Honorable 0. P. Lookhart, Chairman ,Boardof InsuranceCommissioners Austin, Texas

Dear sir; Opinion No. O-5926 Re: The Board o?'Insurance Commissioneiahas no legal authority to enter the order herein~mentioned.

Your letter of,Maroh 8, 1944, requesting the opinion of this department concerningthe legal authbrlty of the Board of Inauranae Commissionersto make an order to the effect asmentioned in your letterhas been received. 'Said letter reads 88 follow&:

"Mututil

AssessmentAssociationa, other than assessment-as-neededor post-mortem oompsniea, oparating under Article 5068-1, levy regular and periodic assessments for payment by tha members on the Leval Premjum Plan; that is, the amount of eachmember's assessment Js the same each time. The asstiasments when collectedare divided into two funds as provided" in Section 12 on the percentage set out in the Assooietion'sby-laws.
"Occasionally'theMortuary hund becomes depleted through excessive claim payments B&cannot be restoredby regtilar assessmentsalone. ,In suoh oaaea a special or emergency assessment is levied against " themembership. The purpose and authority for such' speaialassessmentsare replenishmentof the Mortuary
or claim Fund.

"Pleaseadviseme whether the Board of Insurance Commissionershas authority to enter'itsOrder to the effect that thereafter,theentire proceeds, of such special dr emergenay assessments shall be placed in the Mortuary Fund, exoept an amount show to the Roard to be neoessary to defray the aotual expense in&dent to collectionof the',assessment, whiohmay lwplaced in the Expense Fund.!'

Section 7 of Artiole 5068-1,Vernon'sAnnotated Civil Statutes, requires each association to keep a oompleteand correct roster of itsHonorable 0. P. Lookhart, page 2 O-5826

members with proper statisticalreoards for the purpe of determining the proper cost of the insurance,by ages or otherwise,and eaoh association shall keep accurate records of groups, classes or olubs or other divisiOn6 of mambership, if any; and shall keep reoords to show amountspaid in asse66mentsby eeohmember in eaah groun) and a6 to groups. itmust be shonn how the funds 

### are distributedbetween expense and mortuary or relief funds, and show the amounts paid out of the funds of the whole membership foreaoh group in death claim6 or other benefits.

Section 11 of Artiols 5068-1,Vernon's Annotated Civil Statutes, providest

"Eaah assooiation shall levy a wgular'and $ariodLoal asseasmentlr

by whatever name theymay be oalled. These assessment8must be in~suohamounts and at such proper intervals as will meet the reasonable operating expense of the assaoiation, and pay in full the claims arising under it6 certificates. hhen or if in the ,cour6eof operation it shall be apparent that the claims aannot be met in full from ourront asse6smentsand fund6 on hand, the **6mounb** must be inoreaeeduntil theyare adequate to meet suoh olaims,and the Board shall **60,0rc?ar.**

%hen any assooiation shall refuse-to complywith the Board's reoomm6ndationsor requirem6ntsreapeoting rates or assessments, it shall be treated a6 insolvent, and shall be dealt tith aa hereinafter provided.

"Each assooiation operating under the provisions of this Act shall file its rate sohedulewith the Board ofInsurance Connnissioners."

Motion 12 of Artiole GOSS-1, provides, in effeot, that assessmentswhen collected shall b6 divided into at lsaet two funds. One of these shallbe themortuary or relief fund, by whatever name itmay be oalled in the different associations from which olaimsunder aertifioates shall be paid, and to a limited extent the oost of defending contested claims,and nothing else; and the other fund shall be the expense fund from which expensesmay be paid. 'ihissection of the statute further requires that at least sixty per cent of the seeessmenta collected,exaept themembership fee, must be pleoed in the mortuary or relief fund. E:aoh association shall provide in its bylaws for the portion of its assessments to be allotted to themortuary relief fund and may provide for the payment out of saidmortuary relief fund of attorneys' fees and neoessary **erpsnses** arising out of the defense, settlement or payment of oontsstsd claims. Any suoh payments out of the mortuary relief fund for other than claims shall be subject' to approval of ths Roard of InsuranoeCo66sissioners. In connection with the foregoing statement, it should be borne in mind that Article 601X3-4 as enacted by the 48th Legislature,Regular Session, 1943, pageHonorable 0. F. Lo&hart, page 3 O-5926

696, Chapter366, authorizesany oompany or association operating under ,ths

provisions of S. 9. 135, Aots of the Regular Sessi.on of the 46th Legis3,ature, Chapter 6, page 401, to pay fr& the mortuary or relief funds, by whatever name itmay be called, eny taxes that may be assessed against or required to ba paid by the company or association because of inaome to such funds.

Under the foregoing provisions of Brtiele 5068-1, when or if in the ooursa of operation, It is apparent that the oleIms of any assooistion oannotbe met in full from asaessmantsand funds on hand, the amountmust be inoreaeeduntil they ara adequate tomeet such olaimsand the Board of 'Insurance Commissioners shsll so order that an increase hnmade in the assessmentsuntil they ars adequate to meet suah claims. Tfmy associetion shall becrrme unable to ,payits rsalid clRms withj.,n

the time specified in the statute after due proofs are received, such association for the purposes of Article 6060-1,must 3o rsgsrded as insolvent,and dealt with as is Pully provided in said Act. The foregoing statute expressly sets forth themanner inwhich assessmelts when collected shall be divided and a compliancewith this statute in rsspect to the divisions of such assessments is all that oan he required of such assooiationa.

Generally speaking, the Board of InsuranoeCommissioners, like other regulatoryand administrativeboards, possess only such powsr or authority as is expressly given or necessarily impljed by the Constitutionand statutesof this State. After a careful search of the statutasand various constitutionalprovisions of this State, we f'ajl to find any e,xpresssd or implied authority empowering the Board of InsuranceCommissionerstomake and enforae an order such as the
one i~nquirsd

about, Therefore, it is our opinion that the Board of insurance C!!mmissloners has no legal authority to make and enforce an ordsr of the ,nature of the order inquired about.

Yoursvery truly

ATTORNEY GMWLAL OF TEXAS

By *,/Arch313

tiilliams ,&dell Wlili.ams Assistant

AW:W:wo
APFROVEDMARCY17, 1944 s,/Geo. P. Blackburn ATTORNEY GkNtiRA!,

OF TEXAS