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A BILL TO BE ENTITLED
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AN ACT
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relating to regulation of title insurance rates. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2702.051, Insurance Code, is amended to |
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read as follows: |
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Sec. 2702.051. APPLICABILITY. This subchapter does not |
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apply to the closing or settlement of: |
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(1) a residential real property transaction regulated |
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by the Real Estate Settlement Procedures Act of 1974 (Pub. L. |
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No. 93-533) except as provided by Section 2702.054(b); or |
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(2) a real property transaction if the closing or |
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settlement is not actually handled by: |
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(A) a title insurance company, a title insurance |
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agent, or an attorney for a title insurance company or title |
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insurance agent; or |
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(B) a representative of a title insurance |
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company, a title insurance agent, or an attorney for a title |
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insurance company or title insurance agent. |
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SECTION 2. Section 2702.054, Insurance Code, is amended to |
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read as follows: |
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Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM |
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PERMITTED. (a) A title insurance company or title insurance agent |
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may use the uniform settlement statement form prepared under the |
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Real Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533) |
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instead of the uniform closing and settlement statement form |
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prescribed by the department under this subchapter. |
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(b) A title insurance company or title insurance agent that |
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uses the uniform settlement statement form permitted by Subsection |
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(a) in a residential real estate transaction regulated by the Real |
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Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533) as |
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the closing and settlement statement for the transaction shall |
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disclose on a form promulgated by the commissioner under Subsection |
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(c) the following information: |
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(1) an accurate statement of: |
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(A) the title insurance premium; and |
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(B) the amount of each portion of that premium |
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paid to a third party; and |
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(2) an itemization of all other fees and charges paid |
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to the settlement agent. |
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(c) The commissioner shall promulgate the form required by |
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Subsection (b). |
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SECTION 3. The heading to Subchapter D, Chapter 2703, |
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Insurance Code, is amended to read as follows: |
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SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES; FLEXIBLE RATE |
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BANDS |
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SECTION 4. The heading to Section 2703.151, Insurance Code, |
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is amended to read as follows: |
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Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES; |
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FLEXIBLE RATE BANDS. |
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SECTION 5. Section 2703.151, Insurance Code, is amended by |
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amending Subsections (a) and (c) and adding Subsection (a-1) to |
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read as follows: |
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(a) Except as provided by Subsection (b), the commissioner |
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shall fix and promulgate the premium rates to be charged by a title |
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insurance company or by a title insurance agent and set flexible |
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rate bands within which a title insurance company or title |
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insurance agent may charge a rate under Subchapter F for title |
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insurance policies or for other forms prescribed or approved by the |
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commissioner. |
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(a-1) The flexible rate band set under Subsection (a) must |
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be a range that is a maximum percentage above and a maximum |
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percentage below the rate fixed and promulgated under that |
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subsection. |
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(c) Except as provided by Subsection (b) and Subchapter F |
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[for a premium charged for reinsurance], a premium may not be |
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charged for a title insurance policy or for another prescribed or |
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approved form at a rate different than the rate fixed and |
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promulgated by the commissioner. |
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SECTION 6. Section 2703.152, Insurance Code, is amended to |
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read as follows: |
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Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM RATES |
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AND SETTING FLEXIBLE RATE BANDS. (a) In fixing premium rates and |
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setting flexible rate bands, the commissioner shall: |
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(1) consider all relevant income and expenses of title |
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insurance companies and title insurance agents attributable to |
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engaging in the business of title insurance in this state; and |
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(2) consider and promote the availability and |
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affordability of title insurance, increased efficiency in title |
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operations, and price competition among title insurance companies |
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and agents. |
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(b) The premium rates fixed and flexible rate bands set by |
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the commissioner must be: |
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(1) reasonable and not excessive or unfairly |
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discriminatory as to the public; [and] |
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(2) nonconfiscatory as to title insurance companies |
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and title insurance agents; and |
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(3) designed to promote price competition among |
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insurers to provide rates and premiums that are responsive to |
