SB 2025 Summary

• Requires each domestic title insurer to establish and maintain a statutory premium reserve, treated as an unearned portion of the original premium and charged as a reserve liability.

• For companies with annual gross premiums of $20 million or more, the reserve must be at least 5% of direct premiums written plus reinsurance assumed minus reinsurance ceded, beginning January 1, 2015.

• Companies with annual gross premiums below $20 million may elect either the 5% reserve or an amount equal to their incurred but not reported claims (IBNR) reserve plus unallocated loss adjustment expense (ULAE) reserve.

• Reserves established under the 5% requirement are reduced over a 20-year period using a graduated schedule ranging from 35% reduction in year one down to 1% reduction in years 11-20.

• Effective November 1, 2014; statutory premium reserves must be held in cash or approved securities and are designated to protect title insurance contract holders in case of insurer insolvency.