    TEE     A+IYORNEY                  GENERAL
                  OF.TEXAS
                  AUETIXN    II.   TNXAIS




                  October 31, 1952

Hon. Garland A. Smith
Caqalty Insurance ConnnlBBloaer
Board of Ineurance,Comm$sslonerB
Austin lA,,TeF+B. ~.:. @&nlon Np. V-L534
                             ke: Authority of the Board
                                 of Insurance Commlsslon-
                                 em to suspend or revoke
                            ,'   the'certificates of ll-
                                 aensed workmen's compen-
                                 sation insurers who refuse
                                 to write this insurance
Dear Mr. Smith:                  for eligible applicants.
        Your request for an opinion reads as follows:,
        "Section7, of Article 8308,Revised
    Statutes of Texas (EmployersLiability and
    WorkmenIs CompensationLaw) provides, 'Any
    employer of labor in this State who may be
    s!$ject to the,terms .ofthis 18~ or to the
   '.,term$:~of
             the Lon@hol'&nen~!sand Harbor Work-
    ers' CompensationAct of the United States
    may become a subscriberto the Association:'
         "~Asso~latlon~1s the Texas Employers'
     InsuranceAssociation,as provided for In
     Sections 1 through 6, of'Article 8308.
         "The Supreme Court (Co@. of App.) held
     In the case of Texas Em layers' Ins. Ass%
     v. U. S. Torpedo.Co.,2I!!S.W.2d 1057, that
     the Associstionhad no :choice~aB to Its hub-,
     scribers and.must inBure,eye~ryeligible em-
     player who apjilledfor compensation lnsur-
     ante to the Association.~
         "Section2, of Arti&le 8309, provides
     that other companies may Insure subscribers
     and Imay have and exercise all the rights and
     powers conferredby thle law on the assocla-
     tlon created hereby. . . .I
     "The oonrta have held in Harris v.
Traders' & Oeneral Ins. Co., 82 S.W.2d
750; Southern Casualty Co. v. Freeman,
13 S.W.2d 148; Federal UndervrlteraEx-
change v. Walker, 134 S.X.26 388; and
Capps v. General Accident, FIri8& Life
Assur .Corpi, 92 F.Sup. 227, that such
other companies also have to vrlte oom-
pensatlon lns~ance for,any eligible
employer applying for such Insurance.
    "It has been brought to the attention
of the Board of InsuranceCommlssionel'B
that Texas Employers InsuranceAssociation
and other oasualtp companies chartered or
licensed to transact a 1labllltyand accl-
dent business in this state, and with per-
mlts to write WorionenlsCompensationlnsur- '
ante, have refused, In many Instances,to
write such lnsnrance for eligible employers.
    "The situationvlth reference to the
qbtalnlng of Workmen's Compensationlnsur-
ance has become serious, and some employers
have had to cease operationsor to refuse'
to enter Into certain operationsbecause of
their Inabilityto procure such coverage.
The Board of Insurance Commleslonersaridthe
IndustrialAccident Board have had many in-
quiries from such employers,asking how they
might obtain the needed Insurance.
    "Article1.10, of the Texas Insurance
Code, Section 1, Bets otitthat one of the
duties of the Board Is to 'see that all laws
respecting Insuranceand Insurancecompanl?,s
are faithfullyexecuted.'
    "Section7 of this Article 1.10, providea
that, 'The Board shall suspend the entire
business of any company of this State, and the
business althin this State of any other com-
pany, during Its non-compliancevlth any po-
vision of the laws relative to Insurance,or
vhen Its business is being fraudulentlycon-
ducted; by suspendingor revoking the certlf-
lcate granted by It.'
Hon. Carland A. Smith, page 3 (V-1534)


