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Premium Tax - Unauthorized

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Check Box if Total Texas Premiums Subject to Tax is Zero: Check this box if Total Texas Premiums subject to tax is zero for this return period.

Who Must Report

Unauthorized insurance occurs when an insurance activity is performed in Texas by a person or insurer who is not authorized to do insurance business in this state, or is an insurer who is authorized, but writes coverage for which the insurer is not approved. Refer to Texas Insurance Code (TIC), Chapter 101.

Insurance activities performed in Texas by a non-admitted captive insurance company insuring only the risks of the parent or affiliated companies are unauthorized insurance transactions because the non-admitted captive insurance company is not authorized by the state of Texas. The regulatory prohibitions and sanctions applicable to unauthorized insurance transactions do not apply to the non-admitted captive insurance company, however this does not exempt the non-admitted captive insurance company from the payment of premium tax on this business. §101.053(b)(6), TIC.

Every unauthorized insurer writing coverage for residents of Texas for which the insurer is not approved must file the report.

Exceptions to unauthorized insurance include, but are not limited to:

  1. the lawful transaction of surplus lines insurance under Chapter 981, TIC; and
  2. independently procured insurance as described in §101.053(b)(4), TIC, on which premium tax has been paid in accordance with Chapter 226, TIC.

The unauthorized insurance premium tax does not apply to captive insurers authorized under Chapter 964, TIC and paying insurance premium tax under Chapter 223A, TIC and maintenance taxes under §964.068, TIC.

Policy Number: Enter the unique identification number assigned to a policy, contract, binder, or other evidence of coverage.

Name of Insured and Name of Agent: Under §226.005(c), TIC, unauthorized insurance premium tax, if not paid when due, is a liability of the insurer, the insurer agent and the insured.

  • When the tax return is completed by the insurer, enter the names of the insured and the agent.
  • When the tax return is completed by the insurer agent, enter the name of the insured and the name of the insurer in lieu of the name of the agent.
  • When the tax return is completed by the insured, enter the name of the insurer in lieu of the name of the insured as well as the name of the agent.

Note: Do not use any punctuation in the name field.

Gross Premium: Enter the total amount of premium charged by the insurer for the coverage provided under the policy, regardless of the location of the risks insured under the policy.

Premium Allocated to Texas: Enter the amount of premium attributable to the risks or exposures located in Texas. The premium for a multi-state policy should be allocated or apportioned using one of the following apportionment standards. Consistent with 34 Texas Administrative Code, Rule §3.835 , acceptable apportionment or premium allocation standards are as follows:

  • percentage of physical assets in Texas;
  • percentage of payroll that applies to employees who are located or conducted business in Texas;
  • percentage of sales in Texas;
  • percentage of time that insured's conduct or property is exposed to coverage in Texas;
  • the total insured value of the property that is located in Texas; or
  • any other method of equitable apportionment that is adequately described.

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 coverage provided.

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