There is a newer version of the Idaho Code and Statutes
2005 Idaho Code - 41-612 — STANDARD VALUATION LAW -- LIFE INSURANCE
TITLE 41
INSURANCE
CHAPTER 6
ASSETS AND LIABILITIES
41-612. STANDARD VALUATION LAW -- LIFE INSURANCE. (1) This section shall
be known as the standard valuation law.
(2) Annual valuation. The director shall annually value, or cause to be
valued, the reserve liabilities (hereinafter called reserves) for all
outstanding life insurance policies and annuity and pure endowment contracts
of every life insurer doing business in this state, and may certify the amount
of any such reserves, specifying the mortality table or tables, rate or rates
of interest and methods (net level premium method or others) used in the
calculation of such reserves. In the case of an alien insurer, such valuation
shall be limited to its insurance transactions in the United States. In
calculating such reserves, the director may use group methods and approximate
averages for fractions of a year or otherwise. He may accept in his discretion
the insurer's calculation of such reserves. In lieu of the valuation of the
reserves herein required of any foreign or alien insurer, he may accept any
valuation made or caused to be made by the insurance supervisory official of
any state or other jurisdiction when such valuation complies with the minimum
standard herein provided, and if the official of such state or jurisdiction
accepts as sufficient and valid for all legal purposes the certificate of
valuation of the director when such certificate states the valuation to have
been made in a specified manner according to which the aggregate reserves
would be at least as large as if they had been computed in the manner
prescribed by the law of that state or jurisdiction. Where any such valuation
is made by the director, he may use the actuary of the department or employ an
actuary for the purpose, and the reasonable compensation and expenses of the
actuary, at a rate approved by the director, upon demand by the director
supported by an itemized statement of such compensation and expenses, shall be
paid by the insurer. When a domestic insurer furnishes the director with a
valuation of its outstanding policies as computed by its own actuary or by an
actuary deemed satisfactory for the purpose by the director, the valuation
shall be verified by the actuary of the department without costs to the
insurer.
(3) Except as otherwise provided in subsections (4) and (4a) of this
section, the minimum standard for the valuation of all such policies and
contracts issued on and after January 1, 1914, and prior to the operative date
of section 41-1927, Idaho Code, (standard nonforfeiture law) shall be the
American experience table of mortality and interest at three and one-half
percent (3 1/2%) per annum. Not more than one (1) year shall be used as a
preliminary term. Extra charges may be made in particular cases of invalid
lives and other extra hazards, policies may be valued in groups, and
approximate averages may be used for fractions of a year. Policies other than
ordinary and twenty (20) payment life may be valued according to the modified
preliminary term, with twenty (20) payment life policies as a basis for such
valuation. This subsection applies only as to policies and contracts issued
prior to the operative date of section 41-1927, Idaho Code.
(4) Except as otherwise provided in subsections (4a) and (4b) of this
section, the minimum standard for the valuation of all such policies and
contracts issued on or after the operative date of section 41-1927, Idaho
Code, (standard nonforfeiture law) shall be the commissioners reserve
valuation methods defined in subsections (5), (6) and (10) of this section,
three and one-half percent (3 1/2%) interest for all other such policies and
contracts, except that the rate shall be four and one-half percent (4 1/2%)
for individual annuity contracts, or in the case of policies and contracts,
other than annuity and pure endowment contracts, issued on or after July 1,
1973, four percent (4%) interest for such policies issued prior to July 1,
1977, five and one-half percent (5 1/2%) interest for single premium life
insurance policies and four and one-half percent (4 1/2%) interest for all
other such policies issued on or after July 1, 1977, but prior to the
operative date of section (9)(d) of the standard nonforfeiture law for life
insurance as amended, seven percent (7%) interest for such policies issued on
and after the operative date of section (9)(d) of the standard nonforfeiture
law for life insurance as amended, and the following tables:
(a) For all ordinary policies of life insurance issued on the standard
basis, excluding any disability and accidental death benefits in such
policies, the commissioners 1941 standard ordinary mortality table for
such policies issued prior to the operative date of subsection (9)(b) of
section 41-1927, Idaho Code; the commissioners 1958 standard ordinary
mortality table for such policies issued on or after the operative date of
subsection (9)(b) of the standard nonforfeiture law for life insurance as
amended and prior to the operative date of subsection (9)(d) of the
standard nonforfeiture law for life insurance as amended; except, that for
any category of such policies issued on female risks, all modified net
premiums and present values, referred to in subsections (5) and (10) of
this section, may be calculated according to an age not more than six (6)
years younger than the actual age of the insured; and for such policies
issued on or after the operative date of subsection (9)(d) of the standard
nonforfeiture law for life insurance as amended:
(i) The commissioners 1980 standard ordinary mortality table, or
(ii) At the election of the company for any one (1) or more
specified plans of life insurance, the commissioners 1980 standard
ordinary mortality table with ten-year select mortality factors, or
(iii) Any ordinary mortality table, adopted after 1980 by the
national association of insurance commissioners, that is approved by
regulation promulgated by the director for use in determining the
minimum standard of valuation for such policies.
