April 14, 1939
Honorable Tom C. King opinion lo. 0-W
State Auditor Rtr Examination of dome&k and
AmtIn, Texar foreign ~i.nNranCC companiccl.
Dear Sir:
Your letter of January 13, 1939, hertlnafter set out, ha6 received
the careful attention of this Department.
We acknowledge with thanka the aesietanct rendered UII through numerous
convtraatlons with Mr. T. M. Markham of your Department. In thin connection,
we have also received hlpful information from the Honorable R. L. Daniel,
former Chairnum of the Board of Insurance Conunisniontr6 and members of him
department.
Your letter it as follows:
“Articles 4690, &OS, 46gOb and 46gOc provide for the: exami-
nation of inmrenct comptnlttchartered in, or doing bu6lntss In,
the State of Texa8, and for appointment, qualification, compensa-
tion etc. of examiner8 therefor.
“Your opinion ir rtrpectfully requeatsd regarding the fol-
lowlng:
(1) The authority of the Chahmn of the Board of murance
Comirrlonerr of Texar to accept t6aminat.i~ report6
from sxamintrr not comiraioned by him in writing.
(2) The authorit of actuaries or examiner8 to accept com-
pensation (tither per diem or othtiwltt),gratuity, or
refund6 of txpenrer incurred by them from any lnouranct
company, while connaisrloned by the Chairman of the Board
of InturanctCommirrlontr6 of Tent.
(3) In caw of violation of authorlty In No. 2 above, what
penalty la provided.”
The first rcntence of Article 4690, Revised Civil Gtatutel, 1925,
as ended by Chapter 152, Actr Regular Gession, knd Leglrlature, 1931, reads
a6 follows:
Hon. Tom C. King, Page 2 (O-144)
or by one or more examiners commireloned by him in writing, visit
each company organized under the laws of this State and examine its
financial condition and its ability to meet its liabilitiee, as well
a8 it6 compliance with the law6 of Texan afftctlng the conduct of
itr burinear) and he mx rimilarly, In ptrron or by one or more can-
miariontd txamintr8, visit and examine, tither alone or jointly with
representatives of the insurance rupervlring department6 of other
States, each insurance company not organized under the law8 of this
State but authorized to tranoact buainesr in this State . . .”
Article 46906 provides that the expenses of all Euch examinatlonr
&all be borne by the insurance coxpenles exanined and that the eums received
for such purposes shall be deposited in the Insurance Examinstion Fund of the
State Treamry. From such Fund, it ir, prescribed that the salaries and expense6
of all ntcesssry actuarier and~examinerr, of the department rhall be paid. Thlr
statute also authorizes joint examinations between repreBentative6 of the State
of Texas Insurance Department, and eimilar department8 of other States.
I
Article k6gOb authorize.8 the appointment of certain actuaries and
examiners and prescribes the maximumealariee that each ahall receive. The
last paragraph of thi6 Article reads as followa:
“Neither the actuary to the Board of Insurance Commissioners
l nor any examiner or assistant shall continue to serve ab such if,
while hold;rig such position, he shall, directly or indirectly, ac-
cept from &!y insurance rompany, any employment or pay or compen-
sation or gratuity on account of any service rendered or to be
rendered or on any accouc$ whatsoever.”
Article 4690~ provides that examiners and assistant examiner6 shall
take an oath of office and file a bond conditioned as prescribed by aaid Article.
We call your special attention to the difference in the requirement
of Article 4690, as amended, in regard to examination of insurance companies
organized under the law8 of this state and the examination of ether companies
organized under laws of other States but having pernits to do business in Texas.
It is our' opinion th$ the requirements of the statute in regard to examination6
of domestic companies at leant once every two years are mandatory. It is equally
apparent that the examination of foreign companies with permits to do business
in Texas is not mandatory, but may be made by the Chaiman of the Board of
Insurance Commissioners, or hie representative, if, in hie judgment, such exami-
nation shouldbt made.
Since the statutes prescribe that the mandatory examinations must
be made by examiners commissioned by the Chairman in writing, it is our opin-
ion that the acceptance by the Chal- of reports from examiners not commis-
sioned by him in writing would not be a proper and sufficient compliance with
these requirements of the statutes. By this w& do not mean that it is improper
for said chairmau to receive and have among the papers and files of his office
.
Hon. Tom C. Kiug, Page 3 (O-144)
report-t made by non-comaisrimed examinera, but it ir our opinion that the
acceptance of such report8 doe8 not constitute a compliance with the mandatory
provirionr of there articler.
It ir, therefore, our opiuieu that qutatiou lo. 1 should be mowered
ar followr:
At lea6t one txaminatlon every two yearn of each inmrance corpora-
tleu orgauized under the laws of the State of Texan muat be made by the Chair-
man of the Board of Insurance Comainsionerm or his examiners, duly commissioned
in writing. While said chairman may accept reports from non-commissioned ex-
ami.nerB for the benefit of such information 80 they may contain, yet such re-
portr and 6uch examinationa would not satlafy the mandatory provisions of the
statute. In regard to insurance corporationr not organized under the laws of
the state ofTexam but operating in Texas under permits to do business in Texas,
it is our further opinion that no mandatory examination of ruch companies is
required by Iltatute. If, however, said Chairmen determines that such examine-
tlon should be xkde, the 6ax~ must be made by a duly commissioned examiner,
which commission must be in writing. If, on the other hand, said Chairman de-
termines that such examination of forelgu companlea la not necessary, there
la, in our opinion, no statutory objection to his receiving reports from non-
commissioned examiners for such information as they xay contain.
In anmfer to question lo. 2, it is clear from the above quoted por-
tion of Article 46pOb that actuaries, examiners and aseistant examiners of
the Board of Insurance Commissioners cannot continue to serve as such if, while
holding such position, they shall directly or indirectly receive or accept
from any insurance company any employment or pay'or compensation or gratuity
en account of any service rendered or to be rendered or on any account what-
soever.
In answer to question Ro. 3, the etatute doea not prescribe a penalty
for a violation of the prohibited act except to disqualify such employees from
further continuing to represent the State in aaid capacities. In our opinion
the penalty should be the removal of 8uch employees from the positions they
hold, unleaa their acceptance of such consideration constitutes a violation
of 8ptciflc criminal statutes, in which event, the penalties prescribed by
such statute6 could also be inflicted.
We trust that thin ia the information you desire.
vwB:R:IM Yours very truly
ATTORREY(;ERwAL OFTRXAS
APPROVRD: By (Signed) Victor W. Bouldin
Victor W. Bouldin
(Mened) Gerald C. Warm Assistant
!’
ATT= OBIWUL OF TRXAS