1-1     By:  Harris                                            S.B. No. 105
 1-2           (In the Senate - Filed December 17, 1998; January 28, 1999,
 1-3     read first time and referred to Committee on Economic Development;
 1-4     February 18, 1999, reported favorably by the following vote:  Yeas
 1-5     6, Nays 0; February 18, 1999, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to reports of an audit by a title insurance agent or
 1-9     direct operation of a title insurance company.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Article 9.39, Insurance Code, is amended to read
1-12     as follows:
1-13           Art. 9.39.  ANNUAL AUDIT.  (a)  Every title insurance agent
1-14     and direct operation shall have an annual audit, at the agent's or
1-15     direct operation's [its or his] expense, made of trust fund
1-16     accounts, and before the 91st day after the date of [within ninety
1-17     (90) days from] the termination of its fiscal year, shall send by
1-18     certified mail, postage prepaid, to the department [Board] one copy
1-19     of such audit report with a letter of transmittal, and each such
1-20     agent, shall also send a copy of such letter of transmittal and
1-21     audit report to every title insurance company which it represents.
1-22           (b)  Every title insurance company shall have an annual
1-23     audit, at its expense, made of trust fund accounts for each county
1-24     in which it operates in its own name and before the 91st day after
1-25     the date of [within ninety (90) days from] the termination of its
1-26     fiscal year shall send by certified mail, postage prepaid, to the
1-27     department [Board] one copy of such audit report.
1-28           (c)  The Commissioner [Board] shall promulgate regulations
1-29     setting forth the standards of audit and the form of audit report
1-30     required.
1-31           (d)  Said audit shall be made by an independent certified
1-32     public accountant or licensed public accountant, or a firm composed
1-33     of either.
1-34           (e)  [Each title insurance company shall examine and analyze
1-35     the audit report furnished by each of its agents and direct
1-36     operations, and shall within three (3) months of receipt of same
1-37     report to the Board on forms to be furnished by the Board the
1-38     findings and results of its examination and analysis of such audit
1-39     report.] If a title insurance company fails to receive an audit
1-40     report from any of its agents or direct operations before the 91st
1-41     day after the date of the termination of the fiscal year of the
1-42     agent or direct operation [within the time specified above], it
1-43     shall [forthwith] report that [such] omission to the department not
1-44     later than the 30th day after the expiration of the 90-day period
1-45     [Board].
1-46           (f)  All such reports [and analyses] furnished by the title
1-47     insurance company to the department [Board] shall, at the election
1-48     of the Commissioner, be classed as confidential and privileged
1-49     after having been filed with the department [Board].
1-50           (g)  If any agent, direct operation, or title insurance
1-51     company shall fail or refuse to furnish an audit report within the
1-52     time required, or shall furnish an audit report which reveals any
1-53     shortage or other irregularity, or any practice not in keeping with
1-54     sound, honest business practices, the department [Board] may, after
1-55     notice to the agent, direct operation, or each title insurance
1-56     company involved and after a hearing at which the agent, direct
1-57     operation, or title insurance company may offer evidence explaining
1-58     or excusing such omissions or irregularity, revoke the license of
1-59     such agent or direct operation or revoke the certificate of
1-60     authority of such title insurance company.
1-61           (h)  Any agent, direct operation, or title insurance company
1-62     feeling aggrieved by any action of the Commissioner [Board
1-63     hereunder] shall have the right to appeal under Article 1.04 of
1-64     this code [file a suit in the District Court of Travis County in
 2-1     the time and manner provided in Article 9.37].
 2-2           SECTION 2.  This Act takes effect September 1, 1999.
 2-3           SECTION 3.  The importance of this legislation and the
 2-4     crowded condition of the calendars in both houses create an
 2-5     emergency and an imperative public necessity that the
 2-6     constitutional rule requiring bills to be read on three several
 2-7     days in each house be suspended, and this rule is hereby suspended.
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