CS/CS/HB 1229

1	A bill to be entitled
2	An act relating to title insurance; providing legislative
3	intent; requiring the Department of Financial Services to
4	review the regulatory structure of the title insurance
5	industry and submit findings and recommendations to the
6	Legislature; repealing s. 627.7865, F.S., relating to
7	assessments against title insurers; creating s. 631.400,
8	F.S.; requiring rehabilitation plans for title insurers in
9	receivership to provide for specified matters; requiring a
10	plan to provide that title insurance policies on real
11	property in this state remain in force under certain
12	circumstances; requiring a plan to authorize cancellation
13	of title insurance policies on real property in other
14	states under certain circumstances; requiring a
15	rehabilitation plan for title insurers in receivership to
16	allocate a percentage of estate assets to pay claims on
17	certain in-state and out-of-state policies; providing a
18	methodology for the allocation of funds to pay claims on
19	out-of-state policies; providing procedures and
20	requirements for the imposition and payment of assessments
21	by title insurers relating to the rehabilitation of other
22	title insurers; providing a methodology for determining
23	assessment amounts; providing exemptions and limitations
24	relating to assessments otherwise payable by a title
25	insurer under certain circumstances; authorizing a
26	receiver of a title insurer in rehabilitation to use
27	assessment proceeds for certain purposes relating to
28	policy obligations; requiring the receiver to make
29	available certain information quarterly; barring a title
30	insurer's release from rehabilitation until the recovery
31	of assessments by contributing title insurers; prohibiting
32	the release of insurers in rehabilitation and the issuance
33	of new policies under certain circumstances; creating s.
34	631.401, F.S.; providing procedures, requirements, and
35	criteria relating to the recovery of assessments by
36	contributing title insurers through surcharges on
37	policies; specifying that surcharges are governmental
38	assets and are to be separately stated on any settlement
39	statement; prohibiting an insurer from retaining
40	surcharges in excess of the assessments paid; providing
41	for payment of excess surcharges to the Insurance
42	Regulatory Trust Fund; creating s. 631.402, F.S.;
43	providing procedures and requirements relating to foreign
44	title insurers placed in receivership; amending ss.
45	627.782 and 701.041, F.S.; conforming cross-references;
46	providing an effective date.
47
48	Be It Enacted by the Legislature of the State of Florida:
49
50	Section 1.  It is the intent of the Legislature that the
51	Department of Financial Services undertake a review of the
52	regulatory structure of the title insurance industry in this
53	state, whereby title insurance agents and agencies are regulated
54	by the Department of Financial Services and title insurance
55	companies are regulated by the Office of Insurance Regulation.
56	The Department of Financial Services is to determine whether
57	effective and efficient oversight may be provided under the
58	existing regulatory structure or whether consolidation of all
59	aspects of title insurance regulation under the Department of
60	Financial Services will provide a more effective and viable
61	method of regulation. The Office of Insurance Regulation shall
62	cooperate with the Department of Financial Services in this
63	undertaking. The Department of Financial Services shall submit a
64	report of its findings and recommendations to the Speaker of the
65	House of Representatives and the President of the Senate by
66	December 31, 2011.
67	Section 2.  Section 627.7865, Florida Statutes, is
68	repealed.
69	Section 3.  Section 631.400, Florida Statutes, is created
70	to read:
71	631.400  Rehabilitation of title insurer.-
72	(1)  After the entry of an order of rehabilitation, the
73	receiver shall review the condition of the insurer and file a
74	plan of rehabilitation with the court for approval. The plan of
75	rehabilitation shall provide:
76	(a)  That policies on real property in this state issued by
77	the title insurer in rehabilitation shall remain in force,
78	unless the receiver determines the assessment capacity provided
79	by this section is insufficient to pay claims in the ordinary
80	course of business.
81	(b)  That policies on real property located outside this
82	state may be canceled on a date specified by the receiver and
83	approved by the court if the state where the property is located
84	does not have statutory provisions to pay future losses on such
85	policies.
86	(c)  A claims filing deadline for policies on real property
87	located outside this state that are canceled under paragraph
88	(b).
89	(d)  A proposed percentage of the remaining estate assets
90	to fund out-of-state claims where policies have been canceled,
91	with any unused funds returned to the general assets of the
92	estate.
93	(e)  A proposed percentage of the remaining estate assets
94	to fund out-of-state claims where policies remain in force.
95	(f)  That the funds allocated to pay claims on policies
96	located outside this state shall be based on the pro rata share
97	of premiums written in each state over each of the 5 calendar
98	years before the date of an order of rehabilitation.
99	(2)  As a condition of doing business in this state, each
100	title insurer shall be liable for an assessment to pay all
101	unpaid title insurance claims and expenses for administering and
102	settling the unpaid claims on real property in this state for
103	any title insurer that is ordered into rehabilitation.
104	(3)  The office shall order an assessment, if requested by
105	the receiver, on an annual basis in an amount that the receiver
106	deems sufficient for the payment of known claims, loss
107	adjustment expenses, and the cost of administering the
108	rehabilitation expenses. The receiver shall consider the
109	remaining assets of the insurer in receivership when making a
110	request for an assessment order to the office. Annual
111	assessments may continue until no more policies of the title
112	insurer in rehabilitation are in force or the potential future
113	liability has been satisfied. The office may exempt or limit the
114	assessment of a title insurer if such assessment would result in
115	a reduction to surplus as to policyholders below the minimum
116	required to maintain the insurer's certificate of authority in
117	any state.
118	(4)  Assessments shall be based on the total of direct
119	title insurance premiums written in this state as reported to
120	the office for the most recent calendar year. Each title insurer
121	doing business in this state shall be assessed on a pro rata
122	share basis of the total direct title insurance premiums written
123	in this state.
