HB 540 - Title insurance; provisions
Georgia House of Representatives - 1995/1996 Sessions
HB 540 - Title insurance; provisions
1. Williams 114th 2. Towery 30th 3. Shipp 38th
House Comm: Ins / Senate Comm: /
House Vote: Yeas Nays Senate Vote: Yeas Nays
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House Action Senate
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2/2/95 Read 1st Time
2/3/95 Read 2nd Time
2/27/96 Favorably Reported
Sub Committee Amend/Sub
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Code Sections amended: 33-54-1, 33-54-2, 33-54-3, 33-54-4, 33-54-5, 33-54-6,
33-54-7, 33-54-8, 33-54-9, 33-54-10, 33-54-11, 33-54-12, 33-54-13
HB 540 LC 25 0328ERS
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Title 33 of the Official Code of Georgia Annotated,
1- 2 relating to insurance, so as to provide for the
1- 3 establishment by the Commissioner of Insurance of premium
1- 4 rates to be charged by title insurers; to provide for
1- 5 definitions; to provide that title insurers and agents shall
1- 6 operate under the control and supervision of the
1- 7 Commissioner; to provide for certain filings with the
1- 8 Commissioner; to provide for minimum risk rate premiums; to
1- 9 provide for the promulgation of rules for the reporting by
1-10 title insurers and agents of their loss and expense
1-11 experience; to provide for hearings to be held by the
1-12 Commissioner for the consideration of premium rates and
1-13 other matters; to provide for appeals by aggrieved persons;
1-14 to provide for the issuance of remedial orders by the
1-15 Commissioner; to provide limitations on exposure to risks;
1-16 to provide for reinsurance reserves; to authorize time
1-17 extensions for compliance with reinsurance reserve
1-18 requirements; to provide for the payment of claims from
1-19 assets or reinsurance reserves in the event of liquidation
1-20 or dissolution of the title insurer; to provide for reserves
1-21 against unpaid losses and loss expenses; to provide for
1-22 fiduciary duties regarding certain funds held in trust; to
1-23 provide for a title insurer insolvency trust fund; to
1-24 provide for reinsurance; to provide for the qualifications
1-25 and for the licensing of title agents; to provide that title
1-26 agents shall maintain certain records; to provide for the
1-27 suspension or revocation of title agent licenses; to
1-28 prohibit certain transactions without disclosure of
1-29 financial interest; to provide for penalties; to prohibit
1-30 certain persons from conducting real estate closings; to
1-31 provide limitations on commissions; to provide for
1-32 construction; to provide for other matters relative to the
1-33 foregoing; to provide an effective date; to repeal
1-34 conflicting laws; and for other purposes.
1-35 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
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SECTION 1.
2- 1 Title 33 of the Official Code of Georgia Annotated, relating
2- 2 to insurance, is amended by adding a new Chapter 56 to read
2- 3 as follows:
"CHAPTER 56
2- 4 33-56-1. (Index)
2- 5 As used in this chapter, the term:
2- 6 (1) 'Abstract' means a compilation or summary of all
2- 7 instruments of public record of whatever kind or nature
2- 8 which in any manner may affect title to a specified
2- 9 parcel of real property.
2-10 (2) 'Alien title insurer' means any title insurer
2-11 incorporated or organized under the laws of any foreign
2-12 nation or any province or territory thereof.
2-13 (3) 'Applicant' means a person, whether or not a
2-14 prospective insured, who applies to a title insurer or
2-15 title agent for a title insurance policy and who, at the
2-16 time of the application, is not a title agent.
2-17 (4) 'Approved attorney' means an attorney at law
2-18 licensed to practice law in this state who is not an
2-19 employee of a title insurer and whose certification as
2-20 to status of title a title insurer is willing to accept
2-21 as the basis for issuance of its title insurance policy.
