.
NE
TEXAS
December 14, I94g
Won. George B. Butler, Chirmaa
Beard of Insurance Commiroionars
Austin, Texas Opiaioq no. v-367.
ZC0: Tke legality of allowiq)
credit of a pra rata of ax-
emination few e@ast
pose pramiwms on keelth
end accident insurence
written, by canpnies op
arating ttxder cosurlty
Chs*dO%S.
yaprt btur rdpwating onr opinion raIative to,the above
ceptiared meWer reads ao follows:
“Domestic life insurers, which may also write
haalth and accident insurance, report and pay tbair an-
nual premium taxes as provided by House Bill 472, 988
Legislature, which is Article 7064a, of Vernon’s Stat-
utes, and which includes the following allowance of arad-
it 024 Fe grow Yws:
. . ..and provided further that the amount of all
examination and valuation fees paid in such taxable year
to or for the use of the State of Texas by lny ineoremce
organieetion hereby affected shall be allowed as a crad-
it on tha amount of premium taxes to be pid br 67
awh insurance organiaation for such taxable year.
“Insurers other than life may, and frequently do,
write health end accident insurance along with their
other linas of coverage. The premium taxes of these
companies are reported and paid an their health and
accident business under Article 7064a, and on the basi-
nasa transected in all of the other lines under the pro-
visiona of Article 7064. In the examiaation of such
companies no effort is nqede by this Departmeat to al-
locate and pro-rate the axpense of examimtta iMo tba
health and accident portion of the compap’o b~irr88
as distinguished~ freak thhr businesa iacideat to tk cam-
-y’s other linas of insurance, nor do we tkidr rucb
. .
lirn. George B. Butler, Page 2 (V-967)
an allecrtion could be made with any reasonable degree
ef aecurecy. The company can only be examined as a
WbOk.
“One of the companies writing health and acci-
dent insurance along with other coverages under a cas-
ualty charter has inquired as to whether it will be per-
missible to pro-rate the examination expense on the
basis of the ratio which the taxable premiums received
from health and accident insurance bears to such pre-
miums received from the company’s other lines of in-
surance. In view of the recency of the enactment of the
bill and the allowance of the examination fee deduction,
there is no departmental construction of the problem.
“We, therefore, respectfully request your opinion
es to whether companies other than life, writing health
and accident inaurence may have the benefit of the ex-
amination fee deduction in Article 7064a. If your answer
is in the affirmative. please advise me whether the com-
pany may have as a deduction the entire examination
expanse end if not, whether the proration suggested by
the cempany is allowable”
The portions of H. B. No. 472, Chapter 620, Acts Slst
Legiolature, p. 1365, codified as Article 7064a, read:
“Every group of individuals, society, association,
or corporation (all of which shall be deemed included
in the term “insurance organiution’ wherever used in
this Act) organized under the laws of this State and
trrns8ctin.g the business of life insurance, personal ac-
cident insurance, life and accident insurance, or health
and lccadent msurance for profit, or for mutual bene-
Bt, er protection in thra State shall on or before the
nt day of Mereh d each year ~.file its annual statement
ahowing the gross amount of premiums collected dur-
ing the year ending December 31st, preceding, from
persons residing or domiciled in this State on policies
ef insurance, and showing in separate columns the first-
year premiums and the renewal premiums collected on
such Texas policies, and each such insurance organiee-
birar, except local mutual aid associations, fraternal
b-f&t societies, end fkatermarllinsurance associations
or aeeieties that limit their membership to one (1) oc-
erptien. shll pay an annual tax of one per cent (1%)
ef tfp grass amount ef Pruniams collected during such
m&rem persons res%img er domiciled in the State
e# ‘f;ur*s m pelicias d iaamrance. 0 D 0 end provided
f’fon. George B. Butler, Page 3 (v-967)
further that the amount of all examination and valuation
fees paid in such taxable year to or for the use of the
State of Texas by any insurance organization hereby
affected shall be allowed as a credit on the amount of
premium taxes to be paid by any such insurance organi-
zation for such taxable year.” (Emphasis ours.)
The above quoted portions of Article 7064a are plain
& unambiguous and therefore not susceptible to construction. The
stktute unequivocally provides that domestic insurance companies
who transact the business of life insurance, personal accident in-
surance, life and accident insurance, or health and accident insur-
ance shall be allowed the amount of mTney paid for examination fees
during any taxable year to or for the use of the State of Texas as a
credit on the amount of premium taxes to be paid during that taxable
year.
You stste that domestic insurance companies other than
life insurance companies may and frequently do write health and
accident insurance along with their other. lines of coverage. These
companies, other than life, who also write health and accident insur-
ance, ceme clearly within the terms of the quoted proviso, in so far
is the premiue taxes to be paid on the writing of the health and ac-
cident insurance are concerned. The Legislature did not make any
provision relative to prorating the credit. Of course the credit to
be taken by the companies in question can only be allowed as against
*e premium taxes levied under Article 7064a, and cannot be allowed
&a against the premium taxes levied under Article 7064,
SUMMARY
Domestic insurance companies who write insur-
ance upon which premium taxes are levied under Arti-
cle 7064a, V.C.S., are entitled to a credit, as against
the premium taxes levied during a taxable year, to an
amount equal to the amount of all examination fees paid
in such taxable year to or for the use of the State of
Texas. This credit cannot be allowed as against pre-
mium taxes levied under Article 7064, V.C.S.
Yours very truly
APPROVED ATTORNEYGENERALOF TEXAS
- -
W. V. Geppert
Assistant
W VG/mwb