---
kind: "range"
citation: "5 U.S.C. §§ 8709–8712"
title: "5"
from: "8709"
to: "8712"
count: 4
release: "119-102"
url: "https://uscodex.org/usc/5/8709..8712"
---

# §8709. Insurance policies

- (a) The Office of Personnel Management, without regard to [section 6101(b) to (d)](/usc/41/6101.md?p=b..d) of title 41, may purchase from one or more life insurance companies a policy or policies of group life and accidental death and dismemberment insurance to provide the benefits specified by this chapter. A company must meet the following requirements:
  - (1) It must be licensed to transact life and accidental death and dismemberment insurance under the laws of 48 of the States and the District of Columbia.
  - (2) It must have in effect, on the most recent December 31 for which information is available to the Office, an amount of [employee](/usc/5/5361.md?p=1) group life insurance equal to at least 1 percent of the total amount of [employee](/usc/5/5361.md?p=1) group life insurance in the United States in all life insurance companies.
- (b) A company issuing a policy under [subsection (a)](#a) of this section shall establish an administrative office under a name approved by the Office.
- (c) The Office at any time may discontinue a policy purchased from a company under [subsection (a)](#a) of this section.
- (d)
  - (1) The provisions of any contract under this chapter which relate to the nature or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any law of any State or political subdivision thereof, or any regulation issued thereunder, which relates to group life insurance to the extent that the law or regulation is inconsistent with the contractual provisions.
  - (2) For the purpose of this section, “State” means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and a territory or possession of the United States.

# §8710. Reinsurance

- (a) The Office of Personnel Management shall arrange with a company issuing a policy under this chapter for the reinsurance, under conditions approved by the Office, of portions of the total amount of insurance under the policy, determined under this section, with other life insurance companies which elect to participate in the reinsurance.
- (b) The Office shall determine for and in advance of a policy year which companies are eligible to participate as reinsurers and the amount of insurance under a policy which is to be allocated to the issuing company and to reinsurers. The Office shall make this determination at least every 3 years and when a participating company withdraws.
- (c) The Office shall establish a formula under which the amount of insurance retained by an issuing company after ceding reinsurance, and the amount of reinsurance ceded to each reinsurer, is in proportion to the total amount of each company’s group life insurance, excluding insurance purchased under this chapter, in force in the United States on the determination date, which is the most recent December 31 for which information is available to the Office. In determining the proportions, the portion of a company’s group life insurance in force on the determination date in excess of $100,000,000 shall be reduced by—
  - (1) 25 percent of the first $100,000,000 of the excess;
  - (2) 50 percent of the second $100,000,000 of the excess;
  - (3) 75 percent of the third $100,000,000 of the excess; and
  - (4) 95 percent of the remaining excess.

  However, the amount retained by or ceded to a company may not exceed 25 percent of the amount of the company’s total life insurance in force in the United States on the determination date.

- (d) A fraternal benefit association which is—
  - (1) licensed to transact life insurance under the laws of a State or the District of Columbia; and
  - (2) engaged in issuing insurance certificates on the lives of [employees](/usc/5/5361.md?p=1) of the United States exclusively;

  is eligible to act as a reinsuring company and may be allocated an amount of reinsurance equal to 25 percent of its total life insurance in force on [employees](/usc/5/5361.md?p=1) of the United States on the determination date named by [subsection (c)](#c) of this section.

- (e) An issuing company or reinsurer is entitled, as a minimum, to be allocated an amount of insurance under the policy equal to any reduction from December 31, 1953, to the determination date, in the amount of the company’s group life insurance under policies issued to associations of [employees](/usc/5/5361.md?p=1) of the United States. However, any increase under this subsection in the amount allocated is reduced by the amount in force on the determination date of any policy covering life insurance agreements assumed by the Office.
- (f) The Office may modify the computations under this section as necessary to carry out the intent of this section.

# §8711. Basic tables of premium rates

- (a) A policy purchased under this chapter shall include, for the first policy year, basic tables of premium rates as follows:
  - (1) For group life insurance, a schedule of basic premium rates by age which the Office of Personnel Management determines to be consistent with the lowest schedule of basic premium rates generally charged for new group life insurance policies issued to large employers.
  - (2) For group accidental death and dismemberment insurance, a basic premium rate which the Office determines is consistent with the lowest rate generally charged for new group accidental death and dismemberment policies issued to large employers.

  The schedule for group life insurance, except as otherwise provided by this section, shall be applied to the distribution by age of the amounts of group life insurance under the policy at its date of issuance to determine an average basic premium rate per $1,000 of life insurance.

- (b) The policy shall provide that the basic premium rates determined for the first policy year continue for later policy years except as readjusted for a later year based on experience under the policy. The company issuing the policy may make the readjustment on a basis that the Office determines in advance of the policy year is consistent with the general practice of life insurance companies under policies of group life and group accidental death and dismemberment insurance issued to large employers.
- (c) The policy shall provide that if the Office determines that ascertaining the actual age distribution of the amounts of group life insurance in force at the date of issue of the policy or at the end of the first or any later year of insurance thereunder would not be possible except at a disproportionately high expense, the Office may approve the determination of a tentative average group life premium rate, for the first or any later policy year, instead of using the actual age distribution. The Office, on request by the company issuing the policy, shall redetermine the tentative average premium rate during any policy year, if experience indicates that the assumptions made in determining that rate were incorrect for that year.
- (d) The policy shall stipulate the maximum expense and risk charges for the first policy year. The Office shall determine these charges on a basis consistent with the general level of charges made by life insurance companies under policies of group life and accidental death and dismemberment insurance issued to large employers. The maximum charges continue from year to year, except that the Office may redetermine them for any year either by agreement with the company issuing the policy or on written notice given to the company at least 1 year before the beginning of the year for which the redetermined maximum charges will be effective.

# §8712. Annual accounting; special contingency reserve


A policy purchased under this chapter shall provide for an accounting to the Office of Personnel Management not later than 90 days after the end of each policy year. The accounting shall set forth, in a form approved by the Office—

- (1) the amounts of premiums actually accrued under the policy from its date of issue to the end of the policy year;
- (2) the total of all mortality and other claim charges incurred for that period; and
- (3) the amounts of the insurers’ expense and risk charges for that period.

An excess of the total of [paragraph (1)](#1) of this section over the sum of paragraphs [(2)](#2) and [(3)](#3) of this section shall be held by the company issuing the policy as a special contingency reserve to be used by the company only for charges under the policy. The reserve shall bear interest at a rate determined in advance of each policy year by the company and approved by the Office as being consistent with the rates generally used by the company for similar funds held under other group life insurance policies. When the Office determines that the special contingency reserve has attained an amount estimated by it to make satisfactory provision for adverse fluctuations in future charges under the policy, any further excess shall be deposited in the Treasury of the United States to the credit of the [Employees](/usc/5/5361.md?p=1)’ Life Insurance Fund. When a policy is discontinued, any balance remaining in the special contingency reserve after all charges have been made shall be deposited in the Treasury to the credit of the Fund. The company may make the deposit in equal monthly installments over a period of not more than 2 years.