House Bill 0403er

CODING: Words stricken are deletions; words underlined are additions.





    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1

  2         An act relating to title insurance; amending

  3         ss. 624.509, 626.841, 626.8411, 626.9541,

  4         627.7711, 627.777, 627.7773, 627.7776, 627.780,

  5         627.783, 627.7831, 627.784, 627.7841, 627.7842,

  6         627.7845, 627.786, 627.791, and 627.792, F.S.;

  7         revising and clarifying application of

  8         provisions relating to title insurance agents,

  9         policies, premiums, rates, contracts, charges,

10         and practices; amending s. 625.111, F.S.;

11         specifying the components of unearned premium

12         reserve for certain financial statements;

13         providing a formula for releasing unearned

14         premium reserve over a period of years;

15         providing definitions; amending s. 627.7711,

16         F.S.; revising definitions; amending s.

17         627.782, F.S.; providing a limitation on

18         payment of portions of premiums for primary

19         title services; creating s. 627.7825, F.S.;

20         specifying certain alternative premium rates to

21         be charged by title insurers for certain title

22         insurance contracts for a certain period;

23         providing requirements; providing limitations;

24         providing for a new home purchase discount;

25         excepting such rates from certain deviation

26         provisions under certain circumstances;

27         creating s. 627.793, F.S.; authorizing the

28         Department of Insurance to adopt rules;

29         providing an effective date.

30

31


                                  1

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         WHEREAS, the Legislature finds that regulation of

  2  insurance is in the public interest; that it promotes the

  3  public health, safety and welfare by assuring the solvency and

  4  soundness of insurers; that determination of insurability of

  5  title to real property prior to insuring such property is

  6  essential to the maintenance of the solvency and soundness of

  7  title insurers; and that because title insurance agents or

  8  agencies determine insurability on behalf of title insurers,

  9  there is a direct relationship between the determination of

10  insurability performed by title agents or agencies and the

11  public interest, NOW, THEREFORE,

12

13  Be It Enacted by the Legislature of the State of Florida:

14

15         Section 1.  Subsection (1) of section 624.509, Florida

16  Statutes, 1998 Supplement, is amended to read:

17         624.509  Premium tax; rate and computation.--

18         (1)  In addition to the license taxes provided for in

19  this chapter, each insurer shall also annually, and on or

20  before March 1 in each year, except as to wet marine and

21  transportation insurance taxed under s. 624.510, pay to the

22  Department of Revenue a tax on insurance premiums, risk

23  premiums for title insurance, or assessments, including

24  membership fees and policy fees and gross deposits received

25  from subscribers to reciprocal or interinsurance agreements,

26  and on annuity premiums or considerations, received during the

27  preceding calendar year, the amounts thereof to be determined

28  as set forth in this section, to wit:

29         (a)  An amount equal to 1.75 percent of the gross

30  amount of such receipts on account of life and health

31  insurance policies covering persons resident in this state and


                                  2

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  on account of all other types of policies and contracts

  2  (except annuity policies or contracts taxable under paragraph

  3  (b)) covering property, subjects, or risks located, resident,

  4  or to be performed in this state, omitting premiums on

  5  reinsurance accepted, and less return premiums or assessments,

  6  but without deductions:

  7         1.  For reinsurance ceded to other insurers;

  8         2.  For moneys paid upon surrender of policies or

  9  certificates for cash surrender value;

10         3.  For discounts or refunds for direct or prompt

11  payment of premiums or assessments; and

12         4.  On account of dividends of any nature or amount

13  paid and credited or allowed to holders of insurance policies;

14  certificates; or surety, indemnity, reciprocal, or

15  interinsurance contracts or agreements; and

16         (b)  An amount equal to 1 percent of the gross receipts

17  on annuity policies or contracts paid by holders thereof in

18  this state.

19         Section 2.  Section 625.111, Florida Statutes, is

20  amended to read:

21         (Substantial rewording of section.  See

22         s. 625.111, F.S., for present text.)

23         625.111  Title insurance reserve.--In addition to an

24  adequate reserve as to outstanding losses relating to known

25  claims, as required under s. 625.041, a title insurer shall

26  establish, segregate, and maintain a guaranty fund or unearned

27  premium reserve as provided in this section. The sums required

28  under this section to be reserved for unearned premiums on

29  title guarantees and policies at all times and for all

30  purposes shall be considered and constitute unearned portions

31  of the original premiums and shall be charged as a reserve


                                  3

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  liability of such insurer in determining its financial

  2  condition. While such sums are so reserved, they shall be

  3  withdrawn from the use of the insurer for its general

  4  purposes, impressed with a trust in favor of the holders of

  5  title guarantees and policies, and held available for

  6  reinsurance of the title guarantees and policies in the event

  7  of the insolvency of the insurer. Nothing contained in this

  8  section shall preclude such insurer from investing such

  9  reserve in investments authorized by law for such an insurer

10  and the income from such invested reserve shall be included in

11  the general income of the insurer to be used by such insurer

12  for any lawful purpose.

