By Uher H.B. No. 2749
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to amendment of Chapter 9, Insurance Code, as amended.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 9.01(B), Insurance Code, is amended to
1-5 read as follows:
1-6 B. The Legislature of the State of Texas finds
1-7 that the business of title insurance, both the direct issuance of
1-8 policies and the reinsurance of any assumed risks, of every type,
1-9 shall in all respects be totally regulated by the State of Texas so
1-10 as to provide for the protection of every consumer and purchaser of
1-11 a title insurance policy and to provide for adequate and reasonable
1-12 rates of return for title insurance companies and title insurance
1-13 agents. It is the express legislative intent that this Chapter 9
1-14 accomplish such a result.
1-15 SECTION 2. Article 9.02(b), Insurance Code, is amended to
1-16 read as follows:
1-17 (b) The "business of title insurance" shall be deemed to be
1-18 (1) the making as insurer, guarantor or surety, or proposing to
1-19 make as insurer, guarantor or surety, of any contract or policy of
1-20 title insurance or any equivalent thereof; (2) the transacting or
1-21 proposing to transact, any phase of title insurance, including
1-22 solicitation, title examination, except when conducted by an
1-23 attorney, closing the transaction, except when conducted by an
2-1 attorney, execution of a contract of title insurance, insuring and
2-2 transacting matters subsequent to the execution of the contract and
2-3 arising out of it, including reinsurance; <or> (3) the making of a
2-4 guaranty, warranty, or insurance of a title search, a title
2-5 examination or any component thereof; or (4) the doing, or
2-6 proposing to do, any business in substance equivalent to any of the
2-7 foregoing whether or not <in a manner> designed to evade the
2-8 provisions of this Act.
2-9 SECTION 3. Article 9.02(c), Insurance Code, is amended to
2-10 read as follows:
2-11 (c) "Title Insurance Company" means any domestic company
2-12 organized under the provisions of this Act for the purpose of
2-13 conducting the business of title insurance <insuring titles to real
2-14 property>, any title insurance company organized under the laws of
2-15 another state or foreign government meeting the requirements of
2-16 this Act and holding a certificate of authority to transact
2-17 business in Texas and any domestic or foreign company having a
2-18 certificate of authority to insure titles to real estate within
2-19 this state and which meet the requirements of this Act.
2-20 SECTION 4. Article 9.02(i), Insurance Code, is amended to
2-21 read as follows:
2-22 (i) "Abstract plant" as used herein shall mean a
2-23 geographical abstract plant such as is defined by the commissioner
2-24 <Board> and the commissioner <Board>, in defining an abstract
2-25 plant, shall require a geographically arranged plant, currently
3-1 kept to date, that is found by the commissioner <Board> to be
3-2 adequate for use in insuring titles, and, so as to provide for the
3-3 safety and protection of the policyholders, such abstract plant
3-4 shall contain geographically indexed records showing instruments of
3-5 record affecting the real property within the county for a period
3-6 commencing no later than September 1, 1970, until and including the
3-7 time immediately prior to the date of search.
3-8 SECTION 5. Article 9.02(m), Insurance Code, is amended to
3-9 read as follows:
3-10 (m) "Title Examination" means the search and examination of
3-11 a title for the benefit of the title insurance company, title
3-12 insurance agent, or direct operation to determine the conditions of
3-13 the title to be insured and to evaluate the risk to be undertaken
3-14 in the issuance of a title insurance policy or other title
3-15 insurance form.
3-16 SECTION 6. Article 9.02, Insurance Code, is amended by
3-17 adding Section (r) to read as follows:
3-18 (r) "Determination of Insurability" means the determination
3-19 for the benefit of the title insurance company, title insurance
3-20 agent, or direct operation of the title insurance coverage that
3-21 will be provided to the insured.
