Bill Text: IN HB1321 | 2013 | Regular Session | Engrossed
Bill Title: Insurance matters.
Sponsorship: Bipartisan Bill
Status: (Passed) 2013-05-13 - Public Law 276 [HB1321 Detail]
Download: Indiana-2013-HB1321-Engrossed.html
Citations Affected: IC 27-1; IC 27-8; IC 35-43.
Synopsis: Insurance matters. Amends various provisions of the
insurance law concerning: (1) confidentiality related to examinations;
(2) reserve valuation of life, annuity, and endowment contracts; (3)
motor vehicle insurance with respect to a newly acquired motor
vehicle; (4) sales of travel insurance by travel retailers under a limited
lines travel insurance producer license; (5) continuing education for
certain insurance producers; (6) remedies for violations related to the
sale, solicitation, or negotiation of portable electronics insurance; (7)
risk based capital requirement application to fraternal benefit societies;
(8) confidentiality, privilege, disclosure, and discoverability of certain
risk based capital related information filed with the commissioner; and
(9) residency and coverage requirements applying to the Indiana life
and health guaranty association. Repeals current law concerning
reserve valuation of life, annuity, and endowment contracts. Makes
conforming amendments.
Effective: July 1, 2013.
(SENATE SPONSORS _ PAUL, MRVAN)
January 17, 2013, read first time and referred to Committee on Insurance.
February 11, 2013, amended, reported _ Do Pass.
February 18, 2013, read second time, amended, ordered engrossed.
February 19, 2013, engrossed. Read third time, passed. Yeas 95, nays 0.
February 25, 2013, read first time and referred to Committee on Insurance.
March 21, 2013, reported favorably _ Do Pass.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
insurance.
(1) are confidential
(2) are not subject to public inspection or copying under IC 5-14-3-3;
(3) are not subject to subpoena;
(4) are not subject to discovery or admissible in evidence in a private civil action; and
(5) may not be made public by the commissioner or any other person, except to the extent provided in section 14 of this chapter.
(b) The commissioner may use the materials and information described in subsection (a) in relation to a regulatory or legal action brought as part of the commissioner's duties. Access to the materials and information described in subsection (a) may also be granted to the National Association of Insurance Commissioners.
(c) A court order requiring a release or production of materials or information described in subsection (a) that is not authorized under this section is null and void unless the commissioner has been served, in accordance with the Indiana Rules of Trial Procedure, with a pleading or motion requesting the court to order release or production of the materials or information.
(1) That, in the event of default in any premium payment after premiums have been paid for at least one (1) full year in the case of ordinary insurance or three (3) full years in the case of industrial insurance, the company will grant, upon proper request made not later than sixty (60) days after the due date of the premium in default, a
paid-up nonforfeiture benefit on a plan stipulated in the policy,
effective as of such due date, of an amount determined as specified in
this section. In lieu of such stipulated paid-up nonforfeiture benefit, the
company may substitute, upon proper request not later than sixty (60)
days after the due date of the premium in default, an actuarially
equivalent alternative paid-up nonforfeiture benefit which provides a
greater amount or longer period of death benefits or, if applicable, a
greater amount or earlier payment of endowment benefits;
(2) That, upon surrender of the policy within sixty (60) days after
the due date of any premium in default, after premiums have been paid
for at least three (3) full years in the case of ordinary insurance or five
(5) full years in the case of industrial insurance, the company will pay,
in lieu of any paid-up nonforfeiture benefit, a cash surrender value of
a stated amount determined as specified in this section;
(3) That, if a request for a nonforfeiture benefit or surrender of the
policy is not made or effected as contemplated in subdivisions (1) and
(2) of this subsection, a designated paid-up nonforfeiture benefit shall
become operative as specified in the policy;
(4) That, if the policy shall have become paid up by completion of
all premium payments or if it continues in the form of a paid-up
nonforfeiture benefit which became effective on or after the third
policy anniversary in the case of ordinary insurance or the fifth policy
anniversary in the case of industrial insurance, the company will pay,
upon surrender of the policy within thirty (30) days after any policy
anniversary, a cash surrender value of such amount as may be
determined in this section;
(5) In the case of policies which cause, on a basis guaranteed in the
policy, unscheduled changes in benefits or premiums, or which provide
an option for changes in benefits or premiums other than a change to
a new policy, a statement of the mortality table, interest rate, and
method used in calculating cash surrender values and the paid-up
nonforfeiture benefits available under the policy. In the case of all other
policies, a statement of the mortality table and interest rate used in
calculating the cash surrender values and the paid-up nonforfeiture
benefits available under the policy, together with a table showing the
cash surrender value, if any, and paid-up nonforfeiture benefit, if any,
available under the policy on each policy anniversary either during the
first twenty (20) policy years or during the term of the policy,
whichever is shorter, such values and benefits to be calculated upon the
assumption that there are no dividends or paid-up additions to the
credit of the policy and that there is no indebtedness to the company on
account of or secured by the policy;
(6) A brief and general statement of the method to be used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy on the policy anniversaries beyond the last anniversary of those for which such values and benefits are consecutively shown in the table provided for in subdivision (5) of this subsection;
(7) An explanation of the manner in which the cash surrender value and the paid-up nonforfeiture benefit or benefits are affected by the existence of any paid-up additions to the policy or any indebtedness to the company on account of or secured by the policy.
Any of the provisions of this subsection not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.
The company shall reserve the right to defer the payment of any cash surrender value for a period of six (6) months after demand therefor and surrender of the policy.
(b) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy (including any existing paid-up additions) if there had been no default, over the sum of (1) the then present value of the adjusted premiums as defined in subsections (d) and (dd), corresponding to premiums which would have fallen due on and after such anniversary, and (2) the amount of any indebtedness to the company on account of or secured by the policy. However, for any policy issued on or after the operative date of subsection (dd) of this section which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value is an amount not less than the sum of the cash surrender value as defined in this paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in this paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.
For any family policy issued on or after the operative date of subsection (dd) of this section, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age seventy-one (71), the cash surrender value referred to in the first paragraph of this subsection shall be an amount not less than the sum of the cash surrender value, as defined in
that paragraph, for an otherwise similar policy issued at the same age
without such term insurance on the life of the spouse and the cash
surrender value, as defined in that paragraph, for a policy which
provides only the benefits otherwise provided by such term insurance
on the life of the spouse. Any cash surrender value available within
thirty (30) days after any policy anniversary under any policy paid up
by completion of all premium payments or any policy continued under
any paid-up nonforfeiture benefit, shall be an amount not less than the
present value, on such anniversary, of the future guaranteed benefits
provided for by such paid-up policy (including any existing paid-up
additions) decreased by any indebtedness to the company on account
of or secured by the policy.
(c) Any paid-up nonforfeiture benefit available under a policy in the
event of default in a premium payment due on any policy anniversary
shall be such that its present value as of such anniversary shall be not
less than the cash surrender value then provided for by such policy or,
if none is provided for, the minimum amount determinable in
accordance with subsection (b) in the absence of the condition of
subsection (a)(2) that premiums be paid for at least a specified period.
(d) This subsection does not apply to policies issued on or after the
operative date of subsection (dd) of this section. Except as provided in
the third paragraph of this subsection, the adjusted premiums for any
policy shall be calculated on an annual basis and shall be such uniform
percentage of the respective premiums specified in the policy for each
policy year, excluding any extra premiums charged because of
impairments or special hazards, that the present value, at the date of
issue of the policy, of all such adjusted premiums shall be equal to the
sum of (i) the then present value of the future guaranteed benefits
provided for by the policy; (ii) two per cent (2%) of the amount of
insurance, if the insurance be uniform in amount, or of the equivalent
uniform amount, as hereinafter defined, if the amount of insurance
varies with duration of the policy; (iii) forty per cent (40%) of the
adjusted premium for the first policy year; (iv) twenty-five per cent
(25%) of either the adjusted premium for the first policy year or the
adjusted premium for a whole life policy of the same uniform or
equivalent uniform amount with uniform premiums for the whole of
life issued at the same age for the same amount of insurance, whichever
is less; provided that for the sole purpose of computing the amounts of
(iii) and (iv) above, no adjusted premiums in excess of four per cent
(4%) of the amount of insurance or uniform amount equivalent thereto
shall be used.
In the case of a policy providing an amount of insurance varying
with duration of the policy, the equivalent uniform amount thereof for
the purpose of this subsection shall be deemed to be the uniform
amount of insurance provided by an otherwise similar policy,
containing the same endowment benefit or benefits, if any, issued at the
same age and for the same term, the amount of which does not vary
with duration and the benefits under which have the same present value
at date of issue as the benefits under the policy; provided that in the
case of a policy for a varying amount of insurance issued on the life of
a child under age ten (10), the equivalent uniform amount may be
computed as though the amount of insurance provided by the policy
prior to the attainment of age ten (10) were the amount provided by
such policy at age ten (10) or at expiry, if earlier.
The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision shall be equal to (a)
the adjusted premiums for an otherwise similar policy issued at the
same age without such term insurance benefits, increased, during the
period for which premiums for such term insurance benefits are
payable, by (b) the adjusted premiums for such term insurance, the
foregoing items (a) and (b) being calculated separately and as specified
in the first two (2) paragraphs of this subsection except that, for the
purposes of (ii), (iii) and (iv) of the first such paragraph, the amount of
insurance or equivalent uniform amount of insurance used in the
calculation of the adjusted premiums referred to in (b) shall be equal
to the excess of the corresponding amount determined for the entire
policy over the amount used in the calculation of the adjusted
premiums in (a).
Except as otherwise provided in the succeeding paragraphs of this
subsection, all adjusted premiums and present values referred to in this
section shall for all policies of ordinary insurance be calculated on the
basis of the Commissioners 1941 Standard Ordinary Mortality Table,
provided, that for any category of ordinary insurance issued on female
risks, adjusted premiums and present values may be calculated
according to an age not more than six (6) years younger than the actual
age of the insured, and such calculations for all policies of industrial
insurance shall be made on the basis of the 1941 Standard Industrial
Mortality Table. All calculations shall be made on the basis of the rate
of interest, not exceeding three and one-half percent (3 1/2%) per
annum, specified in the policy for calculating cash surrender values and
paid-up nonforfeiture benefits; provided that in calculating the present
value of any nonforfeiture benefits consisting of paid-up term insurance
with or without pure endowment of a lesser amount, the rates of
mortality assumed may be not more than one hundred and thirty per
cent (130%) of the rates of the mortality according to such applicable
table; and provided that for insurance issued on a substandard basis,
the calculation of any such adjusted premiums and present values may
be based on such other table or tables of mortality as may be specified
by the company and approved by the department.
In the case of ordinary policies bearing a date of issue which is the
same as or later than the operative date of this paragraph as defined in
the succeeding paragraph, all adjusted premiums and present values
referred to in this section shall be calculated on the basis of the
Commissioners 1958 Standard Ordinary Mortality Table and the rate
of interest, specified in the policy for calculating cash surrender values
and paid-up nonforfeiture benefits; provided, that such rate of interest
shall not exceed three and one-half percent (3 1/2%) per annum, except
that such rate of interest shall not exceed four percent (4%) per annum
for policies bearing a date of issue of or later than September 1, 1973
and prior to September 1, 1979, and the interest rate may not exceed
five and one-half percent (5 1/2%) per annum for policies bearing a
date of issue after August 31, 1979; provided that for any category of
ordinary insurance issued on female risks, adjusted premiums and
present values may be calculated according to an age not more than six
(6) years younger than the actual age of the insured; provided that in
calculating the present value of any nonforfeiture benefits consisting
of paid-up term insurance with or without pure endowment of a lesser
amount, the rates of mortality assumed may be not more than those
shown in the Commissioners 1958 Extended Term Insurance Table;
and provided that for insurance issued on a substandard basis, the
calculation of any such adjusted premiums and present values may be
based on such other table or tables of mortality as may be specified by
the company and approved by the department.
Any company may file with the department a written notice of its
election to invoke the provisions of the preceding paragraph after a
specified date before January 1, 1966. After the filing of such notice,
then upon such specified date (which shall be the operative date of the
preceding paragraph for such company), the preceding paragraph shall
become operative with respect to the ordinary policies issued by such
company and bearing a date of issue which is the same as or later than
such specified date. If a company makes no such election, the operative
date of the preceding paragraph for such company shall be January 1,
1966.
In the case of policies of industrial insurance bearing a date of issue
which is the same as or later than the operative date of this paragraph
as defined in the succeeding paragraph, all adjusted premiums and
present values referred to in this section shall be calculated on the basis
of the Commissioners 1961 Standard Industrial Mortality Table and the
rate of interest, specified in the policy for calculating cash surrender
values and paid-up nonforfeiture benefits; provided that such rate of
interest shall not exceed three and one-half percent (3 1/2%) per
annum, except that such rate of interest shall not exceed four percent
(4%) per annum for policies bearing a date of issue of or later than
September 1, 1973 and before September 1, 1979, and the rate of
interest may not exceed five and one-half percent (5 1/2%) per annum
for policies bearing a date of issue after August 31, 1979; provided,
further, that in calculating the present value of any nonforfeiture
benefits consisting of paid-up term insurance with or without pure
endowment of a lesser amount, the rates of mortality assumed may be
not more than those shown in the Commissioners 1961 Industrial
Extended Term Insurance Table; and provided that for insurance issued
on a substandard basis, the calculations of any such adjusted premiums
and present values may be based on such other table or tables of
mortality as may be specified by the company and approved by the
department.
Any company may file with the department a written notice of its
election to invoke the provisions of the preceding paragraph after a
specified date before January 1, 1968. After the filing of such notice,
then upon such specified date (which shall be the operative date of the
preceding paragraph for such company), the preceding paragraph shall
become operative with respect to the policies of industrial insurance
issued by such company and bearing a date of issue which is the same
as or later than such specified date. If a company makes no such
election, the operative date of the preceding paragraph for such
company shall be January 1, 1968.
(dd)(1) This subsection applies to all policies issued on or after the
operative date of this subsection. Except as provided in subdivision (7)
of this subsection, the adjusted premiums for any policy shall be
calculated on an annual basis and shall be such uniform percentage of
the respective premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments or
special hazards and also excluding any uniform annual contract charge
or policy fee specified in the policy in a statement of the method to be
used in calculating the cash surrender values and paid-up nonforfeiture
benefits, that the present value, at the date of issue of the policy, of all
adjusted premiums shall be equal to the sum of (i) the then present
value of the future guaranteed benefits provided for by the policy; (ii)
one percent (1%) of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the
beginning of each of the first ten (10) policy years; and (iii) one
hundred twenty-five percent (125%) of the nonforfeiture net level
premium as defined in this subsection. Provided that in applying the
percentage specified in (iii) no nonforfeiture net level premium may be
considered to exceed four percent (4%) of either the amount of
insurance, if the insurance be uniform in amount, or the average
amount of insurance at the beginning of each of the first ten (10) policy
years. The date of issue of a policy for the purpose of this subsection
shall be the date as of which the rated age of the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present
value, at the date of issue of the policy, of the guaranteed benefits
provided for by the policy divided by the present value, at the date of
issue of the policy, of an annuity of one (1) per annum payable on the
date of issue of the policy and on each anniversary of such policy on
which a premium falls due.
(3) In the case of policies which cause on a basis guaranteed in the
policy unscheduled changes in benefits or premiums, or which provide
an option for changes in benefits or premiums other than a change to
a new policy, the adjusted premiums and present values shall initially
be calculated on the assumption that future benefits and premiums do
not change from those stipulated at the date of issue of the policy. At
the time of any such change in the benefits or premiums, the future
adjusted premiums, nonforfeiture net level premiums, and present
values shall be recalculated on the assumption that future benefits and
premiums do not change from those stipulated by the policy
immediately after the change.
(4) Except as otherwise provided in subdivision (7) of this
subsection, the recalculated future adjusted premiums for any such
policy shall be such uniform percentage of the respective future
premiums specified in the policy for each policy year, excluding
amounts payable as extra premiums to cover impairments and special
hazards, and also excluding any uniform annual contract charge or
policy fee specified in the policy in a statement of the method to be
used in calculating the cash surrender values and paid-up nonforfeiture
benefits, that the present value, at the time of change to the newly
defined benefits or premiums, of all such future adjusted premiums
shall be equal to the excess of: (A) the sum of (i) the then present value
of the then future guaranteed benefits provided for by the policy and
(ii) the additional expense allowance, if any, over (B) the then cash
surrender value, if any, or present value of any paid-up nonforfeiture
benefit under the policy.
(5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of (i) one percent (1%) of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten (10) policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten (10) policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (ii) one hundred twenty-five percent (125%) of the increase, if positive, in the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where:
(A) equals the sum of:
(i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one (1) per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred; and
(ii) the present value of the increase in future guaranteed benefits provided for by the policy; and
(B) equals the present value of an annuity of one (1) per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, that policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of (i) the Commissioners 1980 Standard Ordinary Mortality Table or (ii) at the election of the company for any one (1) or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate
as defined in this subsection, for policies issued in that calendar year.
However:
(A) At the option of the company, calculations for all policies
issued in a particular calendar year may be made on the basis of
a rate of interest not exceeding the nonforfeiture interest rate, as
defined in this subsection, for policies issued in the immediately
preceding calendar year.
(B) Under any paid-up nonforfeiture benefit, including any
paid-up dividend additions, any cash surrender value available,
whether or not required by subsection (a) of this section, shall be
calculated on the basis of the mortality table and rate of interest
used in determining the amount of such paid-up nonforfeiture
benefit and paid-up dividend additions, if any.
(C) A company may calculate the amount of any guaranteed
paid-up nonforfeiture benefit including any paid-up additions
under the policy on the basis of an interest rate no lower than that
specified in the policy for calculating cash surrender values.
(D) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a
nonforfeiture benefit, the rates of mortality assumed may be not
more than those shown in the Commissioners 1980 Extended
Term Insurance Table for policies of ordinary insurance and not
more than the Commissioners 1961 Industrial Extended Term
Insurance Table for policies of industrial insurance.
(E) For insurance issued on a substandard basis, the calculation
of any such adjusted premiums and present values may be based
on appropriate modifications of the tables referred to in this
subdivision.
(F) Any For policies issued:
(i) before the operative date of the valuation manual
specified in IC 27-1-12.8-34, any commissioners standard
ordinary mortality tables, adopted after 1980 by the National
Association of Insurance Commissioners, that are approved
by regulation promulgated by the commissioner for use in
determining the minimum nonforfeiture standard may be
substituted for the Commissioners 1980 Standard Ordinary
Mortality Table with or without Ten-Year Select Mortality
Factors or for the Commissioners 1980 Extended Term
Insurance Table; or
(ii) on or after the operative date of the valuation manual
specified in IC 27-1-12.8-34, the valuation manual must
provide the commissioners standard ordinary mortality
table for use in determining the minimum nonforfeiture
standard that may be substituted for the Commissioners
1980 Standard Ordinary Mortality Table with or
without Ten-Year Select Mortality Factors or for the
Commissioners 1980 Extended Term Insurance Table. If
the commissioner adopts a rule under IC 4-22-2 to
approve any commissioners standard ordinary mortality
table adopted by the National Association of Insurance
Commissioners for use in determining the minimum
nonforfeiture standard for policies issued on or after the
operative date of the valuation manual, that minimum
nonforfeiture standard supersedes the minimum
nonforfeiture standard provided by the valuation
manual.
