Senate Bill 0746
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Florida Senate - 1999 SB 746
By Senator Grant
13-388-99 See HB
1 A bill to be entitled
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. 627.7711, F.S.;
11 revising definitions; amending s. 627.782,
12 F.S.; providing a limitation on payment of
13 portions of premiums for primary title
14 services; providing an effective date.
15
16 Be It Enacted by the Legislature of the State of Florida:
17
18 Section 1. Subsection (1) of section 624.509, Florida
19 Statutes, 1998 Supplement, is amended to read:
20 624.509 Premium tax; rate and computation.--
21 (1) In addition to the license taxes provided for in
22 this chapter, each insurer shall also annually, and on or
23 before March 1 in each year, except as to wet marine and
24 transportation insurance taxed under s. 624.510, pay to the
25 Department of Revenue a tax on insurance premiums, risk
26 premiums for title insurance, or assessments, including
27 membership fees and policy fees and gross deposits received
28 from subscribers to reciprocal or interinsurance agreements,
29 and on annuity premiums or considerations, received during the
30 preceding calendar year, the amounts thereof to be determined
31 as set forth in this section, to wit:
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1 (a) An amount equal to 1.75 percent of the gross
2 amount of such receipts on account of life and health
3 insurance policies covering persons resident in this state and
4 on account of all other types of policies and contracts
5 (except annuity policies or contracts taxable under paragraph
6 (b)) covering property, subjects, or risks located, resident,
7 or to be performed in this state, omitting premiums on
8 reinsurance accepted, and less return premiums or assessments,
9 but without deductions:
10 1. For reinsurance ceded to other insurers;
11 2. For moneys paid upon surrender of policies or
12 certificates for cash surrender value;
13 3. For discounts or refunds for direct or prompt
14 payment of premiums or assessments; and
15 4. On account of dividends of any nature or amount
16 paid and credited or allowed to holders of insurance policies;
17 certificates; or surety, indemnity, reciprocal, or
18 interinsurance contracts or agreements; and
19 (b) An amount equal to 1 percent of the gross receipts
20 on annuity policies or contracts paid by holders thereof in
21 this state.
22 Section 2. Section 626.841, Florida Statutes, is
23 amended to read:
24 626.841 Definitions.--The term:
25 (1) "Title insurance agent" means a person appointed
26 in writing by a title insurer to issue and countersign
27 commitments or binders, commitments, policies of title
28 insurance, or guarantees of title in its behalf.
29 (2) "Title insurance agency" means an insurance agency
30 under which title insurance agents and other employees
31 determine insurability in accordance with underwriting rules
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1 and standards prescribed by the title insurer represented by
2 the agency, and issue and countersign commitments binders,
3 commitments of title insurance, endorsements, or policies
4 guarantees of title insurance, on behalf of the appointing
5 title insurer. The term does not include a title insurer.
6 Section 3. Paragraph (c) of subsection (2) of section
7 626.8411, Florida Statutes, 1998 Supplement, is amended to
8 read:
9 626.8411 Application of Florida Insurance Code
10 provisions to title insurance agents or agencies.--
11 (2) The following provisions of part I do not apply to
12 title insurance agents or title insurance agencies:
13 (c) Section 626.572 626.752, relating to rebating,
14 when allowed exchange of business.
15 Section 4. Paragraph (h) of subsection (1) of section
16 626.9541, Florida Statutes, is amended to read:
17 626.9541 Unfair methods of competition and unfair or
18 deceptive acts or practices defined.--
19 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR
20 DECEPTIVE ACTS.--The following are defined as unfair methods
21 of competition and unfair or deceptive acts or practices:
22 (h) Unlawful Rebates.--
23 1. Except as otherwise expressly provided by law, or
24 in an applicable filing with the department, knowingly:
25 a. Permitting, or offering to make, or making, any
26 contract or agreement as to such contract other than as
27 plainly expressed in the insurance contract issued thereon;
28 b. Paying, allowing, or giving, or offering to pay,
29 allow, or give, directly or indirectly, as inducement to such
30 insurance contract, any unlawful rebate of premiums payable on
31 the contract, any special favor or advantage in the dividends
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1 or other benefits thereon, or any valuable consideration or
2 inducement whatever not specified in the contract;
3 c. Giving, selling, or purchasing, or offering to
4 give, sell, or purchase, as inducement to such insurance
5 contract or in connection therewith, any stocks, bonds, or
6 other securities of any insurance company or other
7 corporation, association, or partnership, or any dividends or
8 profits accrued thereon, or anything of value whatsoever not
9 specified in the insurance contract.
