Weekly Tip: Amendments to Market Value Adjustment Uniform Standards


Weekly Tips

Amendments to Market Value Adjustment Uniform Standards


On April 2nd, 2016 the IIPRC adopted several amendments as a result of the 5th Phase of the Five-Year Review of Uniform Standards, Rules, and Operating Procedures. Uniform Standards that were amended in Phase 5 appear on the Rulemaking Record with an updated effective date of July 18, 2016. This means that the amended Uniform Standards will be effective for submissions pending or submitted after this date. Previously-approved products and forms under the amended Uniform Standards do not need to be refiled or be made to comply with the amendments, as the Uniform Standards in effect at the time remain applicable to the original approval.

The Additional Standards for Market Value Adjustment (MVA) Feature Provided through the General Account and the Additional Standards for Market Value Adjustment Feature Provided through a Separate Account were amended as part of the Phase 5 Five-Year Review. In this week’s Weekly Tip, we want to highlight the amendments to these two Uniform Standards, and what they mean for filings.

In the amended Uniform Standards the separate limitation on surrender charge (7%/7 years) for non-Multi-Year Interest Rate Guarantee Annuities (non-MYGA MVA) has been removed. Even with the elimination of the limitations, nonforfeiture and cash surrender values will still be subject to the retrospective and prospective test minimums, and because the IIPRC standard requires a maturity date equal to the later of age 70 or 10 years for purposes of the prospective test, surrender charges are limited to approximately 10% grading down over 10 years for most issue ages. Additionally, the actuarial opinion included in the original Uniform Standards was deleted, and an actuarial certification similar to the certification required under the IIPRC’s Additional Standards for Bonus Benefits for Individual Deferred Variable Annuity Contracts will be required. Lastly, some actuarial memorandum requirements were clarified to include a demonstration that the values of the contract comply with the nonforfeiture requirements, including Appendix A-1 and A-2 of the Individual Deferred Non-Variable Annuity Contract Standards and that modifications to the demonstrations are found in Appendix B. The amended Uniform Standards and the rulemaking history associated with the amendments may be found on the Record of the IIPRC website.

The amended Uniform Standards are not applicable to product filings and forms approved by the IIPRC before July 18, 2016. Companies wanting to update their previously-approved MVA forms to reflected the amended Uniform Standards must make a new product filing submission (please indicate in the Filing Description if the submission is intended to replace previously-approved forms). Companies may now submit product filings for review under the amended Uniform Standards, but these filings will not be approved until on or after the effective date of July 18th.

If you have any questions about the amendments or the application of the Uniform Standards that will be effective on July 18th, please contact Karen Givens at kgivens@insurancecompact.org. You may also contact the IIPRC Office for assistance.