December 6, 2021

Volume XI, Number 340

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December 06, 2021

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SUPREME COURT OF MISSOURI RULES STOPLOSS INSURERS LIABLE FOR DIRECT PREMIUM TAX UNDER SECTION 148.340 OF THE MISSOURI REVISED STATUTES

In American National Life Insurance Company of Texas v. Director of Revenue, American National, a Texas domiciled insurance company that sells stoploss insurance policies in Missouri to employers who maintain self-funded health benefit plans, claimed a refund for direct premium taxes specified in § 148.340.  Section 148.340 provides that every insurance company not organized under the laws of Missouri shall pay a quarterly tax upon direct premiums received in the State of Missouri or on account of business done in the State of Missouri.  The phrase “Direct Premium” is not defined in the statute or cases interpreting the statute.  The court determined that a tax on “Direct Premiums Received” is imposed upon the consideration paid by an insured to an insurer for a contract of insurance. 

American National argued that its stoploss policies are reinsurance and not subject to the direct tax under § 148.340.  Citing Associated Industries of Missouri v. Angoff, American National argued that stoploss insurance cannot be included in the premiums taxed.  See, 937 SW.2d 277 (Mo. App. 1996).  The court rejected American National’s argument, holding that § 148.340 neither imposes a tax upon insurance, nor exempts reinsurance from tax.  Rather, § 148.340 taxes “Direct Premiums Received.”  The court reasoned that, in this instance, the insured is the employer and the insurer is American National.  The employer does not collect any specific sums from employees for the benefit and no tax is imposed on the benefit by § 148.340 upon the employer or employees.  The first premium paid and subject to tax is that paid by the employer to American National.  Based on this reasoning, the Supreme Court of Missouri affirmed the decision of the Administrative Hearing Commission, finding that stoploss policy premiums are subject to the direct premium tax under § 148.340.

© 2021 Clark HIll PLCNational Law Review, Volume , Number 260
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About this Author

Ben Blume, Clark Hill Law Firm, Insurance Attorney

Benjamin A. Blume is a member in Clark Hill’s Chicago office. He is co-chair in Clark Hill’s new Insurance and Reinsurance Practice Group, which will focus on representing client’s in all aspects of the insurance and reinsurance business, including claims counseling, litigation and arbitration, business transactions and tax matters, regulatory issues and government relations, and formation of captive insurers and risk retention groups. His practice includes the handling of issues involving commercials, primary, umbrella, excess and surplus lines, and reinsurance. Benjamin...

312-985-5937
John D. LaBarbera, Insurance Attorney, Clark Hill Law Firm

John D. LaBarbera is a member in Clark Hill’s Chicago office. He is co-chair in Clark Hill’s new Insurance and Reinsurance Practice Group, which will focus on representing client’s in all aspects of the insurance and reinsurance business, including claims counseling, litigation and arbitration, business transactions and tax matters, regulatory issues and government relations, and formation of captive insurers and risk retention groups. He represents insurers in all aspects of their business, including claims counseling, litigation, and dispute resolution. His practice...

312-985-5936
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