T~ER-~-~oRNEY GENERAL 

OF TEXAS 

PRICE DANIEL 

ATTORNEY GENERAL 

Aun.rx~ 1% we 

February 10, 1919 

Hon. J. P. Gibbs, Commissioner 

Casualty Insurance Division 

Board af Insuraae Cemmlssiaers 

A-tin 14, Texas 

Attention: Mr. Ned Price, Director 

Title Section 

Opinion No. Q-495 

Re: Whether agreement by representative of a title insurer 

to pay a portion of the insurer’s losses constitutes 

a refnsurance agreement; and 

whether such an agreement violates Section 11 of Article 

1302a, Q. C. S. 

Dear Sir: 

Your letter of December 30 states that the Kansas City Title Company, a tftle insurance- cornpax qualified 

and operating under the provisions of Article 13 2a, T.C. 

S has entered into an agreement with the Hexter Abstract 

aii Title Company, an abstract company not qualified to 

operate as a title company under Article 1302a ) Q.C.S., 

as Its representative for the fssuance of title insurance. 

The agreement provides in part as follows: 

“It being mutually agreed and understood 

as a part of the consideration for this contract that Agent hereby agrees to pay all losses and cla?ms under any policy written by Agent 

up to the sum of $l,OOOOOO; and to Indemnify 

Company from any and all loss of any nature or 

kind on any policy, commitment to insure or 

binder issued by Agent on all losses or claims 

up to $1,000.00; and further agrees to pay onehalf of any and all loss incurred under any 

policy ,issued~by Agent over $l,OOO.OO up to and 

including $lO,OOO.OO; and to indemnify Company 

from any and all loss of any nature or kind on 

any policy, commitment to insure or binder issued by Agent to the extent of one-half of any 

sum in excess of $l,OOO.OO up to and including 

$10,000.00.” 
Hon. J. P. Gibbs, Page Z., Q-495 

tions: 

You request an opinion on the following 

“1. Does the above quoted provision 

constitute a reissurence agreement between 

Kansas City Title Company and Hexter Abstract and Title Coapaay? 

“2. If your answer to question No. 1 

is to the effect that the e@reement between 

the Kansas City Tit1.e Company and the Hexter 

Abstract and Title Company is one of reinsurance, then please advise whether or not 

the agreement is in violation of that part 

of Section I1 of Article 1302(a) s which provldes, ‘such Mm any operating under the 

provisions of th !i s Act may reinsure any or 

all of its business provided the reinsuring 

company shall be qualified to do business 

in Texas and the reinsuring contract shall 

be first approved by the Board of Insurance 

Commissioners !” 

quesAs to your fPWs$ question, the agreement clearly ronstltutes a reinsurance agreement. Reins uranc e is 

defkned in Couch, Cyclopedia of Insurance Law, Section 

2256, and in 24 Tax, Jur. o page 1293, as a contract whereby one for a consideration agrees to indemnify another, 

either in whole or in part, against loss or liability the 

risk of whiob’ the latter has assumed under a separate and 

distinct contract as insurer of a third party, 

As to your second question, Section 11 of Article 1302a, which you quote, having provided for the cfrcumstances under which companies operating thereunder 

might reinsure their risks, there is an implied prohfbition to such companies ‘reinsuring in any other manner. 

It is our opinion, therefore, that the agreement is in 

violation of the quoted portion of Section 11 of Article 

1302a e 

SUMMARY 

An agreement by an abstract company 

not qualified to operate as a title company 

under Article 1302a; Q.~C. S., to Indemnify 

a title company which ft represents against 

any portion of the losses sustained by such 

title company on policies issued by the abstract company constitutes a reinsuranct agreement D 
Hon. J. P. Gibbs, Page 3, Y-495 

Saoh an agTeeement would tielate Se01 

tions 3 and 11 of Artlole 130Em, t. C. 9. 

Very truly yours 

ATTOEZNEY GENERAL OF TEXAS 

Ned McDaniel 

Assistant 

APPROWD: 

ATTORI'ZY GENERAL 

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