What's happening
This bill amends insurance law to clarify the rules and authority for valuing life insurance policy reserves and actuarial standards.
Why it matters
Clarifies the roles of life insurance companies and the state superintendent in valuing reserves. The bill specifies that life insurers themselves must perform the annual valuation of their policy reserves, rather than the superintendent doing so directly, which could streamline company processes and clarify regulatory expectations.
Limits the superintendent’s ability to impose new actuarial standards. Any new requirements for actuarial opinions or additional valuation standards must be established only through formal regulation, preventing the superintendent from making ad hoc or informal changes. This could provide greater predictability and transparency for insurers in how standards are set.
Aligns actuarial opinions with external professional standards. The bill requires that actuarial opinions on reserves use standards adopted by the Actuarial Standards Board, minimizing the risk of New York-specific rules conflicting with national practice, which may ease compliance for companies operating in multiple states.
Allows more flexibility in aggregating reserves for valuation purposes. Insurers are permitted to aggregate reserves across different product lines when determining whether they meet minimum requirements, which could allow for more efficient reserve management and potentially lower costs, while still allowing the superintendent to require separate reporting for asset adequacy analysis.
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Update Life Insurance Valuation Rules
Plain English, a few words. Used as the page title.
Sponsors
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History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Update Life Insurance Valuation
In Assembly Committee · Insurance · Sponsor Anthony Brindisi
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1477
2017-2018 Regular Sessions
IN SENATE
January 9, 2017
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to the valuation of life insurance policies and contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph 1 of subsection (a) of section 4217 of the insurance law, as amended by chapter 22 of the laws of 1994, is amended to read as follows:
(1) The superintendent shall annually [value, or] cause every life insurance company doing business in this state to [be valued,] value the reserve liabilities (hereinafter called reserves) for all its outstanding insurance policies and contracts [of every life insurance company doing business in this state], except that, in the case of an alien company, such valuation shall be limited to its United States business[, and may]. The superintendent shall certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods (net level premium method or other) used in the calculation of such reserves, unless the superintendent determines that the memorandum prepared pursuant to paragraph three of subsection (e) of this section to support the actuarial opinion of reserves required by paragraph one of subsection (e) of this section fails to meet the standards prescribed by regulation. In calculating such reserves, [the superintendent] life insurance companies may use group methods and approximate averages for fractions of a year or otherwise.
§ 2. Paragraph 1 of subsection (e) of section 4217 of the insurance law, as added by chapter 22 of the laws of 1994, is amended to read as follows:
(1) General. 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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01966-01-7
S. 1477 2
and contracts specified by the superintendent by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The superintendent [by regulation] shall define the specifics of this opinion and add any other items deemed to be necessary to its scope solely by regulation.
§ 3. Subparagraph (C) of paragraph 4 of subsection (e) of section 4217 of the insurance law, as added by chapter 22 of the laws of 1994, is amended to read as follows:
(C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the superintendent may by regulation prescribe. The superintendent shall not prescribe any assumptions or other additional standards to be used by the qualified actuary when forming the opinion beyond those prescribed by regulation.
§ 4. Paragraph 4 of subsection (f) of section 4217 of the insurance law, as added by chapter 22 of the laws of 1994, is amended to read as follows:
(4) [Without the specific approval of the superintendent subject to such conditions as he may prescribe and as provided by regulation, an insurer shall not] An insurer may aggregate the reserves referred to in [two or more of paragraph] paragraphs one, two [or] and three of this subsection. [Such regulation may prescribe the conditions under which the valuation of two or more classes of business of insurance or the valuation of all of its insurance business to which this section applies may be combined.] The superintendent may, solely by regulation, require insurers to show the results of asset adequacy analysis as to the adequacy of reserves referred to in paragraphs one, two and three of this subsection separately in the actuarial memorandum prepared pursuant to paragraph three of subsection (e) of this section, but may not prohibit insurers from aggregating the reserves referred to in paragraphs one, two and three of this subsection for the purposes of meeting the minimum standards for the valuation of life insurance policies, annuities and guaranteed investment contracts, and individual and group accident and health insurance policies.
§ 5. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to the valuation of life insurance policies and contracts
Purpose
The purpose of this bill is to amend § 4217 of the insurance law (the standard valuation law for life insurance) to require that any additional standards relating to this section proposed for imposition by the Department of Financial Services should be prescribed by regulation.
Summary of provisions
This bill amends § 4217(a)(1), (e)(1), (e)(4)(C) and (f)(4) of the insurance law to refine the rules related to the submission of reserving reports that are required under current law from life company appointed actuaries. The amendments would: 1) permit the appointed actuary to aggregate life, annuity and health business for purposes of performing asset adequacy testing in support of an actuarial opinion on reserve adequacy; and 2) restrict the Superintendent from imposing any assumptions or other additional standards to be used by the appointed actuary in forming his actuarial opinion, beyond those prescribed by regulation.
Justification
Additional actuarial standards that go beyond the current law should only be imposed on life insurance companies via regulation, subject to proposal and comment, and not by arbitrary guidance. Such guidance is currently imposed on life companies annually by the Department of Financial Services without any requirement that it be published for feedback and comment before imposition. The requisite transparency established in this bill will result in any additional standards or assumptions developed by the Department being proposed for public comment and feedback, subject to the state administrative procedures act (SAPA), before implementation. This is especially important since subjective, overly-conservative reserving requirements, which can currently be imposed via fiat through mere guidance, can result in higher product pricing and less product availability for life insurance products sold in New York.
Despite their importance, life insurance products are not required as a matter of law or policy, as is the case with other types of insurance products such as automobile or homeowners insurance. People who purchase life insurance products are choosing to do so with discretionary income and competing priorities and are also often lacking a clear understanding of the importance of the financial protection the products provide. It is in the interest of this state to assist in the promotion of these products, at affordable prices, which provide its citizens with the tools to protect their own financial futures. In turn, the purchase of these products by the citizens of this state alleviates or reduces their need for public assistance in times of need, which decreases financial stress on the state.
Legislative history
S.7535 of 2016.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.