-11-
For the years in issue, petitioner’s case reserves, net of
any reinsurance, for its professional liability insurance were
as follows:
Net Case
Year Reserve
1993 $8,478,000
1994 7,833,000
1995 7,888,000
Throughout petitioner’s period of operations, petitioner’s
claim department was periodically reviewed and examined by
either reinsurance companies or the department. Reinsurance
companies reviewed petitioner’s claim department operations to
assess petitioner’s overall claim handling procedures for
purposes of determining whether to enter into, or renew, a
reinsurance agreement with petitioner. The department examined
petitioner’s claim department as part of its triennial
examination of petitioner’s operations. These reports and
examinations have generally approved petitioner’s procedures in
processing claims and establishing reserves for its case
reserves.8
2. Adverse Development Reserve
In addition to the case reserve set by the claim
department, petitioner’s incurred loss reserve also comprises an
8 The department’s examination for petitioner’s 1993 year
included a review of petitioner’s claim department procedures.
There was only one minor recommendation regarding petitioner’s
claim department procedures, which petitioner implemented after
the examination.
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