2006 Nebraska Revised Statutes - § 44-1988 — Reserves.

Section 44-1988
Reserves.

(1) In determining the financial condition of a title insurer transacting the business of title insurance under the Title Insurers Act, the general provisions of the insurance laws of this state requiring the establishment of reserves sufficient to cover all known and unknown liabilities, including allocated and unallocated loss adjustment expense, shall apply except as provided in subsections (2) through (4) of this section.

(2) A title insurer shall establish and maintain a known claim reserve in an amount estimated to be sufficient to cover all unpaid losses, claims, and allocated loss adjustment expenses arising under title insurance policies, guaranteed certificates of title, guaranteed searches, and guaranteed abstracts of title and all unpaid losses, claims, and allocated loss adjustment expenses for which the title insurer may be liable and for which the title insurer has received notice by or on behalf of the insured, holder of a guarantee or escrow, or security depositor.

(3)(a) If a title insurer is a foreign or non-United-States title insurer, the title insurer shall establish and maintain a statutory or unearned premium reserve consisting of the amount of statutory or unearned premium reserve required by the laws of the domiciliary state of the title insurer.

(b)(i) If a title insurer is a domestic insurer of this state, the title insurer shall establish and maintain a statutory or unearned premium reserve consisting of the amount of the statutory or unearned premium or reinsurance reserve on September 13, 1997, which balance shall be released in accordance with the law in effect at the time such sums were added to the reserve.

(ii) If a title insurer that is organized under the laws of another state transfers its domicile to this state, the statutory or unearned premium reserve shall be that amount required by the laws of the state of the title insurer's former state of domicile as of the date of transfer of domicile. Thereafter, the aggregate of such statutory or unearned premium reserve shall be released from the reserve and restored to profits over a period of twenty years pursuant to the formula set forth in subdivision (3)(b)(vi) of this section. Following the transfer of domicile to this state of the title insurer, for business written after the date of transfer of domicile, the title insurer shall add to and set aside in the statutory or unearned premium reserve such amount as provided in subdivision (3)(b)(v) of this section.

(iii) Out of total charges for title insurance policies written or assumed commencing on September 13, 1997, and until December 31, 1998, a title insurer shall add to and set aside in the reserve required under subdivision (3)(b)(i) of this section an amount equal to six percent of the sum of the following items set forth in the title insurer's most recent annual statement on file with the director:

(A) Direct premiums written;

(B) Escrow, settlement, and closing fees;

(C) Other title fees and service charges, including fees for closing protection letters; and

(D) Premiums for reinsurance assumed less premiums for reinsurance ceded.

(iv) Additions to the reserve required under subdivision (3)(b)(i) of this section commencing on January 1, 1999, and until December 31, 2005, shall be made out of total charges for title insurance policies and guarantees written, equal to the sum of the following items, as set forth in the title insurer's most recent annual statement on file with the director:

(A) For each title insurance policy on a single risk written or assumed on or after January 1, 1999, and until December 31, 2005, twenty-five cents per one thousand dollars of net retained liability for title insurance policies under five hundred thousand dollars and twelve cents per one thousand dollars of net retained liability for title insurance policies of five hundred thousand dollars or greater; and

(B) Six percent of escrow, settlement, and closing fees collected in contemplation of the issuance of title insurance policies or guarantees.

(v) Out of total charges for title insurance policies written or assumed on or after January 1, 2006, a title insurer shall add to and set aside in the reserve required under subdivision (3)(b)(i) of this section an amount equal to seventeen cents per one thousand dollars of net retained liability for each title insurance policy.

(vi) The aggregate of the amounts set aside in the reserve required under subdivision (3)(b)(i) of this section in any calendar year pursuant to subdivisions (3)(b)(iii), (3)(b)(iv), and (3)(b)(v) of this section and the reserve required under subdivision (3)(b)(ii) of this section shall be released from the reserve and restored to net profits over a period of twenty years pursuant to the following formula: For an insurer that transfers its domicile to this state, thirty percent of the aggregate of such reserves on the forty-fifth day following the last day of the calendar quarter in which the insurer transfers its domicile and thereafter pursuant to the formula as set forth in this subdivision; and for all other insurers, thirty percent of the aggregate sum on July 1 of the year next succeeding the year of addition; fifteen percent of the aggregate sum on July 1 of the next succeeding year; ten percent of the aggregate sum on July 1 of each of the next succeeding two years; five percent of the aggregate sum on July 1 of each of the next succeeding two years; three percent of the aggregate sum on July 1 of each of the next succeeding two years; two percent of the aggregate sum on July 1 of each of the next succeeding seven years; and one percent of the aggregate sum on July 1 of each of the next succeeding five years. No release of statutory or unearned premium reserve shall occur if such release would result in the aggregate reserve falling below the actuarial level required by subsection (1) of this section.

(vii) The title insurer shall calculate an adjusted statutory or unearned premium reserve as of September 13, 1997. The adjusted reserve shall be calculated as if subdivisions (3)(b)(iii), (iv), and (vi) of this section had been in effect for all years beginning twenty years prior to September 13, 1997. For purposes of this calculation, the balance of the reserve as of that date shall be deemed to be zero. If the adjusted reserve so calculated exceeds the aggregate amount set aside for statutory or unearned premiums in the title insurer's annual statement on file with the director on September 13, 1997, the title insurer shall, out of total charges for title insurance policies, increase its statutory or unearned premium reserve by an amount equal to one-sixth of that excess in each of the succeeding six years, commencing with the calendar year that includes September 13, 1997, until the entire excess has been added.

(viii) The aggregate of the amounts set aside in the reserve required under subdivision (3)(b)(i) of this section in any calendar year as adjustments to the title insurer's statutory or unearned premium reserve pursuant to subdivision (3)(b)(vii) of this section shall be released from the reserve and restored to net profits, or equity if the additions required by such subdivision reduced equity directly, over a period not exceeding ten years pursuant to the following table:

Calendar Year of Addition	Release
1998	Equally over 10 years
1999	Equally over 9 years
2000	Equally over 8 years
2001	Equally over 7 years
2002	Equally over 6 years
2003	Equally over 5 years

(4) A title insurer shall establish and maintain a supplemental reserve consisting of any other reserves necessary, when taken in combination with the reserves required by subsections (2) and (3) of this section, to cover the title insurer's liabilities with respect to all losses, claims, and loss adjustment expenses. The supplemental reserve required under this subsection shall be phased in as follows: Twenty-five percent of the otherwise applicable supplemental reserve will be required until December 31, 1998; fifty percent of the otherwise applicable supplemental reserve will be required until December 31, 1999; and seventy-five percent of the otherwise applicable supplemental reserve will be required until December 31, 2000.

(5) Each title insurer subject to the Title Insurers Act shall file with its annual financial statement required under section 44-322 a certification by a member in good standing of the American Academy of Actuaries. The actuarial certification required of a title insurer shall conform to the National Association of Insurance Commissioners' annual statement instructions for title insurers.

Source:

Laws 1997, LB 53, § 11

Laws 2006, LB 875, § 3.

~ Revised Statutes Cumulative Supplement, 2006