Ch. 36

1995 LAWS OF MARYLAND

(1)      EXCEPT AS PROVIDED IN SUBSECTION (B) OF THIS SECTION, IF IN
ANY CONTRACT YEAR THE GROSS PREMIUM CHARGED BY AN INSURER ON A
POLICY OR CONTRACT IS LESS THAN THE VALUATION NET PREMIUM FOR THE
POLICY OR CONTRACT, THE MINIMUM RESERVE REQUIRED FOR THE POLICY OR
CONTRACT IS THE GREATER OF:

(I)       THE RESERVE CALCULATED ACCORDING TO THE MORTALITY
TABLE, INTEREST RATE, AND METHOD. ACTUALLY USED FOR THE POLICY OR

CONTRACT; OR

(II)     THE RESERVE CALCULATED BY USING THE METHOD
ACTUALLY USED FOR THE POLICY OR CONTRACT, BUT:

1.        USING THE MINIMUM VALUATION STANDARDS OF
MORTALITY AND OF INTEREST IN §§ 5-304 AND 5-306 OF THIS SUBTITLE; AND

2.        IN EACH CONTRACT YEAR FOR WHICH THE VALUATION
NET PREMIUM EXCEEDS THE ACTUAL GROSS PREMIUM, USING THE ACTUAL GROSS
PREMIUM INSTEAD OF THE VALUATION NET PREMIUM.

(2)      (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS
PARAGRAPH, FOR PURPOSES OF PARAGRAPH (1) OF THIS SUBSECTION, THE
VALUATION NET PREMIUM FOR A POLICY OR CONTRACT SHALL BE CALCULATED BY
THE METHOD USED IN CALCULATING THE RESERVE ON THE POLICY OR CONTRACT
USING THE MINIMUM VALUATION STANDARDS OF MORTALITY AND INTEREST RATE
UNDER §§ 5-304 AND 5-306 OF THIS SUBTITLE.

(II) FOR 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), SHALL BE USED
INSTEAD OF THE MINIMUM VALUATION STANDARD OF MORTALITY UNDER § 5-304
OF THIS SUBTITLE.

(3)      IF THE GROSS PREMIUM RATES FOR A 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 § 5-103(3) OF THIS TITLE.

(B) POLICIES ISSUED AFTER 1985 WITH EXCESS FIRST YEAR PREMIUM.

FOR A LIFE INSURANCE POLICY DESCRIBED IN § 5-307(A)(3)(II) OF THIS
SUBTITLE:

(1)      SUBSECTION (A) OF THIS SECTION SHALL BE APPLIED SUBSTITUTING
THE METHOD DESCRIBED IN § 5-307 OF THIS SUBTITLE, WITHOUT REGARD TO §
5-307(A)(4)(III), FOR THE METHOD ACTUALLY USED IN CALCULATING THE RESERVE
FOR THE POLICY; AND

(2)      THE MINIMUM RESERVE AT EACH POLICY ANNIVERSARY OF THE
POLICY SHALL BE THE GREATER OF:

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