Bill Text: TX HB4239 | 2017-2018 | 85th Legislature | Introduced
Bill Title: Relating to regulation of title insurance rates.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2017-04-25 - Left pending in committee [HB4239 Detail]
Download: Texas-2017-HB4239-Introduced.html
85R11265 SMT-F | ||
By: Muñoz, Jr. | H.B. No. 4239 |
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relating to regulation of title insurance rates. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 2702.051, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2702.051. APPLICABILITY. This subchapter does not | ||
apply to the closing or settlement of: | ||
(1) a residential real property transaction regulated | ||
by the Real Estate Settlement Procedures Act of 1974 (Pub. L. | ||
No. 93-533) except as provided by Section 2702.054(b); or | ||
(2) a real property transaction if the closing or | ||
settlement is not actually handled by: | ||
(A) a title insurance company, a title insurance | ||
agent, or an attorney for a title insurance company or title | ||
insurance agent; or | ||
(B) a representative of a title insurance | ||
company, a title insurance agent, or an attorney for a title | ||
insurance company or title insurance agent. | ||
SECTION 2. Section 2702.054, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM | ||
PERMITTED. (a) A title insurance company or title insurance agent | ||
may use the uniform settlement statement form prepared under the | ||
Real Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533) | ||
instead of the uniform closing and settlement statement form | ||
prescribed by the department under this subchapter. | ||
(b) A title insurance company or title insurance agent that | ||
uses the uniform settlement statement form permitted by Subsection | ||
(a) in a residential real estate transaction regulated by the Real | ||
Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533) as | ||
the closing and settlement statement for the transaction shall | ||
disclose on a form promulgated by the commissioner under Subsection | ||
(c) the following information: | ||
(1) an accurate statement of: | ||
(A) the title insurance premium; and | ||
(B) the amount of each portion of that premium | ||
paid to a third party; and | ||
(2) an itemization of all other fees and charges paid | ||
to the settlement agent. | ||
(c) The commissioner shall promulgate the form required by | ||
Subsection (b). | ||
SECTION 3. The heading to Subchapter D, Chapter 2703, | ||
Insurance Code, is amended to read as follows: | ||
SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES; FLEXIBLE RATE | ||
BANDS | ||
SECTION 4. The heading to Section 2703.151, Insurance Code, | ||
is amended to read as follows: | ||
Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES; | ||
FLEXIBLE RATE BANDS. | ||
SECTION 5. Section 2703.151, Insurance Code, is amended by | ||
amending Subsections (a) and (c) and adding Subsection (a-1) to | ||
read as follows: | ||
(a) Except as provided by Subsection (b), the commissioner | ||
shall fix and promulgate the premium rates to be charged by a title | ||
insurance company or by a title insurance agent and set flexible | ||
rate bands within which a title insurance company or title | ||
insurance agent may charge a rate under Subchapter F for title | ||
insurance policies or for other forms prescribed or approved by the | ||
commissioner. | ||
(a-1) The flexible rate band set under Subsection (a) must | ||
be a range that is a maximum percentage above and a maximum | ||
percentage below the rate fixed and promulgated under that | ||
subsection. | ||
(c) Except as provided by Subsection (b) and Subchapter F | ||
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charged for a title insurance policy or for another prescribed or | ||
approved form at a rate different than the rate fixed and | ||
promulgated by the commissioner. | ||
SECTION 6. Section 2703.152, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM RATES | ||
AND SETTING FLEXIBLE RATE BANDS. (a) In fixing premium rates and | ||
setting flexible rate bands, the commissioner shall: | ||
(1) consider all relevant income and expenses of title | ||
insurance companies and title insurance agents attributable to | ||
engaging in the business of title insurance in this state; and | ||
(2) consider and promote the availability and | ||
affordability of title insurance, increased efficiency in title | ||
operations, and price competition among title insurance companies | ||
and agents. | ||
(b) The premium rates fixed and flexible rate bands set by | ||
the commissioner must be: | ||
(1) reasonable and not excessive or unfairly | ||
