(a)For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subdivision (b) of Section 10489.12, except as provided under subdivision (e) or (g).
(b)
(1)The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:
(A)The valuation manual has been adopted by the NAIC by an affirmative vote of at least 42 members, or three-fourths of the members voting, whichever is greater.
(B)The Standard Valuation
Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than 75 percent of
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(a)
For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subdivision (b) of Section 10489.12, except as provided under subdivision (e) or (g).
(b)
(1)
The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:
(A)
The valuation manual has been adopted by the NAIC by an affirmative vote of at least 42 members, or three-fourths of the members voting, whichever is greater.
(B)
The Standard Valuation
Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than 75 percent of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident, and health annual statements, health annual statements, or fraternal annual statements.
(C)
The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least 42 of the following 55 jurisdictions: The 50 states of the United States, American Samoa, the United States Virgin Islands, the District of Columbia, Guam, and Puerto Rico.
(2)
Notwithstanding paragraph (1), the valuation manual shall not become operative until the commissioner certifies that adequate funding has been appropriated by the Legislature, and
that all other necessary resources, including, but not limited to, adequate staff, are available and sufficient to enable the commissioner to carry out the duties required pursuant to Section 10489.992, and all other duties imposed on the commissioner pursuant to Senate Bill 696 of the 2015–16 Regular Session. The commissioner shall make that certification by submitting a letter to the Chairs of the Assembly Committee on Insurance and the Senate Committee on Insurance stating that the funding and other necessary resources are available and sufficient to carry out those duties. The commissioner shall post a notice on the department’s Internet Web site immediately after submitting that certification letter stating that the certification letter has been submitted and that the provisions of the valuation manual are in effect.
(c)
Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be
effective on January 1 following the date when all of the following have occurred:
(1)
The change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:
(A)
At least three-fourths of the members of the NAIC voting, but not less than a majority of the total membership.
(B)
Members of the NAIC representing jurisdictions totaling greater than 75 percent of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subparagraph (A): life, accident, and health annual statement, health annual statements, or fraternal annual statements.
(2)
The commissioner has issued an order adopting the valuation manual with the changes. The commissioner shall issue the order
only if he or she finds that the conditions set forth in paragraph (1) have been satisfied.
(d)
The valuation manual shall specify all of the following:
(1)
Minimum valuation standards for and definitions of the policies or contracts subject to subdivision (b) of Section 10489.12. Those minimum valuation standards shall be:
(A)
The commissioners reserve valuation method for life insurance contracts, other than annuity contracts, subject to subdivision (b) of Section 10489.12.
(B)
The commissioners annuity reserve valuation method for annuity contracts subject to subdivision (b) of Section 10489.12.
(C)
Minimum reserves for all other policies or contracts subject to subdivision (b) of
Section 10489.12.
(2)
Which policies or contracts or types of policies or contracts are subject to the requirements of a principle-based valuation in subdivision (a) of Section 10489.97 and the minimum valuation standards consistent with those requirements.
(3)
For policies and contracts subject to a principle-based valuation under Section 10489.97:
(A)
Requirements for the format of reports to the commissioner under paragraph (3) of subdivision (b) of Section 10489.97, which shall include information necessary to determine if the valuation is appropriate and in compliance with this article.
(B)
Assumptions for risks over which the company does not have significant control or influence.
(C)
Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of those procedures.
(4)
For policies not subject to a principle-based valuation under Section 10489.97, the minimum valuation standard that shall either:
(A)
Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual.
(B)
Develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.
(5)
Other requirements, including, but not limited to, those relating to reserve methods,
models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules, and internal controls.
(6)
The data and form of the data required pursuant to Section 10489.98, with whom the data is required to be submitted, and may specify other requirements including data analyses and reporting of analyses.
(e)
In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the commissioner, in compliance with, or conflicts with, this code, then the company shall, with respect to those requirements, comply with the minimum valuation standards prescribed by the code or by the commissioner by regulation or bulletin.
(f)
The commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company’s compliance with any requirement set forth in this article. The commissioner may rely upon the opinion, regarding the provisions contained within this article, of a qualified actuary engaged by the commissioner of another state, district, or territory of the United States. As used in this subdivision, the term “engage” includes employment and contracting.
(g)
The commissioner may require a company to change any assumption or method that in the opinion of the commissioner is necessary in order to comply with the requirements of the valuation manual or this article, and the company shall adjust the reserves as required by the commissioner. The commissioner may take other
disciplinary action as permitted pursuant to all other applicable law.