Coverage procured from an unlicensed insurer through negotiations that occur entirely outside Texas is classified by law as independently procured insurance [Insurance Code Sec. 101.053(b)(4)]. Since there is no “business of insurance” taking place in Texas, the state has no jurisdiction for regulating the transaction. There is no stamping fee charged and the policy is not reported to the Surplus Lines Stamping Office.

Under Chapter 226 of the Insurance Code, a premium tax is due on exposures located in Texas that are insured under a policy procured out-of-state. The tax rate is 4.85% of the gross premium. The tax can be paid by the insured or anyone designated by the insured. Payment is due by May 15 following the calendar year in which the insurance was procured. The independently procured tax report is Form 25-103.