(G) Any For policies issued:
(i) before the operative date of the valuation manual
specified in IC 27-1-12.8-34, any commissioners standard
industrial mortality tables, adopted after 1980 by the
National Association of Insurance Commissioners, that are
approved by regulation promulgated by the commissioner
for use in determining the minimum nonforfeiture standard
may be substituted for the Commissioners 1961 Standard
Industrial Mortality Table or the Commissioners 1961
Industrial Extended Term Insurance Table; or
(ii) on or after the operative date of the valuation manual
specified in IC 27-1-12.8-34, the valuation manual must
provide the commissioners standard industrial mortality
table for use in determining the minimum nonforfeiture
standard that may be substituted for the Commissioners
1961 Standard Industrial Mortality Table or the
Commissioners 1961 Industrial Extended Term
Insurance Table. If the commissioner adopts a rule
under IC 4-22-2 to approve any commissioners standard
industrial mortality table adopted by the National
Association of Insurance Commissioners for use in
determining the minimum nonforfeiture standard for
policies issued on or after the operative date of the
valuation manual, that minimum nonforfeiture standard
supersedes the minimum nonforfeiture standard
provided by the valuation manual.
(9) The nonforfeiture interest rate per annum for any policy issued
in a particular calendar year shall be as follows:
(A) For policies issued before the operative date of the
valuation manual specified in IC 27-1-12.8-34, equal to one
hundred twenty-five percent (125%) of the calendar year
statutory valuation interest rate for such policy as defined in
IC 27-1-12-10, under IC 27-1-12.8, rounded to the nearer one
quarter of one percent (1/4 of 1%).
(B) For policies issued on or after the operative date of the
valuation manual specified in IC 27-1-12.8-34, the
nonforfeiture interest rate per annum for a policy issued in
a particular calendar year must be provided by the
valuation manual.
(10) Notwithstanding any other provision in this title to the contrary,
any refiling of nonforfeiture values or their methods of computation for
any previously approved policy form which involves only a change in
the interest rate or mortality table used to compute nonforfeiture values
shall not require refiling of any other provisions of that policy form.
(11) After September 1, 1981, any company may file with the
commissioner a written notice of its election to comply with the
provisions of this subsection after a specified date before January 1,
1989, which shall be the operative date of this subsection for such
company. If a company makes no such election, the operative date of
this subsection for such company shall be January 1, 1989.
(e) Any cash surrender value and any paid-up nonforfeiture benefit,
available under the policy in the event of default in a premium payment
due at any time other than on the policy anniversary, shall be calculated
with allowance for the lapse of time and the payment of fractional
premiums beyond the last preceding policy anniversary. All values
referred to in subsections (b), (c), (d), and (dd) may be calculated upon
the assumption that any death benefit is payable at the end of the policy
year of death. The net value of any paid-up additions, other than
paid-up term additions, shall be not less than the amounts used to
provide such additions. Notwithstanding the provisions of subsection
(b), additional benefits payable (1) in the event of death or
dismemberment by accident or accidental means, (2) in the event of
total and permanent disability, (3) as reversionary annuity or deferred
reversionary annuity benefits, (4) as term insurance benefits provided
by a rider or supplemental policy provision to which, if issued as a
separate policy, this section would not apply, (5) as term insurance on
the life of a child or on the lives of children provided in a policy on the
life of a parent of the child, if such term insurance expires before the
child's age is twenty-six (26), is uniform in amount after the child's age
is one (1), and has not become paid up by reason of the death of a
parent of the child, and (6) as other policy benefits additional to life
insurance and endowment benefits, and premiums for all such
additional benefits, shall be disregarded in ascertaining cash surrender
values and nonforfeiture benefits required by this section, and no such
additional benefits shall be required to be included in any paid-up
nonforfeiture benefits.
(f) This section shall not apply to any reinsurance, group insurance,
pure endowment, annuity or reversionary annuity contract, nor to any
term policy of uniform amount, which provides no guaranteed
nonforfeiture or endowment benefits, or renewal thereof, of twenty (20)
years or less expiring before age seventy-one (71), for which uniform
premiums are payable during the entire term of the policy, nor to any
term policy of decreasing amount, which provides no guaranteed
nonforfeiture or endowment benefits, on which each adjusted premium,
calculated as specified in subsections (d) and (dd), is less than the
adjusted premium so calculated on a term policy of uniform amount,
or renewal of it, which provides no guaranteed nonforfeiture or
endowment benefits, issued at the same age and for the same initial
amount of insurance, and for a term of twenty (20) years or less
expiring before age seventy-one (71), for which uniform premiums are
payable during the entire term of the policy, nor to any policy which
provides no guaranteed nonforfeiture or endowment benefits, for which
no cash surrender value, if any, or present value of any paid-up
nonforfeiture benefit, at the beginning of any policy year, calculated as
specified in subsections (b), (c), (d), and (dd) of this section, exceeds
two and one-half percent (2 1/2%) of the amount of insurance at the
beginning of the same policy year, nor to any policy which shall be
delivered outside this state through an agent or other representative of
the company issuing the policy. For purposes of determining the
applicability of this section, the age at expiry for a joint term life
insurance policy shall be the age at expiry of the oldest life.
(g) This subsection, in addition to all other applicable subsections
of this section, applies to all policies issued on or after January 1, 1985.
Any cash surrender value available under the policy in the event of
default in a premium payment due on any policy anniversary shall be
an amount which does not differ by more than two tenths of one
percent (.2%) of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the
beginning of each of the first ten (10) policy years, from the sum of (a)
the greater of zero (0) and the basic cash value specified in this
subsection and (b) the present value of any existing paid-up additions
less the amount of any indebtedness to the company under the policy.
The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as defined in this subsection, corresponding to premiums which would have fallen due on and after such anniversary. However, the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subsection (b) or (d) of this section, whichever is applicable, shall be the same as are the effects specified in that subsection on the cash surrender values defined in that subsection.
The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subsection (d) or (dd), whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, such percentage:
(1) must be the same percentage for each policy year between the second policy anniversary and the later of (i) the fifth policy anniversary and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two tenths of one percent (.2%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and
(2) must be such that no percentage after the later of the two (2) policy anniversaries specified in the preceding item (a) may apply to fewer than five (5) consecutive policy years. No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subsection (d) or (dd) of this section, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.
All adjusted premiums and present values referred to in this subsection shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other subsections of this section. The cash surrender values referred to in this subsection shall include any endowment benefits provided for by the policy.
Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the
event of default in a premium payment shall be determined in manners
consistent with the manners specified for determining the analogous
minimum amounts in subsections (a), (b), (c), (dd), and (e) of this
section. The amounts of any cash surrender values and of any paid-up
nonforfeiture benefits granted in connection with additional benefits
such as those listed as subdivisions (1) through (6) in subsection (e) of
this section shall conform with the principles of this subsection.
(h) In the case of any plan of life insurance which provides for
future premium determination, the amounts of which are to be
determined by the insurance company based on then estimates of future
experience, or in the case of any plan of life insurance which is of such
a nature that minimum values cannot be determined by the methods
described in subsections (a), (b), (c), (d), or (dd) of this section then:
(1) the commissioner must be satisfied that the benefits provided
under the plan are substantially as favorable to policyholders and
insureds as the minimum benefits otherwise required by subsection (a),
(b), (c), (d), or (dd) of this section;
(2) the commissioner must be satisfied that the benefits and the
pattern of premiums of that plan are not such as to mislead prospective
policyholders or insureds; and
(3) the cash surrender values and paid-up nonforfeiture benefits
provided by such plan must not be less than the minimum values and
benefits required for the plan computed by a method consistent with
the principles of this section, as determined by regulations promulgated
by the department.
than the above, such policies shall be valued according to such
higher standard. For the purpose of making such valuation, the
department may employ an actuary to do the same, who shall be
paid by the company for which the services are rendered, but
nothing herein shall prevent any company from making said
valuation herein contemplated, which may be accepted by the
department upon such proof as it may determine. The department,
or anyone representing it, in making any valuation of the policies
of any life insurance company incorporated under any law of this
state, for the purpose of ascertaining the net reserve value of
outstanding policies of any such company, shall compute such net
reserve value according to the terms of each policy outstanding,
and should any policy provide that any time covered thereby is
term insurance, or for a valuation as term insurance for any time
covered by such policy, the valuation of such policy shall be in
accordance with any such provision in such policy, but any policy
issued after March 5, 1909, may provide for not more than one (1)
year's preliminary term insurance, and if the premium charged for
term insurance under a limited payment life preliminary term
policy providing for the payment of less than twenty (20) annual
premiums or under an endowment preliminary term policy,
exceeds that charged for life insurance under twenty (20) payment
life preliminary term policies of the same company, the reserve
thereon at the end of any year, including the first, shall not be less
than the reserve on a twenty (20) payment life preliminary term
policy issued in the same year at the same age, together with an
amount which shall be equivalent to the accumulation of a net
level premium sufficient to provide for a pure endowment at the
end of the premium payment period equal to the difference
between the value at the end of such period of such a twenty (20)
payment life preliminary term policy and the full reserve at such
time of such limited payment life or endowment policy. All
policies of life insurance, including policies issued on a reducing
premium plan, or a return premium plan shall be valued according
to the provisions in this article, except that, in every case in which
the actual premium charged for an insurance is less than the net
premium for such insurance, based upon the American Men
Ultimate Table of Mortality with three and one-half percent (3
1/2%) interest, then and not otherwise the company shall also be
charged with the value of an annuity, the amount of which shall
be equal to the difference between the premium charged and the
net premium for such insurance based upon the American Men
Ultimate Table with three and one-half percent (3 1/2%) interest
and the term of which in years shall equal the number of future
annual payments due on the insurance at the date of valuation;
provided, however, that the provisions of this subdivision for the
valuation of policies shall apply to life insurance policies only.
(b) Insurance against permanent mental or physical disability
resulting from accident or disease or against accidental death,
combined with a policy of life insurance, shall be valued on a
basis of fifty percent (50%) of the additional annual premium
charged therefor.
(c) The department, for the purpose of ascertaining the solvency
of any company, may at any time during the year proceed to
ascertain the net reserve value of the policies of any company, as
provided in this section.
(d) Reserves may be calculated, at the option of the company,
according to any standards which produce greater aggregate
reserves for all policies and contracts than the reserves produced
by the standard specified in this section.
(e) Any company which at any time shall have adopted any
standard of valuation producing greater aggregate reserves than
those calculated according to the minimum standard provided for
in this section may, with the approval of the department, adopt
any standard of valuation producing lower aggregate reserves, but
not lower in the aggregate than the reserves produced by the
standard or standards specified in its policies.
provided, that in the case of alien companies, the valuation shall be
limited to policies and contracts written within the United States, its
territories or possessions. Group methods and approximate averages for
fractions of a year or otherwise may be used in calculating such
reserves, and the valuation made by the company may be accepted by
the department upon such evidence of its correctness as the department
may require. In lieu of the valuation of the reserves required in this
section of any foreign or alien company, the department may accept
any valuation of the reserves of such company made or caused to be
made by the insurance supervisory official of any state or jurisdiction
(a) if such valuation complies with the minimum standard provided for
in this section, and (b) if the insurance supervisory official of such state
or jurisdiction accepts as sufficient and valid for all legal purposes the
certificate of reserve valuation of the department evidencing that such
valuation was made in a specified manner according to which the
aggregate reserves are at least as large as if computed in the manner
prescribed by the law of such state or jurisdiction.
The department, for the purpose of ascertaining the solvency of any
company, may at any time during the year proceed to ascertain the
reserve liabilities of the policies of any company, as hereinbefore
provided.
(2) Except as otherwise provided in subsections (2)(i) and (2)(j) of
this section, the minimum standard for the valuation of all such policies
and contracts shall be the commissioners' reserve valuation method
defined in subsection (3) of this section, three and one-half percent (3
1/2%) interest, or four percent (4%) interest in the case of policies and
contracts, other than annuity and pure endowment contracts, bearing a
date of issue of or later than September 1, 1973, and before September
1, 1979, five and one-half percent (5 1/2%) interest for single premium
life insurance policies, and four and one-half percent (4 1/2%) interest
for all other policies and contracts issued after August 31, 1979, and
the following tables:
(a) For all ordinary policies of life insurance issued on the standard
basis, excluding any disability and accidental death benefits in such
policies-the Commissioners 1941 Standard Ordinary Mortality Table
for such policies bearing a date of issue prior to the operative date of
the fifth paragraph of subsection (d) of section 7 of this chapter, the
Commissioners 1958 Standard Ordinary Mortality Table for such
policies bearing a date of issue which is the same as or later than the
operative date of the fifth paragraph of IC 27-1-12-7(d) and prior to the
operative date of IC 27-1-12-7(dd); provided, that for any category of
such policies issued on female risks all modified net premiums and
present values referred to in this section may be calculated according
to an age not more than six (6) years younger than the actual age of the
insured; and for such policies issued on or after the operative date of
IC 27-1-12-7(dd): (i) the Commissioners 1980 Standard Ordinary
Mortality Table; or (ii) at the election of the company for any one (1)
or more specified plans of life insurance, the Commissioners 1980
Standard Ordinary Mortality Table with Ten-Year Select Mortality
Factors; or (iii) any ordinary mortality table, adopted after 1980 by the
National Association of Insurance Commissioners, that is approved by
rule promulgated by the department for use in determining the
minimum standard of valuation for such policies.
(b) For all industrial life insurance policies issued on the standard
basis, excluding any disability and accidental death benefits in such
policies-the 1941 Standard Industrial Mortality Table for such policies
bearing a date of issue prior to the operative date of the seventh
paragraph of IC 27-1-12-7(d) and for such policies bearing a date of
issue which is the same as or later than such operative date the
Commissioners 1961 Standard Industrial Mortality Table or any
industrial mortality table, adopted after 1980 by the National
Association of Insurance Commissioners, that is approved by the rule
promulgated by the department for use in determining the minimum
standard of valuation for such policies; for such policies bearing a date
of issue which is the same as or later than such operative date.
(c) For ordinary annuity and pure endowment contracts, excluding
any disability and accidental death benefits in such contracts-the 1937
Standard Annuity Mortality Table or, at the option of the company the
Annuity Mortality Table for 1949, Ultimate, or any modification of
either of these tables approved by the department.
(d) For group annuity and pure endowment contracts, excluding any
disability and accidental death benefits in such contracts-the Group
Annuity Mortality Table for 1951, any modification of such table
approved by the department, or, at the option of the company, any of
the tables or modifications of tables authorized for ordinary annuity and
pure endowment contracts.
(e) For total and permanent disability benefits in or supplementary
to ordinary policies or contracts for such policies or contracts bearing
a date of issue of or later than January 1, 1966, the tables of Period 2
disablement rates and the 1930 to 1950 termination rates of the 1952
Disability Study of the Society of Actuaries, with due regard to the type
of benefit or any tables of disablement rates and termination rates,
adopted after 1980 by the National Association of Insurance
Commissioners, that are approved by rule promulgated by the
department for use in determining the minimum standard of valuation
for such policies; for such policies or contracts bearing a date of issue
of or later than January 1, 1961, and prior to January 1, 1966, either
such tables or, at the option of the company, the Class (3) Disability
Table (1926); and for such policies or contracts bearing a date of issue
prior to January 1, 1961, the Class (3) Disability Table (1926). Any
such table shall, for active lives, be combined with a mortality table
permitted for calculating the reserves for life insurance policies.
(f) For accidental death benefits in or supplementary to ordinary and
industrial policies-for such policies bearing a date of issue of or later
than January 1, 1966, the 1959 Accidental Death Benefits Table or any
accidental death benefits table, adopted after 1980 by the National
Association of Insurance Commissioners, that is approved by rule
promulgated by the commissioner for use in determining the minimum
standard of valuation for such policies; for such policies bearing a date
of issue of or later than January 1, 1961, and prior to January 1, 1966,
either such table or, at the option of the company, the Inter-Company
Double Indemnity Mortality Table; and for such policies bearing a date
of issue prior to January 1, 1961, the Inter-Company Double Indemnity
Mortality Table. Either table shall be combined with a mortality table
permitted for calculating the reserves for life insurance policies.
(g) For group life insurance issued on a standard basis, excluding
any disability and accidental death benefits in such policies-the
Commissioners 1958 Standard Ordinary Mortality Table or such other
table as may be specified by the company and approved by the
department.
(h) For other special benefits and for life insurance benefits
contained in policies issued on a substandard basis-such tables as may
be approved by the department.
(i) Except as provided in subsection (2)(j) of this section, minimum
standard for the valuation of all ordinary annuity and pure endowment
contracts bearing a date of issue which is the same as or later than the
operative date of this paragraph (i), as defined in this subsection, and
for all annuities and pure endowments purchased on or after such
operative date under group annuity and pure endowment contracts,
shall be the commissioners' reserve valuation method defined in
subsection (3) of this section and the following tables and interest rates:
(i) For ordinary annuity and pure endowment contracts bearing a
date of issue before September 1, 1979, excluding any disability
and accidental death benefits in such contracts, the 1971
Individual Annuity Mortality Table, or any modification of this
table approved by the department, and six percent (6%) interest
for ordinary single premium immediate annuity contracts and four
percent (4%) interest for all other ordinary annuity and pure
endowment contracts.
(ii) For ordinary annuity and pure endowment contracts bearing
a date of issue after August 31, 1979, excluding any disability and
accidental death benefits in such contracts, the 1971 Individual
Annuity Mortality Table, or any individual annuity mortality
table, adopted after 1980 by the National Association of Insurance
Commissioners, that is approved by rule promulgated by the
department for use in determining the minimum standard of
valuation for such contracts, or any modification of these tables
approved by the department, and seven and one-half percent (7
1/2%) interest for ordinary single premium immediate annuity
contracts, five and one-half percent (5 1/2%) interest for single
premium deferred annuity and pure endowment contracts; and
four and one-half percent (4 1/2%) interest for all other ordinary
annuity and pure endowment contracts.
(iii) For all annuities and pure endowments purchased before
September 1, 1979, under group annuity and pure endowment
contracts, excluding any disability and accidental death benefits
purchased under such contracts, the 1971 Group Annuity
Mortality Table, or any modification of this table approved by the
department, and six percent (6%) interest.