2-22 (5) 'Associate' means any:
2-23 (A) Business organized for profit in which a producer
2-24 of title business is a director, partner, employee, or
2-25 owner of 1 percent or more of the equity capital
2-26 thereof;
2-27 (B) Employee of a producer of title insurance
2-28 business;
2-29 (C) Franchisor or franchisee of a producer of title
2-30 insurance business;
2-31 (D) Spouse, parent, or child of a producer of title
2-32 insurance business who is a natural person;
2-33 (E) Person, other than a natural person, that
2-34 controls, is controlled by, or is under common control
2-35 with a producer of title insurance business; or
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3- 1 (F) Person with whom a producer of title insurance
3- 2 business or any associate of such producer has any
3- 3 agreement, arrangement, or understanding or pursues
3- 4 any course of conduct, the purpose or substantial
3- 5 effect of which is to evade the provisions of this
3- 6 chapter.
3- 7 (6) 'Charge' means any fee billed by a title agent,
3- 8 title insurer, approved attorney, or others for the
3- 9 performance of services other than fees that fall within
3-10 the definition of premium in paragraph (13) of this Code
3-11 section. Charge includes but is not limited to fees for
3-12 abstracting, searching, and examining titles; fees for
3-13 document preparation; fees for the handling of escrows,
3-14 settlements, or closings; and fees for services
3-15 commenced but not completed.
3-16 (7) 'Domestic title insurer' means a title insurer
3-17 organized under the laws of this state.
3-18 (8) 'Financial interest' means any interest, legal or
3-19 beneficial, that entitles the holder directly or
3-20 indirectly to 1 percent or more of the net profits or
3-21 net worth of the entity in which the interest is held.
3-22 (9) 'Foreign title insurer' means any title insurer
3-23 organized under the laws of any other state of the
3-24 United States, the District of Columbia, or any other
3-25 jurisdiction of the United States.
3-26 (10) 'Net retained liability' means the total liability
3-27 retained by a title insurer for a single risk after
3-28 taking into account the deduction for ceded liability,
3-29 if any.
3-30 (11) 'Opinion of title' means a written expression of
3-31 the status of title, including but not limited to the
3-32 validity or invalidity thereof, based upon an
3-33 examination by an attorney at law of instruments of
3-34 public record or an abstract thereof affecting title to
3-35 a specified parcel of real property to ascertain the
3-36 history and present condition of title to such real
3-37 property as to its ownership and status with respect to
3-38 liens, encumbrances, clouds, and defects.
3-39 (12) 'Person' means any natural person, partnership,
3-40 association, cooperative, corporation, trust, or other
3-41 legal entity.
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4- 1 (13) 'Premium' means fees for assuming liability under a
4- 2 title insurance policy or under a contract of
4- 3 reinsurance.
4- 4 (14) 'Producer of title insurance business' or
4- 5 'producer' means any person, including any officer,
4- 6 director, or owner of 5 percent or more of the equity or
4- 7 capital of any person engaged in this state in the
4- 8 trade, business, occupation, or profession of:
4- 9 (A) Buying or selling interests in real property;
4-10 (B) Making loans secured by real property; or
4-11 (C) Acting as a real estate broker or agent of a
4-12 person who buys or sells any interest in real property
4-13 or who lends or borrows money with such interest as
4-14 security.
4-15 (15) 'Real estate closing' means conducting,
4-16 supervising, and administering the events whereby title
4-17 or security interests in real property are conveyed by
4-18 one party to another and the explanation of such
4-19 documents and events and rendering legal opinions,
4-20 services, or advice in connection therewith.
4-21 (16) 'Refer' means to direct or cause to be directed or
4-22 to exercise any power or influence over the direction of
4-23 title insurance business whether or not the consent or
4-24 approval of any other person is sought or obtained with
4-25 respect to the referral.
4-26 (17) 'Single risk' means the insured amount of any title
4-27 insurance policy, except that where two or more title
4-28 insurance policies are issued simultaneously covering
4-29 different estates in the same real property, single risk
4-30 means the sum of the insured amounts of all such title
4-31 insurance policies. Any title insurance policy insuring
4-32 a mortgage interest a claim payment under which reduces
4-33 the insured amount of a fee or leasehold title insurance
4-34 policy shall be excluded in computing the amount of a
4-35 single risk to the extent that the insured amount of the
4-36 mortgage title insurance policy does not exceed the
4-37 insured amount of the fee or leasehold title insurance
4-38 policy.
