By: Rosson S.B. No. 1284
A BILL TO BE ENTITLED
AN ACT
1-1 relating to amendment of Chapter 9, Insurance Code, as amended.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Article 9.01(B), Insurance Code, is amended to
1-4 read as follows:
1-5 B. The Legislature of the State of Texas finds
1-6 that the business of title insurance, both the direct issuance of
1-7 policies and the reinsurance of any assumed risks, of every type,
1-8 shall in all respects be totally regulated by the State of Texas so
1-9 as to provide for the protection of every consumer and purchaser of
1-10 a title insurance policy and to provide for adequate and reasonable
1-11 rates of return for title insurance companies and title insurance
1-12 agents. It is the express legislative intent that this Chapter 9
1-13 accomplish such a result.
1-14 SECTION 2. Article 9.02(b), Insurance Code, is amended to
1-15 read as follows:
1-16 (b) The "business of title insurance" shall be deemed to be
1-17 (1) the making as insurer, guarantor or surety, or proposing to
1-18 make as insurer, guarantor or surety, of any contract or policy of
1-19 title insurance or any equivalent thereof; (2) the transacting or
1-20 proposing to transact, any phase of title insurance, including
1-21 solicitation, title examination, except when conducted by an
1-22 attorney, closing the transaction, except when conducted by an
1-23 attorney, execution of a contract of title insurance, insuring and
2-1 transacting matters subsequent to the execution of the contract and
2-2 arising out of it, including reinsurance; <or> (3) the making of a
2-3 guaranty, warranty, or insurance of a title search, a title
2-4 examination or any component thereof; or (4) the doing, or
2-5 proposing to do, any business in substance equivalent to any of the
2-6 foregoing whether or not <in a manner> designed to evade the
2-7 provisions of this Act.
2-8 SECTION 3. Article 9.02(c), Insurance Code, is amended to
2-9 read as follows:
2-10 (c) "Title Insurance Company" means any domestic company
2-11 organized under the provisions of this Act for the purpose of
2-12 conducting the business of title insurance <insuring titles to real
2-13 property>, any title insurance company organized under the laws of
2-14 another state or foreign government meeting the requirements of
2-15 this Act and holding a certificate of authority to transact
2-16 business in Texas and any domestic or foreign company having a
2-17 certificate of authority to insure titles to real estate within
2-18 this state and which meet the requirements of this Act.
2-19 SECTION 4. Article 9.02(i), Insurance Code, is amended to
2-20 read as follows:
2-21 (i) "Abstract plant" as used herein shall mean a
2-22 geographical abstract plant such as is defined by the commissioner
2-23 <Board> and the commissioner <Board>, in defining an abstract
2-24 plant, shall require a geographically arranged plant, currently
2-25 kept to date, that is found by the commissioner <Board> to be
3-1 adequate for use in insuring titles, and, so as to provide for the
3-2 safety and protection of the policyholders, such abstract plant
3-3 shall contain geographically indexed records showing instruments of
3-4 record affecting the real property within the county for a period
3-5 commencing no later than September 1, 1970, until and including the
3-6 time immediately prior to the date of search.
3-7 SECTION 5. Article 9.02(m), Insurance Code, is amended to
3-8 read as follows:
3-9 (m) "Title Examination" means the search and examination of
3-10 a title for the benefit of the title insurance company, title
3-11 insurance agent, or direct operation to determine the conditions of
3-12 the title to be insured and to evaluate the risk to be undertaken
3-13 in the issuance of a title insurance policy or other title
3-14 insurance form.
3-15 SECTION 6. Article 9.02, Insurance Code, is amended by
3-16 adding Section (r) to read as follows:
3-17 (r) "Determination of Insurability" means the determination
3-18 for the benefit of the title insurance company, title insurance
3-19 agent, or direct operation of the title insurance coverage that
3-20 will be provided to the insured.
