INSURANCE DEPARTMENT [ 31 PA. CODE CH. 84c ] Valuation of Life Insurance Policies [41 Pa.B. 600]
[Saturday, January 29, 2011]The Insurance Department (Department) amends Chapter 84c (relating to valuation of life insurance policies) under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) and section 301(c) of The Insurance Department Act of 1921 (40 P. S. § 71(c)).
Purpose
The purpose of this final-form rulemaking is to amend § 84c.5 (relating to general requirements for basic reserves and premium deficiency reserves) to include amendments made to Model Regulation 830 by the National Association of Insurance Commissioners (NAIC) to remove restrictions on mortality adjustment factors. These amendments were proposed in conjunction with amendments to Chapters 84b and 84d (relating to actuarial opinion and memorandum; and recognition of the 2001 CSO Mortality Table for use in determining minimum reserve liabilities and nonforfeiture benefits and the 2001 CSO Preferred Class Structure Mortality Table for use in determining minimum reserve liabilities).
Comments and Response
Notice of proposed rulemaking was published at 40 Pa.B. 5069 (September 4, 2010) with a 30-day comment period. One comment in support of the amendments was received from the Insurance Federation of Pennsylvania, Inc. On November 3, 2010, the Independent Regulatory Review Commission (IRRC) indicated that it did not have comments, objections or recommendations.
Affected Parties
This final-form rulemaking applies to insurers issuing life insurance coverage in this Commonwealth.
Fiscal Impact
State government
There will not be an increase in cost to the Department as a result of this final-form rulemaking. The Department currently reviews valuation filings submitted by domestic life insurance companies and fraternal benefit societies for compliance with the minimum standards of valuation.
General public
It is possible that the cost of insurance will be reduced for consumers who purchase life insurance coverage due to these amendments to the requirements for the calculation of reserves.
Political subdivisions
There will not be fiscal impact on political subdivisions as insurers will continue to maintain adequate reserves.
Private sector
This final-form rulemaking requires the appointed actuary to annually opine for all policies subject to this final-form rulemaking as to whether the mortality rates resulting from the application of the X factors meet the requirements in Chapter 84c for deficiency reserves. This opinion must be supported by an actuarial report.
Paperwork
The adoption of this final-form rulemaking will not impose additional paperwork on the Department.
Effectiveness/Sunset Date
This rulemaking will become effective March 30, 2011. The Department continues to monitor the effectiveness of regulations on a triennial basis; therefore, a sunset date has not been assigned.
Contact Person
Questions regarding the final-form rulemaking should be directed to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120, (717) 787-4429, fax (717) 705-3873, psalvatore@state.pa.us.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on November 9, 2010, the Department submitted a copy of the notice of proposed rulemaking, published at 40 Pa.B. 5069 to IRRC and the Chairpersons of the Senate Banking and Insurance Committee and the House Insurance Committee for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the House and Senate Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on December 15, 2010, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on December 16, 2010, and approved the final-form rulemaking.
Findings
The Insurance Commissioner finds that:
(1) Public notice of intention to adopt this final-form regulation was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The adoption of this final-form rulemaking in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statutes.
Order
The Insurance Commissioner, acting under the authorizing statutes, orders that:
(a) The regulations of the Department, 31 Pa. Code Chapter 84c, are amended by amending § 84c.5 to read as set forth at 40 Pa.B. 5069.
(b) The Department shall submit this order and 40 Pa.B. 5069 to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.
(c) The Department shall certify this order and 40 Pa.B. 5069 and deposit them with the Legislative Reference Bureau as required by law.
(d) The final-form rulemaking takes effect on March 30, 2011.
ROBERT L. PRATTER,
Acting Insurance Commissioner(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 41 Pa.B. 118 (January 1, 2011).)
Fiscal Note: Fiscal Note 11-247 remains valid for the final adoption of the subject regulation.
[Pa.B. Doc. No. 11-138. Filed for public inspection January 28, 2011, 9:00 a.m.]
