28 Tex. Admin. Code § 3.6101 - Policy Reserves
(a) Except as provided
in §
3.6102 of this subchapter
(relating to Claims Reserves), the minimum reserves for premium refunds
required by these rules and the payment of benefits under outstanding credit
life insurance policies and certificates issued prior to January 1, 2009, may
not be less in the aggregate than 130 percent of the reserves computed on the
1958 CSO Mortality Table with interest not to exceed 5.5 percent; or, at the
option of the company, such reserves may be maintained at 100 percent of the
reserves computed on the 1941 CSO Mortality Table or the 1958 CET Mortality
Table with interest not to exceed 5.5 percent; or 150 percent of the 1980 CSO
Mortality Table with interest not to exceed 5.5 percent; provided, however,
notwithstanding any other law or rule, the minimum reserve requirements for
policy reserves applicable to credit life policies and certificates issued
prior to January 1, 2009, under the Insurance Code Chapter 1153 or these rules
are met if, in aggregate, the reserves are maintained at 100 percent of the
1980 CSO Mortality Table, with interest not to exceed 5.5 percent. Subchapter
EE of this chapter (relating to Valuation of Life Insurance Policies) shall not
apply to credit life insurance. For credit life insurance policies and
certificates issued on or after January 1, 2009, the minimum reserve
requirements are as follows:
(1) The minimum
standard for both male and female insureds shall be the 2001 CSO Male Composite
Ultimate Mortality Table. This table contains rates of mortality that do not
distinguish between smokers and nonsmokers and is one of the tables contained
in the 2001 CSO Mortality Table adopted by reference in §
3.9103(d) of
this chapter (relating to 2001 CSO Mortality Table).
(2) Where the credit life insurance policy or
certificate insures two lives, the minimum standard shall be twice the
mortality in the 2001 CSO Male Composite Ultimate Mortality Table based on the
age of the older insured.
(3) The
interest rates used in determining the minimum standard of valuation shall be
the calendar year valuation interest rates as defined in the Insurance Code §§
425.060 -
425.063.
(4) The method used in determining the
minimum standard for valuation shall be the commissioners reserve valuation
method as defined in the Insurance Code §
425.064.
(b) The policy reserve
requirements for single premium credit accident and health insurance contracts
issued on or after January 1, 2009, are prescribed in §§
3.7001,
3.7004,
3.7005, and
3.7006 of this chapter (relating
to Introduction; Contract Reserves; Reinsurance; and Specific Standards for
Morbidity, Interest, and Mortality). The policy reserve requirements for credit
accident and health insurance contracts issued after December 31, 1980, and
before January 1, 2009, and for non-single premium credit accident and health
insurance contracts issued on or after January 1, 2009, may not be less than
the product rounded to the next higher dollar of the gross presumptive single
premium rate per $100 of insured indebtedness for the term of the indebtedness
remaining as of the valuation date times the number of hundreds of dollars of
indebtedness outstanding as of the valuation date (herein called the rule of
anticipation) or, as an alternative and at the option of the insurer, the mean
of the gross unearned premium calculated by the "sum of the digits" (rule of
78) and the pro rata methods. The reserve for such insurance which has an
effective date prior to January 1, 1981, may not be less than the gross
unearned premium calculated by the sum of the digits (rule of 78)
method.
(c) Pursuant to the
Insurance Code §
425.058(l)(4),
for all credit insurance contracts, if the net premium refund liability exceeds
the aggregate recorded contract reserves, the insurer shall establish an
additional reserve liability that is equal to the excess of the net refund
liability over the contract reserve recorded. The net refund liability may
include consideration of commission, premium tax, and other expenses
recoverable.
Notes
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