April 14, 1939 

Honorable Tom C. King 

State Auditor 

AmtIn, Texar 

Dear Sir: 

opinion lo. 0-W 

Rtr Examination of dome&k and 

foreign ~i.nNranCC companiccl. 

Your letter of January 13, 1939, hertlnafter set out, ha6 received 

the careful attention of this Department. 

We acknowledge with thanka the aesietanct rendered UII through numerous 

convtraatlons with Mr. T. M. Markham of your Department. In thin connection, 

we have also received hlpful information from the Honorable R. L. Daniel, 

former Chairnum of the Board of Insurance Conunisniontr6 and members of him 

department. 

Your letter it as follows: 

“Articles 4690, &OS, 46gOb and 46gOc provide for the: examination of inmrenct comptnltt chartered in, or doing bu6lntss In, 

the State of Texa8, and for appointment, qualification, compensation etc. of examiner8 therefor. 

“Your opinion ir rtrpectfully requeatsd regarding the followlng: 

(1) The authority of the Chahmn of the Board of murance 

Comirrlonerr of Texar to accept t6aminat.i~ report6 

from sxamintrr not comiraioned by him in writing. 

(2) The authorit of actuaries or examiner8 to accept compensation (tither per diem or othtiwltt), gratuity, or 

refund6 of txpenrer incurred by them from any lnouranct 

company, while connaisrloned by the Chairman of the Board 

of Inturanct Commirrlontr6 of Tent. 

(3) In caw of violation of authorlty In No. 2 above, what 

penalty la provided.” 

The first rcntence of Article 4690, Revised Civil Gtatutel, 1925, 

as ended by Chapter 152, Actr Regular Gession, knd Leglrlature, 1931, reads 

a6 follows: 
Hon. Tom C. King, Page 2 (O-144) 

or by one or more examiners commireloned by him in writing, visit 

each company organized under the laws of this State and examine its 

financial condition and its ability to meet its liabilitiee, as well 

a8 it6 compliance with the law6 of Texan afftctlng the conduct of 

itr burinear) and he mx rimilarly, In ptrron or by one or more canmiariontd txamintr8, visit and examine, tither alone or jointly with 

representatives of the insurance rupervlring department6 of other 

States, each insurance company not organized under the law8 of this 

State but authorized to tranoact buainesr in this State . . .” 

Article 46906 provides that the expenses of all Euch examinatlonr 

&all be borne by the insurance coxpenles exanined and that the eums received 

for such purposes shall be deposited in the Insurance Examinstion Fund of the 

State Treamry. From such Fund, it ir, prescribed that the salaries and expense6 

of all ntcesssry actuarier and~examinerr, of the department rhall be paid. Thlr 

statute also authorizes joint examinations between repreBentative6 of the State 

I 

of Texas Insurance Department, and eimilar department8 of other States. 

Article k6gOb authorize.8 the appointment of certain actuaries and 

examiners and prescribes the maximum ealariee that each ahall receive. The 

last paragraph of thi6 Article reads as followa: 

“Neither the actuary to the Board of Insurance Commissioners 

l nor any examiner or assistant shall continue to serve ab such if, 

while hold;rig such position, he shall, directly or indirectly, accept from &!y insurance rompany, any employment or pay or compensation or gratuity on account of any service rendered or to be 

rendered or on any accouc$ whatsoever.” 

Article 4690~ provides that examiners and assistant examiner6 shall 

take an oath of office and file a bond conditioned as prescribed by aaid Article. 

We call your special attention to the difference in the requirement 

of Article 4690, as amended, in regard to examination of insurance companies 

organized under the law8 of this state and the examination of ether companies 

organized under laws of other States but having pernits to do business in Texas. 

It is our' opinion th$ the requirements of the statute in regard to examination6 

of domestic companies at leant once every two years are mandatory. It is equally 

apparent that the examination of foreign companies with permits to do business 

in Texas is not mandatory, but may be made by the Chaiman of the Board of 

Insurance Commissioners, or hie representative, if, in hie judgment, such examination shouldbt made. 

Since the statutes prescribe that the mandatory examinations must 

be made by examiners commissioned by the Chairman in writing, it is our opinion that the acceptance by the Chal- of reports from examiners not commissioned by him in writing would not be a proper and sufficient compliance with 

these requirements of the statutes. By this w& do not mean that it is improper 

for said chairmau to receive and have among the papers and files of his office 

. 
Hon. Tom C. Kiug, Page 3 (O-144) 

!’ 

report-t made by non-comaisrimed examinera, but it ir our opinion that the 

acceptance of such report8 doe8 not constitute a compliance with the mandatory 

provirionr of there articler. 

It ir, therefore, our opiuieu that qutatiou lo. 1 should be mowered 

ar followr: 

At lea6t one txaminatlon every two yearn of each inmrance corporatleu orgauized under the laws of the State of Texan muat be made by the Chairman of the Board of Insurance Comainsionerm or his examiners, duly commissioned 

in writing. While said chairman may accept reports from non-commissioned exami.nerB for the benefit of such information 80 they may contain, yet such reportr and 6uch examinationa would not satlafy the mandatory provisions of the 

statute. In regard to insurance corporationr not organized under the laws of 

the state ofTexam but operating in Texas under permits to do business in Texas, 

it is our further opinion that no mandatory examination of ruch companies is 

required by Iltatute. If, however, said Chairmen determines that such examinetlon should be xkde, the 6ax~ must be made by a duly commissioned examiner, 

which commission must be in writing. If, on the other hand, said Chairman determines that such examination of forelgu companlea la not necessary, there 

la, in our opinion, no statutory objection to his receiving reports from noncommissioned examiners for such information as they xay contain. 

In anmfer to question lo. 2, 

tion of Article 46pOb that actuaries, 

it is clear from the above quoted porexaminers and aseistant examiners of 

the Board of Insurance Commissioners cannot continue to serve as such if, while 

holding such position, they shall directly or indirectly receive or accept 

from any insurance company any employment or pay'or compensation or gratuity 

en account of any service rendered or to be rendered or on any account whatsoever. 

In answer to question Ro. 3, the etatute doea not prescribe a penalty 

for a violation of the prohibited act except to disqualify such employees from 

further continuing to represent the State in aaid capacities. In our opinion 

the penalty should be the removal of 8uch employees from the positions they 

hold, unleaa their acceptance of such consideration constitutes a violation 

of 8ptciflc criminal statutes, in which event, the penalties prescribed by 

such statute6 could also be inflicted. 

We trust that thin ia the information you desire. 

vwB:R:IM 

APPROVRD: 

(Mened) Gerald C. Warm 

ATT= OBIWUL OF TRXAS 

Yours very truly 

ATTORREY (;ERwAL OFTRXAS 

By (Signed) Victor W. Bouldin 

Victor W. Bouldin 

Assistant