42 CFR 403.254 - Calculation of premiums.

§ 403.254 Calculation of premiums.

(a)General provisions. To calculate the amount of “premiums”, calculate the present value on the initial calculation date of expected earned premiums for the loss ratio calculation period.

(b)Specific provisions.

(1)Earned premium for a given period means -

(i) Written premiums for the period; plus -

(ii) The total premium reserve at the beginning of the period; less -

(iii) The total premium reserve at the end of the period.

(2)Written premiums in a period means -

(i) Premiums collected in that period; plus -

(ii) Premiums due and uncollected at the end of that period; less -

(iii) Premiums due and uncollected at the beginning of that period.

(3)Total premium reserve means the sum of -

(i) The unearned premium reserve;

(ii) The advance premium reserve; and

(iii) The reserve for rate credits.

(4)Unearned premium reserve means the portion of gross premiums due that provide for days of insurance coverage after the valuation date.

(5)Advance premium reserve means premiums received by the insuring organization that are due after the valuation date.

(6)Reserve for rate credits means rate credits on a group policy that -

(i) Accrue by the valuation date of the policy; and

(ii) Are paid or credited after the valuation date.

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