Michigan Laws 500.713 – Minimum unearned premium reserve; basis; sum of unearned premium and contract reserves; limitation
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(1) The minimum unearned premium reserve with respect to any health insurance policy or certificate is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with such premium determined on the basis of either of the following:
(a) The valuation net modal premium on the contract reserve basis applying to the health insurance policy or certificate.
Terms Used In Michigan Laws 500.713
- Contract: A legal written agreement that becomes binding when signed.
- Health insurance policy: means an expense-incurred hospital, medical, or surgical policy, certificate, or contract. See Michigan Laws 500.608
- Insurer: means an individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds organization, fraternal benefit society, or other legal entity, engaged or attempting to engage in the business of making insurance or surety contracts. See Michigan Laws 500.106
- Modal premium: means the premium paid on a health insurance policy or certificate based on a premium term that could be annual, semiannual, quarterly, monthly, or weekly. See Michigan Laws 500.701
- Reserve: means all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued. See Michigan Laws 500.701
- Unearned premium reserve: means that portion of the premium on a health insurance policy or certificate paid or due to the insurer that is applicable to the period of coverage extending beyond the valuation date. See Michigan Laws 500.701
- Valuation net modal premium: means the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. See Michigan Laws 500.701
(b) The gross modal premium for the health insurance policy or certificate if no contract reserve applies.
(2) The sum of the unearned premium and contract reserves for all health insurance policies and certificates of the insurer subject to contract reserve requirements shall not be less than the gross modal unearned premium reserve on all such health insurance policies and certificates, as of the date of valuation. This reserve shall not be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve, to the extent not provided for under this chapter.