Actuarial Services

Smoker and Nonsmoker Mortality Tables

Juvenile Insureds

Adopted Amendment: N.J.A.C. 11:4-24.4

Proposed: November 19, 2001 at 33 N.J.R. 3863(a) (see also 33 N.J.R. 4309(a))

Adopted: March 4, 2002 by Holly C. Bakke, Acting Commissioner, Department of Banking and Insurance.

Filed: March 4, 2002 as R. 2002 d.102, with substantive changes not requiring additional public notice or comment (see N.J.A.C. 1:30-6.3).

Authority: N.J.S.A. 17:1-8.1, 17:1-15e, 17B:19-8 and 17B:25-19.

Effective Date: April 1, 2002.

Expiration Date: November 30, 2005.

Summary of Public Comment and Agency Response:

The Department received one comment from Aid Association for Lutherans (AAL).

COMMENT: The commenter stated that insurers should be allowed some flexibility in their application of the Department's proposed amendment, which requires insurers to notify an insured upon reaching an attained age, of his or her option to elect smoker or nonsmoker status. The commenter requested that the Department permit insurers the option of automatically classifying the insured as a nonsmoker, thereby eliminating the need for such notice. According to the commenter, this would enable individual insurers to determine whether the additional administrative cost involved in systems changes and mailing expenses would be worth the benefit of increased premiums of smoker rates.

RESPONSE: The Department agrees with the commenter, and is revising the proposed amendment accordingly.

Federal Standards Statement

A Federal standards analysis is not required because the adopted amendment does not attempt to regulate an area already regulated by the Federal government through statutes, rules or otherwise.

Full text of the adoption follows (additions to proposal indicated in boldface with asterisks *thus*; deletion from proposal indicated in brackets with asterisks *[thus]*):

11:4-24.4 Juvenile insureds

(a) Because the smoker and nonsmoker mortality tables do not extend below age 15, the Department shall permit the following uses of the composite and smoker and nonsmoker mortality tables for juvenile insureds, as hereafter provided:

1. Insurers may use the composite mortality table for juvenile issues and continue to use such table for all future attained ages; or

2. Insurers may use the composite mortality table for juvenile issues and change to use of a smoker and nonsmoker mortality table when the insured's attained age is a specified age between 15 and 23.

i. iv. (No change from proposal.)

*v. Alternatively, at the insurer's option, the insurer may reclassify the insured as a nonsmoker upon reaching the attained age.*

. . .

(d) The policy form shall accurately describe the process set forth at (a)2 above relating to insurer notification, insured election of smoker or nonsmoker status*,* *[and]* the default classification resulting from failure to elect *, and any automatic reclassification to nonsmoker.*

(e) (No change from proposal.)