3-22 SECTION 7. Article 9.07, Insurance Code, is amended to read
3-23 as follows:
3-24 (a) Corporations organized under this Chapter, as well as
3-25 foreign corporations and those created under Subdivision 57,
4-1 Article 1302, of the Revised Civil Statutes of 1925 before the
4-2 repeal of that statute, or under Chapter 8 of this Code, or any
4-3 other law insofar as the business of either may be the business of
4-4 title insurance, shall operate in Texas under the control and
4-5 supervision and under such uniform rules and regulations as to
4-6 forms of policies and underwriting contracts and premiums therefor,
4-7 and such underwriting standards and practices as may be prescribed
4-8 by the commissioner <Board>; and no Texas or foreign corporation,
4-9 whether incorporated under this Chapter or any other law of the
4-10 State of Texas, shall be permitted to conduct the business of title
4-11 insurance, to issue any title policy of any character, or
4-12 underwriting contract, to delete any policy exclusion or to
4-13 reinsure any portion of the risk assumed by any title policy, on
4-14 Texas real property other than under this Chapter and under such
4-15 rules and regulations. No policy of title insurance, title
4-16 insurance coverage, reinsurance of any risk assumed under any
4-17 policy of title insurance, or any guarantee of any character made
4-18 when insuring Texas titles shall be issued or valid unless written
4-19 by a corporation complying with the provisions of and authorized or
4-20 qualified under this Chapter, except as is provided in Article
4-21 9.19D. Before any premium rate provided for herein shall be fixed
4-22 or charged, reasonable notice shall issue, and a hearing afforded
4-23 to the title insurance companies and title insurance agents
4-24 authorized or qualified under this Chapter and the public. Under
4-25 no circumstances may any title insurance company or title insurance
5-1 agent use any form which is required under the provisions of this
5-2 Chapter 9 to be promulgated or approved until the same shall have
5-3 been so promulgated or approved by the commissioner <Board>.
5-4 (b) The commissioner <Board> shall have the duty to fix and
5-5 promulgate the premium rates to be charged by title insurance
5-6 companies and title insurance agents created or operating under
5-7 this Chapter for policies of title insurance or other promulgated
5-8 or approved forms, and the premiums therefor shall be paid in the
5-9 due and ordinary course of business. Premium rates for reinsurance
5-10 as between title insurance companies qualified under this Chapter
5-11 shall not be fixed or promulgated by the commissioner <Board>, and
5-12 title insurance companies may set such premium rates for
5-13 reinsurance as such title insurance companies shall agree upon.
5-14 Under no circumstance shall any premium be charged for any policy
5-15 of title insurance or other promulgated or approved forms different
5-16 from those fixed and promulgated by the commissioner <Board>,
5-17 except for premiums charged for reinsurance. The premium rates
5-18 fixed by the commissioner <Board> shall be reasonable to the public
5-19 and nonconfiscatory as to the title insurance companies and the
5-20 title insurance agents. For the purpose of collecting data on
5-21 which to determine the proper rates to be fixed, the <Board>
5-22 commissioner shall require all title insurance companies and all
5-23 title insurance agents operating in Texas to submit such
5-24 information in such form, as may be promulgated by the commissioner
5-25 after notice and hearing <as it may deem proper>, all information
6-1 as to loss experience, expense of operation, and other material
6-2 matters <matter> for the commissioner's consideration. In fixing
6-3 the rate of premiums, the commissioner shall consider all relevant
6-4 income and expenses of title insurance companies and title
6-5 insurance agents attributable to Texas title insurance business
6-6 except lobbying expenses and charitable contributions.
6-7 (c) The commissioner <Board> shall hold a biennial hearing
6-8 not earlier than July 1 <October 1 or later than December 15> of
6-9 each even-numbered calendar year, to consider adoption of premium
6-10 rates and such other matters and subjects relative to the
6-11 regulation of the business of title insurance as may be requested
6-12 by any trade association or other association of persons, any title
6-13 insurance company, any title insurance agent, any member of the
6-14 public, or as the commissioner <Board> may determine necessary to
6-15 consider. Any person, association or entity recommending adoption
6-16 of premium rates or other matters and subjects shall be admitted as
6-17 a party to the hearing. Reasonable notice of not less than sixty
6-18 (60) days prior to <Proper notice of> such public hearing and the
6-19 items to be considered shall be <made to the public and shall be>
6-20 sent direct to all title insurance companies and title insurance
6-21 agents qualified or authorized to do business under this Chapter
6-22 and to the public in such a manner as to give fair publicity
6-23 thereto. The hearing shall consist of a rule making phase for
6-24 consideration of rules, forms and endorsements, and other matters
6-25 not having rate implications and a rate making phase for
7-1 consideration of fixing the premium rate and other matters with
7-2 rate implications. The commissioner shall certify which matters
7-3 have rate implications to be considered in the rate making phase of
7-4 the hearing. The commissioner shall conduct both phases of the
7-5 hearing, provided, however, that the rate making phase of the
7-6 hearing shall be conducted by the State Office of Administrative
7-7 Hearings in accordance with Article 1.33B of this code at the
7-8 written request of any person seeking admission as a party to the
7-9 rate making phase of the hearing. Such request must be made at the
7-10 time a person seeks to be admitted as a party to the hearing but in
7-11 no event more than ten (10) days after issuance of public notice of
7-12 the hearing. The rate making phase of the hearing shall be
7-13 conducted as a contested case pursuant to the Administrative
7-14 Procedure Act (V.T.C.A. Government Code Section 2001.001 et seq.).
