Untitled Texas Attorney General Opinion ( 1959 )

August 12. 1959
Honorable William A Harrison Opinion No. WW -684
Commissioner of Insurance
State Board of Insurance Re: Must accident and health
Austin, Texas insurance policies issued
by mutual insurance com-
panies subject to the pro-
visions of Chapter 11. Texas
Insurance Code, be on a par-
Dear Commissioner Harrison: ticipating dividend basis.
We quote from your letter as follows:
“As legal reserve mutual life insurance com-
panies were given the authority in 1947 to write accident
and health insurance policies ‘subject to the provisions
of this chapter’ , it appears to us that such accident and
health insurance policies must be on a participating divi-
dend basis in accordance with Articles 11.11, 11.12, ‘and
11.13 of the Code. However, we find that the departmental
practice since 1947,has been not to require accident and
health insurance policies issued by legal reserve mutual
life insurance companies to contain participating dividend
provisions.
-We. therefore. respectfully request your
opinion as to whether a legal reserve mutual life insur-
ance company may issue accident and health insurance
policies which do not contain participating divided pro-
visions in accordance’with Chapter 11. Texas Insurance
Code, or must all such policies issued by a legal reserve
mutual life insurance company within this State contain
participating dividend provisions 7n
You are hereby advised that all policies issued by a legal reserve
mutual life insurance company subject to the provisions of Chapter 11 (which
we have held in WW-682 to mean domestic mutuals only), whether they be
combined or separately. life, health and accident insurance policies, must
contain participating dividend provisions.
As originally passed. what is now Chapter 11 of the Texas Insur-
ance Code, authorized domestic mutual insurance companies to transact
only a life insurance business.
Commissioner William A. Harrison, page 2 (WW-684)
In 1947 the Legislature by the passage of S.B. 293, Acts 1947.
59th Leg., p. 532. ch. 312. 8 1, authorized domestic legal reserve mutual
companies to write health and accident insurance for the first time. The
caption of that Act stated:
“An Act amending Article 4800, Revised
Civil Statutes of Texas. 1925. so as to authorize a
mutual life insurance company to also issue, com-
bined or separately, life, health, and accident insur-
ance policies;. . .”
Section 1 of S.B. 293 contained among other things the following
language:
Y
. . .and any such company, heretofore or
hereafter created, may issue, combined or separately,
lzfe, health. and accident insurance policies. subject
to the provisions of this chapter. . .” (Emphasis added)
This language is now set forth in Section 1 of Article 11.01. Texas Insurance
Code.
What is now Article 11.13. which was in existence at the time of
the passage of S.B. 293 and is without question one of the “provisions of
this chapter” mentioned in Article 11.01, reads as follows:
“Mutual life insurance companies are author-
ized to transact business throughout this State and other
states to which they may be admitted; they may issue no
policy except upon the participating plan with dividends
payable annually as provided in this chapter;. . .I
In reading the entirety of Chapter 11 of the Insurance Code, and
doing so in conjunction with the historical background of the various enum-
erated provisions, it is apparent that the Legislature in authorizing domes-
tic life insurance companies to write accident and health insurance policies
desired these companies to issue no policy other than those providing for
participating dividends. Had the Legislature desired to exempt the health
and accident policies from the provisions of Article 11.13 of the Texas
Insurance Code, they could.have easily done 80. Not having done so. the
requiremat therein contained must be controlling.
We note from your opinion request that you make reference to
certain departmental construction which is at variance with the conclusions
reached herein. You are advised that since the language of Chapter 11 is
Commissioner William A. Harrison, page 3 (WW-684)
unambiguous in its requirements. the above mentioned departmental con-
struction is not controiling. Jones v. Marrs. 114 Tex. 62. 263 SW. 570;
State v. Texas Mutual Life Insurance Corn1sny (Tex. Civ.App.) 51 S,W.Zd
405. reversed IComm. AnnI.- .~-I 58 S ‘W . 2 d 37: Brmyownv. City of Amarillo,
(Tex. Civ.App.) 180 S.W.654. error ref.
It is noted in passing that Article 11.19 of the Texas Insurance
Code provides as follows:
“The provisions of Chapter 3 of this Code,
when not in conflict with the Articles of this Chapter,
shall apply to and govern mutual life insurance com-
panies organized under the provisions of this Chapter;
provided, however, that when any mutual life insurance
company organized under the provisions of this Chapter
has a surplus equal to or greater than the minimum of
capital and surplus required of capital stock companies
under the provisions of Article 3.02 of Chapter 3, Insur-
ance Code of the State of Texas, Revised Civil Statutes
of Texas of 1925. the following provisions of Chapter 11
only shall apply to such mutual companies: 11.01, 11.02,
11.03. 11.04. 11.05, 11.~06. 11.07. 11.09. 11.10. 11.11.
11.12. 11.14. 11.16, 11.17. 11.18 and 11.19. Onall other
matters the provisions of said Chapter shall apply to and
govern such mutual life insurance companies. As amended
Acts 1955, 54th Leg., p. 546. ch. 171. $ 1.’
In reading Article 11.19 it is noted that any reference to Article
11.13 is omitted therein; thus, indicating that the Legislature did not intend
to restrict those mutuals. which can qualify under the proviso of Article
11.19 to the requirements of Article 11.13. Consequently, a domestic mutual
life insurance company which has been organized under the provisions of
Chapter 11 but which has a surplus equal to or greater than the minimum
of capital and surplus required of capital stock companies under the pro-
visions of Article 3.02 of Chapter 3 of the Insurance Code, need not comply
with the participating dividend plans payable annually as required under
Article 11.13. This caveat has been prompted by the language of your opin-
ion request wherein you ask if all policies issued by a legal reserve mutual
life insurance company within & State of Texas must contain a participating
dividend provision. You are advised that Article 11.19 would operate ‘as an
exception to tbe general requirement of Article 11.13.
Commissioner William A. Harrison. page 4 (WW-684)
SI3M.MAR Y
Accident and health insurance
policies issued by domestic mu-
tual insurance companies subject
to the provisions of Chapter 11,
Texas Insurance Code, must be
on a participating basis unless
they come within the exception of
Article 11.19.
Yours very truly,
WILL WILSON
’ C. Dean Davis
CDD: jg Assistant Attorney General
APPROVED:
OPINION COMMITTEE:
Geo. P. Blackburn. Chairman
Linward Shivers
W. 0. Schultz
James P. Ryan
REVIEWEDFOR THEATTORNEYGENERAL
BY:
W. V. Geppert