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Hon. William A..Harrison Opinion No. WW-297 Commissionerof Insurance State Board-of Insurance .Re:~- Licensing of Credit Life InternationalLife Dullding Insurance Agents. Austin, Texas Dear Sir: We quote from your~oplnlonrequest : "Article 3.53 of the Texas Insurance.Codeis the credit life, health and accident insurance sta- tute pertaining to indivlduaJor personal Insurance .In.whichthe insured.1~a borrower of.'money..ArtG cle 3.50 is the statute pertainin to.gFoup lnsur- ante, and Section 1, paragraph (4e;bf.the,.statute authorizes group credit insurance to.be wrltten.upon a number-.ofpersons who are debtors, and the credItor .'~is deemed.the pollcyholder.- "Article 2l.w-1 is the licensing law for lega!. reserve life Insurance company agents. This'statute exempts from its operationIan agent selling credit life,.healthand accident insurance issued exclu-. slvely In ,connectlonwlth~commercial10ans~. Article 21.07 Is the statute which licenses agents for other types of operationsthan those contemplatedunder. Article 21.07-l. As credit life Insuranceagents are exempt from the provisionsof 21.07-1, It has been' the practice of the State Board of Insurance to use the provisionsof Article 21.07:t.olicense a credit life insuranceagent who was selling credit Insurance under the provlslonsof Article 3.53. "We. respectfully'requestyour opinion as to whether a person selling group credit Insuranceunder the provisionsof Article 3.50, Section l(4) Is exempt from Article 21.07-l; and if so, must such a person be licensed under the provisions of Article 21.071"
.--.Arttcle3.50, Section.l(4)..providesfor group life Insurance In the form of a policy issued to a creditor, who Hon. William A. Harrison,~page 2 (WW-297)
shall be.deemed a policyholder,to insure debtors of the credl- tor, subject to the following requirements:
.. "_(a)The debtors-eligiblefor Insuranceunder tne policy anal1 al?.be members of a group of per- sons numbering not less than fifty (50) at all times, who became borrowers from one financial Institution, or who became purchasersof . . . property from one vendor under agreement to repay the sum borrowed or to pay the balance of the . . . property, purchased to the extent of their respectiveindebtednessto said financial Institutionor vendor . . . "(b) The premium for the policy shall be paid by the policyholder,either from the creditor's funds or from charges collectedfrom the Insured debtors, or both." If no part of the premium for the insurance Is paid by the debtor or from his funds, the creditor or the employee or agent of the creditor would not be consideredan Insurance agent and would cot need a license. However, if any part'of the pre- mium is paid by the debtor,suchcreditor or his agent would be consideredan insurance agent. See Articles 21.02 and 21.07-l of the Insurance Code; Aeka Life InsuranceCompany v. Tippa;. 132 Tax. 213, 121 S.W.2a 324 (1936) Qeneral American Life fisur- at-ice Company v. Car&, 119 S.W.2d 6gj XCiv.App. 1936, error dism.). It will be noticed that paragraph (a) quoted abode allows group Insurance i,nconnectionwith sales transactionsas well as with loans. As a result, the exemptionfound in Article 21.07-l would not apply in all cases to sellers of group credit Insurance,since it applies only to that insurance Issued exclu- sively In connectionwith loans. If the