SB 291

Under existing law, title insurance companies are required to seek prior approval of their rates by the Commissioner of Insurance. This bill would authorize title insurers to form a rating bureau for the purpose of filing rates on behalf of its member insurers

Relating to insurance; to provide for the establishment of a rating bureau for title insurance; and for that purpose to add a new Article 6, commencing with Section 27-13-140, to Chapter 13, Title 27, Code of Alabama 1975; to amend Sections 27-13-2 and 27-25-6, Code of Alabama 1975; and to add Section 27-25-6.1 to the Code of Alabama 1975.

Section 1

Article 6, commencing with Section 27-13-140, of Chapter 13, Title 27, is added to the Code of Alabama 1975, to read as follows: Article 6. Title Insurance. §27-13-140. The commissioner may authorize a rating organization to engage in the business of rate-making on behalf of its subscriber or member insurers for the purposes of Section 27-25-6 upon finding that the organization has complied with this article and is otherwise qualified to function as a rating organization. Upon being authorized, the rating organization may file premium rates as required by Section 27-25-6 on behalf of its member or subscriber insurers authorized to write title insurance in this state. §27-13-141. A rating organization requesting the authority provided in Section 27-13-140 shall pay a fee set by the commissioner, not to exceed two hundred dollars ($200), and shall provide the commissioner with such information as the commissioner, by rule, may prescribe including all of the following: (1) A copy of the organization's constitution, articles of agreement or association, or articles of incorporation, and of its bylaws or rules governing the conduct of its business. (2) A list of insurers which are, or which have agreed to become, members of or subscribers to the organization. (3) The name and address of a person or persons in this state upon whom notices or orders of the commissioner affecting the organization may be served. (4) A detailed description of the manner in which the organization shall determine the premium rates to be filed as required by Section 27-25-6. (5) Such other information as the commissioner may require. §27-13-142. After being initially granted authority to act as a rating organization, an organization shall thereafter renew its authority on an annual basis by filing a request for renewal in a form prescribed by the commissioner, and including the information required in subdivisions (1) to (5), inclusive, of Section 27-13-141, by December 31 of each year, and paying a renewal fee set by the commissioner not to exceed two hundred dollars ($200). §27-13-143. As a condition for obtaining and retaining authority to act as a rating organization, the organization shall make reasonable provision in its constitution, articles of agreement or association, articles of incorporation, bylaws, or otherwise for all of the following: (1) Any insurer engaged in writing title insurance in this state may become a member or subscriber of the rating organization upon application therefor by the insurer. The rating organization may not unjustifiably discriminate between insurers in the conditions imposed for admission as members or subscribers. In the event an insurer is rejected by the rating organization, the rating organization shall set forth the reasons for the rejection in writing and shall provide that writing to the insurer. (2) Any insurer which has been denied or refused membership or admission as a subscriber by the rating organization, within 30 days of receipt of notice of the denial, may petition the commissioner for a hearing on the denial or refusal. The hearing shall be conducted as provided in Section 27-2-30 and the rules of the commissioner, and the order of the commissioner may be appealed as provided in Section 27-2-32. §27-13-144. (a) As a condition for obtaining and retaining authority to act as a rating organization, the organization shall notify the commissioner within 10 days of the withdrawal or expulsion of any member or subscriber. In the event of an expulsion, the rating organization shall include in the notice to the commissioner the reasons for the expulsion. (b) If a member or subscriber is expelled or excluded due to failure to pay an agreed upon membership or subscription fee, the member or subscriber shall be readmitted upon payment of any delinquent fees or charges to the rating organization. (c) An insurer which has been expelled or has withdrawn as a member or subscriber of a rating organization may not use any rate or rating system made by the rating organization during the period that the expulsion or withdrawal continues. §27-13-145. An insurer may not use any rate or rating system made by a rating organization of which the insurer is not a member or subscriber. §27-13-146. All fees collected pursuant to this article shall be deposited in the State Treasury to the credit of the Insurance Department Fund.

