3) 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 paragraph (F) of rule 3901-6-10 of the Administrative Code(valuation of life insurance policies) relative to use of the select ad ultimate form.

(4) 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 superintendent shall be based on an asset adequacy analysis as specified in rule 3901-3-11 of the Administrative Code(actuarial opinion and memorandum). The superintendent may exempt a company from this requirement if it only does business in this state and in no other state.

(F) Applicability of the 2001 CSO mortality table to rule 3901-6-10 of the Administrative Code(valuation of life insurance policies)

(1) The 2001 CSO mortality table may be used in applying rule 3901-6-10 of the Administrative Code(valuation of life insurance policies) in the following manner, subject to the transition dates for use of the 2001 CSO mortality table in paragraph (D) of this rule (unless otherwise noted, the references in this paragraph are to rule 3901-6-10 of the Administrative Code(valuation of life insurance policies)):

(a) Paragraph (C)(1)(b)(ii): the net level reserve premium is based on the ultimate mortality rates in the 2001 CSO mortality table.

(b) Paragraph (D)(2): all calculations are made using the 2001 CSO mortality rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in paragraph (F)(1)(d) of this rule. The value of "q subscript x+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.

(c) Paragraph (E)(1): the 2001 CSO mortality table is the minimum standard for basic reserves.

(d) Paragraph (E)(2): the 2001 CSO mortality table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X per cent for durations in the first segment, subject to the conditions specified in paragraphs (E)(2)(c)(i) to (E)(2)(c)(ix). 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 rule or necessary to be in compliance with relevant actuarial standards of practice.

(e) Paragraph (F)(3): the valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO mortality table.

(f) Paragraph (F)(5)(d): the calculations specified in paragraph (F)(5) shall use the ultimate mortality rates in the 2001 CSO mortality table.

(g) Paragraph (F)(6)(d): the calculations specified in paragraph (F)(6) shall use the ultimate mortality rates in the 2001 CSO mortality table.

(h) Paragraph (F)(7)(b): the calculations specified in paragraph (F)(7) shall use the ultimate mortality rates in the 2001 CSO mortality table.

(i) Paragraph (G)(1)(a)(ii): the one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO mortality table.

(2) Nothing in this paragraph shall be construed to expand the applicability of rule 3901-6-10 of the Administrative Code(valuation of life insurance policies) to include life insurance policies exempted under paragraph (C)(1) of rule 3901-6-10 of the Administrative Code(valuation of life insurance policies).

(G) Gender-blended tables

(1) For any ordinary life insurance policy delivered or issued for delivery in this state on and after January 1, 2004, 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 paragraph of this rule.

(2) 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.

(3) It shall not, in and of itself, be a violation of section 3901.21 of the Revised Code for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.

(H) Severability

If any provision of this rule or its application to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected.

R.C. 119.032 review dates: 09/02/2010 and 08/31/2015
Promulgated Under: 119.03
Statutory Authority: 3901.041 , 3903.72 , 3915.071
Rule Amplifies: 3903.72 , 3915.071
Prior Effective Dates: 9/18/2003