(b) For all industrial life insurance policies issued on the standard
basis, excluding any disability and accidental death benefits in such
policies, the 1941 standard industrial mortality table for such policies
issued prior to the operative date of subsection (9)(c) of section
41-1927, Idaho Code, and for such policies issued on or after such
operative date the commissioners 1961 standard industrial mortality table
or any industrial mortality table, adopted after 1980 by the national
association of insurance commissioners, that is approved by regulation
promulgated by the director for use in determining the minimum standard of
valuation for such policies.
(c) For individual annuity and pure endowment contracts, excluding any
disability and accidental death benefits in such policies, the 1937
standard annuity mortality table or, at the insurer's option, the annuity
mortality table for 1949, ultimate, or any modification of either of these
tables approved by the director.
(d) For group annuity and pure endowment contracts, excluding any
disability and accidental death benefits in such policies, the group
annuity mortality table for 1951, any modification of such table approved
by the director, or, at the insurer's option, any of the tables or
modifications of tables specified for individual annuity and pure
endowment contracts.
(e) For total and permanent disability benefits in or supplementary to
ordinary policies or contracts, for policies or contracts issued on or
after January 1, 1966, the tables of period 2 disablement rates and the
1930 to 1950 termination rates of the 1952 disability study of the Society
of Actuaries, with due regard to the type of benefit, or any tables of
disablement rates and termination rates, adopted after 1980 by the
national association of insurance commissioners, that are approved by
regulation promulgated by the director for use in determining the minimum
standard of valuation for such policies; for policies or contracts issued
on or after the operative date of section 41-1927, Idaho Code, (standard
nonforfeiture law) and prior to January 1, 1966, either such tables or, at
the insurer's option, the class (3) disability table (1926). Any such
table shall, for active lives, be combined with a mortality table
permitted for calculating the reserves for life insurance policies.
(f) For accidental death benefits in or supplementary to policies, for
policies issued on or after January 1, 1966, the 1959 accidental death
benefits table or any accidental death benefits table, adopted after 1980
by the national association of insurance commissioners, that is approved
by regulation promulgated by the director for use in determining the
minimum standard of valuation for such policies; for policies issued on or
after the operative date of section 41-1927, Idaho Code, (standard
nonforfeiture law) and prior to January 1, 1966, either such table or, at
the insurer's option, the intercompany double indemnity mortality table.
Either table shall be combined with a mortality table permitted for
calculating the reserves for life insurance policies.
(g) For group life insurance, life insurance issued on the substandard
basis and other special benefits, such tables as may be approved by the
director as being sufficient with relation to the benefits provided by
such policies.
(4a) Except as provided in subsection (4b), the minimum standard for the
valuation of all individual annuity and pure endowment contracts issued on or
after the operative date of this subsection (4a), as defined herein, and for
all annuities and pure endowments purchased on or after such operative date
under group annuity and pure endowment contracts, shall be the commissioners
reserve valuation methods defined in subsections (5) and (6) of this section
and the following tables and interest rates:
(a) For individual annuity and pure endowment contracts issued prior to
July 1, 1977, excluding any disability and accidental death benefits in
such contracts, the 1971 individual annuity mortality table, or any
modification of this table approved by the director, and six percent (6%)
interest for single premium immediate annuity contracts, and four and
one-half percent (4 1/2%) interest for all other individual annuity and
pure endowment contracts.
