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PA Bulletin, Doc. No. 11-137

RULES AND REGULATIONS

INSURANCE DEPARTMENT

[ 31 PA. CODE CH. 84b ]

Actuarial Opinion and Memorandum

[41 Pa.B. 599]
[Saturday, January 29, 2011]

 The Insurance Department (Department) amends Chapter 84b (relating to actuarial opinion and memorandum) under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) and section 301 of The Insurance Department Act of 1921 (40 P. S. § 71).

Purpose

 The purpose of this final-form rulemaking is to update Chapter 84b to include amendments made by the National Association of Insurance Commissioners to Model Regulation 822, ''Actuarial Opinion and Memorandum Regulation.'' The model regulation requires life insurance companies and fraternal benefit societies to submit actuarial opinions based on an asset adequacy analysis, commonly known as ''Section 8 opinions.'' The amendments to Chapter 84b were proposed in conjunction with proposed amendments to Chapter 84c (relating to valuation of life insurance policies), published at 40 Pa.B. 5069, (September 4, 2010), which would remove restrictions on the mortality adjustment factors (X factors) in deficiency reserve calculations. Specifically, the amendments to Chapter 84b modify requirements for the content of a regulatory asset adequacy issues summary of the actuarial memorandum to require the inclusion of a statement regarding the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods.

Comments and Response

 Notice of proposed rulemaking was published at 40 Pa.B. 5066 (September 4, 2010) with a 30-day comment period. One comment in support of the amendments was received from the Insurance Federation of Pennsylvania, Inc. On November 3, 2010, the Independent Regulatory Review Commission (IRRC) indicated that it did not have comments objections or recommendations regarding this rulemaking.

Affected Parties

 This final-form rulemaking applies to life insurance companies and fraternal benefit societies doing business in this Commonwealth.

Fiscal Impact

State government

 There will be no increase in cost to the Department as a result of this final-form rulemaking. As part of its solvency monitoring responsibilities, the Department currently reviews statements of actuarial opinion and supporting memoranda. Thus, this final-form rulemaking will not require additional staff time or resources to perform the analysis.

General public

 Since this final-form rulemaking concerns the solvency requirements applied to insurers, the public will benefit from a financially sound insurance industry that has the ability to fulfill its contractual obligations under life insurance policies.

Political subdivisions

 This final-form rulemaking will not impose additional costs on political subdivisions. However, because this final-form rulemaking promotes stability in this Commonwealth's insurance industry, political subdivisions' tax revenues would benefit as a result of fewer insurer insolvencies. Fewer insolvencies would result in less unemployment and would also increase incentives for insurers to market new insurance products in this Commonwealth.

Private sector

 This final-form rulemaking will not impose additional costs on insurers.

Paperwork

 The adoption of this final-form rulemaking will not impose additional paperwork on the Department.

Effectiveness/Sunset Date

 This final-form rulemaking will become effective March 30, 2011. The Department continues to monitor the effectiveness of regulations on a triennial basis; therefore, a sunset date has not been assigned.

Contact Person

 Questions regarding this final-form rulemaking may be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120, fax (717) 705-3873, psalvatore@state.pa.us.

Regulatory Review

 Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on November 9, 2010, the Department submitted a copy of the notice of proposed rulemaking, published at 40 Pa.B. 5066, to IRRC and the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee for review and comment.

 Under section 5(c) of the Regulatory Review Act, IRRC and the House and Senate Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.

 Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on December 15, 2010, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on December 16, 2010, and approved the final-form rulemaking.

Findings

 The Commissioner finds that:

 (1) Public notice of intention to adopt this final-form regulations was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.

 (2) The adoption of this final-form rulemaking in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statutes.

Order

 The Commissioner, acting under the authorizing statutes, orders that:

 (a) The regulations of the Department, 31 Pa. Code Chapter 84b, are amended by amending § 84b.9 to read as set forth at 40 Pa.B. 5066.

 (b) The Department shall submit this order and 40 Pa.B. 5066 to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.

 (c) The Department shall certify this order and 40 Pa.B. 5066 and deposit them with the Legislative Reference Bureau as required by law.

 (d) The regulation adopted by this order takes effect March 30, 2011.

ROBERT L. PRATTER, 
Acting Insurance Commissioner

 (Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 41 Pa.B. 118 (January 1, 2011).)

 Fiscal Note: Fiscal Note 11-244 remains valid for the final adoption of the subject regulation.

[Pa.B. Doc. No. 11-137. Filed for public inspection January 28, 2011, 9:00 a.m.]


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