1

A bill to be entitled

2

An act relating to title insurance; creating s.

3

626.84202, F.S.; authorizing a title insurance agent or

4

agency to make reasonable charges for certain services;

5

prohibiting such charges from being part of the premium

6

or rate charged by the title insurer for the issuance

7

of the title insurance form, policy, commitment, or

8

contract issued in connection therewith; requiring that

9

the agent or agency annually file certain information

10

with the Department of Financial Services; requiring

11

that the department publish certain information;

12

defining the term "predatory pricing"; prohibiting the

13

practice of predatory pricing with respect to certain

14

services; amending s. 626.9541, F.S.; authorizing the

15

rebate or abatement of an attorney's fee for certain

16

professional services if such rebate or abatement does

17

not violate state law; amending s. 627.7711, F.S.;

18

expanding the definition of the term "premium" to

19

include certain endorsements, commitments, or other

20

contracts, as well as a formula by which the premium is

21

calculated; creating s. 627.7712, F.S.; authorizing a

22

title insurer to make reasonable charges for certain

23

services; prohibiting such charges from being part of

24

the rate charged by the title insurer for the issuance

25

of the title insurance form, policy, commitment, or

26

contract issued in connection therewith; requiring that

27

the agent or agency annually file certain information

28

with the department; requiring that the department

29

publish certain information; authorizing the department

30

and the Office of Insurance Regulation to jointly

31

publish certain information; prohibiting the practice

32

of predatory pricing as defined by state law with

33

respect to certain services; amending s. 627.780, F.S.;

34

prohibiting a person from knowingly quoting, charging,

35

accepting, collecting, or receiving premium for title

36

insurance other than the premium approved by the

37

office; amending s. 627.782, F.S.; providing for the

38

approval of rates by the office; requiring that each

39

title insurer make an annual filing with the office on

40

or before a specified deadline demonstrating that a

41

rate is actuarially sound; providing that rates for the

42

required filing do not include certain charges;

43

providing methods by which an insurer may satisfy

44

filing requirements; requiring that the office review

45

filings and issue a notice of intent to approve or a

46

notice of intent to disapprove within a specified

47

period following the date on which the office receives

48

such filing; providing that such notice constitutes

49

agency action; providing that requests for additional

50

information do not toll the notice period during any

51

proceedings or judicial review involving the filing;

52

requiring that a rate be deemed approved under certain

53

circumstances; requiring that the office review each

54

filing to determine whether the filing is excessive,

55

inadequate, or unfairly discriminatory; requiring that

56

the office consider certain factors when making such

57

determination; providing standards upon which a finding

58

that a rate is excessive, inadequate, or unfairly

59

discriminatory may be based; authorizing the office to

60

require an insurer to provide, at the insurer's

61

expense, any additional information necessary to

62

evaluate the condition of the company and the

63

reasonableness of the filing; authorizing the office to

64

review certain information at any time; providing

65

procedures for instances in which the office finds that

66

a rate might be excessive, inadequate, or unfairly

67

discriminatory; providing that an insurer must prove by

68

a preponderance of the evidence that a rate is not

69

excessive, inadequate, or unfairly discriminatory;

70

authorizing the office to disapprove certain rate

71

increase without fulfilling notice requirements;

72

requiring that the chief executive officer and chief

73

actuary of a title insurer certify certain information

74

when submitting a rate filing; providing that it is a

75

violation of state law to knowingly make a false

76

certification of such information; providing penalties;

77

providing that the failure to provide such certificate

78

results in a filing being disapproved without

79

prejudice; authorizing an insurer to refile such a

80

disapproved filing; authorizing an insurer to apply for

81

an extension of the period for submission of a rate

82

filing under certain circumstances; authorizing the

83

office to exempt an insurer from filing rates or rate

84

certifications under certain circumstances; authorizing

85

the office to take certain actions if an insurer fails

86

to meet filing requirements or untimely submits a

87

filing; deleting a requirement that the commission

88

adopt rules specifying the percentage of premium

89

required to be retained by the title insurer;

90

authorizing the Financial Services Commission to adopt

91

rules; repealing s. 627.783, F.S., relating to title

92

insurance rate deviation; providing an effective date.

93

94

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

95

96

     Section 1.  Section 626.84202, Florida Statutes, is created

97

to read:

98

     626.84202 Charges for services.--

99

     (1) A title insurance agent or agency may make a reasonable

100

charge for primary title services, title searches, or closing

101

services contracted for or performed. Any charges issued pursuant

102

to this section may not be a part of the premium or rate charged

103

by the title insurer for the issuance of the title insurance

104

form, policy, commitment, or contract issued in connection

105

therewith. The agent or agency must annually file with the

106

department the amount of each such charge together with related

107

information on a form adopted by the department. The department

108

shall publicize the information collected from agents or agencies

109

pursuant to this section on its website or otherwise in a manner

110

sufficient to apprise the title insurance-buying public of costs

111

for such services.

