Court Opinion

ID: 4135207
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:59:33.802305+00
Date Added: 2024-06-11T12:34:24.854136
License: Public Domain

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                                 JRNEY 'GENERAL
                                   EXAS

ligyiz      Wm. Hunter‘,McLean     Qpinion No. c-253
State Board of Insurance           Re: Adoption of reasonable rules,
1110 San Jaclnto                   and regulationsby the State Board
Austin, Texas        78701         of Insurance to prevent use of ex-
                                   tension of credit as an inducement
Dear Mr. McLean:                   to insure.
     You have recently requested our opinion on the following ques-
tion:
       “May the State Board of Insurance adopt reasonable
    rules and regulations so as to prevent the use of e%-
    tension of credit by an insurance company as an induce-
    ment to insure with that particularcompany?”
     It is a well establishedprincipal in the jurisprudenceof
this State that a State regulatory agency may make reasonable rules
and regulations,related to the performenceof a specific statutory
duty placed upon that agency by the Legislature,whenever the
authority to make such rules and regulationsIs expressly or im-
pliedly conferred upon the agency,by statute.  Gulf Land Co. v.
Atlantic Refininu Co,, 134 Tex, 59',131 S.W.2d
                    Oil co,  139,vex. 66, 161
        “ii z%?     co. v. &ate, 120 S.W.2d 1
error ref.)o
     Articles 1.02(b) and 1.10(l) and (7), Texas Insurance Code,
clearly give the State Board of Insurance the general authority and
responsibilityfor the enforcementand execution of laws respecting
insurance and insurance companies. The comprehensiveextent of
such authcirityhas been repeatedly recognized by our courts. In
Buu.,                                      235 S.W.2d 185 (Clv.App.
1950, error ref .~),the Court saidt
        “That the Board of Insurance Commissioners has the
     duty, authority and obligationto see that all laws
     respecting insyrance and insurance companies are faith-
     fully executed aye not questioned; such powers and
     duties are confetiredby statute.  . . .“.

                                   -1219-
Honorable Wm. Hunter McLean, page 2, Opinion No. C-253

     Your question concerns the authority of the Board to'adopt
reasonable rules and regulations concerningthe prohibitionscon-
tained inArticle 5.41, Texas Insurance Code, which provides in
part:
        "No company shall.. 0 0 give, sell or purchase,
     offer.to give, sell or purchase, directly or in-.
     directly, as an inducementto insure or i c nne tlo
     therewith,any stocks,,bonds, ~      or an; dyvid&dsn
     or profits accruedor to accrue ~&i&eon, mg       "
                                                     -

     Article 5.,47,Texas Insurance Code, provides that anylnsur-
ante company subject to the provisions of Chapter 5 shall be sub-
ject to cancellationof its Certificateof Authority upon violation
of any provision of that Chapter. Article 5.41 is such a provision.
     Under the above,statutesand court decisions,the Board un-
questionablyhas the duty, the authority, and the sanctions to pre-
vent the use of "inducements"(not specified in the policy) to
insure with a particularcompany.
     Article 1.04(b) and (c), Texas Insurance Code, clearly recog-
nizesthat the State Board of Insurance,I8 clothed with sufficient
statutory authority to make reasonable rules and regulationsto
effectuate and execute the Insurance laws of this State,
     Statutorily,companies are proscribed from giving "anything of
value whatsoever,not specified inthe policy" asan Inducementto
insure with that partioular company..
     In your request you state that "the rate of Interest or lack
of Interest on the postponementof payment,of insuranc,e premium has
been used as an inducementto acquire business.,"Under th;r;;;z;d
facts such practices are clearly,prohlb,itedby statute.
to the statutes and court declsions cited above the State Board of
Insurance has the power to promulgate such reasonable rules and
regulations 80 as to enable them to effectivelyperform their stat-
utory duty. One such duty is to prevent the use by a company of
"anything of value whatsoever;not specified in the policy" as an
inducement to insure with that particular company.
     You are therefore advised that the State Hoard~of Insurance-
may adopt reasonablerules and regulationsso as to prevent thenuse
of an extension of credit by,'aninsurance company as an Inducement
to insure with that particular company.

                               -1220-
Honorable Wm. Hunter MaLean, page 3, Oplnlon No. C-253

                             SUMMARY
          The State Board of Insurance may adopt reason-
     able rules and regulationsto prevent use of exten-
     sion of credit as an inducementto insure with that
     particular company.
                                Yours very truly,
                                WAQGONER CARR
                                Attorney General of Texas

JRL:da
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Hawthorne Phillips
Stanton Stone
J. C. Davis
J. S. Bracewell
APPROVED:
By: Waggoner Carr
     Attorney General

                                -1221-