10 2. Nothing in paragraph (g) or subparagraph 1. of this
11 paragraph shall be construed as including within the
12 definition of discrimination or unlawful rebates:
13 a. In the case of any contract of life insurance or
14 life annuity, paying bonuses to all policyholders or otherwise
15 abating their premiums in whole or in part out of surplus
16 accumulated from nonparticipating insurance; provided that any
17 such bonuses or abatement of premiums is fair and equitable to
18 all policyholders and for the best interests of the company
19 and its policyholders.
20 b. In the case of life insurance policies issued on
21 the industrial debit plan, making allowance to policyholders
22 who have continuously for a specified period made premium
23 payments directly to an office of the insurer in an amount
24 which fairly represents the saving in collection expenses.
25 c. Readjustment of the rate of premium for a group
26 insurance policy based on the loss or expense thereunder, at
27 the end of the first or any subsequent policy year of
28 insurance thereunder, which may be made retroactive only for
29 such policy year.
30 d. Issuance of life insurance policies or annuity
31 contracts at rates less than the usual rates of premiums for
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1 such policies or contracts, as group insurance or employee
2 insurance as defined in this code.
3 e. Issuing life or disability insurance policies on a
4 salary savings, bank draft, preauthorized check, payroll
5 deduction, or other similar plan at a reduced rate reasonably
6 related to the savings made by the use of such plan.
7 3.a. No title insurer, or any member, employee,
8 attorney, agent, agency, or solicitor thereof, shall pay,
9 allow, or give, or offer to pay, allow, or give, directly or
10 indirectly, as inducement to title insurance, or after such
11 insurance has been effected, any unlawful rebate or abatement
12 of the agent's, agency's, or title insurer's share of the
13 premium or any charge for related title services below the
14 cost for providing such services, or provide charge made
15 incident to the issuance of such insurance, any special favor
16 or advantage, or any monetary consideration or inducement
17 whatever. The words "charge made incident to the issuance of
18 such insurance" shall be construed to encompass underwriting
19 premium, agent's commission, abstracting charges, title
20 examination fee, and closing charges; however, Nothing herein
21 contained shall preclude an abatement in an attorney's fee
22 charged for legal services rendered incident to the issuance
23 of such insurance.
24 b. Nothing in this subparagraph shall be construed as
25 prohibiting the payment of fees to attorneys at law duly
26 licensed to practice law in the courts of this state, for
27 professional services in the actual examination of title to
28 real property as a condition to the issuance of title
29 insurance, or as prohibiting the payment of earned portions of
30 the premium commissions to duly appointed agents or agencies
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1 who actually perform services for the title insurer issue the
2 policy of title insurance for the underwriting company.
3 c. No insured named in a policy, or any other person
4 directly or indirectly connected with the transaction
5 involving the issuance of such policy, including, but not
6 limited to, any mortgage broker, real estate broker, builder,
7 or attorney, any employee, agent, agency, representative, or
8 solicitor thereof, or any other person whatsoever, shall
9 knowingly receive or accept, directly or indirectly, any
10 unlawful rebate or abatement of said charge, or any monetary
11 consideration or inducement, other than as set forth in
12 sub-subparagraph b.
13 Section 5. Subsections (1) and (2) of section
14 627.7711, Florida Statutes, are amended to read:
15 627.7711 Definitions.--As used in this part, the term:
16 (1)(a) "Related title services" means services
17 performed by a title insurer or title insurance agent or
18 agency, in the agent's or agency's capacity as such,
19 including, but not limited to, preparing or obtaining a title
20 search, examining title information, preparing documents
21 necessary to close the transaction, conducting the closing, or
22 handling the disbursing of funds related to the closing in a
23 real estate closing transaction in which a title insurance
24 binder, commitment, or policy is to be issued. The risk
25 premium, together with the charge for related title services,
26 constitutes the regular title insurance premium.
27 (b) "Primary title services" means determining
28 insurability in accordance with sound underwriting practices
29 based upon evaluation of a reasonable search and examination
30 of the title, determination and clearance of underwriting
31 objections and requirements to eliminate risk, preparation and
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1 issuance of a title insurance commitment setting forth the
2 requirements to insure, and preparation and issuance of the
3 policy.
