HB 1267

1
A bill to be entitled
2An act relating to title insurance; creating s. 626.8422,
3F.S.; authorizing a title insurance agent or agency to
4charge a reasonable fee for certain services; providing
5that such charges are not part of the rate charged by the
6title insurer; requiring that certain information
7regarding each charge be filed with the Office of
8Insurance Regulation; requiring that the office publish
9such information by specified means; prohibiting charges
10for certain services from being set below the cost to
11provide such services; amending s. 626.9541, F.S.;
12deleting certain portions of clarifying language related
13to the payment of certain portions of premium; prohibiting
14the payment of any portion of the premium as consideration
15for the referral of title insurance business; amending s.
16627.7711, F.S.; expanding the definition of "premium" to
17include endorsements, commitments, or other contracts;
18providing additional exceptions to the scope of the term
19"premium"; providing a method of calculation of premium;
20creating s. 627.7712, F.S.; authorizing a title insurance
21agent or agency to charge a reasonable fee for certain
22services; providing that such charges are not part of the
23rate charged by the title insurer; requiring that certain
24information regarding each charge be filed with the
25office; requiring that the office publish such information
26by specified means; prohibiting charges for certain
27services from being set below the cost to provide such
28services; amending s. 627.780, F.S.; prohibiting a person
29from knowingly quoting, charging, accepting, collecting,
30or receiving a premium for title insurance other than the
31premium approved by the office; amending s. 627.782, F.S.;
32providing for the approval of rates; requiring that each
33title insurer make an annual filing with the office on or
34before a specified deadline demonstrating that the rate
35for such insurance is actuarially sound; prohibiting rates
36for such filing from including certain charges,
37commission, or compensation; providing methods by which
38filing requirements may be satisfied; requiring that the
39office issue a notice of intent to approve or disapprove
40the filing on or before a specified deadline; providing
41that such notice constitutes agency action; providing that
42requests for supporting information, mathematical or
43mechanical corrections, or notification of the office's
44preliminary findings do not toll the deadline date;
45providing that a rate be deemed approved if the office
46does not issue the required notice within the specified
47period; requiring that the office review a rate filing to
48determine if the rate is excessive, inadequate, or
49unfairly discriminatory; requiring that the office
50consider certain factors and information when making such
51review; providing standards upon which a rate may be found
52excessive, inadequate, or unfairly discriminatory;
53authorizing the office to require an insurer to provide,
54at the insurer's expense, any information necessary to
55evaluate the condition of the company and reasonableness
56of the filing; authorizing the office to review certain
57information at any time; requiring that the office
58initiate proceedings to disapprove a rate and notify the
59insurer if the office finds on a preliminary basis that a
60rate is excessive, inadequate, or unfairly discriminatory;
61requiring that an insurer, upon receipt of such notice
62from the office, provide certain information within a
63specified period; requiring that the office issue a notice
64of intent to approve or a notice of intent to disapprove
65within a specified period; providing that an insurer has
66the burden of proof to show by a preponderance of the
67evidence that a rate is not excessive, inadequate, or
68unfairly discriminatory; prohibiting an insurer from
69altering a rate after its receipt of notice from the
70office that a rate may be excessive, inadequate, or
71unfairly discriminatory for a specified period; providing
72exceptions; authorizing the office to disapprove without
73notice any rate increase filed by an insurer during the
74prohibited period; requiring that certain individuals
75affiliated with a title insurer certify specified
76information on a form approved by the Financial Services
77Commission when submitting a rate filing; providing that
78it is a violation of state law for a certifying officer or
79actuary to knowingly make a false certification; providing
80that failure to provide such certification results in a
81filing being disapproved without prejudice; authorizing an
82insurer to refile a rate filing under such circumstances;
83defining the term "actuary"; authorizing an insurer to
84apply for an extension to make a filing under certain
85circumstances; authorizing the office to exempt a company
86from filing rates or rate certifications under certain
87circumstances; authorizing the office to order insurers
88not meeting certain filing requirements to discontinue the
89issuance of policies for which the required filing was not
90made until such time that the office determines that the
91required filing has been submitted properly; providing for
92application of an approved rate; authorizing the
93commission to require by rule that licensees submit
94certain information determined by the office as necessary
95to analyze premium rates, retention rates, or the
96condition of the title insurance industry; authorizing the
97commission to adopt rules; amending s. 627.7845, F.S.;
98providing that an insurer is liable to the insured for
99damages up to treble the amount of coverage under certain
100conditions; repealing s. 627.783, F.S., relating to rate
101deviation; providing for application of the act; providing
102an effective date.