(iv) For all annuities and pure endowments purchased after
August 31, 1979, under group annuity and pure endowment
contracts, excluding any disability and accidental death benefits
purchased under such contracts, the 1971 Group Annuity
Mortality Table, or any group annuity mortality table, adopted
after 1980 by the National Association of Insurance
Commissioners, that is approved by rule promulgated by the
department for use in determining the minimum standard of
valuation for such annuities and pure endowments, or any
modification of these tables approved by the department, and
seven and one-half percent (7 1/2%) interest.
After September 1, 1973, any company may file with the department
a written notice of its election to invoke the provisions of this
paragraph (i) after a specified date before January 1, 1979, which
specified date shall be the operative date of this paragraph (i) for such
company; provided, that any company may elect an operative date for
ordinary annuity and pure endowment contracts different from that
elected for group annuity and pure endowment contracts. If a company
makes no such election, the operative date of this paragraph (i) for such
company shall be January 1, 1979.
(j)(A) Applicability of this Subsection
(1) The interest rates used in determining the minimum standard for
the valuation of:
(a) all life insurance policies issued in a particular calendar year, on
or after the operative date of IC 27-1-12-7(dd);
(b) all ordinary annuity and pure endowment contracts issued in a
particular calendar year on or after January 1, 1982;
(c) all annuities and pure endowments purchased in a particular
calendar year on or after January 1, 1982, under group annuity and pure
endowment contracts; and
(d) the net increase, if any, in a particular calendar year after
January 1, 1982, in amounts held under guaranteed interest contracts;
shall be the calendar year statutory valuation interest rates as defined
in this subsection.
(B) Calendar Year Statutory Valuation Interest Rates
(1) The calendar year statutory valuation interest rates, 1, shall be
determined as follows and the results rounded to the nearer
one-quarter of one percent (1/4 of 1%):
(a) For life insurance,
I = .03 + W(R1 - .03) + W/2(R2 - .09)
(b) For single premium immediate annuities and for annuity benefits
involving life contingencies arising from other annuities with cash
settlement options and from guaranteed interest contracts with cash
settlement options,
I = .03 + W(R - .03)
where R1 is the lesser of R and .09,
R2 is the greater of R and .09,
R is the reference interest rate defined in this subsection, and W is
the weighting factor defined in this subsection.
(c) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on an issue year
basis, except as stated in (b) above, the formula for life insurance stated
in (a) above shall apply to annuities and guaranteed interest contracts
with guarantee durations in excess of ten (10) years and the formula for
single premium immediate annuities stated in (b) above shall apply to
annuities and guaranteed interest contracts with guarantee duration of
ten (10) years or less.
(d) For other annuities with no cash settlement options and for
guaranteed interest contracts with no cash settlement options, the
formula for single premium immediate annuities stated in (b) above
shall not apply.
as published by Moody's Investors Service, Inc.
(c) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a year of
issue basis, except as stated in (b) above, with guarantee duration in
excess of ten (10) years, the lesser of the average over a period of
thirty-six (36) months and the average over a period of twelve (12)
months, ending on June 30 of the calendar year of issue or purchase, of
Moody's Corporate Bond Yield Average-Monthly Average Corporates,
as published by Moody's Investors Service, Inc.
(d) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a year of
issue basis, except as stated in (b) above, with guarantee duration of ten
(10) years or less, the average over a period of twelve (12) months,
ending on June 30 of the calendar year of issue or purchase, of Moody's
Corporate Bond Yield Average-Monthly Average Corporates, as
published by Moody's Investors Service, Inc.
(e) For other annuities with no cash settlement options and for
guaranteed interest contracts with no cash settlement options, the
average over a period of twelve (12) months, ending on June 30 of the
calendar year of issue or purchase, of Moody's Corporate Bond Yield
Average-Monthly Average Corporates, as published by Moody's
Investors Service, Inc.
(f) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a change in
fund basis, except as stated in (b) above, the average over a period of
twelve (12) months, ending on June 30 of the calendar year of the
change in the fund, of Moody's Corporate Bond Yield
Average-Monthly Average Corporates, as published by Moody's
Investors Service, Inc.
(E) Alternative Method for Determining Reference Interest Rates
In the event that Moody's Corporate Bond Yield Average-Monthly
Average Corporates is no longer published by Moody's Investors
Service, Inc., or in the event that the National Association of Insurance
Commissioners determines that Moody's Corporate Bond Yield
Average-Monthly Average Corporates, as published by Moody's
Investors Service, Inc., is no longer appropriate for the determination
of the reference interest rate, then an alternative method for
determination of the reference interest rate, which is adopted by the
National Association of Insurance Commissioners and approved by
rule promulgated by the department, may be substituted.
(3) Reserves according to the commissioners' reserve valuation
method, for life insurance and endowment benefits of policies
providing for a uniform amount of insurance and requiring the payment
of uniform premiums, shall be the excess, if any, of the present value,
at the date of valuation, of such future guaranteed benefits provided for
by such policies, over the then present value of any future modified net
premiums therefor. The modified net premiums for any such benefits
shall be such uniform percentage of the respective contract premiums
for such benefits, excluding any extra premiums charged because of
impairments or special hazards, that the present value, at the date of
issue of the policy, of all such modified net premiums shall be equal to
the sum of the then present value of such benefits provided for by the
policy and the excess of (a) over (b), as follows:
(a) A net level annual premium equal to the present value, at the
date of issue, of such benefits provided for after the first policy year,
divided by the present value, at the date of issue, of an annuity of one
(1) per annum payable on the first and each subsequent anniversary of
such policy on which a premium falls due; provided that such net level
annual premium shall not exceed the net level annual premium on the
nineteen (19) year premium whole life plan for insurance of the same
amount at an age one (1) year higher than the age at issue of such
policy.
(b) A net one (1) year term premium for such benefits provided for
in the first policy year.
Provided that for any life insurance policy issued on or after January
1, 1985, for which the contract premium in the first policy year exceeds
that of the second year and for which no comparable additional benefit
is provided in the first year for such excess and which provides an
endowment benefit or a cash surrender value or a combination thereof
in an amount greater than such excess premium, the reserve according
to the commissioners' reserve valuation method as of any policy
anniversary occurring on or before the assumed ending date defined
herein as the first policy anniversary on which the sum of any
endowment benefit and any cash surrender value then available is
greater than such excess premium shall, except as otherwise provided
in subsection (6) of this section, be the greater of the reserve as of such
policy anniversary calculated as described in the preceding paragraph
and the reserve as of such policy anniversary calculated as described
in that paragraph, but with (i) the value defined in subparagraph (a) of
that paragraph being reduced by fifteen percent (15%) of the amount
of such excess first year premium, (ii) all present values of benefits and
premiums being determined without reference to premiums or benefits
provided for by the policy after the assumed ending date, (iii) the policy
being assumed to mature on such date as an endowment, and (iv) the
cash surrender value provided on such date being considered as an
endowment benefit. In making the above comparison, the mortality and
interest bases stated in paragraphs (a) through (h) and paragraph (j) of
subsection (2) of this section shall be used.
Reserves according to the commissioners' reserve valuation method
for: (i) life insurance and endowment benefits of policies providing for
a varying amount of insurance or requiring the payment of varying
premiums; (ii) group annuity and pure endowment contracts, purchased
under a retirement plan or a plan of deferred compensation, established
or maintained by an employer (including a partnership or sole
proprietorship), or by an employee organization, or by both, other than
a plan providing individual retirement accounts or individual
retirement annuities under Section 408 of the Internal Revenue Code;
(iii) disability and accidental death benefits in all policies and
contracts; and (iv) all other benefits, except life insurance and
endowment benefits and benefits provided by all other annuity and
pure endowment contracts, shall be calculated by a valuation method
consistent with the principles set forth in the preceding paragraph of
this subsection.
This paragraph applies to all annuity and pure endowment contracts
other than group annuity and pure endowment contracts purchased
under a retirement plan or plan of deferred compensation, established
or maintained by an employer, including a partnership or sole
proprietorship, or by an employee organization, or by both, other than
a plan providing individual retirement accounts or individual
retirement annuities under Section 408 of the Internal Revenue Code.
Reserves according to the commissioners' annuity reserve method for
benefits under annuity or pure endowment contracts, excluding any
disability and accidental death benefits in those contracts, is the
greatest of the respective excesses of present values, at the date of
valuation, of future guaranteed benefits, including guaranteed
nonforfeiture benefits, provided for by the terms of those contracts at
the end of each respective contract year, over the present value, at the
date of valuation, of any future valuation considerations derived from
future gross considerations, required by the terms of the contract, that
become payable before the end of each contract year. The future
guaranteed benefits shall be determined by using the mortality table, if
any, and the interest rate, or rates, specified in the contract for
determining guaranteed benefits. The valuation considerations are the
portions of the respective gross considerations applied under the terms
of those contracts to determine nonforfeiture values.
(4) In no event shall a company's aggregate reserves for all life
insurance policies, excluding disability and accidental death benefits,
be less than the corresponding aggregate reserves calculated in
accordance with the methods set forth in subsections (3), (6), and (7)
of this section and the mortality table or tables and rate or rates of
interest used in calculating nonforfeiture benefits for such policies,
anything in subsections (2) and (5) to the contrary notwithstanding. In
no event shall the aggregate reserves for all policies, contracts, and
benefits be less than the aggregate reserves determined to be necessary
by the qualified actuary under IC 27-1-12-10.1.
(5) Reserves for any category of policies, contracts, or benefits as
may be determined by the company and approved by the department
may be calculated at the option of the company according to any
standards which produce greater aggregate reserves for such category
than those calculated according to the minimum standard established
by this section, but the rate or rates of interest used shall not be higher
than the corresponding rate or rates of interest used in calculating any
nonforfeiture benefits in such policies, contracts, or benefits.
Any company which at any time shall have adopted any standard of
valuation producing greater aggregate reserves than those calculated
according to the minimum standard provided for in this section may,
with the approval of the department, adopt any standard of valuation
producing lower aggregate reserves, but not lower in the aggregate than
the reserves produced by the minimum standard specified in this
section.
(6) If in any contract year the gross premium charged by any life
insurance company on any policy or contract is less than the valuation
net premium for the policy or contract calculated by the method used
in calculating the reserve thereon but using the minimum valuation
standards of mortality and rate of interest, the minimum reserve
required for that policy or contract shall be the greater of:
(A) the reserve calculated according to the mortality table, rate of
interest, and method actually used for that policy; or
(B) the reserve calculated by the method actually used for that
policy or contract but using the minimum standards of mortality
and rate of interest and replacing the valuation net premium by
the actual gross premium in each contract year for which the
valuation net premium exceeds the actual gross premium. The
minimum valuation standards of mortality and rate of interest
referred to in this subsection are those standards stated in
paragraphs (a) through (h) and paragraph (j) of subsection (2) of
this section.
Provided that for any life insurance policy issued on or after January
1, 1985, for which the gross premium in the first policy year exceeds
that of the second year and for which no comparable additional benefit
is provided in the first year for such excess and which provides an
endowment benefit or a cash surrender value or a combination of the
two in an amount greater than such excess premium, the foregoing
provisions of this section (6) shall be applied as if the method actually
used in calculating the reserve for such policy were the method
described in subsection (3) of this section, ignoring the second
paragraph of subsection (3) of this section. The minimum reserve at
each policy anniversary of such a policy shall be the greater of the
minimum reserve calculated in accordance with subsection (3) of this
section, including the second paragraph of that subsection, and the
minimum reserve calculated in accordance with subsection (6) of this
section.
(7) In the case of any plan of life insurance which provides for
future premium determination, the amounts of which are to be
determined by the insurance company based on then estimates of future
experience, or in the case of any plan of life insurance or annuity which
is of such a nature that the minimum reserves cannot be determined by
the methods described in subsections (3) and (6) of this section, the
reserves which are held under any such plan must:
(a) be appropriate in relation to the benefits and the pattern of
premiums for that plan, and
(b) be computed by a method which is consistent with the principles
of this section, as determined by rules promulgated by the department.
information to be included in an actuary's opinion submitted under this
section and may require the inclusion in the opinion of any other items
of information that the commissioner considers necessary to the scope
of the opinion.
(c) Unless it is exempted by a rule adopted by the commissioner
under IC 4-22-2, a life insurance company doing business in Indiana
shall include with the actuary's opinion submitted under subsection (b)
an opinion by the same qualified actuary. The opinion required under
this subsection shall state whether the reserves and related actuarial
items held by the life insurance company in support of the policies and
contracts specified by the commissioner by rules adopted under
IC 4-22-2 make adequate provision for the obligations of the company
under the policies and contracts, including but not limited to:
(1) the benefits under; and
(2) the expenses associated with;
the policies and contracts of the life insurance company. In making the
determination required under this subsection, the qualified actuary
shall consider the assets held by the company with respect to reserves
and related actuarial items, including but not limited to investment
earnings on the assets and the considerations anticipated to be received
and retained under the policies and contracts.
(d) The commissioner, in rules adopted under IC 4-22-2, may
provide for a transition period for establishing any higher reserves that
the qualified actuary may consider necessary in order to render the
opinion required by this section.
(e) The following requirements apply to the actuary's opinion
required by subsection (c):
(1) A memorandum, which meets all requirements that the
commissioner may establish by rules adopted under IC 4-22-2
concerning form and content, shall be prepared to support each
actuarial opinion.
(2) If:
(A) the life insurance company fails to provide a supporting
memorandum at the request of the commissioner within a
period specified by rules adopted by the commissioner under
IC 4-22-2; or
(B) the commissioner determines that the supporting
memorandum provided by the life insurance company does not
meet the standards set forth in rules adopted by the
commissioner under IC 4-22-2 or is otherwise unacceptable to
the commissioner;
the commissioner may engage a qualified actuary at the expense
of the life insurance company to review the opinion and the basis
for the opinion and to prepare a supporting memorandum, if a
supporting memorandum is required by the commissioner.
(f) The following requirements apply to every opinion under this
section:
(1) The opinion shall be submitted with the annual statement of
the life insurance company and must reflect the valuation of
reserve liabilities for each year ending after December 31, 1994.
(2) The opinion must apply to all business in force, including
individual and group health insurance plans, and must meet all
requirements that the commissioner may establish concerning
form and content by rules adopted under IC 4-22-2.
(3) The opinion must be based on standards adopted periodically
by the Actuarial Standards Board and on additional standards that
the commissioner may prescribe by rules adopted under
IC 4-22-2.
(4) In the case of an opinion required to be submitted by a foreign
or an alien life insurance company, the commissioner may accept
the opinion filed by that company with the insurance supervisory
official of another state if the commissioner determines that the
opinion reasonably meets the requirements applicable to a
company domiciled in Indiana.
(g) Except in cases of fraud or willful misconduct, a qualified
actuary who provides an opinion required by this section is not liable
for damages to any person other than:
(1) the life insurance company for which the opinion is offered;
and
(2) the commissioner;
for any act, error, omission, decision, or conduct with respect to the
actuary's opinion.
(h) The rules adopted by the commissioner under IC 4-22-2 to
implement this section shall provide for disciplinary action against a
life insurance company or a qualified actuary who violates this section
or the rules adopted under this section.
(i) Except as provided in subsections (j) and (k), a memorandum
submitted by a life insurance company in support of an opinion
required by this section and any other material provided to the
commissioner by the company in connection with the memorandum:
(1) are declared confidential for the purposes of
IC 5-14-3-4(a)(1);
(2) shall be kept confidential by the commissioner; and
(3) are not subject to subpoena;
value or reserve liabilities or the amount provided under subsection (f).
No life insurance company organized under this article or any other law
of this state shall be required to make such deposit until the amount
prescribed by this subsection exceeds the amount deposited by said
company under IC 27-1-6-14 or IC 27-1-6-15. Investments in real
estate shall be deposited in the form of satisfactory evidences of
ownership. The deposit requirement in relation to policy loans and
bank deposits shall be considered fulfilled by the inclusion of such item
in the company's annual statement, but subject to the right of the
company at any time, and the obligation of the company on demand of
the department, to file with the department a certificate as to the
amount of such item.
(b) If the department in the course of the year ascertains that the net
reserve value of a company's policies (as defined in section 9 of this
chapter) under IC 27-1-12.8-18 or its reserve liabilities (as defined in
section 10 of this chapter) under IC 27-1-12.8 exceeds such company's
deposits as required by subsection (a), it may require such company
within sixty (60) days to increase its deposit to the required amount.
(c) Nothing in this article shall prevent the deposit of bonds,
mortgages, or other securities which meet the investment requirements
of a foreign or alien state or country, to an amount not exceeding the
amount of the reserves on policies issued to residents of, and to
corporations doing business in, such state or country. If, pursuant to the
law of a foreign or alien state or country in which an Indiana life
insurance company is doing business, securities belonging to such a
company are required to be deposited within the boundaries of such
foreign or alien state or country, credit for the amount of such deposit,
not exceeding the amount of the reserves on policies issued to residents
of, and to corporations doing business in, such foreign or alien state or
country, may be taken by the company as an offset against its deposits
required under this article.
(d) If, pursuant to the law of a foreign or alien state or country, a life
insurance company domiciled therein is not permitted a reserve credit
for reserves maintained by a reinsurer foreign to such a state or
country, except on the condition that the amount of such reserve be
deposited with the insurance supervisory official of such state or
country, a deposit credit for the amount of such reserves so deposited
shall be allowed a domestic life insurance company accepting
reinsurance from companies domiciled in such state or country.
(e) Any deposit of assets with the department pursuant to any law
superseded by this chapter shall, prior to the first deposit date
contemplated in subsection (a), be continued with the department and
otherwise be subject to this section.
(f) The amount of the deposit, except as otherwise provided in
subsection (a), shall be one million dollars ($1,000,000) excluding
policy loans and bank deposits, or such greater amount as the
department deems necessary to protect the interests of the
policyholders of a particular company by an order to the company to
deposit additional amounts under this section.
(g) Except for a company that maintains a deposit in the amount
specified in subsection (f), each company:
(1) must report to the department each new asset acquisition to
establish its eligibility for investment under the numbered
categories of permissible investments under section 2 of this
chapter at such regular intervals, within the time limit following
each interval and on the forms as the department may require,
without complying with IC 4-22-2; and
(2) when ordered by the department, shall make any additional
report relating to:
(A) the category of eligibility, the characteristics, or the
amount of any investment; or
(B) the amount of the assets of the company in any category;
calculated under the rules applied for annual statement purposes.
Chapter 12.8. Standard Valuation Law
Sec. 1. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "accident and sickness insurance" means insurance described in Class 1(b), Class 1(c)(2), or Class 2(a) of IC 27-1-5-1.
(b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "accident and sickness insurance" means insurance described in Class 1(b), Class 1(c)(2), or Class 2(a) of IC 27-1-5-1 and as may be specified in the valuation manual.
Sec. 2. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "appointed actuary" means a qualified actuary who is appointed to prepare an actuarial opinion required by sections 21 and 22 of this chapter.
(b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare an actuarial
opinion required by section 23 of this chapter.
