2013 -- S 0598 SUBSTITUTE A

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LC01414/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE -- THE STANDARD NONFORFEITURE LAW FOR LIFE

INSURANCE

     Introduced By: Senators Picard, and Walaska

     Date Introduced: March 06, 2013

     Referred To: Senate Corporations

(Business Regulation)

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-4.3-5 of the General Laws in Chapter 27-4.3 entitled "The

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Standard Nonforfeiture Law for Life Insurance" is hereby amended to read as follows:

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     27-4.3-5. Calculations of adjusted premiums by the nonforfeiture net level premium

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method. -- (a) This section shall apply to all policies issued on or after January 1, 1994. Except as

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provided in subsection (g) of this section, the adjusted premiums for any policy shall be

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calculated on an annual basis and shall be such a uniform percentage of the respective premiums

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specified in the policy for each policy year, excluding amounts payable as extra premiums to

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cover impairments or special hazards, and also excluding any uniform annual contract charge or

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policy fee specified in the policy in a statement of the method to be used in calculating the cash

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surrender values and paid up nonforfeiture benefits, so that the present value, at the date of issue

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of the policy, of all adjusted premiums shall be equal to the sum of: (1) the then present value of

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the future guaranteed benefits provided for by the policy; (2) one percent (1%) of either the

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amount of insurance, if the insurance is be uniform in amount, or the average amount of insurance

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at the beginning of each of the first ten (10) policy years; and (3) one hundred twenty-five percent

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(125%) of the nonforfeiture net level premium as defined in subsection (b); provided, however,

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that in applying the percentage specified in subdivision (a)(3), no nonforfeiture net level premium

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shall be deemed to exceed four percent (4%) of either the amount of insurance, if the insurance is

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be uniform in amount, or the average amount of insurance at the beginning of each of the first ten

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(10) policy years. The date of issue of a policy for the purpose of this section shall be the date as

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of which the rated age of the insured is determined.

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      (b) The nonforfeiture net level premium shall be equal to the present value, at the date of

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issue of the policy, of the guaranteed benefits provided for by the policy divided by the present

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value, at the date of issue of the policy of an annuity of one per annum payable on the date of

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issue of the policy and on each anniversary of the policy on which a premium falls due.

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      (c) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled

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changes in benefits or premiums, or which provide an option for changes in benefits or premiums,

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other than a change to a new policy, the adjusted premiums and present values shall initially be

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calculated on the assumption that future benefits and premiums do not change from those

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stipulated at the date of issue of the policy. At the time of any change in the benefits or premiums,

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the future adjusted premiums, nonforfeiture net level premiums, and present values shall be

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recalculated on the assumption that future benefits and premiums do not change from those

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stipulated by the policy immediately after the change.

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      (d) Except as otherwise provided in subsection (g), the recalculated future adjusted

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premiums for any policy shall be a uniform percentage of the future premiums specified in the

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policy for each policy year, excluding amounts payable as extra premiums to cover impairments

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and special hazards, and also excluding any uniform annual contract charge or policy fee

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specified in the policy in a statement of the method to be used in calculating the cash surrender

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values and paid up nonforfeiture benefits, so that the present value, at the time of change to the

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newly defined benefits or premiums, of all future adjusted premiums shall be equal to the excess

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of: (1) the sum of: (i) the then present value of the then future guaranteed benefits provided for by

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the policy and (ii) the additional expense allowance, if any, over (2) the then cash surrender

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value, if any, or present value of any paid up nonforfeiture benefit under this policy.

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      (e) The additional expense allowance, at the time of the change to the newly defined

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benefits or premiums, shall be the sum of: (1) one percent (1%) of the excess, if positive, of the

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average amount of insurance at the beginning of each of the first ten (10) policy years subsequent

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to the change over the average amount of insurance prior to the change at the beginning of each

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of the first ten (10) policy years subsequent to the time of the most recent previous change, or, if

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there has been no previous change, the date of issue of the policy; and (2) one hundred twenty-

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five percent (125%) of the increase, if positive, in the nonforfeiture net level premium.

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      (f) The recalculated nonforfeiture net level premium shall be equal to the result obtained

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by dividing subdivision (f)(1) by subdivision (f)(2) where:

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      (1) Equals the sum of:

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      (i) The nonforfeiture net level premium applicable prior to the change multiplied by the

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present value of an annuity of one per annum payable on each anniversary of the policy on or

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subsequent to the date of the change on which a premium would have fallen due had the change

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not occurred, and

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      (ii) The present value of the increase in future guaranteed benefits provided for by the

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policy; and

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      (2) Equals the present value of an annuity of one per annum payable on each anniversary

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of the policy on or subsequent to the date of change on which a premium falls due.

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      (g) Notwithstanding any other provisions of this section to the contrary, in the case of a

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policy issued on a substandard basis which provides reduced graded amounts of insurance so that,

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in each policy year, the policy has the same tabular mortality cost as a similar policy issued on the

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standard basis which provides for a higher uniform amount of insurance, adjusted premiums and

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present values for the substandard policy may be calculated as if it were issued to provide the

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higher uniform amounts of insurance on the standard basis.

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      (h) All adjusted premiums and present values referred to in this chapter shall for all

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policies of ordinary insurance be calculated on the basis of the commissioners 1980 standard

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ordinary mortality table or, at the election of the insurance company for any one or more

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specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with

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ten (10) year select mortality factors; adjusted premiums and present values shall for all policies

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of industrial insurance be calculated on the basis of the commissioners 1961 standard industrial

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mortality table; and adjusted premiums and present values shall for all policies issued in a

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particular calendar year be calculated on the basis of a rate of interest not exceeding the

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nonforfeiture interest rate as defined in this section, for policies issued in that calendar year; .

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Provided provided, however that:

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      (1) At the option of the insurance company, calculations for all policies issued in a

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particular calendar year may be made on the basis of a rate of interest not exceeding the

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nonforfeiture interest rate, as defined in this section, for policies issued in the immediately

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preceding calendar year;

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      (2) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions,

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any cash surrender value available, whether or not required by section 27-4.3-2, shall be

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calculated on the basis of the mortality table and rate of interest used in determining the amount

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of any paid-up nonforfeiture benefit and paid-up dividend additions, if any;

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      (3) An insurance company may calculate the amount of any guaranteed paid-up

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nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest

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rate no lower than that specified in the policy for calculating cash surrender values;

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      (4) In calculating the present value of any paid-up term insurance with accompanying

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pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be

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not more than those shown in the commissioners 1980 extended term insurance table for policies

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of ordinary insurance and not more than the commissioners 1961 industrial extended term

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insurance table for policies of industrial insurance;

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      (5) For insurance issued on a substandard basis, the calculation of any adjusted

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premiums and present values may be based on appropriate modifications of the tables mentioned

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in this subsection;

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      (6)(i) For policies issued prior to the operative date of the valuation manual, any Any

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commissioners' standard ordinary mortality tables, adopted after 1980 by the National

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Association of Insurance Commissioners, that are approved by regulation promulgated by the

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commissioner of insurance for use in determining the minimum nonforfeiture standard, may be

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substituted for the commissioners 1980 standard ordinary mortality table with or without ten (10)

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year select mortality factors or for the commissioners 1980 extended term insurance table.; and

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     (ii) For policies issued on or after the operative date of the valuation manual the valuation

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manual shall provide the commissioners' standard mortality table for use in determining the

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minimum nonforfeiture standard that may be substituted for the commissioners 1980 Standard

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Ordinary Mortality Table with or without ten (10) year Select Mortality Factors or for the

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Commissioners 1980 Extended Term Insurance Table. If the commissioner approves by

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regulation any commissioners' standard ordinary mortality table adopted by the NAIC for use in

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determining the minimum nonforfeiture standard for policies issued on or after the operative date

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of the valuation manual then that minimum nonforfeiture standard supersedes the minimum

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nonforfeiture standard provided by the valuation manual.

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      (7)(i) For policies issued prior to the operative date of the valuation manual, any Any

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commissioners' standard industrial mortality tables, adopted after 1980 by the National

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Association of Insurance Commissioners, that are approved by regulation promulgated by the

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commissioner of insurance for use in determining the minimum nonforfeiture standard, may be

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substituted for the commissioners 1961 standard industrial mortality table or the commissioners

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1961 industrial extended term insurance table.

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     (ii) For policies issued on or after the operative date of the valuation manual the valuation

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manual shall provide the commissioners' standard mortality table for use in determining the

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minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard

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Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table.

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If the commissioner approves by regulation any commissioners' standard industrial mortality

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table adopted by the NAIC for use in determining the minimum nonforfeiture standard for

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policies issued on or after the operative date of the valuation manual then that minimum

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nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation

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manual.

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      (i) The nonforfeiture interest rate is defined below:

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     (A) For policies issued prior to the operative date of the valuation manual, the

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nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be

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equal to one hundred and twenty-five percent (125%) of the calendar year statutory valuation

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interest rate for the policy as defined in chapter 4.5 of this title, rounded to the nearer one-quarter

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of one percent (.25%).

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     (B) For policies issued on and after the operative date of the valuation manual the

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nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be

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provided by the valuation manual.

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      (j) Notwithstanding any other provision in this title to the contrary, any re-filing of

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nonforfeiture values or their methods of computation for any previously approved policy form

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which involves only a change in the interest rate or mortality table used to compute nonforfeiture

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values shall not require re-filing of any other provisions of that policy form.

