Texas 2017 - 85th Regular

Texas House Bill HB4239 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	85R11265 SMT-F
2	2	By: Muñoz, Jr. H.B. No. 4239
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to regulation of title insurance rates.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 2702.051, Insurance Code, is amended to
10	10	read as follows:
11	11	Sec. 2702.051. APPLICABILITY. This subchapter does not
12	12	apply to the closing or settlement of:
13	13	(1) a residential real property transaction regulated
14	14	by the Real Estate Settlement Procedures Act of 1974 (Pub. L.
15	15	No. 93-533) except as provided by Section 2702.054(b); or
16	16	(2) a real property transaction if the closing or
17	17	settlement is not actually handled by:
18	18	(A) a title insurance company, a title insurance
19	19	agent, or an attorney for a title insurance company or title
20	20	insurance agent; or
21	21	(B) a representative of a title insurance
22	22	company, a title insurance agent, or an attorney for a title
23	23	insurance company or title insurance agent.
24	24	SECTION 2. Section 2702.054, Insurance Code, is amended to
25	25	read as follows:
26	26	Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM
27	27	PERMITTED. (a) A title insurance company or title insurance agent
28	28	may use the uniform settlement statement form prepared under the
29	29	Real Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533)
30	30	instead of the uniform closing and settlement statement form
31	31	prescribed by the department under this subchapter.
32	32	(b) A title insurance company or title insurance agent that
33	33	uses the uniform settlement statement form permitted by Subsection
34	34	(a) in a residential real estate transaction regulated by the Real
35	35	Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533) as
36	36	the closing and settlement statement for the transaction shall
37	37	disclose on a form promulgated by the commissioner under Subsection
38	38	(c) the following information:
39	39	(1) an accurate statement of:
40	40	(A) the title insurance premium; and
41	41	(B) the amount of each portion of that premium
42	42	paid to a third party; and
43	43	(2) an itemization of all other fees and charges paid
44	44	to the settlement agent.
45	45	(c) The commissioner shall promulgate the form required by
46	46	Subsection (b).
47	47	SECTION 3. The heading to Subchapter D, Chapter 2703,
48	48	Insurance Code, is amended to read as follows:
49	49	SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES; FLEXIBLE RATE
50	50	BANDS
51	51	SECTION 4. The heading to Section 2703.151, Insurance Code,
52	52	is amended to read as follows:
53	53	Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES;
54	54	FLEXIBLE RATE BANDS.
55	55	SECTION 5. Section 2703.151, Insurance Code, is amended by
56	56	amending Subsections (a) and (c) and adding Subsection (a-1) to
57	57	read as follows:
58	58	(a) Except as provided by Subsection (b), the commissioner
59	59	shall fix and promulgate the premium rates to be charged by a title
60	60	insurance company or by a title insurance agent and set flexible
61	61	rate bands within which a title insurance company or title
62	62	insurance agent may charge a rate under Subchapter F for title
63	63	insurance policies or for other forms prescribed or approved by the
64	64	commissioner.
65	65	(a-1) The flexible rate band set under Subsection (a) must
66	66	be a range that is a maximum percentage above and a maximum
67	67	percentage below the rate fixed and promulgated under that
68	68	subsection.
69	69	(c) Except as provided by Subsection (b) and Subchapter F
70	70	[for a premium charged for reinsurance], a premium may not be
71	71	charged for a title insurance policy or for another prescribed or
72	72	approved form at a rate different than the rate fixed and
73	73	promulgated by the commissioner.
74	74	SECTION 6. Section 2703.152, Insurance Code, is amended to
75	75	read as follows:
76	76	Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM RATES
77	77	AND SETTING FLEXIBLE RATE BANDS. (a) In fixing premium rates and
78	78	setting flexible rate bands, the commissioner shall:
79	79	(1) consider all relevant income and expenses of title
80	80	insurance companies and title insurance agents attributable to
81	81	engaging in the business of title insurance in this state; and
82	82	(2) consider and promote the availability and
83	83	affordability of title insurance, increased efficiency in title
84	84	operations, and price competition among title insurance companies
85	85	and agents.
86	86	(b) The premium rates fixed and flexible rate bands set by
87	87	the commissioner must be:
88	88	(1) reasonable and not excessive or unfairly
89	89	discriminatory as to the public; [and]
90	90	(2) nonconfiscatory as to title insurance companies
91	91	and title insurance agents; and
92	92	(3) designed to promote price competition among
93	93	insurers to provide rates and premiums that are responsive to
94	94	competitive market conditions.
