- In determining the financial condition of a title insurer doing business under this chapter, the general provisions of the acts relating to insurance which are codified in this title requiring the establishment of reserves sufficient to cover all known and unknown liabilities, including allocated and unallocated loss adjustment expense, shall apply; provided, that a domestic 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 insurer has received notice by or on behalf of the insured, holder of a guarantee or escrow, or indemnity depositor; and
- 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 insurer if the insurer is a foreign or non-U.S.title insurer; or
- If the insurer is a domestic insurer of the District of Columbia:
- The amount of the statutory or unearned premium or reinsurance reserve on January 1, 2011, which balance shall be released in accordance with the law in effect at the time such sums were added to the reserve; and
- Out of total charges for policies of title insurance written or assumed commencing with January 1, 2011, and until December 31, 2011, a title insurer shall add to, and set aside in, the reserve an amount equal to 8% of the sum of the following items set forth in the title insurer's most recent annual statement on file with the Commissioner:
- Direct premiums written;
- Escrow and settlement service fees;
- Other title fees and service charges, including fees for closing protection letters; and
- Premiums for reinsurance assumed, less premiums for reinsurance ceded during year.
- Additions to the reserve after January 1, 2011, 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 Commissioner:
- For each title insurance policy on a single risk written or assumed after January 1, 2011, $0.36 per $1,000 of net retained liability for policies under $500,000 and $0.16 per $1,000 of net retained liability for policies of $500,000 or greater; and
- Eight percent of escrow, settlement, and closing fees collected in contemplation of the issuance of title insurance policies or guarantees.
- The aggregate of the amounts set aside in the reserve in any calendar year pursuant to subsections (a)(2)(B)(ii) and (b) of this section shall be released from the reserve and restored to net profits over a period of 20 years pursuant to the following formula:
- Thirty-five 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 each of the succeeding 2 years;
- Ten percent of the aggregate sum on July 1 of the next succeeding year;
- Three percent of the aggregate sum on July 1 of each of the next 3 succeeding years;
- Two percent of the aggregate sum on July 1 of each of the next 3 succeeding years; and
- One percent of the aggregate sum on July 1 of each of the next succeeding 10 years.
- A supplemental reserve shall be established consisting of any other reserves necessary, when taken in combination with the reserves required by this section, to cover the company's liabilities with respect to all losses, claims, and loss-adjusted expenses.
- A title insurer subject to the provisions of this chapter shall file with its annual statement required under Chapter 19 of this title 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.
Historical and Statutory
Emergency Act Amendments
For temporary (90 day) addition, see § 2149 of Fiscal Year 2011 Budget Support Emergency Act of 2010 (D.C. Act 18-463, July 2, 2010, 57 DCR 6542).
Legislative History of Laws
For Law 18-223, see notes following § 31-5031.01.
DC CODE § 31-5031.08
Current through December 11, 2012
(Sept. 24, 2010, D.C. Law 18-223, § 2149, 57 DCR 6242.)