Art. 21.35B. Permissible Payments

       (a) No payment may be solicited or collected by an insurer, its agent, or sponsoring
           organization in connection with an application for insurance or the issuance of
           a policy other than:

            (1) premiums;
            (2) taxes;
            (3) finance charges;
            (4) policy fees;
            (5) agent fees;
            (6) service fees, including charges for costs described under Article
                21.35A of this code;
            (7) inspection fees; or
            (8) membership dues in a sponsoring organization.


Tex. Ins. Code Ann. art. 21.35B (West Supp. 2004) (emphasis added). Service Life argues that by

listing premiums and policy fees as separate items that the insurance company is permitted to charge,

article 21.35B makes a clear distinction between premiums and policy fees. The Act, however,

authorizes the Commissioner to establish only a premium, not a policy fee. Thus, the Act should not

be construed to deny an insurer the ability to charge policy fees in addition to premiums. In other

words, Service Life argues that although the purpose of the Act is intended to regulate credit life

insurance and credit accident and health insurance, it may only regulate premiums, not policy fees.1


       1
          Service Life also directs us to the finance code in support of its argument. Section 348.202
of the code permits the sale of credit life insurance and credit health and accident insurance in
connection with a loan and provides that the cost of the insurance as well as a policy or agent fee
charged in connection with the insurance may be included in the loan contract. Tex. Fin. Code Ann.
§ 348.202(c) (West Supp. 2004). Service Life contends that this statute evidences the legislature’s
intent to permit credit life and credit health and accident insurance companies to charge both a
premium rate and an additional policy fee. Section 342.407 of the code, however, sets out the
requirements for including an insurance charge in a loan contract, including that the insurance must
be written “in accordance with the Insurance Code.” Id. § 342.407 (West Supp. 2004). Thus, the
finance code specifically defers to the insurance code for authorization of insurance charges. We
therefore disagree with Service Life’s contention that section 348.202 of the finance code is

                                                  4
                Today, in Liberty Mutual Insurance Co. v. Griesing, No. 03-03-00646-CV, slip op.

(Tex. App.—Austin Aug. 26, 2004, no pet. h.), we considered a similar issue, construing article

21.35B of the insurance code. In that case, Griesing challenged her auto insurer’s imposition of a

state-mandated fee in addition to her auto insurance rate. As with the life insurance industry, the

Commissioner annually sets a benchmark rate for each line of automobile insurers; auto insurers may

charge rates up to thirty percent above or below the benchmark rate set by the Commissioner. In

determining this rate, the Commissioner may consider a number of factors. In defense of its attempt

to impose a fee in addition to the rate set by the Commissioner, Liberty Mutual, Griesing’s auto

insurer, presented an argument in that case similar to the one presented by Service Life here:

Because article 21.35B listed both premiums and taxes as permissible items that an insurance

company may charge, Liberty Mutual should be allowed to charge its customers both the insurance

rate set by the Commissioner as well as a tax (the state-mandated fee). We concluded, however, that

the rate is “the charge” for a line of insurance. Article 21.35B acts only “as a limit on the ability of

the commissioner to consider or of an insurer to include the costs of business in establishing a rate,”

and that an insurer “may only include those [21.35B] costs when filing rates with the commissioner.”

Id. at 10.

                Similarly, we conclude that article 21.35B is not intended to allow insurers to raise

revenues by circumventing rate-regulation requirements. Rather, article 21.35B speaks only

generally to the types of payments that insurers are permitted to solicit or collect and forbids all types

of payments other than those listed in the statute. It does not, however, entitle insurers to charge




dispositive of the issue presented here.

                                                    5
policyholders for every item listed in the statute. Indeed, the statute is included under the subchapter,

“Miscellaneous Provisions,” suggesting that it is a general provision and not part of a specific

regulatory scheme.

                The Act, in contrast, specifically sets out the manner in which insurers may collect

payment. And under the more specific Act, credit life insurance and credit accident and health

insurance are strictly regulated. In keeping with the Act’s regulatory purpose, the Commissioner is

authorized to determine a presumptive premium rate, which is “the charge” for credit life insurance

and credit accident and health insurance. In determining this rate, the Commissioner must consider

any relevant data. See id. at 9. And among the data that may be considered are the items listed in

article 21.35B that a credit life insurance company or a credit accident and health insurance company

may charge; these items, if allowed, would be included in the presumptive premium rate, not as

separate fees, because the presumptive premium rate is the method by which the Act authorizes these

insurance companies to collect their payments.

                We note that among the items listed as permissible charges, article 21.35B includes

“agent fees.” Tex. Ins. Code Ann. art. 21.35B(a)(5). Section 1153.103(e) of the Act, however, also

authorizes the Commissioner to consider agent fees in determining the presumptive premium rate.

Tex. Ins. Code Ann. § 1153.103(e) (“In determining the presumptive premium rate, the

commissioner . . . may request from an insurer or agent any relevant data relating to the presumptive

premium rate, including information relating to compensation paid for the sale of credit insurance,

expenses, losses, and profits.”). Assuming the Commissioner did consider agent fees in determining

the presumptive premium rate, Service Life’s reading of article 21.35B would allow insurers to

collect agent fees twice—once as part of the presumptive premium rate and again as an additional

                                                   6
fee authorized by article 21.35B. Such an interpretation conflicts with the Act’s stated intent of

promoting public welfare by regulating credit life insurance and credit accident and health insurance.

               Finally, even if article 21.35B and the Act could not be construed so as to avoid

conflict, because the Act is more specific than the general article 21.35B, the provisions in the Act

must prevail as an exception to the general provision. See Brazoria County, 128 S.W.3d at 738. We

therefore overrule Service Life’s single issue on appeal.


                                          CONCLUSION

               We hold that the Act for the Regulation of Credit Life Insurance and Credit Accident

and Health Insurance authorizes the Commissioner to set the presumptive premium rate for credit

life insurers and credit accident and health insurers. Insurers may charge up to thirty percent above

this rate, but may not charge additional fees in order to exceed the thirty percent ceiling. Article

21.35B does not allow the insurers to circumvent the presumptive premium rate by charging

additional fees listed in that statute. We therefore affirm the district court’s judgment, denying

Service Life’s request to reverse the Commissioner’s order.




                                               __________________________________________

                                               David Puryear, Justice

Before Chief Justice Law, Justices Patterson and Puryear

Affirmed

Filed: August 26, 2004


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