95	95	SECTION 7. The heading to Section 2703.153, Insurance Code,
96	96	is amended to read as follows:
97	97	Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM RATES
98	98	AND SETTING FLEXIBLE RATE BANDS; ANNUAL STATISTICAL REPORT.
99	99	SECTION 8. Sections 2703.153(a), (c), (d), and (h),
100	100	Insurance Code, are amended to read as follows:
101	101	(a) Each title insurance company and title insurance agent
102	102	engaged in the business of title insurance in this state shall
103	103	annually submit to the department, as required by the department to
104	104	collect data to use to fix premium rates and set flexible rate
105	105	bands, a statistical report containing information relating to:
106	106	(1) loss experience;
107	107	(2) expense of operation; and
108	108	(3) other material matters.
109	109	(c) Not less frequently than once every five years, the
110	110	commissioner shall evaluate the information required under this
111	111	section to determine whether the department needs additional or
112	112	different information or no longer needs certain information to
113	113	promulgate rates and set flexible rate bands. If the department
114	114	requires a title insurance company or title insurance agent to
115	115	include new or different information in the statistical report,
116	116	that information may be considered by the commissioner in fixing
117	117	premium rates and setting flexible rate bands if the information
118	118	collected is reasonably credible for the purposes for which the
119	119	information is to be used.
120	120	(d) A title insurance company or a title insurance agent
121	121	aggrieved by a department requirement concerning the submission of
122	122	information may bring a suit in a district court in Travis County
123	123	alleging that the request for information:
124	124	(1) is unduly burdensome; or
125	125	(2) is not a request for information material to
126	126	fixing and promulgating premium rates or setting flexible rate
127	127	bands or another matter that may be the subject of the periodic
128	128	hearing and is not a request reasonably designed to lead to the
129	129	discovery of that information.
130	130	(h) The contents of the statistical report, including any
131	131	amendments to the statistical report, must be established in a
132	132	rulemaking hearing under Subchapter B, Chapter 2001, Government
133	133	Code. The requirements for reporting of income and expenses on the
134	134	statistical report shall conform to the manner in which accounting
135	135	records are normally kept in the ordinary course of business of a
136	136	title insurance company or title insurance agent.
137	137	SECTION 9. The heading to Subchapter E, Chapter 2703,
138	138	Insurance Code, is amended to read as follows:
139	139	SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES, FLEXIBLE RATE
140	140	BANDS, POLICY FORMS, AND [OTHER] RELATED MATTERS
141	141	SECTION 10. Section 2703.201, Insurance Code, is amended to
142	142	read as follows:
143	143	Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM RATE AND
144	144	SETTING FLEXIBLE RATE BAND. Before a premium rate or flexible rate
145	145	band may be fixed or set and a premium charged, the department must
146	146	provide reasonable notice and a hearing must be afforded to title
147	147	insurance companies, title insurance agents, and the public.
148	148	SECTION 11. The heading to Section 2703.202, Insurance
149	149	Code, is amended to read as follows:
150	150	Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE
151	151	OR FLEXIBLE RATE BAND.
152	152	SECTION 12. Sections 2703.202(a), (b), (d), (e), (l), (m),
153	153	and (o), Insurance Code, are amended to read as follows:
154	154	(a) A premium rate or a flexible rate band previously fixed
155	155	or set by the commissioner may not be changed until after the
156	156	commissioner holds a public hearing.
157	157	(b) The commissioner shall order a public hearing to
158	158	consider changing a premium rate or flexible rate band, including
159	159	fixing a new premium rate or setting a new flexible rate band, in
160	160	response to a written request of an interested person [:
161	161	[(1) a title insurance company;
162	162	[(2) an association composed of at least 50 percent of
163	163	the number of title insurance agents and title insurance companies
164	164	licensed or authorized by the department;
165	165	[(3) an association composed of at least 20 percent of
166	166	the number of title insurance agents licensed or authorized by the
167	167	department; or
168	168	[(4) the office of public insurance counsel].
169	169	(d) Notwithstanding Subsection (c), a public hearing held
170	170	under Subsection (a) or under Section 2703.206 must be conducted by
171	171	the commissioner as a contested case hearing under Subchapters C
172	172	through H and Subchapter Z, Chapter 2001, Government Code, at the
173	173	request of an interested person [:
174	174	[(1) a title insurance company;
175	175	[(2) an association composed of at least 50 percent of
176	176	the number of title insurance agents and title insurance companies
177	177	licensed or authorized by the department;
178	178	[(3) an association composed of at least 20 percent of
179	179	the number of title insurance agents licensed or authorized by the
180	180	department; or
181	181	[(4) the office of public insurance counsel].
