1. (1) Purpose. This rule implements and interprets s. 623.04, Stats., for the purpose of determining liabilities for financial statements filed with the commissioner.
2. (2) Scope. This rule shall apply to all town mutual insurers subject to ch. 612, Stats.

3. (3) Unearned premium reserve. The financial statements of town mutuals which charge advance premiums shall show as a liability an unearned premium reserve. The unearned premium reserve must be calculated on all advance premiums, on the original or full-term premium basis, less advance premiums on risks assumed by other insurers under reinsurance contract. The minimum unearned premium reserves shall be calculated on the premiums in force as follows:

   1. (a) One year policies or policies on which premiums are paid annually.

      1. 1. 50% of the net advanced premium.

   2. (b) Two year policies on which the entire premium is paid in advance.

      1. 1. 75% on policies in first year of term.
      2. 2. 25% on policies in second year of term.

   3. (c) Three year policies on which entire premium is paid in advance.

      1. 1. 83% on policies in first year of term.
      2. 2. 50% on policies in second year of term.
      3. 3. 17% on policies in third year of term.
4. (4) The unearned premium reserve shall be the sum of the amounts as calculated above. Any other method of calculating the unearned premium reserve must be approved by the commissioner.

History

History: Cr. Register, December, 1974, No. 228, eff. 1-1-75; am. (3) (intro.), Register, April, 1982, No. 316, eff. 5-1-82; r. (3) (d) and (e), Register, June, 2001, No. 546, eff. 1-1-02; CR 22-076: am. (3) (intro.) Register July 2023 No. 811, eff. 8-1-23.