Ikmorahle 0. P. Lockhart, Chairman

Board of InsuranoeUasmissionsrs Austin, Texas

Dear Sir: Opinion No. 0-4289 Rer May the Life InsuranaeCumnissioner and Chairman lawfullymake trips to foreign states to axamine into the affairs of oertain foreign life insurance canpsniss,etc., rather than send a designatedactuary, exsminsr or other person, and rslated questions?

Your letter dated Marsh 19, 1942, requestingan opinion of this deparbaent,reads as follows:

"A partioular oooasion has arise in which the Life Insuranoe Conmissioner (or officio Chairman of the Board of Insuranoe Commissioners) finds it more expedient to go in person to foreign states for the purpose of sxsmining into the affairs of certain foreign life insuranae campanise,having oertifioatesof authority from this Board ixconduot lifd'insuranoebusiness in Texas, than to designate the Aotuary, or any examiner or other person to mske.suoh a trip, examinations and investigations for him.

"In oonnedionwith this and a9y similar occasional situationwhioh may arise while the laws remain as they are, ws desire your opinion upon the following points8
sl. Uay the Life Insurance Ccmmissionera.& Chairman lawfullymake.suoh.trips, examinations and investigatf,onsin person, rather than through a designated Actuary, examiner or other person?
"2. In ths event of an affirmative answsr to Number 1, must he do so only in his oapaoity as Life Insurance Camrmissloner

and Chairman of the Board or may he, for the duration of such trip, as ars our sxaminsrs, rsmwe himself'frcsa

the payroll of the Cmsnission as Life IasuranosCcmusissioner and Chairman (thus allowing the Chief Clerk to ssrvs as Acting Life InsuranusCcnmaissionsr and Chairman during his absence) andmake the trip, examination and investigation in the capacity of examiner, designated for suoh purpose by himself as Chairman of the Board?Hon. 0. P. Lockhart, page 2 (O-4289)

“3. Inmaking such trip either in his capacity as Life Insurance Ccsmuissioner and Chainsan or in a capacityas examiner designatedby himself for such purpose,would he necessarily be limited to his statutory compensationof $8000 per year as Ccmmissioner and Chairmpn (#20 per diem onthe basis of 300 working days per year, or $l6.43 per diem on the basis of 565 days per year), plus the $4 per day maxisssn travel expense allowed by the present annual departmentalapproprialionbill (88 423, Act 1941, 47th Leg., Reg. Sess.), or would it be permissible for him under the retaliatoryprovisions of the statutes hereinafter oited to charge the Examination Fund, to be reimbursed by the examined foreign companies,with the largerper diem compensationand travel expense allowance permissibleunder such retaliatoryprovisions and required bythe laws of the home states of such exemined foreign companiesto be charged for examinations of Texas companies by examiners farm their states?
II "

. . . Article 4690,Vernon's Annotated Revised Statutes,reads as followsr
"The Chairmanof the Board of Insurance Covmissionem s.hs.11,

once in each tvo years or oftener if he detrms neoessary, in person or by'one or more examtiers commissionedby him in writin!,visit each oanpany organiced under the lawa of this tate and examine its finanoial conditionand its ability to meet its liabilities, as well its oanplianoewith the laws of Texas affecting the ccnduct of its businesstand he may similarly in person or by one or more commissionedexaminers,visit and examine, either alone or jointlywith the representativesof the insurance supervisingdepartments of other states, each insurance companynot organizedunder the laws ofthis State but authorizedto conductbusiness in this &ate."
Article 4691 of the Revised Statutes reads as follows:
*The Board of InsursnceCommissioners for the purpose of examinationauthorizedby law, has power either inprson or by cplc ormore examinersby him oommissioned is writing;

. . . "(3) To visit at its prinoipal office, wherever situated, eny insurance company doing business in this State. . -

Hon. 0. P. Lookhart, Page S (O-4289)

for the purpose of investigating its affairs and aonditions,

. . . .~.
"The reasonable expenses of all such examinations.shall bs plid by the company examined."

In our opinion, question nmber 1 should bc answered in the affirmative. The statutesabove quoted,wc think, authorize the Chaiwan of the Board of InsuranceCcanmissioners to make the examinationsof oompanies writing insurance,either in person or by his duly appointedemaminers, regardlessof whethsr the company is a domestic or a foreign corporation.Answering question number 2, the Chairman of the Board of Insurance Connnissioners, if he sakes the examination, does so as MS.. sioner, and not as an appointed examiner.

