NAC686A.4775. Illustration actuary to certify illustration; required disclosure in certification.

     1. An illustration actuary shall certify that:

     (a) The disciplined current scale used in illustrations authorized by the insurer comply with the “Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations” adopted by the Actuarial Standards Board; and

     (b) The illustrated scales used in illustrations authorized by the insurer comply with the requirements of NAC 686A.460 to 686A.479, inclusive.

     2. The illustration actuary shall file the certification with the insurer and the Commissioner:

     (a) Annually for all policy forms for which illustrations are used on a date determined by the insurer; and

     (b) Before a new policy form is illustrated.

     3. The illustration actuary shall disclose in the certification:

     (a) Whether, since the last certification, a currently payable scale applicable for business issued within the previous 5 years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar policies that are in force, this fact must be disclosed in the certification. If nonguaranteed elements illustrated for new policies and policies that are in force are not consistent with the nonguaranteed elements actually being paid, charged or credited to the same or similar forms, this fact must be disclosed in the certification.

     (b) The method used to allocate overhead expenses for all illustrations from one of the following methods:

          (1) The fully allocated expense method;

          (2) The marginal expense method; or

          (3) A generally recognized expense table method based on fully allocated expenses that are representative of a significant portion of insurers in this State and is approved by the Commissioner.

     4. If an error in a previous certification is discovered, the illustration actuary shall notify the insurer and the Commissioner promptly.

     5. If an illustration actuary is unable to certify the disciplined current scale for an illustration the insurer intends to use, the actuary shall notify the insurer and the Commissioner promptly of his or her inability to certify that scale.

     6. For the purposes of this section, the “Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations,” adopted by the Actuarial Standards Board, is hereby adopted by reference. A copy of the standard may be obtained from the American Academy of Actuaries, 1850 M Street N.W., Suite 300, Washington, D.C. 20036, [phone], and on the Internet at http://www.actuary.org/index.asp free of charge.

     (Added to NAC by Comm’r of Insurance by R089-97, eff. 1-14-98)