T41CH6
Title 41 > T41CH6
Sections (17)
41-601
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-601. Assets defined. In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the insurer and which consist of: (1) Cash in the possession of the insurer, or in transit under its control, and including the true balance of any deposit in a solvent bank or trust company. (2) Investments, securities, properties and loans acquired or held in accordance with this code, and in connection therewith the following items: (a) Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest. (b) Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset. (c) Interest due or accrued upon a collateral loan in an amount not to exceed one (1) year’s interest thereon. (d) Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the director a collectible asset. (e) Interest due or accrued on a mortgage loan, not in default of the contractual principal payments and the contractual interest payments, pursuant to the contractual terms of the loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of eighteen (18) months be allowed as an asset. (f) Rent due or accrued on real property if such rent is not in arrears for more than three (3) months, and rent more than three (3) months in arrears if the payment of such rent be adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral. (g) The unaccrued portion of taxes paid prior to the due date on real property. (3) Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy. (4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer. (5) Premiums in the course of collection, other than for life insurance, not more than three (3) months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the state of Idaho, any department, board, agency, or institution thereof, or any other political subdivision of the state of Idaho, including municipalities or specially chartered subdivisions, or by the United States government or by any of its instrumentalities. (6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which premiums apply. (7) Notes and
41-602
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-602. Assets as deductions from liabilities. Assets may be allowed as deductions from corresponding liabilities, and liabilities may be charged as deductions from assets, and deductions from assets may be charged as liabilities, in accordance with the form of annual statement applicable to the insurer as prescribed by the director, or otherwise in his discretion. History: [41-602, added 1961, ch. 330, sec. 123, p. 645.]
41-603
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-603. Assets not allowed. In addition to assets impliedly excluded by the provisions of section 41-601 , Idaho Code, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer: (1) Good will, trade names and other like intangible assets, except as expressly permitted and as prescribed by the national association of insurance commissioners’ accounting practices and procedures. (2) Advances to officers (other than policy loans) whether secured or not, and advances to employees, agents and other persons on personal security only. (3) Stock of such insurer, owned by it, or any material equity therein or loans secured thereby, or any material proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation or business unit. (4) Furniture, fixtures, furnishings, safes, vehicles (except as authorized in paragraph (12), section 41-601 , Idaho Code), libraries, stationery, literature, and other equipment, machines, and supplies (other than data processing and accounting systems authorized under section 41-601 (11), Idaho Code), except in the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under section 41-726 , Idaho Code, and except, in the case of any insurer, such personal property as the insurer is permitted to hold pursuant to chapter 7, title 41 , Idaho Code, or which is reasonably necessary for the maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office, branch office and similar purposes. (5) The amount, if any, by which the aggregate book value of investments is carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this code. History: [41-603, added 1961, ch. 330, sec. 124, p. 645; am. 1971, ch. 122, sec. 2, p. 408; am. 2006, ch. 207, sec. 1, p. 636.]
41-604
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-604. Disallowance of wash transactions. (1) The director shall disallow as an asset or as a credit against liabilities any reinsurance found by him after a hearing thereon to have been arranged for the purpose principally of deception as to the ceding insurer’s financial condition as of the date of any financial statement of the insurer. Without limiting the general purport of the foregoing provision, reinsurance of any substantial part of the insurer’s outstanding risks contracted for in fact within four (4) months prior to the date of any such financial statement and canceled in fact within four (4) months after the date of such statement, or reinsurance under which the reinsurer bears no substantial insurance risk or substantial risk of net loss to itself, shall prima facie be deemed to have been arranged for the purpose principally of deception within the intent of this provision. (2) The director shall disallow as an asset any deposit, funds or other assets of the insurer found by him after a hearing thereon: (a) Not to be in good faith the property of the insurer, and (b) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies, and (c) To be resulting from arrangements made principally for the purpose of deception as to the insurer’s financial condition as of the date of any financial statement of the insurer. (3) No such disallowance of assets or credits shall be valid unless made by the director after a hearing of which notice was given the insurer within six (6) months after the date the financial statement of the insurer as to which such deception is claimed was filed with the director. (4) The director may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such deception or attempt thereat. History: [41-604, added 1961, ch. 330, sec. 125, p. 645.]
41-605
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-605. Liabilities, in general. In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include: (1) The amount of its capital stock outstanding, if any. (2) The amount, estimated consistent with the provisions of this code, necessary to pay all of its unpaid losses and claims incurred on or prior to the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof. (3) With reference to life and disability insurance and annuity contracts: (a) The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to this code which are applicable thereto. (b) Reserves for disability benefits, for both active and disabled lives. (c) Reserves for accidental death benefits. (d) Any additional reserves which may be required by the director consistent with applicable customary and general practice in insurance accounting. (4) With reference to insurance other than specified in subsection (3) of this section, and other than title insurance, the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with this chapter. (5) Taxes, expenses and other obligations due or accrued at the date of the statement. History: [41-605, added 1961, ch. 330, sec. 126, p. 645.]
