No. 29684 (Amendment): R590-157. Surplus Lines Insurance Premium Tax and Stamping Fee

DAR File No.: 29684
Filed: 03/15/2007, 02:50
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The rule is being changed to clarify that a fee charged for "courtesy filings" of a surplus lines policy is not included in the definition of surplus lines policy premium.

Summary of the rule or change:

The changes to this rule are being made to clarify that a fee charged for "courtesy filings" of a surplus lines policy is not to be included in the definition of surplus lines policy premium.

State statutory or constitutional authorization for this rule:

Sections 31A-2-201, 31A-3-303, and 31A-15-103

Anticipated cost or savings to:

the state budget:

The changes to this rule clarify that the courtesy filing fee is not to be included in the policy premium when calculating the premium tax, which is .0425, and stamping fee, which is .0025. Few producers have been including their courtesy filing fee in the policy provision so any impact on the general fund will be minimal. These changes to the rule will have no impact on filings, fees to, or workload of the department.

local governments:

This rule will have no impact on local city and county governmental entitles. It will have minimal impact on the premium tax that goes into the state's general fund.

other persons:

The changes to this rule clarify that the courtesy filing fee is not to be included in the surplus lines premium when calculating the premium tax and stamping fee. Neither the department nor the Surplus Lines Association know how often the courtesy fee was charged last year nor how often it was included in the premium when the premium tax and stamping fees were calculated.

Compliance costs for affected persons:

The changes to this rule clarify that the courtesy filing fee is not to be included in the surplus lines premium when calculating the premium tax and stamping fee. Neither the department nor the Surplus Lines Association know how often the courtesy fee was charged last year nor how often it was included in the premium when the premium tax and stamping fees were calculated.

Comments by the department head on the fiscal impact the rule may have on businesses:

The changes to this rule will have minimal impact on insurance producers and insurers.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/01/2007

This rule may become effective on:

05/08/2007

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-157. Surplus Lines Insurance Premium Tax and Stamping Fee.

R590-157-3. Definitions.

For the purpose of this rule the commissioner adopts the definitions set forth in Section 31A-1-301, and the following:

A. "Courtesy filing" means a surplus lines policy filing done by a resident surplus lines producer on behalf of a resident or non-resident producer whose licensure does not include a surplus lines line of authority.

B. "Courtesy filing fee" means a fee charged by the resident surplus lines producer for doing a courtesy filing for a resident or non-resident producer whose licensure does not include a surplus lines line of authority.

C. "Stamping fee" means a percentage of policy premium payable for the examination of a surplus lines transaction as required in Subsection 31A-15-103(11).

[B.]D. "Surplus Line Association" or "Association" means the Surplus Lines Association of Utah.

[C.]E. "Surplus lines producer" means a person licensed under Subsection 31A-23a-106(1)(i) to place insurance with eligible unauthorized insurers in accordance with Section 31A-15-103.

[D.]F. "Surplus lines insurer" means an unauthorized foreign or alien insurer subject to the limitations and requirements of Section 31A-15-103, doing business in this state through surplus lines producers, and included on the commissioner's "recognized" list.

[E.]G. "Surplus lines premium" means the monetary consideration for an insurance policy procured from an unauthorized insurer, and includes policy fees, membership fees, required contributions, or monetary consideration, however designated.

[F.]H. "Surplus lines premium tax" means, as prescribed by Section 31A-3-301, a tax of 4-1/4% of gross surplus lines premiums, less 4-1/4% of return premiums paid to insureds by reason of policy cancellations or premium reductions.

[G.]I. "Surplus lines transaction" means the placement with a surplus lines insurer of an insurance policy or certificate of insurance. It also means any cancellation, endorsement, audit, or other adjustment to the insurance policy that affects the premium.

 

R590-157-4. Stamping Fee Amounts.

A. The surplus lines stamping fee is 1/4 of 1% of the policy premium payable for the examination of a surplus lines transaction as required in Subsection 31A-15-103(11)(d).

B. Late surplus lines stamping fee payments may be subject to late fees of 25% of the stamping fee due plus 1 1/2% per month from the time of default until full payment of the fee.

C. A courtesy filing fee is not included as surplus lines premium for the purpose of computing taxes and stamping fees.

 

KEY: insurance fee, taxes

Date of Enactment or Last Substantive Amendment: [October 23, 2003]2007

Notice of Continuation: February 10, 2003

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-3-303; 31A-15-103