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You are here: Home . rules . 2002 . 1219-059
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Subchapter C. Maintenance Taxes and Fees

28 TAC §1.414

The Commissioner of Insurance adopts an amendment to §1.414 concerning assessment of maintenance taxes and fees for payment in the year 2003. The amended section is adopted with changes to the proposed text as published in the November 15, 2002, issue of the Texas Register (27 TexReg 10698).

The amendment is necessary to adjust the rates of assessment for maintenance taxes and fees for 2003 which will provide the revenue necessary to fund appropriations made by the Legislature to fund regulation of the insurance industry in Texas by the department.

3. HOW THE SECTION WILL FUNCTION. The department uses the rule making process to give notice to the public and the opportunity to comment on the proposed rates of assessment for maintenance taxes. Section 1.414 sets rates of assessment and applies those rates to the gross premium receipts for the calendar year 2002, or some other basis designated by statute, to life, accident, and health insurance; motor vehicle insurance; casualty insurance, and fidelity, guaranty and surety bonds; fire insurance and allied lines, including inland marine; workers' compensation insurance; title insurance; health maintenance organizations; third party administrators; and corporations issuing prepaid legal services contracts. The department anticipates the adopted rates will produce revenue of $48,617,700 to the state's general revenue fund. Unnecessary language has been deleted from subsection (c)(1) which does not affect the substance of the rule.

4. SUMMARY OF COMMENTS AND AGENCYS´S RESPONSE TO COMMENTS. One comment was received in support of the proposal. The department appreciates the comment.

For: Alliance of American Insurers

The amendment is adopted under the Insurance Code Articles 4.17, 5.12, 5.24, 5.49, 5.68, 9.46, 21.07-6 §21, 23.08A, and 20A.33 and §36.001. These articles provide authorization for the Texas Department of Insurance to assess maintenance taxes and fees for the lines of insurance and related activities specified in §1.414. Article 4.17 establishes a maintenance tax based on insurance premiums for life, accident, and health coverage and the gross considerations for annuity and endowment contracts. Article 5.12 establishes a maintenance tax based on insurance premiums for motor vehicle coverage. Article 5.24 establishes a maintenance tax based on insurance premiums for casualty insurance and fidelity, guaranty and surety bonds coverage. Article 5.49 establishes a maintenance tax based on insurance premiums for fire and allied lines coverage, including inland marine. Article 5.68 establishes a maintenance tax based on insurance premiums for workers' compensation coverage. Article 9.46 establishes a maintenance fee based on insurance premiums for title coverage. Article 21.07-6 §21 establishes a maintenance tax based on the gross amount of administrative or service fees for third party administrators. Article 23.08A establishes a maintenance tax based on gross revenue of corporations issuing prepaid legal service contracts. The Texas Health Maintenance Organization Act, Section 33 (Article 20A.33), establishes an annual tax based on the gross amounts of revenues collected for the issuance of health maintenance certificates or contracts. Section 36.001 provides the commissioner of insurance may adopt rules to execute the duties and functions of the department only as authorized by statute.

§1.414. Assessment of Maintenance Taxes and Fees, 2003.

(a) The following rates for maintenance taxes and fees are assessed on gross premiums of insurers for calendar year 2002 for the lines of insurance specified in paragraphs (1) - (5) of this subsection:

(1) for motor vehicle insurance, pursuant to the Insurance Code Article 5.12, the rate is .053 of 1.0%;

(2) for casualty insurance, and fidelity, guaranty and surety bonds, pursuant to the Insurance Code Article 5.24, the rate is .180 of 1.0%;

(3) for fire insurance and allied lines, including inland marine, pursuant to the Insurance Code Article 5.49, the rate is .330 of 1.0%;

(4) for workers' compensation insurance, pursuant to the Insurance Code Article 5.68, the rate is .051 of 1.0%;

(5) for title insurance, pursuant to the Insurance Code Article 9.46, the rate is .073 of 1.0%.

(b) The rate for the maintenance tax to be assessed on gross premiums for calendar year 2002 for life, health, and accident insurance, pursuant to the Insurance Code Article 4.17, is .040 of 1.0%.

(c) Rates for maintenance taxes are assessed for calendar year 2002 for the following entities:

(1) pursuant to the Texas Health Maintenance Organization Act, §33 (Insurance Code Article 20A.33), the rate is $.44 per enrollee for single service health maintenance organizations, $1.32 per enrollee for multi-service health maintenance organizations and $.44 per enrollee for limited service health maintenance organizations;

(2) pursuant to the Insurance Code Article 21.07-6, §21, the rate is .265 of 1.0% of the correctly reported gross amount of administrative or service fees for third party administrators; and

(3) pursuant to the Insurance Code Article 23.08A, the rate is .022 of 1.0% of correctly reported gross revenues for corporations issuing prepaid legal service contracts.

(d) The taxes assessed under subsections (a), (b), and (c) of this section shall be payable and due to the Comptroller of Public Accounts, Austin, TX 78774-0100 on March 1, 2003.



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