17B:19-2 Annual valuation of reserve liabilities for outstanding policies; foreign and alien insurers.
17B:19-2. The commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this State issued prior to the operative date of the valuation manual, except that in the case of an alien insurer, such valuation shall be limited to its United States business, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods (net level premium method or other) used in the calculation of such reserves. All valuations made by him or by his authority shall be upon the net premium basis or such modifications thereof as are provided by law. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise and, with the concurrence of the insurer, make classifications of benefits by years of issue according to such relevant factors as the date as of which the rated age of the insured is determined, the date as of which the benefits have been provided or the premium rates have been changed, or, for policies under which premium rates are guaranteed for a limited period of time, the most recent date as of which the insurer had the right to modify those premium rates. In lieu of the valuation of the reserves herein required of any foreign or alien insurer, he may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standards provided by law and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.
Any such insurer which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standards provided by law may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum standards so provided.
Except in the case of policies for which the reserve liabilities are valued on the basis of the provisions of the standard valuation law contained in N.J.S.17B:19-8 or policies issued on or after the operative date of the valuation manual, all valuations made by the commissioner or by his authority shall be upon the net premium basis, or such modification thereof as hereinafter expressly provided; and all policies issued prior to January 1, 1901, shall be valued according to the actuaries' table of mortality, with compound interest at the rate of 4% per annum, except in cases where a life insurer elects or has elected to have the policies or any class thereof valued according to the American Experience table of mortality, or according to the American Men Ultimate table of mortality, with compound interest at the rate of either 3% or 3 1/2 % per annum or with the approval of the commissioner at a rate of less than 3% per annum; and all policies issued on or after January 1, 1901, shall be valued according to the American Experience table of mortality, with compound interest at the rate of 3 1/2 % per annum, except in cases where a life insurer elects or has elected to have such policies or any class thereof valued according to the American Experience table of mortality with compound interest at a rate of less than 3 1/2% per annum but not less than 3% per annum or with the approval of the commissioner at a rate of less than 3% per annum; and except in cases where any life insurer with the approval of the commissioner may elect or shall have elected to have its ordinary policies or any class thereof valued according to the American Men Ultimate table of mortality, with compound interest at a rate which is not more than 3 1/2% per annum. The minimum standard for the valuation of group term insurance policies under which premium rates are not guaranteed for a period in excess of 5 years shall be the American Men Ultimate table of mortality with interest at 3 1/2 % per annum. The commissioner may vary the standards of interest and mortality in the case of annuities and industrial policies and of invalid lives and other extra hazards. When the actual premium charged for an insurance policy is less than the net premium for the insurance, computed according to the table of mortality, and the rate of interest prescribed herein, the value of the policy shall be increased by the value of an annuity, the amount of which shall equal the difference between the premiums and the term of which in years shall equal the number of future annual payments receivable on the insurance after the date of valuation.
Reserves for all policies and contracts to which the foregoing standards apply may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this section.
amended 1981, c.285, s.1; 2014, c.81, s.59.