182	182	(e) Information received or requested by the commissioner
183	183	as part of an individual audit or examination under Chapters 2602
184	184	and 2651 may not be used for rate or flexible rate band setting
185	185	under Subchapter D, Chapter 2703. Nothing in this section
186	186	prohibits a party from conducting discovery in a ratemaking or
187	187	other proceeding or producing other information requested by the
188	188	department, or verifying the data reported under a statistical plan
189	189	or report promulgated by the commissioner.
190	190	(l) Subject to Subsection (m), if the commissioner fails to
191	191	comply with the requirements under Subsection (g) or (h)(6), a
192	192	combination of at least three interested [associations,] persons[,
193	193	or entities listed in Subsection (b)] may jointly petition a
194	194	district court of Travis County to adopt a rate or flexible rate
195	195	band based on the record made in the hearing before the commissioner
196	196	under this section.
197	197	(m) If the record made in the hearing before the
198	198	commissioner is not complete before the request for the court to
199	199	adopt a premium rate or flexible rate band under Subsection (l), the
200	200	court shall hold an evidentiary hearing to establish a record
201	201	before adopting the premium rate or flexible rate band.
202	202	(o) A district court may appoint a magistrate to adopt a
203	203	rate or flexible rate band under this section.
204	204	SECTION 13. Sections 2703.203, 2703.204, and 2703.206,
205	205	Insurance Code, are amended to read as follows:
206	206	Sec. 2703.203. PERIODIC HEARING. The commissioner shall
207	207	hold a public hearing not earlier than July 1 after the fifth
208	208	anniversary of the closing of a hearing held under this chapter to
209	209	consider adoption of premium rates or flexible rate bands and other
210	210	matters relating to regulating the business of title insurance that
211	211	an interested person [association, title insurance company, title
212	212	insurance agent, or member of the public] admitted as a party under
213	213	Section 2703.204 requests to be considered or that the commissioner
214	214	determines necessary to consider.
215	215	Sec. 2703.204. ADMISSION AS PARTY TO PERIODIC HEARING.
216	216	(a) Subject to this section, an interested [a trade association
217	217	whose membership is composed of at least 20 percent of the members
218	218	of an industry or group represented by the trade association, an
219	219	association, a] person [or entity described by Section
220	220	2703.202(b),] or department staff shall be admitted as a party to
221	221	the periodic hearing under Section 2703.203.
222	222	(b) A party to any portion of the periodic hearing relating
223	223	to ratemaking or the setting of a flexible rate band may request
224	224	that the commissioner remove any other party to that portion of the
225	225	hearing on the grounds that the other party does not have a
226	226	substantial interest in title insurance. A decision of the
227	227	commission to deny or grant the request is final and subject to
228	228	appeal in accordance with Section 36.202.
229	229	Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS AS
230	230	NECESSARY. At any time, the commissioner may order a public hearing
231	231	to consider adoption of premium rates or flexible rate bands and
232	232	other matters relating to regulating the business of title
233	233	insurance as the commissioner determines necessary or proper.
234	234	SECTION 14. Chapter 2703, Insurance Code, is amended by
235	235	adding Subchapter F to read as follows:
236	236	SUBCHAPTER F. FLEXIBLE RATING
237	237	Sec. 2703.301. FLEXIBLE RATING. (a) A title insurance
238	238	company may file with the commissioner to use a premium rate within
239	239	the flexible rate band set by the commissioner under Section
240	240	2703.151.
241	241	(b) A rate filed under this section:
242	242	(1) must be filed with actuarial support and any other
243	243	information required by the commissioner by rule; and
244	244	(2) may not be excessive, inadequate, or unfairly
245	245	discriminatory for the risks to which the rate applies.
246	246	(c) A rate filed under this section is effective until the
247	247	earlier of the effective date of a rate subsequently filed under
248	248	this section or a rate fixed and promulgated by the commissioner
249	249	under Section 2703.151.
250	250	(d) After a rate is fixed and promulgated under Section
251	251	2703.151, a title insurance company shall:
252	252	(1) file rates under this section; or
253	253	(2) notify the commissioner in writing that the
254	254	company will use the promulgated and fixed rate.
255	255	(e) The commissioner by rule shall adopt procedures for a
256	256	rate filing under this section.
257	257	Sec. 2703.302. DISAPPROVAL OF RATE IN FLEXIBLE RATE FILING;
258	258	HEARING. (a) Subject to Section 2703.303, the commissioner shall
259	259	disapprove a rate if the commissioner determines that the rate
260	260	filing made under this subchapter does not meet the standards
261	261	prescribed by Section 2703.301(b).