4 (2) "Risk Premium" means the charge, as specified by
5 rule of the department, that is made by a title insurer for a
6 title insurance policy, including the charge for performance
7 of primary title services by a title insurer or title
8 insurance agent or agency, and incurring the risks incident to
9 such policy the assumption of the risk, under the several
10 classifications of title insurance contracts and forms, and
11 upon which charge a premium tax is paid under s. 624.509. As
12 used in this part or in any other law, with respect to title
13 insurance, the words "premium" does or "risk premium" mean
14 only the risk premium as defined in this section and do not
15 include a commission any other charge incidental to title
16 insurance.
17 Section 6. Section 627.777, Florida Statutes, is
18 amended to read:
19 627.777 Approval of forms.--A title insurer may not
20 issue or agree to issue any form of title insurance binder,
21 title insurance commitment, preliminary report, title
22 insurance policy, other contract of title insurance, or
23 related form until it is filed with and approved by the
24 department. The department may not disapprove a title
25 guarantee or policy form on the ground that it has on it a
26 blank form for an attorney's opinion on the title.
27 Section 7. Section 627.7773, Florida Statutes, is
28 amended to read:
29 627.7773 Accounting and auditing of forms by title
30 insurers.--
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1 (1) Each title insurer authorized to do business in
2 this state shall, at least once during each calendar year,
3 require of each of its title insurance agents or agencies
4 accountings of all outstanding forms in the agent's or
5 agency's possession of the types that are specified in s.
6 627.777.
7 (2) If the department has reason to believe that an
8 audit of outstanding forms should be required of any title
9 insurer as to a title insurance agent or agency, the
10 department may require the title insurer to make a special
11 audit of the forms. The title insurer shall complete the
12 audit not later than 60 days after the request is received
13 from the department, and shall report the results of the
14 special audit to the department no later than 90 days after
15 the request is received.
16 Section 8. Section 627.7776, Florida Statutes, is
17 amended to read:
18 627.7776 Furnishing of supplies; civil liability.--
19 (1) A title insurer may not furnish to any person any
20 blank forms, applications, stationery, or other supplies to be
21 used in soliciting, negotiating, or effecting contracts of
22 title insurance on its behalf until that person has received
23 from the insurer a contract to act as a title insurance agent
24 or agency and has been licensed by the department, if required
25 by s. 626.8417.
26 (2) A title insurer or title insurance agent or agency
27 that furnishes any supplies to a person not authorized by the
28 title insurer as provided in subsection (1) is subject to
29 civil liability to any insured of the title insurer to the
30 same extent and in the same manner as if the person had been
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1 appointed or authorized by the title insurer to act in its
2 behalf.
3 Section 9. Section 627.780, Florida Statutes, is
4 amended to read:
5 627.780 Illegal dealings in risk premium.--
6 (1) A person may not knowingly quote, charge, accept,
7 collect, or receive a risk premium for title insurance other
8 than the risk premium adopted by the department.
9 (2) A title insurer may not knowingly accept, collect,
10 or receive any sum as risk premium for title insurance, if the
11 title insurance is not then provided or is not to be provided,
12 subject to acceptance of the risk, in due course, unless the
13 title insurer promptly enters the sum on its books of account
14 as premium collected in advance.
15 Section 10. Section 627.782, Florida Statutes, is
16 amended to read:
17 627.782 Adoption of rates.--
18 (1) Subject to the rating provisions of this code, the
19 department must adopt a rule specifying the risk premium to be
20 charged in this state by title insurers for the respective
21 types of title insurance contracts and, for policies issued
22 through agents or agencies, the percentage of such premium
23 required to be retained by the title insurer which shall and
24 services incident thereto. The department may, by rule,
25 establish limitations on such reasonable charges made in
26 addition to the risk premium based upon the expenses
27 associated with the services rendered and other relevant
28 factors. The department must also adopt rules incident to the
29 applicability of the risk premium, including the percentage or
30 amount of the risk premium required to be maintained by the
31 title insurer, and related rules to ensure that the amounts
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1 required to be maintained by the insurer are not be less than
2 30 percent of the risk premium for policies sold by agents.
3 However, in a transaction subject to the Real Estate
4 Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as
5 amended from time to time, no portion of the premium
6 attributable to providing a primary title service shall be
7 paid to or retained by any person who does not actually
8 perform or is not liable for the performance of such service.
9 (2) In adopting premium rates, the department must
10 give due consideration to the following:
11 (a) The title insurers' loss experience and
12 prospective loss experience under insured closing protection
13 service letters, search and examination services, and policy
14 liabilities.
