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Premium Tax - Independently Procured
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Independently procured insurance is defined by the Nonadmitted and Reinsurance Reform Act (NRRA) as "insurance procured directly by an insured from a nonadmitted insurer." A broker or agent must not be involved in the placement of the insurance policy and earn any commission or other compensation for assisting with policy placement. If an agent or broker is involved, then the transaction is surplus lines insurance and the surplus lines agent is responsible for reporting any taxes due.
Surplus lines and independently procured policies are subject to regulation and taxation by the home state of the insured.
As defined by the NRRA, home state means, with respect to an insured:
- the state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or
- if 100 percent of the insured risk is located outside of the state that is the principal place of business or principal residence of the insured, the home state is the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.
For affiliated groups, if more than one insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the home state is the state of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.
Principal place of business is generally defined as the location from which the corporation's high-ranking officers direct, control and coordinate the corporation's activities.
If a policy of insurance is independently procured and effective on or after July 21, 2011, the premium tax due Texas is based on the premium paid for single-state or multi-state policies in which Texas is the home state of the insured.
If Texas is the principal place of business or the principal residence of the insured, but a policy covers risks located entirely outside of Texas, no tax is due Texas. In this case, the state to which the largest percentage of premium is allocated becomes the home state.
Policy Number: Enter the unique identification number assigned to a policy, contract, binder, or other evidence of coverage.
Name of Insurer: Enter the exact name of the insurance company that is providing coverage as it appears on the policy, contract, binder or other evidence of coverage. Note: Do not use any punctuation in the name field.
Gross Premium: Enter the total amount of premium for the coverage provided under the policy.
Premium Allocated to Texas: For new or renewal policies having effective dates on or after July 21, 2011, independently procured insurance premium tax applies when Texas is the home state of the insured.
Endorsements and audits on independently procured policies must be reported for the tax year in which the endorsement or audit occurs. Use this date as the effective date for tax reporting purposes.
Effective Date of Policy: Enter the date on which coverage under the policy, contract, binder, or other evidence of coverage begins. Renewal policies should reflect the effective date of the renewal and not the effective date of the original policy.
Type of Insurance: Enter the type of insurance coverage provided.
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