Texas 2015 - 84th Regular

Texas Senate Bill SB572 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Eltife S.B. No. 572
2		-	(Sheets)
	1	+	S.B. No. 572
3	2
4	3
5		-	A BILL TO BE ENTITLED
6	4		AN ACT
7	5		relating to certain title insurance policy liability and
8	6		reinsurance requirements.
9	7		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	8		SECTION 1. Section 2551.301, Insurance Code, is amended to
11	9		read as follows:
12	10		Sec. 2551.301. MAXIMUM POLICY LIABILITY. (a) Except as
13	11		provided by Subsection (b), a title insurance company may [not]
14	12		issue a title insurance policy on any real property located in this
15	13		state involving a potential policy liability of not more than 50
16	14		percent of the sum of the company's [capital stock and] surplus as
17	15		regards policyholders and the company's statutory premium reserves
18	16		as stated in the most recent annual statement of the company.
19	17		(b) A title insurance company may exceed the limit described
20	18		by Subsection (a) if the excess liability is reinsured in due course
21	19		in accordance with Section 2551.302, 2551.305, or 2551.3055 [an
22	20		authorized title insurance company].
23	21		SECTION 2. Section 2551.302, Insurance Code, is amended to
24	22		read as follows:
25	23		Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES. A
26	24		title insurance company may reinsure any of its policies and
27	25		contracts issued on real property located in this state or on
28	26		policies and contracts issued in this state under Chapter 2751, if:
29	27		(1) the reinsuring title insurance company is
30	28		authorized to engage in business in this state under this title; or
31	29		(2) the title insurance company acquires reinsurance
32	30		in accordance with Section 2551.305 or 2551.3055.
33	31		SECTION 3. Subchapter G, Chapter 2551, Insurance Code, is
34	32		amended by amending Section 2551.305 and adding Section 2551.3055
35	33		to read as follows:
36	34		Sec. 2551.305. [CERTAIN] REINSURANCE FROM NON-ADMITTED
37	35		TITLE INSURER [ALLOWED]. [(a)] Notwithstanding any other
38	36		provision of this subchapter, a title insurance company may acquire
39	37		reinsurance on an individual policy or facultative basis from a
40	38		title insurance company not authorized to engage in the business of
41	39		title insurance in this state if[:
42	40		[(1)] the title insurance company from which the
43	41		reinsurance is acquired:
44	42		(1) [(A)] has a combined capital and surplus of at
45	43		least $20 million as stated in the company's most recent annual
46	44		statement preceding the acceptance of reinsurance; and
47	45		(2) [(B)] is domiciled in another state and is
48	46		authorized to engage in the business of title insurance in one or
49	47		more states[; and
50	48		[(2) the title insurance company acquiring
51	49		reinsurance gives written notice to the department at least 30 days
52	50		before acquiring the reinsurance, and the commissioner does not,
53	51		before the expiration of the 30-day period and on the ground that
54	52		the transaction may result in a hazardous financial condition,
55	53		prohibit the title insurance company from obtaining reinsurance
56	54		under this section.
57	55		[(b) The notice required under Subsection (a)(2) must
58	56		provide sufficient information to enable the commissioner to
59	57		evaluate the proposed transaction, including a summary of the
60	58		significant terms of the reinsurance, the financial impact of the
61	59		transaction on the title insurance company acquiring reinsurance,
62	60		and the specific identity and state of domicile of each title
63	61		insurance company from which reinsurance is acquired.
64	62		[(c) Notwithstanding any other provision of this
65	63		subchapter, the department may, on application and hearing, permit
66	64		a title insurance company to acquire reinsurance that does not
67	65		comply with Subsection (a) on an individual policy or facultative
68	66		basis from a title insurance company domiciled in another state and
69	67		not authorized to engage in the business of title insurance in this
70	68		state, if:
71	69		[(1) the company has exhausted the opportunity to
72	70		acquire reinsurance from all other authorized title insurance
73	71		companies; and
74	72		[(2) the title insurance company from which the
75	73		reinsurance is acquired has a combined capital and surplus of at
76	74		least $2 million as stated in its annual statement preceding the
77	75		acceptance of reinsurance.
