Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 3.
LIFE, ACCIDENT AND HEALTH INSURANCE AND ANNUITIES
The Commissioner of Insurance adopts new §§3.1307, 3.1406,
3.4509 and 3.9101 - 3.9106, concerning the adoption by reference of the 2001
Commissioner's Standard Ordinary (CSO) Mortality Table. Section 3.9103 and §3.9106
are adopted with changes to the proposed text as published in the February
21, 2003, issue of the
Texas Register
(28
TexReg 1603). Sections 3.1307, 3.1406, 3.4509, 3.9101, 3.9102, 3.9104 and
3.9105 are adopted without changes and will not be republished. A public hearing
on the new sections was held on March 12, 2003.
The new sections are necessary to recognize, permit and prescribe the use
of the 2001 CSO Mortality Table in determining minimum reserve liabilities
and nonforfeiture benefits. Insurance Code Articles 3.28 and 3.44a authorize
the commissioner to adopt any mortality table adopted by the National Association
of Insurance Commissioners. The table was adopted by the National Association
of Insurance Commissioners in December 2002. The table reflects increases
in life expectancy since the adoption of the 1980 CSO Mortality Table.
Insurers may use the 2001 CSO Mortality Table only for new policies issued
after May 1, 2003. Beginning January 1, 2009, insurers will be required to
use the table for their insurance products issued after that date. The new
table is expected to lower reserve levels for a number of products which use
the new table versus reserve levels produced by the 1980 CSO Mortality Table
which insurers are currently required to use. Term insurance reserves are
estimated to be 30% lower in the aggregate. Whole life insurance reserves
are estimated to be 10% to 15% lower in the aggregate. Universal life and
variable life products are estimated to experience a reduction in reserves
of 5.0% or less. The 2001 CSO Mortality Table is available from the Actuarial
Division, Texas Department of Insurance, 333 Guadalupe, Austin, Texas or on
the internet by accessing the department's website at www.tdi.state.tx.us/company/ficso.html.
Section 3.9103 and 3.9106 were changed to reflect the correct website address
where the table may be found and correct a typographical error.
Comments were received in support of the new sections. The department appreciates
the support expressed for the sections.
USAA Life Insurance Company, The Northwestern Mutual Life Insurance Company,
and the Texas Association of Life and Health Insurers commented in support
of the new sections.
Subchapter N. NONFORFEITURE STANDARDS FOR INDIVIDUAL LIFE INSURANCE IN EMPLOYER PENSION PLANS
28 TAC §3.1307
The new section is adopted under the Insurance Code Articles
3.28 and 3.44a, and §36.001. Article 3.28 provides for the use of any
ordinary mortality table adopted after 1980 by the National Association of
Insurance Commissioners that is approved by regulation adopted by the commissioner
for use in determining the minimum standard valuation for such policies. Article
3.44a provides that any ordinary mortality tables, adopted after 1980 by the
National Association of Insurance Commissioners, that are approved by regulation
adopted by the commissioner for use in determining the minimum nonforfeiture
standard may be substituted for the 1980 CSO Mortality Table with or without
Ten-Year Select Mortality Factors. Section 36.001 provides the commissioner
may adopt rules to execute the duties and functions of the department as authorized
by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 25, 2003.
TRD-200302014
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 14, 2003
Proposal publication date: February 21, 2003
For further information, please call: (512) 463-6327
28 TAC §3.1406
The new section is adopted under the Insurance Code Articles
3.28 and 3.44a, and §36.001. Article 3.28 provides for the use of any
ordinary mortality table adopted after 1980 by the National Association of
Insurance Commissioners that is approved by regulation adopted by the commissioner
for use in determining the minimum standard valuation for such policies. Article
3.44a provides that any ordinary mortality tables, adopted after 1980 by the
National Association of Insurance Commissioners, that are approved by regulation
adopted by the commissioner for use in determining the minimum nonforfeiture
standard may be substituted for the 1980 CSO Mortality Table with or without
Ten-Year Select Mortality Factors. Section 36.001 provides the commissioner
may adopt rules to execute the duties and functions of the department as authorized
by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on March 25, 2003.