13         (1)  For unearned premium reserves established on or

14  after July 1, 1999, such unearned premium reserve shall

15  consist of not less than an amount equal to the sum of:

16         (a)  A reserve with respect to unearned premiums for

17  policies written or title liability assumed in reinsurance

18  before July 1, 1999, equal to the reserve established on June

19  30, 1999, for those unearned premiums with such reserve being

20  subsequently released as provided in subsection (2). For

21  domestic title insurers subject to this section, such amounts

22  shall be calculated in accordance with provisions of law of

23  this state in effect at the time the associated premiums were

24  written or assumed and as amended prior to July 1, 1999.

25         (b)  A total amount equal to 30 cents for each $1,000

26  of net retained liability for policies written or title

27  liability assumed in reinsurance on or after July 1, 1999,

28  with such reserve being subsequently released as provided in

29  subsection (2). For the purpose of calculating this reserve,

30  the total of the net retained liability for all simultaneous

31  issue policies covering a single risk shall be equal to the


                                  4

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  liability for the policy with the highest limit covering that

  2  single risk, net of any liability ceded in reinsurance.

  3         (c)  An additional amount, if deemed necessary by a

  4  qualified actuary, which shall be subsequently released as

  5  provided in subsection (2). Using financial results as of

  6  December 31 of each year, all domestic title insurers shall

  7  obtain a Statement of Actuarial Opinion from a qualified

  8  actuary regarding the insurer's loss and loss adjustment

  9  expense reserves, including reserves for known claims, adverse

10  development on known claims, incurred but not reported claims,

11  and unallocated loss adjustment expenses. The actuarial

12  opinion shall conform to the annual statement instructions for

13  title insurers adopted by the National Association of

14  Insurance Commissioners and shall include the actuary's

15  professional opinion of the insurer's reserves as of the date

16  of the annual statement. If the amount of the reserve stated

17  in the opinion and displayed in Schedule P of the annual

18  statement for that reporting date is greater than the sum of

19  the known claim reserve and unearned premium reserve as

20  calculated under this section, as of the same reporting date

21  and including any previous actuarial provisions added at

22  earlier dates, the insurer shall add to the insurer's unearned

23  premium reserve an actuarial amount equal to the reserve shown

24  in the actuarial opinion, minus the known claim reserve and

25  the unearned premium reserve, as of the current reporting date

26  and calculated in accordance with this section, but in no

27  event calculated as of any date prior to December 31, 1999.

28  The comparison shall be made using that line on Schedule P

29  displaying the Total Net Loss and Loss Adjustment Expense

30  which is comprised of the Known Claim Reserve, and any

31  associated Adverse Development Reserve, the reserve for


                                  5

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  Incurred But Not Reported Losses, and Unallocated Loss

  2  Adjustment Expenses.

  3         (2)(a)  With respect to the reserve established in

  4  accordance with paragraph (1)(a), the domestic title insurer

  5  shall release the reserve over a period of 20 subsequent years

  6  as provided in this paragraph. The insurer shall release 30

  7  percent of the initial aggregate sum during 1999, with one

  8  quarter of that amount being released on March 31, June 30,

  9  September 30, and December 31, 1999, with the March 31 and

10  June 30 releases to be retroactive and reflected on the

11  September 30 financial statements. Thereafter, the insurer

12  shall release, on the same quarterly basis as specified for

13  reserves released during 1999, a percentage of the initial

14  aggregate sum as follows: 15 percent during calendar year

15  2000, 10 percent during each of calendar years 2001 and 2002,

16  5 percent during each of calendar years 2003 and 2004, 3

17  percent during each of calendar years 2005 and 2006, 2 percent

18  during each of calendar years 2007-2013, and 1 percent during

19  each of calendar years 2014-2018.

20         (b)  With respect to reserves established in accordance

21  with paragraph (1)(b), the unearned premium for policies

22  written or title liability assumed during a particular

23  calendar year shall be earned, and released from reserve, over

24  a period of 20 subsequent years as provided in this paragraph.

25  The insurer shall release 30 percent of the initial sum during

26  the year next succeeding the year the premium was written or

27  assumed, with one quarter of that amount being released on

28  March 31, June 30, September 30, and December 31 of such year.

29  Thereafter, the insurer shall release, on the same quarterly

30  basis as specified for reserves released during the year first

31  succeeding the year the premium was written or assumed, a


                                  6

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  percentage of the initial sum as follows: 15 percent during

  2  the next succeeding year, 10 percent during each of the next

  3  succeeding 2 years, 5 percent during each of the next

  4  succeeding 2 years, 3 percent during each of the next

  5  succeeding 2 years, 2 percent during each of the next

  6  succeeding 7 years, and 1 percent during each of the next

  7  succeeding 5 years.

