EXPEDITED RULES
INSURANCE COMMISSIONER
Title of Rule and Other Identifying Information: Regulatory improvement.
THIS RULE IS BEING PROPOSED UNDER AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS USE OF THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO Kacy Scott, Insurance Commissioner's Office, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacys@oic.wa.gov, fax (360) 586-3109 , AND RECEIVED BY May 23, 2006.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: These proposed amendments make changes to sections of Title 284 WAC to correct century references after the millennium and correct the address for the commissioner's office due to recent office moves.
Reasons Supporting Proposal: These proposed amendments further the insurance commissioner's commitment to update Title 284 WAC to improve its clarity and efficiency.
Statutory Authority for Adoption: RCW 48.02.060.
Statute Being Implemented: RCW 48.74.025, 48.36A.250, 48.36A.260, and 48.15.040.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Mike Kreidler, Insurance Commissioner, governmental.
Name of Agency Personnel Responsible for Drafting: Melodie Bankers, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7039; Implementation: Beth Berendt, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7117; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.
March 22, 2006
Mike Kreidler
Insurance Commissioner
OTS-8425.2
AMENDATORY SECTION(Amending Order R 94-26, filed 12/30/94,
effective 1/30/95)
WAC 284-07-380
Statement of actuarial opinion based on
an asset adequacy analysis.
(1) The statement of actuarial
opinion submitted in accordance with this section shall
consist of:
(a) A paragraph identifying the appointed actuary and his or her qualifications (see subsection (2)(a) of this section);
(b) A scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items which have been analyzed for asset adequacy and the method of analysis, (see subsection (2)(b) of this section) and identifying the reserves and related actuarial items covered by the opinion which have not been so analyzed;
(c) A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios (see subsection (2)(c) of this section), supported by a statement of each such expert in the form prescribed by subsection (5) of this section; and
(d) An opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities (see subsection (2)(f) of this section).
(e) One or more additional paragraphs may be appropriate in individual company cases, as follows:
(i) If the appointed actuary considers it necessary to state a qualification of his or her opinion;
(ii) If the appointed actuary must disclose the method of aggregation for reserves of different products or lines of business for asset adequacy analysis;
(iii) If the appointed actuary must disclose reliance upon any portion of the assets supporting the asset valuation reserve (AVR), interest maintenance reserve (IMR), or other mandatory or voluntary statement of reserves for asset adequacy analysis;
(iv) If the appointed actuary must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion;
(v) If the appointed actuary must disclose whether additional reserves of the prior opinion date are released as of this opinion date, and the extent of the release; or
(vi) If the appointed actuary chooses to add a paragraph briefly describing the assumptions which form the basis for the actuarial opinion.
(2) Recommended language: The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. Language is that which in typical circumstances shall be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary shall use language which clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this section.
(a) The opening paragraph shall generally indicate the appointed actuary's relationship to the company and his or her qualifications to sign the opinion.
(i) For a company actuary, the opening paragraph of the actuarial opinion shall read substantially as follows:
| "I, [name], am [title] of [insurance company name] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of that insurer to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and disability insurance companies." |
| "I, [name], a member of the American Academy of Actuaries, am associated with the firm of [name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and disability insurance companies." |
| "I have examined the actuarial assumptions and actuarial
methods used in determining reserves and related
actuarial items listed below, as shown in the annual
statement of the company, as prepared for filing with
state regulatory officials, as of December 31, (( |
| Asset Adequacy Tested Amounts | Reserves and Liabilities | |||||
| Statement Item | Formula Reserves (1) |
Additional Actuarial Reserves (a) (2) |
Analysis Method (b) |
Other Amount (3) |
Total Amount (1) + (2) + (3) (4) |
|
| Exhibit 8 | ||||||
| A | Life Insurance | |||||
| B | Annuities | |||||
| C | Supplementary
Contracts Involving Life Contingencies |
|||||
| D | Accidental Death Benefit |
|||||
| E | Disability - Active | |||||
| F | Disability - Disabled | |||||
| G | Miscellaneous | |||||
| Total (Exhibit 8 Item 1, Page 3) | ||||||
| Exhibit 9 | ||||||
| A | Active Life Reserve | |||||
| B | Claim Reserve | |||||
| Total (Exhibit 9 Item 2, Page 3) | ||||||
| Exhibit 10 | ||||||
| 1 | Premiums and Other Deposit Funds | |||||
| 1.1 | Policyholder Premiums (Page 3, Line 10.1) |
|||||
| 1.2 | Guaranteed Interest Contracts (Page 3, Line 10.2) |
|||||
| 1.3 | Other Contract Deposit Funds (Page 3, Line 10.3) |
|||||
| 2 | Supplementary Contracts Not Involving Life Contingencies (Page 3, Line 3) |
|||||
| 3 | Dividend and Coupon
Accumulations (Page 3, Line 5) |
|||||
| Total Exhibit 10 | ||||||
| Exhibit 11 Part 1 | ||||||
| 1 | Life (Page 3, Line 4.1) | |||||
| 2 | Health (Page 3, Life 4.2) | |||||
| Total Exhibit 11, Part 1 | ||||||
| Separate Accounts (Page 3, Line 27) | ||||||
| TOTAL RESERVES | ||||||
| IMR (Page 3 Line 11.4 ) | |
| AVR (Page 3 Line 24.1 ) | (c) |
Page and line numbers refer to the 1992 blank. Corresponding
entries from blanks from later years shall be substituted as
appropriate.
