MEETING AGENDA March 12, 2013

2. MEETING AGENDAMarch 12, 2013 • Welcome and Overview • Structure of Uniform Standards • Scope of Uniform Standards by Product Line • Actuarial Requirements • Common Filing Objections by Product Line • Other Issues • Questions and Conclusion

3. The IIPRC Today

4. Overview of Insurance Compact • Innovative vehicle formalizing joint and cooperative action among states • Leveraging regulatory expertise to establish Uniform Standards • Central clearinghouse for prompt review of asset-based insurance products using the Uniform Standards

5. Overview of Insurance Compact • Compact filings submitted through the System for Electronic Rate and Form Filing (SERFF) • File one submission under one set of standards for one review and one approval valid in all Compact jurisdictions. • Uniform Standards for individual and group life, annuity, disability income and long-term care

6. Compact’s Value-Added Benefits • Submit one product filing vs. state-by-state • Use one set of comprehensive Uniform Standards to prepare product forms vs. multiple state variations • Undergo one filing review vs. many reviews • Reduce duplicative paperwork, processes and systems implementations

7. Compact’s Value-Added Benefits • Receive one approval on behalf of 41 Compacting States for individual life, annuities, and disability income • Receive one approval on behalf of 37 Compacting States for individual LTC products • Compact-approved LTC forms can be submitted for Partnership via easier certification /approval process

8. Compact’s Value-Added Benefits • Straightforward filing process using SERFF • Tools and checklists for filers on IIPRC web site • Prompt, easy access to professional team of product reviewers and actuaries who will work with companies pre- and post-filing to answer questions and provide guidance for compliance • Average approval in 60 review days or less

9. Compact’s Value-Added Benefits • Easy to update product filings and add states to previously-approved filings • Mix and match accommodates product needs • Implement and administer standard product forms across Compacting States • Streamlined systems programming, testing, rollout • Simplified producer training

10. Uniform Standards • 86 Uniform Standards adopted to date • Individual Life • Individual Annuities • Individual Long-Term Care • Individual Disability Income and Business Overhead Expense • Group Life • Combination product filings accepted

11. (C) IIPRC 2009

12. Getting Started with the Compact • Visit the IIPRC website • insurancecompact.org • Check out the Company Resources Web Page • View IIPRC Tutorials • Contact IIPRC Office with any questions or to set up a one-on-one webinar • Reviewers are available to answer questions both before and after you make your filing

13. Getting Started with the CompactProduct Review Team • Charlie Rapacciuolo is our Product Operations Coordinator • David Morris is our Primary Life Reviewer • Karen Givens is our Primary Annuity Reviewer • Maureen Perry is our Primary LTC/DI Reviewer • Alice Fontaine is our part-time Actuary • Jeanne Daharsh is our full-time Actuary

14. Getting Started with the Compact • IIPRC has unique submission requirements (supporting documentation) • Payment of filing fees • Identification of applicable Uniform Standards • Actuarial memorandum / Rate Schedule for LTC • Flesch Score certification • Statement of Variability • Statement of Intent Schedule

15. How to Prepare a Compact Filing • Review the Uniform Standards on the Record • Review the Operating Procedure for the Review and Filing of Product Filings • Review the TOI Link to see the variety of products that can be filed • Print off the applicable reviewer checklists • Review the Filing Information Notices • Review IIPRC General Instructions in SERFF

16. (C) IIPRC 2009

17. Filing Information Notices • Issued by the Compact Office • Explains or clarifies steps or requirements in the process for filing and review • References applicable Uniform Standards or Operating Procedures • When involves interpretation of Uniform Standard, will consult PSC or Actuarial Working Group

18. Filing Information Notices • FIN 2010-2: Bonus Feature for Deferred Annuity • FIN 2012-2: Rider Charges for GLB on NV Annuity • FIN 2012-3: Changes in Nonforfeiture Interest • FIN 2012-4: Product Filings Subject to AG38 • FIN 2013-1: Guaranteed Living Benefit Amounts Contingent on Inability to Perform Activities of Daily Living • FIN 2013-2: Individual Long-Term Care Filings

19. (C) IIPRC 2009

20. Questions?

21. Structure of Uniform Standards • Cover Page • Uniform Standard Title & Number • Short overview of Purpose & Scope • Adoption & Effective Date • Rules Repealed, Amended or Suspended by the Rule • Statutory Authority

22. Structure of Uniform Standards • First Page • Scope -- carefully review to see what is and what is not covered by the standard • Definitions – only applicable to terms used in Standard • Drafting Notes – provide guidance for filers and reviewers

23. Structure of Uniform Standards • § 1 – Additional Submission Requirements • Components of filing including Actuarial Memorandum requirements • Variability requirements • Readability requirements • §2 – General Form Requirements • Cover Page • Specifications Page • Fairness

24. Structure of Uniform Standards • §3 – Contract Provisions • Alphabetical order • Several provisions are common across standards • §4 – Additional Standards for Fraternal Benefit Associations • §5 – Specialized Products/Marketing • Appendices • Pay particular attention to nonforfeiture demonstration requirements or certifications

25. Life Uniform Standards • Term Life • Whole Life • Endowment • Non-Variable Adjustable Life • Variable Adjustable Life • Each has Single Premium vs. Multi pay version • Joint Last to Die vs. Single Life version

