By: Schaefer H.B. No. 2384

A BILL TO BE ENTITLED

AN ACT

relating to premium rates for title insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. GENERAL PROVISIONS

SECTION 1. Section 2703.003, Insurance Code, is amended to read as follows:

Sec. 2703.003. PAYMENT OF PREMIUMS

(a) The premium for a title insurance policy or for another form prescribed or approved by the commissioner shall be paid in the due and ordinary course of business;

(b) The commission shall not regulate the division of premium between the title insurance company, as defined in Sec. 2501.003(14) and its title insurance agent, or any title insurance agent as defined in Sec. 2501.003.

ARTICLE 2. FILE AND USE RATES

SECTION 1.01. The heading to Subchapter D, Chapter 2703, Insurance Code, is amended to read as follows:

SUBCHAPTER D. [FIXING AND PROMULGATING] TITLE INSURANCE PREMIUM

RATES

SECTION 1.02. Section 2703.151, Insurance Code, is amended to read as follows:

(a) Except as provided by Subsection (b), [the commissioner shall fix and promulgate the premium rates to be charged by a title insurance company or by a title insurance agent for title insurance policies or for other forms prescribed or approved by the commissioner.] premium rates for title insurance are governed by Subchapters A-D, Chapter 2251.

(b) [The commissioner may not fix or promulgate] A title insurance company is not required to file the premium rates for reinsurance between title insurance companies. Title insurance companies may establish the premium rates in amounts to which the companies agree.

(c) Except for a premium charged for reinsurance, a premium may not be charged for a title insurance policy or for another prescribed or approved form at a rate different than the rate [fixed and promulgated by] filed with the commissioner under Chapter 2251.

SECTION 1.03. The heading to Section 2703.153, Insurance Code, is amended to read as follows:

Sec. 2703.153. DATA COLLECTION [OF DATA FOR FIXING PREMIUM RATES]; ANNUAL STATISTICAL REPORT

SECTION 1.04. Section 2703.153(a), Insurance Code, is amended to read as follows:

(a) Each title insurance company and title insurance agent engaged in the business of title insurance in this state shall annually submit to the department, as required by the department [to collect data to use to [fix] premium rates], a statistical report containing information relating to:

(1) loss experience;

(2) expense of operation; and

(3) other material matters.

SECTION 1.05. Sections 2251.002 and 2251.003, Insurance Code, are amended to read as follows:

Sec. 2251.002. DEFINITIONS. In this chapter:

(9) "Title insurance" has the meaning assigned by Section 2501.003.

Sec. 2251.003. APPLICABILITY OF CERTAIN SUBCHAPTERS. (a) This subchapter and Subchapters B, C, D, and E apply to:

(3) a title insurance company, as defined by Section 2501.003(14).

(b) This subchapter and Subchapters B, C, D, and E apply to all lines of the following kinds of insurance written under an insurance policy or contract issued by an insurer authorized to engage in the business of insurance in this state:

(15) multi-peril insurance; [and]

(16) identity theft insurance issued under Chapter 706;[.] and

(17) title insurance.

SECTION 1.06. Section 2251.052, Insurance Code, is amended to read as follows:

Sec. 2251.052. RATE STANDARDS.

(f) In setting rates for title insurance, an insurer shall also consider all relevant income and expenses of title insurance agents attributable to engaging in the business of title insurance in this state.

SECTION 1.07. The heading to Section 2751.051, Insurance Code, is amended to read as follows:

Sec. 2751.051. [FIXING AND PROMULGATING] PREMIUM RATES AND FORMS.

SECTION 1.08. Section 2751.051, Insurance Code, is amended to read as follows:

(a) Premium rates for personal property title insurance are governed by Subchapters A-D, Chapter 2251; and

(b) The commissioner shall, in the manner prescribed by this subchapter,[:

(1) fix and promulgate the premium rates to be charged by a title insurance company or by a title insurance agent for personal property title insurance policies under this chapter; and

(2)] prescribe the policies and forms to be used for title insurance [in connection with those policies].

(c) [(b)] A premium may not be charged for a personal property title insurance policy or for another prescribed or approved form at a rate different than the rate [fixed and promulgated by] filed with the commissioner under Chapter 2251.

ARTICLE 3. CONFORMING AMENDMENTS

SECTION 2.01. Section 2501.003(8), Insurance Code, is amended to read as follows:

(8) "Premium" means the premium rates charged for a title insurance policy or other form prescribed or approved by the Commissioner [promulgated by the commissioner under Subchapters D and E, Chapter 2703,] and includes a charge for:

(A) title examination and closing the transaction, regardless of whether the examination or closing is performed by an attorney; and

(B) issuing the policy or form.

