Court Opinion

ID: 4136683
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:16:23.668294+00
Date Added: 2024-06-11T14:37:43.950842
License: Public Domain

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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 as:follows:
          "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 agent sells the fnsur-
ante In connectionwith a sales transaction,he would not be
exempt and would have to be licensed under the provisions of
Article 21.07-l. However, if the only insurance sold was with
loans, the agent would be exemnt.   In such a case he should be
licensedunder Article 21.07.   -Such a license must be restricted
to the selling of group life insuranceonly in connectionwith
loans.

          A person selling group credit life lnsur-
          ante in connectionwith transactionsother
          than loans is not exempt from Article 21.07-l.
                                                      r   i.   L.

Hon. William A. Rarrlson, page 3   (Ww-297)

          One selling group credit life insurance
          exclusivelyin connectionwith loans is
          exempt from Article 21.07-1, but must
          be licensed under the provisionsof
          Article 21.07.
                          Very truly.yours,
                          WILL WILSON
                          Attorney General of Texas

FWE:pc
APPROVED:
OPINION COMMITTEE:
George P. Blackburn, chairman
L. P. Lollar
Richard B. Stone
J. Arthur Sandlin
Wallace P. Finfrock
REVIEWEDFORTSE ATTORNEYGENERAL
BY:
      J. N. Ludlum