Sec. 3. As used in this chapter, "change in fund basis" refers to
a valuation basis under which the interest rate used to determine
the minimum valuation standard applicable to each change in the
fund held under an annuity or a guaranteed interest contract is the
calendar year valuation interest rate for the year of the change in
the fund.
Sec. 4. As used in this chapter, "company" is limited to a
company that has:
(1) issued, delivered, or reinsured at least one (1):
(A) policy of insurance described in Class 1(a) or Class
1(c)(1) of IC 27-1-5-1; or
(B) policy of insurance or contract described in Class 1(b),
Class 1(c)(2), or Class 2(a) of IC 27-1-5-1;
in Indiana that is in force or subject to at least one (1)
outstanding claim; or
(2) issued, delivered, or reinsured a policy or contract
described in subdivision (1)(A) or (1)(B) in another state and
is required to hold a certificate of authority to issue, deliver,
or reinsure a policy or contract described in subdivision
(1)(A) or (1)(B) in Indiana.
Sec. 5. As used in sections 37 and 38 of this chapter,
"confidential information" means the following:
(1) A supporting memorandum submitted under section 21,
22, or 23 of this chapter and any other documents, materials,
and other information, including all working papers and
copies of working papers that are created, produced, or
obtained by or disclosed to the commissioner or another
person in connection with the supporting memorandum.
(2) All documents, materials, and other information, including
all working papers and copies of working papers that are
created, produced, or obtained by or disclosed to the
commissioner or another person in the course of an
examination made under section 34(f) of this chapter.
However, if an examination report or other material prepared
in connection with an examination made under IC 27-1-3.1 is
not maintained as private and confidential information under
IC 27-1-3.1, an examination report or other material
prepared in connection with an examination made under
section 34(f) of this chapter is not confidential to the same
extent as if the examination report or other material had been
prepared under IC 27-1-3.1.
(3) A report, document, material, or other information developed by a company in support of or in connection with an annual certification by the company under section 35(c)(2) of this chapter evaluating the effectiveness of the company's internal controls with respect to a principle based valuation and any other document, material, or other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with the report, document, material, or other information.
(4) A principle based valuation report developed under section 35(c)(3) of this chapter and any document, material, or other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with the report.
(5) A document, material, data, or other information submitted by a company under section 36 of this chapter and any other document, material, data, or other information, including all working papers and copies of working papers that are created or produced in connection with the document, material, data, or other information in each case that:
(A) includes any potentially company identifying or personally identifiable information;
(B) is provided to or obtained by the commissioner with the document, material, data, or other information; and
(C) any other document, material, data, or other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with a document, material, data, or other information described in this subdivision.
Sec. 6. As used in this chapter, "contract" means a contract or a policy.
Sec. 7. (a) As used in this chapter, "contractholder behavior" means an action taken by a contract holder, certificate holder, or another person possessing the right to elect options, including:
(1) lapse;
(2) withdrawal;
(3) transfer;
(4) deposit;
(5) premium payment;
(6) loan;
(7) annuitization;
(8) benefit elections; and
(9) other options;
under the contract.
(b) As used in this chapter, "contractholder behavior" does not include events of mortality or morbidity resulting in benefits prescribed according to the terms of the contract.
Sec. 8. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "deposit type contract" means a contract that does not incorporate mortality or morbidity risk.
(b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "deposit type contract" means a contract that does not incorporate mortality or morbidity risk and as may be specified in the valuation manual.
Sec. 9. As used in this chapter, "issue year basis" refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of an annuity or a guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract.
Sec. 10. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "life insurance" means insurance under a contract that incorporates mortality risk, including annuity and pure endowment contracts.
(b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "life insurance" means insurance under a contract that incorporates mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.
Sec. 11. As used in this chapter, "NAIC" refers to the National Association of Insurance Commissioners.
Sec. 12. As used in this chapter, "plan type" refers to the following:
(1) "Plan Type A" means a plan type for which a contractholder:
(A) may not withdraw funds; or
(B) at any time may withdraw funds only:
(i) with an adjustment to reflect changes in interest rates
or asset values occurring after receipt of the funds by the
company;
(ii) without an adjustment, but with installments over at
least five (5) years; or
(iii) as an immediate life annuity.
(2) "Plan Type B" means a plan type for which:
(A) before expiration of the interest rate guarantee, a
contractholder may not withdraw funds, or may withdraw
funds only:
(i) with an adjustment to reflect changes in interest rates
or asset values occurring after receipt of the funds by the
company; or
(ii) without an adjustment, but in installments over at
least five (5) years; and
(B) at the expiration of the interest rate guarantee, funds
may be withdrawn without an adjustment in a single sum
or installments over less than five (5) years.
(3) "Plan Type C" means a plan type for which a
contractholder may withdraw funds before expiration of the
interest rate guarantee in a single sum or installments over
less than five (5) years:
(A) without adjustment to reflect changes in interest rates
or asset values occurring after receipt of the funds by the
company; or
(B) subject only to a fixed surrender charge stipulated in
the contract as a percentage of the fund.
Sec. 13. On and after the operative date of the valuation manual
specified in section 34 of this chapter, as used in this chapter,
"principal based valuation" means a reserve valuation that:
(1) uses at least one (1) method or assumption determined by
the insurer; and
(2) is required to comply with section 35 of this chapter as
specified in the valuation manual.
Sec. 14. (a) Before the operative date of the valuation manual
specified in section 34 of this chapter, as used in this chapter,
"qualified actuary" means an individual who is qualified to sign
the applicable statement of actuarial opinion in accordance with
the American Academy of Actuaries qualification standards.
(b) On and after the operative date of the valuation manual
specified in section 34 of this chapter, as used in this chapter,
"qualified actuary" means an individual who:
(1) is qualified to sign the applicable statement of actuarial
opinion in accordance with the American Academy of
Actuaries qualification standards; and
(2) meets the requirements specified in the valuation manual.
Sec. 15. As used in this chapter, "reserves" means reserve
liabilities.
Sec. 16. As used in this chapter, "tail risk" means a risk that
occurs where:
(1) the frequency of low probability events is higher than
expected under a normal probability distribution; or
(2) there are observed events of very significant size or
magnitude.
Sec. 17. As used in this chapter, "valuation manual" refers to
the manual of valuation instructions adopted by the NAIC.
Sec. 18. (a) Contracts of life insurance bearing dates of issue
that are earlier than a transition date selected by the company
under IC 27-1-12-12, the transition date in no event to be later than
January 1, 1948, must be valued in accordance with the following:
(1) As soon as practicable after the filing with the department
under IC 27-1-20-21 of the annual statement of a company
organized under this article or under another law of this state
and doing business in Indiana, the department shall ascertain
the net reserve value of each contract in force on the
immediately preceding December 31, on the basis of:
(A) the American Experience Table of Mortality and four
percent (4%) interest; or
(B) the Actuaries' Combined Experience Table of
Mortality and four percent (4%) interest;
as adopted by the company. However, if the company issues
a contract based on a higher standard than the standards
described in clauses (A) and (B), the contract must be valued
according to the higher standard. The department may hire,
at the company's expense, an actuary to make the valuation
or the department may accept a valuation made by the
company, as determined by the department.
(2) In making a valuation under subdivision (1), the
department or a representative of the department shall
compute the net reserve value according to the terms of the
contract. If a contract provides term insurance, or for a
valuation as term insurance for any time covered by the
contract, the valuation of the contract must be in accordance
with the provision in the contract. However, a contract issued
after March 5, 1909:
(A) may provide for not more than one (1) year of preliminary term insurance; and
(B) if the premium charged for term insurance under:
(i) a limited payment life preliminary term contract providing for the payment of less than twenty (20) annual premiums; or
(ii) an endowment preliminary term contract;
exceeds the premium charged for life insurance under twenty (20) payment life preliminary term contracts of the same company, the reserve on the contract at the end of any year, including the first, must not be less than the reserve on a twenty (20) payment life preliminary term contract issued in the same year at the same age, together with an amount that is equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period equal to the difference between the value at the end of the period of the twenty (20) payment life preliminary term contract and the full reserve at the time of the limited payment life or endowment contract.
(3) All contracts of life insurance, including contracts issued on a reducing premium plan or a return premium plan, must be valued according to this article. However, if the actual premium charged for an insurance contract is less than the net premium for the insurance contract, based on the American Men Ultimate Table of Mortality with three and one-half percent (3 1/2%) interest, the company must also establish an additional reserve equal to the value of an annuity, the amount of which must be equal to the difference between the premium charged and the net premium for insurance based on the American Men Ultimate Table with three and one-half percent (3 1/2%) interest and a term in years that is equal to the number of future annual payments due on the insurance at the date of valuation.
(4) Insurance against permanent mental or physical disability resulting from accident or disease or against accidental death, combined with a contract of life insurance, must be valued on a basis of fifty percent (50%) of the additional annual premium charged for the insurance.
(5) The department may at any time during the year ascertain the net reserve value of the contracts of a company, as provided in this section, to determine the solvency of the
company.
(6) Reserves may be calculated, at the option of the company,
according to standards that produce greater aggregate
reserves for all contracts than the reserves produced by the
standard specified in this section.
(7) A company that has adopted a standard of valuation
producing greater aggregate reserves than the aggregate
reserves calculated according to the minimum standard
provided for in this section may, with the approval of the
department, adopt a standard of valuation producing lower
aggregate reserves, but not lower in the aggregate than the
reserves produced by the standard specified in the company's
contracts.
(b) Subsection (a)(1) through (a)(3) applies only to the valuation
of life insurance contracts.
Sec. 19. (a) The commissioner shall annually value or cause to
be valued the reserves for all outstanding life insurance contracts
and annuity and pure endowment contracts:
(1) of each company doing business in Indiana; and
(2) issued on or after the transition date selected by the
company under IC 27-1-12-12, the transition date in no event
to be later than January 1, 1948, and before the operative date
of the valuation manual.
(b) In calculating reserves, the commissioner may use group
methods and approximate averages for fractions of a year or
otherwise. In lieu of the valuation of the reserves required of a
foreign or alien company, the commissioner may accept a valuation
made, or caused to be made, by the insurance supervisory official
of another state or jurisdiction when the valuation complies with
the minimum standard provided in sections 19 through 40 of this
chapter.
(c) Sections:
(1) 24 through 33 of this chapter apply to all contracts, as
appropriate, issued on or after the transition date selected by
a company under IC 27-1-12-12, the transition date in no
event to be later than January 1, 1948, and before the
operative date of the valuation manual; and
(2) 34 and 35 of this chapter do not apply to contracts
described in subdivision (1).
(d) The minimum standard for the valuation of contracts issued
before the transition date selected by a company under
IC 27-1-12-12, the transition date in no event to be later than
January 1, 1948, is the minimum standard specified in section 18
of this chapter.
Sec. 20. (a) The commissioner shall annually value, or cause to
be valued, the reserves for all outstanding life insurance contracts,
annuity and pure endowment contracts, accident and sickness
insurance contracts, and deposit-type contracts:
(1) of each company; and
(2) issued on or after the operative date of the valuation
manual.
In lieu of the valuation of the reserves required of a foreign or alien
company, the commissioner may accept a valuation made, or
caused to be made, by the insurance supervisory official of another
state or jurisdiction if the valuation complies with the minimum
standards provided in sections 19 through 40 of this chapter.
(b) Sections 34 and 35 of this chapter apply to all contracts
issued on or after the operative date of the valuation manual.
Sec. 21. (a) This section applies before the operative date of the
valuation manual.
(b) A company doing business in Indiana shall annually submit
to the department the opinion of a qualified actuary concerning
whether the reserves and related actuarial items held by the
company in support of the contracts specified by the commissioner
in rules adopted under IC 4-22-2:
(1) are computed appropriately;
(2) are based on assumptions that satisfy contractual
provisions;
(3) are consistent with previously reported amounts; and
(4) comply with applicable laws of the state.
(c) The commissioner shall adopt rules under IC 4-22-2 to
implement this section. The rules adopted by the commissioner:
(1) must specify the information to be included in an actuary's
opinion submitted under this section;
(2) may require the inclusion in the opinion of other items of
information that the commissioner considers necessary to the
scope of the opinion; and
(3) must provide for disciplinary action against a company or
a qualified actuary that violates this section.
(d) Unless exempted by a rule adopted by the commissioner
under IC 4-22-2, a company doing business in Indiana shall include
with the actuary's opinion submitted under subsection (b) an
opinion by the same qualified actuary stating whether the reserves
and related actuarial items held by the company in support of the
contracts specified by the commissioner in rules adopted under
IC 4-22-2 make adequate provision for the obligations of the
company under the contracts, including:
(1) the benefits under;
(2) the expenses associated with; and
(3) any other obligations under;
the contracts of the company. In making the determination
required under this subsection, the qualified actuary shall consider
the assets held by the company with respect to reserves and related
actuarial items, including investment earnings on the assets and the
considerations anticipated to be received and retained under the
contracts.
(e) The commissioner, in rules adopted under IC 4-22-2, may
provide for a transition period to establish higher reserves
considered necessary by the qualified actuary to render the opinion
required by this section.
(f) The following requirements apply to an actuary's opinion
required by subsection (d):
(1) A memorandum that meets all requirements established
by the commissioner in rules adopted under IC 4-22-2
concerning form and content must be prepared to support
each actuarial opinion.
(2) If:
(A) the company fails to provide a supporting
memorandum at the request of the commissioner within a
period specified by rules adopted by the commissioner
under IC 4-22-2; or
(B) the commissioner determines that the supporting
memorandum provided by the company does not meet the
standards set forth in rules adopted by the commissioner
under IC 4-22-2 or is otherwise unacceptable to the
commissioner;
the commissioner, at the expense of the company, may engage
a qualified actuary to review the opinion and the basis for the
opinion and to prepare the supporting memorandum required
by the commissioner.
(g) The following apply to an actuarial opinion submitted under
this section:
(1) The opinion must:
(A) be submitted with the annual statement of the
company; and
(B) reflect the valuation of reserves for each year ending
after December 31, 1994.
(2) The opinion must:
(A) apply to all business in force, including individual and
group accident and sickness insurance contracts; and
(B) meet all requirements concerning form and content
established by the commissioner in rules adopted under
IC 4-22-2.
(3) The opinion must be based on:
(A) standards adopted by the Actuarial Standards Board;
and
(B) additional standards prescribed by the commissioner
in rules adopted under IC 4-22-2.
(4) In the case of an opinion required to be submitted by a
foreign or alien company, the commissioner may accept the
opinion filed by the foreign or alien company with the
insurance supervisory official of another state if the
commissioner determines that the opinion reasonably meets
the requirements applicable to a company domiciled in
Indiana.
(h) Except in cases of fraud or willful misconduct, a qualified
actuary who provides an opinion required by this section is not
liable for damages to a person other than:
(1) the company for which the opinion is offered; and
(2) the commissioner;
for any act, error, omission, decision, or conduct with respect to
the actuary's opinion.
Sec. 22. (a) This section applies before the operative date of the
valuation manual.
(b) Except as otherwise provided in this section, a supporting
memorandum submitted by a company as required by section 21
of this chapter and material provided to the commissioner by the
company in connection with the supporting memorandum:
(1) are confidential;
(2) are not subject to subpoena; and
(3) are not subject to discovery or admissible in evidence in a
private civil action.
However, the commissioner may use the materials and information
in connection with a regulatory or legal action brought as part of
the commissioner's duties.
(c) The commissioner, or a person receiving documents,
materials, or other information while acting under the authority of
the commissioner, is not permitted or required to testify in a
private civil action concerning information that is confidential as
described in subsection (b).
(d) The commissioner may disclose documents, materials, and
other information, including the information described in
subsection (b), to:
(1) other state, federal, and international regulatory agencies;
(2) the NAIC and affiliates and subsidiaries of the NAIC; and
(3) state, federal, and international law enforcement
authorities;
if the recipient agrees to maintain the confidential and privileged
status of the documents, materials, and other information.
(e) The commissioner:
(1) may receive documents, materials, and other information,
including confidential and privileged documents, materials,
and information, from:
(A) other state, federal, and international regulatory
agencies;
(B) the NAIC and affiliates and subsidiaries of the NAIC;
and
(C) other state, federal, and international law enforcement
authorities;
(2) shall maintain as confidential or privileged all documents,
materials, and other information received with notice or the
understanding that the documents, materials, and information
are confidential or privileged under the law of the jurisdiction
that is the source of the documents, materials, and
information; and
(3) may enter into agreements governing sharing and use of
information consistent with subsections (b) through (d).
(f) Any applicable privilege or claim of confidentiality in
documents, materials, or information described in this section is
not waived as a result of the disclosure or receipt of the documents,
materials, or information by the commissioner as authorized by
this section.
(g) A supporting memorandum described in section 21 of this
chapter and other material provided by the company to the
commissioner in connection with the supporting memorandum
may:
(1) be subject to subpoena to defend an action seeking
damages from the actuary who submitted the supporting
memorandum under section 21 of this chapter; and
(2) be released by the commissioner:
(A) with the written consent of the company; or
(B) to the American Academy of Actuaries in response to a written request that:
(i) states that the memorandum or other material is required for the purpose of professional disciplinary proceedings; and
(ii) sets forth procedures satisfactory to the commissioner for preserving the confidentiality of the supporting memorandum or other material.
(h) If any part of a supporting memorandum described in section 21 of this chapter is:
(1) cited by the company in the company's marketing;
(2) cited before a governmental agency other than a state insurance department; or
(3) released by the company to the news media;
all parts of the supporting memorandum are no longer confidential.
(i) The commissioner shall adopt rules under IC 4-22-2 containing the minimum standards for the valuation of accident and sickness insurance contracts.
Sec. 23. (a) This section applies on and after the operative date of the valuation manual.
(b) A company with outstanding life insurance contracts, accident and sickness insurance contracts, or deposit-type contracts in Indiana that is subject to regulation by the commissioner shall:
(1) annually submit the opinion of the appointed actuary concerning whether the reserves and related actuarial items held in support of the contracts:
(A) are computed appropriately;
(B) are based on assumptions that satisfy contractual provisions;
(C) are consistent with previously reported amounts; and
(D) comply with applicable Indiana law;
according to the specific requirements prescribed by the valuation manual; and
(2) except as exempted in the valuation manual, annually submit the opinion of the appointed actuary concerning whether the reserves and related actuarial items held in support of the contracts specified in the valuation manual, when considered with the assets held by the company with respect to the reserves and related actuarial items including
the:
(A) investment earnings on the assets; and
(B) considerations anticipated to be received and retained
under the contracts;
make adequate provision for the company's obligations,
including benefits under, expenses associated with, and any
other obligations under the contracts.
(c) The following requirements apply to an opinion required by
subsection (b)(2):
(1) A memorandum, in form and substance as specified in the
valuation manual and acceptable to the commissioner, must
be prepared to support each actuarial opinion.
