Hon. hlter C. Voodward CNlnmn
~wo8dofT~ance Com&rlonerr
*
Dear sirs Opinion Jio. 04460
Ret: Whether the deaarlbed type of lmur-
arm transaatlon violates the ineur-
Mae laws of Texa8 and whether It is
within the charter powers of the
United Travelers Insurance Compmy,
Houston Texaa, to deal with an ln-
dlviduai or oorporation ln the
Mnner outlined.
As a basis for preaentlng the above questions for an
opinion of this department, we quote from your letter of June 18, where-
in you Qaks the request, as follows:
“In the cases referred to it Is proposed that
certain individuals or oorporatlons will provide their
customers with insurance usually accident Insurance,
without cost to such CUB &omer8 upon the purchase of re-
tail cominodltles. The cost of the insurance 1s paid to
an Insurance company by the individual or corporation
selling the aomodlty, In accordance with the terms of
an insurance contract issued by the lnsurancr company
to the individual or corporation insurlhg the customers
of the indlvldual or corporation.
“The individual or varloua representative8 of
the corporation are to be licensed agents of the inmr-
ance oompany, and It is our request that you advise us
at your earliest convenienae whether or not in your
opinion this type of insurance transaction violates the
Insurance Laws of this State ln any respect, and whether
or not it 1s within the charter powers of the insurance
coupany to deal with an Individual or corporation 3x1
the manner outlined.”
Accompanying your request Is a certificate form proposed
to be issued by the United Travelers Insurance Company, Houston, Texas,
dcslgnated as a conbined customer’s receipt and insurance policy, which
states that the conpany agrees to lnaure the customers of Eaton’s Gulf
Serviae ofSlUdmore, Texas, by a group poliay of insurance No. 0208 under
the subject to tho tern-m and conditlone OS'said policy and the appllca-
t ion there for. The group @lay form Is not submitted with your request.
The plan proposed M stated ln go* request In certain
respects, Is a semblance of the plan upon which group lnaurancc is
generally orovlded by an emlorer for the benefit of lta employees. It
Hon. Walter C. Woodward, Chomn, Pagee2 3-2463
Is to be observed that the corporation owning and controlling ~~‘10~s
wrvlw etetlona, oontraote with the insurance aostpury for a groug
POllOY under and by VirtUb of whlah It gurOhaw8 oertlflcatee in book
lots, with laah aertlflaate to be leewd as a policy or lneurence and
given free at its aervloe stations to auetomere upon their purehaae
0r the acsmaodltlea 0r the oorporatlon on lt~le at such statlone. mu3
corporation or owners or the conmmditlce or group @Icyholders, ln
this ree ct are propoalng to assume the statue of an employer under
a dsenera p” Iy reeognlzed group polloy, ln which It pays the premium ror
each oertffloate ieeued. It aan be assumed that tha aorporatlon or
group pollayholder aleo pay8 all of the coetebr hendliag the lneurme
ror Its auatolaere. Not only the group polloyholder paye to the ln-
wed the prenhm due for each Uertiflcate lemmd by Its a&ent, but it
also transmits, through its agent or servioe station attendant, the
pG8d.i ior My extended ooverage the cuetomer may desire and pCkye l’or
.
Viewing the proposed certificate form, we may assume that
It contains the tesentlal provisions of the master group policy
provides for payment In lieu of all other indemnity, the sum of r 500.33
lnssedlat@Iy upon reoeipt of due proof of the death of the insured as a
reeult of bodily Injuries which are the sole cause of loss of life
effected solely and excluelvcly by violent external causes and solely
thz%mgh accidental meant during the coverage period of the certlflcate
War policy,
Under Title 76 Chepte3, Vernon’s Civil Statutes en-
titled “Life, Health and Accident Insurance”, under which t’he a&ove
rimed company is Incorporated, your attention is directed to Article
&‘64a, Sections l-6. Section 1 of this Statute deflnlng group life
insurance provldeet
“Sec. 1. Oroup Life Insurance Is hereby dc-
clared to be that form of Llfc Insurance covering not
lees than twenty-rive employees written under a policy
lwued to the employer, the premium tor wfilch is to be
paid by the employer or by the employer and employees
jointly and lnaurlng all of his employees, or all of
any class or alasses thereof determined by conditions
pertaining to the en~Iiym?nt, for a~ounta of lnrmrmce
based upon some plan which will preclude Individual se-
lection, and Sor the benefit of persons other than the
employer; provided, however, that when the premium Is
to be paid by the employer end employee6 jointly and
the beneflta of the policy sre offered to all eligible
employees, not less than seventy-five per oentum of
such employees may be so insured. For the purposes
or this Act the membersof any labor union who are
actively engaged In the same oucupatlon shall be con-
sidered employees of such union. The provislonn or
this Section, howeve?, ahall not appl;- tc Croup,,Insur-
ame now In effect, or to any renewals thereof.
