N.Y. Insurance Law § 1305: Unearned premium reserves

§ 1305. Unearned premium reserves. (a) Every authorized insurer shall,

except as to reserves required under section one thousand three hundred

four of this article and subject to paragraph nine of subsection (a) of

section one thousand three hundred one of this article and other

specific provisions of this chapter, maintain reserves equal to the

unearned portions of the gross premiums charged on unexpired or

unterminated risks and policies.

(b) (1) No deductions may be made from the gross premiums in force

except for original premiums cancelled on risks terminated or reduced

before expiration, or except for premiums paid or credited for risks

reinsured with other solvent assuming insurers authorized to transact

such business in this state.

(2) Premiums charged for bulk or portfolio reinsurances assumed from

other insurers shall be included as premiums in force on the basis of

the original premiums and the original terms of the policies of the

ceding insurer.

(3) Reinsurance ceded to such an authorized assuming insurer may be

deducted on the basis of original premiums and original terms except in

the case of excess loss or catastrophe reinsurance which may be deducted

only on the basis of actual reinsurance premiums and actual reinsurance

terms.

(c) (1) The liability for unearned premiums may be computed on the

annual pro rata fraction basis applicable to the date of statement as

prescribed by the superintendent.

(2) If the annual pro rata fractions do not produce an adequate

reserve, the superintendent may, in his discretion, require an insurer

to calculate its unearned premium reserve upon the monthly pro rata

fractional basis or, if necessary, on each respective risk from the date

of the issuance of the policy, and as to premiums covering indefinite

terms he may prescribe special regulations.

(3) As to marine insurance, premiums on trip risks not terminated

shall be deemed unearned and the superintendent may require a reserve to

be carried thereon equal to one hundred percent of the premiums on trip

risks written during the month ended as of the date of statement.

(4) At least ninety percent of the gross amount of premium deposits on

perpetual fire insurance risks shall be charged as a liability.

(5) As to title insurance, unearned premium reserves shall be computed

and maintained only as required by subsection (a) of section six

thousand four hundred five of this chapter.