Senate Bill 0746c1
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Florida Senate - 1999 CS for SB 746
By the Committee on Banking and Insurance; and Senator Grant
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1 A bill to be entitled
2 An act relating to title insurance; making
3 legislative findings; amending ss. 624.509,
4 626.841, 626.8411, 626.9541, 627.7711, 627.777,
5 627.7773, 627.7776, 627.780, 627.783, 627.7831,
6 627.784, 627.7841, 627.7842, 627.7845, 627.786,
7 627.791, and 627.792, F.S.; revising and
8 clarifying application of provisions relating
9 to title insurance agents, policies, premiums,
10 rates, contracts, charges, and practices;
11 amending s. 627.7711, F.S.; revising
12 definitions; amending s. 627.782, F.S.;
13 providing a limitation on payment of portions
14 of premiums for primary title services;
15 authorizing the Department of Insurance to
16 adopt rules; providing an effective date.
17
18 WHEREAS, the Legislature finds that regulation of
19 insurance is in the public interest; that it promotes the
20 public health, safety and welfare by assuring the solvency and
21 soundness of insurers; that determination of insurability of
22 title to real property prior to insuring such property is
23 essential to the maintenance of the solvency and soundness of
24 title insurers; and that because title insurance agents or
25 agencies determine insurability on behalf of title insurers,
26 there is a direct relationship between the determination of
27 insurability performed by title agents or agencies and the
28 public interest; NOW, THEREFORE,
29
30 Be It Enacted by the Legislature of the State of Florida:
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1 Section 1. Subsection (1) of section 624.509, Florida
2 Statutes, 1998 Supplement, is amended to read:
3 624.509 Premium tax; rate and computation.--
4 (1) In addition to the license taxes provided for in
5 this chapter, each insurer shall also annually, and on or
6 before March 1 in each year, except as to wet marine and
7 transportation insurance taxed under s. 624.510, pay to the
8 Department of Revenue a tax on insurance premiums, risk
9 premiums for title insurance, or assessments, including
10 membership fees and policy fees and gross deposits received
11 from subscribers to reciprocal or interinsurance agreements,
12 and on annuity premiums or considerations, received during the
13 preceding calendar year, the amounts thereof to be determined
14 as set forth in this section, to wit:
15 (a) An amount equal to 1.75 percent of the gross
16 amount of such receipts on account of life and health
17 insurance policies covering persons resident in this state and
18 on account of all other types of policies and contracts
19 (except annuity policies or contracts taxable under paragraph
20 (b)) covering property, subjects, or risks located, resident,
21 or to be performed in this state, omitting premiums on
22 reinsurance accepted, and less return premiums or assessments,
23 but without deductions:
24 1. For reinsurance ceded to other insurers;
25 2. For moneys paid upon surrender of policies or
26 certificates for cash surrender value;
27 3. For discounts or refunds for direct or prompt
28 payment of premiums or assessments; and
29 4. On account of dividends of any nature or amount
30 paid and credited or allowed to holders of insurance policies;
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1 certificates; or surety, indemnity, reciprocal, or
2 interinsurance contracts or agreements; and
3 (b) An amount equal to 1 percent of the gross receipts
4 on annuity policies or contracts paid by holders thereof in
5 this state.
6 Section 2. Section 626.841, Florida Statutes, is
7 amended to read:
8 626.841 Definitions.--The term:
9 (1) "Title insurance agent" means a person appointed
10 in writing by a title insurer to issue and countersign
11 commitments or binders, commitments, policies of title
12 insurance, or guarantees of title in its behalf.
13 (2) "Title insurance agency" means an insurance agency
14 under which title insurance agents and other employees
15 determine insurability in accordance with underwriting rules
16 and standards prescribed by the title insurer represented by
17 the agency, and issue and countersign commitments binders,
18 commitments of title insurance, endorsements, or policies
19 guarantees of title insurance, on behalf of the appointing
20 title insurer. The term does not include a title insurer.