103
104Be It Enacted by the Legislature of the State of Florida:
105
106     Section 1.  Section 626.8422, Florida Statutes, is created
107to read:
108     626.8422  Charges for services.--
109     (1)  A title insurance agent or agency may charge a
110reasonable fee for primary title services, title searches, and
111closing services or the components thereof actually performed by
112the agent or agency. Any charges under this section do not
113constitute a part of the rate charged by the title insurer for
114the issuance of the title insurance form, policy, commitment, or
115contract issued in connection therewith. The agent or agency
116must file with the office the amount of each such charge or
117change to such charge, including the components thereof,
118together with related information as required by the office on a
119form adopted by the office. The office shall publish the
120information collected from agents or agencies pursuant to this
121section via the Internet or otherwise as the office deems
122sufficient to apprise the public of costs for these services
123among the various agents or agencies.
124     (2)  Charges for the services or components of services
125described in subsection (1) set by the agent or agency may not
126be set below the cost to provide such services.
127     Section 2.  Paragraph (h) of subsection (1) of section
128626.9541, Florida Statutes, is amended to read:
129     626.9541  Unfair methods of competition and unfair or
130deceptive acts or practices defined.--
131     (1)  UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
132ACTS.--The following are defined as unfair methods of
133competition and unfair or deceptive acts or practices:
134     (h)  Unlawful rebates.--
135     1.  Except as otherwise expressly provided by law, or in an
136applicable filing with the office, knowingly:
137     a.  Permitting, or offering to make, or making, any
138contract or agreement as to such contract other than as plainly
139expressed in the insurance contract issued thereon;
140     b.  Paying, allowing, or giving, or offering to pay, allow,
141or give, directly or indirectly, as inducement to such insurance
142contract, any unlawful rebate of premiums payable on the
143contract, any special favor or advantage in the dividends or
144other benefits thereon, or any valuable consideration or
145inducement whatever not specified in the contract; or
146     c.  Giving, selling, or purchasing, or offering to give,
147sell, or purchase, as inducement to such insurance contract or
148in connection therewith, any stocks, bonds, or other securities
149of any insurance company or other corporation, association, or
150partnership, or any dividends or profits accrued thereon, or
151anything of value whatsoever not specified in the insurance
152contract.
153     2.  Nothing in paragraph (g) or subparagraph 1. of this
154paragraph shall be construed as including within the definition
155of discrimination or unlawful rebates:
156     a.  In the case of any contract of life insurance or life
157annuity, paying bonuses to all policyholders or otherwise
158abating their premiums in whole or in part out of surplus
159accumulated from nonparticipating insurance; provided that any
160such bonuses or abatement of premiums is fair and equitable to
161all policyholders and for the best interests of the company and
162its policyholders.
163     b.  In the case of life insurance policies issued on the
164industrial debit plan, making allowance to policyholders who
165have continuously for a specified period made premium payments
166directly to an office of the insurer in an amount which fairly
167represents the saving in collection expenses.
168     c.  Readjustment of the rate of premium for a group
169insurance policy based on the loss or expense thereunder, at the
170end of the first or any subsequent policy year of insurance
171thereunder, which may be made retroactive only for such policy
172year.