  8         (c)  With respect to reserves established in accordance

  9  with paragraph (1)(c), any additional amount established in

10  any calendar year shall be released in the years subsequent to

11  its establishment as provided in paragraph (b), with the

12  timing and percentage of releases being in all respects

13  identical to those of unearned premium reserves that are

14  calculated as provided in paragraph (b) and established with

15  regard to premiums written or liability assumed in reinsurance

16  in the same year as the year in which any additional amount

17  was originally established.

18         (3)  At any reporting date, the amount of the required

19  releases of existing unearned premium reserves under

20  subsection (2) shall be calculated and deducted from the total

21  unearned premium reserve before any additional amount is

22  established for the current calendar year in accordance with

23  the provisions of paragraph (1)(c).

24         (4)  As used in this section:

25         (a)  "Net retained liability" means the total liability

26  retained by a title insurer for a single risk, after taking

27  into account the deduction for ceded liability, if any.

28         (b)  "Qualified actuary" means a person who is, as

29  detailed in the the National Association of Insurance

30  Commissioners' Annual Statement Instructions:

31


                                  7

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         1.  A member in good standing of the Casualty Actuarial

  2  Society;

  3         2.  A member in good standing of the American Academy

  4  of Actuaries who has been approved as qualified for signing

  5  casualty loss reserve opinions by the Casualty Practice

  6  Council of the American Academy of Actuaries; or

  7         3.  A person who otherwise has competency in loss

  8  reserve evaluation as demonstrated to the satisfaction of the

  9  insurance regulatory official of the domiciliary state. In

10  such case, at least 90 days prior to the filing of its annual

11  statement, the insurer must request approval that the person

12  be deemed qualified and that request must be approved or

13  denied. The request must include the National Association of

14  Insurance Commissioners' Biographical Form and a list of all

15  loss reserve opinions issued in the last 3 years by this

16  person.

17         (c)  "Single risk" means the insured amount of any

18  title insurance policy, except that where two or more title

19  insurance policies are issued simultaneously covering

20  different estates in the same real property, "single risk"

21  means the sum of the insured amounts of all such title

22  insurance policies. Any title insurance policy insuring a

23  mortgage interest a claim payment under which reduces the

24  insured amount of a fee or leasehold title insurance policy

25  shall be excluded in computing the amount of a single risk to

26  the extent that the insured amount of the mortgage title

27  insurance policy does not exceed the insured amount of the fee

28  or leasehold title insurance policy.

29         Section 3.  Section 626.841, Florida Statutes, is

30  amended to read:

31         626.841  Definitions.--The term:


                                  8

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         (1)  "Title insurance agent" means a person appointed

  2  in writing by a title insurer to issue and countersign

  3  commitments or binders, commitments, policies of title

  4  insurance, or guarantees of title in its behalf.

  5         (2)  "Title insurance agency" means an insurance agency

  6  under which title insurance agents and other employees

  7  determine insurability in accordance with underwriting rules

  8  and standards prescribed by the title insurer represented by

  9  the agency, and issue and countersign commitments binders,

10  commitments of title insurance, endorsements, or policies

11  guarantees of title insurance, on behalf of the appointing

12  title insurer. The term does not include a title insurer.

13         Section 4.  Paragraph (c) of subsection (2) of section

14  626.8411, Florida Statutes, 1998 Supplement, is amended to

15  read:

16         626.8411  Application of Florida Insurance Code

17  provisions to title insurance agents or agencies.--

18         (2)  The following provisions of part I do not apply to

19  title insurance agents or title insurance agencies:

20         (c)  Section 626.572 626.752, relating to rebating,

21  when allowed exchange of business.

22         Section 5.  Paragraph (h) of subsection (1) of section

23  626.9541, Florida Statutes, is amended to read:

24         626.9541  Unfair methods of competition and unfair or

25  deceptive acts or practices defined.--

26         (1)  UNFAIR METHODS OF COMPETITION AND UNFAIR OR

27  DECEPTIVE ACTS.--The following are defined as unfair methods

28  of competition and unfair or deceptive acts or practices:

29         (h)  Unlawful Rebates.--

30         1.  Except as otherwise expressly provided by law, or

31  in an applicable filing with the department, knowingly:


                                  9

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         a.  Permitting, or offering to make, or making, any

  2  contract or agreement as to such contract other than as

  3  plainly expressed in the insurance contract issued thereon;

  4         b.  Paying, allowing, or giving, or offering to pay,

  5  allow, or give, directly or indirectly, as inducement to such

  6  insurance contract, any unlawful rebate of premiums payable on

  7  the contract, any special favor or advantage in the dividends

  8  or other benefits thereon, or any valuable consideration or

  9  inducement whatever not specified in the contract;

10         c.  Giving, selling, or purchasing, or offering to

11  give, sell, or purchase, as inducement to such insurance

12  contract or in connection therewith, any stocks, bonds, or

13  other securities of any insurance company or other

14  corporation, association, or partnership, or any dividends or

15  profits accrued thereon, or anything of value whatsoever not

16  specified in the insurance contract.