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competitive market conditions. |
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SECTION 7. The heading to Section 2703.153, Insurance Code, |
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is amended to read as follows: |
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Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM RATES |
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AND SETTING FLEXIBLE RATE BANDS; ANNUAL STATISTICAL REPORT. |
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SECTION 8. Sections 2703.153(a), (c), (d), and (h), |
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Insurance Code, are amended to read as follows: |
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(a) Each title insurance company and title insurance agent |
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engaged in the business of title insurance in this state shall |
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annually submit to the department, as required by the department to |
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collect data to use to fix premium rates and set flexible rate |
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bands, a statistical report containing information relating to: |
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(1) loss experience; |
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(2) expense of operation; and |
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(3) other material matters. |
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(c) Not less frequently than once every five years, the |
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commissioner shall evaluate the information required under this |
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section to determine whether the department needs additional or |
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different information or no longer needs certain information to |
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promulgate rates and set flexible rate bands. If the department |
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requires a title insurance company or title insurance agent to |
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include new or different information in the statistical report, |
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that information may be considered by the commissioner in fixing |
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premium rates and setting flexible rate bands if the information |
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collected is reasonably credible for the purposes for which the |
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information is to be used. |
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(d) A title insurance company or a title insurance agent |
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aggrieved by a department requirement concerning the submission of |
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information may bring a suit in a district court in Travis County |
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alleging that the request for information: |
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(1) is unduly burdensome; or |
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(2) is not a request for information material to |
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fixing and promulgating premium rates or setting flexible rate |
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bands or another matter that may be the subject of the periodic |
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hearing and is not a request reasonably designed to lead to the |
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discovery of that information. |
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(h) The contents of the statistical report, including any |
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amendments to the statistical report, must be established in a |
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rulemaking hearing under Subchapter B, Chapter 2001, Government |
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Code. The requirements for reporting of income and expenses on the |
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statistical report shall conform to the manner in which accounting |
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records are normally kept in the ordinary course of business of a |
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title insurance company or title insurance agent. |
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SECTION 9. The heading to Subchapter E, Chapter 2703, |
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Insurance Code, is amended to read as follows: |
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SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES, FLEXIBLE RATE |
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BANDS, POLICY FORMS, AND [OTHER] RELATED MATTERS |
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SECTION 10. Section 2703.201, Insurance Code, is amended to |
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read as follows: |
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Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM RATE AND |
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SETTING FLEXIBLE RATE BAND. Before a premium rate or flexible rate |
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band may be fixed or set and a premium charged, the department must |
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provide reasonable notice and a hearing must be afforded to title |
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insurance companies, title insurance agents, and the public. |
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SECTION 11. The heading to Section 2703.202, Insurance |
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Code, is amended to read as follows: |
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Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE |
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OR FLEXIBLE RATE BAND. |
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SECTION 12. Sections 2703.202(a), (b), (d), (e), (l), (m), |
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and (o), Insurance Code, are amended to read as follows: |
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(a) A premium rate or a flexible rate band previously fixed |
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or set by the commissioner may not be changed until after the |
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commissioner holds a public hearing. |
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(b) The commissioner shall order a public hearing to |
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consider changing a premium rate or flexible rate band, including |
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fixing a new premium rate or setting a new flexible rate band, in |
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response to a written request of an interested person [:
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[(1) a title insurance company;
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[(2)
an association composed of at least 50 percent of
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the number of title insurance agents and title insurance companies
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licensed or authorized by the department;
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[(3)
an association composed of at least 20 percent of
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the number of title insurance agents licensed or authorized by the
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department; or
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[(4) the office of public insurance counsel]. |
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(d) Notwithstanding Subsection (c), a public hearing held |
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under Subsection (a) or under Section 2703.206 must be conducted by |
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the commissioner as a contested case hearing under Subchapters C |
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through H and Subchapter Z, Chapter 2001, Government Code, at the |
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request of an interested person [:
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[(1) a title insurance company;
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[(2)
an association composed of at least 50 percent of
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the number of title insurance agents and title insurance companies
