(1) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under section 10-7-101 (2)(a)(IV), except as provided under subsection (5) or (7) of this section.

(2) The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:

(a) The valuation manual has been adopted by the NAIC by an affirmative vote of at least forty-two members, or three-fourths of the members voting, whichever is greater.

(b) The "Standard Valuation Law", as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than seventy-five percent of the direct premiums written as reported in the following annual statements submitted for 2008: Life, accident, and health annual statements; health annual statements; or fraternal annual statements.

(c) The "Standard Valuation Law", as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least forty-two of the following fifty-five jurisdictions: The fifty states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.

(3) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual are effective on January 1 following the date when the change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:

(a) At least three-fourths of the members of the NAIC voting, but not less than a majority of the total membership; and

(b) Members of the NAIC representing jurisdictions totaling greater than seventy-five percent of the direct premiums written as reported in the following annual statements most recently available prior to the vote in paragraph (a) of this subsection (3): Life, accident, and health annual statements; health annual statements; or fraternal annual statements.

(4) The valuation manual must specify all of the following:

(a) Minimum valuation standards for and definitions of the policies or contracts subject to section 10-7-101 (2)(a)(IV). The minimum valuation standards must be:

(I) The commissioners reserve valuation method for life insurance contracts, other than annuity contracts, subject to section 10-7-101 (2)(a)(IV);

(II) The commissioners annuity reserve valuation method for annuity contracts subject to section 10-7-101 (2)(a)(IV); and

(III) Minimum reserves for all other policies or contracts subject to section 10-7-101 (2)(a)(IV).

(b) Which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in section 10-7-313.4 (1) and the minimum valuation standards consistent with those requirements;

(c) For policies and contracts subject to a principle-based valuation under section 10-7-313.4:

(I) Requirements for the format of reports to the commissioner under section 10-7-313.4 (2)(c), which reports must include information necessary to determine whether the valuation is appropriate and in compliance with this part 3;

(II) Assumptions for risks over which the company does not have significant control or influence;

(III) Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of the procedures;

(d) For policies not subject to a principle-based valuation under section 10-7-313.4, the minimum valuation standard must either:

(I) Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or

(II) Develop reserves that quantify the benefits, guarantees, and funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring;

(e) Other requirements, including those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules, and internal controls; and

(f) The data and form of the data required under section 10-7-313.6, to whom the data must be submitted, and the valuation manual may specify other requirements including data analyses and reporting of analyses.

(5) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the commissioner, in compliance with this part 3, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the commissioner by rule.

(6) The commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company or to review and opine on a company's compliance with any requirement set forth in this part 3. The commissioner may rely upon the opinion, regarding provisions contained within this part 3, of a qualified actuary engaged by the commissioner of another state, district, or territory of the United States. As used in this subsection (6), the term "engage" includes employment and contracting.

(7) The commissioner may require a company to change any assumption or method that in the opinion of the commissioner is necessary in order to comply with the requirements of the valuation manual or this part 3, and the company shall adjust the reserves as required by the commissioner. The commissioner may take other disciplinary action as permitted under this title.