        "The Board desires your opinion as to
    whether refusal by a licensed insurer to
    write Workmen's Compensationinsurance for
    an eligible applicant constitutesnon-
    compliancewith the Insurancelaws referred
    ,toabove; and.vhether the Board, where such
    refusal Is found~bg It after notice, and
    hearlng,~~maysuspend the entire business o?
    such refusing company by suspendingor re-
    voking the certificategranted to lt'bg
    the,Board."
          The cases aivlna effect to the rule announced In
Texas &sployers'~InsTAs&     v. United States Torpedo Co.,
26 S.W.26 1057 (T~zx.COQIUI.A~~.
                               1930, affirming 8 S.W.2d 266),
clearly estabilsh a,duty on-the part of any insnrer licensed
to write workmen's compensationInsuranceto give protection
to all aoolicsnts vha are ellnlble for vorlcmen'scomnensa-
tlon coverage. Southern Casualty Co. v. Free.man,~l3-SiW.2d
148, 150 (Tex.Clv.App.1928~afflrmed~Com.AppJ   24 S.W.26 370);
Harris v.~l'raders'.% General Ins. Co., 82 S.W.2d 750 (Tex.
Clv.App. 1935,~~error ref.); Federai?Jndervrlterstixchengev.
Walker, 134 S.W.26 388 (Tex.mp      1.1939,erro;;lsm.by agr.);
     rv.~Qenm1 Accident Fire % Life Assur o Da,92 F.Sup.
CCLDDS
227 (S.D.Tex.1950). See also Yoselovltz v. Peoples Bakery,
277 R.W.221 (Mlnn.Sup.1938);CaliforniaState Automobile
Ass'n Inter-InsuranceBureau v. Dovnev. 21b P.2d 882 (Cal.
Dlst.Ct.ofApp.,1950,afflrmed341-iiTi05j. The applicant
for such Insurance must, of course, also comply vlth any
legal conditions oreCede& to nerfectlnn the duty of the
insurer tomafford-the protection. Texas EmDlOyeh3 Ins.
AssIn V. Russell, 127 Tex. 230, 91 S.w.2d 317 (193b); Pose-
                                                       __
lowits v. Peonies Bakery, suvra.
          Your question Is whether an Insurer vho refuses
to Issue a proper policy to any employer ~vhohas perfected
his right thereto Is guilty of such "non-compli?ncewith
any provlslon of the laws rel%tLve to InSuIanCe as to au-
thorize the Board of InsuranceCommissionersto suspend or
revoke the Insurer's oertlflcateof authority to engage In
the Insurancebusiness within the meaning of Section 7 of
Article 1.10 of the InsuranceCode (Vol. 14, V.C.S.).
          Section 7 of Article 1.10 Is derived from S.B. 291,
Acts 31st Leg.,R.S.1909,ch.lOS,p.lY2.The Act provided for
regulation of the Insurancebusiness generally. We conclude
that Section 7 applies to any type of insurance company or
Insurancebusiness In the absence of Inconsistentspecific
Hon. Oarland A. Smith, page 4 (V-1534)


prwlaloaa applloableto a particular type of company
er to a particular portion of the laws relative to
insurance.
           Her do WC have any doubt that Section 7 Is
applicable to thenvotienls compensationlaws and to com-
panies engaged In vrltlng vorknmnfs compensationlnsur-
ance, in the absenoe of particular provisions of the
vorkmenls compensationstatutes at variance with the pro-
visions of Section 7. Workmen8s compensation Is unques-
tionably a type of Insurance. The original WorloDn's
CompensationAct so treated the subject. S.B.ll, Acts
33rd"Leg.,R.S.1913, oh. 179,p.429. Subsequent acts deal-
ing with workmeals compensationare of the same tenor. See,
                       Acts 35th Leg 1917, ch.103 p.269,
:;i ~~p:~i,Si:ts2;~ih bg.,R.S. 19ij,~h.l&',p.406.
           Specific provisionsgovern many phases.of regu-
lation of workmen's compensationInsurers and admlnlstra-
tlon of many phases of the workmen's compensationsystem.
100such specific provision deals with the enforcementof
the i-nsurerl~s
              duty to Insure an employer. There being DO
such specific provision Inconsistenttherewith, Section
7 applies If the refusal Is otherwise within Its terms.
           The question is thus narroued to whether such
a refusal to Insure Is otherwise within the scope of Sec-
tion 7.
           The duty of the Insurer arises under the aork-
men's compensationstatutes. Texas EmDloyersl Ins. Ass'n.
v. U. S. Torpedo Co., supra. While the duty Is not liter-
ally expressed In the statute, "that which Is Implied In a
statute Is as much a part of It as what Is expressed." 39
Tex. Jur. 186, Statutes, Sec. 99. The duty Is, therefore,
a ~proirl$lon"of the laws relative to Insurance and a refusal
would be literally a "non-compliance."
           However, we are of the opinion that the broad
language of Section 7 Is not Intended to apply lndlscrlml-
nately to every failure or refusal to perform an obligation
under the "lavs relative to Insurance"which Is not the
subject of more specific provisions of the statutesas to
enforcement.
           Only such "non-compliance"as threatens to under-
mine the rights of the public generally and policyholders
as 8 class should be appropriatelyrecognized by the Board.
See North Brltlsh % Mercantile Co. v. CralR, 62 S.W. 155,
Hon. Garland A. Smith, p8ge 5 (V-1534)