4-39 (18) 'Title agent' or 'agent' means any person appointed
4-40 in writing, pursuant to this chapter, by a title insurer
4-41 to:
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5- 1 (A) Solicit title insurance business;
5- 2 (B) Collect premiums;
5- 3 (C) Determine insurability in accordance with
5- 4 underwriting rules and standards prescribed by the
5- 5 title insurer; or
5- 6 (D) Issue title policies, commitments, or endorsements
5- 7 of the title insurer.
5- 8 Title agent does not include approved attorneys,
5- 9 officers, or employees of a title insurer.
5-10 (19) 'Title insurance business' or 'business of title
5-11 insurance' means:
5-12 (A) Issuing as insurer or offering to issue as insurer
5-13 title insurance commitments, policies, or
5-14 endorsements; or
5-15 (B) Transacting or proposing to transact by a title
5-16 insurer or title agent any of the following activities
5-17 when conducted or performed in contemplation of the
5-18 issuance of a title insurance policy:
5-19 (i) Soliciting or negotiating the issuance of a
5-20 title insurance policy;
5-21 (ii) Guaranteeing, warranting, or otherwise insuring
5-22 the correctness of opinions of title;
5-23 (iii) Execution of title insurance commitments,
5-24 policies, or endorsements;
5-25 (iv) Effecting contracts of reinsurance; or
5-26 (v) Doing or proposing to do any business in
5-27 substance equivalent to those enumerated in
5-28 divisions (i) through (iv) of this subparagraph in a
5-29 manner designed to evade the provisions of this
5-30 chapter.
5-31 (20) 'Title insurance policy' or 'policy' means a
5-32 contract insuring or indemnifying against loss or damage
5-33 arising from any or all of the following existing on or
5-34 before the policy date:
5-35 (A) Defects in or liens or encumbrances on the insured
5-36 title;
5-37 (B) Unmarketability of the insured title;
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6- 1 (C) Invalidity or unenforceability of liens or
6- 2 encumbrances on the stated property; or
6- 3 (D) Lack of priority of liens or encumbrances.
6- 4 Title insurance policy does not include a preliminary
6- 5 report, binder, commitment, endorsement, or abstract.
6- 6 No title insurance policy shall be issued on property
6- 7 located in this state which is not based upon an opinion
6- 8 of title acceptable to the title insurer signed by an
6- 9 attorney licensed to practice law in this state.
6-10 (21) 'Title insurer' or 'insurer' means a company
6-11 organized under the laws of this state for the purpose
6-12 of transacting as insurer the business of title
6-13 insurance and any foreign or alien title insurer engaged
6-14 in this state in the business of title insurance as
6-15 insurer.
6-16 33-56-2. (Index)
6-17 (a) No person may engage in the title insurance business
6-18 in this state unless authorized to act as a title insurer
6-19 by a certificate of authority issued by the Commissioner
6-20 or licensed as a title insurance agent under this chapter.
6-21 (b) Title insurers and agents shall operate in Georgia
6-22 under the control and supervision of the Commissioner of
6-23 Insurance. The Commissioner may promulgate rules and
6-24 regulations to carry out the provisions of this chapter.
6-25 The Commissioner may adopt uniform rules and regulations
6-26 which prohibit title insurers from insuring specified
6-27 risks which the Commissioner may determine may pose an
6-28 unreasonable risk to the financial stability of title
6-29 insurers.
6-30 (c) No title insurer or agent shall issue any title
6-31 insurance commitment, policy, or endorsement; reinsure any
6-32 portion of the risk assumed under any title insurance
6-33 policy; collect any premium; or otherwise engage in any
6-34 activity in violation of this chapter or the rules and
6-35 regulations adopted by the Commissioner.
6-36 33-56-3. (Index)
6-37 All policy forms, endorsement forms, or other forms to be
6-38 attached to or made a part of a title insurance policy
6-39 shall be filed by the insurer with the Commissioner for
6-40 approval pursuant to Code Section 33-24-9. The basic
6-41 policy forms must be those approved by the American Land
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7- 1 Title Association, and the endorsement forms shall be
7- 2 those approved by the American Land Title Association and
7- 3 regularly and customarily used by the title insurer.
