Section 56-7-911 - ReservesIn order to assure that sufficient funds will be made available to make the refunds as required and to guarantee promised benefits to policyholders, aggregate reserves maintained by the insurer for credit life insurance shall be at least equal to the sum of the following:
(1) For single premium credit life insurance: (A)(i) If ages are available, the net single premiums for the remaining benefits, calculated by a seriatim method using the 1980 commissioner's standard extended term table and interest of not more than three and one half percent (3.5%). Insurers using this standard may accumulate an additional reserve to assure adequacy of funds for refunds and excess claims on terminated group policies or agency agreements. Approximate methods of calculating this reserve liability may be approved by the commissioner; provided, that: (a) The actuarial derivation establishes clearly that the method produces at least the minimum reserve; and(b) The assumptions on which the approximation is based are checked for accuracy and validity against the current business of the insurer at least annually;(ii) Approval of the methods shall be obtained from the commissioner prior to their use and the annual verification of assumptions shall be filed with the commissioner; or(B) If ages are not available, the gross unearned premium, on the "Rule of 78" or pro rata basis as specified for refunds, calculated exactly;(2) For single premium credit life insurance issued after December 31, 2004:(A)(i) If ages are available, an insurer may calculate the net single premium for the remaining benefits by a seriatim method using the 2001 Commissioner's Standard Ordinary Male Composite Ultimate Mortality Table in lieu of the calculations under subdivision (1) for credit life insurance issued after December 31, 2004. The interest rates used in determining the minimum standard for valuation shall be the calendar year statutory valuation interest rates as defined in § 56-1-403(c)(1) [repealed]. Insurers using this standard may accumulate an additional reserve to assure adequacy of funds for refunds and excess claims on terminated group policies or agency agreements. Approximate methods of calculating this reserve liability may be approved by the commissioner; provided, that: (a) The actuarial derivation establishes clearly that the method produces at least the minimum reserve; and(b) The assumptions on which the approximation is based are checked for accuracy and validity against the current business of the insurer at least annually;(ii) Approval of the methods shall be obtained from the commissioner prior to their use and the annual verification of assumptions shall be filed with the commissioner; or(B) If ages are not available, the gross unearned premium, on the "Rule of 78" or pro rata basis as specified for refunds, calculated exactly; and(3) For credit life insurance on the outstanding balance plan, reserves shall be equal to the gross unearned premium, calculated upon a pro rata basis.Acts 1985, ch. 107, § 3; 1988, ch. 538, § 1; 2005, ch. 69, § 1.