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licensed or authorized by the department;
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[(3)
an association composed of at least 20 percent of
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the number of title insurance agents licensed or authorized by the
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department; or
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[(4) the office of public insurance counsel]. |
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(e) Information received or requested by the commissioner |
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as part of an individual audit or examination under Chapters 2602 |
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and 2651 may not be used for rate or flexible rate band setting |
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under Subchapter D, Chapter 2703. Nothing in this section |
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prohibits a party from conducting discovery in a ratemaking or |
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other proceeding or producing other information requested by the |
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department, or verifying the data reported under a statistical plan |
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or report promulgated by the commissioner. |
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(l) Subject to Subsection (m), if the commissioner fails to |
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comply with the requirements under Subsection (g) or (h)(6), a |
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combination of at least three interested [associations,] persons[,
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or entities listed in Subsection (b)] may jointly petition a |
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district court of Travis County to adopt a rate or flexible rate |
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band based on the record made in the hearing before the commissioner |
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under this section. |
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(m) If the record made in the hearing before the |
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commissioner is not complete before the request for the court to |
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adopt a premium rate or flexible rate band under Subsection (l), the |
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court shall hold an evidentiary hearing to establish a record |
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before adopting the premium rate or flexible rate band. |
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(o) A district court may appoint a magistrate to adopt a |
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rate or flexible rate band under this section. |
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SECTION 13. Sections 2703.203, 2703.204, and 2703.206, |
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Insurance Code, are amended to read as follows: |
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Sec. 2703.203. PERIODIC HEARING. The commissioner shall |
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hold a public hearing not earlier than July 1 after the fifth |
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anniversary of the closing of a hearing held under this chapter to |
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consider adoption of premium rates or flexible rate bands and other |
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matters relating to regulating the business of title insurance that |
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an interested person [association, title insurance company, title
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insurance agent, or member of the public] admitted as a party under |
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Section 2703.204 requests to be considered or that the commissioner |
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determines necessary to consider. |
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Sec. 2703.204. ADMISSION AS PARTY TO PERIODIC HEARING. |
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(a) Subject to this section, an interested [a trade association
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whose membership is composed of at least 20 percent of the members
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of an industry or group represented by the trade association, an
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association, a] person [or entity described by Section
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2703.202(b),] or department staff shall be admitted as a party to |
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the periodic hearing under Section 2703.203. |
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(b) A party to any portion of the periodic hearing relating |
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to ratemaking or the setting of a flexible rate band may request |
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that the commissioner remove any other party to that portion of the |
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hearing on the grounds that the other party does not have a |
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substantial interest in title insurance. A decision of the |
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commission to deny or grant the request is final and subject to |
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appeal in accordance with Section 36.202. |
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Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS AS |
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NECESSARY. At any time, the commissioner may order a public hearing |
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to consider adoption of premium rates or flexible rate bands and |
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other matters relating to regulating the business of title |
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insurance as the commissioner determines necessary or proper. |
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SECTION 14. Chapter 2703, Insurance Code, is amended by |
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adding Subchapter F to read as follows: |
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SUBCHAPTER F. FLEXIBLE RATING |
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Sec. 2703.301. FLEXIBLE RATING. (a) A title insurance |
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company may file with the commissioner to use a premium rate within |
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the flexible rate band set by the commissioner under Section |
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2703.151. |
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(b) A rate filed under this section: |
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(1) must be filed with actuarial support and any other |
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information required by the commissioner by rule; and |
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(2) may not be excessive, inadequate, or unfairly |
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discriminatory for the risks to which the rate applies. |
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(c) A rate filed under this section is effective until the |
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earlier of the effective date of a rate subsequently filed under |
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this section or a rate fixed and promulgated by the commissioner |
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under Section 2703.151. |
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(d) After a rate is fixed and promulgated under Section |
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2703.151, a title insurance company shall: |
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(1) file rates under this section; or |
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(2) notify the commissioner in writing that the |
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company will use the promulgated and fixed rate. |
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(e) The commissioner by rule shall adopt procedures for a |
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rate filing under this section. |
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Sec. 2703.302. DISAPPROVAL OF RATE IN FLEXIBLE RATE FILING; |