(2) If:
(A) the company fails to provide a supporting
memorandum at the request of the commissioner within a
period specified in the valuation manual; or
(B) the commissioner determines that the supporting
memorandum provided by the company fails to meet the
standards prescribed by the valuation manual or is
otherwise unacceptable to the commissioner;
the commissioner may engage a qualified actuary at the
expense of the company to review the opinion and the basis
for the opinion and prepare the supporting memorandum
required by the commissioner.
(d) The following requirements apply to an opinion prepared
under subsection (b)(1) or (b)(2):
(1) The opinion must be in form and substance as specified in
the valuation manual and acceptable to the commissioner.
(2) The opinion must be submitted with the annual statement
reflecting the valuation of the reserves for each year ending
on or after the operative date of the valuation manual.
(3) The opinion must apply to all contracts subject to
subsection (b)(2) plus other actuarial liabilities specified in the
valuation manual.
(4) The opinion must be based on:
(A) standards adopted by the Actuarial Standards Board
or a successor to the Actuarial Standards Board; and
(B) additional standards prescribed in the valuation
manual.
(5) In the case of an opinion required to be submitted by a
foreign or alien company, the commissioner may accept the
opinion filed by the company with the insurance supervisory
official of another state if the commissioner determines that
the opinion reasonably meets the requirements applicable to
a company domiciled in Indiana.
(6) Except in cases of fraud or willful misconduct, the
appointed actuary is not liable for damages to a person other
than the company and the commissioner for any act, error,
omission, decision, or conduct with respect to the appointed
actuary's opinion.
(7) Disciplinary action by the commissioner against the
company or the appointed actuary must be defined in rules
adopted by the commissioner under IC 4-22-2.
Sec. 24. (a) Except as provided in sections 25, 26, and 33 of this
chapter, the minimum standard for the valuation of contracts
issued before the operative date of the valuation manual specified
in section 34 of this chapter and on or after the transition date
selected by the company under IC 27-1-12-12, the transition date
in no event to be later than January 1, 1948, is:
(1) the commissioners reserve valuation methods described in
sections 27, 28, 31, and 33 of this chapter;
(2) three and one-half percent (3 1/2%) interest; or
(3) in the case of life insurance contracts (other than annuity
and pure endowment contracts) issued after August 31, 1973:
(A) four percent (4%) interest for contracts issued before
September 1, 1979;
(B) five and one-half percent (5 1/2%) interest for single
premium life insurance contracts; and
(C) four and one-half percent (4 1/2%) interest for all
other contracts issued after August 31, 1979.
(b) In addition to the minimum standards specified in subsection
(a), the following tables apply:
(1) For ordinary contracts of life insurance issued on the
standard basis, excluding disability and accidental death
benefits in the contracts:
(A) the Commissioners 1941 Standard Ordinary Mortality
Table for contracts issued before the operative date of the
fifth paragraph of IC 27-1-12-7(d);
(B) for any category of contracts issued:
(i) on male risks; and
(ii) on or after the operative date of the fifth paragraph
of IC 27-1-12-7(d) and before the operative date of
IC 27-1-12-7(dd);
the Commissioners 1958 Standard Ordinary Mortality
Table;
(C) for any category of contracts issued:
(i) on female risks; and
(ii) on or after the operative date of the fifth paragraph
of IC 27-1-12-7(d) and before the operative date of
IC 27-1-12-7(dd);
the Commissioners 1958 Standard Ordinary Mortality
Table with all modified net premiums and present values
referred to in sections 19 through 40 of this chapter
calculated according to an age not more than six (6) years
younger than the actual age of the insured; and
(D) for contracts issued on or after the operative date of
IC 27-1-12-7(dd):
(i) the Commissioners 1980 Standard Ordinary
Mortality Table;
(ii) at the election of the company for one (1) or more
specified plans of life insurance, the Commissioners 1980
Standard Ordinary Mortality Table with Ten-Year
Select Mortality Factors; or
(iii) an ordinary mortality table, adopted after 1980 by
the NAIC, which is approved by rule adopted by the
department under IC 4-22-2 for use in determining the
minimum standard of valuation for the contracts.
(2) For industrial life insurance contracts issued on the
standard basis, excluding disability and accidental death
benefits in the contracts:
(A) the 1941 Standard Industrial Mortality Table for
contracts bearing a date of issue before the operative date
of the seventh paragraph of IC 27-1-12-7(d); and
(B) for contracts bearing a date of issue that is the same as
or later than the operative date described in clause (A), the
Commissioners 1961 Standard Industrial Mortality Table
or an industrial mortality table adopted after 1980 by the
NAIC that is approved by rule adopted by the department
under IC 4-22-2 for use in determining the minimum
standard of valuation for the contracts.
(3) For individual annuity and pure endowment contracts,
excluding disability and accidental death benefits in the
contracts:
(A) the 1937 Standard Annuity Mortality Table; or
(B) at the option of the company, the Annuity Mortality
Table for 1949, Ultimate; or
(C) a modification of a table specified in clause (A) or (B) that is approved by the commissioner.
(4) For group annuity and pure endowment contracts, excluding disability and accidental death benefits in the contracts:
(A) the Group Annuity Mortality Table for 1951;
(B) a modification of the table approved by the commissioner; or
(C) at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.
(5) For total and permanent disability benefits in or supplementary to contracts:
(A) for contracts issued after December 31, 1965, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit or tables of disablement rates and termination rates adopted after 1980 by the NAIC, that are approved by rule adopted by the department under IC 4-22-2 for use in determining the minimum standard of valuation for those contracts;
(B) for contracts issued after December 31, 1960, and before January 1, 1966:
(i) the tables described in clause (A); or
(ii) at the option of the company, the Class (3) Disability Table (1926); and
(C) for contracts issued before January 1, 1961, the Class (3) Disability Table (1926).
Any table described in this subdivision must, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance contracts.
(6) For accidental death benefits in or supplementary to contracts issued after December 31, 1965:
(A) the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted after 1980 by the NAIC that is approved by rule adopted by the commissioner under IC 4-22-2 for use in determining the minimum standard of valuation for the contracts;
(B) for contracts issued after December 31, 1960, and before January 1, 1966:
(i) the table described in clause (A); or
(ii) at the option of the company, the Inter-Company Double Indemnity Mortality Table; and
(C) for contracts issued before January 1, 1961, the Inter-Company Double Indemnity Mortality Table.
A table described in this subdivision must be combined with a mortality table for calculating the reserves for life insurance contracts.
(7) For group life insurance, life insurance issued on the substandard basis, and other special benefits, tables approved by the commissioner.
Sec. 25. (a) Except as provided in section 26 of this chapter, the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after the operative date of this section, and for annuities and pure endowments purchased on or after the operative date of this section under group annuity and pure endowment contracts, and before the operative date of the valuation manual specified in section 34 of this chapter, is the commissioners reserve valuation methods defined in sections 27 and 28 of this chapter and the following tables and interest rates:
(1) For individual annuity and pure endowment contracts issued before September 1, 1979, excluding disability and accidental death benefits in the contracts, both of the following:
(A) Either of the following:
(i) The 1971 Individual Annuity Mortality Table.
(ii) A modification of the table that is approved by the commissioner.
(B) Either of the following:
(i) Six percent (6%) interest for single premium immediate annuity contracts.
(ii) Four percent (4%) interest for all other individual annuity and pure endowment contracts.
(2) For individual single premium immediate annuity contracts issued after August 31, 1979, excluding disability and accidental death benefits in the contracts, both of the following:
(A) One (1) of the following:
(i) The 1971 Individual Annuity Mortality Table.
(ii) An individual annuity mortality table adopted after 1980 by the NAIC that is approved by rule adopted by the commissioner under IC 4-22-2 for use in determining the minimum standard of valuation for the contracts.
(iii) A modification of a table described in item (i) or (ii) that is approved by the commissioner.
(B) Seven and one-half percent (7 1/2%) interest.
(3) For individual annuity and pure endowment contracts issued after August 31, 1979, other than single premium immediate annuity contracts, excluding disability and accidental death benefits in the contracts, both of the following:
(A) One (1) of the following:
(i) The 1971 Individual Annuity Mortality Table.
(ii) An individual annuity mortality table adopted after 1980 by the NAIC that is approved by rule adopted by the commissioner under IC 4-22-2 for use in determining the minimum standard of valuation for the contracts.
(iii) A modification of a table described in item (i) or (ii) that is approved by the commissioner.
(B) Either of the following:
(i) Five and one-half percent (5 1/2%) interest for single premium deferred annuity and pure endowment contracts.
(ii) Four and one-half percent (4 1/2%) interest for all other individual annuity and pure endowment contracts.
(4) For annuities and pure endowments purchased before September 1, 1979, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under the contracts, both of the following:
(A) Either of the following:
(i) The 1971 Group Annuity Mortality Table.
(ii) A modification of the table that is approved by the commissioner.
(B) Six percent (6%) interest.
(5) For annuities and pure endowments purchased after August 31, 1979, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under the contracts, both of the following:
(A) One (1) of the following:
(i) The 1971 Group Annuity Mortality Table.
(ii) A group annuity mortality table adopted after 1980 by the NAIC that is approved by rule adopted by the commissioner under IC 4-22-2 for use in determining the minimum standard of valuation for annuities and pure endowments.
(iii) A modification of a table described in item (i) or (ii) that is approved by the commissioner.
(B) Seven and one-half percent (7 1/2%) interest.
(b) After September 1, 1973, a company may file with the commissioner a written notice of the company's election to comply with this section after a specified date before January 1, 1979, which is the operative date of this section for the company. If a company makes no election, the operative date of this section for the company is January 1, 1979.
Sec. 26. (a) The interest rates used in determining the minimum standard for the valuation of the following are the calendar year statutory valuation interest rates described in this section:
(1) Life insurance contracts issued in a particular calendar year, on or after the operative date of IC 27-1-12-7(dd).
(2) Individual annuity and pure endowment contracts issued in a particular calendar year after December 31, 1981.
(3) Annuities and pure endowments purchased in a particular calendar year after December 31, 1981, under group annuity and pure endowment contracts.
(4) A net increase in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts.
(b) Except as provided in subsection (c), the calendar year statutory valuation interest rate, I, is determined as follows, and the results must be rounded to the nearest one-quarter of one percent (1/4 of 1%):
(1) For life insurance,
I = .03 + W(R1 - .03) + W/2(R2 - .09)
(2) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,
I = .03 + W(R - .03)
where R1 is the lesser of R and .09,
R2 is the greater of R and .09,
R is the reference interest rate specified in this section, and
W is the weighting factor specified in this section.
(3) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with cash settlement options, valued on an issue year basis, except as provided in subdivision (2), the formula for life insurance specified in subdivision (1) applies to annuities and
guaranteed interest contracts with guarantee durations in
excess of ten (10) years and the formula for single premium
immediate annuities described in subdivision (2) applies to
annuities and guaranteed interest contracts with guarantee
duration of ten (10) years or less.
(4) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with no cash settlement options, the formula for single
premium immediate annuities specified in subdivision (2).
(5) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with cash settlement options, valued on a change in fund basis,
the formula for single premium immediate annuities specified
in subdivision (2).
(c) If the calendar year statutory valuation interest rate for a
life insurance contract issued in a calendar year determined
without reference to this subsection differs from the corresponding
actual rate for similar contracts issued in the immediately
preceding calendar year by less than one-half of one percent (1/2
of 1%), the calendar year statutory valuation interest rate for the
life insurance contract is equal to the corresponding actual rate for
the immediately preceding calendar year. For purposes of this
subsection, the calendar year statutory valuation interest rate for
life insurance contracts issued in a calendar year is determined for
1980 (using the reference interest rate defined in 1979) and must
be determined for each subsequent calendar year regardless of
when IC 27-1-12-7(dd) becomes operative.
(d) The weighting factors referred to in the formulas specified
in subsection (b) are as follows:
(1) Weighting factors for life insurance:
Guarantee Duration Weighting
(Years) Factors
10 or less .50
More than 10, but not more
than 20 .45
More than 20 .35
For life insurance, the guarantee duration is the maximum
number of years the life insurance can remain in force on a
basis guaranteed in the contract or under options to convert
to life insurance contracts with premium rates, nonforfeiture
values, or both that are guaranteed in the original contract.
(2) Weighting factor for single premium immediate annuities
and for annuity benefits involving life contingencies arising
from:
(A) other annuities; and
(B) guaranteed interest contracts with cash settlement
options:
.80
(3) Weighting factors for other annuities and for guaranteed
interest contracts are as specified in clauses (A) through (C),
according to the requirements of clauses (D) and (E), as
follows:
(A) For annuities and guaranteed interest contracts valued
on an issue year basis:
Guarantee Weighting Factor
Duration
for Plan Type
(Years)
A
B
C
5 or less:
.80
.60
.50
More than 5, but
not more than 10: .75
.60
.50
More than 10, but
not more than 20: .65
.50
.45
More than 20:
.45
.35
.35
(B) For annuities and guaranteed interest contracts valued
on a change in fund basis, the weighting factors specified
in clause (A), increased by:
A B C
.15 .25 .05
(C) For annuities and guaranteed interest contracts valued on:
(i) an issue year basis (other than annuities and guaranteed interest contracts with no cash settlement options) that do not guarantee interest on considerations received more than one (1) year after the issue or purchase date; or
(ii) a change in fund basis that do not guarantee interest rates on considerations received more than twelve (12) months after the valuation date;
the weighting factors specified in clause (A) or derived in clause (B), increased by:
A B C
.05 .05 .05
(D) For other annuities and guaranteed interest contracts:
(i) with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance contracts with guarantee duration in excess of twenty (20) years; and
(ii) with no cash settlement options, the guaranteed duration is the number of years from the date of issue or purchase to the date annuity benefits are scheduled to begin.
(E) A company may elect to value:
(i) annuities; and
(ii) guaranteed interest contracts;
with cash settlement options on either an issue year basis or on a change in fund basis. Other annuities and guaranteed interest contracts with no cash settlement options must be valued on an issue year basis.
(e) The reference interest rate referred to in subsection (b) is as follows:
(1) For life insurance, the lesser of:
(A) the average, over a period of thirty-six (36) months; or
(B) the average, over a period of twelve (12) months;
ending on June 30 of the calendar year preceding the year of issue, of the monthly average of the composite yield on seasoned corporate bonds published by Moody's Investors Service, Inc.
(2) For single premium immediate annuities and for annuity benefits involving life contingencies arising from:
(A) other annuities; and
(B) guaranteed interest contracts;
with cash settlement options, the average, over a period of twelve (12) months ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds published by Moody's Investors Service, Inc.
(3) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with cash settlement options valued on a year of issue basis, except as provided in subdivision (2), with guarantee duration
in excess of ten (10) years, the lesser of the average over a
period of thirty-six (36) months or the average over a period
of twelve (12) months ending on June 30 of the calendar year
of issue or purchase, of the monthly average of the composite
yield on seasoned corporate bonds published by Moody's
Investors Service, Inc.
(4) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with cash settlement options valued on a year of issue basis,
except as provided in subdivision (2), with guarantee duration
of ten (10) years or less, the average, over a period of twelve
(12) months ending on June 30 of the calendar year of issue or
purchase, of the monthly average of the composite yield on
seasoned corporate bonds published by Moody's Investors
Service, Inc.
(5) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with no cash settlement options, the average, over a period of
twelve (12) months ending on June 30 of the calendar year of
issue or purchase, of the monthly average of the composite
yield on seasoned corporate bonds published by Moody's
Investors Service, Inc.
(6) For:
(A) other annuities; and
(B) guaranteed interest contracts;
with cash settlement options valued on a change in fund basis,
except as provided in subdivision (2), the average, over a
period of twelve (12) months ending on June 30 of the
calendar year of the change in the fund, of the monthly
average of the composite yield on seasoned corporate bonds
published by Moody's Investors Service, Inc.
(f) If:
(1) the monthly average of the composite yield on seasoned
corporate bonds is no longer published by Moody's Investors
Service, Inc.; or
(2) the NAIC determines that the monthly average of the
composite yield on seasoned corporate bonds published by
Moody's Investors Service, Inc., is no longer appropriate for
the determination of the reference interest rate;
an alternative method for determination of the reference interest
rate that is adopted by the NAIC and approved under rules
adopted by the commissioner under IC 4-22-2 may be substituted.
Sec. 27. (a) Except as provided in sections 28, 31, and 33 of this
chapter, reserves according to the commissioners reserve valuation
method for the life insurance and endowment benefits of a contract
providing for a uniform amount of insurance and requiring the
payment of uniform premiums is the excess, if any, of the present
value (on the date of valuation) of the future guaranteed benefits
provided for by the contract over the then present value of any
future modified net premiums for the contract.
(b) The modified net premiums for a contract described in
subsection (a) are the uniform percentage of the respective
contract premiums for the benefits such that the present value (on
the date of issue of the contract) of all modified net premiums is
equal to the sum of the then present value of the benefits provided
for by the contract plus the excess of subdivision (1) over
subdivision (2), as follows:
(1) A net level annual premium equal to the present value (on
the date of issue) of the benefits provided for after the first
contract year, divided by the present value (at the date of
issue) of an annuity of one (1) per annum payable on the first
and each subsequent anniversary of the contract on which a
premium falls due. However, the net level annual premium
must not exceed the net level annual premium on the nineteen
(19) year premium whole life plan for insurance of the same
amount at an insured age one (1) year greater than the age of
the insured on the date of issue of the contract.
(2) A net one (1) year term premium for the benefits provided
for in the first contract year.
(c) For a life insurance contract issued on or after January 1,
1985:
(1) for which:
(A) the contract premium in the first contract year exceeds
the contract premium in the second contract year; and
(B) no comparable additional benefit is provided in the
first contract year for the excess; and
(2) that provides an endowment benefit, a cash surrender
value, or a combination, in an amount greater than the excess
premium;
the reserve according to the commissioners reserve valuation
method on a contract anniversary that occurs on or before the
assumed ending date (defined to be the first contract anniversary
on which the sum of any endowment benefit and any cash
surrender value then available is greater than the excess premium)
is, except as provided in section 31 of this chapter, the reserve
determined under subsection (d).
(d) For purposes of subsection (c), the reserve is the greater of:
(1) the reserve on the contract anniversary calculated under
subsections (a) and (b); or
(2) the reserve as of the contract anniversary calculated under
subsections (a) and (b) with:
(A) the value described in subsection (b)(1) reduced by
fifteen percent (15%) of the amount of the excess first year
premium;
(B) all present values of benefits and premiums determined
without reference to premiums or benefits provided for by
the contract after the assumed ending date;
(C) the contract assumed to mature on the assumed ending
date as an endowment; and
(D) the cash surrender value provided on the assumed
ending date considered as an endowment benefit.
In making the comparison described in this subsection, the
mortality and interest bases specified in sections 24 and 26 of this
chapter must be used.
(e) Reserves according to the commissioners reserve valuation
method must be calculated by a method consistent with the
principles of this section for the following:
(1) A life insurance contract that provides for a varying
amount of insurance or requires the payment of varying
premiums.
