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A BILL TO BE ENTITLED
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AN ACT
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relating to the requirements for reinsurance contracts covering |
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title insurance policies issued in this state. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2551.302, Insurance Code, is amended to |
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read as follows: |
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Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES. A |
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title insurance company may reinsure any of its policies and |
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contracts issued on real property located in this state or on |
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policies and contracts issued in this state under Chapter 2751, if: |
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(1) the reinsuring title insurance company is |
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authorized to engage in business in this state under this title; or
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[and]
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(2) the title insurance company acquires reinsurance |
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in accordance with Section 2551.305 [the department first approves |
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the form of the reinsurance contract].
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SECTION 2. Section 2551.305, Insurance Code, is amended to |
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read as follows: |
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Sec. 2551.305. CERTAIN REINSURANCE ALLOWED. |
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(a) Notwithstanding any other provision of this subchapter, a |
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title insurance company may acquire reinsurance on an individual |
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policy or facultative basis from a title insurance company not |
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authorized to engage in the business of title insurance in this |
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state if: |
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(1) the title insurance company from which the |
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reinsurance is acquired: |
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(A) has a combined capital and surplus of at |
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least $20 million as stated in the company's most recent annual |
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statement preceding the acceptance of reinsurance; and |
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(B) is domiciled in another state and is |
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authorized to engage in the business of title insurance in one or |
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more states; and |
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(2) the title insurance company acquiring reinsurance |
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gives written notice to the department at least 30 days before |
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acquiring the reinsurance, and the commissioner does not, before |
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the expiration of the 30-day period and on the ground that the |
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transaction may result in a hazardous financial condition, prohibit |
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the title insurance company from obtaining reinsurance under this |
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section. |
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(b) The notice required under Subsection (a)(2) must |
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provide sufficient information to enable the commissioner to |
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evaluate the proposed transaction, including a summary of the |
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significant terms of the reinsurance, the financial impact of the |
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transaction on the title insurance company acquiring reinsurance, |
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and the specific identity and state of domicile of each title |
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insurance company from which reinsurance is acquired. |
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(c) Notwithstanding any other provision of this subchapter,
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the department may, on application and hearing, permit a title |
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insurance company to acquire reinsurance that does not comply with |
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Subsection (a) on an individual policy or facultative basis from a
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title insurance company domiciled in another state and not
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authorized to engage in the business of title insurance in this |
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state, if: |
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(1) the company has exhausted the opportunity to |
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acquire reinsurance from all other authorized title insurance |
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companies; and |
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(2) the title insurance company from which the |
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reinsurance is acquired has a combined capital and surplus of at |
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least $2 [$1.4] million as stated in its annual statement preceding
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the acceptance of reinsurance. |
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(d) [(b)] Notwithstanding any other provision of this
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subchapter, the department may, on application and hearing, permit |
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a title insurance company, including an authorized reinsuring title |
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insurance company, to retain an additional potential liability of |
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not more than 40 percent of the company's capital stock and surplus |
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as stated in the most recent annual statement of the company, if: |
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(1) the company has exhausted the opportunity to |
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acquire reinsurance under Subsection (c) [(a)]; and
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(2) the additional potential liability of the company |
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is incurred only if the loss suffered by the insured under the |
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policy exceeds the amount of insurance and reinsurance accepted by |
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the company and its reinsuring title insurance companies under the |
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other provisions of this subchapter. |
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SECTION 3. Section 2551.303, Insurance Code, is repealed. |
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SECTION 4. The change in law made by this Act applies only |
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to a reinsurance contract entered into by a title insurance company |
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on or after the effective date of this Act. A reinsurance contract |
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entered into by a title insurance company before the effective date |
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of this Act is governed by the law in effect immediately before the |
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effective date of this Act, and the former law is continued in |
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effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2011. |