HS HCS HB 1481 -- TITLE INSURANCE (Smith)

This substitute makes changes to and reorganizes the Missouri
Title Insurance Act.  In its main provisions, the substitute:

(1)  Expands the definitions section of the act;

(2)  Requires a title insurer or title agent issuing a lender's
title insurance policy, when no owner's policy has been
requested, to give written notice to a purchaser/mortgagor that
the lender's policy does not protect the purchaser;

(3)  Requires a written contract setting forth the allocation of
responsibilities between a title insurer and a title insurance
agent and delineates the title insurer's supervisory
responsibilities regarding title insurance agents;

(4)  Permits a title insurer or title insurance agent to operate
as an escrow, security, settlement, or closing agent if certain
listed requirements are complied with or met;

(5)  Lists the actions the Director of the Department of
Insurance may take or penalties that may be imposed against
title insurers or title insurance agents that violate the title
insurance laws;

(6)  Prohibits an insurer that transacts any other class, type,
or kind of business from obtaining a title insurance license,
except that a title insurer can issue closing or settlement
protection;

(7)  Requires domestic and foreign title insurers to file an
actuarial certificate with the required annual audited financial
report and to establish a supplemental reserve accordingly;

(8)  Subjects all title insurers to the Missouri Uniform
Insurers Liquidation Act;

(9)  Prohibits the use of listed title insurance forms unless
the forms have been approved by the director;

(10)  Permits a title insurer to meet its obligations regarding
premium and form filing by becoming a member of or subscriber to
a rate service company organized and licensed under this act;

(11)  Sets forth procedures for hearings and review of rate
filings;

(12)  Sets forth the requirements for the establishment and
licensure of a rate service company; and

(13)  Requires all title insurance agents to be licensed, lists
the responsibilities and obligations for licensure, and details
the title insurance continuing education requirements.

The substitute contains penalty provisions.

The substitute has an effective date of January 1, 2001.

FISCAL NOTE:  Estimated Net Cost to Insurance Dedicated Fund of
$194,554 in FY 2001, $79,811 in FY 2002, and $82,691 in FY 2003.

HCS HB 1481 -- TITLE INSURANCE

SPONSOR:  Smith

COMMITTEE ACTION:  Voted "do pass" by the Committee on Civil and
Administrative Law by a vote of 17 to 1.

This substitute makes changes to and reorganizes the Missouri
Title Insurance Act.  In its main provisions, the substitute:

(1)  Expands the definitions section of the act;

(2)  Requires a title insurer or title agent issuing a lender's
title insurance policy, when no owner's policy has been
requested, to give written notice to a purchaser/mortgagor that
the lender's policy does not protect the purchaser;

(3)  Requires a written contract setting forth the allocation of
responsibilities between a title insurer and a title insurance
agent and delineates the title insurer's supervisory
responsibilities regarding title insurance agents;

(4)  Permits a title insurer or title insurance agent to operate
as an escrow, security, settlement, or closing agent if certain
listed requirements are complied with or met;

(5)  Lists the actions the Director of the Department of
Insurance may take or penalties that may be imposed against
title insurers or title insurance agents that violate the title
insurance laws;

(6)  Prohibits an insurer that transacts any other class, type,
or kind of business from obtaining a title insurance license,
except that a title insurer can issue closing or settlement
protection;

(7)  Requires domestic and foreign title insurers to file an
actuarial certificate with the required annual audited financial
report and to establish a supplemental reserve accordingly;

(8)  Subjects all title insurers to the Missouri Uniform
Insurers Liquidation Act;

(9)  Prohibits the use of listed title insurance forms unless
the forms have been approved by the director;

(10)  Permits a title insurer to meet its obligations regarding
premium and form filing by becoming a member of or subscriber to
a rate service company organized and licensed under this act;

(11)  Sets forth procedures for hearings and review of rate
filings;

(12)  Sets forth the requirements for the establishment and
licensure of a rate service company; and

(13)  Requires all title insurance agents to be licensed, lists
the responsibilities and obligations for licensure, and details
the title insurance continuing education requirements.

The substitute contains penalty provisions.

The substitute has an effective date of January 1, 2001.

FISCAL NOTE:  Estimated Net Cost to Insurance Dedicated Fund of
$94,979 in FY 2001, $78,686 in FY 2002, and $81,566 in FY 2003.

PROPONENTS:  Supporters say that this bill ensures that title
insurance policies will be written using sound accounting and
actuarial practices.  The bill creates a system of reviews of
title agencies by the underwriters.  This is needed to save the
integrity of the title insurance industry, which has been under
attack in recent years.

Testifying for the bill were Representative Smith; Missouri Land
Title Association; and Donna Hayes, title agent.

OPPONENTS:  Those who oppose the bill say that they have
problems with a few provisions of the bill.  One area of
disagreement involves the so-called "good funds" issue, (the
timely transfer of funds from buyer to escrow account to
seller.)  This is not an issue that requires legislation.  It's
something that merely calls for good business sense, such as
requiring a cashier's check upon closing.  In the not-too--
distant future, most transactions will be done electronically,
and this won't be an issue.  In addition, the definitions of
"premium," "title agent," and "title agency" are problematic.

Testifying against the bill were Mortgage Bankers Association of
Missouri; Bar Plan Title Insurance Company; and Missouri
Insurance Coalition.

Richard Smreker, Legislative Analyst

HB 1481 -- Title Insurance

Sponsor:  Smith

This bill makes changes to and reorganizes the Missouri Title
Insurance Act.  In its main provisions, the bill:

(1)  Expands the "definitions" section of the Act;

(2)  Requires a title insurer or title agent issuing a lender's
title insurance policy, when no owner's policy has been
requested, to give written notice to a purchaser/mortgagor that

the lender's policy does not protect the purchaser;

(3)  Requires a written contract setting forth the allocation of
responsibilities between a title insurer and a title insurance
agent, and delineates the title insurer's supervisory
responsibilities regarding title insurance agents;

(4)  Permits a title insurer or title insurance agent to operate
as an escrow, security, settlement, or closing agent if certain
listed requirements are complied with or met;

(5)  Lists the actions the Director of Insurance may take or
penalties that may be imposed against title insurers or title
insurance agents that violate the title insurance laws;

(6)  Prohibits an insurer that transacts any other class, type,
or kind of business from obtaining a title insurance license,
except that a title insurer can issue closing or settlement
protection;

(7)  Requires domestic and foreign title insurers to file an
actuarial certificate with the required annual audited financial
report and to establish a supplemental reserve accordingly;

(8)  Subjects all title insurers to the Missouri Uniform
Insurers Liquidation Act;

(9)  Prohibits a domestic title insurer from accepting certain
defined additional business without prior approval of the
director and sets forth guidelines for approval by the director;

(10)  Prohibits use of listed title insurance forms unless the
forms have been approved by the director;

(11)  Permits a title insurer to meet its obligations regarding
premium and form filing by becoming a member of or subscriber to
a rate service organization organized and licensed under this
Act;

(12)  Sets forth the requirements for the establishment and
licensure of a rate service organization;

(13)  Sets forth procedures for hearings and review of rate
filings; and

(14)  Requires all title insurance agents to be licensed, lists
the responsibilities and obligations for licensure, and details
the title insurance continuing education requirements.

The bill contains penalty provisions.

The bill has an effective date of January 1, 2001.