Section 2

Sections 27-13-2 and 27-25-6 of the Code of Alabama 1975, are amended to read as follows:

§27-13-2.

The commissioner is charged with the duty of the administration of all laws now relating, or hereafter relating, to insurance rates and rating systems of all companies authorized to do business in the State of Alabama, with the exception of rates of life and health and accident business and rates of title insurance.

§27-25-6.

(a) Every title insurer shall file with the commissioner its manual of title insurance rates and rules, schedule of premium rates, and every modification of any premium rate that it proposes to use in this state. A rating organization's filing on behalf of its members or subscribers satisfies the duty of a title under this subsection if the title insurer is a member or subscriber of the rating organization. A rating organization shall be authorized pursuant to Article 6, commencing with Section 27-13-140, of Chapter 13. The premium rates shall not be subject to rebate and the rebate of premiums to the insured are expressly prohibited. If a reissue premium rate is filed by an insurer, an insured may receive reissue credit only when the insured physically produces the prior title insurance policy, including schedules associated therewith, issued by a title insurer licensed to be engaged in the business of title insurance in this state. A title insurer that has not filed its premium rates pursuant to the provisions hereof shall not engage in the business of title insurance until such time as its premium rates are filed. No person, title insurer, agency, or agent shall charge any premium rate for any policy or contract of title insurance except in accordance with the filed premium rates which are in effect for the title insurer as provided in this section.

(b) Every premium rate filing by a title insurer shall state the proposed effective date thereof and shall indicate the character and extent of the coverage contemplated. The commissioner shall determine the form, manner, and detail of premium rate filings required in this section. No premium rate filing shall provide for the negotiation or bidding of the rate to be charged for a policy insuring an interest in real property in this state.

(c) Before the expiration of 60 days after the receipt of a premium rate filing by a title insurer or rating organization, the commissioner shall determine the fairness and justness of all such filings and shall also notify the title insurer or rating organization of any disapproval of the premium rate filing.

(d) Any Except as to rate filings made by a rating organization on behalf of its members or subscribers pursuant to this section, any premium rate filed may be used or charged after the expiration of 60 days from the date of filing in the office of the commissioner, unless the commissioner has issued notice of the commissioner's prior written disapproval thereto within the time period.

(e) A rate filing made by a rating organization on behalf of its members or subscribers pursuant to this section may not become effective, notwithstanding expiration of a waiting period, unless the commissioner approves the filing. The commissioner may not approve a filing unless he or she reviews the substance of the filing and issues a written decision approving the filing stating that the filing comports with this chapter.

(e)(f) A notice of written disapproval by the commissioner shall set forth the reasons therefor and shall state that a hearing will be granted within 30 days after request in writing by the title insurer or rating organization. The commissioner or his or her designee shall have the power to administer oaths, to require the appearance of and examine any person under oath, and to require the production of books, records, or papers relevant to the inquiry upon the commissioner's or the designee's own initiative or upon the request of any interested insurer or rating organization.

(g) The commissioner may promulgate necessary rules to implement the act adding this amendatory language and to establish appropriate limits on the proposed changes to premiums that may be approved."

Section 3

Section 27-25-6.1 is added to the Code of Alabama 1975, to read as follows: §27-25-6.1. (a) Form filings by title insurers are subject to the requirements of Section 27-14-8. (b) A rating organization's form filing on behalf of its members or subscribers satisfies the duty of a title insurer to file forms if the title insurer is a member or subscriber of the rating organization. (c) Form filings by a rating organization are also subject to the requirements of Section 27-14-8, except that forms may not be deemed approved after expiration of a waiting period as provided in subsection (b) of Section 27-14-8. A form filing made by a rating organization does not become effective unless the commissioner approves the filing. The commissioner shall not approve such a filing unless he or she reviews the substance of the filing and issues a written decision approving the filing.

Section 4

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.