No. WW-0532 (1958).

• Case Date: December 09, 1958
• Court: Texas

Texas Attorney General Opinions 1958. No. WW-0532 (1958). 1December 9, 1958Honorable William A. HarrisonCommissioner of InsuranceState Board of InsuranceAustin 14, TexasOpinion No. WW-532Re: Can a county mutual insurance company qualify to write casualty lines of insurance and if so, what requirements must it meet to so qualify? What requirements must it meet to write all lines of automobile insurance?Dear Sir:Your questions in your letter of request for an opinion are as follows:

"(1) Does Article 17.25, Section 1, Texas Insurance Code, require a county mutual insurance company to qualify to write casualty lines of insurance before it can write all lines of automobile insurance? If your answer is in the negative, what does the language 'qualifying to write casualty lines' mean?

"(2) If your answer to the above question is in the affirmative, what statutory authority, if any, exists for a county mutual insurance company to write casualty lines of insurance? If there is no such statutory authority, can a county mutual write casualty lines of insurance?

"(3) If your answer to the first question is in the affirmative, and you have determined that a county mutual can write casualty lines of insurance, what requirements must be met by a county mutual insurance company to qualify to write casualty lines, and thereby write all lines of automobile insurance?

"(4) If your answer to the first question is in the negative, what requirements must be met by a county mutual insurance company to qualify to write all lines of automobile insurance?"

The county mutual type company was first authorized by the Acts of 1937, 45th Legislature, Chapter 99. This Act was enumerated as Article 4860a-20 by Vernon's and the essence of this Act was later incorporated into the provisions of Articles 17.01 to 17.24 of the Texas Insurance Code of 1951. Additional extensive regulations of county mutuals were provided 2in the passage of the Acts of 1947, 50th Leg., p. 739, ch. 367. This Act was designated as Sections la and 2a of Article 4860a-20. The essence of this Act was carried forward into the 1951 Insurance Code as Article 17.25. Thus, after 1951 the principal provisions pertaining to county mutuals were contained in Chapter 17 of the Texas Insurance Code. In 1953 extensive amendments were made to Chapter 17 and again in 1955 not only were extensive amendments again made to Chapter 17 but it was also provided that no further county mutuals could be formed under Chapter 17. Article 17.02 as amended, Acts 1955, 54th Leg., p. 413, ch. 117, Sec. 31 (which Act will hereinafter be referred to as S.B. 15). Each of these amendments to the county mutual plan of operation provided successively more stringent requirements so that while in the beginning it required very little, if any, capital to start a county mutual today the financial requirements for county mutuals are in many respects comparable to those for capital stock companies. When first permitted by law county mutuals could only write insurance against the hazards of fire, lightning, gas explosion, theft, windstorm and hail on the five categories of risks enumerated in Article 17.01, Texas Insurance Code. To commence business there was practically no capital requirement as such. One dollar for each $100.00 of insurance applied for at the time of incorporation and in addition thereto a like amount of written valid extra premium or assessment obligations would suffice for capital. (Sec. 5 of Art. 4860a-20 and Art. 17.05 of the Ins. Code prior to 1953 amendments) It was further provided that the contingent liability of policyholders for assessment should be considered and listed as a part of the assets of the company. (Art. 4860a-20(6) and Art. 17.06 prior to amendment in 1953). A county mutual was considered solvent so long as its assets, including the contingent liability of its policyholders, were sufficient to pay the...