21 Section 3. Paragraph (c) of subsection (2) of section
22 626.8411, Florida Statutes, 1998 Supplement, is amended to
23 read:
24 626.8411 Application of Florida Insurance Code
25 provisions to title insurance agents or agencies.--
26 (2) The following provisions of part I do not apply to
27 title insurance agents or title insurance agencies:
28 (c) Section 626.572 626.752, relating to rebating,
29 when allowed exchange of business.
30 Section 4. Paragraph (h) of subsection (1) of section
31 626.9541, Florida Statutes, is amended to read:
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1 626.9541 Unfair methods of competition and unfair or
2 deceptive acts or practices defined.--
3 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR
4 DECEPTIVE ACTS.--The following are defined as unfair methods
5 of competition and unfair or deceptive acts or practices:
6 (h) Unlawful Rebates.--
7 1. Except as otherwise expressly provided by law, or
8 in an applicable filing with the department, knowingly:
9 a. Permitting, or offering to make, or making, any
10 contract or agreement as to such contract other than as
11 plainly expressed in the insurance contract issued thereon;
12 b. Paying, allowing, or giving, or offering to pay,
13 allow, or give, directly or indirectly, as inducement to such
14 insurance contract, any unlawful rebate of premiums payable on
15 the contract, any special favor or advantage in the dividends
16 or other benefits thereon, or any valuable consideration or
17 inducement whatever not specified in the contract;
18 c. Giving, selling, or purchasing, or offering to
19 give, sell, or purchase, as inducement to such insurance
20 contract or in connection therewith, any stocks, bonds, or
21 other securities of any insurance company or other
22 corporation, association, or partnership, or any dividends or
23 profits accrued thereon, or anything of value whatsoever not
24 specified in the insurance contract.
25 2. Nothing in paragraph (g) or subparagraph 1. of this
26 paragraph shall be construed as including within the
27 definition of discrimination or unlawful rebates:
28 a. In the case of any contract of life insurance or
29 life annuity, paying bonuses to all policyholders or otherwise
30 abating their premiums in whole or in part out of surplus
31 accumulated from nonparticipating insurance; provided that any
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1 such bonuses or abatement of premiums is fair and equitable to
2 all policyholders and for the best interests of the company
3 and its policyholders.
4 b. In the case of life insurance policies issued on
5 the industrial debit plan, making allowance to policyholders
6 who have continuously for a specified period made premium
7 payments directly to an office of the insurer in an amount
8 which fairly represents the saving in collection expenses.
9 c. Readjustment of the rate of premium for a group
10 insurance policy based on the loss or expense thereunder, at
11 the end of the first or any subsequent policy year of
12 insurance thereunder, which may be made retroactive only for
13 such policy year.
14 d. Issuance of life insurance policies or annuity
15 contracts at rates less than the usual rates of premiums for
16 such policies or contracts, as group insurance or employee
17 insurance as defined in this code.
18 e. Issuing life or disability insurance policies on a
19 salary savings, bank draft, preauthorized check, payroll
20 deduction, or other similar plan at a reduced rate reasonably
21 related to the savings made by the use of such plan.
22 3.a. No title insurer, or any member, employee,
23 attorney, agent, agency, or solicitor thereof, shall pay,
24 allow, or give, or offer to pay, allow, or give, directly or
25 indirectly, as inducement to title insurance, or after such
26 insurance has been effected, any unlawful rebate or abatement
27 of the agent's, agency's, or title insurer's share of the
28 premium or any charge for related title services below the
29 cost for providing such services, or provide charge made
30 incident to the issuance of such insurance, any special favor
31 or advantage, or any monetary consideration or inducement
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1 whatever. The words "charge made incident to the issuance of
2 such insurance" shall be construed to encompass underwriting
3 premium, agent's commission, abstracting charges, title
4 examination fee, and closing charges; however, Nothing herein
5 contained shall preclude an abatement in an attorney's fee
6 charged for legal services rendered incident to the issuance
7 of such insurance.