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HEARING. (a) Subject to Section 2703.303, the commissioner shall |
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disapprove a rate if the commissioner determines that the rate |
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filing made under this subchapter does not meet the standards |
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prescribed by Section 2703.301(b). |
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(b) If the commissioner disapproves a filing, the |
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commissioner shall issue an order specifying in what respects the |
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filing fails to meet the requirements of this subchapter. |
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(c) The filer is entitled to a hearing on written request |
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made to the commissioner not later than the 30th day after the date |
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the order disapproving the rate filing under this subchapter takes |
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effect. |
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Sec. 2703.303. DISAPPROVAL OF RATE IN EFFECT; HEARING. (a) |
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The commissioner may disapprove a rate filed under Section 2703.301 |
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that is in effect only after a hearing before the commissioner. The |
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commissioner shall provide the filer written notice of the hearing |
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not later than the 20th day before the date of the hearing. |
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(b) An order disapproving a rate filed under Section |
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2703.301 that is in effect must be issued not later than the 15th |
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day after the date of the close of the hearing. The order must: |
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(1) specify in what respects the rate or rate filing |
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fails to meet the requirements of this subchapter; and |
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(2) state the date on which further use of the rate is |
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prohibited, which may not be earlier than the 45th day after the |
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date of the close of the hearing under this section. |
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Sec. 2703.304. GRIEVANCE. (a) An insured, underwriter, or |
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agent who is aggrieved with respect to a rate filed under Section |
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2703.301 that is in effect, or the public insurance counsel, may |
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apply to the commissioner in writing for a hearing on the filing. |
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The application must specify the grounds for the applicant's |
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grievance. |
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(b) The commissioner shall hold a hearing on an application |
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filed under Subsection (a) not later than the 30th day after the |
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date the commissioner receives the application if the commissioner |
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determines that: |
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(1) the application is made in good faith; |
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(2) the applicant would be aggrieved as alleged if the |
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grounds specified in the application were established; and |
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(3) the grounds specified in the application otherwise |
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justify holding the hearing. |
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(c) The commissioner shall provide written notice of a |
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hearing under Subsection (b) to the applicant and each insurer that |
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made the filing not later than the 10th day before the date of the |
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hearing. |
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(d) If, after the hearing, the commissioner determines that |
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the rate filing under Section 2703.301 does not meet the |
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requirements of this subchapter, the commissioner shall issue an |
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order: |
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(1) specifying in what respects the rate filing fails |
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to meet the requirements of this subchapter; and |
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(2) stating the date on which the rate is no longer in |
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effect, which must be within a reasonable period after the date of |
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the order. |
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(e) The commissioner shall send copies of the order issued |
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under Subsection (d) to the applicant and each affected insurer. |
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Sec. 2703.305. PUBLIC INFORMATION. A filing made and any |
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supporting information filed under this subchapter, as of the date |
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the filing is received by the department: |
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(1) is public information; |
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(2) is not subject to any exceptions to disclosure |
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under Chapter 552, Government Code; and |
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(3) cannot be withheld from disclosure under any other |
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law. |
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SECTION 15. Section 2702.054, Insurance Code, as amended by |
|
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this Act, applies only to a residential real estate transaction |
|
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that closes on or after January 1, 2018. A residential real estate |
|
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transaction that closes before January 1, 2018, is governed by the |
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law as it existed immediately before the effective date of this Act, |
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and that law is continued in effect for that purpose. |
|
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SECTION 16. Section 2703.153(h), Insurance Code, as amended |
|
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by this Act, applies only to an annual statistical report issued on |
|
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or after January 1, 2018. An annual statistical report issued |
|
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before January 1, 2018, is governed by the law as it existed |
|
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 17. Subchapter F, Chapter 2703, Insurance Code, as |
|
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added by this Act, applies only to a title insurance premium rate |
|
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effective on or after January 1, 2018. A title insurance premium |
|
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rate effective before January 1, 2018, is governed by the law as it |
|
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existed immediately before the effective date of this Act, and that |
|
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law is continued in effect for that purpose. |
|
|
SECTION 18. The commissioner of insurance shall hold a |
|
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public hearing to set the initial flexible rate band under Section |
|
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2703.151, Insurance Code, as amended by this Act, and any other |
|
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related matters not later than January 1, 2018. |
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SECTION 19. This Act takes effect September 1, 2017. |