(b) For individual single premium immediate annuity contracts issued on
or after July 1, 1977, but prior to January 1, 1982, excluding any
disability and accidental death benefits in such contracts, the 1971
individual annuity mortality table, or any modification of this table
approved by the director, and seven and one-half percent (7 1/2%)
interest.
(c) For individual single premium immediate annuity contracts issued on
or after January 1, 1982, excluding any disability and accidental death
benefits in such contracts, the 1971 individual annuity mortality table or
any individual annuity mortality table, adopted after 1980 by the national
association of insurance commissioners, that is approved by regulation
promulgated by the director for use in determining the minimum standard of
valuation for such contracts, or any modification of these tables approved
by the director, and eleven percent (11%) interest.
(d) For individual annuity and pure endowment contracts issued on or
after July 1, 1977, but prior to January 1, 1982, other than single
premium immediate annuity contracts, excluding any disability and
accidental death benefits in such contracts, the 1971 individual annuity
mortality table, or any modification of this table approved by the
director, and five and one-half percent (5 1/2%) interest for single
premium deferred annuity and pure endowment contracts and four and
one-half percent (4 1/2%) interest for all other such individual annuity
and pure endowment contracts.
(e) For individual annuity and pure endowment contracts issued on or
after January 1, 1982, other than single premium immediate annuity
contracts, excluding any disability and accidental death benefits in such
contracts, the 1971 individual annuity mortality table or any individual
annuity mortality table, adopted after 1980 by the national association of
insurance commissioners, that is approved by regulation promulgated by the
director for use in determining the minimum standard of valuation for such
contracts, or any modification of these tables approved by the director,
and eight percent (8%) interest.
(f) For all annuities and pure endowments purchased prior to July 1,
1977, under group annuity and pure endowment contracts, excluding any
disability and accidental death benefits purchased under such contracts,
the 1971 group annuity mortality table, or any modification of this table
approved by the director, and six percent (6%) interest.
(g) For all annuities and pure endowments purchased on or after July 1,
1977, but prior to January 1, 1982, under group annuity and pure endowment
contracts, excluding any disability and accidental death benefits
purchased under such contracts, the 1971 group annuity mortality table, or
any modification of this table approved by the director, and seven and
one-half percent (7 1/2%) interest.
(h) For all annuities and pure endowments purchased on or after January
1, 1982, under group annuity and pure endowment contracts, excluding any
disability and accidental death benefits purchased under such contracts,
the 1971 group annuity mortality table or any group annuity mortality
table, adopted after 1980 by the national association of insurance
commissioners, that is approved by regulation promulgated by the director
for use in determining the minimum standard of valuation for such
annuities and pure endowments, or any modification of these tables
approved by the director, and eleven percent (11%) interest.
After July 1, 1973, any insurer may file with the director a written notice of
its election to comply with the provisions of this subsection after a
specified date before January 1, 1979, which shall be the operative date of
this subsection for such insurer, provided that an insurer may elect a
different operative date for individual annuity and pure endowment contracts
from that elected for group annuity and pure endowment contracts. If an
insurer makes no such election, the operative date of this subsection for such
insurer shall be January 1, 1979.
(4b) For any calendar year on or after the effective date of subsection
(9)(d) of the standard nonforfeiture law for life insurance in the case of
life insurance policies issued on or after such effective date, and for any
calendar year on or after January 1, 1982, in the case of:
(a) Individual annuity and pure endowment contracts issued on or after
January 1, 1982;
(b) Annuities and pure endowments purchased on or after January 1, 1982,
under group annuity and pure endowment contracts; and
(c) The net increase, if any, in any particular calendar year after
January 1, 1982, in amounts held under guaranteed interest contracts, the
company may elect, for the purpose of determining the minimum standard for
valuation, for any category of policy or contract, the calendar year
statutory valuation interest rate as defined in this subsection in lieu of
the interest rate specified in subsection (4) or (4a).