41-606
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-606. Unearned premium reserve. (1) As to insurance against loss or damage to property (except as provided in section 41-607 ), and as to all general casualty insurance and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force. (2) The director may require that such reserves shall be equal to the unearned portions of the gross premiums in force after deducting applicable reinsurance in solvent insurers as computed on each respective risk from the policy’s date of issue. If the director does not so require, the portions of the gross premium in force, less applicable reinsurance in solvent insurers, to be held as an unearned premium reserve, shall be computed according to the following table: 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 Over 5 years pro rata (3) In lieu of computation according to the foregoing table, the insurer at its option may compute all of such reserves on a monthly or more frequent pro rata basis. (4) After adopting a method for computing such reserve, an insurer shall not change methods without approval of the insurance supervisory official of the insurer’s domicile. (5) This section does not apply to title insurance. History: [41-606, added 1961, ch. 330, sec. 127, p. 645.]
41-607
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-607. Unearned premium reserve for marine and transportation insurance. As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned; and the director may require the insurer to carry a reserve equal to one hundred per cent (100%) of premiums on trip risks written during the month ended as of the date of statement. History: [41-607, added 1961, ch. 330, sec. 128, p. 645.]
41-608
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-608. Reserve for disability insurance. For all disability insurance policies the insurer shall maintain an active life reserve which shall place a sound value on its liabilities under such policies and be not less than the reserve according to appropriate standards set forth in regulations issued by the director and, in no event, less in the aggregate than the pro rata gross unearned premiums for such policies. History: [41-608, added 1961, ch. 330, sec. 129, p. 645.]
41-609
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-609. Loss reserves, liability insurance and worker’s compensation. Where called for by the form of annual statement required of the insurer, the reserve for outstanding losses under insurance against loss or damage from accident to or injuries suffered by an employee or other person and for which the insured is liable, shall be computed in accordance with the annual statement instructions and the accounting and procedures manual adopted by the national association of insurance commissioners, as provided in section 41-335 , Idaho Code. History: [41-609, added 1961, ch. 330, sec. 130, p. 645; am. 1993, ch. 194, sec. 4, p. 498.]
41-610
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-610. Increase of inadequate loss reserves. If loss experience shows that an insurer’s loss reserves, however computed or estimated, are inadequate, the director shall require the insurer to maintain loss reserves in such additional amount as is needed to make them adequate. This section does not apply as to life insurance. History: [41-610, added 1961, ch. 330, sec. 131, p. 645.]
41-611
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-611. Reserve for losses and unearned premiums — Title insurers. (1) Each title insurer shall maintain a special reserve in adequate amount to cover its liability as to losses incurred under policies issued by it. (2) Each domestic title insurer shall establish and maintain a reserve for unearned premiums on its policies and guaranties in force. Such reserve shall at all times and for all purposes be considered a separate and distinct trust fund and shall be deemed and considered and shall constitute unearned portions of the original premiums and shall be charged as a reserve liability of the insurer in determining its financial condition. On all title insurance policies heretofore issued by the insurer, an unearned premiums reserve shall be set up and hereafter maintained in the amount which would have accumulated, as of the effective date of this code, if the foregoing requirement had been in existence ever since the date of the policy. Such reserve shall be computed as follows: (a) With respect to owners and/or purchasers policies perpetual in term, monthly at the close of each month beginning as of July 1, 1947, the insurer shall set aside into the reserve ten per cent (10%) of the risk portion of the gross premium or fees received or to be received on account of policies written during the next preceding calendar month. After any such policy has been in force for ten (10) years, or upon earlier termination thereof for any cause, that portion of the reserve related thereto shall be released and may be used by the insurer thereafter for any lawful purpose. (b) With respect to mortgage policies having a term, it shall be assumed for the purposes of this provision that all such policies have an average term of five (5) years from date of issue, and the unearned premium reserve thereon, commencing as of July 1, 1947, shall be computed upon the risk portion of the gross premium or fees charged for the policy according to the table for five (5) year term policies as provided in section 41-606 (2) (unearned premium reserve). If such reserve is determined as at any date other than December 31 of any year, the reserve shall be computed on a pro rata basis for the elapsed months of the calendar year in which the computation is made. (c) If at any time, after examination of the insurer, the director determines that its reserve for unearned premiums computed as hereinabove provided is inadequate for the reasonable protection of its policy holders, the director may by order made after hearing thereon require such reserve to be computed upon such reasonable basis as may be prescribed in the order. No such order shall be retroactively effective. (3) The unearned premium reserve of a foreign insurer shall be as prescribed or permitted by the laws of the insurer’s domicile, unless found by the director to be inadequate for the reasonable protection of the insurer’s Idaho policy holders. In event of such a
41-611A
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-611A. Mortgage guaranty insurance — Contingency reserve. In addition to reserves for unearned premiums and losses, as to mortgage guaranty insurance transacted by it an insurer shall establish and maintain a contingency reserve out of net premiums (gross premiums less premiums returned to policy holders) remaining after establishment of the unearned premium reserve. To the contingency reserve the insurer shall contribute an amount equal to fifty per cent (50%) of such remaining premiums. The annual contributions to the contingency reserve made during each calendar year shall be maintained for a period of one hundred twenty (120) months; except that in any year in which incurred losses of the insurer under mortgage guaranty insurance policies exceed thirty-five per cent (35%) of the corresponding earned premiums, the insurer may withdraw from the contingency reserve an amount equal to not more than the amount of such excess. History: [I.C., sec. 41-611A, as added by 1972, ch. 79, sec. 2, p. 159.]
