Page:United States Statutes at Large Volume 100 Part 3.djvu/593

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2401

ending before the beginning of the calendar year for which the determination is made; except that there shall be excluded from the test period any month beginning before August 1, 1986. "(d) Loss PAYMENT PATTERN.— "(1) IN GENERAL.—For each determination year, the Secretary shall determine a loss payment pattern for each line of business by reference to the historical loss payment pattern applicable to such line of business. Any loss payment pattern determined by the Secretary shall apply to the accident year ending with the determination year and to each of the 4 succeeding accident years. "(2) METHOD OF DETERMINATION.—Determinations under paragraph (1) for any determination year shall be made by the Secretary— "(A) by using the aggregate experience reported on the annual statements of insurance companies, "(B) on the basis of the most recent published aggregate data from such annual statements relating to loss payment patterns available on the 1st day of the determination year, "(C) as if all losses paid or treated as paid during any year are paid in the middle of such year, and "(D) in accordance with the computational rules prescribed in paragraph (3). "(3) COMPUTATIONAL RULES.—For purposes of this subsection— "(A) IN GENERAL.—Except as otherwise provided in this paragraph, the loss payment pattern for any line of business shall be based on the assumption that all losses are paid— "(i) during the accident year and the 3 calendar years following the accident year, or "(ii) in the case of any line of business reported in the schedule or schedules of the annual statement relating to auto liability, other liability, medical malpractice, workers' compensation, and multiple peril lines, during the accident year and the 10 calendar years following the accident year. "(B) TREATMENT OF CERTAIN LOSSES.—Except as otherwise

provided in this paragraph— "(i) in the case of any line of business not described in subparagraph (A)(ii), losses paid after the 1st year following the accident year shall be treated as paid equally in the 2nd and 3rd year following the accident year, and "(ii) in the case of a line of business described in subparagraph (A)(ii), losses paid after the close of the period applicable under subparagraph (A)(ii) shall be treated as paid in the last year of such period. "(C) SPECIAL RULE FOR CERTAIN LONG-TAIL LINES.—In the

case of any long-tail line of business— "(i) the period taken into account under subparagraph (A)(ii) shall be extended (but not by more than 5 years) to the extent required under clause (ii), and "(ii) the amount of losses which would have been treated as paid in the 10th year after the accident year shall be treated as paid in such 10th year and each

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