## TEE A+IYORNEY GENERAL

OF.TEXAS

**AUETIXN** II. TNXAIS

October 31, 1952

Hon. Garland A. Smith Caqalty InsuranceConnnlBBloaer Board of Ineurance, Comm$sslonerB Austin lA,,

TeF+B. ~.

:. @&nlon Np. V-L534

ke: Authority of the Board of Insurance Commlsslonem to suspend or revoke ,' the'

certificatesof llaensed workmen's compensation insurerswho refuse to write this insurance Dear Mr. Smith: for eligible applicants.

Your request for an opinion reads as follows:,

"Section7, of Article 

### 8308, Revised Statutes of **Texas** (Employers Liability and WorkmenIs Compensation Law) provides, 'Any employer of labor in this State who may be s!$ject to the,

terms .ofthis 18~ or to the '.,term$:~of

the Lon@hol'&nen~!s and Harbor Workers' Compensation Act of the United States may become a subscriberto the Association:'

"~Asso~latlon~

1s the Texas Employers' InsuranceAssociation,as provided for In Sections 1 through 6, of' Article 8308.

"The Supreme Court (Co@. of App.) held In the case of Texas Em layers' Ins. Ass%
v. U. S. Torpedo.Co.,2I!! S.W.2d 1057, that the Associstionhad no :choice~ aB to Its hub-, scribers and.must inBure,eye~ry eligible emplayer who apjilled for compensation lnsurante to the Association.~

"Section2, of Arti&le 8309, provides that other companiesmay Insure subscribers and Imayhave and exerciseall the rights and powers conferredby thle law on the assoclatlon created hereby.

. . .I"The oonrta have held in Harris v. Traders' & Oeneral Ins. Co., 82 S.W.2d 750; Southern Casualty Co. v. Freeman, 13 S.W.2d 148; Federal UndervrlteraExchange v. Walker, 134 S.X.26 388; and Capps v. GeneralAccident, FIri8 & Life **Assur** .Corpi

, 92 F.Sup. 227, that such other companiesalso have to vrlte oompensatlon lns~ance for,any eligible employer applying for such Insurance.

"It has been brought to the attention of the Board of InsuranceCommlssionel'B that Texas Employers Insurance Association and other oasualtpcompanies charteredor licensed to transacta 1labllltyand accldent business in this state, and with permlts to write Worionenls Compensationlnsur- ' ante, have refused, In many Instances,to write such lnsnrancefor eligible employers.

"The situationvlth reference to the qbtalnlng of Workmen's Compensationlnsurance has become serious, and some employers have had to cease operationsor to refuse' to enter Into certain operations because of their Inabilityto procure such coverage. The Board of InsuranceCommlesloners arid the IndustrialAccident Board have had many inquiries from such employers,asking how they might obtain the needed Insurance.
"Article1.10, of the Texas Insurance Code, Section 1, Bets otit that one of the duties of the Board Is to 'see that all laws respecting Insuranceand Insurancecompanl?,s
are faithfullyexecuted.'

"Section7 of this Article 1.10, providea that, 'TheBoard shall suspend the entire business of any company of this State, and the business althin this State of any other company, during Its non-compliance vlth any povision of the laws relative to Insurance, or vhen Its business is being fraudulentlyconducted; by suspendingor revoking the certlflcate grantedby It.'Hon. Carland A. Smith, page 3 (V-1534)

"The Board desires your opinion as to whether refusal by a licensed insurer to write Workmen's Compensation insurancefor
an eligible applicant constitutesnoncompliancewith the Insurancelaws referred ,to above; and.vhetherthe Board, where such refusal Is found~bg It after notice, and hearlng,~~may

suspend the entire business o? such refusing companyby suspendingor revoking the certificategranted to lt'bg the,Board."

