SECTION 3.1004. Policy Form Review

Annuity and miscellaneous fund submissions which at any point of time make use of an interest rate in excess of the applicable maximum valuation interest rate as defined in the standard valuation law for that type of annuity or pure endowment contract in determining policyholder values will be reviewed and approved or disapproved in accordance with the following standard.

(1) Either of the following alternatives in subparagraphs (A) or (B) of this paragraph, to be selected at the option of the insurance company, must be met at the time the contract is filed for review, except that only the alternative in subparagraph (A) of this paragraph is acceptable for a fixed premium deferred annuity.

(A) A detailed statement of the reserves to be held for such contracts may be furnished prior to policy form approval. The form will not be approved unless the reserves comply with the minimum standards specified herein.

(B) A certification by a qualified actuary may be furnished stating that the reserves to be held on the contract will be equal to or greater than the minimum standards specified in §3.1005 of this title (relating to Reserve Requirements). Submission of a detailed statement of methods will then be required subsequent to form approval, and this detailed statement may be checked for compliance with the minimum standards specified herein.

(2) If any interest rate guarantee exceeding the maximum described in the Standard Valuation Law for the calculation of minimum reserves for that type of annuity or pure endowment contract will apply to future premiums of unspecified amounts or unspecified timing and the contract does not meet the definition of an unallocated group annuity contract, then the company may be required, at the discretion of the commissioner of insurance, to submit supplemental early warning data as specified in the early warning requirements of §3.1006 of this title (relating to Early Warning Requirements) with each subsequent filing of its annual convention blank.

(3) Any interest rate "material" specified in a contract is permitted to be "variable material" and will therefore not require a resubmission of the form. However, any insurer wishing to guarantee a different interest rate than the one specified in the contract when approved with its policy form must file for information with this agency a separate specifications page for each different interest rate it intends to use and the date it intends to use that interest rate.

Source Note: The provisions of this §3.1004 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.