The provisions of this subsection shall be applicable to:
A. The interest rates used in determining the minimum standard for the
valuation of:
a. All life insurance policies issued in a particular calendar year,
on or after the operative date of subsection (9)(d) of the standard
nonforfeiture law for life insurance;
b. All individual annuity and pure endowment contracts issued in a
particular calendar year on or after January 1, 1982;
c. All annuities and pure endowments purchased in a particular
calendar year on or after January 1, 1982, under group annuity and
pure endowment contracts; and
d. The net increase, if any, in a particular calendar year after
January 1, 1982, in amounts held under guaranteed interest contracts
shall be the calendar year statutory valuation interest rates as defined
in this subsection.
B. Calendar year statutory valuation interest rates:
a. The calendar year statutory valuation interest rates, I, shall be
determined as follows and the results rounded to the nearer
one-quarter of one percent (1/4 of 1%).
1. For life insurance,
I = .03 + W ( - .03) + ( - .09);
2. For single premium immediate annuities and for annuity
benefits involving life contingencies arising from other
annuities with cash settlement options and from guaranteed
interest contracts with cash settlement options,
I = .03 + W (R - .03)
where is the lesser of R and .09;
is the greater of R and .09;
R is the reference interest rate defined in this subsection
and W is the weighting factor defined in this subsection,
3. For other annuities with cash settlement options and
guaranteed interest contracts with cash settlement options,
valued on an issue year basis, except as stated in 2. above, the
formula for life insurance stated in 1. above shall apply to
annuities and guaranteed interest contracts with guarantee
durations in excess of ten (10) years and the formula for single
premium immediate annuities stated in 2. above shall apply to
annuities and guaranteed interest contracts with guarantee
duration of ten (10) years or less,
4. For other annuities with no cash settlement options and for
guaranteed interest contracts with no cash settlement options,
the formula for single premium immediate annuities stated in 2.
above shall apply,
5. For other annuities with cash settlement options and
guaranteed interest contracts with cash settlement options,
valued on a change in fund basis, the formula for single
premium immediate annuities stated in 2. above shall apply.
b. However, if the calendar year statutory valuation interest rate
for any life insurance policies issued in any calendar year
determined without reference to this sentence differs from the
corresponding actual rate for similar policies issued in the
immediately preceding calendar year by less than one-half of one
percent (1/2 of 1%), the calendar year statutory valuation interest
rate for such life insurance policies shall be equal to the
corresponding actual rate for the immediately preceding calendar
year. For purposes of applying the immediately preceding sentence,
the calendar year statutory valuation interest rate for life
insurance policies issued in a calendar year shall be determined for
1980 (using the reference interest rate defined for 1979) and shall
be determined for each subsequent calendar year regardless of when
subsection (9)(d) of the standard nonforfeiture law for life
insurance becomes operative.
C. Weighting factors
a. The weighting factors referred to in the formulas stated above
are given in the following tables:
1. Weighting factors for life insurance:
Guarantee
Duration Weighting
(Years) Factors
10 or less .50
More than 10, but not more than 20 .45
More than 20 .35
For life insurance, the guarantee duration is the maximum number
of years the life insurance can remain in force on a basis
guaranteed in the policy or under options to convert to plans of
life insurance with premium rates or nonforfeiture values, or
both, which are guaranteed in the original policy;
2. Weighting factor for single premium immediate annuities and
for annuity benefits involving life contingencies arising from
other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options:
.80
3. Weighting factors for other annuities and for guaranteed
interest contracts, except as stated in 2. above, shall be as
specified in tables (i), (ii) and (iii) below, according to the
rules and definitions in (iv), (v) and (vi) below:
(i) For annuities and guaranteed interest contracts valued
on an issue year basis:
Guarantee Weighting Factor
Duration for Plan Type
(Years) A B C
5 or less .80 .60 .50
More than 5, but not more
than 10 .75 .60 .50
More than 10, but not more
than 20 .65 .50 .45
More than 20 .45 .35 .35
Plan Type
(ii) A B C
For annuities and guaranteed
interest contracts valued on
a change in fund basis, the
factors shown in (i) above
increased by: .15 .25 .05
(iii)
For annuities and guaranteed
interest contracts valued on
an issue year basis (other
than those with no cash
settlement options) which do
not guarantee interest on
considerations received more
than one (1) year after issue
or purchase and for annuities
and guaranteed interest
contracts valued on a change
in fund basis which do not
guarantee interest rates on
considerations received more
than twelve (12) months
beyond the valuation date,
the factors shown in (i) or
derived in (ii) increased by: .05 .05 .05
(iv) For other annuities with cash settlement options and
guaranteed interest contracts with cash settlement options,
the guarantee duration is the number of years for which the
contract guarantees interest rates in excess of the
calendar year statutory valuation interest rate for life
insurance policies with guarantee duration in excess of
twenty (20) years. For other annuities with no cash
settlement options and for guaranteed interest contracts
with no cash settlement options, the guarantee duration is
the number of years from the date of issue or date of
purchase to the date annuity benefits are scheduled to
commence.
