SECTION 365:10-5-71. Policy and claims reserves

(a)   Purpose. The purpose of this section is to provide for the establishment of policy reserves and claims reserves for credit life insurance and credit accident and health insurance.

(b)   Policy reserves.

(1)   Except as provided in 365:10-5-71(c), the minimum reserves for the payment of benefits under outstanding credit life insurance policies and certificates may not be less in the aggregate than one hundred thirty percent (130%) of the reserves computed on the 1958 C.S.O. Mortality Table, with interest not to exceed four and one half percent (4 1/2%); or, at the option of the insurer, such reserves may be maintained at one hundred percent (100%) of the reserves computed on the 1941 C.S.O. Mortality Table, the 1958 C.E.T. Mortality Table, or the 1960 C.S.G. Mortality Table with interest not to exceed four and one half percent (4 1/2%) or the 1980 C.E.T. Mortality Table.

(2)   The reserve for credit accident and health insurance or disability insurance which has an effective date after June 30, 1982, may be the product rounded to the next higher dollar of the gross presumptive single premium rate per One Hundred Dollars ($100.00) of insured indebtedness for the term of the indebtedness remaining as of the valuation date times the number of hundreds of dollars of indebtedness outstanding as of the valuation date, or, as an alternative and at the option of the insurer, the mean of the gross unearned premium calculated by the sum of the digits (Rule of 78's) and the pro rata methods. The reserve for such insurance which has an effective date prior to June 30, 1982, may not be less than the gross unearned premium calculated by the sum of the digits (Rule of 78's) method.

(c)   Claims reserves.

(1)   The insurer shall set up adequate reserves for claims on credit life and credit accident and health insurance, in addition to the policy reserves already described. Such claims reserves shall be based upon appropriate consideration for liability under each of the following categories:

(A)   the liability on claims which are known to be due and already payable, but which have not yet been paid;

(B)   the additional reserve on claims for ongoing and now continuing disability benefits which have already been reported, and on which future payments will be due during the continuance of this disability;

(C)   the liability on claims which are incurred and benefits now due but not yet reported, but which will be payable when they are reported;

(D)   the reserve on claims for disability benefits which are incurred but not yet reported, and on which future payments will be due during the continuance of this disability.

(2)   The Company may rely upon creditable experience developed by its own claims experience, industry wide experience, or any other available source which produces an adequate reserve for the liability described under this section.

[Source: Amended at 14 Ok Reg 2650, eff 7-1-97]