Bill Text: MN HF1530 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Title insurers statutory premium reserves regulated.
Spectrum: Slight Partisan Bill (Republican 3-1)
Status: (Introduced - Dead) 2011-04-28 - Second reading [HF1530 Detail]
Download: Minnesota-2011-HF1530-Introduced.html
1.2relating to insurance; regulating statutory premium reserves for title insurers;
amending Minnesota Statutes 2010, section 68A.03, subdivision 3.1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. Minnesota Statutes 2010, section 68A.03, subdivision 3, is amended to read:
1.6 Subd. 3. Statutory premium reserve. (a) A title insurer shall establish and
1.7maintain a statutory premium reserve consisting of:
1.8(1) the amount of statutory premium reserve required by the laws of the domiciliary
1.9state of the insurer if the insurer is a foreign or non-U.S. title insurer; or
1.10(2) if the insurer is a domestic title insurer of this state, a statutory or unearned
1.11premium reserve consisting of:
1.12(i) the amount of the statutory or unearned premium or reinsurance reserve legally
1.13held on January 1, 2004, which balance must be released according to the law in effect at
1.14the time the sums were added to the reserve, all as set forth in section68A.02 ; and
1.15(ii) after January 1, 2004, until December 31, 2009, a sum equal to a minimum of
1.16eight percent of thefollowing items total of subitems (A) and (B). On and after January 1,
1.172010, a sum equal to a minimum of 6-1/2 percent of the total of subitems (A) and (B):
1.18(A) direct risk premiums written; and
1.19(B) premiums for reinsurance assumed, plus other income, less premiums for
1.20reinsurance ceded as set forth in schedule P of the title insurer's most recent annual
1.21statement filed with the commissioner.
1.22(b) The aggregate of the amounts set aside in this reserve in any calendar year
1.23pursuant to paragraph (a), clause (2), item (ii), must be released from the reserve and
1.24restored to net profits over a period of 20 years at an amortization rate not to exceed the
2.1following formula: 35 percent of the aggregate sum on July 1 of the year next succeeding
2.2the year of addition; 15 percent of the aggregate sum on July 1 of each of the succeeding
2.3two years; ten percent of the aggregate sum on July 1 of the next succeeding year; three
2.4percent of the aggregate sum on July 1 of each of the next three succeeding years; two
2.5percent of the aggregate sum on July 1 of each of the next three succeeding years; and one
2.6percent of the aggregate sum on July 1 of each of the next succeeding ten years.
2.7(c) The insurer shall calculate an adjusted statutory or unearned premium reserve
2.8as of the year of first application of paragraph (a), clause (2), item (ii). The adjusted
2.9reserve must be calculated as if paragraph (a), clause (2), item (ii), had been in effect for
2.10all years beginning 20 years before the year of first application of paragraph (a), clause
2.11(2), item (ii). For purposes of this calculation, the balance of the reserve as of that date is
2.12considered to be zero. If the adjusted reserve so calculated exceeds the aggregate amount
2.13set aside for statutory or unearned premiums in the insurer's most recent annual statement
2.14filed with the commissioner, the insurer shall, out of total charges for policies of title
2.15insurance, increase its statutory or unearned premium reserve by an amount equal to
2.16one-sixth of that excess in each of the succeeding six years, beginning with the calendar
2.17year that includes the year of first application of paragraph (a), clause (2), item (ii), until
2.18the entire excess has been added.
2.19(d) The aggregate of the amounts set aside in this reserve in any calendar year as
2.20adjustments to the insurer's statutory or unearned premium reserve pursuant to paragraph
2.21(c) must be released from the reserve and restored to net profits, or equity if the additions
2.22required by paragraph (c) reduced equity directly, over a period not exceeding ten years
2.23pursuant to the following table:
2.32*The calendar year following the year of first application of paragraphs (a), clause
2.33(2), item (ii), (b), and (c).
2.34(e) A supplemental reserve must be established consisting of any other reserves
2.35necessary, when taken in combination with the reserves required by this section and
2.36section68A.02 , to cover the company's liabilities with respect to all losses, claims, and
2.37loss adjusted expenses.
