Sec. 48.1. Definitions

For purposes of this Part:

(a) Adverse change in the current scale of non-guaranteed elements means any change in the current scale of non-guaranteed elements that increases or may increase a charge or reduces or may reduce a benefit to the policy owner, other than a change in a credited interest rate or an index account parameter based entirely on changes in the insurer’s expected investment income or hedging costs.

(b) Anticipated experience factor means an assumption as to a future experience factor as determined by the insurer.

(c) Applicable group certificate means any group life insurance or group annuity certificate where:

(1) the group life insurance certificate:

(i) may develop nonforfeiture values that are affected by non-guaranteed elements; or

(ii) the certificate holder is required to contribute to the cost of the certificate, the certificate allows for changes in the rate of the certificate holder’s contributions, and there is a guaranteed maximum contribution scale that exceeds five years; or

(2) the group annuity certificate is:

(i) funding individual retirement accounts or individual retirement annuities, as defined in the Internal Revenue Code at 26 U.S.C. section 408;

(ii) funding annuities in accordance with the Internal Revenue Code at 26 U.S.C. section 403(b); or

(iii) providing a plan of retirement annuities under which the payments are derived substantially from funds contributed by the person covered.

(d) Board-approved criteria means written criteria adopted by the board of directors of an insurer, or a committee of directors thereof, that are the basis for determining non-guaranteed charges or benefits.

(e) Class of policies means all policies with similar expectations as to anticipated experience factors that are grouped together for the purpose of determining non-guaranteed elements.

(f) Current scale of non-guaranteed elements means the non-guaranteed elements that apply to a policy in the current and future years unless changed by the insurer.

(g) Exempt policy provision means a dividend provision, a provision providing for readjustments described in Insurance Law section 4231(g)(1)(C), or any other policy provision that gives the insurer discretion and that in the superintendent’s opinion is not designed to allocate to the policy a portion of the anticipated financial experience of an insurer on the policy, such as minimum transaction amounts, maximum number of transactions, or limits on premiums or deposits. Exempt policy provision also means any separate account expense charge providing solely for the actual expense incurred, without profit to the insurer.

(h) Experience factor means a value or set of values consisting of investment income, mortality, morbidity, persistency, or expense that represents the insurer’s financial experience on a class of policies. Profit margin is not an experience factor.

(i) Indeterminate premium policy means a life insurance policy as described in Insurance Law section 4231(g)(1)(D).

(j) Index account parameter means a feature impacting the net credited rate for an index account such as participation rate, cap, or spread.

(k) Insurer means an authorized life insurance company or authorized fraternal benefit society.

(l) Non-guaranteed element means any element within a policy provision other than an exempt policy provision that may be changed at the insurer’s discretion without the consent or request of the policy owner and that affects the policy charges or benefits. Non-guaranteed element includes indeterminate premium policy rates, expense and benefit charge rates, interest crediting rates, cost of insurance rates, and index account parameter, but shall not include elements that are not within the insurer’s discretion, such as the pass-through of variable fund returns. Non-guaranteed element does not include current annuity purchase rates.

(m) Policy means any individual life insurance policy, individual annuity contract, or applicable group certificate.

(n) Pricing cell means a collection of policies for which the same anticipated experience factors are used to determine the same current scale of non-guaranteed elements.

(o) Profit margin means expected revenues less costs.

(p) Qualified actuary means an individual who:

(1) is a member in good standing of the American Academy of Actuaries;

(2) meets the American Academy of Actuaries qualification standards for statements of actuarial opinion required by this Part;

(3) is an associate or fellow by examination of either the Society of Actuaries or the Institute of Actuaries or is designated in writing by the superintendent as a qualified actuary after written application to the superintendent providing evidence of the actuary’s actuarial knowledge and experience of non-guaranteed elements, and stating that the actuary is familiar with the New York Insurance Law and regulations promulgated thereunder and the current standards of practice of the American Academy of Actuaries involving non-guaranteed charges or benefits;

(4) has not been found by a commissioner or superintendent of insurance of any state, following appropriate notice and hearing, within the past five years, to:

(i) have violated any provision of, or any obligation imposed by, any law in the course of his or her dealings as a qualified actuary; or

(ii) have demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as a qualified actuary;

(5) has not resigned or been removed as a qualified actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards; and

(6) has not been convicted of any crime involving fraudulent or dishonest practices within the past five years.