(2) A group annuity or a pure endowment contract that is
purchased under a retirement plan or plan of deferred
compensation that is established or maintained by:
(A) an employer (including a partnership or sole
proprietorship);
(B) an employee organization; or
(C) both;
other than a plan that provides individual retirement accounts
or individual retirement annuities under Section 408 of the
Internal Revenue Code.
(3) Disability and accidental death benefits provided in any
contract.
(4) All other benefits, except life insurance and endowment
benefits in a life insurance contract and benefits provided by
any other annuity or pure endowment contract.
Sec. 28. (a) This section applies to an annuity or a pure
endowment contract other than a group annuity or pure
endowment contract that is purchased under a retirement plan or
plan of deferred compensation that is established or maintained
by:
(1) an employer (including a partnership or sole
proprietorship);
(2) an employee organization; or
(3) both;
other than a plan providing individual retirement accounts or
individual retirement annuities under Section 408 of the Internal
Revenue Code.
(b) Reserves according to the commissioners annuity reserve
method for benefits under an annuity or a pure endowment
contract, excluding disability and accidental death benefits in a
contract, is the greatest of the respective excesses of:
(1) the present value (on the date of valuation) of the future
guaranteed benefits, including guaranteed nonforfeiture
benefits, provided for by the contract at the end of each
respective contract year; over
(2) the present value (on the date of valuation) of any future
valuation considerations derived from future gross
considerations required by the terms of the contract, that
become payable before the end of the respective contract year.
The future guaranteed benefits must be determined by using any
mortality table, if applicable, and the interest rate or rates
specified in the contracts for determining guaranteed benefits. The
valuation considerations are the portion of the respective gross
considerations applied under the terms of a contract to determine
the nonforfeiture value.
Sec. 29. (a) A company's aggregate reserves for all contracts,
excluding disability and accidental death benefits, issued on or
after the transition date selected by the company under
IC 27-1-12-12, the transition date in no event to be later than
January 1, 1948, must not be less than the aggregate reserves
calculated in accordance with sections 27, 28, 31, and 32 of this
chapter and the mortality tables and rates of interest used in
calculating nonforfeiture benefits for the contracts.
(b) The aggregate reserves for all contracts and benefits must
not be less than the aggregate reserves determined by the
appointed actuary to be necessary to render an opinion required
by section 21 or 23 of this chapter.
Sec. 30. (a) Reserves for contracts issued before the transition
date selected by a company under IC 27-1-12-12, the transition
date in no event to be later than January 1, 1948, may be calculated
(at the option of the company) according to any standards that
produce greater aggregate reserves for all of the contracts than the
minimum reserves required by the laws in effect immediately
before the transition date.
(b) Reserves for a category, established by the commissioner, of
contracts or benefits issued on or after the transition date selected
by a company under IC 27-1-12-12, the transition date in no event
to be later than January 1, 1948, may be calculated (at the option
of the company) according to any standards that produce greater
aggregate reserves for the category than the aggregate reserves
calculated according to the minimum standard under this chapter.
However, the rates of interest used for contracts other than
annuity and pure endowment contracts must not be greater than
the corresponding rate of interest used in calculating nonforfeiture
benefits provided in the contracts.
(c) A company that adopts a standard of valuation that
produces greater aggregate reserves than the aggregate reserves
calculated under sections 19 through 40 of this chapter may adopt
a lower standard of valuation with the approval of the
commissioner. However, the lower standard of valuation must not
be lower than the minimum standard provided under this chapter.
For purposes of this subsection, the holding of additional reserves
previously determined by the appointed actuary to be necessary to
render an opinion required by section 21 or 23 of this chapter is
not the adoption of a higher standard of valuation.
Sec. 31. (a) If in any contract year the gross premium charged
by a company on a contract is less than the valuation net premium
for the contract calculated by the method used in calculating the
reserve, but using the minimum valuation standards of mortality
and rate of interest, the minimum reserve required for the contract
is the greater of:
(1) the reserve calculated according to the mortality table,
rate of interest, and method actually used for the contract; or
(2) the reserve calculated by the method actually used for the
contract, but using the minimum valuation standards of
mortality and rate of interest and replacing the valuation net
premium with the actual gross premium in each contract year
for which the valuation net premium exceeds the actual gross
premium.
(b) The minimum valuation standards of mortality and rate of
interest referred to in this section are the standards specified in
sections 24 and 26 of this chapter.
(c) For a life insurance contract issued on or after January 1,
1985:
(1) for which:
(A) the gross premium in the first contract year exceeds
the gross premium in the second contract year; and
(B) no comparable additional benefit is provided in the
first contract year for the excess; and
(2) that provides an endowment benefit, a cash surrender
value, or a combination, in an amount greater than the excess
premium;
this section applies as if the method actually used in calculating the
reserve for the contract were the method described in section 27(a),
27(b), and 27(d) of this chapter. The minimum reserve on each
contract anniversary of a contract described in this subsection is
the greater of the minimum reserve calculated in accordance with
section 27 of this chapter and the minimum reserve calculated
under this section.
Sec. 32. In the case of:
(1) a plan of life insurance that provides for future premium
determination, the amounts of which are to be determined by
the company based on estimates of future experience; or
(2) a contract of life insurance or annuity that is of such a
nature that the minimum reserves cannot be determined by
the methods described in sections 27, 28, and 31 of this
chapter;
the reserves that are held under the contract must be appropriate
in relation to the benefits and pattern of premiums for the contract
and computed by a method that is consistent with the principles of
this chapter, as determined under rules adopted by the
commissioner under IC 4-22-2.
Sec. 33. The following apply to accident and sickness insurance
contracts:
(1) For accident and sickness insurance contracts issued on or
after the operative date of the valuation manual, the standard
prescribed in the valuation manual is the minimum standard
of valuation required under section 20 of this chapter.
(2) For accident and sickness insurance contracts issued
before the operative date of the valuation manual, the
minimum standard of valuation is the standard adopted by
the commissioner in rules adopted under IC 4-22-2.
Sec. 34. (a) Except as provided in subsections (e) and (g), for
contracts issued on or after the operative date of the valuation
manual, the standard prescribed in the valuation manual is the
minimum standard of valuation required under section 20 of this
chapter.
(b) The operative date of the valuation manual is January 1 of
the first calendar year following the first July 1 as of which all of
the following have occurred:
(1) The valuation manual has been adopted by the NAIC by
an affirmative vote of at least forty-two (42) members, or
three-fourths (3/4) of the members voting, whichever is
greater.
(2) The "Standard Valuation Law" of the NAIC, as amended
by the NAIC in 2009, or legislation including substantially
similar terms and provisions, has been enacted by states
representing greater than seventy-five percent (75%) of the
direct premiums written as reported in the following annual
statements submitted for 2008:
(A) Life, accident, and health annual statements.
(B) Health annual statements.
(C) Fraternal annual statements.
(3) The "Standard Valuation Law" of the NAIC, as amended
by the NAIC in 2009, or legislation including substantially
similar terms and provisions, has been enacted by at least
forty-two (42) of the following fifty-five (55) jurisdictions:
(A) The fifty (50) states of the United States.
(B) American Samoa.
(C) The American Virgin Islands.
(D) The District of Columbia.
(E) Guam.
(F) Puerto Rico.
(c) Unless a change in the valuation manual specifies a later
effective date, changes to the valuation manual are effective on the
January 1 following the date when the change to the valuation
manual has been adopted by the NAIC by an affirmative vote
representing:
(1) at least three-fourths (3/4) of the members of the NAIC
voting, but not less than a majority of the total membership;
and
(2) members of the NAIC representing jurisdictions totaling
greater than seventy-five percent (75%) of the direct
premiums written, as reported in the following annual
statements most recently available before the vote:
(A) Life, accident, and health annual statements.
(B) Health annual statements.
(C) Fraternal annual statements.
(d) The valuation manual must specify all of the following:
(1) Minimum valuation standards for contracts that are
subject to section 20 of this chapter are the following:
(A) The commissioners reserve valuation method for life
insurance contracts, other than annuity contracts.
(B) The commissioners annuity reserve valuation method
for annuity contracts.
(C) Minimum reserves for all other contracts.
(2) The contracts or types of contracts that are subject to the
requirements of a principle based valuation under section 35
of this chapter and the minimum valuation standards
consistent with the requirements.
(3) For contracts that are subject to a principle based
valuation under section 35 of this chapter, the following:
(A) Requirements for:
(i) the format of the reports to the commissioner under
section 35(c)(3) of this chapter; and
(ii) which certifications described in item (i) must include
information necessary to determine whether the
valuation is appropriate and in compliance with sections
19 through 40 of this chapter.
(B) Assumptions prescribed for risks over which the
company does not have significant control or influence.
(C) Procedures for corporate governance and oversight of
the actuarial function and a process for appropriate
waiver or modification of the procedures.
(4) For contracts that are not subject to a principle-based
valuation under section 35 of this chapter, the minimum
valuation standard must:
(A) be consistent with the minimum standard of valuation
before the operative date of the valuation manual; or
(B) develop reserves that quantify:
(i) the benefits, guarantees, and funding associated with
the contracts; and
(ii) the contracts' risks at a level of conservatism that
reflects conditions that include unfavorable events that
have a reasonable probability of occurring.
(5) Other requirements, including requirements relating to:
(A) Reserve methods.
(B) Models for measuring risk.
(C) Generation of economic scenarios.
(D) Assumptions.
(E) Margins.
(F) Use of company experience.
(G) Risk measurement.
(H) Disclosure.
(I) Certifications.
(J) Reports.
(K) Actuarial opinions and memorandums.
(L) Transition rules.
(M) Internal controls.
(6) The data and form of the data required under section 36
of this chapter, including:
(A) the person to whom the data must be submitted;
(B) data analyses; and
(C) reporting of analyses.
(e) If:
(1) there is no specific valuation requirement; or
(2) a specific valuation requirement in the valuation manual
is not, in the opinion of the commissioner, in compliance with
sections 19 through 40 of this chapter;
a company shall, with respect to the specific valuation
requirements, comply with minimum valuation standards
prescribed by the commissioner in rules adopted under IC 4-22-2.
(f) The commissioner may employ or contract with a qualified
actuary, at the expense of a company, to:
(1) perform an actuarial examination of the company and
provide an opinion concerning the appropriateness of any
reserve assumption or method used by the company; or
(2) review and provide an opinion concerning the company's
compliance with a requirement of this chapter. The
commissioner may rely upon an opinion of a qualified actuary
engaged by the commissioner of another state, district, or
territory of the United States concerning sections 19 through
40 of this chapter.
(g) The commissioner may:
(1) require a company to change an assumption or method
that in the opinion of the commissioner is necessary to comply
with the requirements of the valuation manual or sections 19
through 40 of this chapter; and
(2) take other disciplinary action allowed by law.
A company described in subdivision (1) shall adjust reserves as
required by the commissioner.
Sec. 35. (a) This section applies on and after the operative date
of the valuation manual specified in section 34 of this chapter.
(b) A company shall, using a principle based valuation, establish
reserves that meet the following conditions for contracts, as
specified in the valuation manual:
(1) The reserves quantify the benefits, guarantees, and
funding associated with the contracts and the contracts' risks
at a level of conservatism that:
(A) reflects conditions that include unfavorable events that
have a reasonable probability of occurring during the
lifetime of the contracts; and
(B) for polices or contracts with significant tail risk,
reflects conditions appropriately adverse to quantify the
tail risk.
(2) The reserves incorporate assumptions, risk analysis
methods, and financial models and management techniques
that are consistent with the assumptions, risk analysis
methods, and financial models and management techniques
used within the company's overall risk assessment process,
while recognizing potential differences in financial reporting
structures and prescribed assumptions or methods.
(3) The reserves incorporate assumptions that are derived in
one (1) of the following manners:
(A) The assumption is prescribed in the valuation manual.
(B) For an assumption that is not prescribed in the
valuation manual, the assumption must:
(i) be established using the company's available
experience to the extent the experience is relevant and
statistically credible; or
(ii) to the extent that company data is not available,
relevant, or statistically credible, be established using
other relevant, statistically credible experience.
(4) The reserves provide margins for uncertainty, including
adverse deviation and estimation error, such that the greater
the uncertainty, the larger the margin and resulting reserve.
(c) A company using a principle based valuation for at least one
(1) contract that is subject to this section, as specified in the
valuation manual, shall do the following:
(1) Establish procedures for corporate governance and
oversight of the actuarial valuation function consistent with
the procedures described in the valuation manual.
(2) Provide to the commissioner and the board of directors an
annual certification of the effectiveness of the internal
controls with respect to the principle based valuation. The
internal controls must be designed to assure that:
(A) all material risks inherent in the liabilities and
associated assets that are subject to the valuation are
included in the valuation; and
(B) valuations are made in accordance with the valuation
manual.
The certification must be based on the controls in place as of
the end of the preceding calendar year.
(3) Develop, and file with the commissioner upon request, a
principle based valuation report that complies with standards
prescribed in the valuation manual.
(d) A principle based valuation may include a prescribed
formulaic reserve component.
Sec. 36. On and after the operative date of the valuation manual
specified in section 34 of this chapter, a company shall submit
mortality, morbidity, contractholder behavior, or expense
experience and other data as prescribed in the valuation manual.
Sec. 37. (a) Except as provided in this section and section 38 of
this chapter, a company's confidential information is:
(1) confidential by law and privileged;
(2) not subject to subpoena; and
(3) not subject to discovery or admissible in evidence in a
private civil action.
However, the commissioner may use confidential information in
the furtherance of a regulatory or legal action brought against the
company as a part of the commissioner's duties.
(b) The commissioner, or a person receiving confidential
information while acting under the authority of the commissioner,
is not permitted or required to testify in a private civil action
concerning confidential information.
(c) The commissioner may disclose confidential information to:
(1) other state, federal, and international regulatory agencies;
(2) the NAIC and affiliates and subsidiaries of the NAIC;
(3) only in the case of confidential information specified in
section 5(1) and 5(4) of this chapter, the Actuarial Board for
Counseling and Discipline or the successor to the Actuarial
Board for Counseling and Discipline upon request stating that
the confidential information is required for professional
disciplinary proceedings; and
(4) state, federal, and international law enforcement
authorities;
if the recipient agrees, and has the legal authority to agree, to
maintain the confidential and privileged status of the confidential
information in the same manner and to the same extent as required
for the commissioner.
(d) The commissioner:
(1) may receive confidential information, including privileged
confidential information, from:
(A) other state, federal, and international regulatory
agencies;
(B) the NAIC and affiliates and subsidiaries of the NAIC;
(C) the Actuarial Board for Counseling and Discipline or
the successor to the Actuarial Board for Counseling and
Discipline; and
(D) other state, federal, and international law enforcement
authorities; and
(2) shall maintain as confidential or privileged all confidential
information received with notice or the understanding that
the confidential information is confidential or privileged
under the law of the jurisdiction that is the source of the
confidential information.
(e) The commissioner may enter into agreements governing
sharing and use of information consistent with this section.
(f) Any applicable privilege or claim of confidentiality in
confidential information described in this section is not waived as
a result of the disclosure or receipt of the confidential information
by the commissioner under this section.
(g) A privilege established under the law of any state or
jurisdiction that is substantially similar to the privilege established
under this section is available and must be enforced in a
proceeding in and by any court of this state.
(h) For purposes of this section, "regulatory agency", "law
enforcement agency", and "NAIC" include employees, agents,
consultants, and contractors of a regulatory agency, law
enforcement agency, and NAIC.
Sec. 38. The following apply to confidential information
specified in section 5(1) and 5(4) of this chapter:
(1) The confidential information may be subject to subpoena to defend an action seeking damages from the appointed actuary submitting the supporting memorandum submitted under sections 21 through 23 of this chapter or principle based valuation report developed under section 35(c)(3) of this chapter due to a requirement of this chapter.
(2) The confidential information may be released by the commissioner with the written consent of the company.
(3) If a part of a supporting memorandum submitted under sections 21 through 23 of this chapter or a principle based valuation report developed under section 35(c)(3) of this chapter is:
(A) cited by a company in the company's marketing;
(B) publicly volunteered to or before a governmental agency other than a state insurance department; or
(C) released by the company to the news media;
all parts of the supporting memorandum or report are not confidential.
Sec. 39. (a) The commissioner may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in Indiana from the requirements of section 34 of this chapter if:
(1) the commissioner has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and
(2) the company computes reserves using assumptions and methods used before the operative date of the valuation manual in addition to requirements established by the commissioner in rules adopted under IC 4-22-2.
(b) With respect to a company granted an exemption under this section, sections 21 through 33 of this chapter apply. With respect to a company applying the exemption under this section, a reference to section 34 of this chapter in sections 21 through 33 of this chapter does not apply.
Sec. 40. (a) If a provision of law is inconsistent with this chapter, this chapter prevails.
(b) Except as otherwise provided in this chapter, this chapter applies to valuations performed after June 30, 2013.
(c) Except as otherwise provided in this chapter, IC 27-1-12-9 and IC 27-1-12-10 (before their repeal) apply to valuations performed before July 1, 2013.
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2013]: Sec. 7.5. (a) As used in this section,
"motor vehicle insurance" means any type of insurance described
in IC 27-1-5-1, Class 2(f).
(b) As used in this section, "newly acquired motor vehicle"
means one (1) of the following types of vehicles of which an
individual who is insured under a personal lines motor vehicle
insurance policy becomes the owner during the policy period:
(1) A private passenger motor vehicle.
(2) A pickup truck or van for which no other insurance policy
provides coverage.
(c) If the insured notifies the insurer of the newly acquired
motor vehicle within the periods specified in subdivisions (1) and
(2), an insurer that issues a motor vehicle insurance policy shall
provide at least:
(1) fourteen (14) days of liability coverage; and
(2) four (4) days of physical damage coverage that is subject
to a deductible of not more than five hundred dollars ($500);
for a newly acquired motor vehicle under the motor vehicle
insurance policy, effective on the date the insured becomes the
owner.
(1) "Bureau" refers to the child support bureau established by IC 31-25-3-1.
(2) "Business entity" means a corporation, an association, a partnership, a limited liability company, a limited liability partnership, or another legal entity.
(3) "Commissioner" means the insurance commissioner appointed under IC 27-1-1-2.
(4) "Consultant" means a person who:
(A) holds himself or herself out to the public as being engaged in the business of offering; or
(B) for a fee, offers;
any advice, counsel, opinion, or service with respect to the benefits, advantages, or disadvantages promised under any policy of insurance that could be issued in Indiana.
(5) "Delinquent" means the condition of being at least:
(A) two thousand dollars ($2,000); or
(B) three (3) months;
past due in the payment of court ordered child support.
(6) "FINRA" refers to the independent Financial Industry Regulatory Authority.