(v) Plan type as used in the above tables is defined as
follows:
Plan Type A: At any time policyholder may withdraw funds
only:
(1) with an adjustment to reflect changes in interest
rates or asset values since receipt of the funds by
the insurer; or
(2) without such adjustment but in installments over
five (5) years or more; or
(3) as an immediate life annuity; or
(4) no withdrawal permitted.
Plan Type B: Before expiration of the interest rate
guarantee, policyholder may withdraw funds only:
(1) with an adjustment to reflect changes in interest
rates or asset values since receipt of the funds by
the insurer; or
(2) without such adjustment but in installments over
five (5) years or more; or
(3) no withdrawal permitted.
At the end of interest rate guarantee, funds may be
withdrawn without such adjustment in a single sum or
installments over less than five (5) years.
Plan Type C: Policyholder may withdraw funds before
expiration of interest rate guarantee in a single sum or
installments over less than five (5) years, either:
(1) without adjustment to reflect changes in interest
rates or asset values since receipt of the funds by
the insurer; or
(2) subject only to a fixed surrender charge
stipulated in the contract as a percentage of the
fund.
(vi) An insurer may elect to value guaranteed interest
contracts with cash settlement options and annuities with
cash settlement options on either an issue year basis or on
a change in fund basis. Guaranteed interest contracts with
no cash settlement options and other annuities with no cash
settlement options must be valued on an issue year basis.
As used in this subsection, an issue year basis of
valuation refers to a valuation basis under which the
interest rate used to determine the minimum valuation
standard for the entire duration of the annuity or
guaranteed interest contract is the calendar year valuation
interest rate for the year of issue or year of purchase of
the annuity or guaranteed interest contract, and the change
in fund basis of valuation refers to a valuation basis
under which the interest rate used to determine the minimum
valuation standard applicable to each change in the fund
held under the annuity or guaranteed interest contract is
the calendar year valuation interest rate for the year of
the change in the fund.
D. Reference interest rate
a. The reference interest rate referred to in paragraph B. of this
subsection shall be defined as follows:
1. For all life insurance, the lesser of the average over a
period of thirty-six (36) months and the average over a period
of twelve (12) months, ending on June 30 of the calendar year
next preceding the year of issue, of Moody's corporate bond
yield average -- monthly average corporates, as published by
Moody's Investors Service, Inc.
b. For single premium immediate annuities and for annuity benefits
involving life contingencies arising from other annuities with cash
settlement options and guaranteed interest contracts with cash
settlement options, the average over a period of twelve (12) months,
ending on June 30 of the calendar year of issue or year of purchase,
of Moody's corporate bond yield average -- monthly average
corporates, as published by Moody's Investors Service, Inc.
c. For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options valued on a year of
issue basis, except as stated in b. above, with guarantee duration in
excess of ten (10) years, the lesser of the average over a period of
thirty-six (36) months and the average over a period of twelve (12)
months, ending on June 30 of the calendar year of issue or purchase,
of Moody's corporate bond yield average -- monthly average
corporates, as published by Moody's Investors Service, Inc.
d. For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a year of
issue basis, except as stated in b. above, with guarantee duration of
ten (10) years or less, the average over a period of twelve (12)
months, ending June 30 of the calendar year of issue or purchase, of
Moody's corporate bond yield average -- monthly average corporates,
as published by Moody's Investors Service, Inc.
e. For other annuities with no cash settlement options and for
guaranteed interest contracts with no cash settlement options, the
average over a period of twelve (12) months, ending on June 30 of the
calendar year of issue or purchase, of Moody's corporate bond yield
average -- monthly average corporates, as published by Moody's
Investors Service, Inc.
f. For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a change
in fund basis, except as stated in b. above, the average over a
period of twelve (12) months, ending on June 30 of the calendar year
of the change in the fund, of Moody's corporate bond yield average --
monthly average corporates, as published by Moody's Investors
Service, Inc.
