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The Attorney General of Texas 

December 31, 1982 

MARK WHITE 

Attorney General 

SuDreme Court Building 

P. 0. Box 12548 

Austin. TX. 78711.2548 

5121475-2501 

Telex 91OlS74-1367 

Telecopier 512l4750266 

IS07 Main St.. Suite 14M) 

Dallas. TX. 752064709 

214/742%944 

4824 Alberta Ave.. Suite 160 

El Paso. TX. 79905.2793 

9156333484 

220 Dallas Ave.. Suite x)2 

Houston. TX. 770026936 

713m806 Broadway. Suite 312 

LubboctC. TX. 79401.3479 

SOM47.5238 

43M) N. Tenth. Suite B 

McAllen. TX. 78501-1685 

51216824547 

200 Main Plaza, Suite 400 

San Antonio, TX. 78205-2797 

512m5-4191 

An Equal Opportunity/ 

Aftirmative Action Employer 

Hr. William P. Daves 

Chairman 

State Board of Insurance 

1110 San Jacinto 

Austin, Texas 78786 

Opinion NO. Mw-564 

Re: Solicitation of insurance 

Dear Mr. Daves: 

You ask whether any of three sample letters from lending 

institutions to borrowers reminding them to renew their hazard 

insurance policy constitutes solicitation of insurance in violation of 

articles 21.02, 21.02-l. 21.14, section 4 and 21.48A. section 2(c) of 

the Texas Insurance Code. 

A summary of the factual context in which these letters are 

written is helpful. It is our understanding that it is common 

practice for a lending institution to require that a borrower obtain 

and maintain hazard insurance coverage on the collateral for a loan as 

a term of the written loan agreement. Such an insurance contract is 

generally negotiated for a one-year term while the loan agreement is 

generally for a term of fifteen, twenty or thirty years. We 

understand further that the borrower is required to provide the 

lending institution with a copy of the hazard insur,ance contract and 

that the lending institution generally sends out letters to the 

borrower to remind him to renew his hazard insurance coverage to 

insure continuous coverage as required by the loan agreement. We are 

advised that insurance agencies may be owned and operated by the same, 

or substantially the same, individuals who own and operate the lending 

institution that sends out such letter. Your inquiry relates to the 

specific language used in these letters reminding the borrower to 

renew his'hazard insurance coverage. In particular, you ask whether 

certain language used in three sample letters violate provisions of 

the Texas Insurance Code which prohibit solicitation of insurance 

without a license. 

At the outset, we should note that a financial institution cannot 

be licensed as an insurance agent because it is not "actively engaged 

in the soliciting or writing of insurance from the public generally" 

as required by section 5 of article 21.14 of the Texas Insurance Code. 

Thus, a lending institution is prohibited from engaging in acts of an 

insurance agent, such as soliciting insurance. 

p. 2073 
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. . Mr. William P. Dave6 - Page 2 (MW-564) 

Various provisions of the Texas Insurance Code prohibit the 

solicitation of insurance on behalf of any insurance company without 

the proper license from the State Board of Insurance. Ins. Code arts. 

21.02; 21.02-l; 21.14. However, the code does not define the term 

~solicitation." 

Article 21.48A of the code, entitled "Prohibiting Certain 

Practices Relating to Insurance of Real or Personal Property," is 

directed to landers who require insurance on real or personal property 

constituting collateral for loans. Section 2(c) states: 

(c) No Lender shall~use or permit the use of any 

of the information taken from a policy of 

insurance insuring the property of a Borrower for 

the purpose of soliciting insurance business from 

the Borrower, or make any of such information 

available to any other person for any purpose, 

unless such Lender has first been furnished 

specific written authority from the Borrower 

permitting or directing such particular use or 

disclosure; provided, however, this paragraph 

shall not prevent a Lender who is a licensed local 

recording agent from selling insurance to a 

Borrower. 

We would note that the proviso about local recording agents does 

not apply to lending institutions. Section 1 of article 21.48A of the 

code defines "lender" as "any person, partnership, corporation, 

association, or other entity, or any agent, loan agent, servicing 

agent, or any loan or mortgage broker." Thus, while a lending 

institution is a "lender," it nonetheless is disqualified as an 

insurance agent, which includes local recording agent, for the reasons 

discussed above. 

The Texas Insurance Code does not define the word "solicit". 

Words that are not defined in a statute are given their ordinary 

sinnificance unless thev are words of art or words connected with a 

paiticular subject mat&r. V.T.C.S. art. 10; National Life Company v. 

Stegall. 169 S.W.2d 155, 157 (Tex. 1943); Willingham v. Hagerte, 553 

S.W.Zd 137. 139 (Tex. Civ. App. - Amarillo 1977, no writ). The word 

"solicit" is one of c-on usage and its meaning is simple and not 

subject to any peculiar usage. Coutlakis v. State, 268 S.W.2d 192. 

198 (Tex. Grim. App. 1954); Page v. State, 492 S.W.Zd 573 (Tex. Grim. 

App. 1972). In Attorney General Opinion VW-551 (1959), this office 

addressed the authority of the State Board of Horticians to promulgate 

rules governing solicitation, and related questions. There it was 

stated: 

p. 2074 
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Mr. William P. Daves - Page 3 (MW-564) 

. . 

