Minnesota Legislature
Office of the Revisor of Statutes
2006 Minnesota Statutes
This is an historical version of this statute chapter. Also view the most recent published version.
60A.764 PREMIUM RESERVES.
Subdivision 1. Generally. (a) 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.
(b) 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
must be carried as an offsetting liability.
(c) The gross premiums paid in advance for a period of coverage beginning after the next
premium due date which follows the date of valuation may be appropriately discounted to the
valuation date and must be held either as a separate liability or as an addition to the unearned
premium reserve which would otherwise be required as a minimum.
Subd. 2. Minimum standards for unearned premium reserves. (a) 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:
(1) the valuation net modal premium on the contract reserve basis applying to the contract; or
(2) the gross modal premium for the contract if no contract reserve applies.
(b) However, 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 must
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.
Subd. 3. 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 the continuing adequacy and reliability.
History: 2004 c 285 art 2 s 5
Subdivision 1. Generally. (a) 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.
(b) 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
must be carried as an offsetting liability.
(c) The gross premiums paid in advance for a period of coverage beginning after the next
premium due date which follows the date of valuation may be appropriately discounted to the
valuation date and must be held either as a separate liability or as an addition to the unearned
premium reserve which would otherwise be required as a minimum.
Subd. 2. Minimum standards for unearned premium reserves. (a) 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:
(1) the valuation net modal premium on the contract reserve basis applying to the contract; or
(2) the gross modal premium for the contract if no contract reserve applies.
(b) However, 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 must
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.
Subd. 3. 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 the continuing adequacy and reliability.
History: 2004 c 285 art 2 s 5
Official Publication of the State of Minnesota
Revisor of Statutes