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     SECTION 2. Sections 27-4.5-1, 27-4.5-2, 27-4.5-3, 27-4.5-4, 27-4.5-4.1, 27-4.5-5, 27-

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4.5-6, 27-4.5-7, 27-4.5-8, 27-4.5-9 and 27-4.5-10 of the General Laws in Chapter 27-4.5 entitled

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"The Standard Valuation Law" are hereby amended to read as follows:

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     27-4.5-1. Short title Short title and Definitions. -- (a) This chapter shall be known as

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the "Standard Valuation Law."

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     (b) For the purpose of this chapter, the following definitions shall apply on or after the

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operative date of the valuation manual:

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     (1) "Accident and health insurance" means contracts that incorporate morbidity risk and

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provide protection against economic loss resulting from accident, sickness, or medical conditions

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and as may be specified in the valuation manual.

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      (2) "Appointed actuary" means a qualified actuary who is appointed in accordance with

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the valuation manual to prepare the actuarial opinion required in subsection 27-4.5-3(a).

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     (3) "Commissioner of insurance" means the director of the department of business

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regulation or his or her designee.

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     (4) "Company" means an entity, which: (i) Has written, issued, or reinsured life insurance

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contracts, accident and health insurance contracts, or deposit-type contracts in this state and has at

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least one such policy in force or on claim; or (ii) Has written, issued, or reinsured life insurance

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contracts, accident and health insurance contracts, or deposit-type contracts in any state and is

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required to hold a certificate of authority to write life insurance, accident and health insurance, or

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deposit-type contracts in this state.

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     (5) "Deposit-type contract" means contracts that do not incorporate mortality or

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morbidity risks and as may be specified in the valuation manual.

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     (6) "Life insurance" means contracts that incorporate mortality risk, including annuity

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and pure endowment contracts, and as may be specified in the valuation manual.

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     (7) "NAIC" means the National Association of Insurance Commissioners.

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     (8) "Policyholder behavior" means any action a policyholder, contract holder or any other

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person with the right to elect options, such as a certificate holder, may take under a policy or

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contract subject to this chapter including, but not limited to, lapse, withdrawal, transfer, deposit,

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premium payment, loan, annuitization , or benefit elections prescribed by the policy or contract,

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but excluding events of mortality or morbidity that result in benefits prescribed in their essential

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aspects by the terms of the policy or contract.

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     (9) "Principle-based valuation" means a reserve valuation that uses one or more methods

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or one or more assumptions determined by the insurer and is required to comply with section 27-

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4.5-14 as specified in the valuation manual.

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     (10) "Qualified actuary" means an individual who is qualified to sign the applicable

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statement of actuarial opinion in accordance with the American Academy of Actuaries

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qualification standards for actuaries signing such statements and who meets the requirements

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specified in the valuation manual.

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     (11) "Tail risk" means a risk that occurs either where the frequency of low probability

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events is higher than expected under a normal probability distribution or where there are observed

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events of very significant size or magnitude.

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     (12) "Valuation manual" means the manual of valuation instructions adopted by the

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NAIC as specified in this chapter or as subsequently amended.

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     27-4.5-2. Reserve valuation. -- (a) Policies and contracts issued prior to the operative

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date of the valuation manual:

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     (1) The commissioner of insurance shall annually value, or cause to be valued, the

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reserve liabilities, called "reserves" in this chapter, for all outstanding life insurance policies and

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annuity and pure endowment contracts of every life insurance company doing business in this

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state, and may certify the amount of any reserves, specifying the mortality table or tables, rate or

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rates of interest, and methods, net level premium method or other, used in the calculation of the

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reserves issued on or after January 1, 1994, and prior to the operative date of the valuation

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manual. In calculating the reserves, the commissioner may use group methods and approximate

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averages for fractions of a year or otherwise. In lieu of the valuation of the reserves required in

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this chapter of any foreign or alien company companies, the commissioner may accept any the

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valuation made or caused to be made by the insurance supervisory official of any state or other

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jurisdiction when the valuation complies with the minimum standard provided in this chapter, and

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if the official of the other state or jurisdiction accepts as sufficient and for all valid legal purposes

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the certificate of valuation of the commissioner of insurance when the certificate states the

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valuation to have been made in a specified manner according to which the aggregate reserves

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would be at least as large as if they had been computed in the manner prescribed by the law of

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that state or jurisdiction.

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     (2) The provisions set forth in sections 27-4.5-4, 27-4.5-4.1, 27-4.5-5, 27-4.5-5.1, 27-4.5-

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6, 27-4.5-7, 27-4.5-8, 27-4.5-9, and 27-4.5-10 shall apply to all policies and contracts, as

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appropriate, subject to this chapter issued on or after January 1, 1994 and prior to the operative

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date of the valuation manual and the provisions set forth in sections 27-4.5-13 and 27-4.5-14 shall

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not apply to any such policies and contracts.

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     (3) The minimum standard for the valuation of policies and contracts issued prior to

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January 1, 1994 shall be that provided by the laws in effect immediately prior to that date.

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     (b) Policies and contracts issued on or after the operative date of the valuation manual.

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(1) The commissioner shall annually value, or cause to be valued, the reserve liabilities

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(hereinafter called reserves) for all outstanding life insurance contracts, annuity and pure

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endowment contracts, accident and health contracts, and deposit-type contracts of every company

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issued on or after the operative date of the valuation manual. In lieu of the valuation of the

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reserves required of a foreign or alien company, the commissioner may accept a valuation made,

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or caused to be made, by the insurance supervisory official of any state or other jurisdiction when

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the valuation complies with the minimum standard provided in this chapter.

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     (2) The provisions set forth in sections 27-4.5-13 and 27-4.5-14 shall apply to all policies

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and contracts issued on or after the operative date of the valuation manual.

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     27-4.5-3. Actuarial opinion of reserves. -- (a) Actuarial opinion prior to the operative

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date of the valuation manual:

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     (1) General. - Every life insurance company doing business in this state shall annually

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submit the opinion of a qualified actuary as to whether the reserves and related actuarial items

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held in support of the policies and contracts specified by the commissioner of insurance by

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regulation are computed appropriately, are based on assumptions which satisfy contractual

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provisions, are consistent with prior reported amounts, and comply with applicable laws of this

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state. The commissioner of insurance by regulation shall define the specifics of this opinion and

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add any other items deemed to be necessary to its scope.

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      (b)(2) Actuarial analysis of reserves and assets supporting the reserves. -

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     (1)(i) Every life insurance company, except as exempted by or pursuant to regulation,

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shall also annually include in the opinion required by subsection (a) above an opinion of the same

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qualified actuary as to whether the reserves and related actuarial items held in support of the

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policies and contracts specified by the commissioner of insurance by regulation, when considered

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in light of the assets held by the company with respect to the reserves and related actuarial items,

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including, but not limited to, the investment earnings on the assets and the considerations

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anticipated to be received and retained under the policies and contracts, make adequate provision

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for the company's obligations under the policies and contracts, including, but not limited to, the

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benefits under and expenses associated with the policies and contracts.

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      (2)(ii) The commissioner of insurance may provide by regulation for a transition period

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for establishing any higher reserves that the qualified actuary may deem necessary in order to

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render the opinion required by this section.

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      (c)(3) Requirement for opinion under subsection (b) subdivision (2) above. - Each

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opinion required by subdivision (2) shall be governed by the following provisions:

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      (1)(i) A memorandum, in form and substance acceptable to the commissioner of

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insurance as specified by regulation, shall be prepared to support each actuarial opinion; and

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      (2)(ii) If the insurance company fails to provide a supporting memorandum at the request

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of the commissioner of insurance within a period specified by regulation or the commissioner of

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insurance determines that the supporting memorandum provided by the insurance company fails

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to meet the standards prescribed by the regulations or is otherwise unacceptable to the

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commissioner of insurance, the commissioner of insurance may engage a qualified actuary at the

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expense of the company to review the opinion and the basis for the opinion and prepare the

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supporting memorandum required by the commissioner of insurance.

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      (d)(4) Requirement for all opinions subject to subsection (a). - Every opinion required by

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subsection (a) shall be governed by the following provisions:

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      (1)(i) The opinion shall be submitted with the annual statement reflecting the valuation

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of the reserve liabilities for each year ending on or after December 31, 1994;

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      (2)(ii) The opinion shall apply to all business in force including individual and group

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health insurance plans, in a form and substance acceptable to the commissioner of insurance as

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specified by regulation;

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      (3)(iii) The opinion shall be based on standards adopted by the actuarial standards board

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and on any additional standards as that commissioner of insurance may by regulation prescribe;

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      (4)(iv) In the case of an opinion required to be submitted by a foreign or alien company,

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the commissioner of insurance may accept the opinion filed by that company with the insurance

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supervisory official of another state if the commissioner of insurance determines that the opinion

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reasonably meets the requirements applicable to a company domiciled in this state;

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      (5)(v) For the purposes of this section, "qualified actuary" means a member in good

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standing of the American Academy of Actuaries who meets the requirements set forth in the

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regulations;

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      (6)(vi) Except in cases of fraud or willful misconduct, the qualified actuary shall not be

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liable for damages to any person, other than the insurance company and the commissioner of

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insurance, for any act, error, omission, decision, or conduct with respect to the actuary's opinion;

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      (7)(vii) Disciplinary action by the commissioner of insurance against the company or the

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qualified actuary shall be defined in regulations by the commissioner of insurance; and

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      (8)(viii) Except as provided in paragraphs (xii), (xiii) and (xiv) below, documents,

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materials or other information in the possession or control of the department of insurance that are

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a Any memorandum in support of the opinion, and any other material provided by the company

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to the commissioner in connection with the memorandum, shall be confidential and privileged,

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shall not be subject to chapter 42-35, the company to the commissioner of insurance in

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connection with the opinion, shall be kept confidential by the commissioner of insurance and

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shall not be made public and shall not be subject to subpoena, and shall not be subject to

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discovery or admissible in evidence as any private/civil action. other than for the purpose of

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defending an action seeking damages from any person by reason of any action required by this

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section or by regulations promulgated under this section; provided, that the memorandum or other

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material may be released by the commissioner of insurance (i) with the written consent of the

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company or (ii) to the American Academy of Actuaries upon request stating that the

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memorandum or other material is required for the purpose of professional disciplinary

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proceedings and setting forth procedures satisfactory to the commissioner of insurance for

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preserving the confidentiality of the memorandum or other material. Once any portion of the

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confidential memorandum is cited by the company in its marketing or is cited before any

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governmental agency other than a state insurance department or is released by the company to the

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news media, all portions of the confidential memorandum shall be no longer confidential.