SECTION 2.02. Section 2551.204(d), Insurance Code, is amended to read as follows:

(d) The amount, handling, and distribution of any reserves required under Subsection (c)(2) are subject to the control and discretion of the department and are reviewable in judicial proceedings governed by rules applicable to review of rates under Section 2703.202, as it existed before its repeal effective September 1, 2014 [Subchapters D and E, Chapter 2703].

SECTION 2.03. Section 2551.351(a), Insurance Code, is amended to read as follows:

a) A foreign or domestic corporation forfeits any right to engage in business in this state if the corporation:

(1) issues any form of title insurance policy, or any other adopted or approved form, on real property in this state other than a form prescribed by the department;

(2) charges any premium rate on an owner, mortgagee, or other title insurance policy, or on any other adopted or approved form, on real property in this state other than a premium rate filed under Chapter 2251 [prescribed by the commissioner]; or

(3) otherwise engages in the business of title insurance in relation to real property in this state on a form [or for a premium rate] not prescribed by the department or commissioner or for a premium rate not filed under Chapter 2251.

SECTION 2.04. Section 2602.210(a), Insurance Code, is amended to read as follows:

(a) A title insurance company is entitled to recover in its rates for the succeeding calendar year amounts paid in assessments not to exceed one percent of the company's net direct written premiums. A title insurance company may include those amounts, less any refund, as an expense of operation in a rate filing under Chapter 2251. [In promulgating or establishing rates the commissioner shall consider assessments and refunds of assessments and shall adjust the rates to allow for recovery under this subsection.]

SECTION 2.05. The heading to Subchapter E, Chapter 2703, Insurance Code, is amended to read as follows:

SUBCHAPTER E. PROCEDURES REGARDING [PREMIUM RATES,] POLICY

FORMS[,] AND OTHER RELATED MATTERS

SECTION 2.06. Sections 2703.203, 2703.206 and 2703.207, Insurance Code, are amended to read as follows:

Sec. 2703.203. PERIODIC HEARING. The commissioner shall hold a public hearing not earlier than July 1 after the fifth anniversary of the closing of a hearing held under this chapter to consider [adoption of premium rates and other] matters relating to regulating the business of title insurance that an association, title insurance company, title insurance agent, or member of the public admitted as a party under Section 2703.204 requests to be considered or that the commissioner determines necessary to consider.

Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS AS NECESSARY. At any time, the commissioner may order a public hearing to consider [adoption of premium rates and other] matters relating to regulating the business of title insurance as the commissioner determines necessary or proper.

Sec. 2703.207. NOTICE OF CERTAIN HEARINGS. Not later than the 60th day before the date of a hearing under Section [2703.202, 2703.203, or] 2703.206, notice of the hearing and of each item to be considered at the hearing shall be:

(1) sent directly to all parties to the previous hearing conducted under Section [2703.202, 2703.203, or] 2703.206, if the hearing was conducted as a contested case hearing; and

(2) published in the Texas Register and on the department's Internet website.

SECTION 2.07. Section 2703.208(a), Insurance Code, is amended to read as follows:

(a) An addition or amendment to the Basic Manual of Rules[, Rates,] and Forms for the Writing of Title Insurance in the State of Texas may be proposed and adopted by reference by publishing notice of the proposal or adoption by reference in the Texas Register.

SECTION 2.08. 2751.053(a), Insurance Code, is amended to read as follows:

(a) Before the commissioner may adopt forms [a premium rate may be fixed and forms adopted] for personal property title insurance under this chapter, the department must provide reasonable notice and a hearing must be afforded to title insurance companies, title insurance agents, and the public.

SECTION 2.09. Section 2751.054, Insurance Code, is amended to read as follows:

[(a)] Not later than the 90th day after the date of a hearing under Section 2751.053, the commissioner shall issue an order prescribing the [rates and] forms to be used in connection with personal property title insurance policies under this chapter.

[(b) The commissioner's order promulgating rates must be based on the evidence adduced at the hearing.]

SECTION 2.10. The heading to Section 2751.055, Insurance Code, is amended to read as follows:

Sec. 2751.055. REVISIONS TO [RATES AND] FORMS; HEARING.

SECTION 2.11. Section 2751.055(a), Insurance Code, is amended to read as follows:

(a) A title insurance company may apply to the department in the manner prescribed by the commissioner for approval of a new or revised personal property title insurance form [or a change in a rate associated with such a form]. The commissioner may approve or disapprove an application after a hearing conducted in the manner prescribed by Section 2751.053.

SECTION 2.12. The following laws are repealed:

Sections 2703.152, 2703.201, 2703.202, 2703.204, and 2751.052, Insurance Code.

ARTICLE 4. TRANSITION; EFFECTIVE DATE

SECTION 3.01. The change in law made by this Act applies only to a premium rate in effect on or after January 1, 2014. A premium rate that in effect before January 1, 2014, is governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 3.02. This Act takes effect September 1, 2014.