8 b. Nothing in this subparagraph shall be construed as
9 prohibiting the payment of fees to attorneys at law duly
10 licensed to practice law in the courts of this state, for
11 professional services in the actual examination of title to
12 real property as a condition to the issuance of title
13 insurance, or as prohibiting the payment of earned portions of
14 the premium commissions to duly appointed agents or agencies
15 who actually perform services for the title insurer issue the
16 policy of title insurance for the underwriting company.
17 c. No insured named in a policy, or any other person
18 directly or indirectly connected with the transaction
19 involving the issuance of such policy, including, but not
20 limited to, any mortgage broker, real estate broker, builder,
21 or attorney, any employee, agent, agency, representative, or
22 solicitor thereof, or any other person whatsoever, shall
23 knowingly receive or accept, directly or indirectly, any
24 unlawful rebate or abatement of said charge, or any monetary
25 consideration or inducement, other than as set forth in
26 sub-subparagraph b.
27 Section 5. Subsections (1) and (2) of section
28 627.7711, Florida Statutes, are amended to read:
29 627.7711 Definitions.--As used in this part, the term:
30 (1)(a) "Related title services" means services
31 performed by a title insurer or title insurance agent or
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1 agency, in the agent's or agency's capacity as such,
2 including, but not limited to, preparing or obtaining a title
3 search, examining title information, preparing documents
4 necessary to close the transaction, conducting the closing, or
5 handling the disbursing of funds related to the closing in a
6 real estate closing transaction in which a title insurance
7 binder, commitment, or policy is to be issued. The risk
8 premium, together with the charge for related title services,
9 constitutes the regular title insurance premium.
10 (b) "Primary title services" means determining
11 insurability in accordance with sound underwriting practices
12 based upon evaluation of a reasonable search and examination
13 of the title, determination and clearance of underwriting
14 objections and requirements to eliminate risk, preparation and
15 issuance of a title insurance commitment setting forth the
16 requirements to insure, and preparation and issuance of the
17 policy.
18 (2) "Risk Premium" means the charge, as specified by
19 rule of the department, that is made by a title insurer for a
20 title insurance policy, including the charge for performance
21 of primary title services by a title insurer or title
22 insurance agent or agency, and incurring the risks incident to
23 such policy the assumption of the risk, under the several
24 classifications of title insurance contracts and forms, and
25 upon which charge a premium tax is paid under s. 624.509. As
26 used in this part or in any other law, with respect to title
27 insurance, the words "premium" does or "risk premium" mean
28 only the risk premium as defined in this section and do not
29 include a commission any other charge incidental to title
30 insurance.
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1 Section 6. Section 627.777, Florida Statutes, is
2 amended to read:
3 627.777 Approval of forms.--A title insurer may not
4 issue or agree to issue any form of title insurance binder,
5 title insurance commitment, preliminary report, title
6 insurance policy, other contract of title insurance, or
7 related form until it is filed with and approved by the
8 department. The department may not disapprove a title
9 guarantee or policy form on the ground that it has on it a
10 blank form for an attorney's opinion on the title.
11 Section 7. Section 627.7773, Florida Statutes, is
12 amended to read:
13 627.7773 Accounting and auditing of forms by title
14 insurers.--
15 (1) Each title insurer authorized to do business in
16 this state shall, at least once during each calendar year,
17 require of each of its title insurance agents or agencies
18 accountings of all outstanding forms in the agent's or
19 agency's possession of the types that are specified in s.
20 627.777.
21 (2) If the department has reason to believe that an
22 audit of outstanding forms should be required of any title
23 insurer as to a title insurance agent or agency, the
24 department may require the title insurer to make a special
25 audit of the forms. The title insurer shall complete the
26 audit not later than 60 days after the request is received
27 from the department, and shall report the results of the
28 special audit to the department no later than 90 days after
29 the request is received.
30 Section 8. Section 627.7776, Florida Statutes, is
31 amended to read:
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1 627.7776 Furnishing of supplies; civil liability.--
2 (1) A title insurer may not furnish to any person any
3 blank forms, applications, stationery, or other supplies to be
4 used in soliciting, negotiating, or effecting contracts of
5 title insurance on its behalf until that person has received
6 from the insurer a contract to act as a title insurance agent
7 or agency and has been licensed by the department, if required
8 by s. 626.8417.