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However, the commissioner is authorized to use the documents, materials or other information in

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the furtherance of any regulatory or legal action brought as a part of the commissioner's official

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duties.

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     (ix) Neither the commissioner nor any person who received documents, materials or other

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information while acting under the authority of the commissioner shall be permitted or required to

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testify in any private civil action concerning any confidential documents, materials or information

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subject to paragraph (viii).

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     (x) In order to assist in the performance of the commissioner's duties, the commissioner:

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     (A) May share documents, materials or other information, including the confidential and

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privileged documents, materials or information subject to paragraph (viii) with other state, federal

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and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with

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state, federal and international law enforcement authorities, provided that the recipient agrees to

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maintain the confidentiality and privileged status of the document, material or other information;

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     (B) May receive documents, materials or information, including otherwise confidential

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and privileged documents, materials or information, from the NAIC and its affiliates and

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subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic

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jurisdictions, and shall maintain as confidential or privileged any document, material or

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information received with notice or the understanding that it is confidential or privileged under

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the laws of the jurisdiction that is the source of the document, material or information; and

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     (C) May enter into agreements governing sharing and use of information consistent with

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paragraphs (viii) through (x).

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     (xi) No waiver of any applicable privilege or claim of confidentiality in the documents,

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materials or information shall occur as a result of disclosure to the commissioner under this

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section or as a result of sharing as authorized in paragraph (x).

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     (xii) A memorandum in support of the opinion, and any other material provided by the

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company to the commissioner in connection with the memorandum, may be subject to subpoena

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for the purpose of defending an action seeking damages from the actuary submitting the

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memorandum by reason of an action required by this section or by regulations promulgated

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hereunder.

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     (xiii) The memorandum or other material may otherwise be released by the commissioner

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with the written consent of the company or to the American Academy of Actuaries upon request

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stating that the memorandum or other material is required for the purpose of professional

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disciplinary proceedings and setting forth procedures satisfactory to the commissioner for

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preserving the confidentiality of the memorandum or other material.

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     (xiv) Once any portion of the confidential memorandum is cited by the company in its

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marketing or is cited before a governmental agency other than a state insurance department or is

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released by the company to the news media, all portions of the confidential memorandum shall be

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no longer confidential.

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     (b) Actuarial opinion of reserves after the operative date of the valuation manual.

11-3

     (1) General. Every company with outstanding life insurance contracts, accident and

11-4

health insurance contracts or deposit-type contracts in this state and subject to regulation by the

11-5

commissioner shall annually submit the opinion of the appointed actuary as to whether the

11-6

reserves and related actuarial items held in support of the policies and contracts are computed

11-7

appropriately, are based on assumptions that satisfy contractual provisions, are consistent with

11-8

prior reported amounts and comply with applicable laws of this state. The valuation manual will

11-9

prescribe the specifics of this opinion including any items deemed to be necessary to its scope.

11-10

     (2) Actuarial analysis of reserves and assets supporting reserves. Every company with

11-11

outstanding life insurance contracts, accident and health insurance contracts or deposit-type

11-12

contracts in this state and subject to regulation by the commissioner, except as exempted in the

11-13

valuation manual, shall also annually include in the opinion required by subdivision (1) of this

11-14

section, an opinion of the same appointed actuary as to whether the reserves and related actuarial

11-15

items held in support of the policies and contracts specified in the valuation manual, when

11-16

considered in light of the assets held by the company with respect to the reserves and related

11-17

actuarial items, including, but not limited to, the investment earnings on the assets and the

11-18

considerations anticipated to be received and retained under the policies and contracts, make

11-19

adequate provision for the company's obligations under the policies and contracts, including but

11-20

not limited to the benefits under and expenses associated with the policies and contracts.

11-21

     (3) Requirements for opinions subject to subdivision 27-4.5-3(b)(2). Each opinion

11-22

required by subdivision 27-4.5-3(b)(2) shall be governed by the following provisions:

11-23

     (i) A memorandum, in form and substance as specified in the valuation manual, and

11-24

acceptable to the commissioner, shall be prepared to support each actuarial opinion.

11-25

     (ii) If the insurance company fails to provide a supporting memorandum at the request of

11-26

the commissioner within a period specified in the valuation manual or the commissioner

11-27

determines that the supporting memorandum provided by the insurance company fails to meet the

11-28

standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner,

11-29

the commissioner may engage a qualified actuary at the expense of the company to review the

11-30

opinion and the basis for the opinion and prepare the supporting memorandum required by the

11-31

commissioner.

11-32

     (4) Requirement for all opinions Subject to subsection 27-4.5-3(b). Every opinion shall

11-33

be governed by the following provisions:

12-34

     (i) The opinion shall be in form and substance as specified in the valuation manual and

12-35

acceptable to the commissioner.

12-36

     (ii) The opinion shall be submitted with the annual statement reflecting the valuation of

12-37

such reserve liabilities for each year ending on or after the operative date of the valuation manual.

12-38

     (iii) The opinion shall apply to all policies and contracts subject to subdivision 27-4.5-

12-39

3(b)(2), plus other actuarial liabilities as may be specified in the valuation manual.

12-40

     (iv) The opinion shall be based on standards adopted from time to time by the actuarial

12-41

standards board or its successor, and on such additional standards as may be prescribed in the

12-42

valuation manual.

12-43

     (v) In the case of an opinion required to be submitted by a foreign or alien company, the

12-44

commissioner may accept the opinion filed by that company with the insurance supervisory

12-45

official of another state if the commissioner determines that the opinion reasonably meets the

12-46

requirements applicable to a company domiciled in this state.

12-47

     (vi) Except in cases of fraud or willful misconduct, the appointed actuary shall not be

12-48

liable for damages to any person (other than the insurance company and the commissioner) for

12-49

any act, error, omission, decision or conduct with respect to the appointed actuary's opinion.

12-50

     (vii) Disciplinary action by the commissioner against the company or the appointed

12-51

actuary shall be defined in regulations by the commissioner.

12-52

     27-4.5-4. Computation of minimum standard. -- (a) Except as provided in this section,

12-53

section 27-4.5-4.1 and section 27-4.5-10, the The minimum standard for valuation of all policies

12-54

and contracts described in section 27-4.5-2 shall be consistent with the provisions of section 27-4-

12-55

17 issued prior to the effective date of this chapter shall be that provided by the laws in effect

12-56

immediately prior to that date. Except as otherwise provided in sections 27-4.5-4, 27-4.5-4.1 and

12-57

27-4.5-10, the minimum standard for the valuation of all policies and contracts issued on or after

12-58

the effective date of this chapter and prior to the effective date of the valuation manual shall be

12-59

the commissioners reserve valuation methods defined in sections 27-4.5-5, 27-4.5-5.1, 27-4.5-8

12-60

and 27-4.5-10 and the following tables:

12-61

      (b) The valuation of all policies and contracts issued on or after January 1, 2000 shall be

12-62

subject to sections 27-4.5-4.1 and 27-4.5-10 and the following tables:

12-63

     (1) For ordinary policies of life insurance issued on the standard basis:

12-64

     (i) The Commissioners 1980 Standard Ordinary Mortality Table;

12-65

     (ii) At the election of the company for any one or more specified plans of life insurance,

12-66

the Commissioners 1980 Standard Ordinary Mortality Table with Ten (10) Year Select Mortality

12-67

Factors; or

13-68

     (iii) Any ordinary mortality table, adopted after 1980 by the NAIC, which is approved by

13-69

regulation promulgated by the commissioner for use in determining the minimum standard of

13-70

valuation for such policies;

13-71

     (2) For industrial life insurance policies issued on the standard basis, excluding any

13-72

disability and accidental death benefits in the policies: the 1941 Standard Industrial Mortality

13-73

Table for policies issued prior to the operative date of section 27-4.3-5.3, and for policies issued

13-74

on or after the operative date of section 27-4.3-5.3, the Commissioners 1961 Standard Industrial

13-75

Mortality Table or any industrial mortality table adopted after 1980 by the NAIC that is approved

13-76

by regulation promulgated by the commissioner for use in determining the minimum standard of

13-77

valuation for the policies;

13-78

     (b) The valuation of all policies and contracts issued on or after January 1, 2000 shall be

13-79

subject to sections 27-4.5-4.1 and 27-4.5-10 and the following tables:

13-80

     (1) For individual annuity and pure endowment contracts, excluding any disability and

13-81

accidental death benefits in those contracts, the Annuity 2000 Mortality Table or any individual

13-82

annuity mortality table adopted after 2000 by the National Association of Insurance

13-83

Commissioners, that is approved by regulation promulgated by the insurance commissioner for

13-84

use in determining the minimum standard of valuation for those contracts;

13-85

      (2) For all annuities and pure endowments purchased under group annuity and pure

13-86

endowment contracts, excluding any disability and accidental death benefits purchased under

13-87

those contracts, the 1994 Group Annuity Reserving Table, or any group annuity mortality table

13-88

adopted after 2000 by the National Association of Insurance Commissioners that is approved by

13-89

regulation promulgated by the insurance commissioner for use in determining the minimum

13-90

standard of valuation for annuities and pure endowments, or any modification of these tables

13-91

approved by the insurance commissioner; and

13-92

      (c) For group life insurance, life insurance issued on the substandard basis and other

13-93

special benefits and tables approved by the insurance commissioner.

