Untitled Texas Attorney General Opinion

i ! Honorable Wm. Hunter McLean Opinion No. C- 167 Chairman, State Board of Insurance 1110 San Jacinto Re: Reconsideration of Austin 14, Texas Opinion S-179 Dear Mr. McLean: Your recent opinion request states that the State Board of In- surance now has under consideration insertion of the following rule in the Texas General Basis Schedules: "DEFERRED PAYMENT OF PREMIUMS. Unless other- wise specifically provided in the General Basis Schedules, interest of 6s per annum shall apply to all premium payments deferred to an agreed stipulated date. This provision, however, is not intended to affect the usual customary open accounts." On October 22, 1955, the then Attorney General issued Opinion No. S-179, summarized as follows: "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." Opinion No. S-179 is based upon those portions of Articles 5.25 and 5.42, Texas Insurance Code, quoted as follows: "Art. 5.25. Board Shall Fix Rates The Board of Insurance Commissioners shall have the sole and exclusive power and authority and it shall be its duty to prescribe, fix, deter- mine and promulgate the-rates of premiums to be charged and collected by Sire insurance comoanles transacting business in-this State. Said Board shall also have authority to alter or amend any and all such rates of premiums so fixed and deter- mined and adopted by it, and 70 raise.or lower -811- Hon. Wm. Hunter McLean, Page 2 (C- 167 ) the same, or any part thereof, as herein pro- vided." (Emphasis supplied) "Art. 5.42. Not Retroactive The provisions of this subchapter shall not deal with the collection of premiums, but each company shall be permitted to make such roles and regulations as it may deem just be- tween the company, its agents, and its policy- holders; and no bona fide extension of credit shall be construed as a discrimination, or in violation of the provisions of this subchapter." This opinion concludes by holding that the Board "does not have the authority to regulate the rate of interest charged by companies on deferred premiums, as the amount of interest charged is not a part of the policy premium determined by the Board, but constitutes a charge separate and apart from the pollcg~premium. . .' We are not directed to any statute purporting to give the State Board of Insurance authority to regulate the rate of interest to be charged on deferred premiums on fire insurance, On the con- trary, Articles 5.25 and 5.26, Texas Insurance Code, ive the Board authority to regulate premium rates, while Article 5. 8 2 constitutes express legislative permission for the deferment of premium pay- ments and the adoption of regulations by each insurance company concerning the collection of such premiums. In the case of Commercial Standard Insurance Company v. Board of Insurance Cornmissloners,34 Y W .2a 343 (Cl~.APP. 1930 error ref.), The issue before the Court was whether or not the Board Lad author- ity to promulgate an order fixing the amount of commissions which fire insurance companies night pay to their local agents. The Court noted the statutes controlling the regulation of fire insur- ante (now subchapter C of Chapter 5 of the Insurance Code) and stated that: "The statutes vest in said Board very ex- tensive and exclusive powers over premium rates and provide for securing information on which to fix, alter, amend, or modify sane.” This is still true of these statutes. In the course of its opinion denying the Board's authority to fix the amount of commis- sion, the Court went on to hold as follows: -812- . . Hon. Wn, Hunter McLean, Page 3 (~C-167 ,) "In all instances, however, such powers re- late to fixing maximum emium-rates;.and. no- where is anv exoress oritv given bv law to regulate or"contro1 any of the items, elements, or charges, entering into or going to make up the aggregate premium rate. ,I . . . 11. . .these statutes, having undertaken in considerable detail to prescribe the powers and duties of the Board relative to such maxi- mum rate only, without giving authority t-em tofix or regulate the different elements of expense entering into that rate, must be con- strued as a legislative denial of such power." The Court further held: "The Board can exercise only the authority conferred upon it by law 'in clear and unnis- takable terms, and will not be deemed to be given by implication, nor can it be extended by inference, but must be strictly construed.' 51 C.J. 56. State v. Robinson (Tex.Sup.), 30 S.W.2d 297." IEmphasis supplied) Had the Legislature desired to confer authority upon the Board to regulate or specify interest rates charged upon deferred premiums, it easily could have done so. Instead, Article 5.42 has not been amended since the release of Opinion No. S-179, some eight years ago. In view of the foregoing authorities and in the absence of any language of the Insurance Code purporting to give the Board authority to regulate rates of interest upon deferred premiums, we affirm the holding of Opinion No. S-179 and respectfully advise you that the State Board of Insurance does not have the authority to promulgate the order set out in your opinion request. -813- Hon. Wm. Hunter McLean, Page 4 (C- 167 ) SUMMARY The StateBoard of Insurance does not have the authority to regulate the rate of Interest charges on deferred premium pay- ments. Opinion No, S-179 is affirmed. Yours very truly, WAGGONER CARR Attorney General of Texas B DDM/snd APPROVED: Opinion Committee W. V. Geppert, Chairman Joe R. Long C. L. Snow, Jr. Howard Fender Gordon Appleman APPROVED FOR THE ATTORNEY GENERAL BY: Stanton Stone -814-