17         2.  Nothing in paragraph (g) or subparagraph 1. of this

18  paragraph shall be construed as including within the

19  definition of discrimination or unlawful rebates:

20         a.  In the case of any contract of life insurance or

21  life annuity, paying bonuses to all policyholders or otherwise

22  abating their premiums in whole or in part out of surplus

23  accumulated from nonparticipating insurance; provided that any

24  such bonuses or abatement of premiums is fair and equitable to

25  all policyholders and for the best interests of the company

26  and its policyholders.

27         b.  In the case of life insurance policies issued on

28  the industrial debit plan, making allowance to policyholders

29  who have continuously for a specified period made premium

30  payments directly to an office of the insurer in an amount

31  which fairly represents the saving in collection expenses.


                                  10

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         c.  Readjustment of the rate of premium for a group

  2  insurance policy based on the loss or expense thereunder, at

  3  the end of the first or any subsequent policy year of

  4  insurance thereunder, which may be made retroactive only for

  5  such policy year.

  6         d.  Issuance of life insurance policies or annuity

  7  contracts at rates less than the usual rates of premiums for

  8  such policies or contracts, as group insurance or employee

  9  insurance as defined in this code.

10         e.  Issuing life or disability insurance policies on a

11  salary savings, bank draft, preauthorized check, payroll

12  deduction, or other similar plan at a reduced rate reasonably

13  related to the savings made by the use of such plan.

14         3.a.  No title insurer, or any member, employee,

15  attorney, agent, agency, or solicitor thereof, shall pay,

16  allow, or give, or offer to pay, allow, or give, directly or

17  indirectly, as inducement to title insurance, or after such

18  insurance has been effected, any unlawful rebate or abatement

19  of the agent's, agency's, or title insurer's share of the

20  premium or any charge for related title services below the

21  cost for providing such services, or provide charge made

22  incident to the issuance of such insurance, any special favor

23  or advantage, or any monetary consideration or inducement

24  whatever.  The words "charge made incident to the issuance of

25  such insurance" shall be construed to encompass underwriting

26  premium, agent's commission, abstracting charges, title

27  examination fee, and closing charges; however, Nothing herein

28  contained shall preclude an abatement in an attorney's fee

29  charged for legal services rendered incident to the issuance

30  of such insurance.

31


                                  11

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         b.  Nothing in this subparagraph shall be construed as

  2  prohibiting the payment of fees to attorneys at law duly

  3  licensed to practice law in the courts of this state, for

  4  professional services in the actual examination of title to

  5  real property as a condition to the issuance of title

  6  insurance, or as prohibiting the payment of earned portions of

  7  the premium commissions to duly appointed agents or agencies

  8  who actually perform services for the title insurer issue the

  9  policy of title insurance for the underwriting company.

10         c.  No insured named in a policy, or any other person

11  directly or indirectly connected with the transaction

12  involving the issuance of such policy, including, but not

13  limited to, any mortgage broker, real estate broker, builder,

14  or attorney, any employee, agent, agency, representative, or

15  solicitor thereof, or any other person whatsoever, shall

16  knowingly receive or accept, directly or indirectly, any

17  unlawful rebate or abatement of said charge, or any monetary

18  consideration or inducement, other than as set forth in

19  sub-subparagraph b.

20         Section 6.  Subsections (1) and (2) of section

21  627.7711, Florida Statutes, are amended to read:

22         627.7711  Definitions.--As used in this part, the term:

23         (1)(a)  "Related title services" means services

24  performed by a title insurer or title insurance agent or

25  agency, in the agent's or agency's capacity as such,

26  including, but not limited to, preparing or obtaining a title

27  search, examining title information, preparing documents

28  necessary to close the transaction, conducting the closing, or

29  handling the disbursing of funds related to the closing in a

30  real estate closing transaction in which a title insurance

31  binder, commitment, or policy is to be issued.  The risk


                                  12

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  premium, together with the charge for related title services,

  2  constitutes the regular title insurance premium.

  3         (b)  "Primary title services" means determining

  4  insurability in accordance with sound underwriting practices

  5  based upon evaluation of a reasonable search and examination

  6  of the title, determination and clearance of underwriting

  7  objections and requirements to eliminate risk, preparation and

  8  issuance of a title insurance commitment setting forth the

  9  requirements to insure, and preparation and issuance of the

10  policy.

11         (2)  "Risk Premium" means the charge, as specified by

12  rule of the department, that is made by a title insurer for a

13  title insurance policy, including the charge for performance

14  of primary title services by a title insurer or title

15  insurance agent or agency, and incurring the risks incident to

16  such policy the assumption of the risk, under the several

17  classifications of title insurance contracts and forms, and

18  upon which charge a premium tax is paid under s. 624.509.  As

19  used in this part or in any other law, with respect to title

20  insurance, the word words "premium" does or "risk premium"

21  mean only the risk premium as defined in this section and do

22  not include a commission any other charge incidental to title

23  insurance.

