RS C.S.S.B. 1155 75(R) BILL ANALYSIS INSURANCE C.S.S.B. 1155 By: Harris (Pitts) 5-22-97 Committee Report (Substituted) BACKGROUND Currently, the Insurance Code does not provide for the regulation of controlled business organizations such as builders, realtors, developers or lenders who own title companies. PURPOSE As proposed, C.S.S.B. 1155 authorizes the commissioner of insurance to regulate the business of title insurance by rulemaking. The bill would prohibit the Commissioner from granting or renewing a license as a title agent unless that person, firm, association, or corporation is engaged in the business of title insurance. RULEMAKING AUTHORITY It is the committee's opinion that express rulemaking authority is granted in SECTION 1 of the bill, (Article 9.01(C), Insurance Code). SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 9.01, Insurance Code, by adding subsection (C) as follows: Art. 9.01 Short Title and Legislative Purpose and Intent C. In addition to other requirements under this chapter, no issuance or renewal of a license shall be granted to a person, firm, association or corporation as a title agent or direct operation unless it is found by the commissioner that such entity intends to be actively involved in the business of title insurance. The commissioner is authorized and required to comprehensively regulate the title insurance business. The commissioner shall adopt rules in order to implement this chapter. SECTION 2. Effective Date, September 1, 1997. SECTION 3. Emergency Clause COMPARISON OF ORIGINAL TO SUBSTITUTE Amends caption to conform to the body of the bill. SECTION 1. Changes from amending Article 9.37, Insurance Code, to amending Article 9.01, Insurance Code. The substitute section changes the language to say that no issuance or renewal of a license shall be granted to a person, firm, association, or corporation or direct operation shall be granted unless it is determined by the commissioner that the entity intends to be actively involved in the business of title insurance. The new section also provides rule-making authority. SECTION 2. Deletes old SECTION 2 which amended article 9.36B to set forth additional licensing requirements for a title insurance agent or direct operation. Set forth the applicability of this article. Set forth requirements for being bonded or alternatives to being bonded. Set forth requirements of a material agreement. Provides that this article does not impair any insurance activity expressly authorized by federal law. Defined "affiliate." New SECTION 2 changes to the effective date. SECTION 3. Old SECTION 3 provided that this Act take effect September 1, 1998 for title agents or direct operations which are currently licensed. Provides that for all new applications, this Act takes effect September 1, 1997. Provided that title agents or direct operations are not required to file the bond required by Article 9.37(c), Insurance Code, as added by this Act, before April 1, 1999. New SECTION 3 changes section from effective date to emergency clause.