15 (b) A reasonable margin for underwriting profit and
16 contingencies, including contingent liability under s.
17 627.7865, sufficient to allow title insurers, and agents, and
18 agencies to earn a rate of return on their capital that will
19 attract and retain adequate capital investment in the title
20 insurance business and maintain the title insurance delivery
21 system.
22 (c) Past expenses and prospective expenses for
23 administration and handling of risks.
24 (d) Liability for defalcation.
25 (e) Other relevant factors.
26 (3) Rates may be grouped by classification or schedule
27 and may differ as to class of risk assumed.
28 (4) Rates may not be excessive, inadequate, or
29 unfairly discriminatory.
30 (5) The risk premium applies to each $100 of insurance
31 issued to an insured.
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1 (6) The risk premium rates apply throughout this
2 state.
3 (7) The department shall, in accordance with the
4 standards provided in subsection (2), review the risk premium
5 and the related title services rate as needed, but not less
6 frequently than once every 3 years, and shall, based upon the
7 review required by this subsection, revise the risk premium
8 and the related title services rate if the results of the
9 review so warrant.
10 (8) The department may, by rule, require licensees
11 under this part to annually submit statistical information,
12 including loss and expense data, as the department determines
13 to be necessary to analyze risk premium and related title
14 services rates, retention rates, and the condition of the
15 title insurance industry.
16 Section 11. Section 627.783, Florida Statutes, is
17 amended to read:
18 627.783 Rate deviation.--
19 (1) A title insurer may petition the department for an
20 order authorizing a specific deviation from the adopted risk
21 premium, and a title insurer or title insurance agent may
22 petition the department for an order authorizing and
23 permitting a specific deviation above the reasonable charge
24 for other services rendered specified in s. 627.782(1). The
25 petition shall be in writing and sworn to and shall set forth
26 allegations of fact upon which the petitioner will rely,
27 including the petitioner's reasons for requesting the
28 deviation. Any authorized title insurer, or agent, or agency
29 may join in the petition for like authority to deviate or may
30 file a separate petition praying for like authority or
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1 opposing the deviation. The department shall rule on all such
2 petitions simultaneously.
3 (2) If, in the judgment of the department, the
4 requested deviation is not justified, the department may enter
5 an order denying the petition. An order granting a petition
6 constitutes an amendment to the adopted risk premium as to the
7 petitioners named in the order, and is subject to s. 627.782.
8 Section 12. Section 627.7831, Florida Statutes, is
9 amended to read:
10 627.7831 Title binders and Commitments; charges;
11 collection.--
12 (1) When a title insurance binder or a commitment to
13 insure a title or risk is issued at the request of the insured
14 or the insured's representative, or agent, or agency, a
15 portion of the risk premium must be charged for the binder or
16 commitment when issued. The portion of the risk premium
17 charged for the binder or commitment must be credited to the
18 risk premium due upon issuance of the title insurance policy.
19 (2) The amount charged under subsection (1) must be
20 collected no later than the date of the closing or 12 months
21 after the date of the commitment or binder, whichever occurs
22 earlier, or another date agreed to in writing at the time of
23 issuance of the binder or commitment.
24 (3) This section does not apply to a transaction
25 involving a residential property.
26 Section 13. Section 627.784, Florida Statutes, is
27 amended to read:
28 627.784 Casualty title insurance prohibited.--A title
29 insurance policy or guarantee of title may not be issued
30 without regard with disregard to the possible existence of
31 adverse matters or defects of title.
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1 Section 14. Section 627.7841, Florida Statutes, is
2 amended to read:
3 627.7841 Insurance against adverse matters or defects
4 in the title.--If a title insurer issuing a binder,
5 commitment, policy of title insurance, or guarantee of title
6 upon an estate, lien, or interest in property located in this
7 state through its officers, employees, or agents, or agencies
8 disburses settlement or closing funds, the title insurer shall
9 insure against the possible existence of adverse matters or
10 defects in the title which are recorded during the period of
11 time between the effective date of the binder or commitment
12 and the date of recording of the document creating the estate
13 or interest to be insured, except as to matters of which the
14 insured has knowledge.
15 Section 15. Subsection (2) of section 627.7842,
16 Florida Statutes, is amended to read:
17 627.7842 Policy exceptions.--
18 (2) The title insurer, or agent, or agency issuing the
19 title policy may except from coverage the items specified in
20 subsection (1) if the title insurer, or agent, or agency has
21 knowledge of facts requiring the exceptions, notwithstanding
22 the survey or affidavits, if the insurer, or agent, or agency
23 discloses such facts to the proposed insured.
