The change adopts annuity mortality tables for use in financial reporting of annuity reserves as set forth in Section 625.121 Florida Statutes. The added new mortality table, recently adopted by the NAIC, is based upon recent annuitant mortality of ...

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NOS.:RULE TITLES:

69O-162.102Purpose

69O-162.103Definitions

69O-162.104Individual Annuity or Pure Endowment Contracts

69O-162.106Application of 1994 GAR Table

69O-162.108Tables

PURPOSE AND EFFECT: The change adopts annuity mortality tables for use in financial reporting of annuity reserves as set forth in Section 625.121 Florida Statutes. The added new mortality table, recently adopted by the NAIC, is based upon recent annuitant mortality of insurers. Adoption will create uniformity among states following NAIC model regulation.

SUMMARY: The amended rules incorporate the 2012 IAR Mortality Table and the Projection Scale G2 (Scale G2) into the current rules regulating Annuity Contracts. The rule amendments also provide definitions and the process for applying the new annuity tables.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION: The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Agency personnel familiar with the subject matter of the rule amendment have performed an economic analysis of the rule amendment that shows that the rule amendment is unlikely to have an adverse impact on the State economy in excess of the criteria established in Section 120.541(2)(a), Florida Statutes.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 624.308, 625.121(5)(i) FS.

LAW IMPLEMENTED: 624.307(1), 625.121 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: Tuesday, February 10, 2015, 9:30 a.m.

PLACE: 116 Larson Building, 200 East Gaines Street, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Kerry Krantz, Office of Insurance Regulation, e-mail: [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Kerry Krantz, Office of Insurance Regulation, E-mail [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-162.102 Purpose.

The purpose of this rule is to recognize the following mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts: the Annuity 2000 Mortality Table, and the 1994 Group Annuity Reserving (1994 GAR) Table, and the 2012 IAR Mortality Table.

Rulemaking Authority 624.308, 625.121(5)(i) FS. Law Implemented 624.307(1), 625.121 FS. History–New 12-23-98, Formerly 4-162.102 Amended,_________________.

 

69O-162.103 Definitions.

As used in this rule chapter, the following terms have the following meaning:

(1) “1994 GAR Table” – means that mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force.

(2) “Annuity 2000 Mortality Table” means that mortality table developed by the Society of Actuaries Committee on Life Insurance Research.

(3) “Period table” means a table of mortality rates applicable to a given calendar year (the Period).

(4) “Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement.

(5) “2012 IAR Table” means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in 69O-162.106(2).

(6) “2012 Individual Annuity Mortality Life (2012 IAM Period) Table” means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research.

(7) “Projection Scale G2 (Scale G2)” is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research.

Rulemaking Authority 624.308, 625.121(5)(i) FS. Law Implemented 624.307(1), 625.121 FS. History–New 12-23-98, Formerly 4-162.103, Amended,___________________.

 

69O-162.104 Individual Annuity or Pure Endowment Contracts.

(1) The Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 1998 and on or before December 31, 2014.

(2) The 2012 IAR Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015, for valuation dates on or after March 31, 2015.

(3) The 1983 Table “a” without projection is to be used for determining the minimum standard of valuation for an individual annuity or pure endowment contract issued on or after July 1, 1998, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(a) Settlements of various forms of claims pertaining to court settlements or out of court settlements for tort actions;

(b) Settlements involving similar actions such as workers compensation claims; or

(c) Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

Rulemaking Authority 624.308, 625.121(5)(i) FS. Law Implemented 624.307(1), 625.121 FS. History–New 12-23-98, Formerly 4-162.104, Amended,________________.

 

69O-162.106 Application of 1994 GAR Table and the 2012 IAR Mortality Table.

(1) In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

qx1994 + n = qx1994(1 - AAx)n

where  qx1994s and AAxs are as specified in the 1994 GAR Table.

(2) In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

qx2012 + n = qx2012(1 - G2x)n

(a) The resulting qx 2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.

(b) For example, for a male age 30, qx2012 = 0.741.

1. qx 2013 = 0.741 * (1 – 0.010) ^ 1 = 0.73359, which is rounded to 0.734.

2. qx 2014 = 0.741 * (1 – 0.010) ^ 2 = 0.7262541, which is rounded to 0.726.

(c) A method leading to incorrect rounding would be to calculate qx 2014 as qx 2013 * (1 – 0.010), or 0.734 * 0.99 = 0.727. It is incorrect to use the already rounded  qx 2013 to calculate qx 2014.

Rulemaking Authority 624.308, 625.121(5)(i) FS. Law Implemented 624.307(1), 625.121 FS. History–New 12-23-98, Formerly 4-162.106, Amended,_________________.

 

69O-162.108 Tables.

(1) The following tables are hereby adopted and incorporated by reference:

(a) The Annuity 2000 Mortality Table;

(b) The 1994 GAR Table;

(c) The 1983 Table “a”;

(d) The 2012 IAR Mortality Table and The Projection Scale G2 (Scale G2),

(2) The tables in subsection (1) are available from the Office of Insurance Regulation, Bureau of Life and Health Financial Oversight Insurer Solvency, 200 East Gaines Street, Tallahassee, Florida 32399-0327.

Rulemaking Authority 624.308, 625.121(5)(i) FS. Law Implemented 624.307(1), 625.121 FS. History–New 12-23-98, Formerly 4-162.108, Amended, ________________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Kerry Krantz, Office of Insurance Regulation, E-mail: [e-mail]

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: THE FINANCIAL SERVICES COMMISSION

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: December 09, 2014

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: March 4, 2013