To: All Health Insurance Companies and Other Interested Parties
Re: Enhanced Cash Surrender Value Programs
From: Glen Mulready, Insurance Commissioner
Date: October 19, 2022


The Oklahoma Insurance Department (“Department”) is releasing this bulletin with the purpose of providing its position on endorsements offering enhanced cash surrender value (“ECSV”) benefits.

Oklahoma adopted the National Association of Insurance Commissioners (“NAIC”) Model Standard Nonforfeiture Law (Model #808), codified at 36 O.S. § 4029. The Standard Nonforfeiture Law contains a smoothness requirement in that intends to require a reasonably orderly progression in the cash value of life insurance policies and prohibits sharp increases in the same. See 36 O.S. § 4029(L). The smoothness requirement, applied in addition to mandated minimum values, serves to avoid erratic cash values and the offering of discontinuous benefits.

There is an ongoing and increasing concern that ECSV endorsements offered to policyholders of universal life insurance policies conflict with the smoothness requirement and are therefore in violation of the Standard Nonforfeiture Law. In order to relieve this concern, the Insurance Commissioner has requested that the NAIC Life Insurance and Annuities (A) Committee and NAIC Life Actuarial (A) Task Force clarify whether the ECSV endorsements violate the Standard Nonforfeiture Law. The National Council of Insurance Legislators (“NCOIL”) is also reviewing this matter.

ECSV endorsements filed by life insurers with the Department in the past were approved for use. However, until clarification on the Standard Nonforfeiture Law’s impact on such endorsements is received, future ECSV endorsement filings will not be approved by the Department.

Questions concerning this bulletin should be directed to Kim Hunter, General Counsel, at kim.hunter@oid.ok.gov, Molly Clinkscales, Assistant General Counsel, at molly.clinkscales@oid.ok.gov, and/or the Oklahoma Insurance Department located at 400 NE 50th Street, Oklahoma City, OK 73105-1816.