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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 6013

November 24, 1981

INSURANCE:

Payment of taxes and assessments by an insurer writing contact lens insurance

Authorization for foreign insurer to write contact lens insurance

An authorized insurer writing contact lens insurance in Michigan is required to remit taxes and assessments due under 1956 PA 218.

A foreign insurer writing only contact lens insurance in Michigan is not required to be authorized to conduct such business by the Commissioner of Insurance.

An unauthorized foreign insurer writing only contact lens insurance in Michigan is subject to the premium tax and the additional tax required pursuant to 1956 PA 218, Secs. 440, 441 and 451, but is not subject to assessments provided for in 1956 PA 218, Sec. 2920.

Silverenia Q. Kanoyton

Director

Commercial Services Bureau

Department of Licensing and Regulation

905 Southland

Lansing, Michigan

My opinion has been requested on the applicability of premium taxes and assessments required by 1956 PA 218, Sec. 2920; MCLA 500.2920; MSA 24.12920, to an authorized insurer which writes only insurance covering the loss of contact lenses in Michigan. This insurer has questioned the authority of the Insurance Bureau to require it to pay taxes and assessments because it asserts that the contact lens insurance written is inland marine insurance, which is not classified as an insurance transaction pursuant to 1956 PA 218, Sec. 402b(6); MCLA 500.402B(6); MSA 24.1402(2)(6).

Since inland marine insurance includes any unscheduled personal property insurance, the Commissioner of Insurance has identified property insurance covering the loss of contact lenses as inland marine insurance pursuant to Administrative Code, 1979, R 501.251 et seq.

In 1956 PA 218, Sec. 2601(2); MCLA 500.2601; MSA 24.12601, the Legislature has provided:

'(2) 'Inland marine insurance' shall be deemed to include:

'(a) Insurance against loss of or damage to domestic shipments, bridges, tunnels and other inland instrumentalities of transportation or communication, excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage.

'(b) Insurance defined by ruling of the commissioner as inland marine insurance.'

Thus, the Legislature has authorized the Commissioner of Insurance to define 'inland marine insurance.'

My opinion has been requested on the following questions:

1. May the Commissioner of Insurance require an authorized insurer writing contact lens insurance only in Michigan to remit taxes and assessments for contact lens insurance due under 1956 PA 218?

2. If an insurer writes only contact lens insurance in Michigan, may such business be written without a certificate of authority being issued by the Commissioner of Insurance to the company?

3. If the answer to question No. 2 is in the affirmative, would the unauthorized insurer be exempt from Michigan premium taxes and assessments on the contact lens insurance written in this state?

1956 PA 218, Sec. 120; MCLA 500.120; MSA 24.1120, provides that no person shall transact insurance business in Michigan without being authorized to do so by the Commissioner of Insurance.

1956 PA 218, Sec. 440; MCLA 500.440; MSA 24.1440, states:

'(1) Every foreign insurer of the classes herein enumerated, admitted to do and doing insurance business in this state as a condition precedent to the privilege of doing business, shall pay to the commissioner for prompt deposit with the state treasurer . . .

(c) Fire, marine, and strictly automobile insurers, whether stock or mutual, 3%, on all premiums, deducting for return premiums on canceled policies and reinsurance when the tax has been paid on the original premiums; and in mutuals also deducting for dividends paid to members. Of the tax collected under this subdivision sums shall be credited by the treasurer to the fire fighters training fund, as established under section 13 of Act No. 291 of the Public Acts of 1966, being section 29.373 of the Michigan Compiled Laws, and appropriated in such amounts which the legislature shall deem necessary for the purposes of such fire fighters training council act of 1966.' (Emphasis added.)

1956 PA 218, Sec. 441; MCLA 500.441; MSA 24.1441, states:

'The taxes on premiums from insurers shall be upon all premiums, whether upon business written or renewed, which are received by any insurer or by any person acting as agent therefor, both upon policies issued by agents in this state, or policies issued at the office of the insurers upon application of subagents or others, or for any individuals or association of individuals, not incorporated or authorized by the laws of this state, to effect insurance against fire, inland, marine, life, casualty, title or other risks, or which are received by any person for such insurer or agent, or are agreed to be paid for any insurance effected, or agreed to be effected or procured by such insurer or agent, or against fire, inland, marine, life, casualty, title or other risks, although such companies, associations or individuals may be incorporated or authorized for that purpose by the laws of any other state of the United States, or of any foreign government.' (Emphasis added.)

