The New York Insurance Department issued proposed Regulation No. 192 (11 NYCRR) (the “Proposed Regulation”) establishing minimum reserve and nonforfeiture standards for preneed life insurance policies (i.e. policies that provide a prearrangement agreement for goods and services to be provided upon the death of the insured). It comes in response to a finding that the current table used to calculate reserves for preneed policies, the 2001 CSO Mortality Table, was inadequate. A new valuation mortality table specific to preneed life insurance is being developed by the Society of Actuaries. The Proposed Regulation is an intermediate solution until an adequate mortality table is adopted.
The Proposed Regulation allows continued use of the 2001 CSO Mortality Table on an optional basis for policies issued on or after January 1, 2009 and through December 31, 2011, and requires that policies issued on or after January 1, 2012 be subject to the Ultimate 1980 CSO Mortality Table, which sets forth more conservative reserve standards than the 2001 CSO Mortality Table. During the transition period from the 2001 CSO Mortality Table to the Ultimate 1980 CSO Mortality Table, insurers continuing to use the 2001 CSO Mortality Table must submit an annual certification and supporting analysis that the reserves are sufficient. The transition period gives insurers time to revise their policy forms to reflect the new mortality table.
The notice of the Proposed Regulation was published in the New York State Register on August 19, 2009. Comments are being accepted until October 3, 2009.