85R11265 SMT-F
By: Muñoz, Jr. H.B. No. 4239
A BILL TO BE ENTITLED
AN ACT
relating to regulation of title insurance rates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2702.051, Insurance Code, is amended to
read as follows:
Sec. 2702.051. APPLICABILITY. This subchapter does not
apply to the closing or settlement of:
(1) a residential real property transaction regulated
by the Real Estate Settlement Procedures Act of 1974 (Pub. L.
No. 93-533) except as provided by Section 2702.054(b); or
(2) a real property transaction if the closing or
settlement is not actually handled by:
(A) a title insurance company, a title insurance
agent, or an attorney for a title insurance company or title
insurance agent; or
(B) a representative of a title insurance
company, a title insurance agent, or an attorney for a title
insurance company or title insurance agent.
SECTION 2. Section 2702.054, Insurance Code, is amended to
read as follows:
Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM
PERMITTED. (a) A title insurance company or title insurance agent
may use the uniform settlement statement form prepared under the
Real Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533)
instead of the uniform closing and settlement statement form
prescribed by the department under this subchapter.
(b) A title insurance company or title insurance agent that
uses the uniform settlement statement form permitted by Subsection
(a) in a residential real estate transaction regulated by the Real
Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533) as
the closing and settlement statement for the transaction shall
disclose on a form promulgated by the commissioner under Subsection
(c) the following information:
(1) an accurate statement of:
(A) the title insurance premium; and
(B) the amount of each portion of that premium
paid to a third party; and
(2) an itemization of all other fees and charges paid
to the settlement agent.
(c) The commissioner shall promulgate the form required by
Subsection (b).
SECTION 3. The heading to Subchapter D, Chapter 2703,
Insurance Code, is amended to read as follows:
SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES; FLEXIBLE RATE
BANDS
SECTION 4. The heading to Section 2703.151, Insurance Code,
is amended to read as follows:
Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES;
FLEXIBLE RATE BANDS.
SECTION 5. Section 2703.151, Insurance Code, is amended by
amending Subsections (a) and (c) and adding Subsection (a-1) 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 and set flexible
rate bands within which a title insurance company or title
insurance agent may charge a rate under Subchapter F for title
insurance policies or for other forms prescribed or approved by the
commissioner.
(a-1) The flexible rate band set under Subsection (a) must
be a range that is a maximum percentage above and a maximum
percentage below the rate fixed and promulgated under that
subsection.
(c) Except as provided by Subsection (b) and Subchapter F
[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 the commissioner.
SECTION 6. Section 2703.152, Insurance Code, is amended to
read as follows:
Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM RATES
AND SETTING FLEXIBLE RATE BANDS. (a) In fixing premium rates and
setting flexible rate bands, the commissioner shall:
(1) consider all relevant income and expenses of title
insurance companies and title insurance agents attributable to
engaging in the business of title insurance in this state; and
(2) consider and promote the availability and
affordability of title insurance, increased efficiency in title
operations, and price competition among title insurance companies
and agents.
(b) The premium rates fixed and flexible rate bands set by
the commissioner must be:
(1) reasonable and not excessive or unfairly
discriminatory as to the public; [and]
(2) nonconfiscatory as to title insurance companies
and title insurance agents; and
(3) designed to promote price competition among
insurers to provide rates and premiums that are responsive to
competitive market conditions.
SECTION 7. The heading to Section 2703.153, Insurance Code,
is amended to read as follows:
Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM RATES
AND SETTING FLEXIBLE RATE BANDS; ANNUAL STATISTICAL REPORT.
SECTION 8. Sections 2703.153(a), (c), (d), and (h),
Insurance Code, are 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 and set flexible rate
bands, a statistical report containing information relating to:
(1) loss experience;
(2) expense of operation; and
(3) other material matters.
(c) Not less frequently than once every five years, the
commissioner shall evaluate the information required under this
section to determine whether the department needs additional or
different information or no longer needs certain information to
promulgate rates and set flexible rate bands. If the department
requires a title insurance company or title insurance agent to
include new or different information in the statistical report,
that information may be considered by the commissioner in fixing
premium rates and setting flexible rate bands if the information
collected is reasonably credible for the purposes for which the
information is to be used.
(d) A title insurance company or a title insurance agent
aggrieved by a department requirement concerning the submission of
information may bring a suit in a district court in Travis County
alleging that the request for information:
(1) is unduly burdensome; or
(2) is not a request for information material to
fixing and promulgating premium rates or setting flexible rate
bands or another matter that may be the subject of the periodic
hearing and is not a request reasonably designed to lead to the
discovery of that information.