9 (2) A title insurer or title insurance agent or agency
10 that furnishes any supplies to a person not authorized by the
11 title insurer as provided in subsection (1) is subject to
12 civil liability to any insured of the title insurer to the
13 same extent and in the same manner as if the person had been
14 appointed or authorized by the title insurer to act in its
15 behalf.
16 Section 9. Section 627.780, Florida Statutes, is
17 amended to read:
18 627.780 Illegal dealings in risk premium.--
19 (1) A person may not knowingly quote, charge, accept,
20 collect, or receive a risk premium for title insurance other
21 than the risk premium adopted by the department.
22 (2) A title insurer may not knowingly accept, collect,
23 or receive any sum as risk premium for title insurance, if the
24 title insurance is not then provided or is not to be provided,
25 subject to acceptance of the risk, in due course, unless the
26 title insurer promptly enters the sum on its books of account
27 as premium collected in advance.
28 Section 10. Section 627.782, Florida Statutes, is
29 amended to read:
30 627.782 Adoption of rates.--
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1 (1) Subject to the rating provisions of this code, the
2 department must adopt a rule specifying the risk premium to be
3 charged in this state by title insurers for the respective
4 types of title insurance contracts and, for policies issued
5 through agents or agencies, the percentage of such premium
6 required to be retained by the title insurer which shall and
7 services incident thereto. The department may, by rule,
8 establish limitations on such reasonable charges made in
9 addition to the risk premium based upon the expenses
10 associated with the services rendered and other relevant
11 factors. The department must also adopt rules incident to the
12 applicability of the risk premium, including the percentage or
13 amount of the risk premium required to be maintained by the
14 title insurer, and related rules to ensure that the amounts
15 required to be maintained by the insurer are not be less than
16 30 percent of the risk premium for policies sold by agents.
17 However, in a transaction subject to the Real Estate
18 Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as
19 amended from time to time, no portion of the premium
20 attributable to providing a primary title service shall be
21 paid to or retained by any person who does not actually
22 perform or is not liable for the performance of such service.
23 The department may, by rule, establish limitations on related
24 title services charges made in addition to the premium, based
25 upon the expenses associated with the services rendered and
26 other relevant factors.
27 (2) In adopting premium rates, the department must
28 give due consideration to the following:
29 (a) The title insurers' loss experience and
30 prospective loss experience under insured closing protection
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1 service letters, search and examination services, and policy
2 liabilities.
3 (b) A reasonable margin for underwriting profit and
4 contingencies, including contingent liability under s.
5 627.7865, sufficient to allow title insurers, and agents, and
6 agencies to earn a rate of return on their capital that will
7 attract and retain adequate capital investment in the title
8 insurance business and maintain an efficient title insurance
9 delivery system.
10 (c) Past expenses and prospective expenses for
11 administration and handling of risks.
12 (d) Liability for defalcation.
13 (e) Other relevant factors.
14 (3) Rates may be grouped by classification or schedule
15 and may differ as to class of risk assumed.
16 (4) Rates may not be excessive, inadequate, or
17 unfairly discriminatory.
18 (5) The risk premium applies to each $100 of insurance
19 issued to an insured.
20 (6) The risk premium rates apply throughout this
21 state.
22 (7) The department shall, in accordance with the
23 standards provided in subsection (2), review the risk premium
24 and the related title services rate as needed, but not less
25 frequently than once every 3 years, and shall, based upon the
26 review required by this subsection, revise the risk premium
27 and the related title services rate if the results of the
28 review so warrant.
29 (8) The department may, by rule, require licensees
30 under this part to annually submit statistical information,
31 including loss and expense data, as the department determines
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1 to be necessary to analyze risk premium and related title
2 services rates, retention rates, and the condition of the
3 title insurance industry.
