§ 58-3-72. Premium deficiency reserves. - North Carolina Statutes

§ 58‑3‑72. Premium deficiency reserves.

(a)        In determining thefinancial condition of any casualty, fidelity, and surety company and any fireand marine company referred to in G.S. 58‑7‑75, and in anyfinancial statement or report of the company, there shall be included in theliabilities of the company premium deficiency reserves at least equal to theamounts required under this section. The date as of which the determination,statement, or report is made is known as the "date of determination."

(b)        For all recordedunearned premium reserves, a premium deficiency reserve shall be calculated toinclude the amount by which the anticipated losses, loss adjustment expenses,commissions and other acquisition costs, and maintenance costs exceed the sumof those unearned premium reserves and any related expected future installmentpremiums as of the date of determination.

(c)        Except as providedin subsection (f) of this section, commissions, other acquisition costs, andpremium taxes do not have to be considered in the determination of the premiumdeficiency reserve, to the extent that they have previously been incurred.

(d)        Except as providedin subsection (f) of this section, no reduction shall be taken for anticipatedinvestment income in the determination of the premium deficiency reserve.

(e)        For purposes ofdetermining if a premium deficiency exists, insurance contracts shall begrouped in a manner consistent with the way in which such policies are marketedor serviced.

(f)         If theCommissioner determines that the premium deficiency reserves of any companythat have been calculated in accordance with this section are inadequate orexcessive, the Commissioner may prescribe any other basis that will produceadequate and reasonable reserves. (2001‑223, s. 1.1.)