E. Alternative method for determining reference interest rates
a. In the event that Moody's corporate bond yield average -- monthly
average corporates is no longer published by Moody's Investors
Service, Inc., or in the event that the national association of
insurance commissioners determines that Moody's corporate bond yield
average -- monthly average corporates, as published by Moody's
Investors Service, Inc., is no longer appropriate for the
determination of the reference interest rate, then an alternative
method for determination of the reference interest rate, which is
adopted by the national association of insurance commissioners and
approved by regulation promulgated by the director, may be
substituted.
(5) Commissioners reserve valuation method.
(a) Except as otherwise provided in subsections (6) and (10) of this
section reserves according to the commissioners reserve valuation method,
for the life insurance and endowment benefits of policies providing for a
uniform amount of insurance and requiring the payment of uniform premiums,
shall be the excess, if any, of the present value, at the date of
valuation, of such future guaranteed benefits provided for by such
policies, over the then present value of any future modified net premiums
therefor. The modified net premiums for any such policy shall be such
uniform percentage of the respective contract premiums for such benefits
that the present value, at the date of issue of the policy, of all such
modified net premiums shall be equal to the sum of the then present value
of such benefits provided for by the policy and the excess of (i) over
(ii) as follows:
(i) A net level annual premium equal to the present value, at the
date of issue, of such benefits provided for after the first policy
year, divided by the present value, at the date of issue, of an
annuity of one (1) per annum payable on the first and each subsequent
anniversary of such policy on which a premium falls due; provided,
however, that such net level annual premium shall not exceed the net
level annual premium on the nineteen (19) year premium whole life
plan for insurance of the same amount at an age one (1) year higher
than the age at issue of such policy.
(ii) A net one (1) year term premium for such benefits provided for
in the first policy year.
Provided that for any life insurance policy issued on or after January 1,
1986, for which the contract premium in the first policy year exceeds that
of the second year and for which no comparable additional benefit is
provided in the first year for such excess and which provides an endowment
benefit or a cash surrender value or a combination thereof in an amount
greater than such excess premium, the reserve according to the
commissioners reserve valuation method as of any policy anniversary
occurring on or before the assumed ending date defined herein as the first
policy anniversary on which the sum of any endowment benefit and any cash
surrender value then available is greater than such excess premium shall,
except as otherwise provided in subsection (10), be the greater of the
reserve as of such policy anniversary calculated as described in the
preceding paragraph and the reserve as of such policy anniversary
calculated as described in that paragraph, but with (a) the value defined
in subparagraph (i) of that paragraph being reduced by fifteen percent
(15%) of the amount of such excess first year premium, (b) all present
values of benefits and premiums being determined without reference to
premiums or benefits provided for by the policy after the assumed ending
date, (c) the policy being assumed to mature on such date as an endowment,
and (d) the cash surrender value provided on such date being considered as
an endowment benefit. In making the above comparison the mortality and
interest basis stated in subsection (4) and (4b) shall be used.
(b) Reserves according to the commissioners reserve valuation method for:
(i) Life insurance policies providing for a varying amount of
insurance or requiring the payment of varying premiums,
(ii) Group annuity and pure endowment contracts purchased under a
retirement plan or plan of deferred compensation, established or
maintained by an employer (including a partnership or sole
proprietorship) or by an employee organization, or by both, other
than a plan providing individual retirement accounts or individual
retirement annuities under section 408 of the Internal Revenue Code,
as now or hereafter amended,
(iii) Disability and accidental death benefits in all policies and
contracts, and
(iv) All other benefits, except life insurance and endowment
benefits in life insurance policies and benefits provided by all
other annuity and pure endowment contracts,
shall be calculated by a method consistent with the principles of
subsection (5)(a) of this section, except that any extra premiums charged
because of impairments or special hazards shall be disregarded in the
determination of modified net premiums.
(6) Individual annuity and pure endowment reserves.