Thus, it is clear that the Legislature intended that a foreign insurer authorized by the Commissioner of Insurance to do business in the State of Michigan be required to pay the premium tax on marine and inland marine insurance, including contact lens insurance.

An authorized insurer writing contact lens insurance would also be subject to the assessments set forth at 1956 PA 218, Sec. 2901 et seq; MCLA 500.2901 et seq; MSA 24.12901 et seq. 1956 PA 218, Sec. 610; MCLA 500.610; MSA 24.1610, includes inland marine insurance within the definition of property insurance as follows:

'[Property] insurance shall be deemed to include also marine insurance as defined in section 614, inland navigation and transportation insurance as defined in section 616, and automobile insurance (limited) as defined in section 620.'

It was the intent of the Legislature that authorized insurers writing inland marine insurance, including contact lens insurance, be subject to the assessment set forth in 1956 PA 218, ch 29, supra.

It is my opinion, in answer to your first question, the Insurance Bureau must require an authorized foreign insurer to remit taxes and assessments for contact lens insurance written in Michigan and identified as inland marine insurance.

Turning to your second question, 1956 PA 218, Sec. 402; MCLA 500.402; MSA 24.1402, provides:

'No person shall act as an insurer and no insurer shall issue any policy or otherwise transact insurance in this state except as authorized by a subsisting certificate of authority granted to it by the commissioner pursuant to this code.'

1956 PA 218, Sec. 402, supra, read alone, would appear to require that any foreign company selling inland marine insurance, including contact lens insurance, in the State of Michigan do so under a certificate of authority granted by the Commissioner of Insurance. However, 1956 PA 218, Sec. 402, supra, is modified by 1956 PA 218, Sec. 402B; MCLA 500.402b; MSA 24.1402(2), which states:

'The following do not constitute transactions of insurance in this state within the meaning of sections 402 and 402a of this code:

(6) Transaction of insurance as defined in sections 614 and 616 of this code, . . .' (Emphasis added.)

The effect of 1956 PA 218, Sec. 402b(6), supra, is that inland marine insurance, including contact lens insurance, is not a transaction of insurance for purposes of 1956 PA 218, Sec. 402, supra, and, therefore, a foreign insurer writing inland marine insurance, including contact lens insurance, is not required to do so under a certificate of authority granted by the Commissioner of Insurance.

In answer to your second question, it is my opinion that an insurer which writes only contact lens insurance may do so without a certificate of authority issued by the Commissioner of Insurance.

In your third question, you inquire whether an unauthorized foreign insurance company transacting only contact lens insurance in the State of Michigan is exempt from payment of Michigan premium taxes and assessments on the business written in this state. In that connection, 1956 PA 218, Sec. 451; MCLA 500.451; MSA 24.1451; states:

'Any unauthorized insurer transacting insurance in this state shall be subject to the same premium taxes on business so transacted as though it were business written by an authorized insurer. In addition thereto, each separate transaction of insurance in this state by an unauthorized insurer shall be subject to a tax of $25.00, which shall be added to the premium tax. . . .'

Thus, in accord with the above quoted section, an unauthorized foreign insurer which writes only contact lens insurance in Michigan is required to pay premium taxes pursuant to 1956 PA 218, Secs. 440 and 441, supra, plus an additional tax of $25.00 for each separate transaction of insurance.

An unauthorized foreign insurer which writes only contact lens insurance in Michigan would not be subject to the provisions of 1956 PA 218, Sec. 2920; MCLA 500.2920; MSA 24.12920, which states, in pertinent part:

'(1) To implement the provisions of this chapter there shall be maintained within this state, by all insurers authorized to transact in this state any of the kinds of insurance included in the definition of assessable premiums for home insurance, as those definitions are set forth in section 2901, other than insurers transacting insurance exclusively under chapter 68, an association of insurers to be known as the 'Michigan basic property insurance association', hereafter referred to as the 'pool'. Every insurer described in this subsection shall be a member of the pool, as a condition of its authority to transact insurance in this state.' (Emphasis added.)

It is my opinion, in answer to your third question, that an unauthorized foreign insurer writing only contact lens insurance in Michigan by the Commissioner of Insurance is subject to the premium tax and additional tax as set forth in 1956 PA 218, Secs. 440, 441 and 451, supra, but is not subject to the assessment provisions of 1956 PA 218, Sec. 2920, supra.

Frank J. Kelley

Attorney General


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