7-15 Presentation by any party of relevant, admissible oral testimony
7-16 shall not be limited. All matters in all phases of the hearing
7-17 shall be considered by the commissioner and decisions thereon
7-18 rendered in open meeting <for at least four (4) weeks in advance of
7-19 such hearing>. Changes to the Basic Manual of Rules, Rates, and
7-20 Forms for the Writing of Title Insurance in the State of Texas,
7-21 including additions or amendments thereto, may be proposed and
7-22 adopted by reference by publishing a notice of such proposal or
7-23 adoption by reference in the Texas Register which notice must
7-24 include a brief summary of the substance of the matter to be added
7-25 or changed and a statement that the full text of the matter is
8-1 available for review in the office of the chief clerk of the Texas
8-2 Department of Insurance.
8-3 (d) Premium rates when once fixed shall not be changed until
8-4 after a public hearing shall be had by the commissioner, after
8-5 reasonable notice of not less than sixty (60) days prior to such
8-6 public hearing, which shall include the items to be considered and
8-7 shall be <Board, after proper notice> sent direct to all title
8-8 insurance companies and title insurance agents qualified or
8-9 authorized to do business under this Chapter, and after public
8-10 notice in such manner as to give fair publicity thereto <for at
8-11 least four (4) weeks in advance>. The commissioner <The Board>
8-12 must call such additional hearings to consider premium rate changes
8-13 at the request of a title insurance company or the office of public
8-14 insurance counsel.
8-15 (e) The commissioner <Board> may, on his or her <its> own
8-16 motion, following notice as required for the biennial hearing, hold
8-17 at any time a public hearing to consider adoption of premium rates
8-18 and such other matters and subjects relative to the regulation of
8-19 the business of title insurance as the commissioner <Board> shall
8-20 determine necessary or proper.
8-21 (f) Any title insurance company, any title insurance agent,
8-22 or other person or association of persons interested, feeling
8-23 injured by any action of the <Board or the> commissioner
8-24 <Commissioner> with regard to premium rates or other action taken
8-25 by the <Board or the> commissioner <Commissioner>, shall have the
9-1 right to appeal in accordance with Article 1.04 of this code.
9-2 SECTION 8. Article 9.07A(b), Insurance Code, is amended to
9-3 read as follows:
9-4 (b) A title insurance company or title insurance agent shall
9-5 use a form adopted by the commissioner <board> under this article
9-6 in issuing owner policies to individuals relating to residential
9-7 real property in this state.
9-8 SECTION 9. Article 9.08, Insurance Code, is amended to read
9-9 as follows:
9-10 Title insurance companies, domestic or foreign, operating
9-11 under this Chapter shall not have the right to guarantee the
9-12 payment of mortgages which cover real estate, and if any such
9-13 corporation shall do so it shall forthwith forfeit and surrender
9-14 its permit to do business.
9-15 "Insuring around" is defined as the willful issuance of a
9-16 title binder or title insurance policy showing no outstanding
9-17 enforceable recorded liens while the title insurance company
9-18 <issuer> knows that in fact a lien or liens are of record against
9-19 the real property, and shall be prohibited, except under
9-20 circumstances as the commissioner <State Board> of Insurance under
9-21 his or her <its> rule-making powers shall approve. A title
9-22 insurance company knows that an outstanding enforceable recorded
9-23 matter exists if it determines that the matter is valid and
9-24 enforceable based upon the examination of the title pursuant to
9-25 which the title binder or title insurance policy is issued. In its
10-1 discretion, the title insurance company may determine the
10-2 insurability of title and those matters which it considers to be
10-3 insurable pursuant to the title binder or title insurance policy;
10-4 provided, however, that insuring around enforceable recorded liens
10-5 shall be prohibited except as allowed by regulation.
10-6 Any person who willfully violates the provisions of this
10-7 Article 9.08, or who disobeys an order of the commissioner <Board>
10-8 refusing to approve an application to insure around, shall, upon
10-9 proof thereof to the satisfaction of the District Court of Travis
10-10 County, Texas, forfeit and pay to the State of Texas a sum not to
10-11 exceed $5,000, which may be recovered in a civil action by the
10-12 commissioner.
10-13 The commissioner <Board>, upon giving thirty (30) days'
10-14 notice by registered mail, and upon hearing had for that purpose,
10-15 may forfeit the Certificate of Authority to do business of any
10-16 company violating the provisions of this Article 9.08.
10-17 SECTION 10. Article 9.09, Insurance Code, is amended to read
10-18 as follows:
10-19 Corporations, domestic or foreign, operating under this
10-20 Chapter shall not transact, underwrite or issue any kind of
10-21 insurance other than title insurance on real property; nor shall
10-22 the business of title insurance be transacted, underwritten or
10-23 issued by any company transacting any other kinds of insurance.