112

     (2) Charges for services or components of services set

113

forth in subsection (1) must not constitute predatory pricing.

114

For the purposes of this section, "predatory pricing" means

115

charges associated with services as described in subsection (1)

116

which are set below cost or which sacrifice present revenues for

117

the purpose of driving out or reducing competition in the title

118

insurance market for such services or related components with the

119

intent to recoup revenue losses through subsequently higher

120

prices or greater business volume.

121

     Section 2.  Paragraph (h) of subsection (1) of section

122

626.9541, Florida Statutes, is amended to read:

123

     626.9541  Unfair methods of competition and unfair or

124

deceptive acts or practices defined.--

125

     (1)  UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE

126

ACTS.--The following are defined as unfair methods of competition

127

and unfair or deceptive acts or practices:

128

     (h)  Unlawful rebates.--

129

     1.  Except as otherwise expressly provided by law, or in an

130

applicable filing with the office, knowingly:

131

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

132

or agreement as to such contract other than as plainly expressed

133

in the insurance contract issued thereon;

134

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

135

or give, directly or indirectly, as inducement to such insurance

136

contract, any unlawful rebate of premiums payable on the

137

contract, any special favor or advantage in the dividends or

138

other benefits thereon, or any valuable consideration or

139

inducement whatever not specified in the contract;

140

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

141

sell, or purchase, as inducement to such insurance contract or in

142

connection therewith, any stocks, bonds, or other securities of

143

any insurance company or other corporation, association, or

144

partnership, or any dividends or profits accrued thereon, or

145

anything of value whatsoever not specified in the insurance

146

contract.

147

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

148

paragraph shall be construed as including within the definition

149

of discrimination or unlawful rebates:

150

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

151

annuity, paying bonuses to all policyholders or otherwise abating

152

their premiums in whole or in part out of surplus accumulated

153

from nonparticipating insurance; provided that any such bonuses

154

or abatement of premiums is fair and equitable to all

155

policyholders and for the best interests of the company and its

156

policyholders.

157

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

158

industrial debit plan, making allowance to policyholders who have

159

continuously for a specified period made premium payments

160

directly to an office of the insurer in an amount which fairly

161

represents the saving in collection expenses.

162

     c.  Readjustment of the rate of premium for a group

163

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

164

end of the first or any subsequent policy year of insurance

165

thereunder, which may be made retroactive only for such policy

166

year.

167

     d.  Issuance of life insurance policies or annuity contracts

168

at rates less than the usual rates of premiums for such policies

169

or contracts, as group insurance or employee insurance as defined

170

in this code.

171

     e.  Issuing life or disability insurance policies on a

172

salary savings, bank draft, preauthorized check, payroll

173

deduction, or other similar plan at a reduced rate reasonably

174

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

175

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

176

agent, or agency thereof, shall pay, allow, or give, or offer to

177

pay, allow, or give, directly or indirectly, as inducement to

178

title insurance, or after such insurance has been effected, any

179

rebate or abatement of the premium or any other charge or fee, or

180

provide any special favor or advantage, or any monetary

181

consideration or inducement whatever.

182

     b.  Nothing in this subparagraph shall be construed as

183

prohibiting the payment of fees to attorneys at law duly licensed

184

to practice law in the courts of this state, for professional

185

services, or as prohibiting the payment of earned portions of the

186

premium to duly appointed agents or agencies who actually perform

187

services for the title insurer. Nothing in this subparagraph

188

shall be construed as prohibiting a rebate or abatement of an

189

attorney's fee charged for professional services, or that portion

190

of the premium that is not required to be retained by the insurer

191

pursuant to s. 627.782(1), or any other agent or agency charge or

192

fee to the person responsible for paying the premium, charge, or

193

fee if the agent or agency rebate or abatement does not violate

194

the provisions of s. 626.84202.

195

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

196

directly or indirectly connected with the transaction involving

197

the issuance of such policy, including, but not limited to, any

198

mortgage broker, real estate broker, builder, or attorney, any

199

employee, agent, agency, or representative thereof, or any other

200

person whatsoever, shall knowingly receive or accept, directly or

201

indirectly, any rebate or abatement of any portion of the title

202

insurance premium or of any other charge or fee or any monetary

203

consideration or inducement whatsoever, except as set forth in

204

sub-subparagraph b.; provided, in no event shall any portion of

205

the attorney's fee, any portion of the premium that is not

206

required to be retained by the insurer pursuant to s. 627.782(1),

207

any agent charge or fee, or any other monetary consideration or

208

inducement be paid directly or indirectly for the referral of

209

title insurance business.