24         Section 7.  Section 627.777, Florida Statutes, is

25  amended to read:

26         627.777  Approval of forms.--A title insurer may not

27  issue or agree to issue any form of title insurance binder,

28  title insurance commitment, preliminary report, title

29  insurance policy, other contract of title insurance, or

30  related form until it is filed with and approved by the

31  department.  The department may not disapprove a title


                                  13

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  guarantee or policy form on the ground that it has on it a

  2  blank form for an attorney's opinion on the title.

  3         Section 8.  Section 627.7773, Florida Statutes, is

  4  amended to read:

  5         627.7773  Accounting and auditing of forms by title

  6  insurers.--

  7         (1)  Each title insurer authorized to do business in

  8  this state shall, at least once during each calendar year,

  9  require of each of its title insurance agents or agencies

10  accountings of all outstanding forms in the agent's or

11  agency's possession of the types that are specified in s.

12  627.777.

13         (2)  If the department has reason to believe that an

14  audit of outstanding forms should be required of any title

15  insurer as to a title insurance agent or agency, the

16  department may require the title insurer to make a special

17  audit of the forms.  The title insurer shall complete the

18  audit not later than 60 days after the request is received

19  from the department, and shall report the results of the

20  special audit to the department no later than 90 days after

21  the request is received.

22         Section 9.  Section 627.7776, Florida Statutes, is

23  amended to read:

24         627.7776  Furnishing of supplies; civil liability.--

25         (1)  A title insurer may not furnish to any person any

26  blank forms, applications, stationery, or other supplies to be

27  used in soliciting, negotiating, or effecting contracts of

28  title insurance on its behalf until that person has received

29  from the insurer a contract to act as a title insurance agent

30  or agency and has been licensed by the department, if required

31  by s. 626.8417.


                                  14

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         (2)  A title insurer or title insurance agent or agency

  2  that furnishes any supplies to a person not authorized by the

  3  title insurer as provided in subsection (1) is subject to

  4  civil liability to any insured of the title insurer to the

  5  same extent and in the same manner as if the person had been

  6  appointed or authorized by the title insurer to act in its

  7  behalf.

  8         Section 10.  Section 627.780, Florida Statutes, is

  9  amended to read:

10         627.780  Illegal dealings in risk premium.--

11         (1)  A person may not knowingly quote, charge, accept,

12  collect, or receive a risk premium for title insurance other

13  than the risk premium adopted by the department.

14         (2)  A title insurer may not knowingly accept, collect,

15  or receive any sum as risk premium for title insurance, if the

16  title insurance is not then provided or is not to be provided,

17  subject to acceptance of the risk, in due course, unless the

18  title insurer promptly enters the sum on its books of account

19  as premium collected in advance.

20         Section 11.  Section 627.782, Florida Statutes, is

21  amended to read:

22         627.782  Adoption of rates.--

23         (1)  Subject to the rating provisions of this code, the

24  department must adopt a rule specifying the risk premium to be

25  charged in this state by title insurers for the respective

26  types of title insurance contracts and, for policies issued

27  through agents or agencies, the percentage of such premium

28  required to be retained by the title insurer which shall and

29  services incident thereto.  The department may, by rule,

30  establish limitations on such reasonable charges made in

31  addition to the risk premium based upon the expenses


                                  15

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  associated with the services rendered and other relevant

  2  factors. The department must also adopt rules incident to the

  3  applicability of the risk premium, including the percentage or

  4  amount of the risk premium required to be maintained by the

  5  title insurer, and related rules to ensure that the amounts

  6  required to be maintained by the insurer are not be less than

  7  30 percent of the risk premium for policies sold by agents.

  8  However, in a transaction subject to the Real Estate

  9  Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as

10  amended, no portion of the premium attributable to providing a

11  primary title service shall be paid to or retained by any

12  person who does not actually perform or is not liable for the

13  performance of such service. The department may, by rule,

14  establish limitations on related title services charges made

15  in addition to the premium based upon the expenses associated

16  with the services rendered and other relevant factors.

17         (2)  In adopting premium rates, the department must

18  give due consideration to the following:

19         (a)  The title insurers' loss experience and

20  prospective loss experience under insured closing protection

21  service letters, search and examination services, and policy

22  liabilities.

23         (b)  A reasonable margin for underwriting profit and

24  contingencies, including contingent liability under s.

25  627.7865, sufficient to allow title insurers, and agents, and

26  agencies to earn a rate of return on their capital that will

27  attract and retain adequate capital investment in the title

28  insurance business and maintain an efficient title insurance

29  delivery system.

30         (c)  Past expenses and prospective expenses for

31  administration and handling of risks.


                                  16

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         (d)  Liability for defalcation.

  2         (e)  Other relevant factors.

  3         (3)  Rates may be grouped by classification or schedule

  4  and may differ as to class of risk assumed.

  5         (4)  Rates may not be excessive, inadequate, or

  6  unfairly discriminatory.

  7         (5)  The risk premium applies to each $100 of insurance

  8  issued to an insured.