10-24 SECTION 11. Article 9.11, Insurance Code, is amended to read
10-25 as follows:
11-1 Any foreign or domestic corporations conducting the business
11-2 of title insurance or issuing any form of title insurance policy or
11-3 other promulgated or approved forms, or charging any premium rates
11-4 on an owner, mortgagee, or other title insurance policy, or on
11-5 other promulgated or approved forms, except for the premium rates
11-6 charged for reinsurance, on Texas real property other than forms
11-7 and premium rates prescribed by the commissioner <Board>, under the
11-8 provisions of this Chapter shall forfeit its right to do business
11-9 in this state. The provisions of this Article 9.11 shall not,
11-10 however, be applicable to premium rates charged in connection with
11-11 reinsurance transactions between or among title insurance companies
11-12 doing business under the provisions of this Chapter, provided any
11-13 such reinsurance contract complies with the provisions of Article
11-14 9.19 of this Chapter.
11-15 SECTION 12. Article 9.30(B), Insurance Code, is amended by
11-16 adding a new subsection (6) to read as follows:
11-17 (6) Normal promotional and educational activities that
11-18 are not conditioned on the referral of title insurance business and
11-19 that do not involve the defraying of expenses that otherwise would
11-20 be incurred by persons in a position to refer title insurance
11-21 business.
11-22 SECTION 13. Article 9.55, Insurance Code, is amended to read
11-23 as follows:
11-24 After January 1, 1976, whenever any improved residential real
11-25 property situated in the State of Texas shall be sold and a
12-1 mortgagee <title policy issued to guarantee the validity of> policy
12-2 of title insurance, or other form or agreement or the equivalent
12-3 thereof that constitutes the business of title insurance is issued
12-4 in connection with a lien thereon, the title insurance company or
12-5 title insurance agent so issuing such mortgagee <title> policy of
12-6 title insurance form or agreement or the equivalent thereof shall
12-7 also issue an owner <title> policy of title insurance to the owner
12-8 of such property and the required premium as promulgated by the
12-9 commissioner <board> shall be charged.
12-10 The provisions of this article may, however, be rejected,
12-11 provided that the person acquiring title shall, at or prior to
12-12 closing and settlement, execute a written and acknowledged
12-13 rejection wherein the purchaser rejects issuance of such owner
12-14 title policy. The form of such rejection shall be prescribed,
12-15 after notice and hearing, by the commissioner <board>.
12-16 <The provisions of this Article 9.55 of this Chapter 9 shall
12-17 not apply to a settlement or closing if neither a title insurance
12-18 company, a title insurance agent, an attorney for a title insurance
12-19 company or title insurance agent, nor a representative of the title
12-20 insurance company, title insurance agent or attorney for a title
12-21 insurance company or title insurance agent has actually handled the
12-22 closing or settlement of such real estate transaction.>
12-23 SECTION 14. Article 9.58, Insurance Code, is amended to read
12-24 as follows:
12-25 A. For protection of the public and to preserve
13-1 and improve competence of licensees, the commissioner shall <board
13-2 may in its sole discretion> require as a condition to continuation
13-3 of license as a title insurance agent or escrow officer that during
13-4 the 24 months next preceding expiration of the current license
13-5 period the licensee has enrolled in and attended or taught 15 hours
13-6 or such lesser amount established by the commissioner in <up to 15
13-7 hours of> class instruction, lectures, seminars, or other forms of
13-8 education approved by the commissioner <board> for the particular
13-9 license.
13-10 B. The instruction shall be designed to refresh
13-11 the licensee's understanding of basic principles and coverages
13-12 involved, recent and prospective changes in those principles and
13-13 coverages, applicable laws and rules and regulations of the
13-14 commissioner <board>, proper conduct of the licensee's business,
13-15 and duties and responsibilities of the licensee.
13-16 C. The commissioner <board> may permit licensees
13-17 who because of remoteness of residence or business cannot with
13-18 reasonable convenience attend these educational sessions to take
13-19 and successfully complete an equivalent course of study and
13-20 instruction by mail.
13-21 D. The commissioner shall <board may> promulgate
13-22 rules and regulations to carry out the purposes and requirements of
13-23 this article.
13-24 E. On written request of the licensee, the
13-25 commissioner <board> may extend the time for the licensee to comply
14-1 with the requirements of this article or may exempt the licensee
14-2 from some or all of the requirements for a licensing period if the
14-3 commissioner <board> finds that the licensee is unable to comply
14-4 with the requirements because of illness, medical disability, or
14-5 another extenuating circumstance beyond the control of the
14-6 licensee. The criteria for such exemptions and extensions shall be
14-7 established by rule.