3-21 SECTION 7. Article 9.07, Insurance Code, is amended to read
3-22 as follows:
3-23 (a) Corporations organized under this Chapter, as well as
3-24 foreign corporations and those created under Subdivision 57,
3-25 Article 1302, of the Revised Civil Statutes of 1925 before the
4-1 repeal of that statute, or under Chapter 8 of this Code, or any
4-2 other law insofar as the business of either may be the business of
4-3 title insurance, shall operate in Texas under the control and
4-4 supervision and under such uniform rules and regulations as to
4-5 forms of policies and underwriting contracts and premiums therefor,
4-6 and such underwriting standards and practices as may be prescribed
4-7 by the commissioner <Board>; and no Texas or foreign corporation,
4-8 whether incorporated under this Chapter or any other law of the
4-9 State of Texas, shall be permitted to conduct the business of title
4-10 insurance, to issue any title policy of any character, or
4-11 underwriting contract, to delete any policy exclusion or to
4-12 reinsure any portion of the risk assumed by any title policy, on
4-13 Texas real property other than under this Chapter and under such
4-14 rules and regulations. No policy of title insurance, title
4-15 insurance coverage, reinsurance of any risk assumed under any
4-16 policy of title insurance, or any guarantee of any character made
4-17 when insuring Texas titles shall be issued or valid unless written
4-18 by a corporation complying with the provisions of and authorized or
4-19 qualified under this Chapter, except as is provided in Article
4-20 9.19D. Before any premium rate provided for herein shall be fixed
4-21 or charged, reasonable notice shall issue, and a hearing afforded
4-22 to the title insurance companies and title insurance agents
4-23 authorized or qualified under this Chapter and the public. Under
4-24 no circumstances may any title insurance company or title insurance
4-25 agent use any form which is required under the provisions of this
5-1 Chapter 9 to be promulgated or approved until the same shall have
5-2 been so promulgated or approved by the commissioner <Board>.
5-3 (b) The commissioner <Board> shall have the duty to fix and
5-4 promulgate the premium rates to be charged by title insurance
5-5 companies and title insurance agents created or operating under
5-6 this Chapter for policies of title insurance or other promulgated
5-7 or approved forms, and the premiums therefor shall be paid in the
5-8 due and ordinary course of business. Premium rates for reinsurance
5-9 as between title insurance companies qualified under this Chapter
5-10 shall not be fixed or promulgated by the commissioner <Board>, and
5-11 title insurance companies may set such premium rates for
5-12 reinsurance as such title insurance companies shall agree upon.
5-13 Under no circumstance shall any premium be charged for any policy
5-14 of title insurance or other promulgated or approved forms different
5-15 from those fixed and promulgated by the commissioner <Board>,
5-16 except for premiums charged for reinsurance. The premium rates
5-17 fixed by the commissioner <Board> shall be reasonable to the public
5-18 and nonconfiscatory as to the title insurance companies and the
5-19 title insurance agents. For the purpose of collecting data on
5-20 which to determine the proper rates to be fixed, the <Board>
5-21 commissioner shall require all title insurance companies and all
5-22 title insurance agents operating in Texas to submit such
5-23 information in such form, as may be promulgated by the commissioner
5-24 after notice and hearing <as it may deem proper>, all information
5-25 as to loss experience, expense of operation, and other material
6-1 matters <matter> for the commissioner's consideration. In fixing
6-2 the rate of premiums, the commissioner shall consider all relevant
6-3 income and expenses of title insurance companies and title
6-4 insurance agents attributable to Texas title insurance business
6-5 except lobbying expenses and charitable contributions.