26. Universal Life Uniform Standards • No lapse requirements in Section 5 • Appendix for Nonforfeiture demonstration • Appendix for Sample certification of compliance

27. Benefit Features on Life • Return of Premium on Term (IIPRC-LB-04-I-ROP) • Graded Death Benefit on Whole Life • Additional Term riders • Index linked crediting for UL • Overloan protection for UL • Accelerated Death Benefits

28. Questions?

29. Core Annuity Uniform Standards • Deferred - Non-Variable and Variable versions • Specific instructions on prospective and retrospective tests for General Account • Retrospective required for Variable investment options • Immediate – Non-Variable and Variable versions • Longevity – Non-variable only

30. Benefit Features on Annuities • Bonus Benefits • Variable • Bonus is considered part of Gross Consideration • Certification required on tradeoff • Non-Variable • Bonus not considered part of Gross Consideration • Level imputed interest rate in Prospective Test

31. Benefit Features on Annuities • Index-Linked Interest • Non-Variable only • Prospective Test and level imputed rate • Market Value Adjustment (MVA) • Non-Variable and the general account portions of variable annuities (IIPRC-A-07-I-2) • Separate Account (IIPRC-A-07-I-3) • MYGA Definition – does not include Index

32. Benefit Features on Annuities • Guaranteed Minimum Death Benefits – Variable Only • GMDB for Non-Variable being considered • Guaranteed Living Benefits • Variable vs. Non-Variable • Charges on Non-Variable cannot impact base policy Retrospective minimum values. • Examples of impact on values of changes or withdrawals both before and after election

33. Questions?

34. Long-Term Care • Ten Uniform Standards • Application, Policy, Forms, Outline of Coverage, Benefit Features, Rates, and Advertisements • Adopted August 13, 2010 with effective date of December 1, 2010. • Rate standards updated August 11, 2011

35. Long-Term Care • Uniform standards only apply to new issues • Do Not permit “mix and match” within product • Combination “mix and match” filings are allowed • Can be used to file with state for Partnership status

36. LTC Rate Standards • Rate standards address both initial rates as well as rate increases • Issue Age Rate Schedules • Modified Rate Schedules • Not permitted in Colorado, Illinois, Maryland, Oklahoma, and Washington • Only available if, in addition to the modified rate schedule, an issue age rate schedule is also approved by the IIPRC

37. Long-Term Care • Annual actuarial certification • Currently marketed rates • Closed forms • Triennial submission of the supporting actuarial memorandum

38. Long-Term Care • Policy Form certifications • Found in LTC Core Standards • Compliance of non-forfeiture and inflation benefits • Exemption for $/$ products • Rate Memorandum certifications • Template for detailed assumptions

39. Disability Income • Effective 1/12/12 • DBOE effective 2/19/12 • Loss Ratio requirements • Sample format in Appendix • Separate standard for Rate Increases vs. Initial Rates

40. Questions?

41. Actuarial Requirements • Actuaries should be familiar with all applicable standards for forms submitted • Scope of Standard • Actuarial Memorandum Requirements • Appendices • Templates for nonforfeiture demos • Templates for Actuarial Certifications • Specific instructions regarding demos and assumptions

42. Actuarial Requirements • Common Actuarial Objections • AM material attached under Actuarial Memorandum field in SERFF • Actuarial Certifications Need to be Submitted • Signature Requirements for AM • Consistent with SOV ranges • Impermissible references to state law

43. Common Filing Objections & Pitfalls – Traditional Life • Issue age and minimum issue amounts • Ranges and charges • Demonstrations or rationale of Nonforfeiture compliance (even ETI, RPU, Child riders) • Guaranteed Charges for Additional Term if Indeterminate

44. Common Filing Objections & Pitfalls - UL • Issue age and minimum issue amounts • Follow template for demonstration with respect to BOY/EOY • Sample calculation of initial expense charge • Juvenile issue age mortality • No lapse rider impact on form compliance

45. Common Filing Objections & Pitfalls - Annuities • Range of Issue Ages • Bonus ranges > 0 • MYGA definition and MVA requirements • Prospective Test Maturity Value • Sample calculation to easily produce values • GLB specified examples – lots of scenarios to cover

46. Common Filing Objections & Pitfalls – Long-Term Care • Inflation and nonforfeiture certifications • Insufficient detail in assumptions • Demonstration that margins don’t deviate materially across issue ages, class, & plan • No statement in rate schedule that they are the rates to which the actuarial memo applies

47. Common Filing Objections & Pitfalls – Long-Term Care • Statement that rates not less than the rates for existing similar forms except for reasonable differences in benefits • Enough detail in the table of relationship between net and gross premiums • Rates and AM in Rate/Rule section of SERFF

48. Common Filing Objections & Pitfalls – Disability • Insufficient detail in assumptions • In addition to description and source of each assumption • Missing statement regarding overall expenses plus contingency/risk margins as a percentage of premiums on a PV basis

49. Common Filing Objections & Pitfalls – Disability • No statement in rate schedule that they are the rates to which the actuarial memo applies • No explanation of actuary’s review of policy design, underwriting, and claim adjudication • Rates and AM in Rate/Rule section of SERFF

50. Questions?