74(R) SB 1284 House Committee Report

                          BILL ANALYSIS

Insurance Committee

By: Rosson (Counts)
04-26-95
Committee Report (Unamended)

BACKGROUND

     The 73rd Legislature passed changes in the state's Insurance
Code including abolition of the State Board of Insurance and
consolidation of its authority with that of the commissioner of
insurance.  Another change involved the role of the State Office of
Administrative Hearings in the industry-wide ratemaking
proceedings.  Since then, more questions have arisen concerning the
role of the commissioner of insurance and the State Office of
Administrative Hearings in the business of title insurance.

PURPOSE

     As proposed, S.B. 1284 amends regulation of the business of
title insurance to conform with changes made in state and federal
law; replaces the State Board of Insurance with the commissioner of
insurance.

RULEMAKING AUTHORITY

     It is the committee's opinion that rulemaking authority is
granted to the commissioner of insurance under SECTION 13 (Article
9.58D, Insurance Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 9.01(B), Insurance Code, to set forth the
findings of the legislature regarding the business of title
insurance.

SECTION 2. Amends Article 9.02(b), Insurance Code, to redefine
"business of title insurance."

SECTION 3. Amends Article 9.02(c), Insurance Code, to redefine
"title insurance company."

SECTION 4. Amends Article 9.02(i), Insurance Code, to redefine
"abstract plant."

SECTION 5. Amends Article 9.02(m), Insurance Code, to redefine
"title examination."

SECTION 6. Amends Article 9.07, Insurance Code, as follows:

Art.  9.07.  POLICY FORMS AND PREMIUMS.  (a) Requires corporations
organized under this chapter, foreign corporations created under
Article 1302, V.T.C.S., before repealed, or any other in so far as
the business of either may be the business of title insurance to
operate under the control, supervision, rules, and regulations as
to forms of policies and underwriting contracts, premiums,
standards, and practices as prescribed by the commissioner of
insurance (commissioner), rather than the state board of insurance
(board).  Prohibits a Texas or foreign corporation, whether
incorporated under this chapter or other law of the state, from
being permitted to conduct the business of title insurance, among
other activities.  Makes a conforming change.

(b) Requires the commissioner to require all title insurance
companies and agents (companies and agents) to submit information
in such form as the commissioner may deem proper including certain
information and other material matters for the commissioner's
consideration for the purpose of collecting data on which to
determine the proper premium rates to be fixed.  Requires the
commissioner, in fixing the premium rates, to consider all relevant
income and expense of companies and agents attributed to the Texas
title insurance business.  Makes conforming and non-substantive
changes.
(c) Requires the commissioner to hold a biennial hearing on or
after July 1, rather than between October 1 and December 15, of
each even-numbered calendar year to consider adoption of premium
rates and other matters relative to regulation of the title
insurance business as requested by any association or as the
commissioner may determine necessary to consider.  Requires any
person, association, or entity recommending adoption of premium
rates or other matters to be admitted as a party to the hearing. 
Requires a notice of public hearing and the items to be considered
to be sent not less than 60 days prior to the hearing direct to all
companies and agents and to the public to give fair publicity. 
Requires the hearing to consist of a rulemaking phase for
consideration of rules, forms, and endorsements, and related
matters not having rate implications and a rate making phase for
consideration of fixing the premium rate and other matters with
rate implications.  Requires the commissioner to certify which
matters have rate implications to be considered in the rate making
phase of the hearing.  Requires the commissioner to conduct both
phases of the hearing provided that the rate making phase shall be
conducted by the State Office of Administrative Hearings in
accordance with Article 1.33B of this code at the request of the
commissioner or at the written request of any person seeking
admission as a party to the rate making phase of the hearing. 
Requires the requests to be made at the time a person seeks to be
admitted as a party to the hearing but in no event more than 10
days after the issuance of the public notice of the hearing. 
Requires the rate making phase to be conducted as a contested case
pursuant to Chapter 2001, Government Code (Administrative
Procedures Act).  Prohibits a presentation by any party of
relevant, admissible oral testimony from being limited.  Requires
all matters in all phases of the hearing to be considered by the
commissioner and decisions rendered in open meeting.  Authorizes
changes to the Basic Manual of Rules, Rates, and Forms for the
Writing of Title Insurance in the State of Texas, including
additions or amendments, to be proposed and adopted by reference by
publishing notice of such proposal or adoption by reference in the
Texas Register.  Requires the notice to include a brief summary of
the substance of the matter to be added or changed and a statement
that the full text of the matter is available for review in the
office of the chief clerk of the Texas Department of Insurance. 
Deletes language requiring the changes to be available for at least
four weeks prior to the hearing.