173     d.  Issuance of life insurance policies or annuity
174contracts at rates less than the usual rates of premiums for
175such policies or contracts, as group insurance or employee
176insurance as defined in this code.
177     e.  Issuing life or disability insurance policies on a
178salary savings, bank draft, preauthorized check, payroll
179deduction, or other similar plan at a reduced rate reasonably
180related to the savings made by the use of such plan.
181     3.a.  No title insurer, or any member, employee, attorney,
182agent, or agency thereof, shall pay, allow, or give, or offer to
183pay, allow, or give, directly or indirectly, as inducement to
184title insurance, or after such insurance has been effected, any
185rebate or abatement of the premium or any other charge or fee,
186or provide any special favor or advantage, or any monetary
187consideration or inducement whatever.
188     b.  Nothing in this subparagraph shall be construed as
189prohibiting the payment of fees to attorneys at law, duly
190licensed to practice law in the courts of this state, for
191professional services, or as prohibiting the payment of earned
192portions of the premium to duly appointed agents or agencies who
193actually perform services for the title insurer. Nothing in this
194subparagraph shall be construed as prohibiting a rebate or
195abatement of an attorney's fee charged for professional
196services, or that portion of the premium that is not required to
197be retained by the insurer pursuant to s. 627.782(1), or any
198other agent charge or fee to the person responsible for paying
199the premium, charge, or fee.
200     c.  No insured named in a policy, or any other person
201directly or indirectly connected with the transaction involving
202the issuance of such policy, including, but not limited to, any
203mortgage broker, real estate broker, builder, or attorney, any
204employee, agent, agency, or representative thereof, or any other
205person whatsoever, shall knowingly receive or accept, directly
206or indirectly, any rebate or abatement of any portion of the
207title insurance premium or of any other charge or fee or any
208monetary consideration or inducement whatsoever, except as set
209forth in sub-subparagraph b.; provided, in no event shall any
210portion of the attorney's fee, any portion of the premium that
211is not required to be retained by the insurer pursuant to s.
212627.782(1), any agent charge or fee, or any other monetary
213consideration or inducement be paid directly or indirectly for
214the referral of title insurance business.
215     Section 3.  Subsection (2) of section 627.7711, Florida
216Statutes, is amended to read:
217     627.7711  Definitions.--As used in this part, the term:
218     (2)  "Premium" means the charge, as specified by rule of
219the commission, that is made by a title insurer for a title
220insurance policy, endorsement, commitment, or other contract for
221including the charge for performance of primary title services
222by a title insurer or title insurance agent or agency, and
223incurring the risks incident to the such policy, endorsement,
224commitment, or other contract under the several classifications
225of title insurance contracts and forms, and upon which charge a
226premium tax is paid under s. 624.509. As used in this part or in
227any other law, with respect to title insurance, the word
228"premium" does not include a commission or any reimbursement for
229primary title services, title searches, closing services, or any
230component thereof performed by a title insurer, title insurance
231agent, or agency. The premium shall be calculated by multiplying
232the approved rate by each $1,000 of title insurance limits
233provided.
234     Section 4.  Section 627.7712, Florida Statutes, is created
235to read:
236     627.7712  Charges for services.--
237     (1)  A title insurance agent or agency may charge a
238reasonable fee for primary title services, title searches, and
239closing services or the components thereof actually performed by
240the agent or agency. Any charges under this section do not
241constitute a part of the rate charged by the title insurer for
242the issuance of the title insurance form, policy, commitment, or
243contract issued in connection therewith. The agent or agency
244must file with the office the amount of each such charge or
245change to such charge, including the components thereof,
246together with related information as required by the office on a
247form adopted by the office. The office shall publish the
248information collected from agents or agencies pursuant to this
249section via the Internet or otherwise as the office deems
250sufficient to apprise the public of costs for these services
251among the various agents or agencies.
252     (2)  Charges for the services or components of services
253described in subsection (1) set by the agent or agency may not
254be set below the cost to provide such services.
