Case Information
*1 Honorable 0. P. Lookhart, Chairman
,Board of Insurance Commissioners
Austin, Texas Opinion No. O-5926
Dear sir; Re: The Board o?' Insurance
Commissioneia has no legal authority to enter the order herein~mentioned.
Your letter of,Maroh 8, 1944, requesting the opinion of
this department concerning the legal authbrlty of the Board of Inauranae Commissioners to make an order to the effect as mentioned in your letter has been received. 'Said letter reads 88 follow&:
"Mututil Assessment Associationa, other than assessment-as-needed or post-mortem oompsniea, opara- ting under Article 5068-1, levy regular and periodic assessments for payment by tha members on the Leval Premjum Plan; that is, the amount of each member's assessment Js the same each time. The asstiasments when collected are divided into two funds as provided" in Section 12 on the percentage set out in the As- sooietion's by-laws.
"Occasionally'the Mortuary hund becomes depleted through excessive claim payments B&cannot be re- stored by regtilar assessments alone. ,In suoh oaaea a special or emergency assessment is levied against " the membership. The purpose and authority for such' speaial assessments are replenishment of the Mortuary or claim Fund.
"Please advise me whether the Board of Insurance Commissioners has authority to enter'its Order to the effect that thereafter,the entire proceeds, of such special dr emergenay assessments shall be placed in the Mortuary Fund, exoept an amount show to the Roard to be neoessary to defray the aotual expense in&dent to collection of the',assessment, whioh may lwplaced in the Expense Fund.!'
Section 7 of Artiole 5068-1, Vernon's Annotated Civil Statutes, requires each association to keep a oomplete and correct roster of its *2 Honorable 0. P. Lookhart, page 2
members with proper statistical reoards for the purpe of determining the proper cost of the insurance, by ages or otherwise, and eaoh as- sociation shall keep accurate records of groups, classes or olubs or other divisiOn6 of mambership, if any; and shall keep reoords to show amountspaid in asse66ments by eeoh member in eaah groun) and a6 to groups. it must be shonn how the funds are distributed between expense and mortuary or relief funds, and show the amounts paid out of the funds of the whole membership foreaoh group in death claim6 or other benefits.
Section 11 of Artiols 5068-1, Vernon's Annotated Civil Statutes, providest
"Eaah assooiation shall levy a wgular'and $ariodLoal asseasmentlr by whatever name they may be oalled. These assessment8 must be in ~suoh amounts and at such proper intervals as will meet the reasonable operating expense of the assaoiation, and pay in full the claims arising under it6 certificates. hhen or if in the ,cour6e of operation it shall be apparent that the claims aannot be met in full from ourront asse6sments and fund6 on hand, the 6mounb must be inoreaeed until theyare adequate to meet suoh olaims, and the Board shall 60,0rc?ar.
%hen any assooiation shall refuse-to comply with the Board's reoomm6ndations or requirem6nts reapeoting rates or assessments, it shall be treated a6 insolvent, and shall be dealt tith aa hereinafter provided. "Each assooiation operating under the provisions of this Act shall file its rate sohedule with the Board of- Insurance Connnissioners."
Motion 12 of Artiole GOSS-1, provides, in effeot, that as- sessments when collected shall b6 divided into at lsaet two funds. One of these shall be the mortuary or relief fund, by whatever name it may be oalled in the different associations from which olaims under aertifioates shall be paid, and to a limited extent the oost of de- fending contested claims, and nothing else; and the other fund shall be the expense fund from which expenses may be paid. 'ihis section of the statute further requires that at least sixty per cent of the se- eessmenta collected, exaept the membership fee, must be pleoed in the mortuary or relief fund. E:aoh association shall provide in its by- laws for the portion of its assessments to be allotted to the mortuary relief fund and may provide for the payment out of said mortuary re- lief fund of attorneys' fees and neoessary erpsnses arising out of the defense, settlement or payment of oontsstsd claims. Any suoh payments out of the mortuary relief fund for other than claims shall be subject' to approval of ths Roard of Insuranoe Co66sissioners. In connection with the foregoing statement, it should be borne in mind that Article 601X3-4 as enacted by the 48th Legislature, Regular Session, 1943, page *3 Honorable 0. F. Lo&hart, page 3
696, Chapter 366, authorizes any oompany or association operating under ,ths provisions of S. 9. 135, Aots of the Regular Sessi.on of the 46th Legis3,ature, Chapter 6, page 401, to pay fr& the mortuary or relief funds, by whatever name it may be called, eny taxes that may be assessed against or required to ba paid by the company or association because of inaome to such funds.
Under the foregoing provisions of Brtiele 5068-1, when or
if in the ooursa of operation, It is apparent that the oleIms of any assooistion oannot be met in full from asaessmants and funds on hand, the amount must be inoreaeed until they ara adequate to meet such olaims and the Board of 'Insurance Commissioners shsll so order that an increase hn made in the assessments until they ars adequate to meet suah claims. Tf my associetion shall becrrme unable to ,pay its rsalid clRms withj.,n the time specified in the statute after due proofs are received, such association for the purposes of Article 6060-1, must 3o rsgsrded as insolvent, and dealt with as is Pully provided in said Act. The foregoing statute expressly sets forth the manner in which assess- melts when collected shall be divided and a compliance with this statute in rsspect to the divisions of such assessments is all that oan he required of such assooiationa.
Generally speaking, the Board of Insuranoe Commissioners, like other regulatory and administrative boards, possess only such powsr or authority as is expressly given or necessarily impljed by the Constitution and statutes of this State. After a careful search of the statutas and various constitutional provisions of this State, we f'ajl to find any e,xpresssd or implied authority empowering the Board of Insurance Commissioners to make and enforae an order such as the one i~nquirsd about, Therefore, it is our opinion that the Board of insurance C!!mmissloners has no legal authority to make and enforce an ordsr of the ,nature of the order inquired about.
Yours very truly ATTORNEY GMWLAL OF TEXAS By *,/Arch313 tiilliams ,&dell Wlili.ams Assistant AW:W:wo
APFROVED MARCY 17, 1944 s,/Geo. P. Blackburn GkNtiRA!, OF TEXAS
ATTORNEY