Section 98.5(d) is amended to state that if an insurer substitutes the 2001 CSO Preferred Class Structure Mortality Table for the 2001 CSO Mortality Table for a policy issued on a form filed for approval after January 1, 2009 and prior to January 1, 2020, then the insurer shall recalculate the segments using the new valuation mortality rates.

A new section 98.5(e) is added to state that if an insurer substitutes the 2017 CSO Preferred Class Structure Mortality Table for the 2017 CSO Mortality Table then the insurer shall recalculate the segments using the new valuation mortality rates.

Sections 98.6(a)(1), 98.6(a)(7), 98.6(b)(1)(ii) and 98.6(b)(2) are amended to specify that the reserve methodology specific to varying premium term life insurance policies may only be applied for policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 if optionally elected subject to the conditions listed in section 98.6(a)(1)(iii).

Sections 98.7(b)(1)(iv) and 98.7(b)(1)(v) are amended to specify that mortality improvement for universal life insurance policies that guarantee coverage will remain in force as long as the accumulation of premiums paid satisfies the secondary guarantee requirement may only be recognized for policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 if optionally elected.

Sections 98.9(c)(2)(viii)(b)(2) and 98.9(c)(2)(viii)(e) are amended to specify that the lapse rate assumption of no more than two percent for the first five years, followed by a rate of no more than one percent for the remaining life of the contract for universal life insurance policies that guarantee coverage will remain in force as long as the accumulation of premiums paid satisfies the secondary guarantee requirement may only be assumed for policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 if optionally elected subject to the conditions listed in section 98.9(c)(2)(viii)(b)(2)(iii).

The title of Part 100 of Title 11 is amended to include reference to the 2017 CSO Mortality Table.

Sections 100.1(a) and 100.1(b) are amended to recognize the 2017 CSO Mortality Table and the 2017 CSO Preferred Class Structure Mortality Table, respectively.

Section 100.3(e) is amended to refer to the 2001 Valuation Basic Preferred Class Structure Mortality Table as 2001 VBT.

Sections 100.3(f) through 100.3(v) are renumbered as sections 100.3(k) through 100.3(aa); and new sections 100.3(f) through 100.3(j) are added to define the 2017 CSO Mortality Table, 2017 CSO Mortality Table (F), 2017 CSO Mortality Table (M), 2017 CSO Preferred Class Structure Mortality Table, and 2017 Unloaded CSO Preferred Class Structure Mortality Table, respectively. A new section 100.3(ab) is added to define Valuation Basic Table. In addition to section 100.3(o) being renumbered as section 100.3(t), it is also amended to update a reference to section 100.11.

The title of section 100.4 is amended to include reference to the 2017 CSO Mortality Table.

Section 100.4(b) is amended and new sections 100.4(d) and 100.4(e) are added to adopt the 2017 CSO Mortality Table as the minimum valuation standard for policies issued on or after January 1, 2020, or if optionally elected, on or after January 1, 2017, replacing the 2001 CSO Mortality Table.

The title of section 100.5 is amended to include reference to the 2017 CSO Mortality Table.

Sections 100.5(c) and 100.5(d) are amended to set forth the conditions for using the 2017 CSO Mortality Table.

The title of section 100.6 is amended to include reference to the 2017 CSO Mortality Table.

Sections 100.6(a)(2), 100.6(a)(3), 100.6(a)(7), and 100.6(a)(8) are amended to specify that mortality improvement for varying premium term life insurance policies may only be recognized for policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 if optionally elected.

Section 100.6(b) is renumbered as 100.6(c); and a new section 100.6(b) is added to state the manner in which the 2017 CSO Mortality Table shall be used in applying Part 98 of this Title.

The title of section 100.7 is amended to include the 2017 CSO gender-blended mortality tables.

Sections 100.7(a) and 100.7(b) are amended to specify that the 2001 CSO gender-blended mortality tables may only be assumed for policies issued on or after January 1, 2004 and prior to January 1, 2020.

Section 100.7(c) is renumbered as 100.7(e); and new sections 100.7(c) and 100.7(d) are added to set forth the general requirements for use of the 2017 CSO gender-blended mortality tables. Such tables may be substituted for the 2017 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits for policies issued on or after January 1, 2017.

The title of section 100.8 is amended to include reference to the 2017 CSO Preferred Class Structure Mortality Table.

Section 100.8(a) is amended to specify that the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum mortality standard for policies issued on or after January 1, 2007 and prior to January 1, 2020.

