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Honorable Wm. Hunter McLean OpinionNo. C-167 Chairman, State Board of Insurance 1110 San Jacinto Re: Reconsideration of Austin 14, Texas Opinion S-179 Dear Mr. McLean: Your recent opinion request states that the State Board of Insurancenow has under considerationinsertion of the following rule in the Texas General Basis Schedules:

"DEFERRED PAYMENT OF PREMIUMS. Unless otherwise specificallyprovided in the GeneralBasis Schedules, interest of 6s per annum shall apply to all premium payments deferred to an agreed stipulateddate. This provision,however, is not intended to affect the usual customary open accounts." On October 22, 1955, the then Attorney General issued Opinion No. S-179, summarizedas follows:

"TheBoard of Insurance Commissioners of the State of Texas does not have the authority to regulate'therate of Interest charged on deferred premiums." OpinionNo. S-179 is based upon those portions of Articles 5.25 and 5.42,Texas Insurance Code, quoted as follows:

"Art. 5.25. Board Shall Fix Rates The Board of Insurance Commissioners shall have the sole and exclusivepower and authority and it shallbe its duty to prescribe, fix, determine and promulgate the-rates of premiums to be chargedand collectedby Sire insurance comoanles transactingbusiness in-this State. Said Board shall alsohave authority to alter or amend any and all such rates of premiums so fixed and determined and adopted by it, and 70 raise.or lower

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the same, vided." or any part thereof, as herein pro-

(Emphasis supplied)

"Art. 5.42. Not Retroactive The provisions of this subchapter shall not dealwith the collection of premiums,but each company shall be permitted to make such roles and regulationsas it may deem justbetween the company, its agents, and itspolicyholders; and no bona fide extension of credit shallbe construedas a discrimination,or in violation of the provisions of this subchapter." This opinion concludesby holding that the Board "doesnot have the authority to regulate the rate of interest chargedby companies on deferredpremiums, as the amount of interest charged is not a part of the policy premium determinedby the Board, but constitutesa charge separateand apart from the pollcg~ premium.
. .' We are not directed to any statutepurporting to give the State Board of Insuranceauthority to regulate the rate of interest to be charged on deferredpremiums on fire insurance, On the contrary, Articles 5.25 and 5.26, Texas Insurance Code, ive the Board authority to regulatepremium rates,while Article 5.82 constitutes express legislativepermission for the deferment of premium payments and the adoption of regulationsby each insurance company concerning the collection of suchpremiums. In the case of Commercial Standard Insurance Company v. Board of Insurance Cornmissloners, 34 Y W 2a 343
. (Cl

~.APP. 1930 The i error ref.), ssuebefore the Court was whether or not the Board Lad authority to promulgate an order fixing the amount of commissionswhich fire insurance companiesnight pay to their local agents. The Court noted the statutes controllingthe regulation of fire insurCode) and ante (now subchapter C of Chapter 5 of the Insurance stated that:

"The statutesvest in said Board very extensive and exclusivepowers overpremium rates and provide for securing information on which to fix, alter, amend, or modify sane.” This is still true of these statutes. In the course of its opinion denying the Board's authority to fix the amount of commission, the Courtwent on to hold as follows:

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Hon. Wn, Hunter McLean, Page 3 (~C- 167 ,)

"Inall instances,however, such powers relate to fixingmaximum emium-rates;. and. nowhere is anv exoress oritv given bv law to regulate or"contro1any of the items, elements, or charges, entering into or going to make up the aggregatepremium rate. ,I

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. . .thesestatutes,having undertaken in considerabledetail to prescribe the powers and duties of the Board relative to such maximum rate only, without giving authority t-em tofix or regulate the different elements of expense entering into that rate, must be construed as a legislativedenial of suchpower." The Court furtherheld: "TheBoard can exercise only the authority conferredupon it by law 'in clear and unnistakable terms, and will not be deemed to be given by implication,nor can it be extended by inference,but must be strictly construed.' 51 C.J. 56. State v. Robinson (Tex.Sup.),30 S.W.2d 297." IEmphasis supplied) Had the Legislature desired to confer authorityupon the Board to regulate or specify interest rates chargedupon deferredpremiums, it easily couldhave done so. Instead, Article 5.42 has not been amended since the release of Opinion No. S-179, some eight years ago. In view of the foregoingauthorities and in the absence of any language of the Insurance Code purporting to give the Board authority to regulate rates of interestupon deferredpremiums, we affirm the holding of Opinion No. S-179 and respectfully advise you that the State Board of Insurance does not have the authority to promulgate the order set out in your opinion request.

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SUMMARY The StateBoard of Insurance does not have the authority to regulate the rate of Interest charges on deferredpremium payments. OpinionNo, S-179 is affirmed. Yours very truly, WAGGONER CARR Attorney General of Texas

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DDM/snd APPROVED: Opinion Committee W. V. Geppert, Chairman Joe R. Long C. L. Snow, Jr. Howard Fender GordonAppleman APPROVED FOR THE ATTORNEY GENERAL BY: Stanton Stone

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