Honorable Ned Price, Chairman Opinion No. M- 546 

Honorable Durwood Manford, Member 

Honorable Charles D. Mathews, Member 

State Board of Insurance 

1110 San Jacinto 

Austin, Texas 78701 Re: Whether H. B. 203 and H. B. 

378, Acts 61st Leg., R,S. , 

1969 (concerning the pur - 

chase of liability insurance 

by State agencies) impose 

any obligation upon the State 

Board of Insurance other 

than the promulgation of an 

Dear Sirs: insurance form. 

In your recent letter you request an answer to the ~above captioned question. You point out that Section 1 of H. B. 203 (Acts 61st 

Leg., R. S., 1969, ch. 797, p. 2357) codified as Section 1 of Article 

6252-19a, Vernon’s Civil Statutes, reads, in part, as follows: 

‘1. . . All liability insurance so purchased 

shall be provided on a policy form or forms approved by the State Board of Insurance as to form 

and by the Attorney General as to liability. ” 

The same language appears in Section 1 of Article 6674s-1, Vernon’s 

Civil Statutes, (H.B. 378, Acts 6lst Leg., R.S., 1969, ch. 212, p. 617. ) 

The above quoted provision of the statutes in question is wholly 

silent as to any duty of the Board to fix or audit the rates which are 

charged for the insurance in question, and deals only with the subject 

of the policy form or forms evidencing such insurance’coverage. In 

your letter you point out that your question arisesby r.eason of the following facts: The above quoted provisions are practically the same as those 

-2608- 
Hon. Ned Price, et al, page 2 M- 546 

found in Section 1 of Article 6166210, V. C. S. , which authorfnes the 

Texas Prison Board (now called the Texas Department of Correct~ions) 

to insure its employees against liability arising from the operation of., 

motor vehicles. That statute, which was enacted in 1933, provides, 

in part: 

‘1. . . All insurance taken out by the said 

Board for and in behalf of the benefits of the State 

shall be on forms approved by the Insurance Commission as to form and by the Attorney General as 

to liability. ‘I 

You further point out that in the administration of the statute 

last mentioned the State Board of Insurance not only approved the lan-, 

guage of the contract of insurance through which the Texas Prison.’ 

Board obtained coverage under Article 6166210, but also it undertook 

to audit the in6uranc.e account for the purpose of determining whether. 

correct rates and rate modifiers had been applied. This practice has 

continued down to the present date. After the Board has ascertained 

that the policy contains both the correct form and the correct rates, it 

is transmitted to the Attorney General setting forth such facts. You 

further point out that the practice of making an audit of the rates itnder 

the 1933 statute has not been burdensome in that it requires only appro,ximately ten to sixteen man hours per year, but that if it is followed in the 

administration of the new statutes above mentioned .it would involve approximately one thousand man hours per year, for which no appropriation has been made by the Legislature. 

In our opinion the assumption of the rate-checking function in 

the administration of Article 6166210 would not constitute an administrative interpretation of the statute which, by reason of legislative 

acquiescence thereto, would change the meaning of the statute so as 

to include rate-checking as one of the duties of the Board under the 

statute. Even if it. constituted an interpretation, rather than a mere 

practice based upon general administrative authority, it could not affect the meaning of the statute. The statute is not ambiguous and the 

administrative practice thereunder is not thus relevant to its construction. The rules of statutory construction, including the doctrine 

of legislative acquiescence, would not be applicable. McCallum v: 

-260’9-’ 
Hon. Ned Price, et al, page 3 M- 546 

Associated Retail Credit Men of Austin, 41 S. W. 2d 45 (Tex. Corn. App. 

1931). See Calvert v. Kadane, 427 S. W. 2d 605 (Tex., Sup. ‘1968); In 

enacting the above quoted provisions, the Le’gislature did not impose 

upon the Board any duty other than the approval of policy forms. 

The Board does have, however, a duty under Articles 1:04(b) 

and (c) and 5.01, Texas Insurance Code, to fix and maintain fair, reasonable, and just insurance premium rates in accordance with its published 

rules and regulations in this connection. The statutes mu& be read in 

pari materia with Articles 6252-19a and 66746-1. The Cornmissioner’s. 

duty to enforce such regulations may, in the Board’s discretion, involve 

an auditing of the rates as a means of enforcement. The authority to 

make such an audit is implicit in these statutes when taken together, but 

the extent of any such audit lies within the sound discretion of the Board, 

and consonant with the availability of the funds appropriated for such enforcement purposes. We will not attempt to relate here the .various circumstances under which a duty could arise to require an audit. 

SUMMARY 

Section 1 of Article 6252-19a, V. C.S. (H. B. 

203, Acts 61st Leg., R.S., 1969, ch. 797, p. ,2357) 

and Section 1 of Article 66746-1, V. C. S. (H. B. ‘378, 

Acts 61st Leg., R.S., 1969, ch. 212,.-p. 617) impose 

no obligation upon the State Board of Ipsurance other 

than the approval of policy forms; h’owever, such 

statutes construed in pari materia with Articles 1. 04 

and 5.01, Texas Insurance Code, require.the State 

Board of Insurance to fix and maintain fair, reasonable, and just insurance premium rates, and the auditing of rates may become a means of enforcement, which 

matter is left to the sound discretion of the Board and 

consonant with the availability of funds for such enforcement purposes. 

-2610- 
-. ” 

Hon. Ned Price, et al, page 4 

Prepared by Ralph R. Rash 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

Alfred Walker, Co-Chairman 

Wardlow Lane 

Malcolm Quick 

Jack Sparks 

Roger Tyler 

Terry Goodman 

Meade F. Griffin 

Staff Legal Assistant 

Nola White ” 

First Assistant Attorney General 

M- 546 

-2611-