Office of the Commissioner of Insurance
125 South Webster St – 2nd Floor
Madison WI 53703-3474
Email address:
Richard B. Wicka
The proposed rule changes are:
SECTION 1.
Ins 2.30 (2) (f) to (j) are created to read:Ins 2.30 (2) (f) “Period table” means a table of mortality rates applicable to a given calendar year (the Period).
(g) “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.
(h) “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 Section 3m.
(i) “2012 Individual Annuity Mortality Period Life Table” or “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, and published in the 2012 proceedings of the NAIC, Fall Volume I, pages 149-150.
(j) “Projection Scale G2” or “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, and published in the 2012 proceedings of the NAIC, Fall Volume I, pages 151-152.
SECTION 2.
Ins 2.30 (3) (c) is amended to read: Ins 2.30 (3) (c) Except as provided in par. (d) the annuity 2000 mortality table shall be used to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1999. but before January 1, 2015.
SECTION 3.
Ins 2.30 (3) (cm) is created to read:Ins 2.30 (3) (cm) Except as provided in par. (d) 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.
Ins 2.30 (3m) Application of the 2012 IAR Table
In using the 2012 IAR Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:
(LRB NOTE: If viewing as an HTML document, a formula in the original is not reproduced here. See the PDF version by clicking the red and white icon in the upper right.)
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. For example, for a male age 30, qx 2012 = 0.741.
qx 2013 = 0.741 * (1 – 0.010) ^ 1 = 0.73359, which is rounded to 0.734.
qx 2014 = 0.741 * (1 – 0.010) ^ 2 = 0.7262541, which is rounded to 0.726.
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.
SECTION 5.
INITIAL APPLICABILITY. These changes apply to contracts issued on or after January 1, 2015.SECTION 6.
EFFECTIVE DATE. These changes will take effect on the first day of the month after publication, as provided in s. 227.22 (2) (intro.), Wis. Stats.Dated at Madison, Wisconsin, this 19th day of December , 2014.
Theodore K. Nickel
Commissioner of Insurance
Office of the Commissioner of Insurance
Private Sector Fiscal Analysis
for Section Ins 2.30 relating to 2012 Individual Annuity Reserving Mortality Table and Affecting Small Business This rule change will have no significant effect on the private sector regulated by OCI.
