Guaranty Assessment Recoupment Fee Set at $4.50 Per Policy
Effective Jan. 1, 2018
During 2018; Guaranty Fee Suspended During That Time
Dec. 1, 2017
TDI Commissioner Kent Sullivan issued an order
on Nov. 30 setting a Guaranty Assessment Recoupment Charge (GARC). Beginning Jan. 1, 2018 through Dec. 31, 2018, title agents will be required to collect a GARC fee of $4.50 on each owner and loan policy. This fee must be rendered quarterly to the Texas Title Insurance Guaranty Association (TTIGA). Exhibit B of the Commissioner's Order includes the Guaranty Assessment Recoupment Charge Remittance Form that title agents should use to remit the charge. You can view that form on pages 11-12 of the Order.
Additionally, while the GARC fee is in place, beginning Jan. 1, 2018, the Guaranty Fee will be lowered from the current $3 per policy charge to $0.
While the GARC fee will function in a similar manner to the current Guaranty Fee, it's important to note that they are two different fees.
The GARC fee:
The Guaranty Fee:
- Will be due to TTIGA from Jan. 1, 2018 through Dec. 31, 2018.
- Will be $4.50 during this time period.
See TTIGA's website for more on this issue.
- Is being suspended starting Jan. 1, 2018 while the GARC Fee is in place.
- Is now $3 but will be $0 during this time period.
In 2013, TTIGA assessed Texas underwriters $2.5 million, based on estimates of the total claims liability of Southern Title, a regional underwriter that was licensed to do business for several years in Texas and later declared bankruptcy.
Once the amount of the assessment recoupment charge was established through the hearing process and an effective date was set, title agents were required to collect this fee, charged to consumers on each policy, and render it quarterly to TTIGA in a similar manner to the current "Guaranty Fee." This process was carried out once before in the early 1990s in connection with the failure of Title USA.
On Feb. 7, 2017, TTIGA executed an assumption agreement with First National Title Insurance Company. Under the agreement, First National Title (FNTI) assumes TTIGA's liabilities for Southern Title Insurance policies. In March 2017, TTIGA assessed title insurers $6 million to pay for the assumption.
This assessment is essentially a loan from the underwriters to TTIGA to provide funds to pay FNTI to assume the liabilities of the failed underwriter. There is a mechanism in place, both in statute (Sec. 2602.210) and in regulation in P-30, for the underwriters to recoup these funds that have been assessed. The establishment of a Guaranty Assessment Recoupment fee (GARC fee) to be charged on each policy is part of that statutory and regulatory mechanism.
It's important to note that the statute allows for the GARC fee to be charged for one year, in the subsequent year after the assessment. In this case, the assessment was charged in 2017, so the GARC fee will be charged during the calendar year of 2018.
The public policy goal of the statute establishing this process is to ensure that consumers are able to have their title policies honored, even in the event of an underwriter insolvency. It's another reason why Texas has one of the strongest and best title systems in the nation, providing consumers with maximum protection.