   .




                                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
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                                                       W. V. Geppert
                                                          Assistant

    W VG/mwb