7- 4 33-56-4. (Index)
7- 5 (a)(1) Every domestic, foreign, or alien title insurer
7- 6 authorized to write insurance in this state shall file
7- 7 with the Commissioner a copy of its schedule of risk
7- 8 rate premiums. No such risk rate premium shall become
7- 9 effective nor may any premium of any nature be collected
7-10 by any insurer thereunder unless the filing has been
7-11 received by the Commissioner in his or her office, such
7-12 filing has been approved by the Commissioner or a period
7-13 of 45 days has elapsed from the date such filing was
7-14 received by the Commissioner during which time such
7-15 filing has not been disapproved by the Commissioner, and
7-16 notice of the filing has been provided pursuant to
7-17 subsection (b) of this Code section. The Commissioner
7-18 shall be authorized to extend such 45 day period by no
7-19 more than 55 days. No premium which has not been filed
7-20 pursuant to this subsection shall be charged for issuing
7-21 a title insurance policy.
7-22 (2) The minimum premium for any policy shall be
7-23 determined by the Commissioner. On July 1, 1999, and on
7-24 each second annual anniversary thereafter, the
7-25 Commissioner may adjust the schedule of risk rate
7-26 premiums based on data submitted to the Commissioner by
7-27 the insurers in connection with the required filing of
7-28 schedules of risk rate premiums and data gathered by the
7-29 Commissioner.
7-30 (3) If an owner's or leasehold owner's policy is issued
7-31 on property on which an owner's or leasehold owner's
7-32 policy has been issued by a title company within five
7-33 years of the policy to be issued then the rate shall be
7-34 60 percent of the rate for original owner's or leasehold
7-35 owner's policies. If a first mortgage policy is issued
7-36 simultaneously with an owner's policy of equal or
7-37 greater liability, the loan policy premium shall be
7-38 $50.00.
7-39 (b) Each title insurer submitting a rate filing shall
7-40 provide a summary of the rate filing to each title insurer
7-41 licensed and authorized to transact title insurance
7-42 business in this state. No back-up documentation provided
7-43 to the Commissioner's office in support of the rate filing
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8- 1 need be provided to the other title insurers. For
8- 2 purposes of this subsection the Commissioner shall
8- 3 maintain a list of all licensed and authorized title
8- 4 insurers in this state, which lists shall be made
8- 5 available upon request. The notice required by this
8- 6 subsection shall be sent in a manner reasonably determined
8- 7 to reach the addressee within five business days of
8- 8 sending. This notice shall be sent on the same day that
8- 9 the rate filing is made with the Commissioner. Each rate
8-10 filing submitted by a title insurer shall contain an
8-11 affidavit executed by an authorized officer of the title
8-12 insurer setting forth under oath that the required notice
8-13 of the rate filing has been sent and specifying the means
8-14 of delivery to each title insurer licensed and authorized
8-15 to transact title insurance business in this state
8-16 pursuant to the list provided by the Commissioner. The
8-17 Commissioner shall immediately reject and return to the
8-18 filer any rate filing submitted without the affidavit
8-19 required by this subsection.
8-20 (c) If a filing is disapproved, written notice of such
8-21 disapproval shall be given by the Commissioner to the
8-22 filer and to any person who challenged the rate filing.
8-23 The notice of disapproval shall specify in what respects
8-24 such filing fails to meet the requirements of this
8-25 chapter. The filer shall be given a hearing upon written
8-26 request made within 30 days after the issuance of the
8-27 disapproval order. The hearing shall be held within 30
8-28 days from the date the Commissioner received the request
8-29 for a hearing. Adequate notice of the hearing shall be
8-30 provided by the Commissioner to the filer and to any
8-31 person who challenged the rate filing. In connection with
8-32 any hearing or judicial review with respect to the
8-33 approval or disapproval of such rates, the burden of
8-34 persuasion shall fall upon the affected filing insurer to
8-35 establish that its proposed rates are adequate, not
8-36 excessive, not unfairly discriminatory, and otherwise in
8-37 compliance with this chapter.
8-38 33-56-5. (Index)
8-39 (a) The Commissioner may, upon request or in the
8-40 Commissioner's discretion, hold a public hearing at any
8-41 time to consider premium rates and other matters and
8-42 subjects as are provided for in this chapter.
8-43 (b) The Commissioner shall give proper notice to the
8-44 public of the hearing provided for in subsection (a) of
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9- 1 this Code section. The notice shall conform to the
9- 2 requirements of Code Section 33-2-19, shall include a list
9- 3 of all matters to be considered at the hearing, and shall
9- 4 be sent to all licensed title insurers and title agents at
9- 5 least 60 days in advance of the date set for the hearing.
