Case Information

*1 Hon. hlter C. Voodward CNlnmn

~wo8dofT~ance Com&rlonerr

* Opinion Jio. 04460

Dear sirs

Ret: Whether the deaarlbed type of lmur- arm transaatlon violates the ineur- Mae laws of Texa8 and whether It is within the charter powers of the United Travelers Insurance Compmy, Houston Texaa, to deal with an ln- dlviduai or oorporation ln the Mnner outlined.

As basis for preaentlng the above questions for an opinion of this department, we quote from your letter of June where- in you Qaks the request, as follows:

“In the cases referred to it Is proposed certain individuals oorporatlons will provide their customers with insurance usually accident Insurance, without cost to such CUB & omer8 upon the purchase of re- tail cominodltles. The cost of the insurance 1s paid to an Insurance company the individual or corporation selling the aomodlty, accordance with the terms of an insurance contract issued by the lnsurancr company to the individual or corporation insurlhg the customers of the indlvldual corporation.

“The individual or varloua representative8 the corporation are to be licensed agents of the inmr- ance oompany, and It is our request that you advise us at your earliest convenienae whether not in your opinion this type of insurance transaction violates Insurance Laws of this State ln any respect, and whether or not it 1s within the charter powers of the insurance coupany to deal with an Individual or corporation 3x1 manner outlined.”

Accompanying your request Is a certificate form proposed to be issued by the United Travelers Insurance Company, Houston, Texas, dcslgnated as a conbined customer’s receipt and insurance policy, which states that the conpany agrees to lnaure the customers of Eaton’s Gulf Serviae ofSlUdmore, Texas, by a group poliay of insurance No. 0208 under the subject to tho tern-m and conditlone OS' said policy and the appllca- t ion there for. The group @lay form Is not submitted with your request.

The plan proposed M stated ln go* request In certain respects, Is a semblance of plan upon which group lnaurancc is the benefit of lta employees. It generally orovlded by an emlorer *2 Hon. Walter C. Woodward, Chomn, Pagee 2 3-2463 Is to be observed that the corporation owning and controlling ~~‘10~s wrvlw etetlona, oontraote with the insurance aostpury for a groug POllOY under and by VirtUb of whlah It gurOhaw8 oertlflcatee in book lots, with l aah aertlflaate to be leewd as a policy or lneurence and given free at its aervloe stations auetomere upon their purehaae the acsmaodltlea the oorporatlon on lt~le at such statlone. mu3 corporation owners or the conmmditlce group @Icyholders, ln this ree ct are propoalng to assume the statue of an employer under dsenera Iy reeognlzed group polloy, p” ln which It pays the premium ror each oertffloate ieeued. It aan be assumed that tha aorporatlon or aleo pay8 all of the coetebr hendliag the lneurme group pollayholder ror Its auatolaere. Not only the group polloyholder paye to the ln- wed the prenhm due for each Uertiflcate lemmd by Its a&ent, but it also transmits, through its agent or servioe station attendant, My extended ooverage pG8d.i the cuetomer may desire and pCkye l’or .

Viewing the proposed certificate form, we may assume that It contains the tesentlal provisions of the master group policy provides for payment In lieu of all other indemnity, the sum of 500.33 r lnssedlat@Iy upon reoeipt of due proof of the death of the insured as a reeult of bodily Injuries which are the sole cause of loss of life effected solely and excluelvcly violent external causes and solely thz%mgh accidental meant during the coverage period of the certlflcate War policy,

Under Title 76 Chepte3, Vernon’s Civil Statutes en- titled “Life, Health and Accident Insurance”, under which t’he a&ove rimed company is Incorporated, your attention is directed to Article &‘64a, Sections l-6. Section 1 of this Statute deflnlng group life insurance provldeet