255     Section 5.  Subsection (1) of section 627.780, Florida
256Statutes, is amended to read:
257     627.780  Illegal dealings in premium.--
258     (1)  A person may not knowingly quote, charge, accept,
259collect, or receive a premium for title insurance other than the
260premium approved by the office adopted by the commission, except
261as provided in s. 626.9541(1)(h)3.b.
262     Section 6.  Section 627.782, Florida Statutes, is amended
263to read:
264     627.782  Approval Adoption of rates.--
265     (1)  Each title insurer shall make an annual filing with
266the office no later than 12 months after the date of that
267insurer's previous filing which demonstrates that the rate is
268actuarially sound. Rates for the required filing may not include
269any charge for primary title services, closing services, or
270title searches as defined in s. 627.7711 or any commission or
271other compensation made to title agents or agencies.
272     (a)  The filing requirements of this section shall be
273satisfied by one of the following methods:
274     1.  A rate filing prepared by an actuary containing
275documentation demonstrating that the proposed rates are not
276excessive, inadequate, or unfairly discriminatory pursuant to
277applicable rating laws and rules of the commission.
278     2.  If no rate change is proposed, a filing consisting of a
279certification by an actuary that the existing rate is
280actuarially sound and not excessive, inadequate, or unfairly
281discriminatory.
282     (b)  The office shall finalize its review by issuing a
283notice of intent to approve or a notice of intent to disapprove
284within 90 days after the date of its receipt of the filing. The
285notice of intent to approve and the notice of intent to
286disapprove constitute agency action for purposes of chapter 120.
287Requests for supporting information, requests for mathematical
288or mechanical corrections, or notification to the insurer by the
289office of its preliminary findings do not toll the 90-day period
290during any such proceeding. The rate shall be deemed approved if
291the office does not issue a notice of intent to approve or a
292notice of intent to disapprove within 90 days after the date of
293its receipt of the filing.
294     (c)  Upon receipt of a rate filing, the office shall review
295the rate filing to determine if the rate is excessive,
296inadequate, or unfairly discriminatory. The office shall, in
297accordance with generally accepted and reasonable actuarial
298principles and techniques, consider the following factors when
299making such determination:
300     1.  Each title insurer's loss experience and prospective
301loss experience within and without this state under closing
302protection letters, policies, endorsements, commitments, and
303other contracts and policy liabilities.
304     2.  A reasonable margin for profit and contingencies,
305including contingent liability under s. 627.7865, sufficient to
306allow title insurers to earn a rate of return on their capital
307which will attract and retain adequate capital investment in the
308title insurance business and maintain an efficient title
309insurance delivery system.
310     3.  Past expenses and prospective expenses for the
311administration and handling of risks.
312     4.  Liability for defalcation.
313     5.  The degree of competition among insurers for the risk
314insured.
315     6.  Investment income reasonably expected by the insurer,
316consistent with the insurer's investment practices, from
317premiums anticipated in the filing, plus any other expected
318income from currently invested assets representing the amount
319expected on unearned premium reserves and loss reserves. The
320commission may adopt rules using reasonable techniques of
321actuarial science and economics to specify the manner in which
322insurers must calculate investment income attributable to such
323classes of insurance written in this state and the manner in
324which such investment income must be used in the calculation of
325insurance rates. The manner of calculation shall contemplate
326allowances for a profit factor and investment income that
327produce a reasonable rate of return; however, investment income
328from invested surplus must not be considered.
329     7.  The reasonableness of the judgment reflected in the
330filing.
331     8.  Dividends, savings, or unabsorbed premium deposits
332allowed or returned to Florida policyholders, members, or
333subscribers.
334     9.  The adequacy of loss reserves.
335     10.  The cost of reinsurance.
336     11.  Trend factors, including trends in actual losses per
337insured unit for the insurer making the filing.
338     12.  Other relevant factors that affect the frequency or
339severity of claims or expenses.