124	(5)  Title insurers doing business in this state writing no
125	premiums in the previous calendar year shall collect the same
126	per transaction surcharge as provided by s. 631.401. The
127	surcharge collected shall be paid to the receiver within 60 days
128	after the title insurer receives the surcharge from the title
129	agent or agency.
130	(6)  Assessments shall be paid to the receiver within 90
131	days after notice of the assessment or pursuant to a quarterly
132	installment plan approved by the receiver. Any insurer that
133	elects to pay an assessment on an installment plan shall also
134	pay a financing charge that is determined by the receiver.
135	(7)  The office shall order an emergency assessment if
136	requested by the receiver. The total of any emergency
137	assessment, when added to any annual assessment in a single
138	calendar year, may not exceed the limitation in subsection (8).
139	(8)  A title insurer is not required to pay an assessment
140	in any one year which exceeds 3 percent of the insurer's surplus
141	to policyholders as of the end of the previous calendar year or
142	more than 10 percent of the insurer's surplus to policyholders
143	over any consecutive 5-year period. The 10 percent limitation
144	shall be calculated as the sum of the percentages of surplus to
145	policyholders assessed in each of the 5 years comprising the
146	period.
147	(9)  Assessments and emergency assessments ordered by the
148	office are assets of the estate and subject to s. 631.154.
149	(10)  In an effort to keep in force the policies on real
150	property issued by the title insurer in rehabilitation, the
151	receiver may use the proceeds of an assessment to acquire
152	reinsurance or otherwise provide for the assumption of policy
153	obligations by another insurer.
154	(11)  The receiver shall make available information
155	regarding unpaid claims on a quarterly basis.
156	(12)  A title insurer in rehabilitation may not be released
157	from rehabilitation until all of the assessed insurers have
158	recovered the amount assessed either through surcharges
159	collected pursuant to s. 631.401 or payments from the insurer in
160	rehabilitation.
161	(13)  A title insurer in rehabilitation for which an
162	assessment has been ordered under this section may not issue any
163	new policies until released from rehabilitation.
164	Section 4.  Section 631.401, Florida Statutes, is created
165	to read:
166	631.401  Recovery of assessments and assumed policy
167	obligations.-
168	(1)  Upon the making of any assessment allowed by s.
169	631.400, the office shall order a surcharge on each title
170	insurance policy thereafter issued insuring an interest in real
171	property in this state. The office shall set the per transaction
172	surcharge in an amount estimated to generate sufficient funds to
173	recover the amount assessed over a period not to exceed 7 years.
174	The amount of the surcharge ordered under this section may not
175	exceed $25 per transaction for each impaired title insurer. If
176	additional surcharges are needed due to additional title
177	insurers becoming impaired, the office shall order an increase
178	in the amount of the surcharge to reflect the aggregate amount
179	of surcharges needed.
180	(2)  The party responsible for payment of the title
181	insurance premium, unless otherwise agreed to by the parties, is
182	responsible for the payment of the surcharge. A surcharge shall
183	not be due or owing as to any policy of insurance issued at the
184	simultaneous issue rate. For all other purposes, the surcharge
185	shall be considered a governmental assessment to be separately
186	stated on any settlement statement. The surcharge is not subject
187	to premium tax or reserve requirements under chapter 625.
188	(3)  Each title insurance agent or agency shall collect the
189	surcharge as to each title insurance policy written and remit
190	those surcharges within 60 days to the title insurer on which
191	the policy was written.
192	(4)  A title insurer may not retain more in surcharges for
193	an ordered assessment than the amount of assessment that title
194	insurer paid.
195	(5)  No later than March 1 of each year, each title insurer
196	shall provide the office with an accounting of assessments paid
197	and surcharges collected during the previous calendar year. Any
198	surcharges collected in excess of the amount assessed shall be
199	paid to the Insurance Regulatory Trust Fund.
200	Section 5.  Section 631.402, Florida Statutes, is created
201	to read:
202	631.402  Receivership of foreign title insurer.-
203	(1)  After a foreign title insurer with policies in this
204	state is placed into receivership by its domiciliary state, the
205	department may apply to the court for an order appointing the
206	department as ancillary receiver for the purpose of making an
207	assessment pursuant to s. 631.400. The receiver may use the
208	proceeds of the assessment to pay claims, acquire reinsurance,
209	or otherwise provide for the assumption of policy obligations in
210	this state by another insurer.
211	(2)  If the assets located in this state are insufficient
212	to pay the administrative costs of the ancillary receivership,
213	the receiver may request additional funds under s.
214	631.141(7)(b).
215	Section 6.  Paragraph (b) of subsection (2) of section
216	627.782, Florida Statutes, is amended to read:
217	627.782  Adoption of rates.-
218	(2)  In adopting premium rates, the commission must give
219	due consideration to the following:
220	(b)  A reasonable margin for underwriting profit and
221	contingencies, including contingent liability under s. 627.7865,
222	sufficient to allow title insurers, agents, and agencies to earn
223	a rate of return on their capital that will attract and retain
224	adequate capital investment in the title insurance business and
225	maintain an efficient title insurance delivery system.
226	Section 7.  Paragraph (d) of subsection (6) of section
227	701.041, Florida Statutes, is amended to read:
228	701.041  Title insurer; mortgage release certificate.-
229	(6)  LIABILITY OF TITLE INSURER AND TITLE INSURANCE AGENT.-
230	(d)  Liability of a title insurer pursuant to this section
231	shall be considered to be a title insurance claim on real
232	property in this state pursuant to s. 627.7865.
233	Section 8.  This act shall take effect upon becoming a law.

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