New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IV - Financial Condition Of Insurer and Reports to Superintendent
Subchapter B - Life Insurers
Part 94 - Valuation Of Individual And Group Accident And Health Insurance Reserves
Section 94.5 - Premium reserves
Universal Citation: 11 NY Comp Codes Rules and Regs ยง 94.5
Current through Register Vol. 46, No. 39, September 25, 2024
(a) General.
(1) Except as noted in paragraph (2)
of this subdivision, unearned premium reserves are required for all contracts
with respect to the period of coverage for which premiums, other than premiums
paid in advance, have been paid beyond the date of valuation.
(2) Single premium credit disability
insurance, both individual and group, is excluded from unearned premium reserve
requirements of this section. For all credit disability contracts in the
aggregate, if the premium refund reserve exceeds the aggregate recorded
reserve, an additional reserve shall be established. This premium refund
reserve may include consideration of commission, premium tax, and other
expenses recoverable.
(3) If
premiums due and unpaid are carried as an asset, the premiums must be treated
as premiums in force, subject to unearned premium reserve determination. The
value of unpaid commissions, premium taxes and the cost of collection
associated with due and unpaid premiums shall be carried as an offsetting
liability.
(4) The gross premiums
paid in advance for a period of coverage commencing after the next premium due
date which follows the date of valuation may be appropriately discounted to the
valuation date and shall be held either as a separate liability or as an
addition to the unearned premium reserve which would otherwise be required as a
minimum.
(b) Minimum standards for unearned premium reserves.
(1)
The minimum unearned premium reserve with respect to a contract is the pro rata
unearned modal premium that applies to the premium period beyond the valuation
date, with the premium determined on the basis of:
(i) the valuation net modal premium on the
contract reserve basis applying to the contract; or
(ii) the gross modal premium for the contract
if no contract reserve applies.
(2) In no event may the sum of the unearned
premium and contract reserves for all contracts of the insurer subject to
contract reserve requirements be less than the gross modal unearned premium
reserve on all such contracts, as of the date of valuation. The reserve shall
never be less than the expected claims for the period beyond the valuation date
represented by the unearned premium reserve, to the extent not provided for
elsewhere.
(c) Premium reserve methods generally. The insurer may employ suitable approximations and estimates, including but not limited to groupings, averages and aggregate estimation, in computing premium reserves. Approximations or estimates should be tested periodically to determine their continuing adequacy and reliability.
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