| (a) | The additional actuarial reserves are the reserves
established under WAC 284-07-350 (5)(b) or (c). |
| (b) | The appointed actuary shall indicate the method of
analysis, determined in accordance with the
standards for asset adequacy analysis referred to in
WAC 284-07-350(4), by means of symbols which shall
be defined in footnotes to the table. |
| (c) | Allocated amount." |
| (i) | "I have relied on [name], [title] for [e.g.,
anticipated cash flows from currently owned
assets, including variations in cash flows
according to economic scenarios] and, as
certified in the attached statement,..." |
| (ii) | "I have relied on personnel as cited in the
supporting memorandum for certain critical
aspects of the analysis in reference to the
accompanying statement." |
(d) If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph shall also include substantially the following statement:
| "My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary." |
| (i) | "I have relied upon listings and summaries [of
policies and contracts, of asset records]
prepared by [name and title of company officer
certifying in-force records] as certified in the
attached statement. In other respects my
examination included such review of the
actuarial assumptions and actuarial methods and
such tests of the actuarial calculations as I
considered necessary." |
| (ii) | "I have relied upon [name of accounting firm]
for the substantial accuracy of the in-force
records inventory and information concerning
other liabilities, as certified in the attached
statement. In other respects my examination
included review of the actuarial assumptions and
actuarial methods and tests of the actuarial
calculations as I considered necessary." |
(f) The opinion paragraph shall include a statement substantially similar to the following:
| "In my opinion the reserves and related actuarial values concerning the statement items identified above: |
| (i) | Are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles; |
| (ii) | Are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions; |
| (iii) | Meet the requirements of the insurance laws and regulations of the state of [state of domicile] and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed; |
| (iv) | Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below); |
| (v) | Include provision for all actuarial reserves and related statement items which ought to be established. |
| The reserves and related items, when considered in
light of the assets held by the company with respect
to such reserves and related actuarial items
including, but not limited to, the investment
earnings on such assets, and the considerations
anticipated to be received and retained under such
policies and contracts, make adequate
provision, according to presently accepted actuarial
standards of practice, for the anticipated cash
flows required by the contractual obligations and
related expenses of the company. |
| The actuarial methods, considerations, and analyses
used in forming my opinion conform to the
appropriate Standards of Practice as promulgated by
the Actuarial Standards Board, which standards form
the basis of this statement of opinion. |
|
| This opinion is updated annually as required by
statute. To the best of my knowledge, there have
been no material changes from the applicable date of
the annual statement to the date of the rendering of
this opinion which should be considered in reviewing
this opinion. |
|
| or |
| The following material change(s) which occurred
between the date of the statement for which this
opinion is applicable and the date of this opinion
should be considered in reviewing this opinion:
(Describe the change or changes.) |
|
| The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis. |
(4) Adverse opinions: If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason(s) for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph.
(5) Reliance on data furnished by other persons. If the appointed actuary does not express an opinion as to the accuracy and completeness of the listings and summaries of policies in force or asset-oriented information, there shall be attached to the opinion the statement of a company officer or accounting firm who prepared such underlying data, substantially similar to either or both of the following, as appropriate:
| (a) "I [name of officer], [title], of [name of
company or accounting firm], hereby affirm that the
listings and summaries of policies and contracts in
force as of December 31, (( |
| Signature of the Officer of the Company or Accounting Firm |
| Address of the Officer of the Company or Accounting Firm |
| Telephone Number of the Officer of the Company or Accounting Firm" |
| (b) "I, [name of officer], [title] of [name of company, accounting firm, or security analyst], hereby affirm that the listings, summaries, and analyses relating to data prepared for and submitted to [name of appointed actuary] in support of the asset-oriented aspects of the opinion were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete. |
| Signature of the Officer of the Company, Accounting Firm or the Security Analyst |
| Address of the Officer of the Company, Accounting Firm or the Security Analyst |
| Telephone Number of the Officer of the Company, Accounting Firm or the Security Analyst" |
[Statutory Authority: RCW 48.01.030, 48.02.060, 48.74.025, 48.36A.250 and 48.36A.260. 95-02-036 (Order R 94-26), § 284-07-380, filed 12/30/94, effective 1/30/95.]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
OTS-8426.1
AMENDATORY SECTION(Amending Order R 81-1, filed 1/21/81)
WAC 284-15-030
Surplus line brokers' form to be
filed -- Contract stamp to be used.
(1) RCW 48.15.040 requires
that a surplus line broker execute an affidavit at the time of
procuring insurance from an unauthorized insurer, and to file
such affidavit with the commissioner within thirty days after
the insurance is procured. The form for filing such affidavit
shall be in substantially the following form, and may include
additional information to satisfy requirements of the Surplus
Line Association of Washington:
(2) Every insurance contract, including those evidenced by a binder, procured and delivered as a surplus line coverage pursuant to chapter 48.15 RCW shall have a conspicuous statement stamped upon its face, which shall be initialed by or bear the name of the surplus line broker who procured it, as follows:
[Statutory Authority: RCW 48.02.060. 81-03-082 (Order R 81-1), § 284-15-030, filed 1/21/81.]
(3) The "person" designated may be an individual, firm or corporation.
(4) The commissioner shall forward process to the person designated in the most recent document filed with him.
(5) Pursuant to RCW 48.15.150, each policy issued by an unauthorized insurer as a surplus line contract must contain a provision designating the commissioner as the person upon whom service of process may be made.
[Statutory Authority: RCW 48.02.060. 81-03-082 (Order R 81-1), § 284-15-040, filed 1/21/81.]