Amend rules to refer to updated Annuity Mortality Tables for individual and group annuity contracts.

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NOS.:RULE TITLES:

69O-162.008Contract Provision; Expense, Mortality and Investment Increment Factor

69O-162.012Valuation of Account Assets; Reserve Liability

PURPOSE AND EFFECT: Amend rules to refer to updated Annuity Mortality Tables for individual and group annuity contracts.

SUMMARY: The rules are amended to cross reference the Annuity Mortality Tables listed in rule 69O-162.108, F.A.C. for policies issued prior to December 31, 2016 and reference the NAIC Valuation Manual adopted by s. 625.1212 F.S. for policies issued on or after January 1, 2017.

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(1), 627.805, FS.

LAW IMPLEMENTED: 624.307(1), 625.121, 627.802, 627.803, 627.804, 627.413, 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: September 12, 2017, 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: Christopher Struk, 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: Christopher Struk, Office of Insurance Regulation, E-mail [e-mail].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-162.008 Contract Provision; Expense, Mortality and Investment Increment Factor.

Any individual or group variable annuity contract delivered or issued for delivery in this state shall stipulate the expense, mortality, and investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values thereunder, and shall guarantee that expense and mortality results shall not adversely affect such dollar amounts. The mortality and investment increment factors used in computing the dollar amount of variable benefits or other contractual payments or values under an individual variable contract shall not produce a large initial payment than would be produced by the use of annuity mortality tables in rule 69O-162.108 for policies issued on or before December 31, 2016 and the 1937 Standard aAnnuity mMortality tTables for use in determining reserve liabilities in accordance with the NAIC Valuation Manual as adopted by s. 625.1212, F.S. for policies issued on or after January 1, 2017 and an annual investment increment assumption of 3 ½%. “Expense” as used in this subsection may exclude some or all taxes as stipulated in the contract.

Rulemaking Specific Authority 624.308(1), 627.805 FS. Law Implemented 624.307(1), 627.803, 627.804, 627.413 FS. History–Repromulgated 12-24-74, Formerly 4-10.08, 4-10.008, 4-162.008, Amended____________.

 

69O-162.012 Valuation of Account Assets; Reserve Liability.

(1) No change.

(2) The reserve liability for variable annuity contracts shall be established by the Office Director pursuant to the requirements of the 1937 Standard aAnnuity mMortality tTables for use in determining reserve liabilities listed in rule 69O-162.108 for policies issued prior to December 31, 2016 and for use in determining reserve liabilities in accordance with the NAIC Valuation Manual as adopted by s. 625.1212, F.S. for policies issued on or after January 1, 2017 and in Appendix VM-M of the NAIC Valuation Manual in accordance with actuarial procedures that recognize the variable nature of the benefits provided.

Rulemaking Authority 627.805 FS. Law Implemented 625.121, 627.802, 627.804 FS. History–Repromulgated 12-24-74, Formerly 4-10.12, 4-10.012, 4-162.012, Amended____________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Christopher Struk, 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:

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: July 12, 2017.