Bill Text: TX SB372 | 2017-2018 | 85th Legislature | Introduced

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Bill Title: Relating to regulation of title insurance.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2017-02-01 - Referred to Business & Commerce [SB372 Detail]

Download: Texas-2017-SB372-Introduced.html

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85R3369 SMT-F
By: Hall S.B. No. 372

A BILL TO BE ENTITLED
AN ACT
relating to regulation of title insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. TITLE INSURANCE PREMIUMS AND OTHER TITLE INSURANCE
REGULATION
SECTION 1.01. Section 2251.002, Insurance Code, is amended
by adding Subdivision (9) to read as follows:
(9) "Title insurance" has the meaning assigned by
Section 2501.003.
SECTION 1.02. Sections 2251.003(a) and (b), Insurance Code,
are amended to read as follows:
(a) This subchapter and Subchapters B, C, and D apply to:
(1) an insurer to which Article 5.13 applies, other
than the Texas Windstorm Insurance Association, the FAIR Plan
Association, and the Texas Automobile Insurance Plan Association;
[and]
(2) except as provided by Subsection (c), a Lloyd's
plan, reciprocal or interinsurance exchange, and county mutual
insurance company with respect to the lines of insurance described
by Subsection (b); and
(3) a title insurance company.
(b) This subchapter and Subchapters B, C, and D apply to all
lines of the following kinds of insurance written under an
insurance policy or contract issued by an insurer authorized to
engage in the business of insurance in this state:
(1) general liability insurance;
(2) residential and commercial property insurance,
including farm and ranch insurance and farm and ranch owners
insurance;
(3) personal and commercial casualty insurance,
except as provided by Section 2251.004;
(4) medical professional liability insurance;
(5) fidelity, guaranty, and surety bonds other than
criminal court appearance bonds;
(6) personal umbrella insurance;
(7) personal liability insurance;
(8) guaranteed auto protection (GAP) insurance;
(9) involuntary unemployment insurance;
(10) financial guaranty insurance;
(11) inland marine insurance;
(12) rain insurance;
(13) hail insurance on farm crops;
(14) personal and commercial automobile insurance;
(15) multi-peril insurance; [and]
(16) identity theft insurance issued under Chapter
706; and
(17) title insurance.
SECTION 1.03. Section 2251.052, Insurance Code, is amended
by adding Subsection (f) to read as follows:
(f) In setting rates for title insurance, an insurer shall
also consider all relevant income and expenses of title insurance
agents attributable to engaging in the business of title insurance
in this state.
SECTION 1.04. Section 2703.003, Insurance Code, is amended
to read as follows:
Sec. 2703.003. PAYMENT OF PREMIUMS; DIVISION OF PREMIUM.
(a) The premium for a title insurance policy or for another form
prescribed or approved by the commissioner shall be paid in the due
and ordinary course of business.
(b) Notwithstanding any other law, the commissioner may not
regulate the division of premium between a title insurance company
and a title insurance agent.
SECTION 1.05. The heading to Subchapter D, Chapter 2703,
Insurance Code, is amended to read as follows:
SUBCHAPTER D. [FIXING AND PROMULGATING] PREMIUM RATES; DATA
REPORTING
SECTION 1.06. Section 2703.151, Insurance Code, is amended
to read as follows:
Sec. 2703.151. [FIXING AND PROMULGATING] PREMIUM RATES.
(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] for title
insurance policies are governed by Subchapters A, B, C, and D,
Chapter 2251 [or for other forms prescribed or approved by the
commissioner].
(b) A title insurance company is not required to file [The
commissioner may not fix or promulgate] the premium rates for
reinsurance between title insurance companies. Title insurance
companies may establish the premium rates in amounts to which the
companies agree.
(c) Except for a premium charged for reinsurance, a premium
may not be charged for a title insurance policy or for another
prescribed or approved form at a rate different than the rate filed
with [fixed and promulgated by] the commissioner under Chapter
2251.