The cases aivlna effect to the rule announced In Texas &sployers'~InsT As& v. United States Torpedo Co., 26 S.W.26 1057 (T~zx.COQIUI.A~~. 1930, affirming 8 S.W.2d 266), clearly estabilsh a,duty on-the part of any insnrer licensed to write workmen's compensationInsuranceto give protection to all aoolicsntsvha are ellnlble for vorlcmen'scomnensatlon coverage. Southern Casualty Co. v. Free.man,~l3-SiW.2d 148, 150 (Tex.Clv.App.1928~afflrmed~Com.AppJ 24 S.W.26 370); Harris v.~l'raders' .%General Ins. Co., 82 S.W.2d 750 (Tex. Clv.App. 1935,~~error ef.); Federa

i?Jndervrlters

tixchenge

v. Walker, 134 S.W.26 388 (Tex.mp CCLDDS 1.1939,erro; rv.~Qenm1 Accident Fire % Life Assur ;lsm.by agr.);
o Da,92 F.Sup. 227 (S.D.Tex.1950). See also Yoselovltz v. Peoples Bakery, 277 R.W.221 (Mlnn.Sup.1938); CaliforniaState Automobile Ass'n Inter-Insurance Bureau v. Dovnev. 21b P.2d 882 (Cal. Dlst.Ct.ofApp.,1950,afflrmed 341-iiTi05j. The applicant for such Insurancemust, of course, also comply vlth any legal conditions oreCede& to nerfectlnnthe duty of the insurer tom

afford-the protection. Texas EmDlOyeh3 Ins. AssIn V. Russell, 127 Tex. 230, 91 S.w.2d 317 (193b)

__ ; Pose- lowits v. Peonies Bakery, suvra.

Your question Is whether an Insurervho refuses to Issue a proper policy to any employer~vho has perfected his right thereto Is guilty of such "non-compli?nce with any provlslonof the laws rel%tLve to InSuIanCe as to authorize the Board of InsuranceCommissionersto suspend or revoke the Insurer's oertlflcate of authority to engage In the Insurance

business within the meaning of Section 7 of Article 1.10 of the InsuranceCode (Vol. 14, V.C.S.).

Section 7 of Article 1.10 Is derived from S.B. 291, Acts 31st Leg.,R.S.1909,ch.lOS,p.lY2. The Act provided for regulationof the Insurance business generally. We conclude that Section 7 applies to any type of insurancecompany or Insurance

business In the absence of InconsistentspecificHon. Oarland A. Smith, page 4 (V-1534)

prwlaloaa applloableto a particular type of company er to a particularportion of the laws relative to insurance.

Her do WC have any doubt that Section 7 Is applicable to then

votienls compensationlaws and to companies engaged In vrltlng vorknmnfs compensationlnsurance, in the absenoe of particularprovisions of the vorkmenls compensation statutesat variance with the provisions of Section 7. Workmen8s compensation Is unquestionably a type of Insurance. The originalWorloDn's Compensation

Act so treated the subject. S.B.ll,Acts 33rd"Leg.,R.S.1913, oh. 179,p.429. Subsequent acts dealing with workmeals compensation are of the same tenor.See, Acts 35th Leg 1917, ch.103 p.269, :;i ~~p:~i,Si:ts2;~ih bg.,R.S. 19ij,~h.l&',p.406.

Specific provisionsgovern many phases. of regulation of workmen'scompensationInsurers and admlnlstratlon of many phases of the workmen's compensationsystem. 100such specificprovisiondeals with the enforcement of the i-nsurerl~s

duty to Insure an employer. There being DO such specific provision Inconsistent therewith,Section 7 applies If the refusal Is otherwisewithin Its terms.

The question is thus narroued to whether such
a refusal to Insure Is otherwisewithin the scope of Section 7.

