Provides for the licensure of agents of authorized title insurance companies

BILL NUMBER:S2668

Title of bill

An act to amend the insurance law, in relation to the licensing of agents of authorized title insurance companies

Purpose/summary of provisions

This bill amends Section 2101 of the Insurance Law in defining insurance agent and title insurance agent. This bill amends Section 2103 of the Insurance Law in the following three ways: 1) By requiring the Superintendent of Insurance to develop an examination adapted to test the qualifications of an individual title insurance agent in accordance with subparagraph (b) of paragraph (2) of subsection (f) of Section 2103 of the Insurance Law. 2) By providing exemptions from the examination to New York State licensed attorneys and title insurance agents who on or before June I, 1994 had acted as an agent of an authorized title insurance company for a period of 30 months. 3) By requiring an initial and renewal fee of two hundred dollars for a two year license. This bill amends Section 2115 of the Insurance Law in relation to the payment of commissions to agents of title insurance companies. Lastly, this bill amends section 2120 of the Insurance Law in relation to treatment of all funds collected as fiduciary funds.

Justification

New York State is one of only a few states that does not require title insurance agents to be licensed. In a hearing held by the New York State Department of Insurance on February 13, 1991, all those who testified spoke of the need for licensing of title insurance agents in this state. Many questions were raised as to the competence of some title insurance agents. The need to assure competency of title agents is essential. The bill provides that the Superintendent of Insurance shall develop an examination to test the qualification of those wishing to act as a title insurance agent. Upon successful passage of this examination, the agent would be issued a two-year license as a title insurance agent. In today's market, the title insurance agent has the capability of moving from one title insurance company to another with the business such agent controls. Title insurers have experienced increases in the number and severity of agent defalcations in recent years. If the Insurance Department were given the authority to discipline and remove the license of any agent who violates the Insurance Law or proves otherwise untrustworthy, the incidence of fraud would be reduced. There is a widely felt need in the industry for licensing of title insurance agents who in many cases do all of the work involved in effecting a title insurance policy, such as title searches, clearing titles and filing of documents for the title companies in the issuance of a title policy. Licensing would elevate

the professionalism and knowledge of title agents. Inevitably it is the consumer who pays the price for this fraudulent practice and this legislation will aid in alleviating that hardship.

Fiscal implications

The New York State Insurance Department shall administer the licensing procedures and charge a two hundred dollar fee for a two-year renewable license. There are approximately 600 title agents operating in the state. This would generate about $120,000 in income for the state, every two years.

Effective date

This act shall take effect immediately, with provisions.