discriminatory as to the public; [ |
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(2) nonconfiscatory as to title insurance companies | ||
and title insurance agents; and | ||
(3) designed to promote price competition among | ||
insurers to provide rates and premiums that are responsive to | ||
competitive market conditions. | ||
SECTION 7. The heading to Section 2703.153, Insurance Code, | ||
is amended to read as follows: | ||
Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM RATES | ||
AND SETTING FLEXIBLE RATE BANDS; ANNUAL STATISTICAL REPORT. | ||
SECTION 8. Sections 2703.153(a), (c), (d), and (h), | ||
Insurance Code, are amended to read as follows: | ||
(a) Each title insurance company and title insurance agent | ||
engaged in the business of title insurance in this state shall | ||
annually submit to the department, as required by the department to | ||
collect data to use to fix premium rates and set flexible rate | ||
bands, a statistical report containing information relating to: | ||
(1) loss experience; | ||
(2) expense of operation; and | ||
(3) other material matters. | ||
(c) Not less frequently than once every five years, the | ||
commissioner shall evaluate the information required under this | ||
section to determine whether the department needs additional or | ||
different information or no longer needs certain information to | ||
promulgate rates and set flexible rate bands. If the department | ||
requires a title insurance company or title insurance agent to | ||
include new or different information in the statistical report, | ||
that information may be considered by the commissioner in fixing | ||
premium rates and setting flexible rate bands if the information | ||
collected is reasonably credible for the purposes for which the | ||
information is to be used. | ||
(d) A title insurance company or a title insurance agent | ||
aggrieved by a department requirement concerning the submission of | ||
information may bring a suit in a district court in Travis County | ||
alleging that the request for information: | ||
(1) is unduly burdensome; or | ||
(2) is not a request for information material to | ||
fixing and promulgating premium rates or setting flexible rate | ||
bands or another matter that may be the subject of the periodic | ||
hearing and is not a request reasonably designed to lead to the | ||
discovery of that information. | ||
(h) The contents of the statistical report, including any | ||
amendments to the statistical report, must be established in a | ||
rulemaking hearing under Subchapter B, Chapter 2001, Government | ||
Code. The requirements for reporting of income and expenses on the | ||
statistical report shall conform to the manner in which accounting | ||
records are normally kept in the ordinary course of business of a | ||
title insurance company or title insurance agent. | ||
SECTION 9. The heading to Subchapter E, Chapter 2703, | ||
Insurance Code, is amended to read as follows: | ||
SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES, FLEXIBLE RATE | ||
BANDS, POLICY FORMS, AND [ |
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SECTION 10. Section 2703.201, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM RATE AND | ||
SETTING FLEXIBLE RATE BAND. Before a premium rate or flexible rate | ||
band may be fixed or set and a premium charged, the department must | ||
provide reasonable notice and a hearing must be afforded to title | ||
insurance companies, title insurance agents, and the public. | ||
SECTION 11. The heading to Section 2703.202, Insurance | ||
Code, is amended to read as follows: | ||
Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE | ||
OR FLEXIBLE RATE BAND. | ||
SECTION 12. Sections 2703.202(a), (b), (d), (e), (l), (m), | ||
and (o), Insurance Code, are amended to read as follows: | ||
(a) A premium rate or a flexible rate band previously fixed | ||
or set by the commissioner may not be changed until after the | ||
commissioner holds a public hearing. | ||
(b) The commissioner shall order a public hearing to | ||
consider changing a premium rate or flexible rate band, including | ||
fixing a new premium rate or setting a new flexible rate band, in | ||
response to a written request of an interested person [ |
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(d) Notwithstanding Subsection (c), a public hearing held | ||
under Subsection (a) or under Section 2703.206 must be conducted by | ||
the commissioner as a contested case hearing under Subchapters C | ||
through H and Subchapter Z, Chapter 2001, Government Code, at the | ||
request of an interested person [ |
