34 Tex. Admin. Code § 3.831 - Gross Premium Definitions for Property and Casualty; Life, Accident, and Health; Health Maintenance Organizations; and Title Insurance Companies; and Clarification of the Taxation on the Distribution of Title Premiums
The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Gross premium
definition for property and casualty companies--
(A) Gross premiums are the total gross amount
of premiums, membership fees, assessments, dues, and any other considerations
for the taxable year on insurance written on each and every kind of property or
risk located in the state, with no deduction for premiums paid for reinsurance,
and excluding:
(i) return premiums (i.e.,
unearned premiums returned to policyholders);
(ii) dividends paid to
policyholders;
(iii) premiums
received from other licensed companies for reinsurance; and
(iv) premium finance charges clearly
identified in a premium note or other evidence of premium payable that are
separately stated to the policyholder (i.e., invoice, billing,
contract).
(B) The
following non-taxable premiums are deducted from gross premiums in order to
calculate taxable premiums:
(i) crop
insurance reinsured by the Federal Crop Insurance Corporation under Federal
Crop Insurance Act (7 U.S.C.
§1508), §508;
(ii) premiums for the Property Protection
Program for Underserved Areas under Insurance Code, Article 5.35-3.
(C) Gross premium defined in
subparagraph (A) of this paragraph applies to every insurance carrier,
including Lloyds, reciprocal exchanges, and any other organization or concern
writing gross premiums from the business of fire, marine, inland marine,
accident, credit, livestock, fidelity, guaranty, surety, casualty, employers'
liability, or any other kind or character of insurance. However, the definition
does not apply to:
(i) title insurance
companies;
(ii) premium receipts
from the business of life insurance, personal accident insurance, life and
accident insurance, or health and accident insurance for profit, or health
maintenance organization coverage;
(iii) fraternal benefit associations or
societies in this state, non-profit group hospital service plans, stipulated
premium companies, mutual assessment associations, companies or corporations
regulated by the Insurance Code, Chapter 14, as amended; and
(iv) cooperative or mutual fire insurance
companies administered by the members thereof solely for the protection of
their own property and not for profit.
(2) Gross premium definition for life,
health, and accident insurance companies and health maintenance organizations--
(A) Gross premiums are the total gross amount
of all premiums, including membership fees, assessments, dues and any other
consideration received during the taxable year, with no deduction for premiums
paid for reinsurance, on each and every kind of life, accident, or health
insurance policy or contract that covers persons who are located in the State
of Texas, or the gross amount of revenues for the issuance of health
maintenance organization certificates or contracts, and excludes:
(i) return premiums (i.e., unearned premiums
returned to policyholders);
(ii)
dividends applied to purchase paid-up additions to life insurance or to shorten
the endowment or premium payment period for life insurance policies;
(iii) premiums that an insurance carriers
receives from another insurance carrier for reinsurance (a stop-loss or
excess-loss insurance policy issued to a health maintenance organization is
considered reinsurance);
(iv)
premium finance charges that are clearly identified in a premium note or other
evidence of premium payable, and that are separately stated to the policyholder
(i.e., invoice, billing, contract);
(v) premiums received from the State
Comptroller or from the Treasury of the United States for accident and health
insurance or health maintenance organization coverage for which the state or
federal government contracts for the purpose of providing welfare benefits to
designated welfare recipients, or for insurance for which the state or federal
government contracts in accordance with, or in furtherance of the provisions of
the Human Resource Code, Title 2, or the Federal Social Security Act;
and
(vi) premiums paid on group
health, accident, and life insurance policies or health maintenance
organization coverage in which the group covered has established a single
non-profit trust to provide coverage primarily for employees of:
(I) a municipality, county, or hospital
district in this state; or
(II) a
county or municipal hospital, without regard to whether the employees are
employees of the county or municipality or another entity that operates the
hospital on behalf of the county or municipality.
(B) The following non-taxable
premiums are deducted from gross premiums in order to calculate taxable
premiums:
(i) group benefits provided under
Insurance Code, Articles 3.50-2, 3.50-3, and 3.50-4;
(ii) premiums for the Texas 65 Health
Insurance Plan under Insurance Code, Article 3.71; and
(iii) premiums for the Federal Employees
Health Benefit Program under United States Code, Title 5, §8909.
(C) The definition of gross
premiums does not include annuities or annuity considerations. Therefore,
annuities and annuity consideration are not subject to premium taxation under
Article 4.11. However, annuities and annuity considerations are included for
purposes of Article 4.17, Maintenance Tax on Gross Premiums, and are taxed
accordingly. Maintenance taxes are assessed when annuities are purchased from
insurance companies (at the time of annuitization), which is typically known as
back-end reporting.
(D) The gross premium definition in
subparagraph (A) of this paragraph applies to every insurance carrier that
receives premiums from the business of life insurance, accident insurance,
health insurance, life and accident insurance, life and health insurance,
health and accident insurance, or life, health and accident insurance,
including variable life insurance, credit life insurance, and credit accident
and health insurance for profit or otherwise or for mutual benefit or
protection in the State of Texas, and to every health maintenance organization
that receives revenues for the issuance of certificates or contracts in the
State of Texas.
(3)
Gross premium definition for title insurance companies--Gross premiums are the
total gross amount of premiums, membership fees, dues, and any other
considerations received by the title insurer or its agent for the taxable year
on title insurance written on property located in this state with no deduction
for premiums paid for reinsurance, and excludes:
(A) premiums received from other licensed
title insurance companies for reinsurance; and
(B) return premiums paid to
policyholders.
(4)
Taxation on distribution of title insurance premiums--
(A) Premium and maintenance taxes are levied
on all amounts defined to be title premiums whether paid to the title insurance
company or retained by the title insurance agent.
(B) The collection of the title premium tax
and maintenance fee remitted to the comptroller on the premium retained by the
title agent is incorporated in the division of the premium between insurer and
agent so that the insurer receives the premium tax and maintenance fee due on
the agent's portion of the premium.
(C) Title insurers and title agents are both
subject to the premium and maintenance tax on their proportional share of the
premiums and are separately liable for the tax if the insurer fails to remit
the tax due on the agent's portion.
(D) The insurer is required to remit to the
comptroller the total title premium and maintenance taxes due.
Notes
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