(a) This subsection (6) shall apply to all annuity and pure endowment
contracts other than group annuity and pure endowment contracts purchased
under a retirement plan or plan of deferred compensation, established or
maintained by an employer (including a partnership or sole proprietorship)
or by an employee organization, or by both, other than a plan providing
individual retirement accounts or individual retirement annuities under
section 408 of the Internal Revenue Code, as now or hereafter amended.
(b) Reserves according to the commissioners annuity reserve method for
benefits under annuity or pure endowment contracts, excluding any
disability and accidental death benefits in such contracts, shall be the
greatest of the respective excesses of the present values, at the date of
valuation, of the future guaranteed benefits, including guaranteed
nonforfeiture benefits, provided for by such contracts at the end of each
respective contract year, over the present value, at the date of
valuation, of any future valuation considerations derived from future
gross considerations, required by the terms of such contract, that become
payable prior to the end of such respective contract year. The future
guaranteed benefits shall be determined by using the mortality table, if
any, and the interest rate, or rates, specified in such contracts for
determining guaranteed benefits. The valuation considerations are the
portions of the respective gross considerations applied under the terms of
such contracts to determine nonforfeiture values.
(7) Minimum aggregate reserves. In no event shall an insurer's aggregate
reserves for all life insurance policies, excluding disability and accidental
death benefits, issued on or after the operative date of section 41-1927,
Idaho Code, be less than the aggregate reserves calculated in accordance with
the methods set forth in subsections (5), (6), (10) and (11) of this section
and the mortality table or tables and rate or rates of interest used in
calculating nonforfeiture benefits for such policies.
(8) Optional reserve basis.
(a) Reserves for all policies and contracts issued prior to the operative
date of section 41-1927, Idaho Code, may be calculated, at the option of
the insurer, according to any standards which produce greater aggregate
reserves for all such policies and contracts than the minimum reserves
required by the laws in effect immediately prior to such date.
(b) For any category of policies, contracts or benefits specified in
subsections (4), (4a) and (4b) of this section, issued on or after the
operative date of section 41-1927, Idaho Code, (the standard nonforfeiture
law), reserves may be calculated, at the option of the insurer, according
to any standard or standards which produce greater aggregate reserves for
such category than those calculated according to the minimum standard
herein provided, but the rate or rates of interest used for policies and
contracts, other than annuity and pure endowment contracts, shall not be
higher than the corresponding rate or rates of interest used in
calculating any nonforfeiture benefits provided for therein.
(9) Lower valuations. An insurer which at any time had adopted any
standard of valuation producing greater aggregate reserves than those
calculated according to the minimum standard herein provided may, with the
approval of the director, adopt any lower standard of valuation, but not lower
than the minimum herein provided.
(10) Minimum reserve. If in any contract year the gross premium charged by
any life insurer on any policy or contract is less than the valuation net
premium for the policy or contract calculated by the method used in
calculating the reserve thereon but using the minimum valuation standards of
mortality and rate of interest the minimum reserve required for such policy or
contract shall be the greater of either the reserve calculated according to
the mortality table, rate of interest, and method actually used for such
policy or contract, or the reserve calculated by the method actually used for
such policy or contract but using the minimum valuation standards of mortality
and rate of interest and replacing the valuation net premium by the actual
gross premium in each contract year for which the valuation net premium
exceeds the actual gross premium. The minimum valuation standards of mortality
and rate of interest referred to in this subsection are those standards stated
in subsections (4) and (4b).
Provided that for any life insurance policy issued on or after January 1,
1986, for which the gross premium in the first policy year exceeds that of the
second year and for which no comparable additional benefit is provided in the
first year for such excess and which provides an endowment benefit or a cash
surrender value or a combination thereof in an amount greater than such excess
premium, the foregoing provisions of this subsection (10) shall be applied as
if the method actually used in calculating the reserve for such policy were
the method described in subsection (5), ignoring the second paragraph of
subsection (5). The minimum reserve at each policy anniversary of such a
policy shall be the greater of the minimum reserve calculated in accordance
with subsection (5), including the second paragraph of that subsection, and
the minimum reserve calculated in accordance with this subsection (10).