13-94

     27-4.5-4.1. Computation of minimum standard by calendar year of issue. -- (a)

13-95

Applicability. - The interest rates used in determining the minimum standards standard for the

13-96

valuation of the following shall be calendar year statutory valuation interest rates as defined in

13-97

this section: (1) all life insurance policies issued in a particular calendar year on or after January

13-98

1, 1994; (2) all individual annuity and pure endowment contracts issued in a particular calendar

13-99

year on or after January 1, 1994; (3) all annuities and pure endowments purchased in a particular

13-100

calendar year on or after January 1, 1994, under group annuity and pure endowment contracts;

13-101

and (4) the net increase, if any, in a particular calendar year after January 1, 1994, in amounts

13-102

held under guaranteed interest contracts; shall be the calendar year statutory valuation interest

14-1

rates as defined in this section.

14-2

     (b) Calendar year statutory valuation interest rates. (1) The calendar year statutory

14-3

valuation interest rates, "I", shall be determined as follows and the results rounded to the nearer

14-4

one-quarter of one percent (.25%) (1/4 of 1%), where R1 is the lesser of R and .09, R2 is the

14-5

greater of R and .09, R is the reference interest rate as defined in this section, and W is the

14-6

weighting factor as defined in this section:

14-7

      (i) For life insurance: I = .03 + W(R1 -.03) + W/2(R2 -.09) I=.03+W(R1-.03)+W/2(R2-

14-8

.09);

14-9

     (ii) For single premium immediate annuities and for annuity benefits involving life

14-10

contingencies arising from other annuities with cash settlement options and from guaranteed

14-11

interest contracts with cash settlement options: I = .03 + W(R1 -.03) I=.03+W(R-.03);

14-12

     Where R1 is the lesser of R and .09,

14-13

     R2 is the greater of R and .09,

14-14

     R is the reference interest rate defined in this section,

14-15

     W is the weighting factor defined in this section;

14-16

     (iii) For other annuities with cash settlement options and guaranteed interest contracts

14-17

with cash settlement options, valued on an issued issue year basis, except as stated in subdivision

14-18

paragraph (b)(1)(ii) above, the formula for life insurance stated in subdivision paragraph (b)(1)(i)

14-19

above shall apply to annuities and guaranteed interest contracts with guarantee durations in

14-20

excess of ten (10) years and the formula for single premium immediate annuities stated in

14-21

subdivision paragraph (b)(1)(ii) above shall apply to annuities and guaranteed interest contracts

14-22

with guarantee duration of ten (10) years or less;

14-23

     (iv) For other annuities with no cash settlement options and for guaranteed interest

14-24

contracts with no cash settlement options, the formula for single premium immediate annuities

14-25

stated in subdivision paragraph (b)(1)(ii) above shall apply; and

14-26

     (v) For other annuities with cash settlement options and guaranteed interest contracts with

14-27

cash settlement options, valued on a change in fund basis, the formula for single premium

14-28

immediate annuities stated in subdivision paragraph (b)(1)(ii) above shall apply; and

14-29

     (2) If However if the calendar year statutory valuation interest rate for any life insurance

14-30

policies issued in any calendar year determined without reference to this subsection sentence

14-31

differs from the corresponding actual rate for similar policies issued in the immediately preceding

14-32

calendar year by less than one-half of one percent (.5%) (1/2 of 1%), the calendar year statutory

14-33

valuation interest rate for those the life insurance policies shall be equal to the corresponding

14-34

actual rate for the immediately preceding calendar year.

15-1

     For purposes of applying the immediately preceding sentence, the calendar year statutory

15-2

valuation interest rate for life insurance policies issued in a calendar year shall be determined for

15-3

1980 (using the reference interest rate defined in 1979) and shall be determined for each

15-4

subsequent calendar year regardless of when section 27-4.3-5 becomes operative.

15-5

     (c) Weighting factors. - (1) The weighting factors referred to in the formulas stated in

15-6

subdivisions (b)(1)(i) and (ii) above are as follows given in the following tables:

15-7

     (i) WEIGHTING FACTORS FOR LIFE INSURANCE:

15-8

     Guarantee Duration (Years) Weighting Factors

15-9

     10 or less .50

15-10

     More than 10, but not more than 20 .45

15-11

     More than 20 .35

15-12

      For life insurance, the guarantee duration is the maximum number of years the life

15-13

insurance can remain in force on a basis guaranteed in the policy or under options to convert to

15-14

plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in

15-15

the original policy;

15-16

     (2)(ii) Weighting factor for single premium immediate annuities and for annuity benefits

15-17

involving life contingencies arising from other annuities with cash settlement options and

15-18

guaranteed interest contracts with cash settlement options is .80;

15-19

     (3)(iii) Weighting factors for other annuities and for guaranteed interest contracts, except

15-20

as stated in subdivision (c)(2) paragraph (ii) above, shall be as specified in paragraphs

15-21

subparagraphs (i)(A), (ii)(B) and (iii)(C) in this subdivision below, according to the rules and

15-22

definitions in paragraphs subparagraphs (iv)(D), (v)(E) and (vi)(F) in this subdivision below:

15-23

     (i)(A) For annuities and guaranteed interest contracts valued on an issue year basis:

15-24

     Guarantee Duration (Years) Weighting Factor for Plan Type

15-25

      A B C

15-26

     5 or less: .80 .60 .50

15-27

     More than 5, but not more than 10: .75 .60 .50

15-28

     More than 10, but not more than 20: .65 .50 . 45

15-29

     More than 20: .45 .35 .35

15-30

      (ii)(B) For annuities and guaranteed interest contracts valued on a change in fund basis,

15-31

the factors show in subdivision (c)(3) paragraph (i) above increased by:

15-32

     Plan Type

15-33

      A B C

16-34

     .15 .25 .05

16-35

      (iii)(C) For annuities and guaranteed interest contracts valued on an issued issue year

16-36

basis, other than those with no cash settlement options, which do not guarantee interest on

16-37

considerations received more than one year after issue or purchase and for annuities and

16-38

guaranteed interest contracts valued on a change in fund basis which that do not guarantee

16-39

interest rates on consideration considerations received more than twelve (12) months beyond the

16-40

valuation date, the factors shown in subdivision (c)(3) paragraph (i) or derived in subdivision

16-41

(c)(3) paragraph (ii) increased by:

16-42

     Plan Type

16-43

      A B C

16-44

     .05 .05 .05

16-45

     (iv)(D) For other annuities with cash settlement options and guaranteed interest contracts

16-46

with cash settlement options, the guarantee duration is the number of years for which the contract

16-47

guarantees interest rates in excess of the calendar year statutory valuation interest rate for life

16-48

insurance policies with guarantee durations in excess of twenty (20) years. For other annuities

16-49

with no cash settlement options and for guaranteed interest contracts with no cash settlement

16-50

options, the guaranteed duration is the number of years from the date of issue or date of purchase

16-51

to the date annuity benefits are scheduled to commence;

16-52

     (v)(E) Plan Type as used in the tables in this subdivision is defined as follows:

16-53

     (A)(I) Plan Type A: At any time the policyholder may withdraw funds only (I) with an

16-54

adjustment to reflect changes in interest rates or asset values since receipt of the funds by the

16-55

insurance company, or (II) without an adjustment but in installments over five (5) years or more,

16-56

or (III) as an immediate life annuity, or (IV) no withdrawal permitted;

16-57

     (B)(II) Plan Type B: Before expiration of the interest rate guarantee, the policyholder

16-58

may withdraw funds only (I) with an adjustment to reflect changes in interest rates or asset values

16-59

since receipt of the funds by the insurance company, or (II) without an adjustment but in

16-60

installments over five (5) years or more, or (III) no withdrawal permitted. At the end of the

16-61

interest rate guarantee, funds may be withdrawn without the an adjustment in a single sum or

16-62

installments over less than five (5) years; and

16-63

     (C)(III) Plan Type C: The policyholder Policyholder may withdraw funds before the

16-64

expiration of interest rate guarantee in a single sum or installments over less than five (5) years

16-65

either (I) without adjustment to reflect changes in interest rates or asset values since receipt of the

16-66

funds by the insurance company, or (II) subject only to a fixed surrender charge stipulated in the

16-67

contract as a percentage of the fund; and

17-68

     (vi)(F) A company may elect to value guaranteed interest contracts with cash settlement

17-69

options and annuities with cash settlement options on either an issue year basis or on a change in

17-70

fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with

17-71

no cash settlement options must be valued on an issue year basis. As used in this section, "issue

17-72

year basis of valuation" refers to a valuation basis under which the interest rate used to determine

17-73

the minimum valuation standard for the entire duration of the annuity or guaranteed interest

17-74

contract is the calendar year valuation interest rate for the year of issue or year of purchase of the

17-75

annuity or guaranteed interest contract, and "change in fund basis of valuation" refers to a

17-76

valuation basis under which the interest rate used to determine the minimum valuation standard

17-77

applicable to each change in the fund held under the annuity or guaranteed interest contract is the

17-78

calendar year valuation interest rate for the year of the change in the fund.

