Title Insurance Updates

New Licensing Requirements for Agents

Recent revisions to the New York Insurance Law require title insurance agents to be licensed when doing business in the state.  Once one of the few states that exempted title insurance agents from licensing requirements, New York amended Article 21 of the Insurance Code, effective January 1, 2015, to require all persons selling and negotiating title insurance in the state to be licensed.

Specifically, section 2101 of the New York Insurance Code was amended to define "title insurance agent" as a person or firm who performs acts on behalf of a title insurance corporation, such as by selling or negotiating the sale of a title insurance policy, evaluating the insurability of title and collecting or remitting title insurance premiums.  Certain individuals, such as regular salaried officers or employees of authorized title insurance corporations who do not receive compensation for services which are directly dependent upon the amount of title insurance business done, are exempt from licensing.

Newly enacted section 2139, as well as recently promulgated Insurance Regulation 206, detail the requirements for an individual or business entity to be licensed as a title insurance agent in New York.  According to guidance from the New York Department of Financial Services (the "NYDFS"), applicants who applied for a license on or before January 1, 2015, are allowed to sell title without a license until there is a determination on their license application.

Proposed Rules Regarding Rates, Expenses and Charges

The NYDFS has also proposed a new rule with respect to title insurance rates, expenses and other charges (see the proposal). Proposed Insurance Regulation 208, published in the State Register on May 6, 2015, seeks to reduce consumer title insurance premiums by prohibiting certain incentive expenditures and capping expenses and ancillary charges.

The new regulation, when promulgated, would ban the payment of meals and entertainment or the provision of gifts, as an inducement to place title insurance business.  The regulation would also place caps on certain ancillary charges and service fees charged by title insurance corporations.  In addition, the proposed regulation would require title insurance companies to submit detailed mandatory filings  at least once every three years, which demonstrate compliance with the applicable rating requirements of the New York Insurance Law.

ICYMI…

Noteworthy links from the past two weeks

General

  • The Federal Reserve said it was tweaking its stress tests to accommodate insurers [Law360 (subscription required)]
  • The NAIC touted the strength of the state regulatory system in a brief filed in the MetLife case against FSOC [A.M. Best (subscription required)]
  • Michigan regulators approved the first major US insurance company acquisition for Chinese company Fosun [Insurance Business America]
  • The IAIS Executive Committee Chairman discussed the new timeline for the release of insurance global capital standards [Swiss Info]
  • An official at the European Insurance and Occupational Pensions Authority said that Solvency II will have a major impact on the insurance linked securities market [Business Insurance]
  • The Senate Banking Committee is holding hearings on the Financial Stability Oversight Committee [A.M. Best (subscription required)]
  • The New York Times called on Governor Cuomo to appoint another prosecutor or consumer advocate to replace former Superintendent Ben Lawsky [The New York Times]

Life & Health

  • The IMF warned that US stocks are inflated and insurers and mutual funds are vulnerable to financial shocks [The New York Times]
  • The Wall Street Journal covered the NAIC's anticipated adoption of new Indexed Universal Life sales illustrations [The Wall Street Journal]
  • Tennessee Commissioner Julie McPeak testified in Washington about her state's health insurance co-op created under the Affordable Care Act [The Tennessean]
  • Senior executives at Aetna said they understood their proposed acquisition of Humana would draw intense regulatory scrutiny [Business Insurance]
  • Health insurers continued to seek big rate increases across the country [The New York Times]
  • Arkansas restructured its insurance department as it prepared to shift to a new state-run ACA health insurance exchange [Northwest Arkansas Democrat Gazette

Property & Casualty

  • The California Workers Comp Insurance Rating Bureau proposed reforms to the state system [Business Insurance]
  • Governor Brown signed a law imposing new insurance requirements on ride-share drivers in California [Capital Public Radio]
  • The Vermont Insurance Department issued a bulletin on price optimization—the practice of using big data analytics to set prices based on which customers are most likely to shop for new coverage if their premiums go up [Insurance Journal]
  • American Modern reached a settlement with state regulators concerning lender-placed insurance rates [Missouri Department of Insurance]
  • Farmers Insurance reached a settlement with Texas over alleged overcharging on personal lines policies[Law360 (subscription required)]