6-6 (c) The commissioner <Board> shall hold a biennial hearing
6-7 not earlier than July 1 <October 1 or later than December 15> of
6-8 each even-numbered calendar year, to consider adoption of premium
6-9 rates and such other matters and subjects relative to the
6-10 regulation of the business of title insurance as may be requested
6-11 by any trade association or other association of persons, any title
6-12 insurance company, any title insurance agent, any member of the
6-13 public, or as the commissioner <Board> may determine necessary to
6-14 consider. Any person, association or entity recommending adoption
6-15 of premium rates or other matters and subjects shall be admitted as
6-16 a party to the hearing. Reasonable notice of not less than sixty
6-17 (60) days prior to <Proper notice of> such public hearing and the
6-18 items to be considered shall be <made to the public and shall be>
6-19 sent direct to all title insurance companies and title insurance
6-20 agents qualified or authorized to do business under this Chapter
6-21 and to the public in such a manner as to give fair publicity
6-22 thereto. The hearing shall consist of a rule making phase for
6-23 consideration of rules, forms and endorsements, and other matters
6-24 not having rate implications and a rate making phase for
6-25 consideration of fixing the premium rate and other matters with
7-1 rate implications. The commissioner shall certify which matters
7-2 have rate implications to be considered in the rate making phase of
7-3 the hearing. The commissioner shall conduct both phases of the
7-4 hearing, provided, however, that the rate making phase of the
7-5 hearing shall be conducted by the State Office of Administrative
7-6 Hearings in accordance with Article 1.33B of this code at the
7-7 written request of any person seeking admission as a party to the
7-8 rate making phase of the hearing. Such request must be made at the
7-9 time a person seeks to be admitted as a party to the hearing but in
7-10 no event more than ten (10) days after issuance of public notice of
7-11 the hearing. The rate making phase of the hearing shall be
7-12 conducted as a contested case pursuant to the Administrative
7-13 Procedure Act (V.T.C.A. Government Code Section 2001.001 et seq.).
7-14 Presentation by any party of relevant, admissible oral testimony
7-15 shall not be limited. All matters in all phases of the hearing
7-16 shall be considered by the commissioner and decisions thereon
7-17 rendered in open meeting <for at least four (4) weeks in advance of
7-18 such hearing>. Changes to the Basic Manual of Rules, Rates, and
7-19 Forms for the Writing of Title Insurance in the State of Texas,
7-20 including additions or amendments thereto, may be proposed and
7-21 adopted by reference by publishing a notice of such proposal or
7-22 adoption by reference in the Texas Register which notice must
7-23 include a brief summary of the substance of the matter to be added
7-24 or changed and a statement that the full text of the matter is
7-25 available for review in the office of the chief clerk of the Texas
8-1 Department of Insurance.
8-2 (d) Premium rates when once fixed shall not be changed until
8-3 after a public hearing shall be had by the commissioner, after
8-4 reasonable notice of not less than sixty (60) days prior to such
8-5 public hearing, which shall include the items to be considered and
8-6 shall be <Board, after proper notice> sent direct to all title
8-7 insurance companies and title insurance agents qualified or
8-8 authorized to do business under this Chapter, and after public
8-9 notice in such manner as to give fair publicity thereto <for at
8-10 least four (4) weeks in advance>. The commissioner <The Board>
8-11 must call such additional hearings to consider premium rate changes
8-12 at the request of a title insurance company or the office of public
8-13 insurance counsel.
8-14 (e) The commissioner <Board> may, on his or her <its> own
8-15 motion, following notice as required for the biennial hearing, hold
8-16 at any time a public hearing to consider adoption of premium rates
8-17 and such other matters and subjects relative to the regulation of
8-18 the business of title insurance as the commissioner <Board> shall
8-19 determine necessary or proper.
8-20 (f) Any title insurance company, any title insurance agent,
8-21 or other person or association of persons interested, feeling
8-22 injured by any action of the <Board or the> commissioner
8-23 <Commissioner> with regard to premium rates or other action taken
8-24 by the <Board or the> commissioner <Commissioner>, shall have the
8-25 right to appeal in accordance with Article 1.04 of this code.
