                        THE       ATTORNEY                 GENERAL
                                        OF      =XAS


  WTIA.       WILSON
A=O’RNIFy        OBSNERAI.
                                               May 29,   1961


            Hon. William A. Harrison                 Opinion No.   WW- 1071
            Commi~ssioner     of Insurance
            International   Life Building            Re:   Whether County Mutual Insur-
            Austin,   Texas                                ance Companies     which are
                                                           authorized to issue automobile
                                                           liability insurance policies in
                                                           the State of Texas are subject
                                                           to the mandatory provisions    of
                                                           Section 35 of the Texas Motor
                                                           Vehicle Safety-Responsibility
                                                           Act, Acts 1951, 52nd Legisla-
                                                           ture (Article 6701h, Civil Statutes
                                                           of Texas).

            Dear Commissioner      Harrison:

                    You have asked our opinion on the following        questions:

                          “1.  Are County Mutual Insurance Companies which
                    are authorized to issue automobile liability insurance
                    policies in the State of Texas subject to the mandatory
                    provisions   of Section 35 of the Texas Motor Vehicle Safety-
                    Responsibility   Act, Acts 1951, 52nd Legislature?

                         “2.   If your answer to the above question is in the af-
                    firmative,   would a County Mutual which subscribed     to the
                    Assigned    Risk Plan be required to charge the rate of pre-
                    mium prescribed     by the State Boa,rd of Insurance for poli-
                    cies issued in accordance    with the Texas Motor Vehicle
                    Assigned   Risk Plan? I’

                    Section 35 of Article 6701h, V. C. S. , the Motor Vehicle Safety-
            Responsibility  Act, after making provisions     for the formation of “a plan
            and procedure to provide a means by which insurance may be assigned
            to an authorized insurance company for a person required by this Act to
            show proof of financial responsibility,    ” commonly known as the assigned
            risk plan, continues by providing:      “When any such plan has been approved
Hon.   William   A.   Harrison,   page 2   (WW-1071)




by the Board of Insurance Commissioners,       all insurance companies    auth-
orized to issue motor vehicle liability policies in the State of Texas shall
subscribe   thereto and participate therein. I’ In addition, the Board is given
the authority to set premium rates commensurate        with the risks.  (In the
field of automobile  insurance generally,   the Board, by Subchapter A of
Chapter 5 of the Insurance Code has been given the responsibility      of pro-
mulgating policy forms and regulating premium rates. )

          County Mutual6 have a somewhat unique history.          Chapter 17 of the
Insurance Code (Art.       17.22, Vol.  14, Vernon’s    Civil Statutes) has consis-
tently provided that such companies       shall be “exempt from the operation
of all insurance laws of this state” unless otherwise specifically        provided
in said Chapter.      Formerly,   no such company could write automobile
liability insurance.     In 1955, however,    certain changes were made in
Chapter 17. Article       17. 02 was amended to prohibit the formation      of such
companies;    Article   17.25 was amended to authorize the writing of auto-
mobile liability insurance by certain classes        of County Mutuals; and Article
 17.22 was amended to provide that such companies           are subject to certain
specified statutes outside of Chapter 17.

         Shortly after the passage of the above-mentioned      amendments,     this
office was called upon to answer somewhat the same ques:tion in regard to
automobile liability insurance      generally that we are now called upon to an-
swer in regard to the assigned risk plan.        In Opinion No. WW-401,    we
held:   1) that County Mutuals were specifically     made subject to the policy
provisions    of Article 5.06,   but 2) were not subject to the rating provisions
of Article 5.01,     et seq, because of the exemption provisions.

          The reasoning of Opinion No. WW-401        applies equally to the ques-
 tion before us.    Although obviously the purpose of Art. 6701h in its entirety
 is “to encourage safer use of motor vehicles,      ” in our opinion Sec. 35 of
 that Article is an “insurance   law” within the purview of Art.      17.22 since
 the regulations   which it imposes upon the insurance industry after approval
 of the plan by the Board are of the most fundamental type, i. e. the com-
 pulsory insuring of a risk at a prescribed    rate.     Nowhere in the 1955
 amendments     to Chapter 17, neither in those giving County Mutual6 the
 authority to write automobile liability insurance,       nor in those specifying
 other portions of the laws of this State to which such companies         should
thenceforth be subject,    are there any references     to Article 6701h. although
 it had been in existence   since 1951.
Hon.   William   A.   Harrison,   page 3   (WW-1071)




        Accordingly,   we are compelled to hold that County Mutual6 are
not subject to the provisions of the Texas Motor Vehicle Assigned Risk
Plan, and both questions are answered in the negative.

                                   SUMMARY

                        County Mutual Insurance Companies
             which are authorized to issue automobile liabil-
             ity insurance policies in the State of Texas are
             not subject to the mandatory provisions   of Sec-
             tion 35 of the Texas Motor Vehicle Safety-Res-
             ponsibility Act, Acts 1951, 52nd Legislature
             (Article   6701h, V. C. S. )~

                                                  Very   truly   yours,

                                                  WILL W.ILSON
                                                  Attorney General        of Texas




                                                         Assistant    A

RVL:lmc

APPROVED:

OPINION    COMMITTEE:

W. V. Geppert,   Chairman
Virgil Pulliam
William R. Hemphill
Ben Harrison
Tom I. McFarling

REVIEWED   FOR THE ATTORNEY                GENERAL
BY:  Morgan Nesbitt
