Pennsylvania Act 1927-486 — MARINE INSURANCE TAX IMPOSED

Act text

MARINE INSURANCE TAX IMPOSED
                  Act of May 13, 1927, P.L. 998, No. 486              Cl. 72
                                  AN ACT

     Imposing a tax for State purposes on marine insurance
        underwriting profits, and providing for the collection of
        such tax.

        Section 1.  Be it enacted, &c., That the term "marine
     insurance" and "marine business" and "marine risks" shall mean
     insurance or reinsurances against any and all kinds of loss of
     or damage to:
        (a)  Vessels, craft, aircraft, cars, automobiles, and
     vehicles of every kind (excluding automobiles operating under
     their own power, or while in storage not incidental to
     transportation), as well as all goods, freights, cargoes,
     merchandise, effects, disbursements, profits, moneys, bullion,
     precious stones, securities, choses in action, evidences of
     debt, valuable papers, bottomry, and respondentia interests, and
     all other kinds of property and interests therein in respect to,
     appertaining to, or in connection with any and all risks or
     perils of navigation, transit or transportation, including war
     risks, on or under any seas or other waters, on land or in the
     air, or while being assembled, packed, crated, baled,
     compressed, or similarly prepared for shipment, or while
     awaiting the same, or during any delays, storage, transshipment
     or reshipment incident thereto, including marine builder's
     risks, and all personal property floater risks; and
        (b)  Person or to property in connection with or appertaining
     to a marine, inland marine transit or transportation insurance,
     including liability for loss of or damage to, either arising out
     of or in connection with, the construction, repair, operation,
     maintenance or use of the subject matter of such insurance (but
     not including life insurance or surety bonds); but, except as
     herein specified, shall not mean insurances against loss by
     reason of bodily injury to the person:
        (c)  Provided, however, That nothing contained in this
     section shall apply to inland marine transit, or transportation
     insurance by land, where the risk begins and ends in the United
     States.
        Section 2.  Every insurer organized, admitted or licensed to
     transact the business of marine insurance within this
     Commonwealth, shall, with respect to such marine insurance
     written by it within this Commonwealth, pay a tax of five per
     centum on that proportion of the total underwriting profit of
     such insurer, from such marine insurance written within the
     United States, which the gross premiums of the insurer from such
     marine insurance written within this Commonwealth bear to the
     gross premiums of the insurer from such marine insurance written
     within the United States. The term "underwriting profit," as
     used herein, shall be arrived at by deducting from the net
     earned premiums on such marine insurance contracts, written
     within the United States during the calendar year, (1) the
     losses incurred, and (2) expenses incurred, including all taxes,
     State and Federal, in connection with such net earned premiums.
        Net earned premiums on such marine insurance contracts
     written during the calendar year shall be arrived at as follows:
        Gross premiums on such marine insurance contracts written
     during the calendar year, less any and all return premiums, any
     and all premiums on policies not taken, any and all premiums
     paid for reinsurance.
        Add unearned premiums on such outstanding marine business at
     the end of the preceding calendar year.
        Deduct unearned premiums on such outstanding marine business
     at the end of the current calendar year.
        Losses incurred, as used herein, shall mean gross losses
     incurred during the calendar year, under such marine insurance
     contracts written within the United States, less reinsurance
     claims collected or collectible and salvages or recoveries
     collectible from any source applicable to the aforesaid losses.
        Expenses incurred shall include:
        (a)  Specific expenses incurred on such earned marine
     premiums, consisting of all commissions, agency expenses, taxes,
     licenses fees, loss-adjustment expenses, and all other expenses
     incurred directly and specifically in connection with such
     premiums, less recoveries or reimbursements on account of or in
     connection with such commissions or other expenses collected or
     collectible because of reinsurance from any other source.
        (b)  General expenses incurred on such earned premiums
     consisting of that proportion of general or overhead expenses,
     such as salaries of officers and employes, printing and
     stationery, all taxes of this Commonwealth and of the United
     States except as otherwise provided herein, and all other
     expenses not chargeable specifically to a particular class of
     insurance which the net premiums of such marine insurance
     written bear to the total net premiums written by such insurer
     from all classes of insurance written by it during the current
     calendar year.
        Section 3.  Every insurer transacting such marine insurance
     in this Commonwealth shall file, on or before the first day of
     June in each year, with the Department of Revenue, and in the
     form prescribed by it, a report of all the items pertaining to
     its insurance business as enumerated and prescribed in the
     preceding section of this act. Every insurer, which has been
     writing such insurance in this Commonwealth for three years,
     shall furnish to the Department of Revenue a statement of all of
     the aforementioned items, in the form prescribed by it, for each
     of the preceding three calendar years. An insurer which has not
     been writing such marine insurance for three years shall furnish
     to the Department of Revenue a statement of all the
     aforementioned items for each of the calendar years during which
     it has written marine insurance. Every insurer, at the time of
     making the reports required by this section, shall compute and
     pay into the State Treasury, through the Department of Revenue,
     the tax, if any, then due the Commonwealth.
        If the insurer has transacted such marine insurance for three
     years, it shall (1) ascertain the average annual underwriting
     profit as defined by this section, derived from its aforesaid
     marine insurance business written within the United States
     during the last preceding three calendar years; (2) ascertain
     the proportion which the average annual premiums of the insurer
     from such marine insurance, written by it in this Commonwealth
     during the last preceding three calendar years, bears to the
     average total marine premiums of the insurer during the same
     three years; (3) compute an amount of five per centum on this
     proportion of the aforementioned average annual underwriting
     profit from such marine insurance; and (4) charge the amount of
     tax thus computed as a tax upon the marine insurance written by
     it in this Commonwealth during the current calendar year. The
     insurer shall, each year, compute the tax, according to the
     method described in this section, upon its average annual
     underwriting profit from such marine insurance during the
     preceding three years, including the current calendar year,
     namely, at the expiration of each current calendar year; the
     profit or loss on the marine insurance business of that year is
     to be added or deducted and the profit or loss upon such marine
     insurance business of the first calendar year of the preceding
     three-year period is to be dropped, so that the computation of
     underwriting profit, for purposes of taxation under this act
     will always be on a three-year average: Provided, however, That
     an insurer which has not been writing marine insurance in this
     Commonwealth for the three years shall, until it has transacted
     such business in this Commonwealth for that number of years, be
     taxed on the basis of its annual underwriting profit on marine
     insurance written within the United States for the current
     calendar year, subject however to an adjustment in the tax as
     soon as in accordance with the provisions of this section, it is
     enabled to compute the tax on the aforementioned three-year
     basis: And provided further, That in the case of mutual
     companies there shall not be included in underwriting profit,
     when computing the tax prescribed by this section, the amounts
     refunded by such companies on account of premiums previously
     paid by its policyholders.
        In making assessments under the retaliatory provisions of
     section two hundred and twelve of the act, approved the
     seventeenth day of May, one thousand nine hundred and twenty-one
     (Pamphlet Laws, seven hundred eighty-nine), known as "The
     Insurance Department Act of one thousand nine hundred and
     twenty-one," credit shall be allowed for any taxes paid or
     payable under this section.
        (3 amended Apr. 20, 1949, P.L.629, No.138)
        Section 4.  The tax imposed by this act shall be collected in
     lieu of the tax heretofore imposed upon the gross premiums of
     such marine insurance.