(7) "Home state" means the District of Columbia or any state or territory of the United States in which an insurance producer:
(A) maintains the insurance producer's principal place of residence or principal place of business; and
(B) is licensed to act as an insurance producer.
(8) "Insurance producer" means a person required to be licensed under the laws of Indiana to sell, solicit, or negotiate insurance.
(9) "License" means a document issued by the commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier.
(10) "Limited line credit insurance" includes the following:
(A) Credit life insurance.
(B) Credit disability insurance.
(C) Credit property insurance.
(D) Credit unemployment insurance.
(E) Involuntary unemployment insurance.
(F) Mortgage life insurance.
(G) Mortgage guaranty insurance.
(H) Mortgage disability insurance.
(I) Guaranteed automobile protection (gap) insurance.
(J) Any other form of insurance:
(i) that is offered in connection with an extension of credit and is limited to partially or wholly extinguishing that credit obligation; and
(ii) that the insurance commissioner determines should be designated a form of limited line credit insurance.
(11) "Limited line credit insurance producer" means a person who sells, solicits, or negotiates one (1) or more forms of limited line credit insurance coverage to individuals through a master, corporate, group, or individual policy.
(12) "Limited lines insurance" means any of the following:
(A) The lines of insurance defined in section 18 of this chapter.
(B) Any line of insurance the recognition of which is considered necessary by the commissioner for the purpose of complying with section 8(e) of this chapter.
(C) For purposes of section 8(e) of this chapter, any form of
insurance with respect to which authority is granted by a home
state that restricts the authority granted by a limited lines
producer's license to less than total authority in the associated
major lines described in section 7(a)(1) through 7(a)(6) of this
chapter.
(13) "Limited lines producer" means a person authorized by the
commissioner to sell, solicit, or negotiate limited lines insurance.
(14) "Limited lines travel insurance producer" means a
person designated by an insurer to sell, solicit, or negotiate a
travel insurance policy. The term includes the following:
(A) A managing general underwriter.
(B) A managing general agent.
(C) A limited lines producer.
(14) (15) "Negotiate" means the act of conferring directly with or
offering advice directly to a purchaser or prospective purchaser of
a particular contract of insurance concerning any of the
substantive benefits, terms, or conditions of the contract, provided
that the person engaged in that act either sells insurance or
obtains insurance from insurers for purchasers.
(15) (16) "Person" means an individual or a business entity.
(16) (17) "Sell" means to exchange a contract of insurance by any
means, for money or its equivalent, on behalf of a company.
(17) (18) "Solicit" means attempting to sell insurance or asking or
urging a person to apply for a particular kind of insurance from a
particular company.
(18) (19) "Surplus lines producer" means a person who sells,
solicits, negotiates, or procures from an insurance company not
licensed to transact business in Indiana an insurance policy that
cannot be procured from insurers licensed to do business in
Indiana.
(19) (20) "Terminate" means:
(A) the cancellation of the relationship between an insurance
producer and the insurer; or
(B) the termination of a producer's authority to transact
insurance.
(21) "Travel insurance" means insurance coverage for
personal risks incident to planned travel, including the
following:
(A) Interruption or cancellation of a trip or an event.
(B) Loss of baggage or personal effects.
(C) Damage to accommodations or rental vehicles.
(D) Sickness, accident, disability, or death that occurs
during travel.
The term does not include a major medical plan that provides
comprehensive medical insurance for a traveler on a trip that
lasts at least six (6) months, including a traveler who is an
individual who works overseas as an expatriot or is deployed
as a member of the military.
(22) "Travel retailer" means a business entity that offers and
delivers travel insurance on behalf of and under the direction
of a limited lines travel insurance producer.
(20) (23) "Uniform business entity application" means the current
version of the national association of insurance commissioners
uniform business entity application for resident and nonresident
business entities.
(21) (24) "Uniform application" means the current version of the
national association of insurance commissioners uniform
application for resident and nonresident producer licensing.
(1) A limited lines travel insurance producer.
(1) The travel insurance policy is offered and delivered under
a limited lines travel insurance producer license that is issued
to a business entity described in subsection (b).
(2) The travel retailer is registered by the business entity as
described in subsection (b).
(b) A business entity that holds a limited lines travel insurance
producer license may register as a travel retailer to offer and
deliver a travel insurance policy on the business entity's behalf if
the business entity complies with all of the following:
(1) The business entity is clearly identified as the limited lines
travel insurance producer, including the business entity's
name and contact information, on all marketing materials and
information delivered to customers by the travel retailer.
(2) The business entity does all of the following:
(A) Maintains a register of each travel retailer that offers
travel insurance on the business entity's behalf, including
all of the following:
(i) The name and contact information of the travel
retailer.
(ii) The name and contact information of an officer or
other individual who controls the travel retailer's
operations.
(iii) The travel retailer's federal employer identification
number.
(B) Certifies that each registered travel retailer complies
with 18 U.S.C. 1033.
(C) Submits to the commissioner, not more than thirty (30)
days after receiving a request from the commissioner, the
register maintained under this subdivision.
(D) Designates an individual employee who is licensed as
an insurance producer to be responsible for the business
entity's compliance with the insurance laws of the state.
(E) Pays all required insurance producer licensing fees.
(F) Requires each travel retailer employee or authorized
representative who offers or delivers travel insurance
policies to receive a program of instruction or training that
has been reviewed by the commissioner.
(c) A business entity is responsible for the acts of a travel
retailer registered by the business entity as described in this
section.
renew a license issued under IC 27-1-15.6, a resident insurance
producer must complete at least twenty-four (24) hours of credit in
continuing education courses. If the insurance producer has a
qualification described in IC 27-1-15.6-7(a)(1),
IC 27-1-15.6-7(a)(2), or IC 27-1-15.6-7(a)(5), for a license renewal
that occurs after June 30, 2014, at least three (3) of the hours of
credit required by this subsection must be related to ethical
practices in the marketing and sale of life, health, or annuity
insurance products. An attorney in good standing who is admitted to
the practice of law in Indiana and holds a license issued under
IC 27-1-15.6 may complete all or any number of hours of continuing
education required by this subsection by completing an equivalent
number of hours in continuing legal education courses that are related
to the business of insurance.
(b) Except as provided in subsection (c), to renew a license issued
under IC 27-1-15.6, a limited lines producer with a title qualification
under IC 27-1-15.6-7(a)(8) must complete at least seven (7) hours of
credit in continuing education courses related to the business of title
insurance with at least one (1) hour of instruction in a structured setting
or comparable self-study in each of the following:
(1) Ethical practices in the marketing and selling of title
insurance.
(2) Title insurance underwriting.
(3) Escrow issues.
(4) Principles of the federal Real Estate Settlement Procedures
Act (12 U.S.C. 2608).
An attorney in good standing who is admitted to the practice of law in
Indiana and holds a license issued under IC 27-1-15.6 with a title
qualification under IC 27-1-15.6-7(a)(8) may complete all or any
number of hours of continuing education required by this subsection by
completing an equivalent number of hours in continuing legal
education courses related to the business of title insurance or any
aspect of real property law.
(c) The following insurance producers are not required to complete
continuing education courses to renew a license under this chapter:
(1) A limited lines producer who is licensed without examination
under IC 27-1-15.6-18(1). or IC 27-1-15.6-18(2).
(2) A limited line credit insurance producer.
(3) A nonresident limited lines producer with a title qualification:
(A) whose home state requires continuing education for a title
qualification; and
(B) who has met the continuing education requirements
described in clause (A).
(d) To satisfy the requirements of subsection (a) or (b), a licensee
may use only those credit hours earned in continuing education courses
completed by the licensee:
(1) after the effective date of the licensee's last renewal of a
license under this chapter; or
(2) if the licensee is renewing a license for the first time, after the
date on which the licensee was issued the license under this
chapter.
(e) If an insurance producer receives qualification for a license in
more than one (1) line of authority under IC 27-1-15.6, the insurance
producer may not be required to complete a total of more than
twenty-four (24) hours of credit in continuing education courses to
renew the license.
(f) Except as provided in subsection (g), a licensee may receive
credit only for completing continuing education courses that have been
approved by the commissioner under section 4 of this chapter.
(g) A licensee who teaches a course approved by the commissioner
under section 4 of this chapter shall receive continuing education credit
for teaching the course.
(h) When a licensee renews a license issued under this chapter, the
licensee must submit:
(1) a continuing education statement that:
(A) is in a format authorized by the commissioner;
(B) is signed by the licensee under oath; and
(C) lists the continuing education courses completed by the
licensee to satisfy the continuing education requirements of
this section; and
(2) any other information required by the commissioner.
(i) A continuing education statement submitted under subsection (h)
may be reviewed and audited by the department.
(j) A licensee shall retain a copy of the original certificate of
completion received by the licensee for completion of a continuing
education course.
(k) A licensee who completes a continuing education course that:
(1) is approved by the commissioner under section 4 of this
chapter;
(2) is held in a classroom setting; and
(3) concerns ethics;
shall receive continuing education credit not to exceed four (4) hours
in a renewal period.
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2013]: Sec. 16. (a) This section supplements and does not
limit the actions that may be taken by the commissioner for a violation
under IC 27-1-15.6.
(b) If a vendor or an employee or authorized representative of a
vendor violates this chapter, the commissioner may do any of the
following:
(1) After notice and hearing, impose on the vendor a civil penalty
of not less than fifty dollars ($50) and not more than ten thousand
dollars ($10,000).
(2) After notice and hearing, impose other penalties that the
commissioner considers necessary and reasonable, including:
(A) suspending the privilege of transacting portable
electronics insurance under this chapter at specific locations
where violations have occurred; and
(B) suspending or revoking the ability of an individual
employee or authorized representative to act under the
vendor's limited lines producer license.
(3) Take action that is otherwise authorized under this title
against the supervising entity.
(1) insurance company;
(2) health maintenance organization;
(3) limited service health maintenance organization; or
(4) fraternal benefit society;
that is domiciled in Indiana.
(1) An insurer that is:
(A) licensed to do business in Indiana under IC 27-1-17; but
(B) not a domestic insurer.
(2) A health maintenance organization that:
(A) is organized under the laws of a state other than Indiana, a territory or another insular possession of the United States, or the District of Columbia; and
(B) has obtained a certificate of authority under IC 27-13-2.
(3) A limited service health maintenance organization that:
(A) is organized under the laws of a state other than Indiana, a territory or another insular possession of the United States,
or the District of Columbia; and
(B) has obtained a certificate of authority under IC 27-13-34.
(4) A fraternal benefit society that:
(A) is organized under the laws of a state other than
Indiana, a territory or another insular possession of the
United States, or the District of Columbia; and
(B) has obtained a certificate of authority under
IC 27-11-8-5.
(1) A health maintenance organization.
(2) A limited service health maintenance organization.
(3) An insurer that makes one (1) or more of the types of insurance described in Class 1(b) or Class 2(a) of IC 27-1-5-1.
(4) An insurer that files a health blank in accordance with the NAIC Annual Statement Instructions.
(1) a health maintenance organization;
(2) a limited service health maintenance organization; and
(3) a fraternal benefit society.
instructions.
(1) A life
(2) A fraternal benefit society.
(b) An insurer's RBC must be determined in accordance with the formula set forth in the RBC instructions. The formula must take into account (and may adjust for the covariance between):
(1) the risk with respect to the insurer's assets;
(2) the risk of adverse insurance experience with respect to the insurer's liabilities and obligations;
(3) the interest rate risk with respect to the insurer's business; and
(4) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined by applying the factors in the manner set forth in the RBC instructions.
(1) affiliation investment risk;
(2) asset risk;
(3) credit risk;
(4) underwriting risk; and
(5) all other business risks and such other relevant risks as are set forth in the RBC instructions;
determined by applying the factors in the manner set forth in the RBC instructions.
(1) The filing of an RBC report by an insurer that indicates that:
(A) the insurer's total adjusted capital is:
(i) greater than or equal to its regulatory action level RBC; but
(ii) less than its company action level RBC;
(B) if a life
(i) has total adjusted capital that is greater than or equal to its company action level RBC but less than the product of
(ii) has a negative trend;
(C) if a property and casualty insurer,
(i) has total adjusted capital that is greater than or equal to its company action level RBC but less than the product of three (3) multiplied by its authorized control level RBC; and
(ii) has a negative trend; or
(D) if a health insurer, the insurer:
(i) has a total adjusted capital that is greater than or equal to its company action level RBC but less than the product of three (3) multiplied by its authorized control level RBC; and
(ii) has a negative trend.
(2) The notification by the commissioner to the insurer of an adjusted RBC report that indicates that:
(A) the insurer's total adjusted capital is:
(i) greater than or equal to its regulatory action level RBC; but
(ii) less than its company action level RBC;
(B) if a life
(i) has total adjusted capital that is greater than or equal to its company action level RBC but less than the product of
(ii) has a negative trend;
(C) if a property and casualty insurer,
(i) has total adjusted capital that is greater than or equal to its company action level RBC but less than the product of three (3) multiplied by its authorized control level RBC; and
(ii) has a negative trend; or
(D) if a health insurer, the insurer:
(i) has total adjusted capital that is greater than or equal
to its company action level RBC but less than the
product of three (3) multiplied by its authorized control
level RBC; and
(ii) has a negative trend;
unless the insurer challenges the adjusted RBC report under
section 44 of this chapter.
(3) The notification by the commissioner to the insurer that the
commissioner has, after a hearing under section 44 of this chapter,
rejected the insurer's challenge to an adjusted RBC report
described in subdivision (2).
(b) A mandatory control level event is sufficient grounds for the commissioner to take action against a life
(c) If the commissioner takes action against a life
(d) The commissioner may forego action under subsections (a) through (c) for not more than ninety (90) days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period.
(1) An RBC report filed with the commissioner under this chapter, to the extent that the information in the report is not required to be provided in a publicly available annual statement schedule.
(2) An RBC plan filed with the commissioner under this chapter, including:
(A) the results or report of any examination or analysis of an insurer performed under the plan; and
(B) any corrective order issued by the commissioner under the examination or analysis.
(b) The information described in subsection (a):
(1) must be kept confidential by the commissioner;
(2) shall not be made public; and
(3) is not:
(A) subject to subpoena;
(B) subject to discovery in a private civil action; or
(C) admissible in evidence in a private civil action;
other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner under this chapter or another provision of this title.
(c) The commissioner, or a person receiving documents, materials, or other information while acting under the authority of the commissioner, is not permitted or required to testify in a private civil action concerning confidential information described in subsection (a).
(d) The commissioner may disclose documents, materials, and other information, including the information described in subsection (a), to:
(1) other state, federal, and international regulatory agencies;
(2) the NAIC and affiliates and subsidiaries of the NAIC; and
(3) state, federal, and international law enforcement authorities;
if the recipient agrees to maintain the confidential and privileged status of the documents, materials, and other information.
(e) The commissioner:
(1) may receive documents, materials, and other information, including confidential and privileged documents, materials, and information, from:
(A) other state, federal, and international regulatory agencies;
(B) the NAIC and affiliates and subsidiaries of the NAIC; and
(C) other state, federal, and international law enforcement authorities; and
(2) shall maintain as confidential or privileged all documents, materials, and other information received with notice or the understanding that the documents, materials, and information are confidential or privileged under the law of the jurisdiction
that is the source of the documents, materials, and
information.
(f) Any applicable privilege or claim of confidentiality in
documents, materials, or information described in this section is
not waived as a result of the disclosure or receipt of the documents,
materials, or information by the commissioner under this section.
(b) Provided, that this section shall not apply to any corporation or association that has prior to July 1, 1970, reorganized and accepted the provisions of IC 27-1, as provided in IC 27-1-11. Nor shall this section apply to any insurance policies issued or sold prior to July 1, 1970, or prior to any such reorganization under IC 27-1, whichever occurs earlier.
(c) Provided, further, that with respect to insurance policies issued by any corporation or association on a pure assessment basis, no premiums having been collected in advance, which corporation or association is incorporated and operating under this chapter as of August 18, 1969, and which has had in force between August 18, 1964, and August 18, 1969, insurance policies covering not less than fifteen thousand (15,000) members, such company or association shall maintain, beginning January 1, 1971, a legal reserve on its life assessment business on the basis of monthly renewable term insurance, and said monthly unearned premium reserve shall be calculated at one dollar and thirty cents ($1.30) per member.
(d) Such legal reserve shall be deposited with the insurance department under compulsory deposit provisions referred to in subsection (a).
a coverage date before March 28, 2006, are not affected by changes
made by P.L.193-2006.
(b) The association's coverage obligations under this chapter with
respect to a member insurer that has a coverage date before March 28,
2006, are governed by this chapter as it existed on January 1, 2006.
(c) The amendments made during the 2013 regular session of
the general assembly to section 2.1 of this chapter do not apply to
a member insurer that has been placed under an order of
rehabilitation or liquidation before January 1, 2013.
(d) The amendment made during the 2013 regular session of the
general assembly to section 2.3(e) of this chapter does not apply to
a member insurer that has a coverage date before January 1, 2012.
(e) The amendments made during the 2013 regular session of
the general assembly to section 2.3(f) of this chapter do not apply
to a member insurer that has been placed under an order of
rehabilitation or liquidation before January 1, 2013.
(b) "Account" means one (1) of the two (2) accounts created under section 3 of this chapter.
(c) "Annuity contract", except as provided in section 2.3(e) of this chapter, includes:
(1) a guaranteed investment contract;
(2) a deposit administration contract;
(3) a structured settlement annuity;
(4) an annuity issued to or in connection with a government lottery; and
(5) an immediate or a deferred annuity contract.
(d) "Assessment base year" means, for an impaired insurer or insolvent insurer, the most recent calendar year for which required premium information is available preceding the calendar year during which the impaired insurer's or insolvent insurer's coverage date occurs.
(e) "Association", except when the context otherwise requires, means the Indiana life and health insurance guaranty association created by section 3 of this chapter.
(f) "Benefit plan" means a specific plan, fund, or program that is established or maintained by an employer or an employee organization, or both, that:
(1) provides retirement income to employees; or
(2) results in a deferral of income by employees for a period extending to or beyond the termination of employment.
(g) "Board" refers to the board of directors of the association selected under IC 27-8-8-4.
(h) "Called", when used in the context of assessments, means that notice has been issued by the association to member insurers requiring the member insurers to pay, within a time frame set forth in the notice, an assessment that has been authorized by the board.
(i) "Commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.
(j) "Contractual obligation" means an enforceable obligation under a covered policy for which and to the extent that coverage is provided under section 2.3 of this chapter.
(k) "Coverage date" means, with respect to a member insurer, the date on which the earlier of the following occurs:
(1) The member insurer becomes an insolvent insurer.
(2) The association determines that the association will provide coverage under section 5(a) of this chapter with respect to the member insurer.
(l) "Covered policy" means a:
(1) nongroup policy or contract;
(2) certificate under a group policy or contract; or
(3) part of a policy, contract, or certificate described in subdivisions (1) and (2);
for which coverage is provided under section 2.3 of this chapter.
