Administrative Code

Virginia Administrative Code
Title 14. Insurance
Agency 5. State Corporation Commission, Bureau of Insurance
1/23/2020

Chapter 321. Use of the 2001 CSO Mortality Table in Determining Reserve Liabilities and Nonforfeiture Benefits

14VAC5-321-10. Authority.

This chapter is promulgated by the commission, pursuant to § 38.2-223 of the Code of Virginia and in accordance with §§ 38.2-1369, 38.2-3206 through 38.2-3209, and 38.2-4120 of the Code of Virginia and 14VAC5-319-40, to approve, recognize, permit, and prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality Table by and for insurers transacting the business of insurance in this Commonwealth.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 16, eff. July 1, 2004; amended, Virginia Register Volume 23, Issue 10, eff. January 1, 2007; Volume 31, Issue 9, eff. January 1, 2015.

14VAC5-321-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"2001 CSO Mortality Table" means that mortality table, which is included in the Proceedings of the NAIC (2nd Quarter 2002), 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 NAIC in December 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. The 2001 CSO Mortality Table may be accessed via the American Academy of Actuaries' website, http://www.actuary.org/life/cso/appendix_a_jun02.xls.

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

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

"Commission" means the State Corporation Commission.

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

"NAIC" means the National Association of Insurance Commissioners.

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

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 16, eff. July 1, 2004; amended, Virginia Register Volume 23, Issue 10, eff. January 1, 2007.

14VAC5-321-30. 2001 CSO Mortality Table.

A. At the election of the insurer for any one or more specified plans of insurance and subject to the conditions stated in this chapter, 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 subsection B of this section to which subdivision 1 of § 38.2-1369 and § 38.2-3209 of the Code of Virginia are applicable. If the insurer elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.

B. Subject to the conditions stated in this chapter, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1, 2009, to which subdivision 1 of § 38.2-1369 and § 38.2-3209 of the Code of Virginia are applicable.

C. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of 14VAC5-322, will be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of this chapter.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 16, eff. July 1, 2004; amended, Virginia Register Volume 23, Issue 10, eff. January 1, 2007; Volume 26, Issue 9, eff. December 31, 2009; Volume 31, Issue 9, eff. January 1, 2015.

14VAC5-321-40. Conditions.

A. For policies issued on or after July 1, 2004, with each plan of insurance with separate rates for smokers and nonsmokers an insurer may use:

1. Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;

2. Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by § 38.2-1376 of the Code of Virginia and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values, and amounts of paid-up nonforfeiture benefits; or

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

B. For policies issued on or after July 1, 2004, with plans of insurance without separate rates for smokers and nonsmokers the composite mortality tables shall be used.

C. 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 insurer for each such plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of 14VAC5-321-50 and 14VAC5-319 relative to use of the select and ultimate form.

D. When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for an insurer, any actuarial opinion in the annual statement filed with the commission shall be based on an asset adequacy analysis that meets the standards and satisfies requirements for an asset adequacy analysis performed pursuant to subdivision A 2 of § 38.2-1367 of the Code of Virginia and rules governing actuarial opinions and memoranda at 14VAC5-310.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 16, eff. July 1, 2004;  amended, Virginia Register Volume 31, Issue 9, eff. January 1, 2015.

14VAC5-321-50. Applicability of the 2001 CSO Mortality Table to 14VAC5-319.

A. The 2001 CSO Mortality Table may be used in applying rules at 14VAC5-319, concerning life insurance reserves, in the following manner, subject to the transition dates for use of the 2001 CSO Mortality Table in 14VAC5-321-30.

1. When applying 14VAC5-319-30 B 2, the net level reserve premium is based on the ultimate mortality rates in the 2001 CSO Mortality Table.

2. When determining "contract segmentation method" as defined by 14VAC5-319-10, all calculations are made using the 2001 CSO mortality rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in subdivision 4 of this subsection. The value of "qx+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.

3. When applying 14VAC5-319-40 A, the 2001 CSO Mortality Table is the minimum standard for basic reserves.

4. When applying 14VAC5-319-40 B, the 2001 CSO Mortality Table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in subdivisions 1 c, 1 d, 2, and 3 of 14VAC5-319-40 B. 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 regulation or necessary to be in compliance with relevant Actuarial Standards of Practice.

5. When applying 14VAC5-319-50 C, the valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table.

6. When applying 14VAC5-319-50 E 4, the calculations specified in 14VAC5-319-50 E shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

7. When applying 14VAC5-319-50 F 4, the calculations specified in 14VAC5-319-50 F shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

8. When applying 14VAC5-319-50 G 2, the calculations specified in 14VAC5-319-50 G shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

9. When applying 14VAC5-319-60 A 1 b, the one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table.

B. Nothing in this section shall be construed to expand the applicability of 14VAC5-319 to include life insurance policies excepted from regulation pursuant to 14VAC5-319-30 B.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 16, eff. July 1, 2004.

14VAC5-321-60. Gender-blended tables.

A. For any ordinary life insurance policy delivered or issued for delivery in this Commonwealth on and after July 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 insurer 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 subsection.

B. When applying subsection A of this section, the insurer 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.

C. It shall not, in and of itself, be a violation of § 38.2-508 or § 38.2-508.2 of the Code of Virginia concerning respectively, unfair discrimination and discrimination prohibited, for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 16, eff. July 1, 2004.

14VAC5-321-70. Severability clause.

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

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 23, Issue 10, eff. January 1, 2007.

Documents Incorporated by Reference (14VAC5-321)

2001 CSO Mortality Table, American Academy of Actuaries, June 2002.



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