| TO: | Honorable Joe Straus, Speaker of the House, House of Representatives |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2408 by Darby (Relating to title insurance.), As Passed 2nd House |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2012 | $0 |
| 2013 | $0 |
| 2014 | $0 |
| 2015 | $0 |
| 2016 | $0 |
| Fiscal Year | Probable Revenue Gain from Insurance Maint Tax Fees 8042 |
Probable (Cost) from Insurance Maint Tax Fees 8042 |
Change in Number of State Employees from FY 2011 |
|---|---|---|---|
| 2012 | $663,276 | ($663,276) | 8.5 |
| 2013 | $688,631 | ($688,631) | 8.5 |
| 2014 | $616,928 | ($616,928) | 8.5 |
| 2015 | $688,631 | ($688,631) | 8.5 |
| 2016 | $616,928 | ($616,928) | 8.5 |
The bill would amend the Insurance Code relating to the regulation of the title insurance industry.
The bill would require the Texas Department of Insurance (TDI) to notify renewal applicants within 20 business days of receipt of an application of any and all deficiencies in the application, to notify renewal applicants in writing within 5 business days of an application being complete that it is complete, and to grant or propose denial of a renewal application within 30 business days of the application being complete, or the application is deemed approved. The bill would require TDI to observe the same time frames and detailed notice requirements for potential new underwriter appointments, or the appointments are deemed approved. The bill would prohibit the use of pending enforcement actions as grounds for denying applications, require TDI to notify applicants of enforcement actions within 30 business days of their being assigned a file number, and require a detailed Notice of Hearing with all alleged facts, to be submitted within 60 business days or the case is dismissed with prejudice.
The bill would amend the anti-rebating subchapter of the Texas Title Insurance Act by striking the word "legal" as a qualifier of permissible promotional and educational activities. The bill would modify what persons may request a title insurance premium rate hearing, establish a new timing and procedural requirements associated with the rate hearing, and would includes a mechanism to petition a district court adopt a rate. The bill would amend title insurance biennial hearing requirement, amend the party admission statute for certain title insurance rate hearings, and amend notice requirements for certain title insurance rate and rule hearings.
The bill would take effect immediately upon receiving a two-thirds majority vote in each house. If the bill does not receive a two-thirds vote in each house, the bill would take effect September 1, 2011.
Based on the analysis by TDI, implementation of the bill would require 5.5 full-time-equivalent positions (FTEs) in each fiscal year in the enforcement division due to the increased workload created by additional title insurance enforcement cases and increased frequency of rate hearings and 3.0 FTEs in the Title Division for the increased licensing workload. Based on the analysis by TDI, the 8.5 FTEs would cost $457,888 for salaries and wages with associated benefit costs of $127,568, travel costs of $12,500, telephone and consumable costs of $16,650, and other operating expenses of $2,025 each fiscal year from General Revenue – Insurance Maintenance Tax. One-time equipment costs are anticipated to be $46,348 in fiscal year 2012 and additional operating expenses of $297 will be incurred in fiscal years 2012, 2014 and 2016 due to additional reference materials that are updated every two years. Additionally, expert witnesses will be required the additional rate cases at a cost of $72,000 in fiscal year 2013 and 2015.
Since insurance maintenance tax is self-leveling, this analysis assumes that the costs to implement this bill would come from fund balances or the maintenance tax would be set to recover a higher level of revenue.
| Source Agencies: | 454 Department of Insurance
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| LBB Staff: | JOB, SD, KJG, MW, CH, AG
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