159 (Term. Sup. 1901), vhtreln a slmllar statuk vi-.~5-3.
appllca~le to matters which 'go to the general irte&:ity
of the Insurancebusiness, and affect 811 policyhoLders
In the same way."
            Individualdisputes, not of that nature, m8y
be settled through the norm81 processes of the courts.
Thus, where individualdisputes arise between an Insurer
and a member of the public, though based on a contention
that the Insurer has failed to fulfll an obligationarls-
in& under provfslons of the Insurance laws, the Board does
not normally have jurisdictionto revoke or suspend the
lnsurerls permit. It Is a different matter, however, when
the obligationon the part of the Insurer Is one In which
policyholdersor other members of the public, as a class,
have a common Interest. Thus, where the question between
the company,anda member of the public or a policyholder
1s peculiar to the individualcontroversy,the Board, In
the absence of specific authority, would not be authorized
to act until the matter Is settled by judicialprocess.
Where, however, the policyholderor member of the public
has 8 clear rSgbt under the Insurance 18~s because of mem-
bership in a class In whom the right Is clearly established,
such right is within the scope of the Board's authority un-
der Section 7. We conclude that the duty to insure an eli-
gible employer Is of the latter type.
           The obligationto Insure employers who have
properly qualified Is a sufflclentlysettled question to
m8ke a refusal, In our opinion, such a "non-compliance"as
to give the Board jurisdlctlonfor action In the premises.
If upon the hearing required before a determinationIs
finally made to revoke or suspend a permit, It appears that
the employer'sright to Insurance Is clear, the Board's duty
Is to enforce compliance. An opportunityto comply with the
obllgatlon should be given the Insurer after a hearing at
which It is confrontedvith the full facts which impose the
obligationupon It.
           The authority and duty of the Board to effect com-
pliance with the laws respecting Insurance Is fully dls-
cussed and supportedby appropriate citations In Butler v.
American Nat. Ins. Cc., 235 S.W.2d 185 (Tex.Civ.App.1950,
error ref.). It Is suggested that, when an allegation of
such refusal Is brought to the attention of the Board, a
hearing should be conducted,after proper notice is given
the Insurer, to determinewhether the insurer'sduty to
Insure Is clearly establishedand to determinewhether the
Insurer's permit should be suspended or revoked. Upon such
                                                             .   ,
eon. garland II. Smith, page 6 N-1534)


 hearing, thenBoard may, If tha duty to insure is clearly
 establlshe6, order compliance,and upon failure to comply,
 order a revocation or suepen13ionof the insurer~scertlfi-
 cate.

                      SUMMARY

              The Board of Insurance Commls-
         sloners has the duty, under Section
         7 of Article 1.10 of the Insurance
         Code (Vol. 14, V.C.S.), to revoke
         or suspend the certificateof author-
         ity of an insurancecompany operating
         under a permit to write workmen's com-
         pensation insurance if, after notice
         and hearing, the insurer refuses to
         comply with an order of the Board di-
         rectlng it to Insure an employer who
         Is eligible under the workmen's com-
         pensation laws.
APPROVED:                           Yours   very   truly,
Mary K. Wall                         PRICE DANIEL
Reviewing Assistant                Attorney General
Charles S. Mathews
First Assistant
                                    Bykh%rJ&
                                      Ned McDaniel
NMc/rt                                  Assistant