(h) The contents of the statistical report, including any
amendments to the statistical report, must be established in a
rulemaking hearing under Subchapter B, Chapter 2001, Government
Code. The requirements for reporting of income and expenses on the
statistical report shall conform to the manner in which accounting
records are normally kept in the ordinary course of business of a
title insurance company or title insurance agent.
SECTION 9. The heading to Subchapter E, Chapter 2703,
Insurance Code, is amended to read as follows:
SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES, FLEXIBLE RATE
BANDS, POLICY FORMS, AND [OTHER] RELATED MATTERS
SECTION 10. Section 2703.201, Insurance Code, is amended to
read as follows:
Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM RATE AND
SETTING FLEXIBLE RATE BAND. Before a premium rate or flexible rate
band may be fixed or set and a premium charged, the department must
provide reasonable notice and a hearing must be afforded to title
insurance companies, title insurance agents, and the public.
SECTION 11. The heading to Section 2703.202, Insurance
Code, is amended to read as follows:
Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE
OR FLEXIBLE RATE BAND.
SECTION 12. Sections 2703.202(a), (b), (d), (e), (l), (m),
and (o), Insurance Code, are amended to read as follows:
(a) A premium rate or a flexible rate band previously fixed
or set by the commissioner may not be changed until after the
commissioner holds a public hearing.
(b) The commissioner shall order a public hearing to
consider changing a premium rate or flexible rate band, including
fixing a new premium rate or setting a new flexible rate band, in
response to a written request of an interested person [:
[(1) a title insurance company;
[(2) an association composed of at least 50 percent of
the number of title insurance agents and title insurance companies
licensed or authorized by the department;
[(3) an association composed of at least 20 percent of
the number of title insurance agents licensed or authorized by the
department; or
[(4) the office of public insurance counsel].
(d) Notwithstanding Subsection (c), a public hearing held
under Subsection (a) or under Section 2703.206 must be conducted by
the commissioner as a contested case hearing under Subchapters C
through H and Subchapter Z, Chapter 2001, Government Code, at the
request of an interested person [:
[(1) a title insurance company;
[(2) an association composed of at least 50 percent of
the number of title insurance agents and title insurance companies
licensed or authorized by the department;
[(3) an association composed of at least 20 percent of
the number of title insurance agents licensed or authorized by the
department; or
[(4) the office of public insurance counsel].
(e) Information received or requested by the commissioner
as part of an individual audit or examination under Chapters 2602
and 2651 may not be used for rate or flexible rate band setting
under Subchapter D, Chapter 2703. Nothing in this section
prohibits a party from conducting discovery in a ratemaking or
other proceeding or producing other information requested by the
department, or verifying the data reported under a statistical plan
or report promulgated by the commissioner.
(l) Subject to Subsection (m), if the commissioner fails to
comply with the requirements under Subsection (g) or (h)(6), a
combination of at least three interested [associations,] persons[,
or entities listed in Subsection (b)] may jointly petition a
district court of Travis County to adopt a rate or flexible rate
band based on the record made in the hearing before the commissioner
under this section.
(m) If the record made in the hearing before the
commissioner is not complete before the request for the court to
adopt a premium rate or flexible rate band under Subsection (l), the
court shall hold an evidentiary hearing to establish a record
before adopting the premium rate or flexible rate band.
(o) A district court may appoint a magistrate to adopt a
rate or flexible rate band under this section.
SECTION 13. Sections 2703.203, 2703.204, and 2703.206,
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 or flexible rate bands and other
matters relating to regulating the business of title insurance that
an interested person [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. 2703.204. ADMISSION AS PARTY TO PERIODIC HEARING.
(a) Subject to this section, an interested [a trade association
whose membership is composed of at least 20 percent of the members
of an industry or group represented by the trade association, an
association, a] person [or entity described by Section
2703.202(b),] or department staff shall be admitted as a party to
the periodic hearing under Section 2703.203.
(b) A party to any portion of the periodic hearing relating
to ratemaking or the setting of a flexible rate band may request
that the commissioner remove any other party to that portion of the
hearing on the grounds that the other party does not have a
substantial interest in title insurance. A decision of the
commission to deny or grant the request is final and subject to
appeal in accordance with Section 36.202.
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 or flexible rate bands and
other matters relating to regulating the business of title
insurance as the commissioner determines necessary or proper.
SECTION 14. Chapter 2703, Insurance Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. FLEXIBLE RATING
Sec. 2703.301. FLEXIBLE RATING. (a) A title insurance
company may file with the commissioner to use a premium rate within
the flexible rate band set by the commissioner under Section
2703.151.
