Relates to the licensing of agents of authorized title insurance corporations; repealer

Section 2 of the bill repeals Insurance Law § 2101(k)(4), which specifically excludes title insurance agents from the definition of "insurance producer" within the meaning of Section 2101(k).

Section 3 of the bill amends Insurance Law § 2101 to add new subsection (v) to define the term "title insurance agent."

Section 4 of the bill amends the title heading of Insurance Law . 2103, the licensing section for insurance agents, to also include title insurance agents.

Section 5 of the bill amends Insurance Law § 2103(b) of the Insurance Law to authorize the Superintendent of Insurance ("Superintendent") to issue licenses to title insurance agents.

Section 6 of the bill amends Insurance Law . Section 2103( c) to authorize the Superintendent to issue a title insurance agent license to a firm or association and its sublicensees. Any sub-licensee would only be authorized to act in the name of the licensee. In the case of a license issued to a title insurance agent, at least one designated sublicensee must have a financial or other beneficial interest in the license.

Section 7 of the bill amends Insurance Law § 2103 (e) to require the filing of an application before a title insurance agent's license may be issued.

Section 8 of the bill amends Insurance Law § 2103(f)(2)(B) to increase from six to seven the number of licensing examinations the Superintendent may prescribe so that the Department can test those seeking to become licensed as a title insurance agent.

Section 9 of the bill amends Insurance Law § 2103(g)(7) to waive the written examination requirement for an applicant who has passed the title insurance agent examination and who was licensed as a title insurance agent, provided that the applicant applies for the license within two years following the termination of his license.

Section 10 of the bill amends Insurance Law . 2103(g) to exempt attorneys from the written examination requirement in order to become licensed as a title insurance agent.

Section 11 of the bill amends Insurance Law § 2103(h) of the Insurance Law to permit the Superintendent to refuse to issue a title insurance agent's license if in the Superintendent's judgment the applicant is not trustworthy and competent, or has given cause for the revocation

or suspension of such license, or has not complied with any prerequisite for the issuance of a title insurance agent's license.

Section 12 of the bill amends Insurance Law § 2103(j)(5) of the Insurance Law to require title insurance agents to file a renewal application and pay the prescribed fee before their license may be renewed.

Section 13 of the bill amends Insurance Law § 2103(j)(8)(A) to authorize the Superintendent to dispense with the requirements for a renewal application of a title insurance agent's license for military personnel who are unable to make a personal application for such license.

Section 14 of the bill amends Insurance Law § 2103(j)(12) to permit a licensee to amend his or her license without having to pay the required fee.

Section 15 of the bill amends Insurance Law § 2103(1) to permit title insurance agents to apply for an additional license authorizing them or sub-licensees to act as insurance agents for additional insurers.

Section 16 of the bill adds two new subsections to Insurance Law § 2103 to provide a licensing mechanism for those currently acting as title insurance agents.

Section 17 of the bill amends Insurance Law § 2109(a) to authorize the Superintendent to issue a temporary title insurance agent's license.

Section 18 of the bill amends Insurance Law § 2109(c) to permit a title insurance agent who is issued a temporary license to use such license to renew existing business, to collect premiums due, and to perform such other acts as are incidental to the continuance of the insurance business.

Section 19 of the bill amends Insurance Law § 2112(a) and (d) to require title insurance corporations to file a certificate of appointment in order to appoint a title insurance agent to act on their behalf.

Sections 20, 21 and 22 of the bill amend Insurance Law § 2115 to make the section applicable to title insurance agents and to prohibit a title insurance corporation or any of its representatives from paying any compensation except to a licensed title insurance agent.

Section 23 of the bill amends Insurance Law §§ 2120(a) and 2120(c) to require title insurance agents to act in a fiduciary capacity for any funds received or collected as a title insurance agent.

Section 24 of the bill amends Insurance Law § 2122(a) to prohibit a title insurance agent from advertising the financial condition of an insurer unless the advertising conforms to the requirements of Insurance Law § 1313 and places certain restrictions pertaining to unauthorized insurers.

Section 25 of the bill amends Insurance Law §§ 2128(a) and 2128(b) to prohibit title insurance agents from receiving any commissions or fees in connection with coverages placed for or services rendered with various governmental entities unless they actually placed coverage or rendered services to the governmental entity.

