23-84-101. Title — Definitions.

23-84-101. Title — Definitions. (a) This chapter shall be known and may be cited as the “Standard Valuation Law for Life Insurance and Annuities”. (b) As used in this chapter: (1) “Accident and health insurance” means: (A) A contract that incorporates morbidity risk and provides protection against economic loss resulting from accident, sickness, or medical conditions; and (B) The definition or description of “accident and health insurance” specified in the valuation manual; (2) “Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required by § 23-84-112(b); (3) “Company” means an entity that has written, issued, or reinsured a policy or contract: (A) In this state and has at least one (1) policy or contract in force or in claim status; or (B) In any state and is required to hold a certificate of authority to write a policy or contract in this state; (4) “Deposit-type contract” means: (A) A contract that does not incorporate mortality or morbidity risks; and (B) The definition or description of “deposit-type contract” specified in the valuation manual; (5) “Life insurance” means: (A) A contract that incorporates mortality risk, including annuity and pure endowment contracts; and (B) The definition or description of “life insurance” specified in the valuation manual; (6) “Operative date of the valuation manual” means the date if approved by the Insurance Commissioner as the date for use under this chapter of the valuation manual or a change to the valuation manual that is: (A) January 1 of the first calendar year following the first July 1 as of which all of the following have occurred: (i) The valuation manual has been adopted by the National Association of Insurance Commissioners by an affirmative vote of at least forty-two (42) members or three-fourths (3/4) of the members voting, whichever is greater; (ii) The Standard Valuation Law, as amended by the National Association of Insurance Commissioners in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than seventy-five percent (75%) of the direct premiums written as reported for 2008 for: (a) Life, accident, and health annual statements; (b) Health annual statements; and (c) Fraternal annual statements; and (iii) The Standard Valuation Law, as amended by the National Association of Insurance Commissioners in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least forty-two (42) of the following fifty-five (55) jurisdictions: The fifty (50) states of the United States, American Samoa, the Virgin Islands of the United States, the District of Columbia, Guam, and Puerto Rico; or (B) For a change to the valuation manual unless the change to the valuation manual specifies a later effective date, January 1 following the date when the change to the valuation manual has been adopted by the National Association of Insurance Commissioners by an affirmative vote representing: (i) At least three-fourths (3/4) of the members of the National Association of Insurance Commissioners that vote on the change to the valuation manual, but not less than a majority of the total membership; and (ii) Members of the National Association of Insurance Commissioners representing jurisdictions totaling greater than seventy-five percent (75%) of the direct premiums written as reported in the annual statements most recently available before the vote in subdivision (6)(B)(i) of this section for: (a) Life, accident, and health annual statements; (b) Health annual statements; and (c) Fraternal annual statements; (7) “Policy or contract” means life insurance, accident and health insurance, or a deposit-type contract; (8) “Policyholder behavior” means any action a policyholder, contract holder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract, including without limitation lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract; (9) “Principle-based valuation” means a reserve valuation that uses one (1) or more methods or one (1) or more assumptions determined by the insurer and is required to comply with § 23-84-116 as specified in the valuation manual; (10) “Qualified actuary” means an individual who: (A) Is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries' qualification standards for actuaries signing such statements; and (B) Meets the requirements specified in the valuation manual; (11) “Reserve” means the amount set aside by a company to cover all future liabilities under the company's policies or contracts; (12) “Tail risk” means a risk that occurs because: (A) The frequency of low probability events is higher than expected under a normal probability distribution; or (B) Observed events of very significant size or magnitude exist; and (13) “Valuation manual” means the manual of valuation instructions adopted by the National Association of Insurance Commissioners that is approved for use under this chapter by the commissioner.