Minnesota Lawyers Mutual Insurance Company and Subsidiaries - Page 9


            Petitioner’s Liability for Policy Claims                                                   
                  Since 1982, petitioner has written professional liability                            
            insurance policies on a claims-made basis.  Under such policies,                           
            petitioner is liable only for claims that are made and reported                            
            during the effective dates of a policy.  For example, if an                                
            insured was covered by a policy effective January 1 through                                
            December 31, 1993, the insured would have professional liability                           
            protection for claims made and reported during that policy year.                           
            If the insured terminated insurance coverage effective January 1,                          
            1994, any claims made thereafter would not be covered unless the                           
            insured purchased an extended reporting period endorsement                                 
            Petitioner's Loss Reserves Process                                                         
                  Petitioner annually determines its loss and loss adjustment                          
            expense reserves (loss reserves) for purposes of reporting such                            
            amounts on the NAIC annual statement, particularly schedule P                              
            thereto.  Petitioner’s total unpaid loss reserve comprises two                             
            components:  An incurred loss case reserve (case reserve) and a                            

                  7 From 1982 until 1986, petitioner offered its insureds the                          
            opportunity to purchase ERE’s with an unlimited tail period.  In                           
            order to receive this type of coverage, the insured was required                           
            to purchase a policy endorsement that provided for extended                                
            coverage for claims that were made and reported after the claims-                          
            made policy period had expired.  Since 1986, petitioner has                                
            offered to its insureds ERE’s, with up to five annual renewals,                            
            that provide only for a 1-year extended reporting period.                                  

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Last modified: May 25, 2011