9-1 SECTION 8. Article 9.07A(b), Insurance Code, is amended to
9-2 read as follows:
9-3 (b) A title insurance company or title insurance agent shall
9-4 use a form adopted by the commissioner <board> under this article
9-5 in issuing owner policies to individuals relating to residential
9-6 real property in this state.
9-7 SECTION 9. Article 9.08, Insurance Code, is amended to read
9-8 as follows:
9-9 Title insurance companies, domestic or foreign, operating
9-10 under this Chapter shall not have the right to guarantee the
9-11 payment of mortgages which cover real estate, and if any such
9-12 corporation shall do so it shall forthwith forfeit and surrender
9-13 its permit to do business.
9-14 "Insuring around" is defined as the willful issuance of a
9-15 title binder or title insurance policy showing no outstanding
9-16 enforceable recorded liens while the title insurance company
9-17 <issuer> knows that in fact a lien or liens are of record against
9-18 the real property, and shall be prohibited, except under
9-19 circumstances as the commissioner <State Board> of Insurance under
9-20 his or her <its> rule-making powers shall approve. A title
9-21 insurance company knows that an outstanding enforceable recorded
9-22 matter exists if it determines that the matter is valid and
9-23 enforceable based upon the examination of the title pursuant to
9-24 which the title binder or title insurance policy is issued. In its
9-25 discretion, the title insurance company may determine the
10-1 insurability of title and those matters which it considers to be
10-2 insurable pursuant to the title binder or title insurance policy;
10-3 provided, however, that insuring around enforceable recorded liens
10-4 shall be prohibited except as allowed by regulation.
10-5 Any person who willfully violates the provisions of this
10-6 Article 9.08, or who disobeys an order of the commissioner <Board>
10-7 refusing to approve an application to insure around, shall, upon
10-8 proof thereof to the satisfaction of the District Court of Travis
10-9 County, Texas, forfeit and pay to the State of Texas a sum not to
10-10 exceed $5,000, which may be recovered in a civil action by the
10-11 commissioner.
10-12 The commissioner <Board>, upon giving thirty (30) days'
10-13 notice by registered mail, and upon hearing had for that purpose,
10-14 may forfeit the Certificate of Authority to do business of any
10-15 company violating the provisions of this Article 9.08.
10-16 SECTION 10. Article 9.09, Insurance Code, is amended to read
10-17 as follows:
10-18 Corporations, domestic or foreign, operating under this
10-19 Chapter shall not transact, underwrite or issue any kind of
10-20 insurance other than title insurance on real property; nor shall
10-21 the business of title insurance be transacted, underwritten or
10-22 issued by any company transacting any other kinds of insurance.
10-23 SECTION 11. Article 9.11, Insurance Code, is amended to read
10-24 as follows:
10-25 Any foreign or domestic corporations conducting the business
11-1 of title insurance or issuing any form of title insurance policy or
11-2 other promulgated or approved forms, or charging any premium rates
11-3 on an owner, mortgagee, or other title insurance policy, or on
11-4 other promulgated or approved forms, except for the premium rates
11-5 charged for reinsurance, on Texas real property other than forms
11-6 and premium rates prescribed by the commissioner <Board>, under the
11-7 provisions of this Chapter shall forfeit its right to do business
11-8 in this state. The provisions of this Article 9.11 shall not,
11-9 however, be applicable to premium rates charged in connection with
11-10 reinsurance transactions between or among title insurance companies
11-11 doing business under the provisions of this Chapter, provided any
11-12 such reinsurance contract complies with the provisions of Article
11-13 9.19 of this Chapter.
11-14 SECTION 12. Article 9.30(B), Insurance Code, is amended by
11-15 adding a new subsection (6) to read as follows:
11-16 (6) Normal promotional and educational activities that
11-17 are not conditioned on the referral of title insurance business and
11-18 that do not involve the defraying of expenses that otherwise would
11-19 be incurred by persons in a position to refer title insurance
11-20 business.
