BILL ANALYSIS
C.S.S.B. 1284
By: Rosson
Economic Development
04-12-95
Committee Report (Substituted)
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, C.S.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repealed, or any other in so far as the business of either may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 nonsubstantive
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 nonsubstantive 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 nonsubstantive 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 nonsubstantive 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.