Article 4690a .ofthe Revised Statutes,.reads:

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. . . In case of an examination of the company snot organizedunder the laws'of Texas,whether such examination ismade by the Te5za.s authoritiesalone, or jointlytith the insurenoe supervisoryauthorities ~of-,another~

state or states,-the expenses of such emamination due tc Texas*.participationtherein shallbe borne by-the compaqy'underexamination. Payment of such oosts shall bs made by the oompany upon presentation of itemiaedwrittenstatement bythe Chairman,and sha.ll,oonsist

of the examiner's rcrmuneration and expense, and the other expenses of the:Department of Insurance properly allooable to the examination. Payment shall be made dire&ly to the Chairman,and all,money collected by assessment of foreign oompanies,forthe cost of exsmination shall.

be deposited inthe state treasury bythe Chairman to the credit of the insurance examinationfund out of which shallbe paid, by a warrant of the state Comptroller-ofPubiic Aaioounts on voucher of the Chairman of.the Board of Insuranoe Cozmaissioners, the examiner's rcmunerationand~expenses in the amounts determinedby the methods hereinafter provided,rPlen verified by their affidavit and approvedby-the Chairman;

. .~. exeminer~s remunerationand expenses shall be the'same as that which wouldbe paid by the haae~state of the company under examination to ,prsons conducting the examination of a Texas company admitted to do business in that state."
Article 4690b provides:
“The Chairman~ofthe Board oftInshrsnce armmissioners,shsll appoint suoh number of examiners'.

. . as he may ~Jeemnewssary forthe purpose ofmaking on behalf of theHon. 0. Fe Lookhart, Page 4 (O-4289)

state and of the Eoardof InsuranoeCcamissioaersall suoh exeminationsof Insurance companies, at the expense of such companiesor corporations,as are required to be made or provided for by law."

The Appropriation Bill passed in 1941, pages 1184-1188 of the Acts of the 47th Legislature, appropriated$6,CCO.CC our of the General hevenue &nd to pay the salary of the Life Ins-ce 'hmissioner and Chair-
-n of the Board. It also appropriatedcertain fixed amounts fir the exminers thatmay be appointedby the aairman ofthe Board Of ~surenoe Canmissioners.
Under the statuteshereinbeforequoted, a life insurance ocmppany is required'topay the expenses of the examinationwhen aada. It includes the'examiner's remneration, togetherwith all of.the expenses inoident to said particular examination. If theexamination is made by the Qlai+xan ofthe Board of Cxmsissionershimself, therewould not be any examiner's remunerationtobe charged,since the Chairman of the Board would be acting under the powers given him .bythe Legislature tomake the examination in person. The only expense'that could be charged against the ompauy examined by him would be his expenses, togetherwith any other expenses Of the k+I%aent Of Insuranceproperly allocable to suoh ems&nation. end The Chairman of the Board of Insurance Cmmissioners is limited to,
the flMot drawmore thanthe $6,000.00per annm salary appropriated by gislature.
By question nuder 3 you ask what expenses the Chairman of the Board of Life fnsuranoeCommissionerscould charge if he &es 5.u fact. exmine a foreign corporation.

Under the provisions of &tioles 4690a and 4891, above quoted, the actual expenses incurred in the examination of a foreign i&umnoe c~S pany is to be PaId by the oonpany examined. As ws interpret saidArticles, it Is imaterial~whether the examination ismade 9 the Chairman of the .lkardof Insur&oe Ccmaissioners,ormade by one of theeceminers appointed by him. The actual and neoessary expenses incurredare to be paid bythe company examined,and when paid, same are to be deposited in the State treasury, and then the actual expenses inourredby the party or parties who in faot made the examinationare to be paid toraid party or parties onwarrants drawn on the &ate Treasurer. wuoted protion of &ticle 4690a above, The expression used in the that the cost of examination shall consist of “the examiner’s remuneration and expenses,and the other expsnsea of the Dsparbnent"means the expenses of the party who makes the examination,and if the Olaiman of the Board makes the examination, his actual expeiises

should be paid by the examined company. 8aid Article 4690a provides that, %xaminers~ remunerationand (all) expenses shall be the ssme as that which would be paid by the home state of the company under examinationto persons conductingtheexsminations by the Texas ccmpany.a This statute-&~~at theexpense paid is the same as would be required under examination to persons conducting the examination. If the -_. -

Hon. 0. P. lockhart, page 5(0-4289)

Commissionerhimself examines a domestio company,the companywould be required to pay his actual expenses. In otherwords, it is not the expenses of the examiners as distinguishedfras the Ccaucissioner himself when he makes the examination, tit it refers to and is intendedto coverthe expenses of whoevermakes the examination,and whatever amount of actual expense is incurred bythe partymaking the examination. All expensemoney, under the law, when collected, is paid to the Chairman of the Ebsrd of Insurance Commissioners,and he is required to deposit it in the State treasury. The actual expense of the partywho made the examination is then paid to him "bywarrant of the State Comptrollerof Public Acoounts on voucher ofthe aairman of the Board of Insurance &mmissioners." If the Commissionerhimselfmade the examination,he would end will-be entitled to the actual expenses he incurred end oollleoted frosthe companyhe examined. Under the law,when he collects this expensemoney, he shoulddeposit the same in the State treasury,and then issue to himself a voucher for his said expenses, and obtain a warrant from the Comptrolleragainst said fund. By thismethod the Stats can keep a check on the amount collectedby the Cammissioner as epenses, whether it be for examining a domestio or a foreign company.
Very truly yours
ATTOBXEY GENERALOF TEXAS

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_ Gee. IL Barous

Gee. PT.Birous Assistant

APTROVED DJL 28, '1942 /s/Gerald C. Mann ATTORSSYGWERALOFTEXAS
This opiaion consideredand approved in limited conference.