. 

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 axemination 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 annual premium taxes as provided by House Bill 472, 988 

Legislature, which is Article 7064a, of Vernon’s Statutes, and which includes the following allowance of aradit 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 l ny ineoremce 

organieetion hereby affected shall be allowed as a cradit 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 basinasa transected in all of the other lines under the provisiona of Article 7064. In the examiaation of such 

companies no effort is nqede by this Departmeat to allocate 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 accident insurance along with other coverages under a casualty charter has inquired as to whether it will be permissible 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 premiums received from the company’s other lines of insurance. 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 examination fee deduction in Article 7064a. If your answer 

is in the affirmative. please advise me whether the company 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 accident insurance, life and accident insurance, or health 

and l ccadent msurance for profit, or for mutual beneBt, 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 during the year ending December 31st, preceding, from 

persons residing or domiciled in this State on policies 

ef insurance, and showing in separate columns the firstyear premiums and the renewal premiums collected on 

such Texas policies, and each such insurance organieebirar, except local mutual aid associations, fraternal 

b-f&t societies, end fkatermarllinsurance associations 

or aeeieties that limit their membership to one (1) ocerptien. 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 organization 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 insurance, life and accident insurance, or health and accident insurance 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 insurance, 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 accident 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 insurance upon which premium taxes are levied under Article 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 premium taxes levied under Article 7064, V.C.S. 

Yours very truly 

APPROVED 

- - 

ATTORNEYGENERALOF TEXAS 

W. V. Geppert 

Assistant 

W VG/mwb