17-79

     (d) Reference interest rate. - Reference interest rate referred to in subsection (b) is

17-80

defined as follows:

17-81

     (1) For all life insurance, the lesser of the average over a period of thirty-six (36) months

17-82

and the average over a period of twelve (12) months, ending on June 30 of the calendar year next

17-83

preceding the year of issue, of the monthly average of the composite yield on seasoned corporate

17-84

bonds, as published by Moody's Investors Service, Inc.;

17-85

     (2) For single premium immediate annuities and for annuity benefits involving life

17-86

contingencies arising from other annuities with cash settlement options and guaranteed interest

17-87

contracts with cash settlement options, the average over a period of twelve (12) months, ending

17-88

on June 30 of the calendar year of issue or year of purchase, of the monthly average of the

17-89

composite yield on seasoned corporate bonds, as published by Moody's Investors Service, Inc.;

17-90

     (3) For other annuities with cash settlement options and guaranteed interest contracts with

17-91

cash settlement options, valued on a year of issue basis, except as stated in subdivision paragraph

17-92

(d)(2) above, with guarantee duration in excess of ten (10) years, the lesser of the average over a

17-93

period of thirty-six (36) months and the average over a period of twelve (12) months, ending on

17-94

June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield

17-95

on seasoned corporate bonds, as published by Moody's Investors Service, Inc.;

17-96

     (4) For other annuities with cash settlement options and guaranteed interest contracts with

17-97

cash settlement options, valued on a year of issue basis, except as stated in subdivision paragraph

17-98

(d)(2) above, with guarantee duration of ten (10) years or less, the average over a period of twelve

17-99

(12) months, ending on June 30 of the calendar year of issue or purchase, of the monthly average

17-100

of the composite yield on seasoned corporate bonds, as published by Moody's Investors Service,

17-101

Inc.;

18-102

     (5) For other annuities with no cash settlement options and for guaranteed interest

18-103

contracts with no cash settlement options, the average over a period of twelve (12) months,

18-104

ending on June 30 of the calendar year of issue or purchase, of the monthly average of the

18-105

composite yield on seasoned corporate bonds, as published by Moody's Investors Service, Inc.;

18-106

and

18-107

     (6) For other annuities with cash settlement options and guaranteed interest contracts with

18-108

cash settlement options, valued on a change in fund basis, except as stated in subdivision (d)(2),

18-109

the average over a period of twelve (12) months, ending on June 30 of the calendar year of the

18-110

change in the fund, of the monthly average of the composite yield on seasoned corporate bonds,

18-111

as published by Moody's Investors Service, Inc.

18-112

     (e) Alternative method for determining reference interest rates. - In the event that the

18-113

monthly average of the composite yield on seasoned corporate bonds is no longer published by

18-114

Moody's Investors Service, Inc., or in the event that the National Association of Insurance

18-115

Commissioners determines that the monthly average of the composite yield on seasoned

18-116

corporate bonds as published by Moody's Investors Service, Inc. is no longer appropriate for the

18-117

determination of the reference interest rate, then an alternative method for determination of the

18-118

reference interest rate, which is adopted by the National Association of Insurance Commissioners

18-119

and approved by regulation promulgated by the commissioner of insurance, may be substituted.

18-120

     27-4.5-5. Reserve valuation method -- Life insurance and endowment benefits. -- (a)

18-121

Except as provided in sections 27-4.5-5.1, 27-4.5-8 and 27-4.5-10, reserves according to the

18-122

commissioners' reserve valuation method for the life insurance and endowment benefits of

18-123

policies providing for a uniform amount of insurance and requiring the payment of uniform

18-124

premiums shall be the excess, if any, of the present value, at the date of valuation, of the future

18-125

guaranteed benefits provided for by the policies therefor, over the then present value of any future

18-126

modified net premiums. The modified net premiums for any policy shall be a the uniform

18-127

percentage of the respective contract premiums for the benefits so such that the present value, at

18-128

the date of issue of the policy, of all modified net premiums shall be equal to the sum of the then

18-129

present value of the benefits provided for by the policy and the excess of (1) over (2), as follows:

18-130

      (1) A net level annual premium equal to the present value, at the date of issue, of the

18-131

benefits provided for after the first policy year, divided by the present value, at the date of issue,

18-132

of an annuity of one per annum payable on the first and each subsequent anniversary of the policy

18-133

on which a premium falls due; provided however, that the net level annual premium shall not

18-134

exceed the net level annual premium on the nineteen (19) year premium whole life plan for

18-135

insurance of the same amount at an age one year higher than the age at issue of the policy; and

19-136

      (2) A net one year term premium for the benefits provided for in the first policy year.

19-137

      (b) For any life insurance policy issued on or after January 1, 1994 for which the contract

19-138

premium in the first policy year exceeds that of the second year and for which no comparable

19-139

additional benefit is provided in the first year for the excess, and which provides an endowment

19-140

benefit or a cash surrender value or a combination of them in an amount greater than the excess

19-141

premium, the reserve according to the commissioner's reserve valuation method as of any policy

19-142

anniversary occurring on or before the assumed ending date, defined herein as the first policy

19-143

anniversary on which the sum of any endowment benefit and any cash surrender value then

19-144

available is greater than the excess premium, shall, except as provided in section 27-4.5-8, be the

19-145

greater of the reserve as of the policy anniversary calculated as described in subsection (a) and the

19-146

reserve as of the policy anniversary calculated as described in subsection (a), but with:

19-147

     (1) the value defined in subdivision subsection (a)(1) being reduced by fifteen percent

19-148

(15%) of the amount of the such excess first year premium,

19-149

     (2) all present values of benefits and premiums being determined without reference to

19-150

premiums or benefits provided for by the policy after the assumed ending date,

19-151

     (3) the policy being assumed to mature on the that date as an endowment, and

19-152

     (4) the cash surrender value provided on the that date being considered as an endowment

19-153

benefit. In making the above comparison contained in this subsection the mortality and interest

19-154

basis bases stated in sections 27-4.5-4 and 27-4.5-4.1 shall be used.

19-155

      (c) Reserves according to the commissioner's reserve valuation method shall be

19-156

calculated by a method consistent with the principles of the preceding paragraphs of this section

19-157

for: (1) life insurance policies providing for a varying amount of insurance or requiring the

19-158

payment of varying premiums; (2) group annuity and pure endowment contracts purchased under

19-159

a retirement plan or plan of deferred compensation, established or maintained by an employer

19-160

including a partnership or sole proprietorship or by an employee organization, or by both, other

19-161

than a plan providing individual retirement accounts or individual retirement annuities under 26

19-162

U.S.C. section 408 as now or hereafter amended; (3) disability and accidental death benefits in all

19-163

policies and contracts; and (4) all other benefits, except life insurance and endowment benefits in

19-164

life insurance policies and benefits provided by all other annuity and pure endowment contracts;

19-165

shall be calculated by a method consistent with the principles of subsections (a) and (b) of this

19-166

section.

19-167

     27-4.5-6. Minimum reserves. -- (a) In no event shall a company's aggregate reserves for

19-168

all life insurance policies, excluding disability and accidental death benefits, issued on or after

19-169

January 1, 1994, be less than the aggregate reserves calculated in accordance with the methods set

19-170

forth in sections 27-4.5-5, 27-4.5-5.1, 27-4.5-8 and 27-4.5-9 and the mortality table or tables and

20-1

rate or rates of interest used in calculating nonforfeiture benefits for the policies.

20-2

      (b) In no event shall the aggregate reserves for all policies, contracts, and benefits be less

20-3

than the aggregate reserves determined by the qualified appointed actuary to be necessary to

20-4

render the opinion required by section 27-4.5-3.

20-5

     27-4.5-7. Optional reserve calculation. -- (a) Reserves for all policies and contracts

20-6

issued prior to January 1, 1994, may be calculated, at the option of the company, according to any

20-7

standards that produce greater aggregate reserves for all such policies and contracts than the

20-8

minimum reserves required by consistent with the laws in effect immediately prior to that date.

20-9

      (b) Reserves for any category of policies, contracts, or benefits as established by the

20-10

commissioner of insurance, issued on or after the January 1, 1994, may be calculated, at the

20-11

option of the company, according to any standards which produce greater aggregate reserves for

20-12

the category than those calculated according to the minimum standard provided in this chapter,

20-13

but the rate or rates of interest used for policies and contracts, other than annuity and pure

20-14

endowment contracts, shall not be higher greater than the corresponding rate or rates of interest

20-15

used in calculating any nonforfeiture benefits provided in them the policies or contracts.

