§ 1305 — Unearned premium reserves

§ 1305. Unearned premium reserves. (a) Every authorized insurer shall,\nexcept as to reserves required under section one thousand three hundred\nfour of this article and subject to paragraph nine of subsection (a) of\nsection one thousand three hundred one of this article and other\nspecific provisions of this chapter, maintain reserves equal to the\nunearned portions of the gross premiums charged on unexpired or\nunterminated risks and policies.\n (b) (1) No deductions may be made from the gross premiums in force\nexcept for original premiums cancelled on risks terminated or reduced\nbefore expiration, or except for premiums paid or credited for risks\nreinsured with other solvent assuming insurers authorized to transact\nsuch business in this state.\n (2) Premiums charged for bulk or portfolio reinsurances assumed from\nother insurers shall be included as premiums in force on the basis of\nthe original premiums and the original terms of the policies of the\nceding insurer.\n (3) Reinsurance ceded to such an authorized assuming insurer may be\ndeducted on the basis of original premiums and original terms except in\nthe case of excess loss or catastrophe reinsurance which may be deducted\nonly on the basis of actual reinsurance premiums and actual reinsurance\nterms.\n (c) (1) The liability for unearned premiums may be computed on the\nannual pro rata fraction basis applicable to the date of statement as\nprescribed by the superintendent.\n (2) If the annual pro rata fractions do not produce an adequate\nreserve, the superintendent may, in his discretion, require an insurer\nto calculate its unearned premium reserve upon the monthly pro rata\nfractional basis or, if necessary, on each respective risk from the date\nof the issuance of the policy, and as to premiums covering indefinite\nterms he may prescribe special regulations.\n (3) As to marine insurance, premiums on trip risks not terminated\nshall be deemed unearned and the superintendent may require a reserve to\nbe carried thereon equal to one hundred percent of the premiums on trip\nrisks written during the month ended as of the date of statement.\n (4) At least ninety percent of the gross amount of premium deposits on\nperpetual fire insurance risks shall be charged as a liability.\n (5) As to title insurance, unearned premium reserves shall be computed\nand maintained only as required by subsection (a) of section six\nthousand four hundred five of this chapter.\n