This rule change will have no significant effect on the private sector regulated by OCI.
11. A description of the Effect on Small Business:
This rule will have little or no effect on small business since very few, if any, life insurers meet the definition of a small business. In addition, many of the implementation and compliance costs are mitigated by other factors contained in the proposed rule. First, insurers already have the systems in place perform the calculations, they primarily just need to substitute in new numbers and equations. Moreover, the 2012 IAR Table will only apply to contracts issued on or after January 1, 2015, which provides insurers with the opportunity to minimize any economic impact by adjusting their products. Finally, with a majority of states on the verge of adopting the 2012 IAR Table, insurers will be able to avoid excess federal taxes on reserves held in excess of the current federally recognized mortality table.
12. Agency contact person:
A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the Web site at: http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, OCI Services Section, at:
Phone: (608) 264-8110
Address: 125 South Webster St – 2nd Floor, Madison WI 53703-3474
Mail: PO Box 7873, Madison, WI 53707-7873
13. Place where comments are to be submitted and deadline for submission:
The deadline for submitting comments is 4:00 p.m. on the 14th day after the date for the hearing stated in the Notice of Hearing.
Mailing address:
Richard B. Wicka
Legal Unit - OCI Rule Comment for Rule Ins 08614
Office of the Commissioner of Insurance
PO Box 7873
Madison WI 53707-7873
Street address:
Richard B. Wicka
Legal Unit - OCI Rule Comment for Rule Ins 08614
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.
