PROPOSED RULEMAKINGS
INSURANCE DEPARTMENT
[ 31 PA. CODE CH. 84b ]
Actuarial Opinion and Memorandum
[40 Pa.B. 5066]
[Saturday, September 4, 2010]The Insurance Department (Department) proposes to amend Chapter 84b (relating to actuarial opinion and memorandum) to read as set forth in Annex A. This rulemaking is proposed 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 the proposed rulemaking is to update Chapter 84b to include amendments made by the National Association of Insurance Commissioners (NAIC) to Model Regulation 822, ''Actuarial Opinion and Memorandum Regulation.'' Model Regulation 822 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 § 84b.9 (relating to description of actuarial memorandum including an asset adequacy analysis and regulatory asset adequacy issues summary) are proposed in conjunction with proposed amendments to Chapter 84c (relating to valuation of life insurance policies), which removes 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.
A copy of the copyrighted NAIC model regulation was provided to the legislative standing committees, the Independent Regulatory Review Commission (IRRC), the Governor's Office of Policy and Planning, the Governor's Office of General Counsel and the Attorney General to assist in their analysis of this proposed rulemaking. Copies of NAIC model regulations are available to the general public by contacting the NAIC.
Explanation of Regulatory Requirements
The following is a description of the changes in the proposed rulemaking:
Section 84b.9 is amended to comply with amendments to the NAIC model regulation. This proposed rulemaking provides that a statement of ''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'' is an example of the type of comments on interim results that shall be included by the appointed actuary in the regulatory asset adequacy issues summary required by Chapter 84b.
Affected Parties
The proposed rulemaking will apply to life insurance companies and fraternal benefit societies doing business in this Commonwealth.
Fiscal Impact
State government
There will not be an increase in cost to the Department as a result of the adoption of the proposed rulemaking. As part of its solvency monitoring responsibilities, the Department currently reviews statements of actuarial opinion and supporting memoranda. Thus, this proposed rulemaking will not require additional staff time or resources to perform the analysis.
General public
Since the proposed 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
The proposed rulemaking will not impose additional costs on political subdivisions. However, because the proposed 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
The proposed rulemaking will not impose additional costs on insurers.
Paperwork
The adoption of this proposed rulemaking will not impose additional paperwork on the Department.
Effectiveness/Sunset Date
The proposed rulemaking will become effective on the first of the month following 60 days from the publication date of the final-form rulemaking. The Department continues to monitor the effectiveness of regulations on a triennial basis; therefore, a sunset date has not been assigned.
Contact Person
Questions or comments regarding the proposed rulemaking should be addressed in writing to Peter J. Salvatore, Regulatory Coordinator, Insurance Department, 1326 Strawberry Square, Harrisburg, PA 17120 within 30 days following the publication in the Pennsylvania Bulletin. Questions or comments also may be e-mailed to psalvatore@state.pa.us or faxed to (717) 705-3873.
Under the Regulatory Review Act (71 P. S. §§ 745.1—745.12), the Department is required to write to all commentators requesting whether or not they wish to receive a copy of the final-form rulemaking. To better serve the stakeholders, the Department determined that all commentators will receive a copy of the final-form rulemaking when it is made available to the IRRC and the legislative standing committees.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on August 24, 2010, the Department submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to IRRC and to the Chairpersons of the Senate Banking and Insurance Committee and the House Insurance Committee. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Department, the General Assembly and the Governor of comments, recommendations or objections raised.
JOEL SCOTT ARIO,
Insurance Commissioner(Editor's Note: For a proposed rulemaking amending Chapter 84c relating to this proposed rulemaking, see 40 Pa.B. 5069 (September 4, 2010).)
Fiscal Note: 11-244. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 31. INSURANCE
PART IV. LIFE INSURANCE
CHAPTER 84b. ACTUARIAL OPINION AND MEMORANDUM § 84b.9. Description of actuarial memorandum including an asset adequacy analysis and regulatory asset adequacy issues summary.
* * * * * (c) Details of the regulatory asset adequacy issues summary.
(1) The regulatory asset adequacy issues summary must include the following:
* * * * * (iv) Comments on any interim results that may be of significant concern to the appointed actuary (for example, 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).
* * * * *
[Pa.B. Doc. No. 10-1627. Filed for public inspection September 3, 2010, 9:00 a.m.]
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