(A) An insurer authorized to transact business in this State, except as to risks or policies for which reserves are required under subsections (B) and (C) and Section 38-9-180 except for real estate title insurance policies, and subject to specific provisions of this title, shall maintain reserves equal to the unearned portions of the gross premiums charged on unexpired or unterminated risks and policies. Credit for reinsurance is allowed a ceding insurer as a deduction from reserves required by this section only as provided in Section 38-9-200 or 38-9-210.
(B)(1) With reference to insurance against loss or damage to property except as provided in item (5) and with reference to all general casualty insurance and surety insurance every insurer shall maintain an unearned premium reserve on all policies in force.
(2) The director or his designee may require that these reserves are equal to the unearned portions of the gross premiums in force as computed on each respective risk from the policy's date of issue. If the director or his designee does not so require, the portions of the gross premium in force to be held as premium reserve must be computed according to the following table:
Term for Which
Policy was Written Reserved for
Unearned Premium 1 year or less 1/2 2 years 1st year 3/4 2nd year 1/4 3 years 1st year 5/6 2nd year 1/2 3rd year 1/6 4 years 1st year 7/8 2nd year 5/8 3rd year 3/8 4th year 1/8 5 years 1st year 9/10 2nd year 7/10 3rd year 1/2 4th year 3/10 5th year 1/10 Over 5 years pro rata.
(3) All of these reserves may be computed, at the option of the insurer, on a yearly or more frequent pro rata basis.
(4) After adopting a method for computing the reserve, an insurer may not change methods without the director's or his designee's approval.
(5) With reference to marine insurance, premiums on trip risks not terminated are considered unearned, and the director or his designee may require the insurer to carry a reserve equal to one hundred percent on trip risks written during the month ended as of the date of statement. For all accident and health policies the insurer shall maintain an active life reserve which places a sound value on its liabilities under these policies and which is not less than the reserve according to standards set forth in regulations issued by the director and not less, in the aggregate, than the pro rata gross unearned premium reserves for these policies.
HISTORY: Former 1976 Code Section 38-9-170 [1947 (45) 322; 1952 Code Section 37-152; 1962 Code Section 37-152] recodified as Section 38-55-110 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-5-770 [1947 (45) 322; 1948 (45) 1734; 1949 (46) 600; 1952 Code Section 37-188; 1956 (49) 2022; 1958 (50) 1608; 1960 (51) 1554; 1962 Code Section 37-188; 1964 (53) 1835; 1969 (56) 210; 1975 (59) 182; 1978 Act No. 601; 1979 Act No. 18; 1982 Act No. 373] recodified as Section 38-9-170 by 1987 Act No. 155, Section 1; 1991 Act No. 13, Section 9; 1993 Act No. 181, Section 535.