11-21 SECTION 13. Article 9.55, Insurance Code, is amended to read
11-22 as follows:
11-23 After January 1, 1976, whenever any improved residential real
11-24 property situated in the State of Texas shall be sold and a
11-25 mortgagee <title policy issued to guarantee the validity of> policy
12-1 of title insurance, or other form or agreement or the equivalent
12-2 thereof that constitutes the business of title insurance is issued
12-3 in connection with a lien thereon, the title insurance company or
12-4 title insurance agent so issuing such mortgagee <title> policy of
12-5 title insurance form or agreement or the equivalent thereof shall
12-6 also issue an owner <title> policy of title insurance to the owner
12-7 of such property and the required premium as promulgated by the
12-8 commissioner <board> shall be charged.
12-9 The provisions of this article may, however, be rejected,
12-10 provided that the person acquiring title shall, at or prior to
12-11 closing and settlement, execute a written and acknowledged
12-12 rejection wherein the purchaser rejects issuance of such owner
12-13 title policy. The form of such rejection shall be prescribed,
12-14 after notice and hearing, by the commissioner <board>.
12-15 <The provisions of this Article 9.55 of this Chapter 9 shall
12-16 not apply to a settlement or closing if neither a title insurance
12-17 company, a title insurance agent, an attorney for a title insurance
12-18 company or title insurance agent, nor a representative of the title
12-19 insurance company, title insurance agent or attorney for a title
12-20 insurance company or title insurance agent has actually handled the
12-21 closing or settlement of such real estate transaction.>
12-22 SECTION 14. Article 9.58, Insurance Code, is amended to read
12-23 as follows:
12-24 A. For protection of the public and to preserve
12-25 and improve competence of licensees, the commissioner shall <board
13-1 may in its sole discretion> require as a condition to continuation
13-2 of license as a title insurance agent or escrow officer that during
13-3 the 24 months next preceding expiration of the current license
13-4 period the licensee has enrolled in and attended or taught 15 hours
13-5 or such lesser amount established by the commissioner in <up to 15
13-6 hours of> class instruction, lectures, seminars, or other forms of
13-7 education approved by the commissioner <board> for the particular
13-8 license.
13-9 B. The instruction shall be designed to refresh
13-10 the licensee's understanding of basic principles and coverages
13-11 involved, recent and prospective changes in those principles and
13-12 coverages, applicable laws and rules and regulations of the
13-13 commissioner <board>, proper conduct of the licensee's business,
13-14 and duties and responsibilities of the licensee.
13-15 C. The commissioner <board> may permit licensees
13-16 who because of remoteness of residence or business cannot with
13-17 reasonable convenience attend these educational sessions to take
13-18 and successfully complete an equivalent course of study and
13-19 instruction by mail.
13-20 D. The commissioner shall <board may> promulgate
13-21 rules and regulations to carry out the purposes and requirements of
13-22 this article.
13-23 E. On written request of the licensee, the
13-24 commissioner <board> may extend the time for the licensee to comply
13-25 with the requirements of this article or may exempt the licensee
14-1 from some or all of the requirements for a licensing period if the
14-2 commissioner <board> finds that the licensee is unable to comply
14-3 with the requirements because of illness, medical disability, or
14-4 another extenuating circumstance beyond the control of the
14-5 licensee. The criteria for such exemptions and extensions shall be
14-6 established by rule.
14-7 SECTION 15. Article 9.59, Section 15, Insurance Code, is
14-8 amended to read as follows:
14-9 Sec. 15. Article <Articles> 4.12, <4.13, 4.14, 4.15, and
14-10 4.16,> Insurance Code, applies <apply> to title insurance companies
14-11 which are subject to this article.
14-12 SECTION 16. This Act takes effect September 1, 1995.
14-13 SECTION 17. The importance of this legislation and the
14-14 crowded condition of the calendars in both houses create an
14-15 emergency and an imperative public necessity that the
14-16 constitutional rule requiring bills to be read on three several
14-17 days in each house be suspended, and this rule is hereby suspended.