Section 862.102 - Reinsurance or Reserves Required for Fire Insurance(a) An insurance company writing fire insurance in this state shall maintain reinsurance or unearned premium reserves on its policies in force.(b) The commissioner may require that reserves required by Subsection (a) equal the unearned portions of the gross premiums in force after deducting reinsurance under Section 862.101, as computed on each respective risk from the policy's date of issue.(c) If the commissioner does not impose a requirement under Subsection (b), the portions of the gross premium in force held as reinsurance or unearned premium reserves after deducting reinsurance under Section 862.101 shall be computed as follows: Term for Which Policy Was Written | Reserve for Unearned Premium |
1 year or less | 1/2 |
2 years | 1st year 3/4 |
| 2nd year 1/4 |
3 years | 1st year 5/6 |
| 2nd year 1/2 |
| 3rd year 1/6 |
4 years | 1st year 7/8 |
| 2nd year 5/8 |
| 3rd year 3/8 |
| 4th year 1/8 |
5 years | 1st year 9/10 |
| 2nd year 7/10 |
| 3rd year 1/2 |
| 4th year 3/10 |
| 5th year 1/10 |
More than 5 years | pro rata |
(d) Notwithstanding Subsection (c), an insurance company may compute, or the commissioner may require an insurance company to compute, the reserves on a quarterly, monthly, or more frequent pro rata basis.(e) An insurance company that adopts a method for computing the reserve may not adopt another method without commissioner approval.Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. 6/1/2003.