Bill Text: TX SB572 | 2015-2016 | 84th Legislature | Enrolled


Bill Title: Relating to certain title insurance policy liability and reinsurance requirements.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2015-05-19 - Effective on 9/1/15 [SB572 Detail]

Download: Texas-2015-SB572-Enrolled.html
 
 
  S.B. No. 572
 
 
 
 
AN ACT
  relating to certain title insurance policy liability and
  reinsurance requirements.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2551.301, Insurance Code, is amended to
  read as follows:
         Sec. 2551.301.  MAXIMUM POLICY LIABILITY. (a)  Except as
  provided by Subsection (b), a title insurance company may [not]
  issue a title insurance policy on any real property located in this
  state involving a potential policy liability of not more than 50
  percent of the sum of the company's [capital stock and] surplus as
  regards policyholders and the company's statutory premium reserves 
  as stated in the most recent annual statement of the company.
         (b)  A title insurance company may exceed the limit described
  by Subsection (a) if the excess liability is reinsured in due course
  in accordance with Section 2551.302, 2551.305, or 2551.3055 [an
  authorized title insurance company].
         SECTION 2.  Section 2551.302, Insurance Code, is amended to
  read as follows:
         Sec. 2551.302.  REQUIREMENTS FOR REINSURING POLICIES. A
  title insurance company may reinsure any of its policies and
  contracts issued on real property located in this state or on
  policies and contracts issued in this state under Chapter 2751, if:
               (1)  the reinsuring title insurance company is
  authorized to engage in business in this state under this title; or
               (2)  the title insurance company acquires reinsurance
  in accordance with Section 2551.305 or 2551.3055.
         SECTION 3.  Subchapter G, Chapter 2551, Insurance Code, is
  amended by amending Section 2551.305 and adding Section 2551.3055
  to read as follows:
         Sec. 2551.305.  [CERTAIN] REINSURANCE FROM NON-ADMITTED
  TITLE INSURER [ALLOWED].  [(a)]  Notwithstanding any other
  provision of this subchapter, a title insurance company may acquire
  reinsurance on an individual policy or facultative basis from a
  title insurance company not authorized to engage in the business of
  title insurance in this state if[:
               [(1)]  the title insurance company from which the
  reinsurance is acquired:
               (1) [(A)]  has a combined capital and surplus of at
  least $20 million as stated in the company's most recent annual
  statement preceding the acceptance of reinsurance; and
               (2) [(B)]  is domiciled in another state and is
  authorized to engage in the business of title insurance in one or
  more states[; and
               [(2)     the title insurance company acquiring
  reinsurance gives written notice to the department at least 30 days
  before acquiring the reinsurance, and the commissioner does not,
  before the expiration of the 30-day period and on the ground that
  the transaction may result in a hazardous financial condition,
  prohibit the title insurance company from obtaining reinsurance
  under this section.
         [(b)     The notice required under Subsection (a)(2) must
  provide sufficient information to enable the commissioner to
  evaluate the proposed transaction, including a summary of the
  significant terms of the reinsurance, the financial impact of the
  transaction on the title insurance company acquiring reinsurance,
  and the specific identity and state of domicile of each title
  insurance company from which reinsurance is acquired.
         [(c)     Notwithstanding any other provision of this
  subchapter, the department may, on application and hearing, permit
  a title insurance company to acquire reinsurance that does not
  comply with Subsection (a) on an individual policy or facultative
  basis from a title insurance company domiciled in another state and
  not authorized to engage in the business of title insurance in this
  state, if:
               [(1)     the company has exhausted the opportunity to
  acquire reinsurance from all other authorized title insurance
  companies; and
               [(2)     the title insurance company from which the
  reinsurance is acquired has a combined capital and surplus of at
  least $2 million as stated in its annual statement preceding the
  acceptance of reinsurance.
         [(d)     Notwithstanding any other provision of this
  subchapter, the department may, on application and hearing, permit
  a title insurance company, including an authorized reinsuring title
  insurance company, to retain an additional potential liability of
  not more than 40 percent of the company's capital stock and surplus
  as stated in the most recent annual statement of the company, if:
               [(1)     the company has exhausted the opportunity to
  acquire reinsurance under Subsection (c); and
               [(2)     the additional potential liability of the company
  is incurred only if the loss suffered by the insured under the
  policy exceeds the amount of insurance and reinsurance accepted by
  the company and its reinsuring title insurance companies under the
  other provisions of this subchapter].
         Sec. 2551.3055.  REINSURANCE FROM INSURER OTHER THAN TITLE
  INSURER. [(e)]  Notwithstanding any other provision of this
  subchapter, a title insurance company may obtain reinsurance by a
  reinsurance treaty or other reinsurance agreement from an assuming
  insurer with a financial strength rating of B+ or better from the A.
  M. Best Company, which reinsurance [that] meets the requirements of
  Subchapter C, Chapter 493, if the title insurance company has
  provided the department with notice [an affidavit] that:
               (1)  contains representations [facts] that
  [demonstrate] the title insurance company was unable after diligent
  effort to procure sufficient reinsurance from another title
  insurance company; and
               (2)  summarizes [states] the terms of the reinsurance
  treaty or other reinsurance agreement that the title insurance
  company will obtain.
         SECTION 4.  Section 2703.001(c), Insurance Code, is amended
  to read as follows:
         (c)  With respect to real property located in this state, a
  corporation may not issue any kind of title insurance coverage, any
  kind of guarantee, or reinsurance of a risk assumed under a title
  insurance policy, except as provided by Section 2551.305 or
  2551.3055 [2551.305(a)], unless the corporation is authorized to
  engage in the business of title insurance under this title and
  otherwise complies with this title. In engaging in the business of
  title insurance with respect to real property located in this
  state, the corporation shall comply with this title and rules
  described by Subsection (b), including when:
               (1)  issuing any kind of title insurance policy or an
  underwriting contract;
               (2)  reinsuring any portion of a risk assumed under a
  title insurance policy; and
               (3)  deleting a title insurance policy exclusion.
         SECTION 5.  (a)  Section 2551.301, Insurance Code, as
  amended by this Act, applies only to a title insurance policy issued
  on or after the effective date of this Act.  A title insurance
  policy issued before the effective date of this Act is governed by
  the law as it existed immediately before the effective date of this
  Act, and the former law is continued in effect for that purpose.
         (b)  Sections 2551.302 and 2551.305, Insurance Code, as
  amended by this Act, and Section 2551.3055, Insurance Code, as
  added by this Act, apply only to a reinsurance contract entered into
  by a title insurance company on or after the effective date of this
  Act.  A reinsurance contract entered into by a title insurance
  company before the effective date of this Act is governed by the law
  as it existed immediately before the effective date of this Act, and
  the former law is continued in effect for that purpose.
         SECTION 6.  This Act takes effect September 1, 2015.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 572 passed the Senate on
  April 9, 2015, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 572 passed the House on
  May 6, 2015, by the following vote:  Yeas 143, Nays 0,
  four present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor
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