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.