§ 118.3. Restrictions on discounting loss reserves.
The discounting of loss reserves is subject to the following limitations:
(1) The loss reserves discounted to present value in accordance with this chapter may not be less than those required in accordance with section 313(b) of the act (40 P. S. § 112(b)).
(2) The maximum rate of interest which an insurer may assume for purposes of discounting is 6%.
(3) An insurer may request an exception to the maximum interest rate in paragraph (2) if the insurer can demonstrate to the satisfaction of the Commissioner that its investment yield justifies a higher interest rate assumption. The Commissioner may require the insurer to submit additional documentation to support its request for approval of a higher interest rate assumption. The Commissioner will act upon requests for exceptions made under this paragraph within 90 days of the date the request is received by the Insurance Department.
(4) An insurer may not discount loss reserves or loss adjustment expense reserves for policies with an effective date on or after June 16, 2001.
(5) An insurer may not discount loss reserves or loss adjustment expense reserves after December 31, 2010.
The provisions of this § 118.3 amended June 15, 2001, effective June 16, 2001, 31 Pa.B. 3190. Immediately preceding text appears at serial page (265032).
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