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(e) Information received or requested by the commissioner | ||
as part of an individual audit or examination under Chapters 2602 | ||
and 2651 may not be used for rate or flexible rate band setting | ||
under Subchapter D, Chapter 2703. Nothing in this section | ||
prohibits a party from conducting discovery in a ratemaking or | ||
other proceeding or producing other information requested by the | ||
department, or verifying the data reported under a statistical plan | ||
or report promulgated by the commissioner. | ||
(l) Subject to Subsection (m), if the commissioner fails to | ||
comply with the requirements under Subsection (g) or (h)(6), a | ||
combination of at least three interested [ |
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district court of Travis County to adopt a rate or flexible rate | ||
band based on the record made in the hearing before the commissioner | ||
under this section. | ||
(m) If the record made in the hearing before the | ||
commissioner is not complete before the request for the court to | ||
adopt a premium rate or flexible rate band under Subsection (l), the | ||
court shall hold an evidentiary hearing to establish a record | ||
before adopting the premium rate or flexible rate band. | ||
(o) A district court may appoint a magistrate to adopt a | ||
rate or flexible rate band under this section. | ||
SECTION 13. Sections 2703.203, 2703.204, and 2703.206, | ||
Insurance Code, are amended to read as follows: | ||
Sec. 2703.203. PERIODIC HEARING. The commissioner shall | ||
hold a public hearing not earlier than July 1 after the fifth | ||
anniversary of the closing of a hearing held under this chapter to | ||
consider adoption of premium rates or flexible rate bands and other | ||
matters relating to regulating the business of title insurance that | ||
an interested person [ |
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Section 2703.204 requests to be considered or that the commissioner | ||
determines necessary to consider. | ||
Sec. 2703.204. ADMISSION AS PARTY TO PERIODIC HEARING. | ||
(a) Subject to this section, an interested [ |
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the periodic hearing under Section 2703.203. | ||
(b) A party to any portion of the periodic hearing relating | ||
to ratemaking or the setting of a flexible rate band may request | ||
that the commissioner remove any other party to that portion of the | ||
hearing on the grounds that the other party does not have a | ||
substantial interest in title insurance. A decision of the | ||
commission to deny or grant the request is final and subject to | ||
appeal in accordance with Section 36.202. | ||
Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS AS | ||
NECESSARY. At any time, the commissioner may order a public hearing | ||
to consider adoption of premium rates or flexible rate bands and | ||
other matters relating to regulating the business of title | ||
insurance as the commissioner determines necessary or proper. | ||
SECTION 14. Chapter 2703, Insurance Code, is amended by | ||
adding Subchapter F to read as follows: | ||
SUBCHAPTER F. FLEXIBLE RATING | ||
Sec. 2703.301. FLEXIBLE RATING. (a) A title insurance | ||
company may file with the commissioner to use a premium rate within | ||
the flexible rate band set by the commissioner under Section | ||
2703.151. | ||
(b) A rate filed under this section: | ||
(1) must be filed with actuarial support and any other | ||
information required by the commissioner by rule; and | ||
(2) may not be excessive, inadequate, or unfairly | ||
discriminatory for the risks to which the rate applies. | ||
(c) A rate filed under this section is effective until the | ||
earlier of the effective date of a rate subsequently filed under | ||
this section or a rate fixed and promulgated by the commissioner | ||
under Section 2703.151. | ||
(d) After a rate is fixed and promulgated under Section | ||
2703.151, a title insurance company shall: | ||
(1) file rates under this section; or | ||
(2) notify the commissioner in writing that the | ||
company will use the promulgated and fixed rate. | ||
(e) The commissioner by rule shall adopt procedures for a | ||
rate filing under this section. | ||
Sec. 2703.302. DISAPPROVAL OF RATE IN FLEXIBLE RATE FILING; | ||
HEARING. (a) Subject to Section 2703.303, the commissioner shall | ||
disapprove a rate if the commissioner determines that the rate | ||
filing made under this subchapter does not meet the standards | ||
prescribed by Section 2703.301(b). | ||
(b) If the commissioner disapproves a filing, the | ||
commissioner shall issue an order specifying in what respects the | ||
