40-1108. Reserves of surety company.
40-1108
40-1108. Reserves of surety company.(a) An insurance company transacting surety business shall at all timeskeep and maintain adequate reserves on its suretyship obligations asfollows: (1) An unearned premium reserve of fifty percentum of the currentannual premiums upon all outstanding suretyship obligations: Provided,That the commissioner of insurance, in estimating the condition of such aninsurance company, may charge it with a premium reserve equal to theunearned portions of the gross premiums charged, computed on each risk,from the date of the issuance of such suretyship obligation; and (2) a lossreserve at least equal to the aggregate estimated amounts due or to becomedue on account of all losses and claims of which the corporation hasreceived notice: Provided, That such loss reserve shall also includethe estimated liability on any notices received by the insurance company ofthe occurrence of any event which may result in a loss, and the estimatedliability of all losses which have occurred but on which no notice has beenreceived.
(b) For the purpose of such reserves, the insurance company shall keep acomplete and itemized record showing all losses and claims on which it hasreceived notice, including all notices received by it of the occurrence ofany event which may result in a loss; and, in its annual statement to thecommissioner of insurance, shall include a schedule showing all losses andclaims of which the insurance company has received notice during the yearfor which the statement is made and which remains unpaid and undisposed ofon December thirty-first of such year, and shall also include a scheduleshowing all the losses and claims of the insurance company unpaid onDecember thirty-first of the year next preceding, specifying whether theclaims have been settled or remain unadjusted, and setting opposite eachclaim the amount of the reserve carried or maintained against it.
(c) Whenever, in the judgment of the commissioner of insurance, the lossreserves on the suretyship obligations of any insurance company, calculatedin accordance with the provisions of this section, are inadequate, he may,in his discretion, require such insurance company to maintain additionalreserves.
History: L. 1927, ch. 231, 40-1108; June 1.