California Insurance Code 10509.960 – (a) The board of directors of each insurer shall appoint one or …
(a) The board of directors of each insurer shall appoint one or more illustration actuaries.
(b) The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this chapter.
Terms Used In California Insurance Code 10509.960
- Actuarial Standards Board: means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. See California Insurance Code 10509.953
- Commissioner: means the Insurance Commissioner of this State. See California Insurance Code 20
- Currently payable scale: means a scale of nonguaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days. See California Insurance Code 10509.953
- Disciplined current scale: means a scale of nonguaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. See California Insurance Code 10509.953
- Illustration: means a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined below:
California Insurance Code 10509.953
- Illustration actuary: means an actuary meeting the requirements of Section 10509. See California Insurance Code 10509.953
- Life insurance: means insurance upon the lives of persons or appertaining thereto. See California Insurance Code 10509.953
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- State: means the State of California, unless applied to the different parts of the United States. See California Insurance Code 28
(c) The illustration actuary shall comply with all of the following:
(1) Be a member in good standing of the American Academy of Actuaries.
(2) Be familiar with the standard of practice regarding life insurance policy illustrations.
(3) Not been found by the commissioner, following appropriate notice and hearing, to have engaged in or committed any of the following acts:
(A) Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary.
(B) Been found guilty of fraudulent or dishonest practices.
(C) Demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary.
(D) Resigned or been removed as an illustration 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.
(4) Notify the commissioner of any acts engaged in or committed in another state that are similar to those described in paragraph (3).
(5) Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. Nonguaranteed elements illustrated for new policies that are not consistent with those illustrated for similar in force policies shall be disclosed in the annual certification. Nonguaranteed elements illustrated for both new and in force policies that are not consistent with the nonguaranteed elements actually being paid, charged or credited to the same or similar forms shall be disclosed in the annual certification.
(6) Disclose in the annual certification the method used to allocate overhead expenses for all illustrations including:
(A) Fully allocated expenses.
(B) Marginal expenses.
(C) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the commissioner.
(d) (1) The illustration actuary shall file a certification with the board of directors of the insurer and with the commissioner as follows:
(A) Annually for all policy forms for which illustrations are used.
(B) Before a new policy form is illustrated.
(2) If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly.
(e) If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify.
(f) A responsible officer of the insurer, other than the illustration actuary, shall certify annually the following:
(1) The illustration formats meet the requirements of this chapter and the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary.
(2) The company provided its agents with information about the expense allocation method used by the company in its illustrations and complied with the disclosure requirements of paragraph (6) of subdivision (c).
(g) The annual certifications shall be provided to the commissioner each year by a date determined by the insurer.
(h) If an insurer changes the illustration actuary responsible for all or a portion of the company’s policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change.
(Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)