Weekly Tip: Filing Updated IIPRC CSO Material

 

Weekly Tips

Filing Updated IIPRC CSO Material

9/15/2016

This week’s tip is an important one to share with your company actuary. Since publishing Filing Information Notice FIN 2016-1 outlining the options and procedures for filing new products or amending previously-approved products to reflect the 2017 CSO Mortality Table, the IIPRC Office has received many questions about such updates. This week the IIPRC Office would like to review some points to keep in mind as you prepare the submission. As a reminder, the IIPRC can accept the 2017 CSO Mortality Table for products newly submitted to or previously approved by the IIPRC. The IIPRC is unable to review updates to mortality tables being used for state-approved or –filed policies via mix and match.

The Variability of Information sections of the IIPRC life insurance policy Uniform Standards specify that mortality tables may only be changed upon prior approval. At this time, only the version of the 2017 CSO Mortality Table approved by the NAIC on April 6, 2016, is approved for use in determining nonforfeiture values for new issues on or after January 1, 2017. Other versions of the 2017 CSO Mortality Table that may be approved in the future – i.e. the guaranteed issue and simplified issue versions - should not be referenced in the filing and cannot be approved for use without submitting a filing for prior approval consistent with FIN 2016-1. As a result, the IIPRC is suggesting as a best practice that companies add “adopted by the NAIC on April 6, 2016” in references to the 2017 CSO Morality Table in actuarial memos, forms, and Statements of Variability so that it is clear going forward which version of the tables will be used for nonforfeiture values (and guaranteed maximum COIs, if applicable).

The table has to be identified with specificity, including when variability is used to reserve the option to identify different tables to be used in the future, subject to prior approval. When variability is used, the specification page, statement of variability (as applicable), and actuarial memorandum must specify each variable that defines the mortality table(s) that will be used for new issues of the form(s). With the exception of bracketing the entire table or reference to “2017 CSO,” any of the variables defining a specific mortality table including “adopted by the NAIC on April 6, 2016” may be bracketed as variable only on the specification page, and the Statement of Variability and actuarial memorandum must clearly explain which combinations of variables comprising a mortality table will be used for new issues. This will allow the company to avoid the need to file revised forms/specification pages if other versions of the mortality table are approved in the future and/or the company decides to change the mortality table(s) for new issues in the future. Note that the Statement of Variability should describe only those mortality tables that will actually be used by the company as of the date of implementation. In addition, the IIPRC asks that the actuary acknowledge in the actuarial memorandum that any change to the mortality tables specified in the form or specification page, Statement of Variability and actuarial memorandum will be filed with the IIPRC for approval prior to use.

Illustrations of acceptable mortality table references:

  1. Specification Page reference:

    2017 CSO Mortality tables adopted by the NAIC on April 6, 2016, 80% Male Gender-Blended, [Smoker], Ultimate, ALB

    Statement of Variability explanation:

    Smoker or Non-Smoker will be used depending on insured, Composite will be used for issue ages 0-17

    Actuarial Memorandum:

    Mortality Basis: 2017 CSO Mortality tables adopted by the NAIC on April 6, 2016, 80% Male Gender-Blended, Smoker/Non-Smoker, Ultimate, ALB. Composite rates will be used for issue ages 0-17. Any change to this mortality basis will be filed with the IIPRC for approval prior to use.

  2. Specification Page reference:

    2017 CSO Mortality tables [adopted by the NAIC on April 6, 2016], [80% Male Gender-Blended], [Smoker], [Ultimate], ALB

    Statement of Variability explanation:

    • Adopted by the NAIC on April 6, 2016 will be used

    • 80% Male Gender-Blended rates will be used for issues of the unisex version of the form and Male or Female rates will be used depending on the insured on the gender-distinct version of the form

    • Ultimate rates will be used

    • Smoker or Non-Smoker will be used depending on insured, Composite will be used for issue ages 0-17

    Actuarial memorandum:

    Mortality Basis: 2017 CSO Mortality tables adopted by the NAIC on April 6, 2016, Male/Female, Smoker/Non-Smoker, Ultimate, ALB will be used for the gender-distinct form. 80% Male Gender-Blended rates will be used for the unisex form. Composite rates will be used for issue ages 0-17. Any change to this mortality basis will be filed with the IIPRC for approval prior to use.

If the company decides in the future to use a mortality table that differs from the mortality table(s) specified in the specification page, Statement of Variability, and/or actuarial memorandum, the company must submit a filing for approval consistent with FIN 2016-1. While it is not required to bracket any part of the mortality table identification, the benefit of bracketing is that the update can be made without re-filing the forms to which the mortality table update applies. When the specification page, Statement of Variability, and actuarial memorandum are ready for submission and a new policy form is not being submitted, the company filer should choose “Supporting Documentation Update” as the Filing Type. The TOI and Sub-TOI should be the same as elected in the initial policy filing. A reference to the previously approved policy filing should be provided under Associated Filings. No new forms need to be added to the filing and the Form Schedule may be left blank.

If you have any questions about this Weekly Tip or 2017 CSO Mortality Table updates, please contact the IIPRC Office.