262	262	(b) If the commissioner disapproves a filing, the
263	263	commissioner shall issue an order specifying in what respects the
264	264	filing fails to meet the requirements of this subchapter.
265	265	(c) The filer is entitled to a hearing on written request
266	266	made to the commissioner not later than the 30th day after the date
267	267	the order disapproving the rate filing under this subchapter takes
268	268	effect.
269	269	Sec. 2703.303. DISAPPROVAL OF RATE IN EFFECT; HEARING. (a)
270	270	The commissioner may disapprove a rate filed under Section 2703.301
271	271	that is in effect only after a hearing before the commissioner. The
272	272	commissioner shall provide the filer written notice of the hearing
273	273	not later than the 20th day before the date of the hearing.
274	274	(b) An order disapproving a rate filed under Section
275	275	2703.301 that is in effect must be issued not later than the 15th
276	276	day after the date of the close of the hearing. The order must:
277	277	(1) specify in what respects the rate or rate filing
278	278	fails to meet the requirements of this subchapter; and
279	279	(2) state the date on which further use of the rate is
280	280	prohibited, which may not be earlier than the 45th day after the
281	281	date of the close of the hearing under this section.
282	282	Sec. 2703.304. GRIEVANCE. (a) An insured, underwriter, or
283	283	agent who is aggrieved with respect to a rate filed under Section
284	284	2703.301 that is in effect, or the public insurance counsel, may
285	285	apply to the commissioner in writing for a hearing on the filing.
286	286	The application must specify the grounds for the applicant's
287	287	grievance.
288	288	(b) The commissioner shall hold a hearing on an application
289	289	filed under Subsection (a) not later than the 30th day after the
290	290	date the commissioner receives the application if the commissioner
291	291	determines that:
292	292	(1) the application is made in good faith;
293	293	(2) the applicant would be aggrieved as alleged if the
294	294	grounds specified in the application were established; and
295	295	(3) the grounds specified in the application otherwise
296	296	justify holding the hearing.
297	297	(c) The commissioner shall provide written notice of a
298	298	hearing under Subsection (b) to the applicant and each insurer that
299	299	made the filing not later than the 10th day before the date of the
300	300	hearing.
301	301	(d) If, after the hearing, the commissioner determines that
302	302	the rate filing under Section 2703.301 does not meet the
303	303	requirements of this subchapter, the commissioner shall issue an
304	304	order:
305	305	(1) specifying in what respects the rate filing fails
306	306	to meet the requirements of this subchapter; and
307	307	(2) stating the date on which the rate is no longer in
308	308	effect, which must be within a reasonable period after the date of
309	309	the order.
310	310	(e) The commissioner shall send copies of the order issued
311	311	under Subsection (d) to the applicant and each affected insurer.
312	312	Sec. 2703.305. PUBLIC INFORMATION. A filing made and any
313	313	supporting information filed under this subchapter, as of the date
314	314	the filing is received by the department:
315	315	(1) is public information;
316	316	(2) is not subject to any exceptions to disclosure
317	317	under Chapter 552, Government Code; and
318	318	(3) cannot be withheld from disclosure under any other
319	319	law.
320	320	SECTION 15. Section 2702.054, Insurance Code, as amended by
321	321	this Act, applies only to a residential real estate transaction
322	322	that closes on or after January 1, 2018. A residential real estate
323	323	transaction that closes before January 1, 2018, is governed by the
324	324	law as it existed immediately before the effective date of this Act,
325	325	and that law is continued in effect for that purpose.
326	326	SECTION 16. Section 2703.153(h), Insurance Code, as amended
327	327	by this Act, applies only to an annual statistical report issued on
328	328	or after January 1, 2018. An annual statistical report issued
329	329	before January 1, 2018, is governed by the law as it existed
330	330	immediately before the effective date of this Act, and that law is
331	331	continued in effect for that purpose.
332	332	SECTION 17. Subchapter F, Chapter 2703, Insurance Code, as
333	333	added by this Act, applies only to a title insurance premium rate
334	334	effective on or after January 1, 2018. A title insurance premium
335	335	rate effective before January 1, 2018, is governed by the law as it
336	336	existed immediately before the effective date of this Act, and that
337	337	law is continued in effect for that purpose.
338	338	SECTION 18. The commissioner of insurance shall hold a
339	339	public hearing to set the initial flexible rate band under Section
340	340	2703.151, Insurance Code, as amended by this Act, and any other
341	341	related matters not later than January 1, 2018.
342	342	SECTION 19. This Act takes effect September 1, 2017.