New York Laws
Article 45 - Fraternal Benefit Societies
4517 - Standard of Valuation Reserves.

(b) In every valuation report of every authorized society and in every
valuation of reserves made or caused to be made by the superintendent or
accepted by him in lieu of such valuation, the reserve liability on all
certificates issued on and after January first, nineteen hundred
fifty-seven shall be determined on a basis of the net tabular value of
the reserves on such certificates, not including any value for the right
to make extra payments or to require additional insurance contributions.
Such tabular values shall not be less than the reserve determined
according to the commissioners reserve valuation method as defined in
this subsection. If the premium charged is less than the tabular net
premium according to the basis of valuation used, an additional reserve
equal to the present value of the deficiency in such premiums, as
determined in the manner prescribed in section four thousand two hundred
eighteen of this chapter, shall be set up and maintained as a liability;
provided that, in the case of any society which is not qualifying with
the provisions of section four thousand five hundred fifteen of this
article, the deficiency reserve shall be determined on the basis of the
difference between the net insurance contribution, as in practice
actually collected for life insurance benefits, and the tabular net
premium. The reserve liability shall be properly adjusted in the event
that the mid-year or tabular values are not appropriate.
(1) Reserves according to the commissioners reserve valuation method,
for the life insurance and endowment benefits of certificates providing
for a uniform amount of insurance and requiring the payment of uniform
premiums shall be the excess, if any, of the present value, at the date
of valuation, of such future guaranteed benefits provided for by such
certificates, over the then present value of any future modified net
premiums therefor. The modified net premiums for any such certificate
shall be such uniform percentage of the respective contract premiums for
such benefits that the present value, at the date of issue of the
certificate, of all such modified net premiums shall be equal to the sum
of the then present value of such benefits provided for by the
certificate and the excess of:
(A) a net level premium equal to the present value, at the date of
issue, of such benefits provided for after the first certificate year,
divided by the present value, at the date of issue, of an annuity of one
dollar per annum payable on the first and each subsequent anniversary of
such certificate on which a premium falls due; provided however, that
such net level annual premium shall not exceed the net level annual
premium on the nineteen year premium whole life plan for insurance of
the same amount at an age one year higher than the age at issue of such
certificate, over
(B) a net one-year term premium for such benefits provided for in the
first certificate year.
(2) Reserves according to the commissioners reserve valuation method
for (i) life insurance certificates providing for varying amounts of

benefits or requiring the payment of varying premiums, (ii) annuity and
pure endowment benefits, (iii) disability and accidental death benefits
in all certificates and contracts, and (iv) all other benefits, except
life insurance and endowment benefits, shall be calculated by a method
consistent with the principles of this subsection (b), except that any
extra premiums charged because of impairments or special hazards shall
be disregarded in the determination of modified net premiums.
(c) (1) The minimum standard for the valuation of life insurance and
annuity certificates issued on and after January first, nineteen hundred
fifty-seven, but prior to July first, nineteen hundred seventy-two,
shall be three percent interest and for life insurance and annuity
certificates issued on and after July first, nineteen hundred
seventy-two, but prior to January first, nineteen hundred eighty, shall
be three and one-half percent interest, and the following tables:
(A) for certificates of life insurance issued prior to January first,
nineteen hundred seventy-five -- American Men Ultimate Table of
Mortality, with Bowerman's or Davis' Extension thereof or, with the
consent of the superintendent, the Commissioners 1941 Standard Ordinary
Mortality Table, the Commissioners 1958 Standard Ordinary Mortality
Table or the Commissioners 1941 Standard Industrial Table of Mortality;
provided that for any category of ordinary insurance issued on female
risks, all modified net premiums and present values may be calculated
according to an age not more than three years younger than the actual
age of the insured; and for certificates issued on and after January
first, nineteen hundred seventy-five, -- the Commissioners 1941 Standard
Ordinary Mortality Table, the Commissioners 1958 Standard Ordinary
Mortality Table or the Commissioners 1961 Standard Industrial Table of
Mortality;
(B) for annuity certificates, including life annuities provided or
available under optional modes of settlement in such certificates -- the
1937 Standard Annuity Table or, at the option of the society, the
Annuity Mortality Table for 1949, Ultimate, or any modification of
either table approved by the superintendent;
(C) for disability benefits issued in connection with life benefit
certificates -- Hunter's Disability Table, which, for active lives,
shall be combined with a mortality table permitted for calculating the
reserves on life insurance certificates, except that the table known as
Class III Disability Table (1926) modified to conform to the contractual
waiting period, or, at the option of the society, the tables of Period 2
disablement rates and the 1930 to 1950 termination rates of the 1952
Disability Study of the Society of Actuaries, with due regard to the
type of benefits, shall be used in computing reserves for disability
benefits under a contract which presumes that total disability shall be
considered to be permanent after a specified period; and
(D) for accidental death benefits issued in connection with life
benefit certificate -- the Inter-Company Double Indemnity Mortality
Table or, at the option of the society, the 1959 Accidental Death
Benefits Table. Either such table shall be combined with a mortality
table permitted for calculating the reserves for life insurance
certificates.
(2) The minimum standard for the valuation of life insurance and
annuity certificates issued on and after January first, nineteen hundred
eighty, shall be subject to the requirements and exceptions of section
four thousand two hundred seventeen of this chapter, provided that a
society may also elect to use the Commissioners 1941 Standard Ordinary
Mortality Table or the Commissioners 1961 Standard Industrial Table.
(3) The superintendent may, in his discretion, accept other standards
for valuation if he finds that the reserves produced thereby will not be

less in the aggregate than reserves computed in accordance with the
minimum valuation standard herein prescribed. The superintendent may, in
his discretion, vary the standards of mortality applicable to all
certificates of insurance on substandard lives or other extrahazardous
lives by any society authorized to do business in this state. Whenever
the mortality experience under all certificates valued on the same
mortality table is in excess of the expected mortality according to such
table for a period of three consecutive years, the superintendent may
require additional reserves when deemed necessary in his judgment on
account of such certificates.
(4) Any society, with the consent of the superintendent and under any
conditions he may impose, may establish and maintain reserves on its
certificates in excess of the reserves required thereunder, but the
contractual rights of any insured member shall not be affected thereby.
(d) Every society shall maintain reserves for all individual accident
and health insurance certificates which shall place a sound value on its
liabilities under such certificates and which shall not be less than the
reserves according to the standards set forth in regulations issued by
the superintendent and, in no event, less than the pro rata gross
unearned premium reserve for such certificates. Prior to the issuance
of any regulation provided for in this subsection the superintendent
shall give at least ten days notice thereof to each society licensed to
write accident and health insurance in this state, by ordinary mail
addressed to its principal place of business, and provide an opportunity
for hearing on such proposed action.
(e) All of the foregoing valuations, in any valuation report filed by
a society as required by the provisions of this article, shall either be
certified by a competent actuary, or, at the request and expense of the
society be verified by an actuary of the insurance department of the
state, province or country in which the society is domiciled.
(f) Any authorized society which issues certificates or other
obligations providing for benefits in case of death or disability
resulting solely from accident, or in case of temporary disability
resulting from sickness, or hospital expense or surgical and medical
expense benefits shall maintain reserves for unearned premiums and for
disabled lives in accordance with standards prescribed from time to time
by the superintendent, which standards shall conform as nearly as
practicable to those required for similar reserves of accident and
health insurance companies under the laws of this state.