Sec. 48.4. Filing and records requirements

(a) An insurer shall obtain an actuarial memorandum signed and dated by a qualified actuary:

(1) prior to the issuance of any policy of a new policy form;

(2) prior to the issuance of any policy of a policy form for which the non-guaranteed elements have been changed for only new issues; and

(3) prior to any change to the non-guaranteed elements of an existing policy 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) The actuarial memorandum shall contain the following as applicable:

(1) sufficient detail of the pricing assumptions by duration of the current scale of non-guaranteed elements and the anticipated experience factors on which they are based. The information shall include:

(i) premium;

(ii) gross investment returns;

(iii) investment expenses;

(iv) investment defaults;

(v) credited rates and index account parameters;

(vi) policyholder behavior assumptions including option elections and persistency;

(vii) benefits paid;

(viii) mortality rates;

(ix) morbidity rates;

(x) insurance expenses, including the allocation of tax, sale, maintenance, service and overhead expenses;

(xi) profit margins;

(xii) policy expense charges; and

(xiii) policy benefit charges;

(2) a description of the experience or other information used to determine the anticipated experience factors, including a description of the reasoning and analysis that led from the information to the anticipated experience factors;

(3) a description of the processes and methods used in the determination of non-guaranteed elements for a pricing cell from the anticipated experience factors;

(4) any formula used to determine index account parameters and a description of the index formula;

(5) the investment strategy, which shall include:

(i) a description of the method used for the allocation of investment income, specifying how trading gains and losses due to interest rate changes are allocated; and

(ii) a description of the methods used to assess deductions from gross earned rates for default, investment expenses and risk items; and

(6) a statement signed and dated by a qualified actuary that the anticipated experience factors in the actuarial memorandum are reasonable assumptions and are the basis for determining the scale of non-guaranteed elements, and that the actuary is familiar with the current requirements in this State for non-guaranteed elements.

(c) An insurer shall have procedures in place to require a qualified actuary acting on the insurer’s behalf to notify the insurer of any action specified in sections 48.1(p)(4), (5), and (6) of this Part. The insurer shall notify the superintendent of the action taken against the actuary as soon as practicable.

(d) An insurer shall file any adverse change in the current scale of non-guaranteed elements applicable to existing life insurance policies or applicable group life insurance certificates with the superintendent at least 120 days prior to implementation. The filing shall include:

(1) the actuarial memorandum required by subdivision (a) of this section;

(2) a tabulation of all proposed changes in the current scale of non-guaranteed elements by pricing cell giving the current scale of non-guaranteed elements, the proposed current scale of non-guaranteed elements, and the changes in the non-guaranteed elements;

(3) a tabulation of all changes in the anticipated experience factors and profit margins by pricing cell giving the prior anticipated experience factors and profit margins, the current anticipated experience factors and profit margins, and the changes in the anticipated experience factors and profit margins;

(4) a narrative description of experience or other rationale that explain the changes in anticipated experience factors; and

(5) for pricing cells, a narrative description of any changes in the methods or procedures for determining non-guaranteed elements from the anticipated experience factors.

(e) By May 1st of each year, the insurer shall file with the superintendent a listing of any adverse change in the current scale of non-guaranteed elements of any existing policy that occurred in the prior calendar year. The filing shall include a statement signed and dated by a qualified actuary that all changes were in compliance with this Part.

(f) An insurer shall provide all records required by this Part to the superintendent upon request.

(g) The insurer shall maintain in its records, for six years after the termination of the last policy subject to the board-approved criteria, the written documentation of the determination of non-guaranteed elements required by this Part. The insurer shall maintain the written documentation in accordance with section 243.3 of this Title (Regulation 152).