Tex.
Ins. Code Section 2551.251
Statutory Premium Reserve Required
(a)
Each domestic title insurer shall establish and maintain a statutory premium reserve. The reserve is cumulative. The reserve must consist of the amounts required under Sections 2551.252-2551.260 and must be established and maintained during the period and for the uses and purposes provided by those sections.(b)
The reserve required under this section:(1)
is considered to be unearned portions of the original premium; and(2)
must be charged as a reserve liability of the title insurer in determining the insurer’s financial condition.(1)
the direct premium written by the insurer;(2)
the escrow and settlement service fees paid directly to and collected by the insurer;(3)
other title fees and service charges paid directly to and collected by the insurer, including fees for closing protection letters; and(4)
premiums for any reinsurance assumed by the insurer, less premiums for reinsurance ceded by the insurer during that year.(b)
The amount a domestic title insurer must set aside in the statutory premium reserve for the 1997 calendar year is computed by multiplying the total charges computed under Subsection (a) by:(1)
6-1/5 percent if the insurer had $250 million or more in direct premium written for the year 1996; or(2)
3-1/2 percent if the insurer had less than $250 million in direct premium written for the year 1996.(c)
A domestic title insurer shall reduce additions to the statutory premium reserve set aside for title insurance policies written or assumed during the year 1997 over a 20-year period beginning in the year after the year in which the policies are written or assumed, as provided by Subsection (d), by:(1)
26 percent of the additions in the first year following the year of addition;(2)
20 percent of the additions in the second year following the year of addition;(3)
10 percent of the additions in the third year following the year of addition;(4)
nine percent of the additions in the fourth year following the year of addition;(5)
five percent of the additions in the fifth and sixth years following the year of addition;(6)
three percent of the additions in the seventh, eighth, and ninth years following the year of addition;(7)
two percent of the additions in the 10th through 14th years following the year of addition; and(8)
one percent of the additions in the last six years of the 20-year period.(d)
A domestic title insurer shall make the annual reductions under Subsection (c) in increments of one-fourth of the appropriate percentage of the additions each on March 31, June 30, September 30, and December 31 of each year.(1)
25 cents per $1,000 of net retained liability if the insurer had $250 million or more in direct written premiums written for the most recent calendar year; or(2)
30 cents per $1,000 of net retained liability if the insurer had less than $250 million in direct written premiums written for the most recent calendar year.(b)
Out of total charges for title insurance policies written or assumed on or after January 1, 2005, a domestic title insurer shall add to and set aside in the statutory premium reserve an amount equal to the total of 18.5 cents per $1,000 of net retained liability for the most recent calendar year, as described in the insurer’s annual statement.(c)
A domestic title insurer shall reduce additions to the statutory premium reserve set aside for title insurance policies written or assumed after the year 1997 over a 20-year period beginning in the year after the year in which the policies are written or assumed in the manner and under the same percentages applied under Sections 2551.252(c) and (d).
Source:
Section 2551.251 — Statutory Premium Reserve Required, https://statutes.capitol.texas.gov/Docs/IN/htm/IN.2551.htm#2551.251 (accessed Jun. 5, 2024).