210

     Section 3.  Subsection (2) of section 627.7711, Florida

211

Statutes, is amended to read:

212

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

213

     (2) "Premium" means the charge, as specified by rule of the

214

commission, that is made by a title insurer for a title insurance

215

policy, endorsement, commitment, or other contract for, including

216

the charge for performance of primary title services by a title

217

insurer or title insurance agent or agency, and incurring the

218

risks incident to the such policy, endorsement, commitment, or

219

other contract under the several classifications of title

220

insurance contracts and forms, and upon which charge a premium

221

tax is paid under s. 624.509. As used in this part or in any

222

other law, with respect to title insurance, the word "premium"

223

may include a reasonable sales commission but may does not

224

include a commission or any reimbursement for primary title

225

services, a title search, or closing services, or a component

226

thereof performed by a title insurer, title insurance agent, or

227

title insurance agency. Premium shall be calculated by

228

multiplying the approved rate by the amount of the title

229

insurance limits provided, divided by 1,000.

230

     Section 4.  Section 627.7712, Florida Statutes, is created

231

to read:

232

     627.7712 Charges for services.--

233

     (1) A title insurer may make a reasonable charge for

234

primary title services, title searches, or closing services

235

contracted for or performed. Any charges issued pursuant to this

236

section may not be a part of the premium or rate charged by the

237

title insurer for the issuance of the title insurance form,

238

policy, commitment, or contract issued in connection therewith.

239

The agent or agency must annually file with the department the

240

amount of each such charge, together with related information on

241

a form adopted by the department. The department shall publicize

242

the information collected from agents or agencies pursuant to

243

this section on its website or otherwise in a manner sufficient

244

to apprise the title-insurance-buying public of costs for such

245

services. The office and the department may jointly publicize

246

information collected pursuant to s. 626.84202 for the purposes

247

of facilitating the distribution of such information to the

248

public.

249

     (2) Charges for services or components of services set

250

forth in subsection (1) must not constitute predatory pricing.

251

For purposes of this section, "predatory pricing" has the same

252

meaning as in s. 626.84202(2).

253

     Section 5.  Subsection (1) of section 627.780, Florida

254

Statutes, is amended to read:

255

     627.780  Illegal dealings in premium.--

256

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

257

collect, or receive a premium for title insurance other than the

258

premium approved by the office adopted by the commission, except

259

as provided in s. 626.9541(1)(h)3.b.

260

     Section 6.  Section 627.782, Florida Statutes, is amended to

261

read:

262

     627.782 Approval Adoption of rates.--

263

     (1) Each title insurer shall make an annual filing with the

264

Office of Insurance Regulation no later than 12 months after the

265

date on which the title insurer submitted its previous filing

266

which demonstrates that the rate is actuarially sound. Rates for

267

the required filing do not include the charges for primary

268

services, title searches, or closing services as defined in s.

269

627.7711.

270

     (a) The filing requirements of this section must be

271

satisfied by one of the following methods:

272

     1. A rate filing prepared by an actuary which contains

273

documentation demonstrating that the proposed rates are not

274

excessive, inadequate, or unfairly discriminatory pursuant to the

275

applicable rating laws or rules of the commission.

276

     2. If no rate change is proposed, a filing consisting of a

277

certification by an actuary that the existing rate level produces

278

rates that are actuarially sound and not inadequate.

279

     (b) The office shall finalize its review by issuing a

280

notice of intent to approve or a notice of intent to disapprove

281

within 90 days after the date on which it receives the filing.

282

The notice of intent to approve and the notice of intent to

283

disapprove constitute agency action for purposes of chapter 120.

284

Requests for supporting information, requests for mathematical or

285

mechanical corrections, or notification to the insurer by the

286

office of its preliminary findings do not toll the 90-day period

287

during any such proceedings or subsequent judicial review. The

288

rate shall be deemed approved if the office does not issue a

289

notice of intent to approve or a notice of intent to disapprove

290

within 90 days after the date on which it receives the filing.

291

     (c) Upon receiving a rate filing, the office shall review

292

the rate filing to determine if the rate is excessive,

293

inadequate, or unfairly discriminatory. In making such

294

determination, the office shall, in accordance with generally

295

accepted and reasonable actuarial principles and techniques,

296

consider the following factors:

297

     1. Each title insurer's loss experience and prospective

298

loss experience under closing protection letters and policy

299

liabilities.

