What You Need to Know
Two significant regulatory changes are affecting the Life Insurance Industry — Principle-Based Reserving (PBR) and a new standard mortality table, the 2017 Commissioners Standard Ordinary (CSO) Table. These regulations apply to all life insurance carriers.
January 1, 2020, all life products sold on or after this date must be compliant with these regulations.
December 31, 2019, all non-compliant life products must be placed in force with premium. *No Exceptions
Due to the unpredictable duration of Life Insurance Underwriting we recommend that advisors should not quote or submit applications for non-compliant products after October 15, 2019.
PBR represents a change in the way carriers calculate reserves needed to pay future claims. Existing reserving formulas are more than 150 years old. Because products have evolved since then, the old one-size-fits-all approach to reserving is moving to a method aligned to the actual risk carriers assume on various products.
The new 2017 CSO table sets the mortality standard for calculating the minimum cash value, statutory reserves and death benefit required for a policy to be considered life insurance. It also specifies the maximum amount that can be charged for cost of insurance.
CPS will continue to communicate carrier updates to you as we receive them. We suggest you contact clients that you have quoted and explain that the rates will be changing effective 1/1/2020 and they should act now!
If you have any questions, please call one of our Sales & Marketing Associates at 949.863.0700.