56-1-402 - Annual valuation of life policies Reserve liabilities Annuity and endowment contracts Actuarial review.
56-1-402. Annual valuation of life policies Reserve liabilities Annuity and endowment contracts Actuarial review.
(a) (1) The commissioner shall annually value, or cause to be valued, the reserve liabilities, referred to as reserves or net value, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state, except that in the case of an alien insurance company the valuation shall be limited to its United States business, and may certify the amount of the reserves, specifying the mortality table or tables, rate or rates of interest and methods, (net level premium or other method), used in the calculation of the reserves. In calculating the reserves, the commissioner may use group methods and approximate averages for fractions of a year or otherwise.
(2) In lieu of the valuation of the reserves required in this part of any foreign or alien company, the commissioner may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this part, and if the official of the state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when the certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.
(b) A company that at any time has adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this part may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum provided in this part.
(c) The aggregate net value so ascertained of the policies of the company shall be deemed its liability on account of its policy obligations, other than accrued claims, to provide for which it shall hold funds, in secure investments, of an amount equal to the net value above all of its other liabilities.
(d) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.
(e) (1) Every life insurance company, except as exempted by or pursuant to regulation, shall also annually include in the opinion required by subsection (d) an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.
(2) The commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary deems necessary in order to render the opinion required by this section.
(f) Each opinion required by subsection (e) shall be governed by the following:
(1) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion; and
(2) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation, or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum as is required by the commissioner.
(g) Every opinion shall be governed by the following:
(1) The opinion shall be submitted with the annual statement reflecting the valuation of the reserve liabilities for each year ending on or after December 31, 1995;
(2) The opinion shall apply to all business in force, including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation;
(3) The opinion shall be based on standards adopted from time to time by the actuarial standards board and on additional standards the commissioner prescribes by regulation;
(4) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state, if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
(5) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion;
(6) Disciplinary action by the commissioner against the company or the qualified actuary shall be defined in regulations by the commissioner; and
(7) Any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, shall be kept confidential by the commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by regulations promulgated under this section; provided, that the memorandum or other material otherwise may be released by the commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings, and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
(h) For the purposes of this section, qualified actuary means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulations.
[Acts 1895, ch. 160, § 8; Shan., § 3288; Code 1932, § 6103; Acts 1945, ch. 56, § 1; C. Supp. 1950, § 6103; Acts 1963, ch. 140, §§ 1, 2; T.C.A. (orig. ed.), § 56-114; Acts 1995, ch. 363, § 1.]