300

     2. A reasonable margin for profit and contingencies,

301

including contingent liability under s. 627.7865, sufficient to

302

allow title insurers to earn a rate of return on their capital

303

which will attract and retain adequate capital investment in the

304

title insurance business.

305

     3. Past expenses and prospective expenses for the

306

administration and handling of risks.

307

     4. Liability for defalcation.

308

     5. The degree of competition among insurers for the risk

309

insured.

310

     6. Investment income reasonably expected by the insurer,

311

consistent with the insurer's investment practices, from

312

investable premiums anticipated in the filing, plus any other

313

expected income from currently invested assets representing the

314

amount expected on unearned premium reserves and loss reserves.

315

The commission may adopt rules using reasonable techniques of

316

actuarial science and economics to specify the manner in which

317

insurers must calculate investment income attributable to such

318

classes of insurance written in this state and the manner in

319

which such investment income must be used in the calculation of

320

insurance rates. The manner of calculation shall contemplate

321

allowances for an underwriting profit factor and investment

322

income that produce a reasonable rate of return. However,

323

investment income from invested surplus may not be considered.

324

     7. The reasonableness of the judgment reflected in the

325

filing.

326

     8. Dividends, savings, or unabsorbed premium deposits

327

allowed or returned to Florida policyholders, members, or

328

subscribers.

329

     9. The adequacy of loss reserves.

330

     10. The cost of reinsurance.

331

     11. Trend factors, including trends in actual losses per

332

insured unit for the insurer making the filing.

333

     12. Other relevant factors that affect the frequency or

334

severity of claims or upon expenses.

335

     (d) After consideration of the rate factors provided in

336

paragraph (a), a rate may be found by the office to be excessive,

337

inadequate, or unfairly discriminatory based upon the following

338

standards:

339

     1. Rates shall be deemed excessive if they are likely to

340

produce a profit from Florida business which is unreasonably high

341

in relation to the risk involved in the class of business or if

342

expenses are unreasonably high in relation to services rendered.

343

     2. Rates shall be deemed excessive if, among other things,

344

the rate structure established by a stock insurance company

345

provides for the replenishment of surpluses from premiums and the

346

replenishment is necessitated by investment losses.

347

     3. Rates shall be deemed inadequate if the rates and the

348

investment income attributable to such rates are clearly

349

insufficient to sustain projected losses and expenses in the

350

class of business to which they apply.

351

     4. A rate shall be deemed inadequate as to the premium

352

charged to a risk or group of risks if discounts or credits that

353

exceed a reasonable reflection of expense savings and reasonably

354

expected loss experience from the risk or group of risks are

355

allowed.

356

     5. A rate shall be deemed unfairly discriminatory as to a

357

risk or group of risks if the application of premium discounts,

358

credits, or surcharges among such risks does not bear a

359

reasonable relationship to the expected loss and expense

360

experience among the various risks.

361

     (e) When reviewing a rate filing, the office may require

362

the insurer to provide at the insurer's expense any information

363

necessary to evaluate the condition of the company and the

364

reasonableness of the filing according to the provisions of this

365

section.

366

     (f) The office may at any time review a rate, rating

367

schedule, rating manual, rate change, the pertinent records of

368

the insurer, or market conditions. If the office finds on a

369

preliminary basis that a rate might be excessive, inadequate, or

370

unfairly discriminatory, the office shall initiate proceedings to

371

disapprove the rate and shall notify the insurer. Upon being

372

notified, the insurer shall, within 60 days after the date on

373

which it receives such notice, file with the office all

374

information that, in the belief of the insurer, proves the

375

reasonableness, adequacy, and fairness of the rate or rate

376

change. The office shall issue a notice of intent to approve or a

377

notice of intent to disapprove pursuant to the procedures of

378

subsection (3) within 90 days after the date on which it receives

379

the insurer's initial response. In such instances and in any

380

administrative proceeding relating to the legality of the rate,

381

the insurer or rating organization has the burden of proof to

382

show by a preponderance of the evidence that the rate is not

383

excessive, inadequate, or unfairly discriminatory. After the

384

office notifies an insurer that a rate may be excessive,

385

inadequate, or unfairly discriminatory, unless the office

386

withdraws the notification, the insurer may not alter the rate

387

except to conform with the office's notice until 120 days after

388

the date the notification was provided or 180 days after the date

389

of the implementation of the rate, whichever is earlier. The

390

office may, subject to chapter 120, disapprove without the

391

required 60-day notification, any rate increase filed by an

392

insurer within the prohibited time period or during the time that

393

the legality of the increased rate is being contested.