  9         (6)  The risk premium rates apply throughout this

10  state.

11         (7)  The department shall, in accordance with the

12  standards provided in subsection (2), review the risk premium

13  and the related title services rate as needed, but not less

14  frequently than once every 3 years, and shall, based upon the

15  review required by this subsection, revise the risk premium

16  and the related title services rate if the results of the

17  review so warrant.

18         (8)  The department may, by rule, require licensees

19  under this part to annually submit statistical information,

20  including loss and expense data, as the department determines

21  to be necessary to analyze risk premium and related title

22  services rates, retention rates, and the condition of the

23  title insurance industry.

24         Section 12.  Section 627.7825, Florida Statutes, is

25  created to read:

26         627.7825  Alternative rate adoption.--Notwithstanding

27  s. 627.782(1) and (7), the premium rates to be charged by

28  title insurers in this state from July 1, 1999, through June

29  30, 2002, for title insurance contracts shall be as set forth

30  in this section. The rules related to premium rates for title

31  insurance, including endorsements, adopted by the department


                                  17

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  and in effect on April 1, 1999, that do not conflict with the

  2  provisions of this section shall remain in effect until June

  3  30, 2002.  The department shall not grant a rate deviation

  4  pursuant to s. 627.783 for the premium rates established in

  5  this section and in department rules in effect on April 1,

  6  1999, that do not conflict with this section.

  7         (1)  ORIGINAL TITLE INSURANCE RATES.--

  8         (a)  For owner and leasehold title insurance:

  9         1.  The premium for the original owner's or for

10  leasehold insurance shall be:

11

12                                             Per        Minimum

13                                             Thousand   Insurer

14                                                        Retention

15  From $0 to $100,000 of liability written   $5.75      30%

16  From $100,000 to $1 million, add           $5.00      30%

17  Over $1 million and up to $5 million, add  $2.50      35%

18  Over $5 million and up to $10 million, add $2.25      40%

19  Over $10 million, add                      $2.00      40%

20

21  The minimum premium for all conveyances except multiple

22  conveyances shall be $100. The minimum premium for multiple

23  conveyances on the same property shall be $60.

24         2.  In all cases, the owner's policy shall be issued

25  for the full insurable value of the premises.

26         (b)  For mortgage title insurance:

27         1.  The premium for the original mortgage title

28  insurance shall be:

29

30

31


                                  18

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1                                             Per        Minimum

  2                                             Thousand   Insurer

  3                                                        Retention

  4  From $0 to $100,000 of liability written   $5.75      30%

  5  From $100,000 to $1 million, add           $5.00      30%

  6  Over $1 million and up to $5 million, add  $2.50      35%

  7  Over $5 million and up to $10 million, add $2.25      40%

  8  Over $10 million, add                      $2.00      40%

  9

10  The minimum premium for all conveyances except multiple

11  conveyances shall be $100. The minimum premium for multiple

12  conveyances on the same property shall be $60.

13         2.  A mortgage title insurance policy shall not be

14  issued for an amount less than the full principal debt. A

15  policy may, however, be issued for an amount up to 25 percent

16  in excess of the principal debt to cover interest and

17  foreclosure costs.

18         (2)  REISSUE RATES.--

19         (a)  The reissue premium charge for owner's, mortgage,

20  and leasehold title insurance policies shall be:

21

22                                             Per Thousand

23  Up to $100,000 of liability written        $3.30

24  Over $100,000 and up to $1 million, add    $3.00

25  Over $1 million and up to $10 million, add $2.00

26  Over $10 million, add                      $1.50

27

28  The minimum premium shall be $100.

29         (b)  Provided a previous owner's policy was issued

30  insuring the seller or the mortgagor in the current

31  transaction and that both the reissuing agent and the


                                  19

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  reissuing underwriter retain for their respective files copies

  2  of the prior owner's policy or policies, the reissue premium

  3  rates in paragraph (a) shall apply to:

  4         1.  Policies on real property which is unimproved

  5  except for roads, bridges, drainage facilities, and utilities

  6  if the current owner's title has been insured prior to the

  7  application for a new policy;

  8         2.  Policies issued with an effective date of less than

  9  3 years after the effective date of the policy insuring the

10  seller or mortgagor in the current transaction; or

11         3.  Mortgage policies issued on refinancing of property

12  insured by an original owner's policy which insured the title

13  of the current mortgagor.

14         (c)  Any amount of new insurance, in the aggregate, in

15  excess of the amount under the previous policy shall be

16  computed at the original owner's or leasehold rates, as

17  provided in subsection (1).

