38.2-3723 - Reserves.
§ 38.2-3723. Reserves.
A. Each insurer licensed to write credit life insurance in the Commonwealthshall establish and maintain reserves on all its credit life insurance. Theminimum standard for the valuation for such reserves:
1. For both male and female insureds shall be the 2001 Commissioners'Standard Ordinary (CSO) Male Composite Ultimate Mortality Table as adopted bythe National Association of Insurance Commissioners;
2. Where the credit life policy or certificate insures two lives shall betwice the 2001 CSO Male Composite Ultimate Mortality Table based on the ageof the older insured;
3. Shall use, for the interest rate calculation, the calendar year statutoryvaluation interest rates determined pursuant to §§ 38.2-3132 through38.2-3136; and
4. Shall use, as the method of valuation, the Commissioners reserve valuationmethod set forth in § 38.2-3137.
Reserves may be calculated on an annual or a monthly basis with a reasonableassumption, subject to statistical proof, as to average ages at issue or atexpiration.
B. Each insurer licensed to write credit accident and sickness insurance inthe Commonwealth shall establish and maintain reserves on all its creditaccident and sickness insurance. For contracts other than single premiumcredit disability contracts, the minimum standard for the valuation of suchreserves shall be the total gross unearned premiums calculated by theactuarial method, but not less than the aggregate amounts calculated as ofthe valuation date by the refund formulas approved for the policies by theCommission pursuant to subsection C of § 38.2-3729. For single premium creditdisability contracts, the minimum standard for valuation of such reserves:
1. For plans having less than a 15-day elimination period, the morbiditystandard shall be the 1985 Commissioners' Individual Disability Table A asadopted by the NAIC (85CIDA) with claim incidence rates increased by 12percent;
2. For plans having a greater than 14-day elimination period, the morbiditystandard shall be the 85CIDA for a 14-day elimination period with claimincidence rates increased by 12 percent; and
3. The interest rate used shall be the calendar year statutory valuationinterest rate for valuation of whole life insurance determined pursuant to §§38.2-3132 through 38.2-3136.
It may be assumed that all business written in any calendar month was writtenas of the fifteenth of such month.
C. For all credit life and disability contracts in the aggregate, if the netpremium refund liability exceeds the aggregate recorded contract reserve, theinsurer shall establish an additional reserve liability that is equal to theexcess of the net refund liability over the contract reserve recorded. Thenet refund liability may include consideration of commission, premium tax,and other expenses recoverable. In all cases, such amounts shall be evaluatedfor probability of recovery.
D. In no event shall the aggregate reserves for all policies, contracts andbenefits be less than the aggregate reserves determined by a qualifiedactuary to be necessary to support fully the insurer's obligations under itspolicies, certificates and contracts.
(1982, c. 223, § 38.1-482.12:1; 1986, c. 562, § 38.2-3715; 1992, c. 586;2002, c. 72; 2009, c. 642.)