394

     (g) When submitting a rate filing, the chief executive

395

officer or the chief financial officer of the title insurer and

396

the chief actuary of the title insurer must certify the following

397

information on a form approved by the commission, under oath and

398

subject to penalty of perjury:

399

     1. The signing officer and actuary have reviewed the rate

400

filing;

401

     2. Based on the knowledge of the signing officer and

402

actuary, the rate filing does not contain any untrue statement of

403

a material fact or omit a material fact necessary to make the

404

statements not misleading, in light of the circumstances under

405

which such statements were made;

406

     3. Based on the knowledge of the signing officer and

407

actuary, the information and other factors described in this

408

section, including, but not limited to, investment income,

409

present the basis of the rate filing in all material respects for

410

the periods presented in the filing; and

411

     4. Based on the knowledge of the signing officer and

412

actuary, the rate filing reflects all premium savings that are

413

reasonably expected to result from legislative enactments and are

414

in accordance with generally accepted and reasonable actuarial

415

techniques.

416

417

A signing officer or actuary who knowingly makes a false

418

certification under this subsection commits a violation of s.

419

626.9541(1)(e) and is subject to penalties as prescribed in s.

420

626.9521. Failure to provide such certification by the officer

421

and actuary shall result in the rate filing being disapproved

422

without prejudice. Under such circumstances, the insurer or

423

rating organization may refile its rate filing with the required

424

certification. As used in this subsection, the term "actuary"

425

means an individual who is a member of the Society of Actuaries

426

or the American Academy of Actuaries.

427

     (h) If, at the time a filing is required under this

428

section, an insurer is in the process of completing a rate

429

review, the insurer may apply to the office for an extension of

430

up to an additional 30 days to make the filing. The request for

431

an extension must be received by the office no later than the

432

date on which the filing is due.

433

     (i) After receiving a request to be exempted from the

434

provisions of this section before the filing is due, the office

435

may, due to insignificant numbers of policies in force or

436

insignificant premium volume, exempt a company from filing rates

437

or rate certifications as required by this section.

438

     (j) If an insurer fails to meet the filing requirements of

439

this subsection and does not submit the filing within 60 days

440

after the date on which the filing is due, the office may, in

441

addition to any other penalty authorized by law, order the

442

insurer to discontinue the issuance of policies for which the

443

required filing was not made until such time that the office

444

determines that the required filing has been submitted properly.

445

Subject to the rating provisions of this code, the commission

446

must adopt a rule specifying the premium to be charged in this

447

state by title insurers for the respective types of title

448

insurance contracts and, for policies issued through agents or

449

agencies, the percentage of such premium required to be retained

450

by the title insurer which shall not be less than 30 percent.

451

However, in a transaction subject to the Real Estate Settlement

452

Procedures Act of 1974, 12 U.S.C. ss. 2601 et seq., as amended,

453

no portion of the premium attributable to providing a primary

454

title service shall be paid to or retained by any person who does

455

not actually perform or is not liable for the performance of such

456

service.

457

     (2) In adopting premium rates, the commission must give due

458

consideration to the following:

459

     (a) The title insurers' loss experience and prospective

460

loss experience under closing protection letters and policy

461

liabilities.

462

     (b) A reasonable margin for underwriting profit and

463

contingencies, including contingent liability under s. 627.7865,

464

sufficient to allow title insurers, agents, and agencies to earn

465

a rate of return on their capital that will attract and retain

466

adequate capital investment in the title insurance business and

467

maintain an efficient title insurance delivery system.

468

     (c) Past expenses and prospective expenses for

469

administration and handling of risks.

470

     (d) Liability for defalcation.

471

     (e) Other relevant factors.

472

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

473

may differ as to class of risk assumed.

474

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

475

discriminatory.

476

     (2)(5) The approved rate premium applies to each $100 of

477

insurance issued to an insured.

478

     (3)(6) The approved rate applies premium rates apply

479

throughout this state.

480

     (7) The commission shall, in accordance with the standards

481

provided in subsection (2), review the premium as needed, but not

482

less frequently than once every 3 years, and shall, based upon

483

the review required by this subsection, revise the premium if the

484

results of the review so warrant.

485

     (4)(8) The commission may, by rule, require licensees under

486

this part to annually submit statistical information, including

487

loss and expense data, as the office department determines to be

488

necessary to analyze premium rates, retention rates, and the

489

condition of the title insurance industry.

490

     (5) The commission may establish procedures for the

491

required filings by rule.

492

     Section 7. Section 627.783, Florida Statutes, is repealed.

493

     Section 8.  This act shall take effect January 1, 2009, and

494

applies to title insurance forms, contracts, commitments, or

495

policies issued or used on or after that date.