340     (d)  After consideration of the rate factors provided in
341paragraph (c), a rate may be found by the office to be
342excessive, inadequate, or unfairly discriminatory based upon the
343following standards:
344     1.  Rates shall be deemed excessive if they are likely to
345produce a profit from Florida business which is unreasonably
346high in relation to the risk involved in the class of business
347or if expenses are unreasonably high in relation to services
348rendered.
349     2.  Rates shall be deemed excessive if, among other things,
350the rate structure established by a title insurer provides for
351replenishment of surpluses from premiums if the replenishment is
352necessitated by investment losses.
353     3.  Rates shall be deemed inadequate if the rates and the
354investment income attributable to them are clearly insufficient
355to sustain projected losses and expenses in the class of
356business to which they apply.
357     (e)  In reviewing a rate filing, the office may require the
358insurer to provide, at the insurer's expense, all information
359necessary to evaluate the condition of the company and the
360reasonableness of the filing according to the criteria
361enumerated in this section.
362     (f)  The office may at any time review a rate, rating
363schedule, rating manual, or rate change; the pertinent records
364of the insurer; and market conditions. If the office finds on a
365preliminary basis that a rate may be excessive, inadequate, or
366unfairly discriminatory, the office shall initiate proceedings
367to disapprove the rate and shall notify the insurer. Upon being
368notified, the insurer shall, within 60 days, file with the
369office all information that, in the belief of the insurer,
370proves the reasonableness, adequacy, and fairness of the rate or
371rate change. The office shall issue a notice of intent to
372approve or a notice of intent to disapprove pursuant to the
373procedures of paragraph (b) within 90 days after the date of its
374receipt of the insurer's initial response. In such instances and
375in any administrative proceeding relating to the legality of the
376rate, the insurer has the burden of proof to show by a
377preponderance of the evidence that the rate is not excessive,
378inadequate, or unfairly discriminatory. After the office
379notifies an insurer that a rate may be excessive, inadequate, or
380unfairly discriminatory, unless the office withdraws the
381notification, the insurer may not alter the rate except to
382conform with the office's notice until the earlier of 120 days
383after the date the notification was provided or 180 days after
384the date of the implementation of the rate. The office may,
385subject to chapter 120, disapprove without the required 60-day
386notification any rate increase filed by an insurer within the
387prohibited period or during the time that the legality of the
388increased rate is being contested.
389     (g)  When submitting a rate filing, the chief executive
390officer or the chief financial officer of the title insurer and
391the chief actuary of the title insurer must certify the
392following information on a form approved by the commission,
393under oath, and subject to penalty of perjury:
394     1.  The signing officer and actuary have reviewed the rate
395filing;
396     2.  Based on the knowledge of the signing officer and
397actuary, the rate filing does not contain any untrue statement
398of a material fact or omit a material fact necessary to make the
399statements not misleading, in light of the circumstances under
400which such statements were made;
401     3.  Based on the knowledge of the signing officer and
402actuary, the information and other factors described in this
403section, including, but not limited to, investment income,
404present the basis of the rate filing in all material respects
405for the periods presented in the filing; and
406     4.  Based on the knowledge of the signing officer and
407actuary, the rate filing reflects all premium savings that are
408reasonably expected to result from legislative enactments and
409are in accordance with generally accepted and reasonable
410actuarial techniques.
411
412A signing officer or actuary who knowingly makes a false
413certification under this subsection commits a violation of s.
414626.9541(1)(e) and is subject to the penalties prescribed in s.
415626.9521. Failure to provide such certification by the officer
416and actuary shall result in the rate filing being disapproved
417without prejudice. Under such circumstances, the insurer or
418rating organization may refile its rate filing with the required
419certification. As used in this paragraph, the term "actuary"
420means an individual who is a member of the Casualty Actuary
421Society or the American Academy of Actuaries.
