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Honorable Wm. Hunter McLean           Opinion No. C- 167
Chairman, State Board of Insurance
1110 San Jacinto                      Re:   Reconsideration of
Austin 14, Texas                            Opinion S-179
Dear Mr. McLean:
     Your recent opinion request states that the State Board of In-
surance now has under consideration insertion of the following
rule in the Texas General Basis Schedules:
        "DEFERRED PAYMENT OF PREMIUMS. Unless other-
    wise specifically provided in the General Basis
    Schedules, interest of 6s per annum shall apply
    to all premium payments deferred to an agreed
    stipulated date. This provision, however, is
    not intended to affect the usual customary open
    accounts."
     On October 22, 1955, the then Attorney General issued Opinion
No. S-179, summarized as follows:
         "The Board of Insurance Commissioners of the
     State of Texas does not have the authority to
     regulate'the rate of Interest charged on deferred
     premiums."
     Opinion No. S-179 is based upon those portions of Articles
5.25 and 5.42, Texas Insurance Code, quoted as follows:
        "Art. 5.25. Board Shall Fix Rates
            The Board of Insurance Commissioners shall
    have the sole and exclusive power and authority
    and it shall be its duty to prescribe, fix, deter-
    mine and promulgate the-rates of premiums to be
    charged and collected by Sire insurance comoanles
    transacting business in-this State. Said Board
    shall also have authority to alter or amend any
    and all such rates of premiums so fixed and deter-
    mined and adopted by it, and 70 raise.or lower



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Hon. Wm. Hunter McLean, Page 2 (C- 167   )


     the same, or any part thereof, as herein pro-
     vided." (Emphasis supplied)

         "Art. 5.42. Not Retroactive
             The provisions of this subchapter shall
     not deal with the collection of premiums, but
     each company shall be permitted to make such
     roles and regulations as it may deem just be-
     tween the company, its agents, and its policy-
     holders; and no bona fide extension of credit
     shall be construed as a discrimination, or in
     violation of the provisions of this subchapter."
This opinion concludes by holding that the Board "does not have the
authority to regulate the rate of interest charged by companies on
deferred premiums, as the amount of interest charged is not a part
of the policy premium determined by the Board, but constitutes a
charge separate and apart from the pollcg~premium. . .'
     We are not directed to any statute purporting to give the
State Board of Insurance authority to regulate the rate of interest
to be charged on deferred premiums on fire insurance, On the con-
trary, Articles 5.25 and 5.26, Texas Insurance Code, ive the Board
authority to regulate premium rates, while Article 5. 8 2 constitutes
express legislative permission for the deferment of premium pay-
ments and the adoption of regulations by each insurance company
concerning the collection of such premiums.
     In the case of Commercial Standard Insurance Company v. Board
of Insurance Cornmissloners,34 Y W .2a 343 (Cl~.APP. 1930 error ref.),
The issue before the Court was whether or not the Board Lad author-
ity to promulgate an order fixing the amount of commissions which
fire insurance companies night pay to their local agents. The
Court noted the statutes controlling the regulation of fire insur-
ante (now subchapter C of Chapter 5 of the Insurance Code) and
stated that:
         "The statutes vest in said Board very ex-
     tensive and exclusive powers over premium rates
     and provide for securing information on which
     to fix, alter, amend, or modify sane.”
     This is still true of these statutes. In the course of its
opinion denying the Board's authority to fix the amount of commis-
sion, the Court went on to hold as follows:




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        Hon. Wn, Hunter McLean, Page 3 (~C-167   ,)


                "In all instances, however, such powers re-
            late to fixing maximum    emium-rates;.and. no-
            where is anv exoress      oritv given bv law to
            regulate or"contro1 any of the items, elements,
            or charges, entering into or going to make up
            the aggregate premium rate.
                ,I
                  . . .
                11. . .these statutes, having undertaken in
            considerable detail to prescribe the powers
            and duties of the Board relative to such maxi-
            mum rate only, without giving authority t-em
            tofix or regulate the different elements of
            expense entering into that rate, must be con-
            strued as a legislative denial of such power."
             The Court further held:
                 "The Board can exercise only the authority
             conferred upon it by law 'in clear and unnis-
             takable terms, and will not be deemed to be
             given by implication, nor can it be extended by
             inference, but must be strictly construed.' 51
             C.J. 56. State v. Robinson (Tex.Sup.), 30 S.W.2d
             297." IEmphasis supplied)
             Had the Legislature desired to confer authority upon the Board
        to regulate or specify interest rates charged upon deferred premiums,
        it easily could have done so. Instead, Article 5.42 has not been
        amended since the release of Opinion No. S-179, some eight years
        ago.
             In view of the foregoing authorities and in the absence of any
        language of the Insurance Code purporting to give the Board authority
        to regulate rates of interest upon deferred premiums, we affirm the
        holding of Opinion No. S-179 and respectfully advise you that the
        State Board of Insurance does not have the authority to promulgate
        the order set out in your opinion request.




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Hon. Wm. Hunter McLean, Page 4 (C- 167       )


                               SUMMARY
              The StateBoard of Insurance does not
          have the authority to regulate the rate of
          Interest charges on deferred premium pay-
          ments. Opinion No, S-179 is affirmed.
                                         Yours very truly,
                                         WAGGONER CARR
                                         Attorney General of Texas


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DDM/snd
APPROVED:
Opinion Committee
W. V. Geppert, Chairman
Joe R. Long
C. L. Snow, Jr.
Howard Fender
Gordon Appleman
APPROVED FOR THE ATTORNEY GENERAL
BY: Stanton Stone




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