381.072. Reserve requirements, reserve to cover all known claims--unearned premium reserve, amount, actuarial certification required, supplemental reserve, amount, deadline.

MISSOURI STATUTES AND CODES

381.072. Reserve requirements, reserve to cover all known claims--unearned premium reserve, amount, actuarial certification required, supplemental reserve, amount, deadline.

Reserve requirements, reserve to cover all known claims--unearnedpremium reserve, amount, actuarial certification required,supplemental reserve, amount, deadline.

381.072. 1. In determining the financial condition of a titleinsurer doing business under this chapter, the general provisions of thelaws regulating the business of insurance requiring the establishment ofreserves sufficient to cover all known and unknown liabilities, includingallocated and unallocated loss adjustment expense, shall apply; exceptthat, a title insurer shall establish and maintain:

(1) (a) A known claim reserve in an amount estimated to besufficient to cover all unpaid losses, claims, and allocated lossadjustment expenses arising under title insurance policies for which thetitle insurer may be liable, and for which the insurer has discovered orreceived notice by or on behalf of the insured or escrow or securitydepositor;

(b) Upon receiving notice from or on behalf of the insured of a titledefect in or lien or adverse claim against the title of the insured thatmay result in a loss or cause expense to be incurred in the properdisposition of the claim, the title insurer shall determine the amount tobe added to the reserve, which amount shall reflect a careful estimate ofthe loss or loss expense likely to result by reason of the claim;

(c) Reserves required under this section may be revised from time totime and shall be redetermined at least once each year;

(2) A statutory or unearned premium reserve established andmaintained as follows:

(a) A domestic title insurer shall establish and maintain an unearnedpremium reserve computed in accordance with this section, and all sumsattributed to such reserve shall at all times and for all purposes beconsidered and constitute unearned portions of the original premiums. Thisreserve shall be reported as a liability of the title insurer in itsfinancial statements;

(b) The unearned premium reserve shall be maintained by the titleinsurer for the protection of holders of title insurance policies. Exceptas provided in this section, assets equal in value to the reserve are notsubject to distribution among creditors or stockholders of the titleinsurer until all claims of policyholders or claims under reinsurancecontracts have been paid in full, and all liability on the policies orreinsurance contracts has been paid in full and discharged or lawfullyreinsured;

a. The amount of the unearned premium reserve on January 1, 2008;

b. A sum equal to fifteen cents for each one thousand dollars of netretained liability under each title insurance policy, excluding mortgagee'spolicies simultaneously issued with owner's policies or owner's leaseholdpolicies of the same or greater amount, on a single risk written onproperties located in this state and issued after January 1, 2008; and

c. Unearned premium for closing protection letters;

(d) Amounts placed in the unearned premium reserve in any year inaccordance with paragraph (c) of this subdivision shall be deducted indetermining the net profit of the title insurer for that year;

(e) A title insurer shall release from the unearned premium reserve asum equal to ten percent of the amount added to the reserve during acalendar year on July first of each of the five years following the year inwhich the sum was added, and shall release from the unearned premiumreserve a sum equal to three and one-third percent of the amount added tothe reserve during that year on each succeeding July first until the entireamount for that year has been released. The amount of the unearned premiumreserve or similar unearned premium reserve maintained before January 1,2008, shall be released in accordance with the law in effect immediatelybefore January 1, 2008;

(f) a. Each domestic and foreign title insurer shall file annuallywith the audited financial report required under section 375.1032, RSMo, anactuarial certificate made by a member in good standing of the AmericanAcademy of Actuaries, or by an actuary permitted to make such certificateby the commissioner, superintendent or director of the department ofinsurance of the state of incorporation of a foreign title insurer;

b. The actuarial certification shall conform to the annual statementinstructions for title insurers adopted by the National Association ofInsurance Commissioners and shall include the actuary's professionalopinion of the insurer's reserves as of the date of the annual statement.The reserves analyzed under this section shall include reserves for knownclaims, including adverse developments on known claims, and reserves forincurred but not reported claims;

(g) Each domestic and foreign title insurer shall establish asupplemental reserve in the amount by which the actuarially certifiedreserves exceed the total of the known claim reserve and statutory premiumreserve as set forth in the title insurer's annual financial report,subject to this subdivision.

2. A foreign or alien title insurer licensed to transact titleinsurance business in this state shall maintain at least the same reserveson title insurance policies issued on properties located in this state asare required of domestic title insurers, unless the laws of thejurisdiction of domicile of the foreign or alien title insurer require ahigher amount.