Principle-Based Reserving Assessment
NOTICE
February 8, 2016
All Insurance Companies Licensed to Sell Life Insurance Products in California
PRINCIPLE-BASED RESERVING ASSESSMENT FOR FISCAL YEAR (FY) 2015-16
Senate Bill (SB) 696 (Chapter 658, Statutes of 2015) added Insurance Code Section 10489.992 effective January 1, 2016. Section 10489.992(b)(1) authorizes the Commissioner to annually assess each life insurance company, based on the company's gross annual life insurance premium written in California in the immediately preceding year, to defray the Department's costs to implement principle-based reserving valuation. The annual aggregate assessment for all companies must, under Section 10489.992(b)(2), be at least $1,000,000.
The California Department of Insurance has set the annual aggregate assessment for FY 2015-16 at $1,000,000. In accordance with Section 10489.992(b)(3), the Department is notifying insurers of its intent to finalize this assessment and the assessment tiers shown below:
|
Insurer's 2014 Annual Premium |
Initial Annual Assessment Per Company |
|
$500,000,001 + |
$64,000 |
|
$400,000,001-$500,000,000 |
$43,000 |
|
$300,000,001-$400,000,000 |
$34,000 |
|
$200,000,001-$300,000,000 |
$26,000 |
|
$150,000,001-$200,000,000 |
$17,000 |
|
$100,000,001-$150,000,000 |
$9,000 |
|
$50,000,001-$100,000,000 |
$4,000 |
The initial tiers included in Section 10489.992(b)(4) used 2013 premium and market share data, and would have resulted in an assessment of approximately $1.2 million. The actual tiers the Department is using, as shown above, have been adjusted to reflect 2014 premium and market share data. The assessment per company for each tier is lower than the assessment amount listed in SB 696, and should result in an assessment of $1.0 million.
Persons who would like comment on the assessment and tier table must do so no later than March 24, 2016. Comments should be sent to:
Susan Bernard, Deputy Commissioner, Financial Surveillance Branch
California Department of Insurance
45 Fremont Street, 23rd Floor
San Francisco, CA 94105-2279
Once the assessment has been finalized the Department will issue a bulletin formally establishing the annual aggregate assessment and the above tiers. The Department will then invoice companies accordingly based on the final tier table. This will likely occur beginning on or shortly after May 9, 2016.
Please contact Julia Cross, Chief, Financial Management Division at (916) 492-3264 or Julia.cross@insurance.ca.gov should you have any questions concerning this assessment.