4 Section 11. Section 627.783, Florida Statutes, is
5 amended to read:
6 627.783 Rate deviation.--
7 (1) A title insurer may petition the department for an
8 order authorizing a specific deviation from the adopted risk
9 premium, and a title insurer or title insurance agent may
10 petition the department for an order authorizing and
11 permitting a specific deviation above the reasonable charge
12 for other services rendered specified in s. 627.782(1). The
13 petition shall be in writing and sworn to and shall set forth
14 allegations of fact upon which the petitioner will rely,
15 including the petitioner's reasons for requesting the
16 deviation. Any authorized title insurer, or agent, or agency
17 may join in the petition for like authority to deviate or may
18 file a separate petition praying for like authority or
19 opposing the deviation. The department shall rule on all such
20 petitions simultaneously.
21 (2) If, in the judgment of the department, the
22 requested deviation is not justified, the department may enter
23 an order denying the petition. An order granting a petition
24 constitutes an amendment to the adopted risk premium as to the
25 petitioners named in the order, and is subject to s. 627.782.
26 Section 12. Section 627.7831, Florida Statutes, is
27 amended to read:
28 627.7831 Title binders and Commitments; charges;
29 collection.--
30 (1) When a title insurance binder or a commitment to
31 insure a title or risk is issued at the request of the insured
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1 or the insured's representative, or agent, or agency, a
2 portion of the risk premium must be charged for the binder or
3 commitment when issued. The portion of the risk premium
4 charged for the binder or commitment must be credited to the
5 risk premium due upon issuance of the title insurance policy.
6 (2) The amount charged under subsection (1) must be
7 collected no later than the date of the closing or 12 months
8 after the date of the commitment or binder, whichever occurs
9 earlier, or another date agreed to in writing at the time of
10 issuance of the binder or commitment.
11 (3) This section does not apply to a transaction
12 involving a residential property.
13 Section 13. Section 627.784, Florida Statutes, is
14 amended to read:
15 627.784 Casualty title insurance prohibited.--A title
16 insurance policy or guarantee of title may not be issued
17 without regard with disregard to the possible existence of
18 adverse matters or defects of title.
19 Section 14. Section 627.7841, Florida Statutes, is
20 amended to read:
21 627.7841 Insurance against adverse matters or defects
22 in the title.--If a title insurer issuing a binder, commitment
23 or, policy of title insurance, or guarantee of title upon an
24 estate, lien, or interest in property located in this state
25 through its officers, employees, or agents, or agencies
26 disburses settlement or closing funds, the title insurer shall
27 insure against the possible existence of adverse matters or
28 defects in the title which are recorded during the period of
29 time between the effective date of the binder or commitment
30 and the date of recording of the document creating the estate
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1 or interest to be insured, except as to matters of which the
2 insured has knowledge.
3 Section 15. Subsection (2) of section 627.7842,
4 Florida Statutes, is amended to read:
5 627.7842 Policy exceptions.--
6 (2) The title insurer, or agent, or agency issuing the
7 title policy may except from coverage the items specified in
8 subsection (1) if the title insurer, or agent, or agency has
9 knowledge of facts requiring the exceptions, notwithstanding
10 the survey or affidavits, if the insurer, or agent, or agency
11 discloses such facts to the proposed insured.
12 Section 16. Section 627.7845, Florida Statutes, is
13 amended to read:
14 627.7845 Determination of insurability required;
15 preservation of evidence of title search and examination.--
16 (1) A title insurer may not issue a title insurance
17 binder, commitment or, endorsement or, title insurance policy,
18 or guarantee of title until the title insurer has caused to be
19 conducted a reasonable search and examination of the title and
20 of such other information as may be necessary, and has caused
21 to be made a determination of insurability of title, including
22 endorsement coverages, in accordance with sound underwriting
23 practices.
24 (2) The title insurer shall cause the evidence of the
25 reasonable search and examination of the title to be preserved
26 and retained in its files or in the files of its title
27 insurance agent or agency for a period of not less than 7
28 years after the title insurance binder, commitment or, title
29 insurance policy, or guarantee of title was issued. The title
30 insurer or agent or agency must produce the evidence required
31 to be maintained by this subsection at its offices upon the
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1 demand of the department. Instead of retaining the original
2 evidence, the title insurer or the title insurance agent or
3 agency may, in the regular course of business, establish a
4 system under which all or part of the evidence is recorded,
5 copied, or reproduced by any photographic, photostatic,
6 microfilm, microcard, miniature photographic, or other process
7 which accurately reproduces or forms a durable medium for
8 reproducing the original.