18         (3)  NEW HOME PURCHASE DISCOUNT.--Provided the seller

19  has not leased or occupied the premises, the original premium

20  for a policy on the first sale of residential property with a

21  one to four family improvement that is granted a certificate

22  of occupancy shall be discounted by the amount of premium paid

23  for any prior loan policies insuring the lien of a mortgage

24  executed by the seller on the premises. In the case of prior

25  loan policies insuring the lien of a mortgage on multiple

26  units or parcels, the discount shall be prorated by dividing

27  the amount of the premium paid for the prior loan policies by

28  the total number of units or parcels without regard to varying

29  unit or parcel value. The minimum new home purchase premium

30  shall be $200. The new home purchase discount may not be

31  combined with any other reduction from original premium rates


                                  20

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  provided for in this section. The insurer shall reserve for

  2  unearned premiums only on the excess amount of the policy over

  3  the amount of the actual or prorated amount of the prior loan

  4  policy.

  5         (4)  SUBSTITUTION LOANS RATES.--

  6         (a)  When the same borrower and the same lender make a

  7  substitution loan on the same property, the title to which was

  8  insured by an insurer in connection with the previous loan,

  9  the following premium rates for substitution loans shall

10  apply:

11

12  Age of Previous Loan    Premium Rates

13  3 years or under        30 percent of the original rates

14  From 3 to 4 years       40 percent of the original rates

15  From 4 to 5 years       50 percent of the original rates

16  From 5 to 10 years      60 percent of the original rates

17  Over 10 years           100 percent of original rates

18

19  The minimum premium for substitution loan rates shall be $100.

20         (b)  At the time a substitution loan is made, the

21  unpaid principal balance of the previous loan will be

22  considered the amount of insurance in force on which the

23  foregoing premium rates shall be calculated. To these rates

24  shall be added the original rates in the applicable schedules

25  for any new insurance, including any difference between the

26  unpaid principal balance of the previous loan and the amount

27  of the new loan.

28         (c)  In the case of a substitution loan of $250,000 or

29  more, when the same borrower and any lender make a

30  substitution loan on the same property, the title to which was

31  insured by an insurer in connection with the previous loan,


                                  21

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  the premium for such substitution loans shall be the rates as

  2  set forth in paragraphs (a) and (b).

  3         Section 13.  Section 627.783, Florida Statutes, is

  4  amended to read:

  5         627.783  Rate deviation.--

  6         (1)  A title insurer may petition the department for an

  7  order authorizing a specific deviation from the adopted risk

  8  premium, and a title insurer or title insurance agent may

  9  petition the department for an order authorizing and

10  permitting a specific deviation above the reasonable charge

11  for related title other services rendered specified in s.

12  627.782(1).  The petition shall be in writing and sworn to and

13  shall set forth allegations of fact upon which the petitioner

14  will rely, including the petitioner's reasons for requesting

15  the deviation.  Any authorized title insurer, or agent, or

16  agency may join in the petition for like authority to deviate

17  or may file a separate petition praying for like authority or

18  opposing the deviation. The department shall rule on all such

19  petitions simultaneously.

20         (2)  If, in the judgment of the department, the

21  requested deviation is not justified, the department may enter

22  an order denying the petition.  An order granting a petition

23  constitutes an amendment to the adopted risk premium as to the

24  petitioners named in the order, and is subject to s. 627.782.

25         Section 14.  Section 627.7831, Florida Statutes, is

26  amended to read:

27         627.7831  Title binders and Commitments; charges;

28  collection.--

29         (1)  When a title insurance binder or a commitment to

30  insure a title or risk is issued at the request of the insured

31  or the insured's representative, or agent, or agency, a


                                  22

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  portion of the risk premium must be charged for the binder or

  2  commitment when issued. The portion of the risk premium

  3  charged for the binder or commitment must be credited to the

  4  risk premium due upon issuance of the title insurance policy.

  5         (2)  The amount charged under subsection (1) must be

  6  collected no later than the date of the closing or 12 months

  7  after the date of the commitment or binder, whichever occurs

  8  earlier, or another date agreed to in writing at the time of

  9  issuance of the binder or commitment.

10         (3)  This section does not apply to a transaction

11  involving a residential property.

12         Section 15.  Section 627.784, Florida Statutes, is

13  amended to read:

14         627.784  Casualty title insurance prohibited.--A title

15  insurance policy or guarantee of title may not be issued

16  without regard with disregard to the possible existence of

17  adverse matters or defects of title.

18         Section 16.  Section 627.7841, Florida Statutes, is

19  amended to read:

20         627.7841  Insurance against adverse matters or defects

21  in the title.--If a title insurer issuing a binder, commitment

22  or, policy of title insurance, or guarantee of title upon an

23  estate, lien, or interest in property located in this state

24  through its officers, employees, or agents, or agencies

25  disburses settlement or closing funds, the title insurer shall

26  insure against the possible existence of adverse matters or

27  defects in the title which are recorded during the period of

28  time between the effective date of the binder or commitment

29  and the date of recording of the document creating the estate

30  or interest to be insured, except as to matters of which the

31  insured has knowledge.


