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Abstract

Plaintiff, an insurance agents' association and several other insurance companies and associations, instituted an action attacking an order of the State Board of Insurance. The order approved a guaranty bond form, together with rates and rules, which had been submitted to ,the Board pursuant to statute by the defendant insurance company. The guaranty agreement was an arrangement whereby defendant guaranteed payment of losses under fire insurance policies of other insurers in the event the latter should be unable to pay. Although the bond form was not restricted to any specific original insurers, it was contemplated that defendant would use ,the guaranty arrangement in connection with the policies of its affiliate. Defendant was subject to regulated fire insurance rates, while its affiliate was not, even though both were under common management; thus, its affiliate was able to sell fire insurance at lower rates than those fixed by, the Board for defendant. Plaintiff objected to the guaranty agreement on the ground that it would, in effect, permit defendant to write fire insurance at unregulated rates. The lower court agreed and set aside the Board's order. On appeal, held, reversed, one judge dissenting. The guaranty agreement was a true guaranty bond, not a fire insurance policy, and thus was not subject to regulated rates. International Serv. Ins. Co. v. Dallas Ass'n of Ins. Agents, 351 S.W.2d 297 (Tex. Civ. App. 1961).

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