24 Section 16. Section 627.7845, Florida Statutes, is
25 amended to read:
26 627.7845 Determination of insurability required;
27 preservation of evidence of title search and examination.--
28 (1) A title insurer may not issue a title insurance
29 binder, commitment, endorsement, title insurance policy, or
30 guarantee of title until the title insurer has caused to be
31 conducted a reasonable search and examination of the title and
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1 of such other information as may be necessary, and has caused
2 to be made a determination of insurability of title, including
3 endorsement coverages, in accordance with sound underwriting
4 practices.
5 (2) The title insurer shall cause the evidence of the
6 reasonable search and examination of the title to be preserved
7 and retained in its files or in the files of its title
8 insurance agent or agency for a period of not less than 7
9 years after the title insurance binder, commitment, title
10 insurance policy, or guarantee of title was issued. The title
11 insurer or agent or agency must produce the evidence required
12 to be maintained by this subsection at its offices upon the
13 demand of the department. Instead of retaining the original
14 evidence, the title insurer or the title insurance agent or
15 agency may, in the regular course of business, establish a
16 system under which all or part of the evidence is recorded,
17 copied, or reproduced by any photographic, photostatic,
18 microfilm, microcard, miniature photographic, or other process
19 which accurately reproduces or forms a durable medium for
20 reproducing the original.
21 (3) The title insurer or its agent or agency must
22 maintain a record of the actual risk premium and related title
23 service charges made for issuance of the policy and any
24 endorsements in its files for a period of not less than 7
25 years. The title insurer, or agent, or agency must produce
26 the record at its office upon demand of the department.
27 (4) This section does not apply to an insurer assuming
28 no primary liability in a contract of reinsurance or to an
29 insurer acting as a coinsurer if any other coinsuring insurer
30 has complied with this section.
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1 Section 17. Subsection (3) of section 627.786, Florida
2 Statutes, is amended to read:
3 627.786 Transaction of title insurance and any other
4 kind of insurance prohibited.--
5 (3) Subsection (1) does not preclude a title insurer
6 from providing instruments to any prospective insured, in the
7 form and content approved by the department, under which the
8 title insurer assumes liability for loss due to the fraud of,
9 dishonesty of, misappropriation of funds by, or failure to
10 comply with written closing instructions by, its contract
11 agents, agencies, or approved attorneys in connection with a
12 real property transaction for which the title insurer is to
13 issue a title insurance policy or guarantee of title.
14 Section 18. Section 627.791, Florida Statutes, is
15 amended to read:
16 627.791 Penalties against title insurers for
17 violations by persons or entities not licensed.--A title
18 insurer is subject to the penalties in ss. 624.418(2) and
19 624.4211 for any violation of a lawful order or rule of the
20 department, or for any violation of this code, committed by:
21 (1) A person, firm, association, corporation,
22 cooperative, joint-stock company, or other legal entity not
23 licensed under this part when issuing and countersigning
24 binders, commitments or, policies of title insurance, or
25 guarantees of title on behalf of the title insurer.
26 (2) An attorney when issuing and countersigning
27 binders, commitments or, policies of title insurance, or
28 guarantees of title on behalf of the title insurer.
29 Section 19. Section 627.792, Florida Statutes, is
30 amended to read:
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1 627.792 Liability of title insurers for defalcation by
2 title insurance agents or agencies.--A title insurer is liable
3 for the defalcation, conversion, or misappropriation by a
4 licensed title insurance agent or agency of funds held in
5 trust by the agent or agency pursuant to s. 626.8473. If the
6 agent or agency is an agent or agency for licensed by two or
7 more title insurers, any liability shall be borne by the title
8 insurer upon which a title insurance binder, commitment or,
9 policy, or title guarantee was issued prior to the illegal
10 act. If no binder, commitment or, policy, or guarantee was
11 issued, each title insurer represented by the agent or agency
12 at the time of the illegal act shares in the liability in the
13 same proportion that the premium remitted to it by the agent
14 or agency during the 1-year period before the illegal act
15 bears to the total premium remitted to all title insurers by
16 the agent or agency during the same time period.
17 Section 20. This act shall take effect July 1, 1999.
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20 LEGISLATIVE SUMMARY
21 Generally revises and clarifies provisions relating to
title insurance agents, policies, premiums, rates,
22 contracts, charges, and practices.
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