20-16

      (c) Any A company which adopts at any time shall have adopted any a standard of

20-17

valuation producing greater aggregate reserves than those calculated according to the minimum

20-18

standard provided in this chapter may adopt a lower standard of valuation, with the approval of

20-19

the commissioner of insurance, adopt any lower standard of valuation, but not lower than the

20-20

minimum provided in this chapter; provided that, for the purposes of this section, the holding of

20-21

additional reserves previously determined by a qualified the appointed actuary to be necessary to

20-22

render the opinion required by section 27-4.5-3 shall not be deemed to be the adoption of a higher

20-23

standard of valuation.

20-24

     27-4.5-8. Reserve calculation -- Valuation net premium exceeding the gross

20-25

premium charged. -- (a) If in any contract year the gross premium charged by the any life

20-26

insurance company on any policy or contract is less than the valuation net premium for the policy

20-27

or contract calculated by the method used in calculating the reserve on it but using the minimum

20-28

valuation standards of mortality and rate of interest, the minimum reserve required for the policy

20-29

or contract shall be the greater of either the reserve calculated according to the mortality table,

20-30

rate of interest, and method actually used for the policy or contract, or the reserve calculated by

20-31

the method actually used for the policy or contract but using the minimum valuation standards of

20-32

mortality and rate of interest and replacing the valuation net premium by the actual gross

20-33

premium in each contract year for which the valuation net premium exceeds the actual gross

20-34

premium. The minimum valuation standards of mortality and rate of interest referred to in this

21-1

section are those standards stated in sections 27-4.5-4 and 27-4.5-4.1.

21-2

      (b) For any life insurance policy issued on or after January 1, 1994, for which the gross

21-3

premium in the first policy year exceeds that of the second year and for which no comparable

21-4

additional benefit is provided in the first year for the excess, and which provides an endowment

21-5

benefit or a cash surrender value or a combination of them in an amount greater than the excess

21-6

premium, the provisions of subsection (a) this section shall be applied as if the method actually

21-7

used in calculating the reserve for the policy were the method described in section 27-4.5-5,

21-8

ignoring section 27-4.5-5(b). The minimum reserve at each policy anniversary of the such a

21-9

policy shall be the greater of the minimum reserve calculated in accordance with section 27-4.5-5,

21-10

including section 27-4.5-5(b), and the minimum reserve calculated in accordance with this

21-11

section.

21-12

     27-4.5-9. Reserve calculation -- Indeterminate premium plans. -- In the case of any

21-13

plan of life insurance which that provides for future premium determination, the amounts of

21-14

which are to be determined by the insurance company based on the then estimates of future

21-15

experience, or in the case of any plan of life insurance or annuity which that is of such a nature

21-16

that the minimum reserves cannot be determined by the methods described in sections 27-4.5-5,

21-17

27-4.5-5.1 and 27-4.5-8, the reserves which that are held under that the plan must shall:

21-18

      (1) Be appropriate in relation to the benefits and the pattern of premiums for that plan;

21-19

and

21-20

      (2) Be computed by a method that is consistent with the principles of this chapter, as

21-21

determined by regulations promulgated by the commissioner of insurance.

21-22

     Notwithstanding any other provision in the laws of this state, a policy, contract or

21-23

certificate providing life insurance under such a plan shall be affirmatively approved by the

21-24

commissioner before it can be marketed, issued, delivered or used in this state.

21-25

     27-4.5-10. Minimum standards for accident and sickness plans Minimum standards

21-26

for accident and health insurance contracts. -- The commissioner of insurance shall

21-27

promulgate a regulation containing the minimum standards applicable to the valuation of accident

21-28

and sickness plans. For accident and health insurance contracts issued on or after the operative

21-29

date of the valuation manual, the standard prescribed in the valuation manual is the minimum

21-30

standard of valuation required under subsection 27-4.5-2(b). For accident and health insurance

21-31

contracts issued on or after January 1, 1994 and prior to the operative date of the valuation

21-32

manual the minimum standard of valuation is the standard adopted by the commissioner by

21-33

regulation.

22-34

     SECTION 3. Chapter 27-4.3 of the General Laws entitled "The Standard Nonforfeiture

22-35

Law for Life Insurance" is hereby amended by adding thereto the following section:

22-36

     27-4.3-1.1. Definitions. -- "Operative date of the valuation manual" means January 1 of

22-37

the first calendar year that the valuation manual as defined in chapter 27-4.5 is effective.

22-38

     SECTION 4. Chapter 27-4.5 of the General Laws entitled "The Standard Valuation Law"

22-39

is hereby amended by adding thereto the following sections:

22-40

     27-4.5-13. Valuation manual for policies issued on or after the operative date of the

22-41

valuation manual. -- (a) For policies issued on or after the operative date of the valuation

22-42

manual, the standard prescribed in the valuation manual is the minimum standard of valuation

22-43

required under subsection 27-4.5-2(b), except as provided under subsections (e) or (g) of this

22-44

section.

22-45

     (b) The operative date of the valuation manual is January 1 of the first calendar year

22-46

following the first July 1 as of which all of the following have occurred:

22-47

     (1) The valuation manual has been adopted by the NAIC by an affirmative vote of at least

22-48

forty-two (42) members, or three-fourths (3/4) of the members voting, whichever is greater.

22-49

     (2) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation

22-50

including substantially similar terms and provisions, has been enacted by states representing

22-51

greater than seventy-five percent (75%) of the direct premiums written as reported in the

22-52

following annual statements submitted for 2008: life, accident and health annual statements;

22-53

health annual statements; or fraternal annual statements.

22-54

     (3) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation

22-55

including substantially similar terms and provisions, has been enacted by at least forty-two (42)

22-56

of the following fifty-five (55) jurisdictions: The fifty (50) States of the United States, American

22-57

Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.

22-58

     (c) Unless a change in the valuation manual specifies a later effective date, changes to the

22-59

valuation manual shall be effective on January 1 following the date when all of the following

22-60

have occurred:

22-61

     (1) The change to the valuation manual has been adopted by the NAIC by an affirmative

22-62

vote representing:

22-63

     (i) At least three-fourths (3/4) of the members of the NAIC voting, but not less than a

22-64

majority of the total membership, and

22-65

     (ii) Members of the NAIC representing jurisdictions totaling greater than seventy-five

22-66

percent (75%) of the direct premiums written as reported in the following annual statements most

22-67

recently available prior to the vote in subsection (c)(1)(i): life, accident and health annual

22-68

statements, health annual statements, or fraternal annual statements.

23-1

     (2) The valuation manual becomes effective pursuant to a regulation adopted by the

23-2

commissioner.

23-3

     (d) The valuation manual must specify all of the following:

23-4

     (1) Minimum valuation standards for and definitions of the policies or contracts subject

23-5

to subsection 27-4.5-2(b). Such minimum valuation standards shall be:

23-6

     (i) The commissioner's reserve valuation method for life insurance contracts, other than

23-7

annuity contracts, subject to subsection 27-4.5-2(b);

23-8

     (ii) The commissioner's annuity reserve valuation method for annuity contracts subject to

23-9

subsection 27-4.5- 2(b); and

23-10

     (iii) Minimum reserves for all other policies or contracts subject to subsection 27-4.5-

23-11

2(b).

23-12

     (2) Which policies or contracts or types of policies or contracts that are subject to the

23-13

requirements of a principle-based valuation in subsection 27-4.5-14(a) and the minimum

23-14

valuation standards consistent with those requirements;

23-15

     (3) For policies and contracts subject to a principle-based valuation under section 27-4.5-

23-16

14:

23-17

     (i) Requirements for the format of reports to the commissioner under subdivision 27-4.5-

23-18

14(b)(2) and which shall include information necessary to determine if the valuation is

23-19

appropriate and in compliance with this chapter;

23-20

     (ii) Assumptions shall be prescribed for risks over which the company does not have

23-21

significant control or influence.

23-22

     (iii) Procedures for corporate governance and oversight of the actuarial function, and a

23-23

process for appropriate waiver or modification of such procedures.

23-24

     (4) For policies not subject to a principle-based valuation under section 27-4.5-14 the

23-25

minimum valuation standard shall either:

23-26

     (i) Be consistent with the minimum standard of valuation prior to the operative date of

23-27

the valuation manual; or

23-28

     (ii) Develop reserves that quantify the benefits and guarantees, and the funding,

23-29

associated with the contracts and their risks at a level of conservatism that reflects conditions that

23-30

include unfavorable events that have a reasonable probability of occurring.

23-31

     (5) Other requirements, including, but not limited to, those relating to reserve methods,

23-32

models for measuring risk, generation of economic scenarios, assumptions, margins, use of

23-33

company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and

23-34

memorandums, transition rules and internal controls; and

24-1

     (6) The data and form of the data required under section 27-4.5-15, with whom the data

24-2

must be submitted, and may specify other requirements including data analyses and reporting of

24-3

analyses.

24-4

     (e) In the absence of a specific valuation requirement or if a specific valuation

24-5

requirement in the valuation manual is not, in the opinion of the commissioner, in compliance

24-6

with this chapter, then the company shall, with respect to such requirements, comply with

24-7

minimum valuation standards prescribed by the commissioner by regulation.

