By Pitts                                        H.B. No. 2609

      75R8698 DLF-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the certain business practices in the writing of title

 1-3     insurance.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section B, Article 9.30, Insurance Code, is

 1-6     amended to read as follows:

 1-7           B.  Subject to Article 9.30A of this code, this [This]

 1-8     Article may not be construed as prohibiting:

 1-9           (1)  a foreign or domestic title insurance company doing

1-10     business in this state under this Chapter, from appointing as its

1-11     title insurance agent pursuant to this Chapter a person owning or

1-12     leasing and operating an abstract plant of such county and making

1-13     the arrangement for division of premiums with the agent as shall be

1-14     set by the commissioner;

1-15           (2)  payments for services actually performed by a title

1-16     insurance company, a title insurance agent, or a direct operation,

1-17     in connection with closing the transaction, furnishing of title

1-18     evidence, or title examination, which payment may not exceed the

1-19     percentages of the premium or amounts established by the

1-20     commissioner for those payments;  or

1-21           (3)  payment of bona fide compensation to a bona fide

1-22     employee principally employed by a title insurance company, direct

1-23     operation, title insurance agent, or other reasonable payment for

1-24     goods or facilities actually furnished and received;  or

 2-1           (4)  payments for services actually performed by an attorney

 2-2     in connection with title examination or closing a transaction,

 2-3     which payment may not exceed a reasonable charge for such services.

 2-4           (5)  Nothing in this article shall affect the division of

 2-5     premium between a title insurance company and its subsidiary title

 2-6     insurance agent when the title insurance company directly issues

 2-7     its policy or contract of title insurance pursuant to Article 9.34.

 2-8     For purposes of this provision, a subsidiary is a company at least

 2-9     50 percent of the voting stock of which is owned by the title

2-10     insurance company or by a wholly owned subsidiary of the title

2-11     insurance company.

2-12           (6)  legal promotional and educational activities that are

2-13     not conditioned on the referral of title insurance business.

2-14           SECTION 2.  Chapter 9, Insurance Code, is amended by adding

2-15     Article 9.30A to read as follows:

2-16           Art. 9.30-A.  ACTIVE SOLICITATION OF TITLE INSURANCE

2-17     REQUIRED.  (a)  It is the intent of this article to:

2-18                 (1)  prohibit coercion of insurance and preserve a

2-19     person's right to choose an agent or insurance company; and

2-20                 (2)  prohibit the licensing of an agent to engage in

2-21     the title insurance business principally to handle business that

2-22     the agent controls only through ownership, mortgage, sale, family

2-23     relationship, or employment.

2-24           (b)  A person, firm, association or corporation may not be

2-25     licensed as a title insurance agent under Article 9.36 of this code

2-26     unless the commissioner finds that the person, firm, association,

2-27     or corporation is or intends to be actively engaged in the

 3-1     soliciting or writing of title insurance for the public generally.

 3-2           (c)  An applicant who is making an original application for

 3-3     license as a title insurance agent must demonstrate to the

 3-4     commissioner that the applicant has a bona fide intention to engage

 3-5     in business in which, in any calendar year, at least 50 percent of

 3-6     the total volume of premiums is derived from:

 3-7                 (1)  persons or organizations other than the applicant;

 3-8     and

 3-9                 (2)  property other than property with respect to which

3-10     the applicant controls the placing of insurance through ownership,

3-11     mortgage, sale, family relationship, or employment.

3-12           (d)  This article does not prohibit a title insurance agent

3-13     from writing title insurance with respect to property that the

3-14     agent owns or in which the agent has an interest.

3-15           SECTION 3.  This Act takes effect September 1, 1997.

3-16           SECTION 4.  The importance of this legislation and the

3-17     crowded condition of the calendars in both houses create an

3-18     emergency and an imperative public necessity that the

3-19     constitutional rule requiring bills to be read on three several

3-20     days in each house be suspended, and this rule is hereby suspended.