78	76		[(d) Notwithstanding any other provision of this
79	77		subchapter, the department may, on application and hearing, permit
80	78		a title insurance company, including an authorized reinsuring title
81	79		insurance company, to retain an additional potential liability of
82	80		not more than 40 percent of the company's capital stock and surplus
83	81		as stated in the most recent annual statement of the company, if:
84	82		[(1) the company has exhausted the opportunity to
85	83		acquire reinsurance under Subsection (c); and
86	84		[(2) the additional potential liability of the company
87	85		is incurred only if the loss suffered by the insured under the
88	86		policy exceeds the amount of insurance and reinsurance accepted by
89	87		the company and its reinsuring title insurance companies under the
90	88		other provisions of this subchapter].
91	89		Sec. 2551.3055. REINSURANCE FROM INSURER OTHER THAN TITLE
92	90		INSURER. [(e)] Notwithstanding any other provision of this
93	91		subchapter, a title insurance company may obtain reinsurance by a
94	92		reinsurance treaty or other reinsurance agreement from an assuming
95	93		insurer with a financial strength rating of B+ or better from the A.
96	94		M. Best Company, which reinsurance [that] meets the requirements of
97	95		Subchapter C, Chapter 493, if the title insurance company has
98	96		provided the department with notice [an affidavit] that:
99	97		(1) contains representations [facts] that
100	98		[demonstrate] the title insurance company was unable after diligent
101	99		effort to procure sufficient reinsurance from another title
102	100		insurance company; and
103	101		(2) summarizes [states] the terms of the reinsurance
104	102		treaty or other reinsurance agreement that the title insurance
105	103		company will obtain.
106	104		SECTION 4. Section 2703.001(c), Insurance Code, is amended
107	105		to read as follows:
108	106		(c) With respect to real property located in this state, a
109	107		corporation may not issue any kind of title insurance coverage, any
110	108		kind of guarantee, or reinsurance of a risk assumed under a title
111	109		insurance policy, except as provided by Section 2551.305 or
112	110		2551.3055 [2551.305(a)], unless the corporation is authorized to
113	111		engage in the business of title insurance under this title and
114	112		otherwise complies with this title. In engaging in the business of
115	113		title insurance with respect to real property located in this
116	114		state, the corporation shall comply with this title and rules
117	115		described by Subsection (b), including when:
118	116		(1) issuing any kind of title insurance policy or an
119	117		underwriting contract;
120	118		(2) reinsuring any portion of a risk assumed under a
121	119		title insurance policy; and
122	120		(3) deleting a title insurance policy exclusion.
123	121		SECTION 5. (a) Section 2551.301, Insurance Code, as
124	122		amended by this Act, applies only to a title insurance policy issued
125	123		on or after the effective date of this Act. A title insurance
126	124		policy issued before the effective date of this Act is governed by
127	125		the law as it existed immediately before the effective date of this
128	126		Act, and the former law is continued in effect for that purpose.
129	127		(b) Sections 2551.302 and 2551.305, Insurance Code, as
130	128		amended by this Act, and Section 2551.3055, Insurance Code, as
131	129		added by this Act, apply only to a reinsurance contract entered into
132	130		by a title insurance company on or after the effective date of this
133	131		Act. A reinsurance contract entered into by a title insurance
134	132		company before the effective date of this Act is governed by the law
135	133		as it existed immediately before the effective date of this Act, and
136	134		the former law is continued in effect for that purpose.
137	135		SECTION 6. This Act takes effect September 1, 2015.
	136	+	______________________________ ______________________________
	137	+	President of the Senate Speaker of the House
	138	+	I hereby certify that S.B. No. 572 passed the Senate on
	139	+	April 9, 2015, by the following vote: Yeas 31, Nays 0.
	140	+	______________________________
	141	+	Secretary of the Senate
	142	+	I hereby certify that S.B. No. 572 passed the House on
	143	+	May 6, 2015, by the following vote: Yeas 143, Nays 0,
	144	+	four present not voting.
	145	+	______________________________
	146	+	Chief Clerk of the House
	147	+	Approved:
	148	+	______________________________
	149	+	Date
	150	+	______________________________
	151	+	Governor