(215 ILCS 5/393.1) (from Ch. 73, par. 1005.1)
Sec. 393.1.
Unearned premium reserve.
(1) Every insurance company authorized in this State to transact any of
the kinds of business described in Class 3 of Section 4 shall maintain an
unearned premium reserve on all policies in force which reserve shall be
charged as a liability. The portions of the gross premiums in force, after
deducting bona fide reinsurance in authorized companies, which shall be
held as a premium reserve, shall never be less in the aggregate than the
company's actual liability to all its insureds for the return of gross
unearned premiums. In the calculation of the company's actual liability to
all its insureds, the reserve shall be computed pursuant to the method
commonly referred to as the monthly pro rata method; provided, however,
that the Director may require that such reserve shall be equal to the
unearned portions of the gross premiums in force, after deducting
reinsurance in authorized companies, in which case the reserve shall be
computed on each respective risk from the date of the issuance of the
policy.
(2) Before any reinsurance may qualify as a deduction from a company's
unearned premium reserve, the accepting company shall assume full liability
for the amount of coverage which the ceding company guaranteed for the
portions of premiums which it ceded to the accepting company.
(Source: Laws 1967, p. 1745.)
|