The opinion
October 30, 1957
State Board of Insurance Opinion No. WW-291
Hon. William A. Harrison
Commissioner of Insurance Re: Does the State Board of Insurance
International Life Building have authority to fix maximum
Austin, Texas commissions. which insurers writing
credit insurance may allow to lenders,
1 nder agents, or insurance agents
, :$der Article 3.53 of the Texas
Gentlemen: ::. lnsu~rance Code ?
f<
s., ,.,
..’; i,!,
Your letter of September 9, 19~57;‘hcs been received, .and we~quote
.;,.2
from it in part as follows:
1
“In this connection, we desire you; opinion of the authority
of this Board to fix the maliimum ,commissions which insurers
writing credit insurance may aDow to lenders, lender agents,
, ‘,
or insurance agents.”
Article 3.53, origina,lly Senate Bill No. 208, was enacted by the
51st Legis,lature in 1949. From the caption of this Act we quote in part
as follows: ,
“fan Act proiidi,ng for regulation of life insurance and
health and accident insurance issued in connection with loan
transactions; ~ ~ . declaring certain commissions for the sale
of credit insurance legal, and forbidding those above maximum
rates1 or based on loss experience; . . .”
.,
Section 6 of Article 3.53 provides:
“Commissions received by lenders, lender agents and
insurance agents from insurers for the writing of credit
insurance complying with the terms of this article, the
maximum rates promulgated by the Board, and rules and
regulations of the Board of Insurance Commissioners, shall
be considered for all purposes as compensation for services
rendered to such insurer and shall not be taken to be an
interest charge on the money borrowed; provided, however,
.State Board of Insurance, page 2 ,(WW-291)
should such commissions be in ‘excess of any maximum fixed ’
here’under, then such commissions shall be deemed to be an
interest charge on the money borrowed. No agreements ,by
insurers with any of its agents shall permit contingent com-
missions based on loss ,experience.”
Section 9 of Article 3.53 provides:
“The Board is hereby authorized to promulgate rules
and regulations to carry out the spirit and purposes of this
article, including but without limiting the generality hereof,
the reserve requirement and records to be maintained on
; such business, the method of insurance and deliirery of the
‘. policies and the methods for the settlement of claims.”
It is evident~from this language that it was the intent of the Legisla-
ture’to authorize the State Board of Insurance, the successor to the Board’
of Insurance Commissione,rs, to set a maximum rate of commissions that
can be paid. by the,credit life, health. and i(ccident insurers. If this were
nottrue,, such language as quoted above @uld be mere surplusage.
SUMMAR,Y
“. .,
The State Board.of I&urance is authorized by
Article 3.53 of the Texas Code of Insurance to
set maximu:m com;?nissions that may be allowed
by insurers writing credit life, health and acci-
dent insurance..” -
Very truly yours,
WILL WILSON
Attorney General of Texas
RAW:pc ,, ;’
APPROVED:
OPINION COMMITTEE: Richard A. Wells
Assistant
Geo. P. Blackburn, Chairman
w. v. Gappert
B. H,, Timminr, Jr.
John B. Webster
REVIEW,ED FOR THE ATTORNEY, GENERAL
BY: James N. Ludlum
1Emphasis supplied throughout.