The duty of the Insurer arises under the aorkmen's compensationstatutes. Texas EmDloyersl Ins. Ass'n.
v. U. S. Torpedo Co., supra. While the duty Is not literally expressed In the statute, "that which Is Implied In a statute Is as much a part of It as what Is expressed." 39 Tex. Jur. 186, Statutes,Sec. 99. The duty Is, therefore,
a ~proirl$lon"

of the laws relative to Insuranceand a refusal would be literallya "non-compliance."

However, we are of the opinion that the broad language of Section 7 Is not Intended to apply lndlscrlmlnately to every failure or refusal to perform an obligation under the "lavs relative to Insurance"which Is not the subject of more specificprovisionsof the statutesas to enforcement.

Only such "non-compliance" as threatensto undermine the rights of the public generally and policyholders
as 8 class shouldbe appropriately recognizedby the Board. See North Brltlsh % MercantileCo. v. CralR, 62 S.W. 155,Hon. GarlandA. Smith, p8ge 5 (V-1534)

159 (Term. Sup. 1901), vhtreln a slmllar statuk vi-. ~5-3. appllca~leto matters which 'go to the general irte&:ity of the Insurance

business, and affect 811 policyhoLders In the same way."

Individualdisputes, not of that nature, m8y be settled through the norm81 processes of the courts. Thus, where individualdisputes arise between an Insurer and a member of the public, though based on a contention that the Insurerhas failed to fulfll an obligationarlsin& under provfslonsof the Insurancelaws, the Board does not normallyhave jurisdiction to revoke or suspend the lnsurerlspermit. It Is a differentmatter, however, when the obligationon the part of the Insurer Is one In which policyholders

or other members of the public, as a class, have a common Interest. Thus, where the questionbetween the company,and

a member of the public or a policyholder 1s peculiar to the individualcontroversy,the Board, In the absence of specificauthority,would not be authorized to act until the matter Is settledby judicial process. Where, however, the policyholder or member of the public has 8 clear rSgbt under the Insurance 18~s because of membership in a class In whom the right Is clearly established, such right is within the scope of the Board's authority under Section 7. We conclude that the duty to insure an eligible employer Is of the latter type.

The obligationto Insure employerswho have properly qualified Is a sufflclentlysettled question to m8ke a refusal, In our opinion, such a "non-compliance" as to give the Board jurisdlctlon for action In the premises. If upon the hearing requiredbefore a determinationIs finallymade to revoke or suspend a permit, It appears that the employer'sright to Insurance Is clear, the Board's duty Is to enforce compliance. An opportunityto comply with the obllgatlonshould be given the Insurer after a hearing at which It is confronted vith the full facts which impose the obligationupon It.

The authorityand duty of the Board to effect compliancewith the laws respecting Insurance Is fully dlscussed and supportedby appropriatecitations In Butler v. American Nat. Ins. Cc., 235 S.W.2d 185 (Tex.Civ.App. 1950,
error ref.). It Is suggested that, when an allegation of such refusal Is brought to the attention of the Board, a hearing should be conducted,after proper notice is given the Insurer,to determinewhether the insurer'sduty to Insure Is clearly establishedand to determinewhether the Insurer'spermit shouldbe suspended or revoked. Upon sucheon. garland II. Smith, page 6 N-1534)

hearing, then

Board establlshe6,order order a revocation cate. may, If tha duty to insure is clearly compliance,

and upon failure to comply,
or suepen13ion

of the insurer~scertlfiSUMMARY

The Board of InsuranceCommlssloners has the duty, under Section 7 of Article 1.10 of the Insurance Code (Vol. 14, V.C.S.), to revoke
or suspend the certificateof authority of an insurancecompany operating under a permit to write workmen's compensation insuranceif, after notice and hearing, the insurer refuses to comply with an order of the Board directlng it to Insure an employerwho Is eligible under the workmen's compensation laws.

APPROVED:
Mary K. Wall ReviewingAssistant

Charles S. Mathews First Assistant

NMc/rt **Yours very**  truly,

PRICE DANIEL Attorney General

Bykh%rJ& Ned McDaniel Assistant . ,