                                                              October                 30, 1957



    State     Board         of Insurance                              Opinion                   No.    WW-291
    Hon.      William        A.     Harrison
    Commissioner                  of Insurance                        Re:             Does        the State          Board         of Insurance
    International            Life        Building                                      have       authority           to fix      maximum
    Austin,        Texas                                                              commissions.                 which        insurers         writing
                                                                                      credit          insurance           may      allow        to lenders,
                                                                                      1 nder          agents,        or     insurance           agents
,                                                                                     :$der       Article          3.53      of the Texas
    Gentlemen:                                                             ::. lnsu~rance                   Code      ?
                                                                                                                                         f<
                                                                         s.,                                                              ,.,
                                                                               ..’;      i,!,
               Your        letter     of September              9, 19~57;‘hcs been                          received,           .and we~quote
                                                                           .;,.2
    from      it in part          as follows:
                                                                                                                 1

               “In this          connection,           we    desire       you;             opinion          of the         authority
         of this     Board          to fix the maliimum                  ,commissions                        which         insurers
         writing      credit        insurance           may aDow                 to lenders,                lender          agents,
                                                           , ‘,
         or   insurance           agents.”


               Article           3.53,     origina,lly        Senate           Bill        No.        208, was            enacted        by the
    51st Legis,lature               in 1949.        From        the caption                      of this     Act       we    quote       in part
    as    follows:                                                       ,


               “fan        Act    proiidi,ng        for     regulation                  of life        insurance            and
         health      and accident             insurance          issued                in connection                 with    loan
         transactions;              ~ ~ . declaring           certain             commissions                    for      the     sale
         of credit         insurance          legal,        and forbidding                      those       above         maximum
         rates1       or    based        on loss       experience;                    . . .”
                    .,

               Section           6 of Article          3.53     provides:


               “Commissions                  received    by lenders,  lender                                 agents    and
         insurance   agents               from    insurers   for the writing                                 of credit
         insurance          complying           with        the terms                 of this         article,        the
         maximum            rates        promulgated            by the Board,                         and    rules        and
         regulations   of the Board   of Insurance   Commissioners,                                                        shall
         be considered    for all purposes    as compensation    for                                                   services
         rendered          to such        insurer         and    shall          not be taken                 to be an
         interest       charge           on the money           borrowed;                       provided,          however,
.State Board       of Insurance,    page 2 ,(WW-291)



  should such commissions     be in ‘excess of any maximum fixed                   ’
  here’under, then such commissions      shall be deemed to be an
  interest charge on the money borrowed.       No agreements  ,by
  insurers with any of its agents shall permit contingent com-
  missions   based on loss ,experience.”

         Section     9 of Article   3.53 provides:

          “The Board is hereby authorized to promulgate    rules
    and regulations   to carry out the spirit and purposes of this
    article, including but without limiting the generality hereof,
    the reserve   requirement  and records to be maintained on
 ; such business,    the method of insurance and deliirery of the
 ‘. policies and the methods for the settlement of claims.”

        It is evident~from this language that it was the intent of the Legisla-
ture’to authorize the State Board of Insurance, the successor       to the Board’
of Insurance Commissione,rs,      to set a maximum rate of commissions       that
can be paid. by the,credit  life, health. and i(ccident insurers. If this were
nottrue,, such language as quoted above @uld be mere surplusage.

                                     SUMMAR,Y
                                          “. .,
               The State Board.of I&urance     is authorized by
               Article  3.53 of the Texas Code of Insurance to
               set maximu:m com;?nissions   that may be allowed
               by insurers writing credit life, health and acci-
               dent insurance..”   -

                                                       Very   truly yours,

                                                       WILL WILSON
                                                       Attorney General      of Texas
RAW:pc       ,, ;’

APPROVED:
OPINION COMMITTEE:                                            Richard A. Wells
                                                                 Assistant
Geo. P. Blackburn,   Chairman
w. v. Gappert
B. H,, Timminr,  Jr.
John B. Webster
REVIEW,ED FOR THE ATTORNEY,                       GENERAL
BY:      James N. Ludlum

         1Emphasis       supplied   throughout.