“Sec. 1. Oroup Life Insurance Is hereby dc- clared to be that form of Llfc Insurance covering not lees than twenty-rive employees written under a policy lwued to the employer, the premium tor wfilch is to be paid by the employer or by the employer and employees jointly and lnaurlng all of his employees, or all of any class or alasses thereof determined by conditions pertaining to the en~Iiym?nt, for a~ounta of lnrmrmce based upon some plan which will preclude Individual se- lection, and Sor the benefit of persons other than the employer; provided, however, that when the premium Is to be paid by the employer end employee6 jointly and beneflta of the policy sre offered to all eligible employees, not less than seventy-five per oentum such employees may be so insured. For the purposes or this Act members of any labor union who are actively engaged In the same oucupatlon shall be con- sidered employees of such union. The provislonn or this Section, howeve?, ahall not appl;- tc Croup,,Insur- ame now In effect, or to any renewals thereof.

It seems to be well settled by the authorities that a ror ln case of aocldental death is, to the ex- policy provldlng tent or such provleion, deemed a policy of life insurance within *3 the mean- of a statute having relation life lneurance. Logan v. Company of Hew York, 146 MO. 114 47 S.V. 948; Fidelity and Casualty v Central Aaoldent Ineurenoe Comparq 207 Pa. 472 56 A. 1003; zimser Paoifla ktual Life Xmurance Cwny of Calirornla v. P&ker et ux., 71 F. (24) 872, and other authorltlee alted therein.

In the Logan oaea, eupra, the Suprem Court of Hleeouri etatest

“The promise to pay a weekly indemnity an lneuranoe aompany ln the event Insured reoelvee the fmm an aacldent not resulting death 8n injury does not change the aharaoter of the agreement of the policy to pay a certaia other sum when the accl- dent results fatally, whioh 18 life Insurance from causes, as the promise to pay a certain accidental etlpulated sum to the (now contained in mtu’q insured of the pollclee leeued b what 1s knm es 'old line1 life lneurance oompeniee when tho Insured attains f a given age or 5.n a definite specified time, and If insured arrives at the age designated, or berore the before the time fixed Its certain payment, he shall die from any came, accidental or otherwise, pay his legal representatives eoms one named In the polioy as bcneflolary the amount etlpulated, Is nona the less life insurance became coupled Yith an investment bond feature, not found In what 18 commonly known as a ‘8traIght life insurance POllCY.

Yhe calling of a contract of insurance sn ‘accident, life policy, or for ltontlne,v lrerpler' matter, by any other appellation that may adopted business or conventional uses or claesif1cation, cannot make a pCrllcy contalnlng an agreement to pay to another a sum of money designated upon the hsppening of an unknown or contlngent event, depending upon the existence life, lees policy of lneurence on llfe.

Ineurancc on life includes all pollclee of Insurance in which the payment of the InsUranCe money ISContIn- gent upon the lees of life.”

The particular group policy under consideration, with the principal sum contingent, depending uponthe existence or life, insuring a collection of lndlvlduals limited to the customers of the grou policyholder, is clearly not within the ecope of Section 1 Section 6 OS this law provldesr of Article E 764a above referred to. “Except ae may be provided In this Act, Itshall be unlawful to make a contract life insurance cover- lng a group In this State,” it clear that the propooed plan or transaction,

We think involving the contract of ineuranca described, is prohIbIted by above quoted provision of the law. *4 Q-24&

Hon. Walter C. C;oodwa.rd, ?a.ge 4 You are thererore respectfully advlsed that group policy aontraots gush aa that of the United Travelers Inmranae Company, Xourton Texas, under and rubject which aertlflaatee are lsrrued insuring the cutstoner of the Insured, are prohibited by Seation Artlale 4764a, Vemon~a Civil Statutes, and in the opinion of thlr Depart- ment, the writing or ouah tppe lnarururae 18 without the charter powers of ruah aorporatlon.

Youra very truly

ATTORNEYOENBRALOFTXXAS APPROVED AU0 12, 1949

I/ Orover Sellers

FIRST ASSISTAXT

AlToRNxY OENXRAL

Approved opinion Comlttee By sm ChaIrman

This Opinion Considered and Approved In llmlted Cmferencc