Louisiana § RS 22:761 - Unearned premium reserve

§ RS 22:761. Unearned premium reserve

            A. With reference to insurance against loss or damage to property, except as provided in R.S. 22:763, and with reference to all general casualty insurance, health and accident insurance except as provided in R.S. 22:764, and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force.

            B.(1) The commissioner of insurance may require that such reserve shall be equal to the unearned portions of the gross premiums in force after deducting authorized reinsurance, as computed on each respective risk, from the policy's date of issue.

            (2) If the commissioner of insurance does not so require, then the unearned portions of the gross premiums in force, less authorized reinsurance which shall be held as a premium reserve, shall be computed according to the following table.

              Term for Which Policy                                    Reserve for Unearned

                      Was Written                                                      Premium

               One year, or less                                                            1/2

               Two years:

                    First year                                                                  3/4

                    Second year                                                              1/4

               Three years:

                    First year                                                                  5/6

                    Second year                                                              1/2

                    Third year                                                                 1/6

               Four years:

                    First year                                                                  7/8

                    Second year                                                              5/8

                    Third year                                                                 3/8

                    Fourth year                                                               1/8

               Five years:

                    First year                                                                9/10

                    Second year                                                            7/10

                    Third year                                                                 1/2

                    Fourth year                                                             3/10

                    Fifth year                                                                1/10

               Over five years                                                       Pro rata

            (3) In lieu of computation according to such table, all of such reserves may be computed, at the insurer's option, on a monthly pro rata basis.

            (4) After adopting any one of the methods for computing such reserve, an insurer shall not change methods without the commissioner of insurance's approval.

            Acts 1996, 1st Ex. Sess., No. 71, §1, eff. May 10, 1996; Redesignated from R.S. 22:8913 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.

NOTE: Former R.S. 22:761 redesignated as R.S. 22:2042 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.