                                  23

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         Section 17.  Subsection (2) of section 627.7842,

  2  Florida Statutes, is amended to read:

  3         627.7842  Policy exceptions.--

  4         (2)  The title insurer, or agent, or agency issuing the

  5  title policy may except from coverage the items specified in

  6  subsection (1) if the title insurer, or agent, or agency has

  7  knowledge of facts requiring the exceptions, notwithstanding

  8  the survey or affidavits, if the insurer, or agent, or agency

  9  discloses such facts to the proposed insured.

10         Section 18.  Section 627.7845, Florida Statutes, is

11  amended to read:

12         627.7845  Determination of insurability required;

13  preservation of evidence of title search and examination.--

14         (1)  A title insurer may not issue a title insurance

15  binder, commitment, endorsement, or title insurance policy, or

16  guarantee of title until the title insurer has caused to be

17  conducted a reasonable search and examination of the title and

18  of such other information as may be necessary, and has caused

19  to be made a determination of insurability of title, including

20  endorsement coverages, in accordance with sound underwriting

21  practices.

22         (2)  The title insurer shall cause the evidence of the

23  reasonable search and examination of the title to be preserved

24  and retained in its files or in the files of its title

25  insurance agent or agency for a period of not less than 7

26  years after the title insurance binder, commitment, title

27  insurance policy, or guarantee of title was issued.  The title

28  insurer or agent or agency must produce the evidence required

29  to be maintained by this subsection at its offices upon the

30  demand of the department. Instead of retaining the original

31  evidence, the title insurer or the title insurance agent or


                                  24

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1  agency may, in the regular course of business, establish a

  2  system under which all or part of the evidence is recorded,

  3  copied, or reproduced by any photographic, photostatic,

  4  microfilm, microcard, miniature photographic, or other process

  5  which accurately reproduces or forms a durable medium for

  6  reproducing the original.

  7         (3)  The title insurer or its agent or agency must

  8  maintain a record of the actual risk premium and related title

  9  service charges made for issuance of the policy and any

10  endorsements in its files for a period of not less than 7

11  years.  The title insurer, or agent, or agency must produce

12  the record at its office upon demand of the department.

13         (4)  This section does not apply to an insurer assuming

14  no primary liability in a contract of reinsurance or to an

15  insurer acting as a coinsurer if any other coinsuring insurer

16  has complied with this section.

17         Section 19.  Subsection (3) of section 627.786, Florida

18  Statutes, is amended to read:

19         627.786  Transaction of title insurance and any other

20  kind of insurance prohibited.--

21         (3)  Subsection (1) does not preclude a title insurer

22  from providing instruments to any prospective insured, in the

23  form and content approved by the department, under which the

24  title insurer assumes liability for loss due to the fraud of,

25  dishonesty of, misappropriation of funds by, or failure to

26  comply with written closing instructions by, its contract

27  agents, agencies, or approved attorneys in connection with a

28  real property transaction for which the title insurer is to

29  issue a title insurance policy or guarantee of title.

30         Section 20.  Section 627.791, Florida Statutes, is

31  amended to read:


                                  25

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         627.791  Penalties against title insurers for

  2  violations by persons or entities not licensed.--A title

  3  insurer is subject to the penalties in ss. 624.418(2) and

  4  624.4211 for any violation of a lawful order or rule of the

  5  department, or for any violation of this code, committed by:

  6         (1)  A person, firm, association, corporation,

  7  cooperative, joint-stock company, or other legal entity not

  8  licensed under this part when issuing and countersigning

  9  binders, commitments or, policies of title insurance, or

10  guarantees of title on behalf of the title insurer.

11         (2)  An attorney when issuing and countersigning

12  binders, commitments or, policies of title insurance, or

13  guarantees of title on behalf of the title insurer.

14         Section 21.  Section 627.792, Florida Statutes, is

15  amended to read:

16         627.792  Liability of title insurers for defalcation by

17  title insurance agents or agencies.--A title insurer is liable

18  for the defalcation, conversion, or misappropriation by a

19  licensed title insurance agent or agency of funds held in

20  trust by the agent or agency pursuant to s. 626.8473.  If the

21  agent or agency is an agent or agency for licensed by two or

22  more title insurers, any liability shall be borne by the title

23  insurer upon which a title insurance binder, commitment or,

24  policy, or title guarantee was issued prior to the illegal

25  act.  If no binder, commitment or, policy, or guarantee was

26  issued, each title insurer represented by the agent or agency

27  at the time of the illegal act shares in the liability in the

28  same proportion that the premium remitted to it by the agent

29  or agency during the 1-year period before the illegal act

30  bears to the total premium remitted to all title insurers by

31  the agent or agency during the same time period.


                                  26

CODING: Words stricken are deletions; words underlined are additions.




    ENROLLED

    1999 Legislature                    CS/HB 403, First Engrossed



  1         Section 22.  Section 627.793, Florida Statutes, is

  2  created to read:

  3         627.793  Rulemaking authority.--The department is

  4  authorized to adopt rules implementing the provisions of this

  5  part.

  6         Section 23.  This act shall take effect July 1, 1999.

  7

  8

  9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31


                                  27