(d) Prohibits fixed premium rates from being changed until after a
public hearing has been held by the commissioner.  Requires a
notice of the hearing to be sent at least 60 days, rather than four
weeks, prior to the public hearing.  Requires the notice to include
items to be considered, to be sent direct to all qualified
companies and agents, and to be provided in such a manner to give
fair publicity to the hearing.  Makes conforming changes.

(e) and (f) Make conforming and non-substantive changes.

SECTION 7. 

Amends Article 9.07A(b), Insurance Code, to require a company or
agent to use a form adopted by the commissioner under this article
in issuing owner policies to natural persons relating to
residential real property in this state.

SECTION 8. 

Amends Article 9.08, Insurance Code, as follows:

Art.  9.08.  PROHIBITING GUARANTEE OF PAYMENT OF OBLIGATIONS OF
OTHERS--INSURING AROUND.  Redefines "insuring around."  Provides
that a company knows that an outstanding enforceable recorded
matter exists if it determines that the matter is valid and
enforceable based upon the examination of the title pursuant to
which the title binder or title policy is issued.  Authorizes the
company, in its discretion, to determine the insurability of title
and those matters which it considers to be insurable under the
title binder or title insurance policy, provided that insuring
around enforceable recorded liens shall be prohibited except as
allowed by regulation.  Authorizes the fine for violation of this
article to be recovered by the commissioner in a civil action. 
Makes conforming changes.




SECTION 9. Amends Article 9.09, Insurance Code, as follows:

Art.  9.09.  PROHIBITING TRANSACTING OF OTHER KINDS OF INSURANCE BY
TITLE INSURANCE COMPANIES OR THE TRANSACTING OF TITLE INSURANCE BY
OTHER TYPES OF INSURANCE COMPANIES.  Makes a non-substantive
change.

SECTION 10.    Amends Article 9.11, Insurance Code, as follows:

Art.  9.11.  REVOCATION OF RIGHT TO DO BUSINESS.  Makes a
conforming and a non-substantive change.

SECTION 11.

Amends Section B, Article 9.30, Insurance Code, to prohibit this
article from being construed as prohibiting normal promotional and
educational activities that are not conditioned on the referral of
title insurance business.  Makes conforming changes.

SECTION 12.

Amends Article 9.55, Insurance Code, as follows:

Art.  9.55.  REQUIREMENTS FOR ISSUANCE OF OWNERS AND MORTGAGEE
TITLE POLICIES IN CONNECTION WITH RESIDENTIAL PROPERTY.  Requires
any residential property situated in the state to be sold and a
mortgagee policy of title insurance or other form of agreement or
the equivalent thereof that constitutes the business of title
insurance to be issued in connection with a lien, rather than a
title policy issued to guarantee the validity of the lien. 
Requires the company or agent so issuing such mortgagee policy,
rather than title policy, of title insurance form or agreement or
the equivalent thereof to also issue an owner policy of title
insurance to the owner of such property and the required premium. 
Deletes language prohibiting the provisions of Article 9.55 from
applying to certain people.  Makes conforming changes.

SECTION 13.    

Amends Article 9.58, Insurance Code, as follows:

Art.  9.58.  CONTINUING EDUCATION.  A.  Requires the commissioner,
rather than authorizing the board at its own discretion, to require
as a condition to continuation of license as an agent or escrow
officer that during 24 months preceding the expiration of the
current license period, the licensee has enrolled in and attended
or taught 15 hours or such lesser amount as established by the
commissioner in class instruction, lectures, seminars or other
forms of education approved by the commissioner for a particular
license.  Makes conforming changes.

B and C.   Make conforming changes.

D.   Requires the commissioner, rather than authorizing the board,
to promulgate rules and  regulations to carry out the purposes or
requirements of this article.

E.  Makes conforming changes.

SECTION 14.

Amends Section 15, Article 9.59, Insurance Code, as follows:

Art.  9.59.  OTHER LAWS TO GOVERN.  Provides that Article 4.12,
Insurance Code, rather than Articles 4.12-4.16, applies to
companies which are subject to this Article.

SECTION 15.    Effective date: September 1, 1995.

SECTION 16.    Emergency clause.

SUMMARY OF COMMITTEE ACTION

     In accordance with House rules, S.B. 1284 was heard in a
public hearing on April 26, 1995.  The Chair laid out S.B. 1284 and
recognized Representative Counts to explain the bill.  The Chair
recognized the following person to testify in support of S.B. 1284: 
     Tom Rutledge, Texas Land Title Association.  The Chair
recognized the following person to testify neutrally on S.B. 1284:
David Durden, Texas Department of Insurance.

     The Chair recognized Representative Counts who moved the
Committee report S.B. 1284 as engrossed to the full House with the
recommendation that it do pass and be printed.  Representative G.
Lewis seconded the motion and the motion prevailed by the following
vote:
AYES (6); NAYES (0); ABSENT (3); PNV (0).