41-612
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-612. Standard valuation law — Life insurance. (1) (a) This section shall be known as the standard valuation law. (b) For the purposes of this section the following definitions shall apply on or after the operative date of the valuation manual: (i) Accident and health insurance means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness or medical conditions and as may be specified in the valuation manual. As used in this section and in the valuation manual, this term is synonymous with disability insurance as defined in section 41-503 , Idaho Code. (ii) Appointed actuary means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subsection (12)(b) of this section. (iii) Company means an entity, which (a) has written, issued or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and has at least one (1) such policy in force or on claim or (b) has written, issued or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance or deposit-type contracts in this state. (iv) Deposit-type contract means contracts that do not incorporate mortality or morbidity risks, and as may be specified in the valuation manual. (v) Life insurance means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual. (vi) NAIC means the national association of insurance commissioners. (vii) Policyholder behavior means any action a policyholder, contract holder or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract. (viii) Principle-based valuation means a reserve valuation that uses one (1) or more methods or one (1) or more assumptions determined by the insurer and is required to comply with subsection (15) of this section as specified in the valuation manual. (ix) Qualified actuary means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American academy of actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual. (x) Tail risk means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability di
41-613
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-613. Valuation of bonds. (1) All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows: (a) If purchased at par, at the par value. (b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of such method, according to such generally accepted method of valuation elected by the insurer and approved by the director. (c) Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of such securities. (d) Unless otherwise provided by valuation established or approved by the director, no such security shall be carried at above the call price for the entire issue during any period within which the security may be so called. (2) The director shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but no such method or valuation shall be inconsistent with any applicable valuation method used by insurers in general, or any such method then currently formulated or approved by the national association of insurance commissioners or its successor organization. History: [41-613, added 1961, ch. 330, sec. 134, p. 645; am. 1993, ch. 194, sec. 5, p. 499.]
41-614
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-614. Valuation of other securities. (1) Securities, other than those referred to in section 41-613 , Idaho Code, held by an insurer may be valued, in the discretion of the director: (a) At their market value if market value can be reasonably ascertained, or (b) If the issuer is an insurer, at their unadjusted book value as determined by the issuer’s convention form financial statement filed with insurance public supervisory officials, or (c) Any other value which the insurer can substantiate to the satisfaction of the director. In addition to other applicable bases of valuation, the director shall give due consideration to valuation based upon: (i) The net worth of the issuer as shown by financial statements acceptable to the director. (ii) The acquisition cost of the security to the insurer, adjusted in accordance with generally accepted accounting principles to reflect changes since such acquisition in the issuer’s financial condition and business. (2) Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, according to a generally accepted method of computation approved by the director. (3) Stock of a subsidiary corporation of an insurer shall not be valued at an amount in excess of the net value thereof as based upon those assets only of the subsidiary which would be eligible under chapter 7, title 41 , Idaho Code, for investment of the funds of the insurer directly. (4) No valuations under this section shall be inconsistent with any applicable valuation or method then currently formulated or approved by the national association of insurance commissioners or its successor organization. History: [41-614, added 1961, ch. 330, sec. 135, p. 645; am. 1971, ch. 122, sec. 3, p. 408; am. 1972, ch. 369, sec. 7, p. 1072; am. 1993, ch. 194, sec. 6, p. 499.]
41-615
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-615. Valuation of property. (1) Real property acquired pursuant to a mortgage loan or contract for sale, in the absence of a recent appraisal deemed by the director to be reliable, shall not be valued at an amount greater than the unpaid principal of the defaulted loan or contract at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such acquisition, and the cost of improvements thereafter made by the insurer and any amounts thereafter paid by the insurer on assessments levied for improvements in connection with the property. (2) Other real property held by an insurer shall not be valued at an amount in excess of fair value as determined by recent appraisal. If valuation is based on an appraisal more than three years old, the director may at his discretion call for and require a new appraisal in order to determine fair value. History: [41-615, added 1961, ch. 330, sec. 136, p. 645.]
41-616
TITLE 41 INSURANCE CHAPTER 6 ASSETS AND LIABILITIES 41-616. Valuation of purchase money mortgages. Purchase money mortgages on real property referred to in subsection (1) of section 41-615 of this chapter shall be valued in an amount not exceeding the acquisition cost of the real property covered thereby or ninety per cent (90%) of the fair value of such real property, whichever is less. History: [41-616, added 1961, ch. 330, sec. 137, p. 645.]