THE ATTORNEY GENERAL
OF TEXAS
Aus~nv. TExAsm37u
December 23, 1975
TheSnorableJosephD. Hawkins c&G.nilnlNo.
n-755
&missioner of Inswmce
stateBoardof&Suratlce Re: WhetherStateagencies
1110San Jacinto may oIxltract
with mutual
e, Texas 78786 illmmxecarpaniesfornon-~
assessableimumncepolicies.
l%e Ekmorsble
Bqmxxl W. Vcwell
CUUlliSSioner
stateDepartment
of Fublicwelfaze
JohnH.RBaganEiuilding
Austin,T&as 78701
Dear sirs:
YOUhaverequestedoUrCpilliOIl~ whetheramutualinsurance
caqxmymykeewudedamtrsctsforveriarsnm-smess&leinsmmce
policies.calet3uchcontractwarldbeentereabythe Department
of Public
welfareforwi.icaiaswriceswhiletheotherwoulabe forgroup life,
healthandaccicIenti.mmmceundertheTkxa!3R@Jyeesmifonnci?mp
Insurance BenefitsAct. Ins.Code art. 3.50-2,Acts 1975,64thLeg.,
ch. 79, p. 208. lllelsttwmuldbeentereabythe~loyeesRetiranen
Systea. Your questicnsare whethersuchcontractsmay he enteredwithoti
violatingarticle3, sectionsSO-52of the TexasCmstitution.
In AttorneyGmersl opinionH-365 (1974),
we ruledthatTexasTech
University couldcontractwithnutual insuranceccmpaniesfor grouplife
insurance solongas thepolicyinvolvedwesm-assessable. Wedeter-
minedthatarticle3,~52anditsprovis~thatapoLiticdl
subdivis~aoulanot~astockholderina~~ration,as~ti~
or canpanywere inapplicable,
for the Universityms an "azmof the
state"ratherthana@iticalsukdivisicm. ?hus the Universitywas~
cokrolledby article3, sectim 50 and 51,whichprohibitthe "grant
of publicmmeym and tile"lendingof credit."we deteminedthat the
contractinvdvedwculanotviolatethesepmvisions,sinceitwas for a
publicpurpose.
p. 3194
clueEknwreble
Jose&D. Hawkins- page 2 (H-755)
?heHonorableRqmmxlW.Vcwell
wecanperoeiveno meaningful distinctionbe~yourquestions
am3 that involvedin H-365. The Department of PublicWelfareand the
Dnployees R&iremmtSystanare mt"plitical subdivisions." Solenv.
waraofFi.rmen,
-- PolicxwnandFireAlm
--.-&p+- ators'Trustees, 308
--
s.w.2a904 &I. iipp.- San Antomo 1 57, writ ref'd).Article3,
seztian52 is thus ina@icable. In addition, underour rulinginH-365
thereda he no violationof article3, sections50 and 51, for the
amtractswoulabe forapublicpurpse. Accordingly, inouropinion
tberespebive stateagenciesmyenter intomn-assessablecontracts
withmutualinsuranoe anpanieswithoutviolating article3, sections
50, 51 or 52 of the TexasCmstitution.
SUMMARY
Stateagenciesmy enterintocmtracts fornon-
assessableinsuxance
policieswith mtual insurance
anpnies withoutviolatingarticle3, sections50,
51 or 52.
very WY yours,
AttorneyGenexalofTexas
p. 3195