Section 100.8(b) is renumbered as 100.8(c) and amended to specify that the 2017 CSO Preferred Class Structure Mortality Table shall not be used as the minimum nonforfeiture standard described in section 4221(k)(9)(B)(vi) of the Insurance Law.

A new section 100.8(b) is added that sets forth the general requirements for use of the 2017 CSO Preferred Class Structure Mortality Table. Such table may be substituted for the 2017 CSO Mortality Table for policies issued on or after January 1, 2017, for individual life insurance and group life insurance products sold to individuals by certificate with premium rates guaranteed from issue for at least two years, if certain conditions are met by the insurer.

The title of section 100.9 is amended to include the 2017 CSO Preferred Class Structure Mortality Table.

Sections 100.9(a), 100.9(b), 100.9(c), 100.9(d), 100.9(e), 100.9(f) and 100.9(g) are amended to define the conditions for use of the 2017 CSO Preferred Class Structure Mortality Table and define tests of sufficiency that must be met for policies valued as super preferred nonsmoker, preferred nonsmoker, and preferred smoker.

The title of section 100.10 is amended to include reference to the 2017 CSO Preferred Class Structure Mortality Table.

Sections 100.10(a), 100.10(a)(1), 100.10(a)(2), 100.10(a)(2)(i)(a), 100.10(a)(2)(i)(e), 100.10(a)(2)(ii)(e) and 100.10(b)(2)(i) are amended to provide guidance on how to choose an appropriate table from the 2017 CSO Preferred Class Structure Mortality Table.

Section 100.11 is amended to specify that mortality improvement for varying premium term life insurance policies may only be recognized for policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 if optionally elected subject to the conditions listed in section 100.11(b).

Section 100.12 is amended to specify that mortality improvement for universal life insurance policies that guarantee coverage will remain in force as long as the accumulation of premiums paid satisfies the secondary guarantee requirement may only be recognized for policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 if optionally elected subject to the conditions listed in section 100.12(b).

A new Appendix 26 is added that contains the 2017 CSO Mortality Table.

A new Appendix 26A is added that contains the 2017 CSO Preferred Class Structure Mortality Table.

A new Appendix 26B is added that contains the 2017 Unloaded CSO Preferred Class Structure Mortality Table.

The proposed consolidated rulemaking specifies that the Fifth and Sixth Amendments to Insurance Regulation 147 and the Third and Fourth Amendments to Insurance Regulation 179 shall only apply to policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 with written notification provided to the Superintendent by June 30, 2017. The proposed consolidated rulemaking also adopts the 2017 CSO Mortality Table as the minimum valuation standard for applicable life insurance policies issued on or after January 1, 2020, or if the insurer optionally so elects, on or after January 1, 2017. The proposed table is the same table that was adopted by the National Association of Insurance Commissioners (“NAIC”) in April of 2016, which had been vetted with the life insurance industry and consumer representatives during the NAIC adoption process.

The Department of Financial Services had implemented the prior amendments to Insurance Regulation 147 and Insurance Regulation 179 to reflect the emerging mortality experience that had significantly improved since the implementation of the 2001 CSO Mortality Table. The mortality improvement included in the prior amendments are no longer needed since this is directly incorporated within the 2017 CSO table. Allowing the Fifth and Sixth Amendments to Insurance Regulation 147 and the Third and Fourth Amendments to Insurance Regulation 179 to remain along with the adoption of the 2017 CSO Mortality Table would, in essence, be double counting the mortality improvement. As such, the concurrent amendments to Insurance Regulations 147 and 179 are not expected to have a material impact on the minimum reserve standards or costs to consumers. For this reason, no person or entity is likely to object to the adoption of this rulemaking.

Accordingly, this rulemaking is determined to be a consensus rulemaking, as defined in State Administrative Procedure Act (“SAPA”) § 102(11), and is proposed pursuant to SAPA § 202(1)(b)(i). Therefore, this rulemaking is exempt from the requirements to file a Regulatory Impact Statement, Regulatory Flexibility Analysis for Small Businesses and Local Governments, and a Rural Area Flexibility Analysis.

The amendments to Insurance Regulations 147 and 179 should have no impact on jobs and employment opportunities. The amendments adopt the 2017 CSO Mortality Table as the minimum valuation standard for applicable life insurance policies issued on or after January 1, 2020, or if optionally elected, on or after January 1, 2017, replacing the 2001 CSO Mortality Table. The amendments also specify that the Fifth and Sixth Amendments to Regulation 147 and the Third and Fourth Amendments to Regulation 179 shall only apply to policies issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2018 with written notification provided to the Superintendent by June 30, 2017. Insurers should not need to hire additional employees or independent contractors to comply with these new standards.