9- 6 (c) In the event the Commissioner elects not to hold a
9- 7 public hearing as provided for in subsection (a) of this
9- 8 Code section, then no decision shall be made by the
9- 9 Commissioner with respect to any changes in any premium
9-10 rate, rule or regulation, or other matters or subjects
9-11 provided for in this chapter until the Commissioner has
9-12 given not less than 60 days notice of the proposed change
9-13 to all licensed title insurers and title agents.
9-14 (d) Any person requesting a hearing or desiring to
9-15 recommend any premium rate, rule, regulation, or other
9-16 matter for consideration by the Commissioner shall file
9-17 with the Commissioner not less than 30 days prior to the
9-18 hearing date a written statement of such proposed premium
9-19 rate, rule, regulation, or other matter for consideration
9-20 together with all information or data such person wishes
9-21 to be considered by the Commissioner in support of any
9-22 matter to be considered. Any person desiring to support
9-23 or oppose any matter to be considered may file supporting
9-24 or rebuttal information or data for consideration by the
9-25 Commissioner at any time prior to the hearing date or
9-26 within 30 days following the hearing date or within 60
9-27 days following the date notice of the proposed change is
9-28 given in accordance with subsection (c) of this Code
9-29 section if no hearing is to be held. All recommendations,
9-30 information, and data filed with the Commissioner for
9-31 consideration shall be available for public inspection
9-32 provided that the Commissioner shall withhold from public
9-33 inspection any proprietary information submitted by any
9-34 person.
9-35 (e) The Commissioner shall issue a decision in not less
9-36 than 30 nor more than 60 days following the conclusion of
9-37 a public hearing provided for in subsection (a) of this
9-38 Code section or not less than 60 nor more than 90 days
9-39 after the date of the notice given pursuant to subsection
9-40 (c) of this Code section. In making the decision the
9-41 Commissioner may rely upon recommendations and supporting
9-42 information and data which, in the Commissioner's
9-43 discretion, the Commissioner deems relevant. The
9-44 Commissioner may elect to hold further public hearings or
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10- 1 request additional information or data regarding any
10- 2 matter for consideration. Notice of any such public
10- 3 hearing shall be given in accordance with subsection (b)
10- 4 of this Code section and any request for additional
10- 5 information shall be solicited in accordance with
10- 6 subsection (c) of this Code section.
10- 7 33-56-6. (Index)
10- 8 Any person aggrieved by an order of the Commissioner
10- 9 establishing rates or other matters shall have the right
10-10 to review and appeal provided for in Code Sections 33-2-26
10-11 through 33-2-28.
10-12 33-56-7. (Index)
10-13 The costs incurred by the Commissioner in conducting any
10-14 hearing under this chapter may be assessed against the
10-15 parties to the hearing in such proportion as the
10-16 Commissioner may determine upon consideration of all
10-17 relevant circumstances including, but not limited to, the
10-18 nature of the hearing; whether the hearing was instigated
10-19 by or for the benefit of a particular party or parties;
10-20 whether there is a successful party on the merits of the
10-21 proceeding; and the relative levels of participation by
10-22 the parties. For purposes of this Code section, costs
10-23 incurred shall include payments made by the Commissioner
10-24 to obtain the services of independent contractors or
10-25 outside experts and travel expenses of such contractors or
10-26 experts. The Commissioner shall make the assessment of
10-27 costs incurred a part of the final order or decision
10-28 arising out of the proceeding; provided, however, that any
10-29 order or decision shall include findings and conclusions
10-30 of the Commissioner or the designee of the Commissioner to
10-31 support the assessment of costs.
10-32 33-56-8. (Index)
10-33 No insurer transacting title insurance business in this
10-34 state may expose itself to any single risk in an amount
10-35 exceeding 50 percent of the aggregate amount of its total
10-36 capital and surplus and its reserves other than its loss
10-37 or claim reserves. Any risk or portion of any risk which
10-38 has been reinsured as authorized in this title must be
10-39 deducted in determining the limitation of risk prescribed
10-40 in this Code section.