(b) A rate filed under this section:
(1) must be filed with actuarial support and any other
information required by the commissioner by rule; and
(2) may not be excessive, inadequate, or unfairly
discriminatory for the risks to which the rate applies.
(c) A rate filed under this section is effective until the
earlier of the effective date of a rate subsequently filed under
this section or a rate fixed and promulgated by the commissioner
under Section 2703.151.
(d) After a rate is fixed and promulgated under Section
2703.151, a title insurance company shall:
(1) file rates under this section; or
(2) notify the commissioner in writing that the
company will use the promulgated and fixed rate.
(e) The commissioner by rule shall adopt procedures for a
rate filing under this section.
Sec. 2703.302. DISAPPROVAL OF RATE IN FLEXIBLE RATE FILING;
HEARING. (a) Subject to Section 2703.303, the commissioner shall
disapprove a rate if the commissioner determines that the rate
filing made under this subchapter does not meet the standards
prescribed by Section 2703.301(b).
(b) If the commissioner disapproves a filing, the
commissioner shall issue an order specifying in what respects the
filing fails to meet the requirements of this subchapter.
(c) The filer is entitled to a hearing on written request
made to the commissioner not later than the 30th day after the date
the order disapproving the rate filing under this subchapter takes
effect.
Sec. 2703.303. DISAPPROVAL OF RATE IN EFFECT; HEARING. (a)
The commissioner may disapprove a rate filed under Section 2703.301
that is in effect only after a hearing before the commissioner. The
commissioner shall provide the filer written notice of the hearing
not later than the 20th day before the date of the hearing.
(b) An order disapproving a rate filed under Section
2703.301 that is in effect must be issued not later than the 15th
day after the date of the close of the hearing. The order must:
(1) specify in what respects the rate or rate filing
fails to meet the requirements of this subchapter; and
(2) state the date on which further use of the rate is
prohibited, which may not be earlier than the 45th day after the
date of the close of the hearing under this section.
Sec. 2703.304. GRIEVANCE. (a) An insured, underwriter, or
agent who is aggrieved with respect to a rate filed under Section
2703.301 that is in effect, or the public insurance counsel, may
apply to the commissioner in writing for a hearing on the filing.
The application must specify the grounds for the applicant's
grievance.
(b) The commissioner shall hold a hearing on an application
filed under Subsection (a) not later than the 30th day after the
date the commissioner receives the application if the commissioner
determines that:
(1) the application is made in good faith;
(2) the applicant would be aggrieved as alleged if the
grounds specified in the application were established; and
(3) the grounds specified in the application otherwise
justify holding the hearing.
(c) The commissioner shall provide written notice of a
hearing under Subsection (b) to the applicant and each insurer that
made the filing not later than the 10th day before the date of the
hearing.
(d) If, after the hearing, the commissioner determines that
the rate filing under Section 2703.301 does not meet the
requirements of this subchapter, the commissioner shall issue an
order:
(1) specifying in what respects the rate filing fails
to meet the requirements of this subchapter; and
(2) stating the date on which the rate is no longer in
effect, which must be within a reasonable period after the date of
the order.
(e) The commissioner shall send copies of the order issued
under Subsection (d) to the applicant and each affected insurer.
Sec. 2703.305. PUBLIC INFORMATION. A filing made and any
supporting information filed under this subchapter, as of the date
the filing is received by the department:
(1) is public information;
(2) is not subject to any exceptions to disclosure
under Chapter 552, Government Code; and
(3) cannot be withheld from disclosure under any other
law.
SECTION 15. Section 2702.054, Insurance Code, as amended by
this Act, applies only to a residential real estate transaction
that closes on or after January 1, 2018. A residential real estate
transaction that closes before January 1, 2018, is governed by the
law as it existed immediately before the effective date of this Act,
and that law is continued in effect for that purpose.
SECTION 16. Section 2703.153(h), Insurance Code, as amended
by this Act, applies only to an annual statistical report issued on
or after January 1, 2018. An annual statistical report issued
before January 1, 2018, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 17. Subchapter F, Chapter 2703, Insurance Code, as
added by this Act, applies only to a title insurance premium rate
effective on or after January 1, 2018. A title insurance premium
rate effective before January 1, 2018, is governed by the law as it
existed immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
SECTION 18. The commissioner of insurance shall hold a
public hearing to set the initial flexible rate band under Section
2703.151, Insurance Code, as amended by this Act, and any other
related matters not later than January 1, 2018.
SECTION 19. This Act takes effect September 1, 2017.