Wis. Admin. Code Office of the Commissioner of Insurance § A
I. MORBIDITY
A. Minimum morbidity standards for valuation of specified individual contract accident and sickness insurance benefits are as follows:
(1) Disability income benefits due to accident or sickness.
(a) Contract reserves:
Contracts issued on or after January 1, 1968, and prior to January 1, 1987:
The 1964 Commissioners Disability Table (64 CDT)
Contracts issued on or after January 1, 1992:
The 1985 Commissioners Individual Disability Tables A (85CIDA); or
The 1985 Commissioners Individual Disability Tables B (85CIDB).
Contracts issued during 1987 through 1991:
Optional use of either the 1964 Table or the 1985 Tables.
Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A or Tables B as the minimum standard. The insurer may, however, elect to use the other tables with respect to contracts issued in any subsequent statement year.
(b) Claim reserves:
The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the claim is incurred.
(2) Hospital benefits, surgical benefits and maternity benefits (scheduled benefits or fixed time period benefits only).
(a) Contract reserves:
Contracts issued on or after January 1, 1955, and before January 1, 1987:
The 1956 Intercompany Hospital-Surgical Tables.
Contracts issued on or after January 1, 1992:
The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, pg. 63. Refer to the paper (in the same volume, pg. 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf. Contracts issued during 1987 through 1991:
Optional use of either the 1956 Intercompany Tables or the 1974 Medical Expense Tables.
(b) Claim reserves:
No specific standard. See (5).
(3) Cancer expense benefits (scheduled benefits or fixed time period benefits only).
(a) Contract reserves:
Contracts issued on or after January 1, 1992:
The 1985 NAIC Cancer Claim Cost Tables.
Contracts issued during 1986 through 1991:
Optional use of the 1985 NAIC Cancer Claim Cost Tables.
(b) Claim reserves: No specific standard. See (5).
(4) Accidental death benefits.
(a) Contract reserves:
Contracts issued on or after January 1, 1992:
The 1959 Accidental Death Benefits Table.
Contracts issued during 1965 through 1991:
Optional use of the 1959 Accidental Death Benefits Tables.
(b) Claim reserves:
Actual amount incurred.
(5) Other individual contract benefits.
(a) Contract reserves:
For all other individual contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.
(b) Claim reserves:
For all benefits other than disability, claim reserves are to be determined as provided in the standards.
B. Minimum morbidity standards for valuation of specified group contract accident and health insurance benefits are as follows:
(1) Disability income benefits due to accident or sickness.
(a) Contract reserves:
Contracts issued prior to January 1, 1989:
The same basis, if any, as that employed by the insurer as of January 1, 1989.
Contracts issued on or after January 1, 1992:
The 1987 Commissioners Group Disability Income Table (87CGDT).
Contracts issued during 1989 through 1991:
Optional use of the 1989 standard or the 1987 CGDT.
(b) Claim reserves:
For claims incurred on or after January 1, 1992:
The 1987 Commissioners Group Disability Income Table (87CGDT).
For claims incurred prior to January 1, 1987:
The 1964 Commissioners Disability Table (64CDT).
For claims incurred during 1987 through 1991:
Optional use of either the 1964 Table or the 1987 Table.
(2) Other group contract benefits.
(a) Contract reserves:
For all other group contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.
(b) Claim reserves: For all benefits other than disability, claim reserves are to be determined as provided in the standards.
II. INTEREST
A. For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the accident and sickness insurance contract.
B. For claim reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date.
III. MORTALITY
The mortality basis used shall be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the accident and sickness insurance contract.
Wis. Admin. Code Office of the Commissioner of Insurance § A
The tables referenced in this Appendix may be found as follows:
The 1964 Commissioners Disability Table, 1965 Proceedings of the National Association of Insurance Commissioners, Vol. I, pgs. 78-80.
The 1985 Commissioners Individual Disability Tables A, 1986 Proceedings of the National Association of Insurance Commissioners, Vol. I, pgs. 574-589.
The 1985 Commissioners Individual Disability Tables B, 1985 Proceedings of the National Association of Insurance Commissioners, Vol. I, pgs. 486-540.
The 1956 Intercompany Hospital-Surgical Tables, 1957 Proceedings of the National Association of Insurance Commissioners, Vol. I, pgs. 83-85.
The 1985 NAIC Cancer Claim Cost Tables, 1986 Proceedings of the National Association of Insurance Commissioners, Vol. I, pgs. 609-623.
The 1959 Accidental Death Benefits Table, Transactions of the Society of Actuaries, Vol. XI, pg. 754.
The 1987 Commissioners Group Disability Income Table, 1987 Proceedings of the National Association of Insurance Commissioners, Vol. II, pgs. 557-619.
Note: Reserves for waiver of premium. Waiver of premium reserves involve several special considerations. First, the disability valuation tables promulgated by the NAIC are based on exposures that include contracts on premium waiver as in-force contracts. Therefore, contract reserves based on these tables are not reserves on "active lives," but rather reserves on contracts "in force." This is true for the 1964 CDT and for both the 1985 CIDA and CIDB tables.
Accordingly, tabular reserves using any of these tables should value reserves on the following basis:
Claim reserves should include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived.
Premium reserves should include contracts on premium waiver as in-force contracts, valuing as a minimum the unearned modal valuation net premium being waived.
Contract reserves should include recognition of the waiver of premium benefit in addition to other contract benefits provided for, valuing as a minimum the valuation net premium to be waived.
If an insurer is, instead, valuing reserves on what is truly an active life table, or if a specific valuation table is not being used but the insurer's gross premiums are calculated on a basis that includes in the projected exposure only those contracts for which premiums are being paid, then it may not be necessary to provide specifically for waiver of premium reserves. Any insurer using the true "active life" basis should carefully consider, however, whether or not additional liability should be recognized on account of premiums waived during periods of disability or during claim continuation.