Texas 2015 - 84th Regular

Texas House Bill HB1357 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	84R14560 LED-F
2	2	By: Sheets H.B. No. 1357
3	3	Substitute the following for H.B. No. 1357:
4	4	By: Meyer C.S.H.B. No. 1357
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to certain title insurance policy liability and
10	10	reinsurance requirements.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 2551.301, Insurance Code, is amended to
13	13	read as follows:
14	14	Sec. 2551.301. MAXIMUM POLICY LIABILITY. (a) Except as
15	15	provided by Subsection (b), a title insurance company may [not]
16	16	issue a title insurance policy on any real property located in this
17	17	state involving a potential policy liability of not more than 50
18	18	percent of the sum of the company's [capital stock and] surplus as
19	19	regards policyholders and the company's statutory premium reserves
20	20	as stated in the most recent annual statement of the company.
21	21	(b) A title insurance company may exceed the limit described
22	22	by Subsection (a) if the excess liability is reinsured in due course
23	23	in accordance with Section 2551.302, 2551.305, or 2551.3055 [an
24	24	authorized title insurance company].
25	25	SECTION 2. Section 2551.302, Insurance Code, is amended to
26	26	read as follows:
27	27	Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES. A
28	28	title insurance company may reinsure any of its policies and
29	29	contracts issued on real property located in this state or on
30	30	policies and contracts issued in this state under Chapter 2751, if:
31	31	(1) the reinsuring title insurance company is
32	32	authorized to engage in business in this state under this title; or
33	33	(2) the title insurance company acquires reinsurance
34	34	in accordance with Section 2551.305 or 2551.3055.
35	35	SECTION 3. Subchapter G, Chapter 2551, Insurance Code, is
36	36	amended by amending Section 2551.305 and adding Section 2551.3055
37	37	to read as follows:
38	38	Sec. 2551.305. [CERTAIN] REINSURANCE FROM NON-ADMITTED
39	39	TITLE INSURER [ALLOWED]. [(a)] Notwithstanding any other
40	40	provision of this subchapter, a title insurance company may acquire
41	41	reinsurance on an individual policy or facultative basis from a
42	42	title insurance company not authorized to engage in the business of
43	43	title insurance in this state if[:
44	44	[(1)] the title insurance company from which the
45	45	reinsurance is acquired:
46	46	(1) [(A)] has a combined capital and surplus of at
47	47	least $20 million as stated in the company's most recent annual
48	48	statement preceding the acceptance of reinsurance; and
49	49	(2) [(B)] is domiciled in another state and is
50	50	authorized to engage in the business of title insurance in one or
51	51	more states[; and
52	52	[(2) the title insurance company acquiring
53	53	reinsurance gives written notice to the department at least 30 days
54	54	before acquiring the reinsurance, and the commissioner does not,
55	55	before the expiration of the 30-day period and on the ground that
56	56	the transaction may result in a hazardous financial condition,
57	57	prohibit the title insurance company from obtaining reinsurance
58	58	under this section.
59	59	[(b) The notice required under Subsection (a)(2) must
60	60	provide sufficient information to enable the commissioner to
61	61	evaluate the proposed transaction, including a summary of the
62	62	significant terms of the reinsurance, the financial impact of the
63	63	transaction on the title insurance company acquiring reinsurance,
64	64	and the specific identity and state of domicile of each title
65	65	insurance company from which reinsurance is acquired.
66	66	[(c) Notwithstanding any other provision of this
67	67	subchapter, the department may, on application and hearing, permit
68	68	a title insurance company to acquire reinsurance that does not
69	69	comply with Subsection (a) on an individual policy or facultative
70	70	basis from a title insurance company domiciled in another state and
71	71	not authorized to engage in the business of title insurance in this
72	72	state, if:
73	73	[(1) the company has exhausted the opportunity to
74	74	acquire reinsurance from all other authorized title insurance
75	75	companies; and
76	76	[(2) the title insurance company from which the
77	77	reinsurance is acquired has a combined capital and surplus of at
78	78	least $2 million as stated in its annual statement preceding the
79	79	acceptance of reinsurance.
80	80	[(d) Notwithstanding any other provision of this
81	81	subchapter, the department may, on application and hearing, permit
82	82	a title insurance company, including an authorized reinsuring title
83	83	insurance company, to retain an additional potential liability of
84	84	not more than 40 percent of the company's capital stock and surplus
85	85	as stated in the most recent annual statement of the company, if:
86	86	[(1) the company has exhausted the opportunity to
87	87	acquire reinsurance under Subsection (c); and
88	88	[(2) the additional potential liability of the company
89	89	is incurred only if the loss suffered by the insured under the
90	90	policy exceeds the amount of insurance and reinsurance accepted by
91	91	the company and its reinsuring title insurance companies under the
92	92	other provisions of this subchapter].
93	93	Sec. 2551.3055. REINSURANCE FROM INSURER OTHER THAN TITLE
94	94	INSURER. [(e)] Notwithstanding any other provision of this
95	95	subchapter, a title insurance company may obtain reinsurance by a
96	96	reinsurance treaty or other reinsurance agreement from an assuming
97	97	insurer with a financial strength rating of B+ or better from the A.
98	98	M. Best Company which reinsurance [that] meets the requirements of
99	99	Subchapter C, Chapter 493, if the title insurance company has
100	100	provided the department with notice [an affidavit] that:
101	101	(1) contains representations [facts] that
102	102	[demonstrate] the title insurance company was unable after diligent
103	103	effort to procure sufficient reinsurance from another title
104	104	insurance company; and
105	105	(2) summarizes [states] the terms of the reinsurance
106	106	treaty or other reinsurance agreement that the title insurance
107	107	company will obtain.
108	108	SECTION 4. Section 2703.001(c), Insurance Code, is amended
109	109	to read as follows:
110	110	(c) With respect to real property located in this state, a
111	111	corporation may not issue any kind of title insurance coverage, any
112	112	kind of guarantee, or reinsurance of a risk assumed under a title
113	113	insurance policy, except as provided by Section 2551.305 or
114	114	2551.3055 [2551.305(a)], unless the corporation is authorized to
115	115	engage in the business of title insurance under this title and
116	116	otherwise complies with this title. In engaging in the business of
117	117	title insurance with respect to real property located in this
118	118	state, the corporation shall comply with this title and rules
119	119	described by Subsection (b), including when:
120	120	(1) issuing any kind of title insurance policy or an
121	121	underwriting contract;
122	122	(2) reinsuring any portion of a risk assumed under a
123	123	title insurance policy; and
124	124	(3) deleting a title insurance policy exclusion.
125	125	SECTION 5. (a) Section 2551.301, Insurance Code, as
126	126	amended by this Act, applies only to a title insurance policy issued
127	127	on or after the effective date of this Act. A title insurance
128	128	policy issued before the effective date of this Act is governed by
129	129	the law as it existed immediately before the effective date of this
130	130	Act, and the former law is continued in effect for that purpose.
131	131	(b) Sections 2551.302 and 2551.305, Insurance Code, as
132	132	amended by this Act, and Section 2551.3055, Insurance Code, as
133	133	added by this Act, apply only to a reinsurance contract entered into
134	134	by a title insurance company on or after the effective date of this
135	135	Act. A reinsurance contract entered into by a title insurance
136	136	company before the effective date of this Act is governed by the law
137	137	as it existed immediately before the effective date of this Act, and
138	138	the former law is continued in effect for that purpose.
139	139	SECTION 6. This Act takes effect September 1, 2015.