9 (3) The title insurer or its agent or agency must
10 maintain a record of the actual risk premium and related title
11 service charges made for issuance of the policy and any
12 endorsements in its files for a period of not less than 7
13 years. The title insurer, or agent, or agency must produce
14 the record at its office upon demand of the department.
15 (4) This section does not apply to an insurer assuming
16 no primary liability in a contract of reinsurance or to an
17 insurer acting as a coinsurer if any other coinsuring insurer
18 has complied with this section.
19 Section 17. Subsection (3) of section 627.786, Florida
20 Statutes, is amended to read:
21 627.786 Transaction of title insurance and any other
22 kind of insurance prohibited.--
23 (3) Subsection (1) does not preclude a title insurer
24 from providing instruments to any prospective insured, in the
25 form and content approved by the department, under which the
26 title insurer assumes liability for loss due to the fraud of,
27 dishonesty of, misappropriation of funds by, or failure to
28 comply with written closing instructions by, its contract
29 agents, agencies, or approved attorneys in connection with a
30 real property transaction for which the title insurer is to
31 issue a title insurance policy or guarantee of title.
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1 Section 18. Section 627.791, Florida Statutes, is
2 amended to read:
3 627.791 Penalties against title insurers for
4 violations by persons or entities not licensed.--A title
5 insurer is subject to the penalties in ss. 624.418(2) and
6 624.4211 for any violation of a lawful order or rule of the
7 department, or for any violation of this code, committed by:
8 (1) A person, firm, association, corporation,
9 cooperative, joint-stock company, or other legal entity not
10 licensed under this part when issuing and countersigning
11 binders, commitments or, policies of title insurance, or
12 guarantees of title on behalf of the title insurer.
13 (2) An attorney when issuing and countersigning
14 binders, commitments or, policies of title insurance, or
15 guarantees of title on behalf of the title insurer.
16 Section 19. Section 627.792, Florida Statutes, is
17 amended to read:
18 627.792 Liability of title insurers for defalcation by
19 title insurance agents or agencies.--A title insurer is liable
20 for the defalcation, conversion, or misappropriation by a
21 licensed title insurance agent or agency of funds held in
22 trust by the agent or agency pursuant to s. 626.8473. If the
23 agent or agency is an agent or agency for licensed by two or
24 more title insurers, any liability shall be borne by the title
25 insurer upon which a title insurance binder, commitment or,
26 policy, or title guarantee was issued prior to the illegal
27 act. If no binder, commitment or, policy, or guarantee was
28 issued, each title insurer represented by the agent or agency
29 at the time of the illegal act shares in the liability in the
30 same proportion that the premium remitted to it by the agent
31 or agency during the 1-year period before the illegal act
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1 bears to the total premium remitted to all title insurers by
2 the agent or agency during the same time period.
3 Section 20. Section 627.793, Florida Statutes, is
4 created to read:
5 627.793 Rulemaking authority.--The department is
6 authorized to adopt rules implementing the provisions of this
7 part.
8 Section 21. This act shall take effect July 1, 1999.
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10 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
11 Senate Bill 746
12
13 Makes the legislative findings that regulation of insurance is
in the public interest, that determination of insurability of
14 title to real property is essential to the maintenance of the
solvency of title insurers, and that there is a direct
15 relationship between the determination fo insurability
performed by title agents and the public interest, and other
16 related findings.
17 Retains the authority of the Department of Insurance to
establish, by rule, limitations on related title services made
18 in addition to the premium.
19 Authorizes the department to adopt rules to implement part
XIII of chapter 627, F.S., Title Insurance Contracts.
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Eliminates references to title insurers, agents, and agencies
21 issuing "guarantees of title."
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