filing fails to meet the requirements of this subchapter. | ||
(c) The filer is entitled to a hearing on written request | ||
made to the commissioner not later than the 30th day after the date | ||
the order disapproving the rate filing under this subchapter takes | ||
effect. | ||
Sec. 2703.303. DISAPPROVAL OF RATE IN EFFECT; HEARING. (a) | ||
The commissioner may disapprove a rate filed under Section 2703.301 | ||
that is in effect only after a hearing before the commissioner. The | ||
commissioner shall provide the filer written notice of the hearing | ||
not later than the 20th day before the date of the hearing. | ||
(b) An order disapproving a rate filed under Section | ||
2703.301 that is in effect must be issued not later than the 15th | ||
day after the date of the close of the hearing. The order must: | ||
(1) specify in what respects the rate or rate filing | ||
fails to meet the requirements of this subchapter; and | ||
(2) state the date on which further use of the rate is | ||
prohibited, which may not be earlier than the 45th day after the | ||
date of the close of the hearing under this section. | ||
Sec. 2703.304. GRIEVANCE. (a) An insured, underwriter, or | ||
agent who is aggrieved with respect to a rate filed under Section | ||
2703.301 that is in effect, or the public insurance counsel, may | ||
apply to the commissioner in writing for a hearing on the filing. | ||
The application must specify the grounds for the applicant's | ||
grievance. | ||
(b) The commissioner shall hold a hearing on an application | ||
filed under Subsection (a) not later than the 30th day after the | ||
date the commissioner receives the application if the commissioner | ||
determines that: | ||
(1) the application is made in good faith; | ||
(2) the applicant would be aggrieved as alleged if the | ||
grounds specified in the application were established; and | ||
(3) the grounds specified in the application otherwise | ||
justify holding the hearing. | ||
(c) The commissioner shall provide written notice of a | ||
hearing under Subsection (b) to the applicant and each insurer that | ||
made the filing not later than the 10th day before the date of the | ||
hearing. | ||
(d) If, after the hearing, the commissioner determines that | ||
the rate filing under Section 2703.301 does not meet the | ||
requirements of this subchapter, the commissioner shall issue an | ||
order: | ||
(1) specifying in what respects the rate filing fails | ||
to meet the requirements of this subchapter; and | ||
(2) stating the date on which the rate is no longer in | ||
effect, which must be within a reasonable period after the date of | ||
the order. | ||
(e) The commissioner shall send copies of the order issued | ||
under Subsection (d) to the applicant and each affected insurer. | ||
Sec. 2703.305. PUBLIC INFORMATION. A filing made and any | ||
supporting information filed under this subchapter, as of the date | ||
the filing is received by the department: | ||
(1) is public information; | ||
(2) is not subject to any exceptions to disclosure | ||
under Chapter 552, Government Code; and | ||
(3) cannot be withheld from disclosure under any other | ||
law. | ||
SECTION 15. Section 2702.054, Insurance Code, as amended by | ||
this Act, applies only to a residential real estate transaction | ||
that closes on or after January 1, 2018. A residential real estate | ||
transaction that closes before January 1, 2018, is governed by the | ||
law as it existed immediately before the effective date of this Act, | ||
and that law is continued in effect for that purpose. | ||
SECTION 16. Section 2703.153(h), Insurance Code, as amended | ||
by this Act, applies only to an annual statistical report issued on | ||
or after January 1, 2018. An annual statistical report issued | ||
before January 1, 2018, is governed by the law as it existed | ||
immediately before the effective date of this Act, and that law is | ||
continued in effect for that purpose. | ||
SECTION 17. Subchapter F, Chapter 2703, Insurance Code, as | ||
added by this Act, applies only to a title insurance premium rate | ||
effective on or after January 1, 2018. A title insurance premium | ||
rate effective before January 1, 2018, is governed by the law as it | ||
existed immediately before the effective date of this Act, and that | ||
law is continued in effect for that purpose. | ||
SECTION 18. The commissioner of insurance shall hold a | ||
public hearing to set the initial flexible rate band under Section | ||
2703.151, Insurance Code, as amended by this Act, and any other | ||
related matters not later than January 1, 2018. | ||
SECTION 19. This Act takes effect September 1, 2017. |