THE ATTORNEY GENERAL 

OF =XAS 

WTIA. WILSON 

A=O’RNIFy OBSNERAI. 

May 29, 1961 

Hon. William A. Harrison 

Commi~ssioner of Insurance 

International Life Building 

Austin, Texas 

Opinion No. WW- 1071 

Re: Whether County Mutual Insurance Companies which are 

authorized to issue automobile 

liability insurance policies in 

the State of Texas are subject 

to the mandatory provisions of 

Section 35 of the Texas Motor 

Vehicle Safety-Responsibility 

Act, Acts 1951, 52nd Legislature (Article 6701h, Civil Statutes 

of Texas). 

Dear Commissioner Harrison: 

You have asked our opinion on the following questions: 

“1. Are County Mutual Insurance Companies which 

are authorized to issue automobile liability insurance 

policies in the State of Texas subject to the mandatory 

provisions of Section 35 of the Texas Motor Vehicle SafetyResponsibility Act, Acts 1951, 52nd Legislature? 

“2. If your answer to the above question is in the affirmative, would a County Mutual which subscribed to the 

Assigned Risk Plan be required to charge the rate of premium prescribed by the State Boa,rd of Insurance for policies issued in accordance with the Texas Motor Vehicle 

Assigned Risk Plan? I’ 

Section 35 of Article 6701h, V. C. S. , the Motor Vehicle SafetyResponsibility Act, after making provisions for the formation of “a plan 

and procedure to provide a means by which insurance may be assigned 

to an authorized insurance company for a person required by this Act to 

show proof of financial responsibility, ” commonly known as the assigned 

risk plan, continues by providing: “When any such plan has been approved 
Hon. William A. Harrison, page 2 (WW-1071) 

by the Board of Insurance Commissioners, all insurance companies authorized to issue motor vehicle liability policies in the State of Texas shall 

subscribe thereto and participate therein. I’ In addition, the Board is given 

the authority to set premium rates commensurate with the risks. (In the 

field of automobile insurance generally, the Board, by Subchapter A of 

Chapter 5 of the Insurance Code has been given the responsibility of promulgating policy forms and regulating premium rates. ) 

County Mutual6 have a somewhat unique history. Chapter 17 of the 

Insurance Code (Art. 17.22, Vol. 14, Vernon’s Civil Statutes) has consistently provided that such companies shall be “exempt from the operation 

of all insurance laws of this state” unless otherwise specifically provided 

in said Chapter. Formerly, no such company could write automobile 

liability insurance. In 1955, however, certain changes were made in 

Chapter 17. Article 17. 02 was amended to prohibit the formation of such 

companies; Article 17.25 was amended to authorize the writing of automobile liability insurance by certain classes of County Mutuals; and Article 

17.22 was amended to provide that such companies are subject to certain 

specified statutes outside of Chapter 17. 

Shortly after the passage of the above-mentioned amendments, this 

office was called upon to answer somewhat the same ques:tion in regard to 

automobile liability insurance generally that we are now called upon to answer in regard to the assigned risk plan. In Opinion No. WW-401, we 

held: 1) that County Mutuals were specifically made subject to the policy 

provisions of Article 5.06, but 2) were not subject to the rating provisions 

of Article 5.01, et seq, because of the exemption provisions. 

The reasoning of Opinion No. WW-401 applies equally to the question before us. Although obviously the purpose of Art. 6701h in its entirety 

is “to encourage safer use of motor vehicles, ” in our opinion Sec. 35 of 

that Article is an “insurance law” within the purview of Art. 17.22 since 

the regulations which it imposes upon the insurance industry after approval 

of the plan by the Board are of the most fundamental type, i. e. the compulsory insuring of a risk at a prescribed rate. Nowhere in the 1955 

amendments to Chapter 17, neither in those giving County Mutual6 the 

authority to write automobile liability insurance, nor in those specifying 

other portions of the laws of this State to which such companies should 

thenceforth be subject, are there any references to Article 6701h. although 

it had been in existence since 1951. 
Hon. William A. Harrison, page 3 (WW-1071) 

Accordingly, we are compelled to hold that County Mutual6 are 

not subject to the provisions of the Texas Motor Vehicle Assigned Risk 

Plan, and both questions are answered in the negative. 

SUMMARY 

County Mutual Insurance Companies 

which are authorized to issue automobile liability insurance policies in the State of Texas are 

not subject to the mandatory provisions of Section 35 of the Texas Motor Vehicle Safety-Responsibility Act, Acts 1951, 52nd Legislature 

(Article 6701h, V. C. S. )~ 

Very truly yours, 

WILL W.ILSON 

Attorney General of Texas 

Assistant A 

RVL:lmc 

APPROVED: 

OPINION COMMITTEE: 

W. V. Geppert, Chairman 

Virgil Pulliam 

William R. Hemphill 

Ben Harrison 

Tom I. McFarling 

REVIEWED FOR THE ATTORNEY GENERAL 

BY: Morgan Nesbitt