### 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. NedPrice, Director

Title Section

Opinion No. Q-495 Re: Whether agreement by representative of atitle 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 30states that the Kansas City Title Company, a tftle insurance- cornpax qualified and operating under the provisions of Article 132a, T.C. S has entered into an agreement with the Hexter Abstract aii Title Company, anabstract company not qualified to operate as atitle 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 upto the sumof $l,OOOOOO; and to Indemnify Companyfrom any and all loss of any nature or kind on any policy, commitment to insure or binder issued byAgent on all losses or claims upto $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 upto 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 sumin excess of $l,OOO.OO upto and including $10,000.00.”Hon. J. P. Gibbs, Page Z., Q-495

tions: You request an

### opinionon the following

“1. Does the above quoted provision constitute a reissurence agreement between Kansas City Title Companyand 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 Companyandthe Hexter Abstract and Title Companyis one of reinsurance, then please advise whether or not the agreement is in violation of that part of Section I1 of Article 1302(a) swhich provldes, ‘such Mm

### anyoperating under the provisions of !i

th s Act may reinsure any or all of its business provided the reinsuring company shall be qualified to dobusiness 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. Reinsurance is defkned in Couch, Cyclopedia of Insurance Law, Section 2256, and in 24Tax, Jur. opage 1293, as a contract whereby one for aconsideration 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 1302ae SUMMARY

Anagreement 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 areinsuranct agreement DHon. J. P. Gibbs, Page 3, Y-495

Saoh an agTeeementwould tielate Se01 tions 3and 

### 11ofArtlole130Em,t.C.9. Very truly yours ATTOEZNEY

GENERAL

OFTEXAS

NedMcDaniel Assistant

APPROWD:

ATTORI'ZYGENERAL NMc:jmc:jrb