HARRY HUGHES, Governor                               2311

BY repealing and reenacting, with amendments,

Article 48A - Insurance Code

Section 83(3)(e)

Annotated Code of Maryland

(1979 Replacement Volume and 1980 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That section(s) of the Annotated Code of Maryland
be repealed, amended, or enacted to read as follows:

Article 48A - Insurance Code

83.

(3) This subsection shall apply to only those policies
and contracts issued on or after the operative date of § 414
(the Standard Nonforfeiture Law), except as otherwise
provided in paragraph (a-2) of this subsection for group
annuity and pure endowment contracts issued prior to the
operative date.

(e) If in any contract year the gross premium
charged by any insurer on any policy or contract is less
than the valuation net premium for the policy or contract
calculated by the method used in calculating the reserve on
[it but using] THE POLICY OR CONTRACT USING EITHER the
minimum valuation standards of mortality and rate of
interest, OR, IN THE CASE OF FUTURE RENEWALS UNDER A
RENEWABLE TERM INSURANCE POLICY, THE MODERN CSO MORTALITY
TABLE PUBLISHED IN THE TRANSACTIONS OF THE SOCIETY OF
ACTUARIES, VOL. XXVII (1975), the minimum reserve required
for the policy or contract shall be the greater of either
(1) the reserve calculated according to the mortality table,
rate of interest, and method actually used for the policy or
contract, or (2) the reserve calculated by the method
actually used for the policy or contract but using the
minimum standards of mortality and rate of interest
PRESCRIBED IN THIS SECTION and replacing the valuation net
premium by the actual gross premium in each contract year
for which the valuation net premium exceeds the actual gross
premium. If the gross premium rates for the policy or
contract are not based consistently on a suitable accepted
or credible mortality basis or table, the Commissioner may
require additional reserves in accordance with Section
77(3)(iv) of this Article.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act
shall take effect July 1, 1981.

Approved May 19, 1981.