TRD-200302015
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 14, 2003
Proposal publication date: February 21, 2003
For further information, please call: (512) 463-6327
28 TAC §3.4509
The new section is adopted under the Insurance Code Articles
3.28 and 3.44a, and §36.001. Article 3.28 provides for the use of any
ordinary mortality table adopted after 1980 by the National Association of
Insurance Commissioners that is approved by regulation adopted by the commissioner
for use in determining the minimum standard valuation for such policies. Article
3.44a provides that any ordinary mortality tables, adopted after 1980 by the
National Association of Insurance Commissioners, that are approved by regulation
adopted by the commissioner for use in determining the minimum nonforfeiture
standard may be substituted for the 1980 CSO Mortality Table with or without
Ten-Year Select Mortality Factors. Section 36.001 provides the commissioner
may adopt rules to execute the duties and functions of the department as authorized
by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on March 25, 2003.
TRD-200302016
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 14, 2003
Proposal publication date: February 21, 2003
For further information, please call: (512) 463-6327
28 TAC §§3.9101 - 3.9106
The new sections are adopted under the Insurance Code Articles
3.28 and 3.44a, and §36.001. Article 3.28 provides for the use of any
ordinary mortality table adopted after 1980 by the National Association of
Insurance Commissioners that is approved by regulation adopted by the commissioner
for use in determining the minimum standard valuation for such policies. Article
3.44a provides that any ordinary mortality tables, adopted after 1980 by the
National Association of Insurance Commissioners, that are approved by regulation
adopted by the commissioner for use in determining the minimum nonforfeiture
standard may be substituted for the 1980 CSO Mortality Table with or without
Ten-Year Select Mortality Factors. Section 36.001 provides the commissioner
may adopt rules to execute the duties and functions of the department as authorized
by statute.
§3.9103.2001 CSO Mortality Table.
(a)
At the election of the company for any one or more specified
plans of insurance and subject to the conditions stated in this subchapter,
the 2001 CSO Mortality Table may be used as the minimum standard for policies
issued on or after May 1, 2003 and before the date specified in subsection
(b) of this section to which Insurance Code Article 3.28 §3(a)(iii) and
Article 3.44a §(8)(e)(6) and §3.4505 of this title (relating to
General Calculation Requirements for Basic Reserves and Premium Deficiency
Reserves) are applicable. If the company elects to use the 2001 CSO Mortality
Table, it shall do so for both valuation and nonforfeiture purposes.
(b)
Subject to the conditions stated in this subchapter, the
2001 CSO Mortality Table shall be used in determining minimum standards for
policies issued on and after January 1, 2009, to which Insurance Code Articles
3.28 §3(a)(iii) and 3.44a §(8)(e)(6) and §3.4505 of this title
(relating to General Calculation Requirements for Basic Reserves and Premium
Deficiency Reserves) are applicable.
(c)
The minimum basis for computation of values related to
extended term benefits will be the 2001 CSO Mortality Table pursuant to the
requirements of this subchapter.
(d)
The Commissioner of Insurance adopts by reference the 2001
CSO Mortality Table. The table is available from the Actuarial Division, Texas
Department of Insurance, 333 Guadalupe, Austin, Texas or on the internet by
accessing the department's website at www.tdi.state.tx.us/company/ficso.html.
§3.9106.Gender-Blended Tables.
(a)
For any ordinary life insurance policy delivered or issued
for delivery in this state on and after May 1, 2003, that utilizes the same
premium rates and charges for male and female lives or is issued in circumstances
where applicable law does not permit distinctions on the basis of gender,
a mortality table that is a blend of the 2001 CSO Mortality Table (M) and
the 2001 CSO Mortality Table (F) may, at the option of the company for each
plan of insurance, be substituted for the 2001 CSO Mortality Table for use
in determining minimum cash surrender values and amounts of paid-up nonforfeiture
benefits. No change in minimum valuation standards is implied by this subsection.
(b)
The company may choose from among the blended tables developed
by the American Academy of Actuaries CSO Task Force and adopted by the National
Association of Insurance Commissioners in December 2002. These blended tables
are available from the Actuarial Division, Texas Department of Insurance,
333 Guadalupe, Austin, Texas or on the internet by accessing the department's
website at www.tdi.state.tx.us/company/ficso.html.
(c)
It shall not, in and of itself, be a violation of Insurance
Code Article 21.21 for an insurer to issue the same kind of policy of life
insurance on both a sex-distinct and sex-neutral basis.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on March 25, 2003.
TRD-200302017
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 14, 2003
Proposal publication date: February 21, 2003
For further information, please call: (512) 463-6327
Subchapter D. FIRE AND ALLIED LINES INSURANCE
Subchapter O. SMOKER-NONSMOKER COMPOSITE MORTALITY TABLES
Subchapter EE. VALUATION OF LIFE INSURANCE POLICIES
Subchapter JJ. 2001 CSO MORTALITY TABLE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE