April 30, 2004
page 2
 

Insurance Commissioner Reduces Texas Title Insurance Rates by 6.5%
Effective July 1, 2004
On April 23, 2004, Texas Insurance Commissioner Jose Montemayor issued his final order in the Texas Title Insurance Biennial Rate Hearing.  The Commissioner’s final order makes specific Findings of Fact based upon the testimony and written reports and analyses presented by expert witnesses at the hearing.

The Commissioner’s final order makes 167 Findings of Fact and 7 Conclusions of Law. The final order reduces the Basic Premium Rate across the board by 6.5%. It also adopts or amends 10 Rate Rules.  To review the complete order please click here.

New Rate Rules Provide More Industry Options
Commissioner’s final order adopts all proposed Rate Rules, including 5 new Rate Rules authorizing rates for endorsements and amends 5 existing Rate Rules.  Beginning July 1, 2004 you may charge the following rates in conjunction with issuance of the five (5) new endorsements approved by the Commissioner at the 2002 Biennial Rule Hearing.

NEW RATE RULES
R-29- Premium for Restrictions, Encroachments, Minerals Endorsement (T-19) and Restrictions, Encroachments, Minerals Endorsement- Owner Policy (T-19.1)

Adopts a Premium Rate as follows:

Residential Real Property - T-19
5% of the Basic Rate/ Minimum $25

Non-Residential Real Property- T-19
10% of the Basic Rate/ Minimum $25

Residential Real Property-T-19.1
May not Issue T-19.1

Non-Residential Real Property
15% of Basic Rate/ Minimum $25

R-30- Premium for Access Endorsement (T-23)
Adopts a premium for Access Endorsment (T-23) of $100 for each policy.

R-31- Premium for Non-Imputation Endorsement (T-24)
Adopts a premium for Non-Imputation Endorsement (T-24) of 5% of the Basic Rate
for each policy/ Minimum $25.

R-32- Premium for Contiguity Endorsement (T-25)
Adopts a premium for Contiguity Endorsement (T-25) of $100 for each policy.

R-33- Premium for Additional Insured Endorsement T-26
Adopts a premium for Additional Insured Endorsement (T-26) of 10% of the Basic Rate for each policy/ Minimum $25.

AMENDED RATE RULES
R-5-Simultaneous Issuance of Owner and Mortgagee Policies
Amended to streamline the procedure for providing the credit, does not change the rate or the credit calculated in a transaction.

R-8- Mortgagee Policy, on a loan to take Up, Renew, Extend or
Satisfy an Existing Lien
Amended to clarify that a credit will still be allowed in situations where only one or more new loans are insured in a multiple loan situation.

R-11- Mortgagee Policy Endorsement
Reduces Premium charged for issuance of each endorsement provided for in rule P-9b(9) from $50 to $25.

R-15- Owner Policy Endorsement
Amended to clarify that the Supplemental Coverage Manufactured Housing Unit Endorsement (T-31.1) is appropriate for use under both Procedural Rule P-9.a.(3) and P-9.a.(4).

R-27- Texas Limited Coverage Junior Mortgagee Policy
Modified to reference the updated title of the Texas Residential Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (Form T-46).

SPECIAL SESSION UPDATE      
School Finance Proposals Run the Gamut - Some Potentially Harmful to Business
You know how the old saying goes. Politics is a lot like the weather in Texas. If you don’t like what it’s doing outside, wait around 5 minutes and it will change. You can say the same thing about the debate on school finance.

As reported in the April 23 Dateline Austin, Governor Perry called the legislature back to Austin to address how to eliminate “Robin Hood” while cutting property taxes for homeowners. Although there are a number of plans circulating the capitol hallways so far there is no consensus between the Governor, the Senate and the House on what is the best way to achieve this goal. Both House and Senate committees have been working off the Governor’s plan as a starting place. Click here to view the Governor’s “Educational Excellence and Equity Plan."

Tax bills must originate in the House and after only one week of work, the House Select Committee on School Finance intends to kick out their proposal, House Bill 1, by the end of the week. Their proposal mirrors the Governor’s plan in some respects but includes significant departures. The proposal would cut rates by one-third, eliminate the franchise tax, create a payroll tax and increase and expand the sales tax. It would also legalize video lottery terminals and increase tobacco taxes. At this point we see a few options that could potentially affect how you do business in Texas. One, the proposal would eliminate the franchise tax on corporations in favor of a payroll tax that would require all employers other than government and nonprofit entities to pay 1.25 percent of their wage base or $125 per employee quarterly. Two, the proposal would increase the sales tax from 6.25 percent to 6.5 percent. Third, it would extend the sales tax to include legal, accounting and auditing and financial brokerage services.

The proposal is not too far from what the Senate has been saying they wanted: a broad-based business tax, a sizable property cut, sin taxes on gambling and tobacco and some extra money for education. However, it is unsure whether or not there will be enough votes in both the House and Senate to pass any of these proposed measures. And I'm sure by the time you read this article, things will have changed – just like the weather. One thing you can be sure about is that we will continue to keep a watchful eye on any developments and report them to you as soon as we can. If you would like to give your input on how these changes might affect you or your company, please contact Mindy Carr, at mindy@tlta.com  or 512.472.6593.