SECTION 1.07. The heading to Section 2703.153, Insurance
Code, is amended to read as follows:
Sec. 2703.153. DATA COLLECTION [OF DATA FOR FIXING PREMIUM
RATES]; ANNUAL STATISTICAL REPORT.
SECTION 1.08. Sections 2703.153(a), (c), and (d), 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], 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. 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 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 a
[fixing and promulgating premium rates 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.
SECTION 1.09. The heading to Section 2751.051, Insurance
Code, is amended to read as follows:
Sec. 2751.051. [FIXING AND PROMULGATING] PREMIUM RATES AND
FORMS.
SECTION 1.10. Section 2751.051, Insurance Code, is amended
by amending Subsections (a) and (b) and adding Subsection (a-1) to
read as follows:
(a) The commissioner shall, in the manner prescribed by this
subchapter, [:
[(1) fix and promulgate the premium rates to be
charged by a title insurance company or by a title insurance agent
for personal property title insurance policies under this chapter;
and
[(2)] prescribe the policies and forms to be used for
personal property title insurance [in connection with those
policies].
(a-1) Premium rates for personal property title insurance
are governed by Subchapters A, B, C, and D, Chapter 2251.
(b) A premium may not be charged for a personal property
title insurance policy or for another prescribed or approved form
at a rate different than the rate filed with [fixed and promulgated
by] the commissioner under Chapter 2251.
ARTICLE 2. CONFORMING AMENDMENTS
SECTION 2.01. Section 2501.003(8), Insurance Code, is
amended to read as follows:
(8) "Premium" means the premium rates charged for a
title insurance policy or other form prescribed or approved
[promulgated] by the commissioner [under Subchapters D and E,
Chapter 2703,] and includes a charge for:
(A) title examination and closing the
transaction, regardless of whether the examination or closing is
performed by an attorney; and
(B) issuing the policy or form.
SECTION 2.02. Section 2551.204(d), Insurance Code, is
amended to read as follows:
(d) The amount, handling, and distribution of any reserves
required under Subsection (c)(2) are subject to the control and
discretion of the department and are reviewable in judicial
proceedings governed by rules applicable to review of rates under
Section 2703.202, as it existed before its repeal by the 85th
Legislature, Regular Session, 2017 [Subchapters D and E, Chapter
2703].
SECTION 2.03. Section 2551.351(a), Insurance Code, is
amended to read as follows:
(a) A foreign or domestic corporation forfeits any right to
engage in business in this state if the corporation:
(1) issues any form of title insurance policy, or any
other adopted or approved form, on real property in this state other
than a form prescribed by the department;
(2) charges any premium rate on an owner, mortgagee,
or other title insurance policy, or on any other adopted or approved
form, on real property in this state other than a premium rate filed
under Chapter 2251 [prescribed by the commissioner]; or
(3) otherwise engages in the business of title
insurance in relation to real property in this state on a form [or
for a premium rate] not prescribed by the department or
commissioner or for a premium rate not filed under Chapter 2251.
SECTION 2.04. Section 2552.007, Insurance Code, is amended
to read as follows:
Sec. 2552.007. OTHER PREMIUM OR FEE PROHIBITED. Attorney's
title insurance may not be issued for any premium or fee other than
the applicable [prescribed] premium charged at the rate filed with
the commissioner under Chapter 2251 [as provided by Subchapters D
and E, Chapter 2703].
SECTION 2.05. Section 2602.210(a), Insurance Code, is
amended to read as follows:
(a) A title insurance company is entitled to recover in its
rates for the succeeding calendar year amounts paid in assessments
not to exceed one percent of the company's net direct written
premiums and may include those amounts, less any refund, as an
expense of operation in a rate filing made under Chapter 2251. [In
promulgating or establishing rates the commissioner shall consider
assessments and refunds of assessments and shall adjust the rates
to allow for recovery under this subsection.]
