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I_ . .
Hon. William A..Harrison Opinion No. WW-297
Commissionerof Insurance
State Board-of Insurance .Re:~-
Licensing of Credit Life
InternationalLife Dullding Insurance Agents.
Austin, Texas
Dear Sir:
We quote from your~oplnlonrequest as:follows:
"Article 3.53 of the Texas Insurance.Codeis
the credit life, health and accident insurance sta-
tute pertaining to indivlduaJor personal Insurance
.In.whichthe insured.1~a borrower of.'money..ArtG
cle 3.50 is the statute pertainin to.gFoup lnsur-
ante, and Section 1, paragraph (4e;bf.the,.statute
authorizes group credit insurance to.be wrltten.upon
a number-.ofpersons who are debtors, and the credItor
.'~is
deemed.the pollcyholder.-
"Article 2l.w-1 is the licensing law for lega!.
reserve life Insurance company agents. This'statute
exempts from its operationIan agent selling credit
life,.healthand accident insurance issued exclu-.
slvely In ,connectlonwlth~commercial10ans~. Article
21.07 Is the statute which licenses agents for other
types of operationsthan those contemplatedunder.
Article 21.07-l. As credit life Insuranceagents are
exempt from the provisionsof 21.07-1, It has been'
the practice of the State Board of Insurance to use
the provisionsof Article 21.07:t.olicense a credit
life insuranceagent who was selling credit Insurance
under the provlslonsof Article 3.53.
“We. respectfully'requestyour opinion as to
whether a person selling group credit Insuranceunder
the provisionsof Article 3.50, Section l(4) Is
exempt from Article 21.07-l; and if so, must such a
person be licensed under the provisions of Article
21.071”
.--.Arttcle3.50, Section.l(4)..providesfor group life
Insurance In the form of a policy issued to a creditor, who
Hon. William A. Harrison,~page 2 (WW-297)
shall be.deemed a policyholder,to insure debtors of the credl-
tor, subject to the following requirements:
.. "_(a)The debtors-eligiblefor Insuranceunder
tne policy anal1 al?.be members of a group of per-
sons numbering not less than fifty (50) at all times,
who became borrowers from one financial Institution,
or who became purchasersof . . . property from one
vendor under agreement to repay the sum borrowed or
to pay the balance of the . . . property, purchased
to the extent of their respectiveindebtednessto
said financial Institutionor vendor . . .
"(b) The premium for the policy shall be paid
by the policyholder,either from the creditor's
funds or from charges collectedfrom the Insured
debtors, or both."
If no part of the premium for the insurance Is paid by
the debtor or from his funds, the creditor or the employee or
agent of the creditor would not be consideredan Insurance agent
and would cot need a license. However, if any part'of the pre-
mium is paid by the debtor,suchcreditor or his agent would be
consideredan insurance agent. See Articles 21.02 and 21.07-l
of the Insurance Code; Aeka Life InsuranceCompany v. Tippa;.
132 Tax. 213, 121 S.W.2a 324 (1936) Qeneral American Life fisur-
at-ice
Company v. Car&, 119 S.W.2d 6gj XCiv.App. 1936, error dism.).
It will be noticed that paragraph (a) quoted abode
allows group Insurance i,nconnectionwith sales transactionsas
well as with loans. As a result, the exemptionfound in Article
21.07-l would not apply in all cases to sellers of group credit
Insurance,since it applies only to that insurance Issued exclu-
sively In connectionwith loans. If the agent sells the fnsur-
ante In connectionwith a sales transaction,he would not be
exempt and would have to be licensed under the provisions of
Article 21.07-l. However, if the only insurance sold was with
loans, the agent would be exemnt. In such a case he should be
licensedunder Article 21.07. -Such a license must be restricted
to the selling of group life insuranceonly in connectionwith
loans.
A person selling group credit life lnsur-
ante in connectionwith transactionsother
than loans is not exempt from Article 21.07-l.
r i. L.
Hon. William A. Rarrlson, page 3 (Ww-297)
One selling group credit life insurance
exclusivelyin connectionwith loans is
exempt from Article 21.07-1, but must
be licensed under the provisionsof
Article 21.07.
Very truly.yours,
WILL WILSON
Attorney General of Texas
FWE:pc
APPROVED:
OPINION COMMITTEE:
George P. Blackburn, chairman
L. P. Lollar
Richard B. Stone
J. Arthur Sandlin
Wallace P. Finfrock
REVIEWEDFORTSE ATTORNEYGENERAL
BY:
J. N. Ludlum