Ala. Code § 27-36-3: Unearned Premium Reserve - Property, General Casualty and Surety Insurance.

(a) As to insurance against loss or damage to property, except as provided in Section 27-36-4, and as to all general casualty insurance and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force.

(b) The commissioner may require that such reserves shall be equal to the unearned portions of the gross premiums in force after deducting applicable reinsurance in solvent insurers as computed on each respective risk from the policy’s date of issue. If the commissioner does not so require, the portions of the gross premium in force, less applicable reinsurance in solvent insurers, to be held as an unearned premium reserve, shall 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

(c) In lieu of computation according to the table in subsection (b) of this section, the insurer, at its option, may compute all of such reserves on a monthly or more frequent pro rata basis.

(d) After adopting a method for computing such reserve, an insurer shall not change methods without approval of the insurance supervisory official of its state of domicile.

(e) This section does not apply to title insurance.