Section 26 of the bill amends Insurance Law § 2132(b) to exempt attorneys from the continuing education requirements for title insurance agents.

Section 27 of the bill amends the Insurance Law by adding a new § 2137 to prohibit anyone who holds a financial interest in a title insurance agency or title insurance corporation from referring business to that agency or corporation unless certain conditions are met.

Section 28 of the bill amends Insurance Law § 305(b) to prohibit title insurance agents and their officers, directors and employees, whose conduct, condition or practices are being investigated from being entitled to witness or mileage fees.

Section 29 of the bill amends Insurance Law § 6409(a) to prohibit a title insurance corporation from issuing or delivering a title insurance policy in New York unless the policy has been filed with, and approved by, the Superintendent in accordance with Article 23 of the Insurance Law, and amends Insurance Law § 6409(b) to clarify the applicability of Article 23 to title insurance rates and rate filings.

Section 29 of the bill further amends Insurance Law § 6409(c) to require a title insurance corporation to file with, and seek approval from, the Superintendent with regard to the optional policy form offered at or prior to closing that will insure the title, and the rates for this coverage.

Section 29 also amends Insurance Law § 6409(d) to prohibit a title agent or any other person acting on behalf of the title agent or title insurance corporation to directly or indirectly offer or make any rebate or payor give any other consideration or valuable thing as an inducement for title insurance business, and prohibits any applicant for insurance, or any person, firm, or corporation acting as agent, representative, attorney, or employee of the owner, lessee, mortgagee or the prospective owner, lessee, or mortgagee of the real property or anyone having any interest in real property from knowingly receiving, directly or indirectly, any rebate or other consideration or valuable thing.

Section 30 of the bill requires the Superintendent to promulgate application forms for title insurance agent licensing.

Section 31 of the bill allows persons, firms and corporations who have filed an application for a title insurance agent license on or before January 1, 2010, or within 90 days after the Superintendent has promulgated application forms pursuant to this act, whichever is later, to act as such agent without a license until the Superintendent has made a final determination on the application for such license.

Section 32 of the bill provides for an effective date of 120 days after the legislation has been chaptered, except that any rules and regulations necessary for the timely implementation of this act on its effective elate shall be promulgated on or before such date.

Existing law

Currently, title insurance agents are not licensed in New York. Article 21, which this bill amends, governs the licensing of insurance agents, insurance brokers, adjusters, consultants and intermediaries.

Legislative history

This legislation was introduced in the 2007-2008 legislative session as A.11252/S.3565.

Statement in support

Effective regulation of the title insurance industry is vital to the public interest, since most people who buy, sell or refinance their homes or other real estate will need to purchase title insurance. Title insurance guarantees clear ownership of a property that is being sold and protects both buyers and lenders.

Title insurance is primarily sold through title insurance agents, who often play a key role in the underwriting process in performing title search and examination work and collect title insurance premiums.

However, while title insurance corporations are regulated under the Insurance Law, title insurance agents are not required to be licensed as insurance agents under the Insurance Law and are not regulated by the Superintendent of Insurance. New York is one of the very few states that do not license title insurance agents or regulate them in any fashion. Thus, the Department has no regulatory authority over title insurance agents who may act in an improper manner.

Title insurance agents hold large sums of fiduciary funds in connection with title insurance transactions. Recently, title insurance corporations have reportedly experienced increases in the number and severity of agent defalcations. Inevitably, this leads to increased costs passed on to the consumer. This legislation seeks to reduce fraud and thereby, stem increasing costs. Licensing title insurance agents would provide the Superintendent with the authority to discipline and remove the license of any title agent who violated the Insurance Law or was otherwise untrustworthy or incompetent, thereby preventing that agent from engaging further in title insurance activities.

This bill establishes minimum education and other qualifying requirements that would help elevate the professionalism and knowledge of title insurance agents and is modeled after the licensing requirements for other insurance producers while at the same time acknowledging the unique nature of the title insurance business.

Budget implications

The bill requires the Department to collect fees associated with the licensing of title insurance agents.

Effective date

This bill would take effect 120 days after enactment.