‘Solicit’ is defined as: ‘To ask for with 

earnestness; to make petition to; to endeavor to 

obtain; to make or excite to action; to appeal to; 

or to invite.’ 

Black’s Law Dictionary, 1248 (5th ed. 1979). 

Applying these definitions to the solicitation of insurance, we 

conclude that any person, including a financial institution, who 

requests, asks or appeals to or recommends or entices a borrower to 

renew his hazard insurance policy with a particular insurance company 

would be soliciting insurance and would be held to be an agent of that 

company under article 21.02 and 21.02-l of the Texas Insurance Code. 

Although the letters of the lending institutions recommend an 

insurance agency rather than an insurance company, articles 21.02 and 

21.02-l apply under the express terms of the statutes which provide 

that any person who does or performs any other act or thing in the 

making of any contract of insurance for or with any such insurance 

company other than for himself shall be held to be the agent of the 

company. The act of recommending an insurance agency is an act in the 

making of an insurance contract. Moreover, an insurance company. as a 

corporate body, can act only through its agents, and it expressly 

authorizes and appoints its agents to enter into insurance contracts. 

Turning now to the specific letters about which you inquired, we 

believe that part of Trample 1 is permissible, hut Examples 2 and 3 

are prohibited by the Texas Insurance Code. 

The pertinent language of Example 1 is: 

We fully recognize your right, of choice of agent 

or carrier in selecting hazard insurance on your 

dwelling. However, since there is a common 

interest between yourself and our firm in seeing 

that your hazard insurance is in a proper form and 

sufficient in an amount to cover your valuable 

home in the event of loss, we would be pleased to 

assist you in obtaining this insurance coverage. 

If you desire that we procure hazard Insurance for 

your dwelling or have quotations provided to you 

for such insurance. it will be necessary for you 

to consent to our releasing the information which 

we have in your insurance file. This consent can 

be given by signing the appropriate space below 

and returning this letter in the enclosed 

self-addressed envelope. 

p. 2075 
. . 

. 1 Hr. William P. Daves - Page 4 @iW-364) 

We believe the second paragraph of Example 1, if sent alone, 

would be permissible in light of article 21.48A. section 2(c), which 

allows the lender to use information taken from an insurance policy 

for the purpose of soliciting insurance business after obtaining 

written authority from the borrower-policyholder. This statutory 

provision clearly envisions and expressly provides for coannunications 

such. as this. However, we believe the second sentence of paragraph 

one constitutes an invitation to assist the borrower in securing 

coverage and thus constitutes the solicitation of insurance. We 

cannot determine from the information presented whether this 

solicitation is made on behalf of an insurance company. If, however, 

this solicitation is in fact made to benefit an insurance company, the 

lender will violate the Insurance Code provisions under discussion. 

The pertinent language of Example 2 is: 

For your renewal we recommend you contact [name of 

insurance agency]. In many cases, this agency can 

offer you more coverage for less premium than you 

are now paying. 

Please call [name of insurance agency] during 

office hours, 8:30 A.M. until 5:30 P.M; at [phone 

number of insurance agency]. Ask for [name of 

agent] or [name of agent]. 

We believe Example’2 is prohibited by articles 21.02 and 21.02-l 

of the Texas Insurance Code because it recommends that the borrower 

renew his hazard insurance policy through a particular agency. which 

sells insurance on behalf of an insurance company. It also entices a 

borrower .by stating that the agency can offer “more coverage for less 

premium.” This language treats the insurance agency as an insurance 

company because only a company can provide coverage. Moreover, 

Example 2 asks the borrower to call the insurance agency, and directs 

him to particular agents within the agency. Also, Example 2 can be 

considered to be “perform[ing] any other act or thing in the making or 

consummating of any contract of insurance.” 

The pertinentlanguage of Example 3 is: 

It is our reconrmendation that you use [name of 

insurance agency) as your insurance agent. It has 

been found that in many instances insurance 

coverage can be purchased for less money than you 

are paying now. [name of insurance agency] can be 

contacted during office hours at [phone number of 

insurance agency]. Their address is [address of 

insurance agency]. 

p. 2076 
. . 

I 

:: 

Mr. William P. Dave6 - Page 5 (MW-5841 

Example 3 constitutes a solicitation of insurance in violation of 

articles. 21.02 and 21.02-l for the same reasons discussed relating to 

Example 2. 

SUMMARY 

Articles 21.02, 21.02-l. 21.14. and 21.48A. 

section 2(c) of the Texas Insurance Code prohibit 

a lending institution from soliciting insurance 

which includes requesting, asking or appealing to 

or recommending or enticing a borrower to renew 

his hazard insurance policy with a particular 

insurance company or egency. On the other hand, 

article 21.48A. section 2(c) allows a lending 

institution to request written authorization from 

a borrower to release information from the 

borrower's file to an insurance agency for the 

purpose of soliciting insurance. 

Very truly yours. 

MARK WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistan: Attorney General 

Prepared by Yolanda McKeeman 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

. . 

Rick Gilpin 

Patricia Hinojosa 

Yolanda McKeeman 

Jim Moellinger 

Bruce Youngblood 

. 

p. 2077