SECTION 2.06. Section 2651.012(b), Insurance Code, is
amended to read as follows:
(b) The unencumbered assets required under this section are
reserves for contingencies. The reserves must be deducted from
premiums for purposes of proceedings conducted with respect to
premium rates [under Subchapter D, Chapter 2703]. The reserves may
only be spent or released:
(1) as permitted by the commissioner if the agent is
declared impaired;
(2) if the agent merges or consolidates with another
agent who maintains the amount of unencumbered assets that would be
required for the survivor of the merger or consolidation;
(3) if the agent surrenders the agent's license under
Section 2651.201;
(4) if the agent is liquidated; or
(5) if the agent's license is revoked.
SECTION 2.07. The heading to Subchapter E, Chapter 2703,
Insurance Code, is amended to read as follows:
SUBCHAPTER E. PROCEDURES REGARDING [PREMIUM RATES,] POLICY
FORMS[,] AND OTHER RELATED MATTERS
SECTION 2.08. Section 2703.203, Insurance Code, is 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 and other] matters relating to
regulating the business of title insurance that an association,
title insurance company, or title insurance agent[, or member of
the public admitted as a party under Section 2703.204] requests to
be considered or that the commissioner determines necessary to
consider.
SECTION 2.09. Section 2703.206, Insurance Code, is amended
to read as follows:
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 and other] matters relating
to regulating the business of title insurance as the commissioner
determines necessary or proper.
SECTION 2.10. Section 2703.207, Insurance Code, is amended
to read as follows:
Sec. 2703.207. NOTICE OF CERTAIN HEARINGS. Not later than
the 60th day before the date of a hearing under Section [2703.202,]
2703.203[,] or 2703.206, notice of the hearing and of each item to
be considered at the hearing shall be:
(1) sent directly to all parties to the previous
hearing conducted under Section [2703.202,] 2703.203[,] or
2703.206, if the hearing was conducted as a contested case hearing;
and
(2) published in the Texas Register and on the
department's Internet website.
SECTION 2.11. Section 2703.208(a), Insurance Code, is
amended to read as follows:
(a) An addition or amendment to the Basic Manual of Rules,
Rates[,] and Forms for the Writing of Title Insurance in the State
of Texas may be proposed and adopted by reference by publishing
notice of the proposal or adoption by reference in the Texas
Register.
SECTION 2.12. Section 2751.053(a), Insurance Code, is
amended to read as follows:
(a) Before the commissioner may adopt [a premium rate may be
fixed and] forms [adopted] for personal property title insurance
under this chapter, the department must provide reasonable notice
and a hearing must be afforded to title insurance companies, title
insurance agents, and the public.
SECTION 2.13. Section 2751.054, Insurance Code, is amended
to read as follows:
Sec. 2751.054. COMMISSIONER ORDER. [(a)] Not later than
the 90th day after the date of a hearing under Section 2751.053, the
commissioner shall issue an order prescribing the [rates and] forms
to be used in connection with personal property title insurance
policies under this chapter.
[(b) The commissioner's order promulgating rates must be
based on the evidence adduced at the hearing.]
SECTION 2.14. The heading to Section 2751.055, Insurance
Code, is amended to read as follows:
Sec. 2751.055. REVISIONS TO [RATES AND] FORMS; HEARING.
SECTION 2.15. Section 2751.055(a), Insurance Code, is
amended to read as follows:
(a) A title insurance company may apply to the department in
the manner prescribed by the commissioner for approval of a new or
revised personal property title insurance form [or a change in a
rate associated with such a form]. The commissioner may approve or
disapprove an application after a hearing conducted in the manner
prescribed by Section 2751.053.
ARTICLE 3. REPEALER
SECTION 3.01. Sections 2703.152, 2703.201, 2703.202,
2703.204, and 2751.052, Insurance Code, are repealed.
ARTICLE 4. TRANSITION; EFFECTIVE DATE
SECTION 4.01. The changes in law made by this Act affecting
premium rates for title insurance apply only to a premium rate in
effect on and after January 1, 2018. A premium rate in effect
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 4.02. This Act takes effect September 1, 2017.