24-8

     (f) The commissioner may engage a qualified actuary, at the expense of the company, to

24-9

perform an actuarial examination of the company and opine on the appropriateness of any reserve

24-10

assumption or method used by the company, or to review and opine on a company's compliance

24-11

with any requirement set forth in this chapter. The commissioner may rely upon the opinion,

24-12

regarding provisions contained within this chapter, of a qualified actuary engaged by the

24-13

commissioner of another state, district or territory of the United States. As used in this

24-14

subsection, term "engage" includes employment and contracting.

24-15

     (g) The commissioner may require a company to change any assumption or method that

24-16

in the opinion of the commissioner is necessary in order to comply with the requirements of the

24-17

valuation manual or this chapter; and the company shall adjust the reserves as required by the

24-18

commissioner. The commissioner may take other disciplinary action as permitted pursuant to

24-19

section 42-14-16.

24-20

     27-4.5-14. Requirements of a principle-based valuation. -- (a) A company must

24-21

establish reserves using a principle-based valuation that meets the following conditions for

24-22

policies or contracts as specified in the valuation manual:

24-23

     (1) Quantify the benefits and guarantees, and the funding, associated with the contracts

24-24

and their risks at a level of conservatism that reflects conditions that include unfavorable events

24-25

that have a reasonable probability of occurring during the lifetime of the contracts. For policies

24-26

or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail

24-27

risk.

24-28

     (2) Incorporate assumptions, risk analysis methods and financial models and management

24-29

techniques that are consistent with, but not necessarily identical to, those utilized within the

24-30

company's overall risk assessment process, while recognizing potential differences in financial

24-31

reporting structures and any prescribed assumptions or methods.

24-32

     (3) Incorporate assumptions that are derived in one of the following manners:

24-33

     (i) The assumption is prescribed in the valuation manual.

25-34

     (ii) For assumptions that are not prescribed, the assumptions shall:

25-35

     (A) Be established utilizing the company's available experience, to the extent it is

25-36

relevant and statistically credible; or

25-37

     (B) To the extent that company data is not available, relevant, or statistically credible, be

25-38

established utilizing other relevant, statistically credible experience.

25-39

     (4) Provide margins for uncertainty including adverse deviation and estimation error,

25-40

such that the greater the uncertainty the larger the margin and resulting reserve.

25-41

     (b) A company using a principle-based valuation for one or more policies or contracts

25-42

subject to this section as specified in the valuation manual shall:

25-43

     (1) Establish procedures for corporate governance and oversight of the actuarial valuation

25-44

function consistent with those described in the valuation manual.

25-45

     (2) Provide to the commissioner and the board of directors an annual certification of the

25-46

effectiveness of the internal controls with respect to the principle-based valuation. Such controls

25-47

shall be designed to assure that all material risks inherent in the liabilities and associated assets

25-48

subject to such valuation are included in the valuation, and that valuations are made in accordance

25-49

with the valuation manual. The certification shall be based on the controls in place as of the end

25-50

of the preceding calendar year.

25-51

     (3) Develop, and file with the commissioner upon request, a principle-based valuation

25-52

report that complies with standards prescribed in the valuation manual.

25-53

     (c) A principle-based valuation may include a prescribed formulaic reserve component.

25-54

     27-4.5-15. Experience reporting for policies in force on or after the operative date of

25-55

the valuation manual. -- A company shall submit mortality, morbidity, policyholder behavior, or

25-56

expense experience and other data as prescribed in the valuation manual.

25-57

     27-4.5-16. Confidentiality. -- (a) For purposes of this section, "confidential information"

25-58

shall mean:

25-59

     (1) A memorandum in support of an opinion submitted under section 27-4-3 and any

25-60

other documents, materials and other information, including, but not limited to, all working

25-61

papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or

25-62

any other person in connection with such memorandum;

25-63

     (2) All documents, materials and other information, including, but not limited to, all

25-64

working papers, and copies thereof, created, produced or obtained by or disclosed to the

25-65

commissioner or any other person in the course of an examination made under subsection 27-4.5-

25-66

13(f); provided, however, that if an examination report or other material prepared in connection

25-67

with an examination made under chapter 27-13.1 is not held as private and confidential

25-68

information under chapter 27-13.1, an examination report or other material prepared in

26-1

connection with an examination made under subsection 27-4.5-13(f) of this chapter shall not be

26-2

"confidential information" to the same extent as if such examination report or other material had

26-3

been prepared in accordance with chapter 27-13.1;

26-4

     (3) Any reports, documents, materials and other information developed by a company in

26-5

support of, or in connection with, an annual certification by the company under subdivision 27-

26-6

4.5- 14(b)(1) of this chapter evaluating the effectiveness of the company's internal controls with

26-7

respect to a principle-based valuation and any other documents, materials and other information,

26-8

including, but not limited to, all working papers, and copies thereof, created, produced or

26-9

obtained by or disclosed to the commissioner or any other person in connection with such reports,

26-10

documents, materials and other information;

26-11

     (4) Any principle-based valuation report developed under subdivision 27-4.5-14(b)(2)

26-12

and any other documents, materials and other information, including, but not limited to, all

26-13

working papers, and copies thereof, created, produced or obtained by or disclosed to the

26-14

commissioner or any other person in connection with such report; and

26-15

     (5) Any documents, materials, data and other information submitted by a company under

26-16

section 27-4.5- 15 (collectively, "experience data") and any other documents, materials, data and

26-17

other information, including, but not limited to, all working papers, and copies thereof, created or

26-18

produced in connection with such experience data, in each case that include any potentially

26-19

company-identifying or personally identifiable information, that is provided to or obtained by the

26-20

commissioner (together with any "experience data", the "experience materials") and any other

26-21

documents, materials, data and other information, including, but not limited to, all working

26-22

papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or

26-23

any other person in connection with such experience materials.

26-24

     (b) Privilege for, and confidentiality of, confidential information.

26-25

     (1) Except as provided in this section 27-4.5-16, a company's confidential information is

26-26

confidential by law and privileged, and shall not be subject to chapter 38-2, shall not be subject to

26-27

subpoena and shall not be subject to discovery or admissible in evidence in any private civil

26-28

action; provided, however, that the commissioner is authorized to use the confidential information

26-29

in the furtherance of any regulatory or legal action brought against the company as a part of the

26-30

commissioner's official duties.

26-31

     (2) Neither the commissioner nor any person who received confidential information

26-32

while acting under the authority of the commissioner shall be permitted or required to testify in

26-33

any private civil action concerning any confidential information.

27-34

     (3) In order to assist in the performance of the commissioner's duties, the commissioner

27-35

may share confidential information: (i) With other state, federal and international regulatory

27-36

agencies and with the NAIC and its affiliates and subsidiaries; and (ii) In the case of confidential

27-37

information specified in subdivisions 27-4.5-16(a)(1) and 27-4.5-16(a)(4) only, with the actuarial

27-38

board for counseling and discipline or its successor upon request stating that the confidential

27-39

information is required for the purpose of professional disciplinary proceedings and with state,

27-40

federal and international law enforcement officials; in the case of subsections (a) and (b),

27-41

provided, that, such recipient agrees, and has the legal authority to agree, to maintain the

27-42

confidentiality and privileged status of such documents, materials, data and other information in

27-43

the same manner and to the same extent as required for the commissioner.

27-44

     (4) The commissioner may receive documents, materials, data and other information,

27-45

including otherwise confidential and privileged documents, materials, data or information, from

27-46

the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other

27-47

foreign or domestic jurisdictions and from the actuarial board for counseling and discipline or its

27-48

successor and shall maintain as confidential or privileged any document, material, data or other

27-49

information received with notice or the understanding that it is confidential or privileged under

27-50

the laws of the jurisdiction that is the source of the document, material or other information.

27-51

     (5) The commissioner may enter into agreements governing sharing and use of

27-52

information consistent with subsection 27-4.5-16(b).

27-53

     (6) No waiver of any applicable privilege or claim of confidentiality in the confidential

27-54

information shall occur as a result of disclosure to the commissioner under this section or as a

27-55

result of sharing as authorized in subdivision 27-4.5-16(b)(3).

27-56

     (7) A privilege established under the law of any state or jurisdiction that is substantially

27-57

similar to the privilege established under subsection 27-4.5-16(b) shall be available and enforced

27-58

in any proceeding in, and in any court of, this state.

27-59

     (8) In section 27-4.5-16 "regulatory agency," "law enforcement agency" and the "NAIC"

27-60

include, but are not limited to, their employees, agents, consultants and contractors.

27-61

     (c) Notwithstanding subsection 27-4.5-16(b), any confidential information specified in

27-62

subdivisions 27-4.5-16(a)(1) and 27-4.5-14(a)(4):

27-63

     (1) May be subject to subpoena for the purpose of defending an action seeking damages

27-64

from the appointed actuary submitting the related memorandum in support of an opinion

27-65

submitted under section 27-4.5-3 or principle-based valuation report developed under subdivision

27-66

27-4.5-14(b)(3) by reason of an action required by this chapter or by regulations promulgated

27-67

hereunder;

28-68

     (2) May otherwise be released by the commissioner with the written consent of the

28-69

company; and

28-70

     (3) Once any portion of a memorandum in support of an opinion submitted under section

28-71

27-4.5-3 or a principle-based valuation report developed under subdivision 27-4.5-14(b)(3) is

28-72

cited by the company in its marketing or is publicly volunteered to or before a governmental

28-73

agency other than a state insurance department or is released by the company to the news media,

28-74

all portions of such memorandum or report shall no longer be confidential.

