(1)In
determining the financial condition of a title insurer transacting the business
of title insurance under the Title Insurers Act, the general provisions of
the insurance laws of this state requiring the establishment of reserves sufficient
to cover all known and unknown liabilities, including allocated and unallocated
loss adjustment expense, shall apply except as provided in subsections (2)
through (4) of this section.
(2)A title insurer shall establish and maintain a known claim reserve
in an amount estimated to be sufficient to cover all unpaid losses, claims,
and allocated loss adjustment expenses arising under title insurance policies,
guaranteed certificates of title, guaranteed searches, and guaranteed abstracts
of title and all unpaid losses, claims, and allocated loss adjus
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(1) In
determining the financial condition of a title insurer transacting the business
of title insurance under the Title Insurers Act, the general provisions of
the insurance laws of this state requiring the establishment of reserves sufficient
to cover all known and unknown liabilities, including allocated and unallocated
loss adjustment expense, shall apply except as provided in subsections (2)
through (4) of this section.
(2) A title insurer shall establish and maintain a known claim reserve
in an amount estimated to be sufficient to cover all unpaid losses, claims,
and allocated loss adjustment expenses arising under title insurance policies,
guaranteed certificates of title, guaranteed searches, and guaranteed abstracts
of title and all unpaid losses, claims, and allocated loss adjustment expenses
for which the title insurer may be liable and for which the title insurer
has received notice by or on behalf of the insured, holder of a guarantee
or escrow, or security depositor.
(3)(a) If a title insurer is a foreign or non-United-States title insurer,
the title insurer shall establish and maintain a statutory or unearned premium
reserve consisting of the amount of statutory or unearned premium reserve
required by the laws of the domiciliary state of the title insurer.
(b)(i) If a title insurer is a domestic insurer of this state, the title
insurer shall establish and maintain a statutory or unearned premium reserve in
an amount equal to seventeen cents per one thousand dollars of net retained
liability for each insurance policy.
(ii) The amount set aside
in the reserve required under subdivision (3)(b)(i) of this section shall
be released from the reserve and restored to net profits over a period of
twenty years pursuant to the following formula: Thirty percent of the aggregate
sum in the year next succeeding the year of addition; fifteen percent of the
aggregate sum in the next succeeding year; ten percent of the aggregate sum
in each of the next succeeding two years; five percent of the aggregate sum
in each of the next succeeding two years; three percent of the aggregate sum
in each of the next succeeding two years; two percent of the aggregate sum
in each of the next succeeding seven years; and one percent of the aggregate
sum in each of the next succeeding five years. For each year in which a release
of statutory or unearned premium reserve is authorized under this subdivision,
such reserve shall be released over the course of the year in twelve equal
monthly amounts, beginning on July 1.
(c)(i) If
a title insurer that is organized under the laws of another state transfers
its domicile to this state, the statutory or unearned premium reserve shall
be that amount required by the laws of the state of the title insurer's former
state of domicile as of the date of transfer of domicile. Thereafter, the
aggregate of such statutory or unearned premium reserve shall be released
from the reserve and restored to profits over a period of twenty years pursuant
to the formula set forth in subdivision (3)(c)(iii) of this section.
(ii) Following the transfer
of domicile to this state of the title insurer described in subdivision (3)(c)(i) of this section,
for business written after the date of transfer of domicile, the title insurer
shall add to and set aside in the statutory or unearned premium reserve such
amount as provided in subdivision (3)(b)(i) of this section.
(iii) The amounts set aside in the reserve
required under subdivision (3)(c)(i) of this section shall be released
from the reserve and restored to net profits over a period of twenty years
pursuant to the following formula: An initial release of thirty
percent of the aggregate of such reserves on the forty-fifth day following
the last day of the calendar quarter in which the insurer transfers its domicile; fifteen
percent of the aggregate sum in the
next succeeding year; ten percent of the aggregate sum in each
of the next succeeding two years; five percent of the aggregate sum in each of the next succeeding two years; three
percent of the aggregate sum in each
of the next succeeding two years; two percent of the aggregate sum in each of the next succeeding seven years;
and one percent of the aggregate sum in each
of the next succeeding five years. For
each year in which a release of statutory or unearned premium reserve is authorized
under this subdivision, such reserve shall be released over the course of
the year in twelve equal monthly amounts, beginning on July 1.
(4) A title insurer shall establish and maintain a supplemental reserve
consisting of any other reserves necessary, when taken in combination with
the reserves required by subsections (2) and (3) of this section, to cover
the title insurer's liabilities with respect to all losses, claims, and loss
adjustment expenses.
(5) Each title insurer subject to the Title Insurers Act shall file
with its annual financial statement required under section 44-322 a certification
by a member in good standing of the American Academy of Actuaries. The actuarial
certification required of a title insurer shall conform to the National Association
of Insurance Commissioners' annual statement instructions for title insurers.