By Harris                                              S.B. No. 105
         76R1236 DB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to reports of an audit by a title insurance agent or
 1-3     direct operation of a title insurance company.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Article 9.39, Insurance Code, is amended to read
 1-6     as follows:
 1-7           Art. 9.39.  ANNUAL AUDIT. (a) Every title insurance agent and
 1-8     direct operation shall have an annual audit, at the agent's or
 1-9     direct  operation's [its or his] expense, made of trust fund
1-10     accounts, and before the 91st day after the date of [within ninety
1-11     (90) days from] the termination of its fiscal year, shall send by
1-12     certified mail, postage prepaid, to the department [Board] one copy
1-13     of such audit report with a  letter of transmittal, and each such
1-14     agent, shall also send a copy of such letter of transmittal and
1-15     audit report to every title insurance company which it represents.
1-16           (b)  Every title insurance company shall have an annual
1-17     audit, at its expense, made of trust fund accounts for each county
1-18     in which it  operates in its own name and before the 91st day after
1-19     the date of [within ninety (90) days from] the termination of its
1-20     fiscal year shall send  by certified mail, postage prepaid, to the
1-21     department [Board] one copy of such audit report.
1-22           (c)  The Commissioner [Board] shall promulgate regulations
1-23     setting forth the standards of audit and the form of audit report
1-24     required.
 2-1           (d)  Said audit shall be made by an independent certified
 2-2     public accountant or licensed public accountant, or a firm composed
 2-3     of either.
 2-4           (e)  [Each title insurance company shall examine and analyze
 2-5     the audit report furnished by each of its agents and direct
 2-6     operations, and  shall within three (3) months of receipt of same
 2-7     report to the Board on forms to be furnished by the Board the
 2-8     findings and results of its  examination and analysis of such audit
 2-9     report.]  If a title insurance company fails to receive an audit
2-10     report from any of its agents or direct operations before the 91st
2-11     day after the date of the termination of the fiscal year of the
2-12     agent or direct operation  [within the time specified above], it
2-13     shall [forthwith] report that [such] omission to the department not
2-14     later than the 30th day after the expiration of the 90-day period
2-15     [Board].
2-16           (f)  All such reports [and analyses] furnished by the title
2-17     insurance company to the department [Board] shall, at the election
2-18     of the  Commissioner, be classed as confidential and privileged
2-19     after having been filed with the department [Board].
2-20           (g)  If any agent, direct operation, or title insurance
2-21     company shall fail or refuse to furnish an audit report within the
2-22     time required, or  shall furnish an audit report which reveals any
2-23     shortage or other irregularity, or any practice not in keeping with
2-24     sound, honest business practices, the department [Board] may, after
2-25     notice to the agent, direct operation, or each title insurance
2-26     company involved and after a hearing at which the  agent, direct
2-27     operation, or title insurance company may offer evidence explaining
 3-1     or excusing such omissions or irregularity, revoke the license of
 3-2     such agent or direct operation or revoke the certificate of
 3-3     authority of such title insurance company.
 3-4           (h)  Any agent, direct operation, or title insurance company
 3-5     feeling aggrieved by any action of the Commissioner [Board
 3-6     hereunder]  shall have the right to appeal under Article 1.04 of
 3-7     this code [file a suit in the District Court of Travis County in
 3-8     the time and manner provided in Article 9.37].
 3-9           SECTION 2.  This Act takes effect September 1, 1999.
3-10           SECTION 3.  The importance of this legislation and the
3-11     crowded condition of the calendars in both houses create an
3-12     emergency and an imperative public necessity that the
3-13     constitutional rule requiring bills to be read on three several
3-14     days in each house be suspended, and this rule is hereby suspended.