August 12. 1959 

Honorable William A Harrison Opinion No. WW -684 

Commissioner of Insurance 

State Board of Insurance Re: Must accident and health 

Austin, Texas insurance policies issued 

by mutual insurance companies subject to the provisions of Chapter 11. Texas 

Insurance Code, be on a parDear Commissioner Harrison: ticipating dividend basis. 

We quote from your letter as follows: 

“As legal reserve mutual life insurance companies were given the authority in 1947 to write accident 

and health insurance policies ‘subject to the provisions 

of this chapter’ , it appears to us that such accident and 

health insurance policies must be on a participating dividend basis in accordance with Articles 11.11, 11.12, ‘and 

11.13 of the Code. However, we find that the departmental 

practice since 1947,has been not to require accident and 

health insurance policies issued by legal reserve mutual 

life insurance companies to contain participating dividend 

provisions. 

-We. therefore. respectfully request your 

opinion as to whether a legal reserve mutual life insurance company may issue accident and health insurance 

policies which do not contain participating divided provisions in accordance’with Chapter 11. Texas Insurance 

Code, or must all such policies issued by a legal reserve 

mutual life insurance company within this State contain 

participating dividend provisions 7 n 

You are hereby advised that all policies issued by a legal reserve 

mutual life insurance company subject to the provisions of Chapter 11 (which 

we have held in WW-682 to mean domestic mutuals only), whether they be 

combined or separately. life, health and accident insurance policies, must 

contain participating dividend provisions. 

As originally passed. what is now Chapter 11 of the Texas Insurance Code, authorized domestic mutual insurance companies to transact 

only a life insurance business. 
Commissioner William A. Harrison, page 2 (WW-684) 

In 1947 the Legislature by the passage of S.B. 293, Acts 1947. 

59th Leg., p. 532. ch. 312. 8 1, authorized domestic legal reserve mutual 

companies to write health and accident insurance for the first time. The 

caption of that Act stated: 

“An Act amending Article 4800, Revised 

Civil Statutes of Texas. 1925. so as to authorize a 

mutual life insurance company to also issue, combined or separately, life, health, and accident insurance policies;. . .” 

Section 1 of S.B. 293 contained among other things the following 

language: 

Y 

. . .and any such company, heretofore or 

hereafter created, may issue, combined or separately, 

lzfe, health. and accident insurance policies. subject 

to the provisions of this chapter. . .” (Emphasis added) 

This language is now set forth in Section 1 of Article 11.01. Texas Insurance 

Code. 

What is now Article 11.13. which was in existence at the time of 

the passage of S.B. 293 and is without question one of the “provisions of 

this chapter” mentioned in Article 11.01, reads as follows: 

“Mutual life insurance companies are authorized to transact business throughout this State and other 

states to which they may be admitted; they may issue no 

policy except upon the participating plan with dividends 

payable annually as provided in this chapter;. . .I 

In reading the entirety of Chapter 11 of the Insurance Code, and 

doing so in conjunction with the historical background of the various enumerated provisions, it is apparent that the Legislature in authorizing domestic life insurance companies to write accident and health insurance policies 

desired these companies to issue no policy other than those providing for 

participating dividends. Had the Legislature desired to exempt the health 

and accident policies from the provisions of Article 11.13 of the Texas 

Insurance Code, they could.have easily done 80. Not having done so. the 

requiremat therein contained must be controlling. 

We note from your opinion request that you make reference to 

certain departmental construction which is at variance with the conclusions 

reached herein. You are advised that since the language of Chapter 11 is 
Commissioner William A. Harrison, page 3 (WW-684) 

unambiguous in its requirements. the above mentioned departmental construction is not controiling. Jones v. Marrs. 114 Tex. 62. 263 SW. 570; 

State v. Texas Mutual Life Insurance Corn1 sny (Tex. Civ.App.) 51 S,W.Zd 

405. reversed IComm. AnnI 58 S W 2 

.- .~ -I ‘ . d 37: Br 

(Tex. Civ.App.) 180 S.W.654. error ref. 

myown v. City of Amarillo, 

It is noted in passing that Article 11.19 of the Texas Insurance 

Code provides as follows: 

“The provisions of Chapter 3 of this Code, 

when not in conflict with the Articles of this Chapter, 

shall apply to and govern mutual life insurance companies organized under the provisions of this Chapter; 

provided, however, that when any mutual life insurance 

company organized under the provisions of this Chapter 

has a surplus equal to or greater than the minimum of 

capital and surplus required of capital stock companies 

under the provisions of Article 3.02 of Chapter 3, Insurance Code of the State of Texas, Revised Civil Statutes 

of Texas of 1925. the following provisions of Chapter 11 

only shall apply to such mutual companies: 11.01, 11.02, 

11.03. 11.04. 11.05, 11.~06. 11.07. 11.09. 11.10. 11.11. 

11.12. 11.14. 11.16, 11.17. 11.18 and 11.19. Onall other 

matters the provisions of said Chapter shall apply to and 

govern such mutual life insurance companies. As amended 

Acts 1955, 54th Leg., p. 546. ch. 171. $ 1.’ 

In reading Article 11.19 it is noted that any reference to Article 

11.13 is omitted therein; thus, indicating that the Legislature did not intend 

to restrict those mutuals. which can qualify under the proviso of Article 

11.19 to the requirements of Article 11.13. Consequently, a domestic mutual 

life insurance company which has been organized under the provisions of 

Chapter 11 but which has a surplus equal to or greater than the minimum 

of capital and surplus required of capital stock companies under the provisions of Article 3.02 of Chapter 3 of the Insurance Code, need not comply 

with the participating dividend plans payable annually as required under 

Article 11.13. This caveat has been prompted by the language of your opinion request wherein you ask if all policies issued by a legal reserve mutual 

life insurance company within & State of Texas must contain a participating 

dividend provision. You are advised that Article 11.19 would operate ‘as an 

exception to tbe general requirement of Article 11.13. 
Commissioner William A. Harrison. page 4 (WW-684) 

CDD: jg 

SI3M.MAR Y 

Accident and health insurance 

policies issued by domestic mutual insurance companies subject 

to the provisions of Chapter 11, 

Texas Insurance Code, must be 

on a participating basis unless 

they come within the exception of 

Article 11.19. 

Yours very truly, 

WILL WILSON 

’ C. Dean Davis 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE: 

Geo. P. Blackburn. Chairman 

Linward Shivers 

W. 0. Schultz 

James P. Ryan 

REVIEWEDFOR THEATTORNEYGENERAL 

BY: 

W. V. Geppert