March 11,2017

Two More Title Insurance Bills Filed on Friday Bill Filing Deadline – TLTA Analyzing Impact

Friday was the deadline for bill filing at the Texas Legislature and, as we anticipated, there were additional bills filed dealing with the regulation of title insurance.

HB 4239 by Rep. Sergio Muñoz, Jr. (D-Palmview) proposes a flex band rate system as well as some other regulatory cleanup items dealing with transparency in reporting. SB 2203 by Sen. Kelly Hancock (R-North Richland Hills) does not address title insurance rate making at all, but mimics the other regulatory cleanup proposals in Muñoz’s bill. Please note: The regulatory cleanup language included in these two bills has been previously vetted and supported by the TLTA Board; however, the flex band proposal in Muñoz’s bill is new and will have to be fully analyzed to determine the impact. It is a departure from our current, stable, successful rate system, so our initial read is that it will have a negative impact. These bills are in addition to SB 372 previously filed by Sen. Bob Hall (R-Edgewood), which proposes a file-and-use system of rate making. TLTA has reported on this bill and is in strong opposition to it.

Again, we are continuing to fully analyze these bills and their impact, but below are a few more specifics of each, as well as links to the full text.

HB 4239:
  • States that the commissioner shall continue to fix and promulgate the premium rates to be charged, but also states that the Commissioner shall set “flexible rate bands” within which a lower or higher rate can be charged.
  • The flexible rate band must be a range that is a maximum percentage above or below the promulgated rate. A title insurance company (underwriter) may file with the Commissioner to use a premium rate that is different from the promulgated rate but within the flexible rate band set by the Commissioner.
  • In order to charge a rate that is different than the promulgated rate, a title insurance company (underwriter) would file a premium rate within the flexible rate band. The filing would require actuarial support, could not be excessive, inadequate or unfairly discriminatory, etc.
  • Takes away any limitations on who has standing to request a rate hearing, changing that simply to “an interested person.”
  • Codifies in law the P-73 regulation already in place in the Basic Manual, requiring a separate promulgated Texas disclosure in conjunction with the Closing Disclosure to accurately disclose the title insurance premium, the amount of each portion of that premium to a third party and an itemization of all other fees and charges paid to the settlement agent. No real change other than to formalize this requirement in statute.
  • Requires TDI to conform the statistical report to the manner in which accounting records are normally kept in the ordinary business of a title insurance company or agent. This is an effort TLTA had already been working on and supports.

SB 2203:
  • Codifies in law the P-73 regulation already in place in the Basic Manual, requiring a separate promulgated Texas disclosure in conjunction with the Closing Disclosure to accurately disclose the title insurance premium, the amount of each portion of that premium to a third party and an itemization of all other fees and charges paid to the settlement agent. No real change other than to formalize this requirement in statute.
  • Requires TDI to conform the statistical report to the manner in which accounting records are normally kept in the ordinary business of a title insurance company or agent. This is an effort TLTA had already been working on and supports.
We will keep you closely posted as the TLTA legislative committee and board continue to analyze these bills as well as any others that were filed before the deadline yesterday and are of interest or concern to our industry.