422     (h)  If, at the time a filing is required under this
423section, an insurer is in the process of completing a rate
424review, the insurer may apply to the office for an extension of
425up to an additional 30 days to make the filing. The request for
426an extension must be received by the office no later than the
427date the filing is due.
428     (i)  After receiving a request to be exempted from the
429provisions of this section before the filing is due, the office
430may, due to insignificant numbers of policies in force or
431insignificant premium volume, exempt a company from filing rates
432or rate certification as required by this section.
433     (j)  If an insurer fails to meet the filing requirements of
434this subsection and does not submit the filing within 60 days
435after the date on which the filing is due, the office may, in
436addition to any other penalty authorized by law, order the
437insurer to discontinue the issuance of policies for which the
438required filing was not made until such time that the office
439determines that the required filing has been submitted properly.
440     (1)  Subject to the rating provisions of this code, the
441commission must adopt a rule specifying the premium to be
442charged in this state by title insurers for the respective types
443of title insurance contracts and, for policies issued through
444agents or agencies, the percentage of such premium required to
445be retained by the title insurer which shall not be less than 30
446percent. However, in a transaction subject to the Real Estate
447Settlement Procedures Act of 1974, 12 U.S.C. ss. 2601 et seq.,
448as amended, no portion of the premium attributable to providing
449a primary title service shall be paid to or retained by any
450person who does not actually perform or is not liable for the
451performance of such service.
452     (2)  In adopting premium rates, the commission must give
453due consideration to the following:
454     (a)  The title insurers' loss experience and prospective
455loss experience under closing protection letters and policy
456liabilities.
457     (b)  A reasonable margin for underwriting profit and
458contingencies, including contingent liability under s. 627.7865,
459sufficient to allow title insurers, agents, and agencies to earn
460a rate of return on their capital that will attract and retain
461adequate capital investment in the title insurance business and
462maintain an efficient title insurance delivery system.
463     (c)  Past expenses and prospective expenses for
464administration and handling of risks.
465     (d)  Liability for defalcation.
466     (e)  Other relevant factors.
467     (3)  Rates may be grouped by classification or schedule and
468may differ as to class of risk assumed.
469     (4)  Rates may not be excessive, inadequate, or unfairly
470discriminatory.
471     (2)(5)  The approved rate premium applies to each $100 of
472insurance issued to an insured.
473     (3)(6)  The approved rate applies premium rates apply
474throughout this state.
475     (7)  The commission shall, in accordance with the standards
476provided in subsection (2), review the premium as needed, but
477not less frequently than once every 3 years, and shall, based
478upon the review required by this subsection, revise the premium
479if the results of the review so warrant.
480     (4)(8)  The commission may, by rule, require licensees
481under this part to annually submit statistical information,
482including loss and expense data, as the office department
483determines to be necessary to analyze premium rates, retention
484rates, and the condition of the title insurance industry.
485     (5)  The commission may establish procedures for the
486required filings by rule.
487     Section 7.  Subsection (1) of section 627.7845, Florida
488Statutes, is amended to read:
489     627.7845  Determination of insurability required;
490preservation of evidence of title search and examination.--
491     (1)  A title insurer may not issue a title insurance
492commitment, endorsement, or title insurance policy until the
493title insurer has caused to be made a determination of
494insurability based upon the evaluation of a reasonable title
495search or a search of the records of a Uniform Commercial Code
496filing office, as applicable, has examined such other
497information as may be necessary, and has caused to be made a
498determination of insurability of title or the existence,
499attachments, perfection, and priority of a Uniform Commercial
500Code security interest, including endorsement coverages, in
501accordance with sound underwriting practices. If an insurer or
502its agent is negligent in performing the activities required in
503this subsection, the insurer is liable to the insured for
504damages up to three times the amount of coverage.
505     Section 8.  Section 627.783, Florida Statutes, is repealed.
506     Section 9.  This act shall take effect July 1, 2009, and
507applies to title insurance forms, contracts, commitments, or
508policies issued on or after that date.


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