1006 Tables approved for use in determining minimum nonforfeiture standards and minimum standards for valuation

Title 31--INSURANCE

INSURANCE DEPARTMENT

[31 PA. CODE CH. 84]

Tables Approved for Use in Determining Minimum Nonforfeiture Standards and Minimum Standards for Valuation

[29 Pa.B. 3208]

   The Insurance Department (Department) hereby amends Chapter 84 (relating to tables approved for use in determining minimum nonforfeiture standards and minimum standards for valuation) to read as set forth at 28 Pa.B. 4794 (September 26, 1998).

   The amendments to Chapter 84 adopt new mortality tables for use in determining the minimum reserves for annuities. These new minimum standards apply to annuities issued on or after June 26, 1999. The mortality tables are based on historical experience and have been developed by the Society of Actuaries. In December 1996, the National Association of Insurance Commissioners adopted the proposed mortality tables as part of its Model Rule (Regulation) For Recognizing A New Annuity Mortality Table For Use In Determining Reserve Liabilities For Annuities. The Department's adoption of the mortality tables will help to assure the solvency of insurance companies by requiring adequate reserves based on the most recent mortality tables.

Statutory Authority

   The amendments are adopted under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412); section 301(c)(1) of The Insurance Department Act of 1921 (30 P. S. § 71(c)(1)); and section 410F(e)(8)(F) of The Insurance Company Law (40 P. S. § 510.1(e)(8)(F)).

Comments

   Notice of proposed rulemaking was published at 28 Pa.B. 4794 with a 30-day public comment period.

   No comments were received from the standing committees. The Insurance Federation of Pennsylvania, representing a substantial portion of the life insurance industry operating in this Commonwealth, has endorsed the revisions set forth in the proposed rulemaking. The Independent Regulatory Review Commission (IRRC) reviewed the amendments and had no objections, comments or suggestions to offer on these amendments. The amendments were deemed approved.

Persons Regulated

   This final rulemaking applies to life insurance companies marketing annuity contracts in this Commonwealth.

Fiscal Impact

State Government

   There will be no increase in cost to the Department due to the adoption of new annuity tables since the final rulemaking does not impose additional requirements on the insurance industry which the Department will monitor for compliance.

General Public

   It is unlikely that there will be any adverse fiscal impact on the consumers who purchase annuity contracts. The general public will be purchasing annuity contracts from more financially stable insurers.

Political Subdivisions

   The final rulemaking will strengthen the solvency requirements of insurance companies issuing annuity contracts. Increasing insurance company solvency requirements has the potential to minimize insurance company insolvencies which could result in less erosion of the tax base since insurers pay premium taxes on premium income and pay salaries which are taxed.

Private Sector

   The final rulemaking may have some fiscal impact on insurance companies marketing annuity contracts. Insurers will be required to expend the time necessary to determine if their current annuity reserve standards meet the new requirements. To the extent that the standards do not comply with the new requirements, an insurance company must increase the reserves for contracts issued on or after June 26, 1999.

Paperwork

   The adoption of this final rulemaking will not impose additional paperwork on the Department and the insurance industry. The rulemaking provides for the use of additional mortality tables and does not impose additional requirements resulting in additional paperwork.

Contact Person

   Questions regarding these amendments, should be directed to Peter J. Salvatore, Regulatory Coordinator, Office of Special Projects, 1326 Strawberry Square, Harrisburg, PA 17120, [phone], or e-mail [e-mail].

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 14, 1998, the Department submitted a copy of the notice of proposed rulemaking, published at 28 Pa.B. 4794 to IRRC and to the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to the submitted amendments, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of that material is available to the public upon request.

   In preparing these final-form regulations, the Department considered all comments received from IRRC, the Committees and the public. These final-form regulations were deemed approved by the House and Senate Committees on May 18, 1999. In accordance with section 5a(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), IRRC met on May 20, 1999, and the final-form regulations were deemed approved in accordance with section 5a(e) of the Regulatory Review Act.

Findings

   The Commissioner finds that:

   (1)  Public notice of intention to adopt this rulemaking as amended by this order has been 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 rulemaking in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statutes.

Order

   The Commissioner, acting under the authorizing statutes, orders that:

   (a)  The regulations of the Department, 31 Pa. Code Chapter 84, are amended by amending §§ 84.2 and 84.3 and by deleting § 84.4 to read as set forth at 28 Pa.B. 4794.

   (b)  The Commissioner shall submit this order and 28 Pa.B. 4794 to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.

   (c)  The Commissioner shall certify this order and 28 Pa.B. 4794 and deposit them with the Legislative Reference Bureau as required by law.

   (d)  The amendments adopted by this order shall take effect upon final publication in the Pennsylvania Bulletin.

M. DIANE KOKEN,   
Insurance Commissioner

   (Editor's Note:  For the text of the order of the Independent Regulatory Review Commission relating to this document, see 29 Pa.B. 2933 (June 5, 1999).)

   Fiscal Note:  Fiscal Note 11-181 remains valid for the final adoption of the subject regulations.

[Pa.B. Doc. No. 99-1006. Filed for public inspection June 25, 1999, 9:00 a.m.]