(11) In the case of any plan of life insurance which provides for future
premium determination, the amounts of which are to be determined by the
insurer based on the then estimates of future experience, or in the case of
any plan of life insurance or annuity which is of such a nature that the
minimum reserves cannot be determined by the methods described in subsections
(5), (6) and (10), the reserves which are held under any such plan must:
(a) Be appropriate in relation to the benefits and the pattern of
premiums for that plan, and
(b) Be computed by a method which is consistent with the principles of
this standard valuation law,
as determined by rules promulgated by the director.
(12) Actuarial opinion of reserves.
(a) Every life insurance company doing business in this state shall
annually submit the opinion of a qualified actuary as to whether the
reserves and related actuarial items held in support of the policies and
contracts specified by the director by rule are computed appropriately,
are based on assumptions which satisfy contractual provisions, are
consistent with prior reported amounts and comply with applicable laws of
this state. The director by rule shall define the specifics of this
opinion and add any other items deemed to be necessary to its scope.
(b) Actuarial analysis of reserves and assets supporting such reserves.
(i) Every life insurance company, except as exempted by or pursuant
to rule, shall also annually include in the opinion required by
paragraph (a) of this subsection, an opinion of the same qualified
actuary as to whether the reserves and related actuarial items held
in support of the policies and contracts specified by the director by
rule, when considered in light of the assets held by the company with
respect to the reserves and related actuarial items, including, but
not limited to, the investment earnings on the assets and the
considerations anticipated to be received and retained under the
policies and contracts, make adequate provision for the company's
obligations under the policies and contracts including, but not
limited to, the benefits under and expenses associated with the
policies and contracts.
(ii) The director may provide by rule for a transition period for
establishing any higher reserves which the qualified actuary may deem
necessary in order to render the opinion required in this section.
(c) Requirements for opinion in paragraph (b) of this subsection. Each
opinion required in paragraph (b) of this subsection shall be governed by
the following provisions:
(i) A memorandum, in form and substance acceptable to the director
as specified by rule, shall be prepared to support each actuarial
opinion.
(ii) If the insurance company fails to provide a supporting
memorandum at the request of the director within a period specified
by rule or the director determines that the supporting memorandum
provided by the insurance company fails to meet the standards
prescribed by the rules or otherwise unacceptable to the director,
the director may engage a qualified actuary at the expense of the
company to review the opinion and prepare such supporting memorandum
as is required by the director.
(d) Requirements for all opinions. Every opinion shall be governed by
the following provisions:
(i) The opinion shall be submitted with the annual statement
reflecting the valuation of such reserve liabilities for each year
ending on or after December 31, 1995.
(ii) The opinion shall apply to all business in force including
individual and group health insurance plans, in form and substance
acceptable to the director as specified by rule.
(iii) The opinion shall be based on standards adopted from time to
time by the actuarial standards board and on such additional
standards as the director may by rule prescribe.
(iv) In the case of an opinion required to be submitted by a
foreign or alien company, the director may accept the opinion filed
by that company with the insurance supervisory official of another
state if the director determines that the opinion reasonably meets
the requirements applicable to a company domiciled in this state.
(v) For the purposes of this section, "qualified actuary" means a
member in good standing of the American academy of actuaries who
meets the requirements set forth in such regulations.
(vi) Except in cases of fraud or willful misconduct, the qualified
actuary shall not be liable for damages to any person (other than the
insurance company and the director) for any act, error, omission,
decision or conduct with respect to the actuary's opinion.
(vii) Disciplinary action by the director against the company or the
qualified actuary shall be defined by rule by the director.
(viii) Any memorandum in support of the opinion, and any other
material provided by the company to the director in connection
therewith, shall be kept confidential by the director and shall not
be made public and shall not be subject to subpoena, other than for
the purpose of defending an action seeking damages from any person by
reason of any action required in this section or by rule promulgated
hereunder; provided however, that the memorandum or other material
may otherwise be released by the director (A) with the written
consent of the company or (B) to the American academy of actuaries
upon request stating that the memorandum or other material is
required for the purpose of professional disciplinary proceedings and
setting forth procedures satisfactory to the director for preserving
the confidentiality of the memorandum or other material. Once any
portion of the confidential memorandum is cited by the company in its
marketing or is cited before any governmental agency other than a
state insurance department or is released by the company to the news
media, all portions of the confidential memorandum shall no longer be
confidential.
Disclaimer: These codes may not be the most recent version. Idaho may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
