Relating to the collection of surplus lines insurance premium taxes for insurance placed with a managing underwriter.
This legislative change is designed to streamline the insurance tax process and potentially reduce confusion surrounding tax obligations in surplus lines insurance. By delineating the responsibilities between surplus lines agents and managing underwriters, the bill attempts to create clarity in compliance with tax laws. The impact of these changes will likely enhance regulatory adherence, benefiting both state tax revenue collections and the operational processes of insurance agents and underwriters.
House Bill 1405 aims to amend the Texas Insurance Code regarding the collection of surplus lines insurance premium taxes for policies placed with managing underwriters. The bill specifically revisions Section 225.006 of the Insurance Code to clarify the responsibilities of surplus lines agents and managing underwriters in the tax collection process. Under the revised statute, managing underwriters have the obligation to collect, report, and pay these taxes imposed at the time of providing insurance coverage, while surplus lines agents can opt into an agreement where they handle these responsibilities instead.
While the bill received significant support indicated by a unanimous vote in the House, there may be underlying concerns relating to the balance of responsibilities placed on surplus lines agents and the implications for smaller agents who may feel overwhelmed by additional obligations. The language of the bill suggests a minimal increase in regulatory burden but emphasizes compliance as a priority. Discussions around HB 1405 hint at possible contention regarding whether the new requirements will effectively enhance operational efficiency without creating additional barriers to market entry for smaller insurance providers.