Untitled Texas Attorney General Opinion ( 1957 )

October 30, 1957 State Board of Insurance Opinion No. WW-291 Hon. William A. Harrison Commissioner of Insurance Re: Does the State Board of Insurance International Life Building have authority to fix maximum Austin, Texas commissions. which insurers writing credit insurance may allow to lenders, 1 nder agents, or insurance agents , :$der Article 3.53 of the Texas Gentlemen: ::. lnsu~rance Code ? f< s., ,., ..’; i,!, Your letter of September 9, 19~57;‘hcs been received, .and we~quote .;,.2 from it in part as follows: 1 “In this connection, we desire you; opinion of the authority of this Board to fix the maliimum ,commissions which insurers writing credit insurance may aDow to lenders, lender agents, , ‘, or insurance agents.” Article 3.53, origina,lly Senate Bill No. 208, was enacted by the 51st Legis,lature in 1949. From the caption of this Act we quote in part as follows: , “fan Act proiidi,ng for regulation of life insurance and health and accident insurance issued in connection with loan transactions; ~ ~ . declaring certain commissions for the sale of credit insurance legal, and forbidding those above maximum rates1 or based on loss experience; . . .” ., Section 6 of Article 3.53 provides: “Commissions received by lenders, lender agents and insurance agents from insurers for the writing of credit insurance complying with the terms of this article, the maximum rates promulgated by the Board, and rules and regulations of the Board of Insurance Commissioners, shall be considered for all purposes as compensation for services rendered to such insurer and shall not be taken to be an interest charge on the money borrowed; provided, however, .State Board of Insurance, page 2 ,(WW-291) should such commissions be in ‘excess of any maximum fixed ’ here’under, then such commissions shall be deemed to be an interest charge on the money borrowed. No agreements ,by insurers with any of its agents shall permit contingent com- missions based on loss ,experience.” Section 9 of Article 3.53 provides: “The Board is hereby authorized to promulgate rules and regulations to carry out the spirit and purposes of this article, including but without limiting the generality hereof, the reserve requirement and records to be maintained on ; such business, the method of insurance and deliirery of the ‘. policies and the methods for the settlement of claims.” It is evident~from this language that it was the intent of the Legisla- ture’to authorize the State Board of Insurance, the successor to the Board’ of Insurance Commissione,rs, to set a maximum rate of commissions that can be paid. by the,credit life, health. and i(ccident insurers. If this were nottrue,, such language as quoted above @uld be mere surplusage. SUMMAR,Y “. ., The State Board.of I&urance is authorized by Article 3.53 of the Texas Code of Insurance to set maximu:m com;?nissions that may be allowed by insurers writing credit life, health and acci- dent insurance..” - Very truly yours, WILL WILSON Attorney General of Texas RAW:pc ,, ;’ APPROVED: OPINION COMMITTEE: Richard A. Wells Assistant Geo. P. Blackburn, Chairman w. v. Gappert B. H,, Timminr, Jr. John B. Webster REVIEW,ED FOR THE ATTORNEY, GENERAL BY: James N. Ludlum 1Emphasis supplied throughout.