..
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
Untitled Texas Attorney General Opinion
Combined Opinion