N.J. Admin. Code § 11:4-6.16

Current through Register Vol. 56, No. 21, November 4, 2024

Section 11:4-6.16 - Specific standards for interest

(a) For contract reserves the maximum interest rate is:

1. For contracts issued prior to January 1, 1973: 3 1/2 percent.

2. For contracts issued on or after January 1, 1973 through December 31, 2000: A rate of interest not exceeding the maximum rate of interest specified in 17B:19-8 for policies of life insurance which are issued the same year and, if relevant, for policies of life insurance containing a maximum guaranteed duration of more than 10 years but not more than 20 years.

3. For contracts issued on or after January 1, 2001: The maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract.

(b) For claim reserves on policies that require contract reserves where the claim incurral date is prior to January 1, 2001, the maximum rate of interest is:

1. For contracts issued prior to January 1, 1973: 3 1/2 percent.

2. For contracts issued on or after January 1, 1973 through December 31, 2000: A rate of interest not exceeding the maximum rate of interest specified in 17B:19-8 for policies of life insurance which are issued the same year and, if relevant, for policies of life insurance containing a maximum guaranteed duration of more than 10 years but not more than 20 years.

3. Upon demonstrating the adequacy of the reserves and with the approval of the Commissioner, a company may determine the maximum interest rate to be used in calculating the claim reserve using the rates specified in (b)1 and 2 above, based on the incurral date of the claim instead of the contract issue date. Once an insurer elects to calculate reserves based on the incurral date of the claim, all future valuations must be on that basis.

(c) For claim reserves on policies that require contract reserves, where the claim incurral date is on or after January 1, 2001, the maximum rate of interest is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date.

(d) For claim reserves on policies not requiring contract reserves, where the claims incurral date is prior to January 1, 2001, the maximum rate of interest is:

1. For contracts issued prior to January 1, 1973: 3 1/2 percent.

2. For contracts issued on or after January 1, 1973 through December 31, 2000: A rate of interest not exceeding the maximum rate of interest specified in 17B:19-8 for policies of life insurance which are issued the same year and, if relevant, for policies of life insurance containing a maximum guaranteed duration of more than 10 years but not more than 20 years.

3. Upon demonstrating the adequacy of the reserves and with the approval of the Commissioner, a company may determine the maximum interest rate to be used in calculating the claim reserve using the rates specified in (d)1 and 2 above, based on the incurral date of the claim instead of the contract issue date. Once an insurer elects to calculate reserves based on the incurral date of the claim, all future valuations must be on that basis.

(e) For claim reserves on policies not requiring contract reserves, where the claim incurral date is on or after January 1, 2001, the maximum rate of interest is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by one hundred basis points. Upon demonstrating the adequacy of the reserves and with the prior approval of the Commissioner, an insurer may elect to use this rate for claims incurred prior to January 1, 2001. Once an insurer makes such an election, all future valuations must be on that basis.

N.J. Admin. Code § 11:4-6.16