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11- 1 33-56-9. (Index)
11- 2 (a) A domestic title insurer shall establish and maintain
11- 3 a reinsurance reserve computed in accordance with this
11- 4 Code section, and all sums attributed to the reserve are
11- 5 at all times and for all purposes considered unearned
11- 6 portions of the original premiums. This reserve must be
11- 7 reported as a liability of the title insurer in its
11- 8 financial statements.
11- 9 (b) The reinsurance reserve must be maintained by the
11-10 title insurer for the protection of holders of title
11-11 insurance policies. Except as provided in this Code
11-12 section, assets equal in value to the reinsurance reserve
11-13 are not subject to distribution among creditors or
11-14 stockholders of the title insurer until all claims of
11-15 policyholders or claims under reinsurance contracts have
11-16 been paid in full, and all liability on the policies or
11-17 reinsurance contracts has been paid in full and discharged
11-18 or lawfully reinsured.
11-19 (c) A foreign or alien title insurer licensed to transact
11-20 title insurance business in this state shall maintain at
11-21 least the same reserves on title insurance policies issued
11-22 on properties located in this state as are required of
11-23 domestic title insurers, unless the laws of jurisdiction
11-24 of domicile of the foreign or alien title insurer require
11-25 a higher amount.
11-26 (d) The reinsurance reserve consists of:
11-27 (1) The amount of the reinsurance reserve on July 1,
11-28 1996; and
11-29 (2) A sum equal to $1.50 per policy and, in addition, a
11-30 sum equal to 12.5› for each $1,000.00 of net retained
11-31 liability under each title insurance policy on a single
11-32 risk on properties located in this state after July 1,
11-33 1996.
11-34 (e) Amounts placed in the reinsurance reserve in any year
11-35 in accordance with paragraph (2) of subsection (d) of this
11-36 Code section must be deducted in determining the net
11-37 profit of the title insurer for that year.
11-38 (f) A title insurer shall release from the reinsurance
11-39 reserve a sum equal to 10 percent of the amount added to
11-40 the reserve during a calendar year on July 1 of each of
11-41 the five years following the year in which the sum was
11-42 added and shall release from the reinsurance reserve a sum
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12- 1 equal to 3 1/3 percent of the amount added to the reserve
12- 2 during that year on each succeeding July 1 until the
12- 3 entire amount for that year has been released. The amount
12- 4 of the reinsurance reserve or similar unearned premium
12- 5 reserve maintained before July 1, 1996, must be released
12- 6 in accordance with the law in effect before July 1, 1996.
12- 7 (g) The Commissioner may grant a title insurer an
12- 8 extension of time, not to exceed two years from July 1,
12- 9 1996, to achieve compliance with this Code section.
12-10 33-56-10. (Index)
12-11 If a domestic title insurer becomes insolvent, is in the
12-12 process of liquidation or dissolution, or is in the
12-13 possession of the Commissioner:
12-14 (1) The amount of the assets of the title insurance
12-15 company equal to the reinsurance reserve then remaining
12-16 may be used with the written approval of the
12-17 Commissioner to pay for reinsurance of the liability of
12-18 such title insurer upon all outstanding title insurance
12-19 policies or reinsurance agreements to the extent for
12-20 which claims for losses by the holders are not then
12-21 pending. The balance of the assets, if any, equal to
12-22 the reinsurance reserve then may be transferred to the
12-23 general assets of the title insurer; and
12-24 (2) The net assets of the reinsurance reserve must be
12-25 available to pay claims for losses sustained by holders
12-26 of title insurance policies then pending or arising up
12-27 to the time reinsurance is effected. If claims for
12-28 losses exceed other assets of the title insurer, the
12-29 claims, when established, must be paid pro rata out of
12-30 the surplus assets attributable to the reinsurance
12-31 reserve to the extent of the surplus, if any.
12-32 33-56-11. (Index)
12-33 (a) All title insurers licensed in this state shall
12-34 establish and maintain reserves against unpaid losses and
12-35 loss expenses.
12-36 (b) Upon receiving written notice from or on behalf of the
12-37 insured of a title defect in or lien or adverse claims
12-38 against the title of the insured that may result in a loss
12-39 or cause expense to be incurred in the proper disposition
12-40 of the claim, the title insurer shall determine the amount
12-41 to be added to the reserve which shall reflect a careful
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13- 1 estimate of the loss and loss expense likely to result by
13- 2 reason of the claim.
