Court Opinion

ID: 4137027
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:20:12.319006+00
Date Added: 2024-06-11T14:37:44.608353
License: Public Domain

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                                  AUSTIN   ai.TEXAS
     JOEN BEN 8HEppIERD
        *--    OmmRraAx',
                                      October 20, 1955

           Hon. Mark Wentz
           Fire Insurance Comu@ssioner
           Board of InsurancsCommissioners
           International Life'Building
           Austin, Texas      :
                            Opinion No. S-179
                            Re:   construction   ofArticles.5.25 and
                                  5.42, Texas Insurance Code 1951,
                                  'as to authority,of Board o$ Insur-
                                  ance,.Commissionersto regulate the
                                  amount of interest charged on de-
                                  ferred premiums.
            Dear Mr. Wentz:
                      You have asked for the opinion of this office on
            the following questions:
                      "1. Does the amount of interest which an
                 insurance company might charge for deferring
                 the colleation of premium under an insurance
                 policy actually constitute a part of the policy
                 premium derived from the application of rates
                 promulgated by the Board, thus making it sub-
                 jeot to the rate making authority of the Board?
                      “2.  Does it constitute a charge~separate
                 and apart from the policy premium which is de-
                 rived from the application of approved rates,
                 thus making it subject to the provisions of other
                 laws of this State rather than insurance rate
                 making laws?
                      “3. Do the provisions of Article 5.42 Pen-'
                 der the 6% interest rule as found on Page 88 of
                 the General Basis Schedules to be of no mandatory
                 force and effect?."
                      Article 5.2.5of the Texas Insurance Code,'l951,
            reads as follows:
Hon. Mark IrEentz,
                 page 2   (s-179)

          "The Board of Insurance Commissioners
     shall have the sole and exclusive cower and
     authority and it shall be its duty to pre-
     scribe,~fix, determine and promulgate the
     rates of oremiums'to be charged and collected
    by fire insurance companies transacting busi-
     ness in this State. Said Board shall also
     have authority to alter or amend any and ail
     such rates of premiums so fixed and deter-
     mined and adopted by it,.and to raise or ,lower
     the same, or any part thereof, as herein pro-
     vided. Said Board shall have authority'to
     employ clerical help, inspectors, experts and
     other assistants, and to incur such other ex-
     penses as may be necessary in carrying out the
    provisiorisof ~thislaw. Such expenses, in-
     cluding the ~salaries of the members of the
    ,Board, shall not exceed in the aggregate, for
    ~atiyfiscal year;.thesum of.One Hundred and
    Thirty Thousand ($130,000.00) Dollars. Said
    Board. shall ascertain as soon as practicable
     the annual fire loss in this State; obtain
     make and maintain a record thereof and co1i.ect   )
    such data with respect thereto as will enable
     said Board to Classify the fire losses of th1.s
     State, the causes thereof, and the'amount of
     premiums c~ollectedtherefor for each class of
     risksandlthe amount paid thereon,,~:in such
     manner as 'willaid.in'determining equitable,.
     insurance rates:%methods of reducing suoh~fire
     losses.and reducing the insurance rates of the
     State,;or subdivisions of the State. pacts. pi
     1951, 52nd.&eg., ch. 491."
          It is clear from the .above quoted Article that
the duty of the.,Boardis to determine the'rate~:.ofpremium
to be charged.'
         particle 5.42,Drov1de.sas follows:' ~~
         "The nrovisions of this subchaoter shall
    pot deal with the collection of oremiu     but
    each com@&ny 'shallbe permitted to.make .&ch
    rules and regulation'sas it may deem just be-~'
    tweenthe. company; its ~agehts,,and its~@iiCy-
    holders; and no bona'fide extension of credit
    shall be,construed as a discrimination, or in
    v'iolationof the provisions of this subchapter.
I.   -

         Hon. Mark Wentz, page 3   (s-179)

             All policies heretofore issued which provide
             that said policies shall be void for non-
             payment of premiums at a certain specified
             time, shall be and the same are in full force
             and effect, provided, that the aompany or any
             ,of its agents have accepted the premium on
              said policies after the expiration of the
             dates named in said provisions fixing the date
              of payment."
                   This article permits the company to make such
         rules and regulations as it may deem just between the coa
         pany, its agents, and its policyholders and furthermore
         "The provisions of this subchapter m   shali not dealwi$h
         the colleati~cnlo~p;em;p.   . . and po bona fide extensiog
         of credit sh     e on rued as a discrimination, or in
         violation of the provisions of this subchapter."
                   It is therefore the opinion of this office that
         the Board'of Insurance Commissioners of the State of Texas
              not have the authority to regulate the rate of inter-
          st.charged byecompanies on deferred premiums, as the
         amount of interest charged is not a part of the policy prem-
         ium determined by the Board, but constitutes a charge separ-
         ate and apart from the policy premium, and said interest,
         if any, is subject to Articles 5069-5073, Vernon's Civil
         Statutes.

                                    SUMMARY
                   The Board of Insurance Commissioners of
              the State of Texas does not have the authority
              to regulate the rate of interest charged on
              deferred premiums.
         APPROVRD:                           Yours very truly,
         J. Fred Jones                       JOHN BEN SRRPPRRD
         State Affairs Division              Attorney General of Texas
         J. A. Amis
         Reviewer
         Will D. Davis                         Robert 0..Fagg
         Reviewer                              Assistant
         Davis Grant
         Reviewer
         Robert S. Trotti
         First Assistant
         John Ben Shepperd
         Attorney General