28-75

     27-4.5-17. Single state exemption. -- (a) The commissioner may exempt specific product

28-76

forms or product lines of a domestic company that is licensed and doing business only in Rhode

28-77

Island from the requirements of section 27-4.5-13 provided:

28-78

     (1) The commissioner has issued an exemption in writing to the company and has not

28-79

subsequently revoked the exemption in writing; and

28-80

     (2) The company computes reserves using assumptions and methods used prior to the

28-81

operative date of the valuation manual in addition to any requirements established by the

28-82

commissioner and promulgated by regulation.

28-83

     (b) For any company granted an exemption under this section, and sections 27-4.5-3, 27-

28-84

4.5-4, 27-4.5-4.1, 27-4.5-4.2, 27-4.5-5, 27-4.5-5.1, 27-4.5-6, 27-4.5-7, 27-4.5-8, 27-4.5-9 and 27-

28-85

4.5-10 shall be applicable. With respect to any company applying this exemption, any reference

28-86

to section 27-4.5-13 found in sections 27-4.5-3, 27-4.5-4, 27-4.5-4.1, 27-4.5-4.2, 27-4.5-5, 27-

28-87

4.5-5.1, 27-4.5-6, 27-4.5-7, 27-4.5-8, 27-4.5-9 and 27-4.5-10 shall not be applicable.

28-88

     SECTION 5. Sections 27-4-17, 27-4-18, 27-4-19, 27-4-20 and 27-4-21 of the General

28-89

Laws in Chapter 27-4 entitled "Life Insurance Policies and Reserves" are hereby repealed.

28-90

     27-4-17. Annual valuation of policies and reserves. -- (a) The director of business

28-91

regulation shall make annual valuations of all outstanding policies, additions to policies, unpaid

28-92

dividends, and all other obligations of every life insurance corporation doing business in this

28-93

state. All valuations made by the director, or by his or her authority, shall be made upon the net

28-94

premium basis. The legal minimum standard for valuation of contracts issued before January 1,

28-95

1907, shall be the American experience table of mortality with the interest at four percent (4%)

28-96

per annum, and for contracts issued on or after that date the same table of mortality with interest

28-97

at three and one-half percent (3 1/2%) per annum. Any company may adopt as a legal minimum

28-98

standard, for the valuation of life insurance policies issued on or after January 1, 1948, the

28-99

commissioners reserve valuation method, with interest at three and one-half percent (3 1/2%) per

28-100

annum, or in the case of policies issued on or after April 17, 1975, four percent (4%) per annum

28-101

for policies issued prior to April 27, 1979, and four and one-half percent (4 1/2%) per annum for

28-102

policies issued on or after April 27, 1979, and either the commissioners 1941 standard ordinary

29-1

mortality table or the commissioners 1958 standard ordinary mortality table for ordinary policies,

29-2

and either the 1941 standard industrial mortality table or the commissioners 1961 standard

29-3

industrial mortality table or any industrial mortality table, adopted after 1980 by the National

29-4

Association of Insurance Commissioners, that is approved by regulation promulgated by the

29-5

commissioner for use in determining the minimum standard of valuation for industrial policies,

29-6

for industrial policies in lieu of the legal minimum standard allowed by this section. (b) The

29-7

interest rates used in determining the minimum standard for the valuation of all life insurance

29-8

policies issued in a particular calendar year on or after May 15, 1981, shall be the calendar year

29-9

statutory valuation interest rates as defined in this section. (c) (1) The calendar year statutory

29-10

valuation interest rates shall be determined as follows and the results rounded to the nearer one-

29-11

quarter of one percent (.25%): For life insurance: = I = .03 + W (R1 -.03) + W/2 (R1 -.09);

29-12

where R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate

29-13

defined in this section, and W is the weighting factor defined in this section; (2) If the calendar

29-14

year statutory valuation interest rate for any life insurance policies issued in any calendar year

29-15

determined without reference to subdivision (c)(1) differs from the corresponding actual rate for

29-16

similar policies issued in the immediately preceding calendar year by less than one-half of one

29-17

percent (.5%), the calendar year statutory valuation interest rate for these life insurance policies

29-18

shall be equal to the corresponding actual rate for the immediately preceding calendar year. For

29-19

the purposes of applying the provisions in this subdivision, the calendar year statutory valuation

29-20

interest rate for life insurance policies issued in a calendar year shall be determined for 1980

29-21

using the reference interest rate defined for 1979 and shall be determined for each subsequent

29-22

calendar year. (3) The weighting factors referred to in the formula stated in subdivision (c)(1) are

29-23

given in the following table:

29-24

     Weighting Factors for Life Insurance: Guarantee Duration
Weighting (Years) Factors

29-25

10 or less
.50 More than 10, but not more than 20
.45 More than 20
.35 For life insurance,

29-26

the guarantee duration is the maximum number of years the life insurance can remain in force on

29-27

a basis guaranteed in the policy or under options to convert to plans of life insurance with

29-28

premium rates or non-forfeiture values or both which are guaranteed in the original policy.

29-29

      (4) The reference interest rate referred to in subdivision (c)(1) shall be defined as

29-30

follows: (i) For all life insurance, the lesser of the average over a period of thirty-six (36) months

29-31

and the average over a period of twelve (12) months, ending on June 30 of the calendar year next

29-32

preceding the year of issue, of Moody's corporate bond yield average -- monthly average

29-33

corporates, as published by Moody's Investors Service, Inc., or any successor; or (ii) In the event

29-34

that the Moody's corporate bond yield average -- monthly average corporates is no longer

30-1

published by Moody's Investors Service, Inc., or in the event that the National Association of

30-2

Insurance Commissioners determines that the Moody's corporate bond yield average -- monthly

30-3

average corporates, as published by Moody's Investors Service, Inc., is no longer appropriate for

30-4

the determination of the reference interest rate, then an alternative method for determination of

30-5

the references interest rate, which is adopted by the National Association of Insurance

30-6

Commissioners and approved by regulation promulgated by the commissioner, may be

30-7

substituted. (d) The mortality table used in determining the minimum standard for the valuation

30-8

of ordinary life insurance policies issued on or after May 15, 1981, shall be: (1) The

30-9

commissioners 1980 standard ordinary mortality table; (2) At the election of the company for

30-10

any one or more specified plans of life insurance, the commissioners 1980 standard ordinary

30-11

mortality table with ten (10) year select mortality factors; or (3) Any ordinary mortality table,

30-12

adopted after 1980 by the National Association of Insurance Commissioners, that is approved by

30-13

regulation promulgated by the commissioner for use in determining the minimum standard of

30-14

valuation for these policies. (e) Reserves for any category of policies or contracts may be

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calculated, at the option of the insurer, according to any standard or standards which produce

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greater aggregate reserves for all policies or contracts than the legal minimum standard or

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standards.

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     27-4-18. Variance from valuation standards. -- The director of business regulation may

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vary the standards of interest and mortality in the case of corporations from foreign countries as

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to contracts issued by these corporations in countries other than the United States, and in

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particular cases of invalid lives and other extra hazards, and value policies seriatim or in groups,

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use approximate averages for fractions of a year and otherwise, and accept the valuation of the

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department of insurance of any other state or country if made upon the basis of, and according to,

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standards not lower than required or authorized by sections 27-4-17 -- 27-4-20, in place of the

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valuation required by sections 27-4-17 -- 27-4-20.

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     27-4-19. Valuation of bonds and fixed obligation investments. -- All bonds or other

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evidences of debt having a fixed term and rate held by any life insurance company, assessment

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life association, or fraternal beneficiary association authorized to do business in this state, may, if

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amply secured and not in default as to principal or interest, be valued as follows: if purchased at

30-30

par, at the par value; and if purchased above or below par, on the basis of the purchase price

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adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective

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rate of interest at which the purchase was made; provided, that the purchase price shall in no case

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be taken at a higher figure than the actual market value at the time of purchase; and provided, that

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the director of business regulation shall have full discretion in determining the method of

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calculating values according to this rule.

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     27-4-20. Employment of actuary to make valuation -- Acceptance of valuation by

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company. -- For the purpose of making a valuation, the director of business regulation may

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employ a competent actuary to do the valuation, who shall be paid by the company for which the

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services are rendered, but nothing in this chapter shall prevent any company from making the

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valuation contemplated in this section, which may be received by the director upon the proof that

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he or she may determine. The expense of procuring that proof shall be paid by the company.

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     27-4-21. Certificate of compliance with reserve requirements. -- Upon the valuation

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being made as provided in sections 27-4-17 -- 27-4-20, the director of business regulation shall

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issue a certificate setting forth the corporate name of the company, its principal office, that it has

31-11

fully complied with the provisions of this chapter, stating the amount of the net reserve value of

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outstanding policies and the table upon which that value is computed, and that it is authorized to

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transact the business of life insurance in this state.

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     SECTION 6. This act shall take effect upon passage.

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LC01414/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE -- THE STANDARD NONFORFEITURE LAW FOR LIFE

INSURANCE

***

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     This act would bring the Standard Valuation and Standard Nonforfeiture for Life

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Insurance laws into compliance with the current version of the National Association of Insurance

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Commissioners Model Act by amending and adding a number of provisions to chapters 27-4.3

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and 27-4.5, and repealing the provisions of chapter 27-4 that are addressed in the amended

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version of chapter 27-4.5.

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     This act would take effect upon passage.

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LC01414/SUB A

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