3.1(f) Each title insurer subject to the provisions of this chapter shall file with its annual
3.2statement, required under section60A.13, subdivision 1 , a certification by a member in
3.3good standing of the American Academy of Actuaries. The actuarial certification required
3.4of a title insurer must conform to the National Association of Insurance Commissioners'
3.5annual statement instructions for title insurers.
3.6EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.
amending Minnesota Statutes 2010, section 68A.03, subdivision 3.1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. Minnesota Statutes 2010, section 68A.03, subdivision 3, is amended to read:
1.6 Subd. 3. Statutory premium reserve. (a) A title insurer shall establish and
1.7maintain a statutory premium reserve consisting of:
1.8(1) the amount of statutory premium reserve required by the laws of the domiciliary
1.9state of the insurer if the insurer is a foreign or non-U.S. title insurer; or
1.10(2) if the insurer is a domestic title insurer of this state, a statutory or unearned
1.11premium reserve consisting of:
1.12(i) the amount of the statutory or unearned premium or reinsurance reserve legally
1.13held on January 1, 2004, which balance must be released according to the law in effect at
1.14the time the sums were added to the reserve, all as set forth in section
1.15(ii) after January 1, 2004, until December 31, 2009, a sum equal to a minimum of
1.16eight percent of the
1.172010, a sum equal to a minimum of 6-1/2 percent of the total of subitems (A) and (B):
1.18(A) direct risk premiums written; and
1.19(B) premiums for reinsurance assumed, plus other income, less premiums for
1.20reinsurance ceded as set forth in schedule P of the title insurer's most recent annual
1.21statement filed with the commissioner.
1.22(b) The aggregate of the amounts set aside in this reserve in any calendar year
1.23pursuant to paragraph (a), clause (2), item (ii), must be released from the reserve and
1.24restored to net profits over a period of 20 years at an amortization rate not to exceed the
2.1following formula: 35 percent of the aggregate sum on July 1 of the year next succeeding
2.2the year of addition; 15 percent of the aggregate sum on July 1 of each of the succeeding
2.3two years; ten percent of the aggregate sum on July 1 of the next succeeding year; three
2.4percent of the aggregate sum on July 1 of each of the next three succeeding years; two
2.5percent of the aggregate sum on July 1 of each of the next three succeeding years; and one
2.6percent of the aggregate sum on July 1 of each of the next succeeding ten years.
2.7(c) The insurer shall calculate an adjusted statutory or unearned premium reserve
2.8as of the year of first application of paragraph (a), clause (2), item (ii). The adjusted
2.9reserve must be calculated as if paragraph (a), clause (2), item (ii), had been in effect for
2.10all years beginning 20 years before the year of first application of paragraph (a), clause
2.11(2), item (ii). For purposes of this calculation, the balance of the reserve as of that date is
2.12considered to be zero. If the adjusted reserve so calculated exceeds the aggregate amount
2.13set aside for statutory or unearned premiums in the insurer's most recent annual statement
2.14filed with the commissioner, the insurer shall, out of total charges for policies of title
2.15insurance, increase its statutory or unearned premium reserve by an amount equal to
2.16one-sixth of that excess in each of the succeeding six years, beginning with the calendar
2.17year that includes the year of first application of paragraph (a), clause (2), item (ii), until
2.18the entire excess has been added.
2.19(d) The aggregate of the amounts set aside in this reserve in any calendar year as
2.20adjustments to the insurer's statutory or unearned premium reserve pursuant to paragraph
2.21(c) must be released from the reserve and restored to net profits, or equity if the additions
2.22required by paragraph (c) reduced equity directly, over a period not exceeding ten years
2.23pursuant to the following table:
2.32*The calendar year following the year of first application of paragraphs (a), clause
2.33(2), item (ii), (b), and (c).
2.34(e) A supplemental reserve must be established consisting of any other reserves
2.35necessary, when taken in combination with the reserves required by this section and
2.36section
2.37loss adjusted expenses.
3.1(f) Each title insurer subject to the provisions of this chapter shall file with its annual
3.2statement, required under section
3.3good standing of the American Academy of Actuaries. The actuarial certification required
3.4of a title insurer must conform to the National Association of Insurance Commissioners'
3.5annual statement instructions for title insurers.
3.6EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.
