Pennsylvania Act 1919-216 — INSURANCE COMPANY LOSSES RESERVE PROVIDED FOR LIABILITIES

Act text

INSURANCE COMPANY LOSSES RESERVE PROVIDED FOR LIABILITIES
                  Act of Jun. 9, 1919, P.L. 437, No. 216              Cl. 77
                                  AN ACT

     To provide reserves for outstanding liability losses of
        insurance companies transacting the business of insuring any
        one against loss or damage resulting from accident to, or
        injury suffered by, an employe or other person, for which the
        person insured is liable, and also for outstanding losses
        incurred under the Workmen's Compensation Act of one thousand
        nine hundred fifteen; and repealing existing laws.

        Compiler's Note:  Section 701 of Act 285 of 1921 provided
            that Act 216 is repealed insofar as it relates to
            insurance companies, associations and exchanges and saved
            from repeal insofar as it relates to the State Workmen's
            Insurance Fund.
        Section 1.  Be it enacted, &c., That the reserve for
     outstanding losses under insurance against loss or damage from
     accident to, or injuries suffered by, an employe or other
     person, and for which the insured is liable, shall be computed
     as follows:
        (1)  For all liability suits being defended under policies
     written more than
        (a)  Ten years prior to the date as of which the statement is
     made, one thousand five hundred dollars for each suit.
        (b)  Five and less than ten years prior to the date as of
     which the statement is made, one thousand dollars for each suit.
        (c)  Three and less than five years prior to the date as of
     which the statement is made, eight hundred and fifty dollars for
     each suit.
        (2)  For all liability policies written during the three
     years immediately preceding the date as of which the statement
     is made, such reserve shall be sixty per centum of the earned
     liability premiums of each of such three years, less all loss
     and loss expense payments made under liability policies written
     in the corresponding years, but, in any event, such reserve
     shall, for the first of such three years, be not less than seven
     hundred and fifty dollars for each outstanding liability suit on
     said year's policies.
        (3)  For all compensation claims under policies written more
     than three years prior to the date as of which the statement is
     made, the present value, at four per centum interest, of the
     determined and estimated future payments.
        (4)  For all compensation claims under policies written in
     the three years immediately preceding the date as of which the
     statement is made, such reserve shall be sixty-five per centum
     of the earned compensation premiums of each of such three years,
     less all loss and loss expense payments made in connection with
     such claims under policies written in the corresponding years,
     but, in any event, in the case of the first year of any such
     three-year period, such reserve shall be not less than the
     present value, at four per centum interest, of the determined
     and the estimated unpaid compensation claims under policies
     written during such year.
        Section 2.  The term "earned premiums," as used herein, shall
     include gross premiums charged on all policies written,
     including all determined excess and additional premiums, less
     return premiums other than premiums returned to policyholders as
     dividends, and less reinsurance premiums and premiums on
     policies canceled, and less unearned premiums on policies in
     force. But any participating company which has charged in its
     premiums a loading solely for dividends shall not be required to
     include such loading in its earned premiums, provided a
     statement of the amount of such loading has been filed with, and
     approved by, the Insurance Commissioner.
        The term "compensation," as used in this act, shall relate to
     all insurances effected by virtue of statutes providing
     compensation to employes for personal injuries irrespective of
     fault of the employer. The term "liability" shall relate to all
     insurance, except compensation insurance against loss or damage
     from accident to or injuries suffered by an employe or other
     person and for which the insured is liable.
        The terms "loss payments" and "loss expense payments," as
     used herein, shall include all payments to claimants, including
     payments for medical and surgical attendance, legal expenses,
     salaries, and expenses of investigators, adjusters, and field
     men, rents, stationery, telegraph, and telephone charges,
     postage, salaries, and expenses of office employes, home office
     expenses, and all other payments made on account of claims,
     whether such payments shall be allocated to specific claims or
     unallocated.
        Section 3.  All unallocated liability loss expense payments
     made in a given calendar year subsequent to the first four years
     in which an insurer has been issuing liability policies, shall
     be distributed as follows: Thirty-five per centum shall be
     charged to the policies written in that year; forty per centum
     to the policies written in the preceding year; ten per centum to
     the policies written in the second year preceding; ten per
     centum to the policies written in the third year preceding; and
     five per centum to the policies written in the fourth year
     preceding. And such payments, made in each of the first four
     calendar years in which an insurer issues liability policies,
     shall be distributed as follows: In the first calendar year, one
     hundred per centum shall be charged to the policies written in
     that year; in the second calendar year, fifty per centum shall
     be charged to the policies written in that year, and fifty per
     centum to the policies written in the preceding year; in the
     third calendar year, forty per centum shall be charged to the
     policies written in that year, forty per centum to the policies
     written in the preceding year, and twenty per centum to the
     policies written in the second year preceding; and in the fourth
     calendar year, thirty-five per centum shall be charged to the
     policies written in that year, forty per centum to the policies
     written in the preceding year, fifteen per centum to the
     policies written in the second year preceding, and ten per
     centum to the policies written in the third year preceding; and
     a schedule showing such distribution shall be included in the
     annual statement.
        All unallocated compensation loss expense payments made in a
     given calendar year subsequent to the first three years in which
     an insurer has been issuing compensation policies, shall be
     distributed as follows: Forty per centum shall be charged to
     policies written in that year; forty-five per centum to the
     policies written in the preceding year; ten per centum to the
     policies written in the second year preceding; and five per
     centum to the policies written in the third year preceding. And
     such payments made in each of the first three calendar years in
     which an insurer issues compensation policies, shall be
     distributed as follows: In the first calendar year, one hundred
     per centum shall be charged to the policies written in that
     year; in the second calendar year, fifty per centum shall be
     charged to the policies written in that year, and fifty per
     centum to the policies written in the preceding year; in the
     third calendar year, forty-five per centum shall be charged to
     the policies written in that year, forty-five per centum to the
     policies written in the preceding year, and ten per centum to
     the policies written in the second year preceding; and a
     schedule showing such distribution shall be included in the
     annual statement.
        Whenever, in the judgment of the Insurance Commissioner, the
     liability or compensation loss reserves of any insurer under his
     supervision, calculated in accordance with the foregoing
     provisions, are inadequate, he may, in his discretion, require
     such insurer to maintain additional reserves based upon
     estimated individual claims or otherwise; or whenever a
     satisfactory mathematical or actuarial table for valuing
     compensation loss reserves is promulgated and approved by the
     Insurance Commissioner, he may require any insurer under his
     supervision to maintain, upon such tabular basis, greater or
     lesser reserves than those hereinbefore provided for.
        Section 4.  Each insurer that writes liability or
     compensation policies shall include, in the annual statement
     required by law, schedule of its experience thereunder in such
     form as the Insurance Commissioner may prescribe.