L&HIllinoishard
Under the Standard Valuation Law at 215 ILCS 5/223, as amended to incorporate Principle-Based Reserving (PBR) effective 2017, which statement most accurately describes how Illinois insurers must calculate statutory reserves for newly issued life policies?
AReserves are calculated solely using the 1980 CSO mortality table without modification
BReserves are set entirely at the insurer's discretion with no statutory floor
Reserves must use the greater of a formulaic minimum (using prescribed mortality such as the 2017 CSO and statutory interest) and a principle-based amount reflecting the insurer's own experience and risk modeling, as specified in the NAIC Valuation Manual adopted under 215 ILCS 5/223
DReserves are calculated only on a GAAP basis with no statutory minimum
Why this is the answer
215 ILCS 5/223, as amended to implement PBR effective for policies issued on or after January 1, 2017, requires Illinois insurers to compute statutory reserves under the NAIC Valuation Manual. For most life products, reserves must equal the greater of a formulaic minimum using the prescribed CSO mortality table and statutory interest, and a principle-based amount that reflects the insurer's own assumptions and stochastic risk modeling. The IDOI enforces compliance through periodic financial examinations.
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