(m) "Extracontractual claims" includes claims that relate to bad faith in the payment of claims, punitive or exemplary damages, or attorney's fees and costs.
(n) "Funding agreement" has the meaning set forth in IC 27-1-12.7-1.
(o) "Impaired insurer" means a member insurer that is:
(1) not an insolvent insurer; and
(2) placed under an order of rehabilitation or conservation by a court with jurisdiction.
(p) "Insolvent insurer" means a member insurer that is placed under an order of liquidation with a finding of insolvency by a court with jurisdiction.
(q) "Member insurer" means any person that holds a certificate of authority to transact in Indiana any kind of insurance for which coverage is provided under section 2.3 of this chapter. The term includes an insurer whose certificate of authority to transact such insurance in Indiana may have been suspended, revoked, not renewed,
or voluntarily withdrawn but does not include the following:
(1) A for-profit or nonprofit hospital or medical service
organization.
(2) A health maintenance organization under IC 27-13.
(3) A fraternal benefit society under IC 27-11.
(4) The Indiana Comprehensive Health Insurance Association or
any other mandatory state pooling plan or arrangement.
(5) An assessment company or another person that operates on an
assessment plan (as defined in IC 27-1-2-3(y)).
(6) An interinsurance or reciprocal exchange authorized by
IC 27-6-6.
(7) A prepaid limited service health maintenance organization or
a limited service health maintenance organization under
IC 27-13-34.
(8) A farm mutual insurance company under IC 27-5.1.
(9) A person operating as a Lloyds under IC 27-7-1.
(10) The political subdivision risk management fund established
by IC 27-1-29-10 and the political subdivision catastrophic
liability fund established by IC 27-1-29.1-7.
(11) The small employer health reinsurance board established by
IC 27-8-15.5-5.
(12) A person similar to any person described in subdivisions (1)
through (11).
(r) "Moody's Corporate Bond Yield Average" means:
(1) the monthly average of the composite yield on seasoned
corporate bonds as published by Moody's Investors Service, Inc.;
or
(2) if the monthly average described in subdivision (1) is no
longer published, an alternative publication of interest rates or
yields determined appropriate by the association.
(s) "Multiple employer welfare arrangement" has the meaning set
forth in IC 27-1-34-1.
(t) "Owner" means the person:
(1) identified as the legal owner of a policy or contract according
to the terms of the policy or contract; or
(2) otherwise vested with legal title to a policy or contract through
a valid assignment completed in accordance with the terms of the
policy or contract and properly recorded as the owner on the
books of the insurer.
The term does not include a person with a mere beneficial interest in
a policy or contract.
(u) "Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a governmental entity, a
voluntary organization, a trust, a trustee, or another business entity or
organization.
(v) "Plan sponsor" refers to only one (1) of the following with
respect to a benefit plan:
(1) The employer, in the case of a benefit plan established or
maintained by a single employer.
(2) The holding company or controlling affiliate, in the case of a
benefit plan established or maintained by affiliated companies
comprising a consolidated corporation.
(3) The employee organization, in the case of a benefit plan
established or maintained by an employee organization.
(4) In a case of a benefit plan established or maintained:
(A) by two (2) or more employers;
(B) by two (2) or more employee organizations; or
(C) jointly by one (1) or more employers and one (1) or more
employee organizations;
and that is not of a type described in subdivision (2), the
association, committee, joint board of trustees, or other similar
group of representatives of the parties that establish or maintain
the benefit plan.
(w) "Premiums" means amounts, deposits, and considerations
received on covered policies, less returned premiums, returned
deposits, returned considerations, dividends, and experience credits.
The term does not include the following:
(1) Amounts, deposits, and considerations received for policies or
contracts or parts of policies or contracts for which coverage is
not provided under section 2.3(d) of this chapter, as qualified by
section 2.3(e) of this chapter, except that an assessable premium
must not be reduced on account of the limitations set forth in
section 2.3(e)(3), 2.3(e)(15), or 2.3(f)(2) of this chapter.
(2) Premiums in excess of five million dollars ($5,000,000) on an
unallocated annuity contract not issued or not connected with a
governmental benefit plan established under Section 401, 403(b),
or 457 of the United States Internal Revenue Code.
(x) "Principal place of business" refers to the single state in which
individuals who establish policy for the direction, control, and
coordination of the operations of an entity as a whole primarily exercise
the direction, control, and coordination, as determined by the
association in the association's reasonable judgment by considering the
following factors:
(1) The state in which the primary executive and administrative
headquarters of the entity is located.
(2) The state in which the principal office of the chief executive
officer of the entity is located.
(3) The state in which the board of directors or similar governing
person of the entity conducts the majority of the board of
directors' or governing person's meetings.
(4) The state in which the executive or management committee of
the board of directors or similar governing person of the entity
conducts the majority of the committee's meetings.
(5) The state from which the management of the overall
operations of the entity is directed.
However, in the case of a plan sponsor, if more than fifty percent (50%)
of the participants in the plan sponsor's benefit plan are employed in a
single state, that state is considered to be the principal place of business
of the plan sponsor. The principal place of business of a plan sponsor
of a benefit plan described in subsection (v)(4), if more than fifty
percent (50%) of the participants in the plan sponsor's benefit plan are
not employed in a single state, is considered to be the principal place
of business of the association, committee, joint board of trustees, or
other similar group of representatives of the parties that establish or
maintain the benefit plan and, in the absence of a specific or clear
designation of a principal place of business, is considered to be the
principal place of business of the employer or employee organization
that has the largest investment in the benefit plan in question on the
coverage date.
(y) "Receivership court" refers to the court in an insolvent insurer's
or impaired insurer's state that has jurisdiction over the conservation,
rehabilitation, or liquidation of the insolvent insurer or impaired
insurer.
(z) "Resident" means the following:
(1) An individual who resides in Indiana on the applicable
coverage date.
(2) A person that resides or is not an individual and has the
person's principal place of business in Indiana on the applicable
coverage date.
(aa) "State" includes a state, the District of Columbia, Puerto Rico,
and a United States possession, territory, or protectorate.
(bb) "Structured settlement annuity" means an annuity purchased to
fund periodic payments for a plaintiff or other claimant in payment for
or with respect to personal injury suffered by the plaintiff or other
claimant.
(cc) "Supplemental contract" means a written agreement entered
into for the distribution of proceeds under a life, health, or annuity
policy or contract.
(dd) "Unallocated annuity contract" means an annuity contract or
group annuity certificate:
(1) the owner of which is not a natural person; and
(2) that does not identify at least one (1) specific natural person
as an annuitant;
except to the extent of any annuity benefits guaranteed to a natural
person by an insurer under the contract or certificate. For purposes of
this chapter, an unallocated annuity contract shall not be considered a
group policy or group contract.
(1) a policy or contract issued on a blanket basis is a group policy or group contract;
(2) each individual insured under a policy or contract issued on a blanket basis is a certificate holder under the policy or contract; and
(3) a policy or contract issued on a franchise plan to members of a qualified group is a nongroup policy or nongroup contract.
(b) For purposes of this chapter, a benefit plan may have only one (1) plan sponsor.
(c) For purposes of this chapter, an individual who, on the applicable coverage date:
(1) is a citizen of the United States; and
(2) resides in a:
(A) foreign country; or
(B) United States possession, territory, or protectorate;
that does not have an association similar to the association created by this chapter;
is considered to be a resident of the state of domicile of the insurer that issued the policies or contracts.
(1) To a person, other than a certificate holder under a group policy or a group contract, that, regardless of where the person resides, is the beneficiary, nonowner assignee, or payee of a person covered under subdivision (2).
(2) To a person that is a certificate holder under a group policy or group contract, and to a person that is the owner of a nongroup policy or nongroup contract that is not an unallocated annuity contract or a structured settlement annuity, and that:
(A) is a resident; or
(B) is not a resident if all the following conditions are satisfied:
(i) The member insurer that issued the policy or contract is domiciled in Indiana.
(ii) The state in which the person resides has an association similar to the association.
(iii) The nonresident is not eligible for coverage by the other association referred to in item (ii) solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.
(3) For an unallocated annuity contract, subdivisions (1) and (2) do not apply, and this chapter provides coverage to the following:
(A) A person that is the owner of the unallocated annuity contract, if the contract was issued to or in connection with a benefit plan whose plan sponsor is a resident or, if the plan sponsor is not a resident, if all the following conditions are satisfied:
(i) The member insurer that issued the unallocated annuity contract is domiciled in Indiana.
(ii) The state in which the plan sponsor resides has an association similar to the association.
(iii) The other association referred to in item (ii) does not provide coverage of the unallocated annuity contract solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.
(B) A person that is the owner of an unallocated annuity contract issued to or in connection with a government lottery, if the owner is a resident or, if the owner is not a resident, if all the following conditions are satisfied:
(i) The member insurer that issued the unallocated annuity contract is domiciled in Indiana.
(ii) The state in which the owner resides has an association similar to the association.
(iii) The other association referred to in item (ii) does not provide coverage of the unallocated annuity contract solely
because the member insurer was not licensed in the state of
residence at the time specified in the guaranty association
law of the state of residence.
(4) For a structured settlement annuity, subdivisions (1) and (2)
do not apply, and this chapter provides coverage to a person that
is a payee under the structured settlement annuity (or beneficiary
of a payee if the payee is deceased), if the payee:
(A) is a resident, regardless of where the contract owner
resides; or
(B) is not a resident if all the following conditions are
satisfied:
(i) The member insurer that issued the structured settlement
annuity is domiciled in Indiana.
(ii) The state in which the payee resides has an association
similar to the association.
(iii) Neither the payee nor the beneficiary of the payee (if the
payee is deceased) is eligible for coverage by the other
association referred to in item (ii) solely because the
member insurer was not licensed in the state of residence at
the time specified in the guaranty association law of the state
of residence.
(b) This chapter does not provide coverage to a person that is:
(1) a payee or beneficiary of a contract owner that is a resident, if
the payee or beneficiary is afforded any coverage by the
association of another state; or
(2) otherwise covered under subsection(a)(3), if any coverage is
provided to the person by the association of another state.
(c) To avoid duplicate coverage, if a person that would otherwise
receive coverage under this chapter is provided coverage under the
laws of another state, the person is not eligible for coverage under this
chapter. In determining the application of this subsection when a
person may be covered by the association of more than one (1) state as
an owner, a payee, a beneficiary, or an assignee, this chapter must be
construed in conjunction with the laws of the other state to result in
coverage by only one (1) association.
(d) Except as otherwise excluded or limited by this chapter, this
chapter provides coverage to the persons specified in subsection (a)
for:
(1) direct nongroup life, health, or annuity policies and contracts
and supplemental contracts to direct nongroup life, health, or
annuity policies and contracts;
(2) certificates under direct group life, health, and annuity policies
and contracts; and
(3) unallocated annuity contracts;
issued by member insurers.
(e) This chapter does not provide coverage for or with respect to the
following:
(1) A part of a certificate, policy, or contract:
(A) not guaranteed by the insurer; or
(B) under which the risk is borne by the payee, certificate
holder, or the policy or contract owner.
(2) A reinsurance policy or contract, unless and to the extent that
assumption certificates have been issued under the reinsurance
policy or contract.
(3) A part of a certificate, policy, or contract to the extent that the
certificate's, policy's, or contract's interest rate, crediting rate, or
similar factor employed in calculating returns or changes in
values, whether expressly stated in the certificate, policy, or
contract or determined by use of an index or other external
referent stated in the certificate, policy, or contract, either:
(A) when averaged over a period of four (4) years immediately
before the applicable coverage date, exceeds the rate of
interest determined by subtracting two (2) percentage points
from Moody's Corporate Bond Yield Average averaged for the
same four (4) year period or for a lesser period if the
certificate, policy, or contract was issued less than four (4)
years before the applicable coverage date; or
(B) in effect under the certificate, policy, or contract on and
after the applicable coverage date, exceeds the rate of interest
determined by subtracting three (3) percentage points from
Moody's Corporate Bond Yield Average as most recently
available on the applicable coverage date.
(4) The obligations of a plan or program of an employer, an
association, or another person to provide life, health, or annuity
benefits to the employer's, association's, or other person's
employees, members, or others, including obligations arising
under and benefits payable by the employer, association, or other
person under a multiple employer welfare arrangement.
(5) A minimum premium group insurance plan.
(6) A stop-loss or excess loss insurance policy or contract
providing for the indemnification of or payment to a policy owner,
a contract owner, a plan, or another person obligated to pay life,
health, or annuity benefits or to provide services in connection
with a benefit plan or another plan, fund, or program for the
provision of employee welfare or pension benefits.
(7) An administrative services only contract.
(8) A part of a certificate, policy, or contract to the extent that the
certificate, policy, or contract provides for:
(A) dividends or experience rating credits;
(B) voting rights; or
(C) payment of fees or allowances to a person, including the
certificate holder or policy or contract owner, in connection
with service with respect to or administration of the certificate,
policy, or contract.
(9) A certificate, policy, or contract issued in Indiana by a
member insurer when the member insurer did not have a
certificate of authority to issue the certificate, policy, or contract
in Indiana.
(10) An unallocated annuity contract issued to or in connection
with a benefit plan protected by the federal Pension Benefit
Guaranty Corporation, regardless of whether the federal Pension
Benefit Guaranty Corporation has yet been required to make
payments with respect to the benefit plan.
(11) An unallocated annuity contract or part of an unallocated
annuity contract that is not issued to or in connection with a
benefit plan or a government lottery.
(12) A certificate, policy, or contract or part of a certificate,
policy, or contract with respect to which the Class B assessments
contemplated by section 6 of this chapter may not be made or
collected under federal or state law.
(13) An obligation or claim that does not arise under the express
written terms of the policy or contract issued by the member
insurer to the contract owner or policy owner, including any of the
following obligations and claims:
(A) Obligations and claims based on marketing materials.
(B) Obligations and claims based on side letters, riders, or
other documents issued by the member insurer without
meeting applicable policy form filing or approval
requirements.
(C) Obligations and claims based on actual or alleged
misrepresentations.
(D) Obligations and claims that are extracontractual claims.
(E) Obligations and claims for penalties or consequential,
incidental, punitive, or exemplary damages.
(14) An obligation to provide a book value accounting guaranty
for defined contribution benefit plan participants by reference to
a portfolio of assets that is owned by the:
(A) benefit plan; or
(B) benefit plan's trustee;
that is not an affiliate of the member insurer.
(15) A part of a certificate, policy, or contract to the extent the:
(A) certificate, policy, or contract provides for the certificate's,
policy's, or contract's interest rate, crediting rate, or similar
factor employed in calculating returns or changes in values, to
be determined by use of an index or other external referent
stated in the certificate, policy, or contract; and
(B) returns or changes in value have not been credited to the
certificate, policy, or contract, or as to which the certificate
holder's or policy or contract owner's rights are subject to
forfeiture, as of the applicable coverage date.
If a certificate's, policy's, or contract's returns or changes in values
are credited to the certificate, policy, or contract less frequently
than annually, for purposes of determining the returns and values
that have been credited and are not subject to forfeiture under this
subdivision, the returns and changes in value determined by using
the procedures defined in the certificate, policy, or contract must
be considered credited as if the contractual date of crediting
returns or changes in values were the applicable coverage date,
and those credited returns or changes in value are not subject to
forfeiture under this subdivision, but will be subject to any other
applicable limitations under this chapter.
(16) A funding agreement.
(17) An annuity not subject to regulation as described in
IC 27-1-12.4.
(18) A certificate, policy, or contract that provides a hospital,
medical, prescription drug, or other health care benefit
under:
(A) Part C of Title XVIII of the federal Social Security Act
(42 U.S.C. 1395w-21 through 1395w-28);
(B) Part D of Title XVIII of the federal Social Security Act
(42 U.S.C. 1395w-101 through 1395w-153); or
(C) regulations adopted under a law specified in clause (A)
or (B).
(f) The benefits that the association is obligated to cover do not
exceed the lesser of the following:
(1) The contractual obligations for which the member insurer is
liable or would have been liable if the member insurer were not
an impaired insurer or insolvent insurer.
(2) The applicable limitations as follows:
(A) With respect to certificates, policies, and contracts not subject to clause (B), (C), (E), or (F), with respect to one (1) life, regardless of the number of policies or contracts, the following limitations:
(i) Three hundred thousand dollars ($300,000) in life insurance death benefits, but not more than one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values.
(ii)
(iii) Three hundred thousand dollars ($300,000) in health insurance benefits that are disability insurance.
(iv) Three hundred thousand dollars ($300,000) in health insurance benefits under one (1) or more long term care insurance policies (as defined in IC 27-8-12-5).
(v) Five hundred thousand dollars ($500,000) in health insurance benefits that are basic hospital, medical, and surgical insurance or major medical insurance.
(B) With respect to unallocated annuity contracts issued to or in connection with a governmental benefit plan established under Section 401, 403(b), or 457 of the United States Internal Revenue Code,
(C) With respect to structured settlement annuities,
(D) In addition to the foregoing limitations, the association is not obligated to cover more than:
(i) an aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one (1) person
under clauses (A), (B), and (C), except with respect to
benefits for basic hospital, medical, and surgical
insurance and major medical insurance under clause
(A)(v), an aggregate of five hundred thousand dollars
($500,000) with respect to any one (1) person; or
(ii) with respect to one (1) owner of multiple nongroup
policies of life insurance, whether the policy owner is an
individual, a firm, a corporation, or another person, and
whether the persons insured are officers, managers,
employees, or other persons, five million dollars
($5,000,000) in benefits, including net cash surrender and
net cash withdrawal values, regardless of the number of
policies and contracts held by the owner.
(E) With respect to unallocated annuity contracts issued to or
in connection with a government lottery, five million dollars
($5,000,000) in benefits per contract owner, regardless of the
number of contracts held by the contract owner.
(F) With respect to unallocated annuity contracts:
(i) issued to or in connection with a benefit plan; and
(ii) not subject to clause (B);
five million dollars ($5,000,000) in benefits per plan sponsor,
regardless of the number of unallocated annuity contracts
entitled to coverage under this chapter.
(g) The limitations set forth in subsection (f) are limitations on the
benefits for which the association is obligated before taking into
account the:
(1) association's subrogation and assignment rights; or
(2) extent to which the benefits could be provided out of the
assets of the impaired insurer or insolvent insurer attributable to
covered policies.
The costs of discharging the association's obligations under this chapter
may be met by the use of assets attributable to covered policies or
reimbursed to the association under the association's subrogation and
assignment rights.
(h) In discharging the association's obligations to provide coverage
under this chapter, the association is not required to:
(1) guarantee, assume, reinsure, or perform;
(2) cause to be guaranteed, assumed, reinsured, or performed; or
(3) otherwise assure the discharge of;
the obligations of the insolvent insurer or impaired insurer under a
covered policy that do not materially affect the economic values or
economic benefits of the covered policy.
