News

We step away from our SERFF Modernization series to bring you an update on key points emerging from deployment of the Standards for Individual Deferred Index Linked Variable Annuity Contracts (commonly referenced as ILVAs). Savvy filers will avoid compliance issues on these points when preparing filings.

• Type of Insurance - The Compact Office enabled A02.1I, Individual Annuities-Deferred Non-Variable and Variable, to separate ILVAs from other variable annuity submissions. Using this TOI will avoid intake objections and the inadvertent inclusion of Oregon.
• Interim Value description in contracts - Section 3H(3) requires the contract to "describe any formula or methodology used to determine Interim Values including (a) All elements used in determining Interim Values, and (b) how the interim value formula or methodology applies to upward and downward adjustments."  This is a contract requirement, as well as part of the actuarial memorandum requirements.
• Right to Examine - Section 3Z(1)(c) requires the refund of any premium paid if the contract is returned for a ILVA, defined in the standards as “the account value that accumulates with interest based on the performance of an index subject to certain index parameters.”
• Read the standards carefully. The standards include requirements that may not be required in filings submitted with the states and you will save significant review time by making sure the forms and the memorandums include all of  the information required in the standards. In the memorandum, error on the side of providing more detail on how interim values are determined, particularly as it relates to the derivative asset proxy.  The memorandum must include enough information to demonstrate how the actuary is able to make each of the required certifications.

If you have any questions, please reach out to the Compact Office via comments@insurancecompact.org.