It seems to be well settled by the authorities that a
policy provldlng ror payment ln case of aocldental death is, to the ex-
tent or such provleion, to be deemed a policy of life insurance within
the mean- of a statute having relation to life lneurance. Logan v.
Fidelity and Casualty Company of Hew York, 146 MO. 114 47 S.V. 948;
zimser v Central Aaoldent Ineurenoe Comparq 207 Pa. 472 56 A. 1003;
Paoifla ktual Life Xmurance Cwny of Calirornla v. P&ker et ux.,
71 F. (24) 872, and other authorltlee alted therein.
In the Logan oaea, eupra, the Suprem Court of Hleeouri
etatest
“The promise to pay a weekly indemnity by an
lneuranoe aompany ln the event the Insured reoelvee
8n injury fmm an aacldent not resulting In death
does not change the aharaoter of the agreement of
the policy to pay a certaia other sum when the accl-
dent results fatally, whioh 18 life Insurance from
accidental causes, as the promise to pay a certain
etlpulated sum to the insured (now contained in mtu’q
of the pollclee leeued b what 1s knm es 'old line1
life lneurance oompeniee f when tho Insured attains
a given age or 5.n a definite specified time, and If
berore the insured arrives at the age designated, or
before the time fixed ior Its certain payment, he
shall die from any came, accidental or otherwise,
to pay his legal representatives or eoms one named
In the polioy as bcneflolary the amount etlpulated,
Is nona the less life insurance became coupled
Yith an investment or bond feature, not found In what
18 commonly known as a ‘8traIght life insurance
POllCY.
Yhe calling of a contract of insurance sn
‘accident, ltontlne,v or lrerpler' life policy, or for that
matter, by any other appellation that may be adopted
for business or conventional uses or claesif1cation,
cannot make a pCrllcy contalnlng an agreement to pay
to another a sum of money designated upon the hsppening
of an unknown or contlngent event, depending upon the
existence 0r life, lees a policy of lneurence on llfe.
Ineurancc on life includes all pollclee of Insurance
in which the payment of the InsUranCe money ISContIn-
gent upon the lees of life.”
The particular group policy under consideration, with
payment 0r the principal sum contingent, depending uponthe existence
or life, insuring a collection of lndlvlduals limited to the customers
of the grou policyholder, is clearly not within the ecope of Section 1
of Article E764a above referred to. Section 6 OS this law provldesr
“Except ae may be provided In this Act, Itshall
be unlawful to make a contract of life insurance cover-
lng a group In this State,”
it clear
We think that the propooed plan or transaction,
involving the contract of ineuranca described, is prohIbIted by the
above quoted provision of the law.
Hon. Walter C. C;oodwa.rd, ?a.ge 4 Q-24&
You are thererore respectfully advlsed that group policy aontraots
gush aa that of the United Travelers Inmranae Company, Xourton
Texas, under and rubject to which aertlflaatee are lsrrued insuring
the cutstoner of the Insured, are prohibited by Seation 6, Artlale
4764a, Vemon~a Civil Statutes, and in the opinion of thlr Depart-
ment, the writing or ouah tppe 0r lnarururae 18 without the charter
powers of ruah aorporatlon.
Youra very truly
ATTORNEYOENBRALOFTXXAS
APPROVED AU0 12, 1949
I/ Orover Sellers
FIRST ASSISTAXT
AlToRNxYOENXRAL
Approved opinion Comlttee By sm ChaIrman
This Opinion Considered and Approved In llmlted Cmferencc