13- 3 (c) Reserves required under this Code section may be
13- 4 revised from time to time and must be redetermined at
13- 5 least once each year.
13- 6 (d) If the Commissioner determines that the loss and loss
13- 7 expense reserves of the title insurer are inadequate, the
13- 8 title insurer may be required to increase the amount of
13- 9 reserves to an amount the Commissioner considers
13-10 reasonable.
13-11 33-56-12. (Index)
13-12 All funds received by a title agent relative to title
13-13 insurance transactions, including any funds to be held in
13-14 escrow, shall be deemed as held in trust. The agent has a
13-15 fiduciary duty to safeguard such funds by depositing them
13-16 into a financial institution insured by an agency of the
13-17 federal government and located within this state. All
13-18 funds received shall be the property of the person or
13-19 persons entitled thereto, and the agent shall pay such
13-20 funds to the proper designees.
13-21 33-56-13. (Index)
13-22 (a) The Commissioner by rule or regulation shall establish
13-23 a title insurer insolvency trust fund as provided by this
13-24 Code section.
13-25 (b) As a condition of doing business in this state, each
13-26 title insurer shall be liable for an assessment to pay all
13-27 unpaid title insurance claims on real property in this
13-28 state for any title insurer which is liquidated with
13-29 unpaid outstanding claims.
13-30 (c) The Commissioner shall assess all title insurers on a
13-31 pro rata basis, determined by their written premiums in
13-32 this state, for the amounts necessary to satisfy the
13-33 unpaid outstanding claims.
13-34 (d) To establish the trust fund provided by this Code
13-35 section, on or before October 1, 1997, the Commissioner
13-36 shall collect from each title insurer an initial basic
13-37 assessment of 1 percent of annual premiums written in this
13-38 state. The Commissioner may collect additional basic
13-39 assessments by October 1 of each subsequent year until the
13-40 trust fund balance reaches a funded level of $5 million.
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LC 25 0328ERS
14- 1 No further basic assessments shall be made unless the
14- 2 funded level falls below the $5 million level.
14- 3 (e) All moneys assessed, including the initial assessment,
14- 4 shall be deposited into an interest-bearing trust account
14- 5 in a financial institution which is located within this
14- 6 state and which is insured by an agency of the federal
14- 7 government.
14- 8 (f) In the event an insolvency and liquidation of a title
14- 9 insurer leaves unpaid outstanding claims on real property
14-10 located in this state, the Commissioner shall utilize
14-11 funds from the title insurer insolvency trust fund for
14-12 payment of such claims. The Commissioner may collect
14-13 special assessments on a pro rata basis, as needed, from
14-14 each title insurer in accordance with the formula provided
14-15 in subsection (d) of the Code section when clear and
14-16 convincing evidence indicates that an insolvency will
14-17 result in claims which, in the aggregate, will exceed the
14-18 balance of the trust fund.
14-19 (g) For the purpose of providing the insurers with the
14-20 assessment required by this Code section and to defray
14-21 costs and expenses incurred in the collection of the
14-22 assessments, there is imposed on the issuance of every
14-23 title insurance policy a fee of 1.25 percent of the
14-24 premium. The fee shall be paid by the insured to the
14-25 insurer at the time of the payment of the premium. The
14-26 fee shall not be paid directly or indirectly by an insurer
14-27 or agent, but an insured lender may include it as part of
14-28 the closing costs to be paid by its borrower. The insurer
14-29 shall remit such required assessments to the Commissioner
14-30 in accordance with the provisions of this Code section and
14-31 retain any balance to defray costs and expenses. The fee
14-32 is not premium and is not subject to agent commission,
14-33 premium tax, or reserves. The fee shall not be collected
14-34 except during periods when insurers are required to pay
14-35 assessments to the Commissioner.
14-36 33-56-14. (Index)
14-37 (a) A title insurer may obtain reinsurance for all or any
14-38 part of its liability under one or more of its title
14-39 insurance policies or reinsurance agreements and also may
14-40 reinsure title insurance policies issued by other title
14-41 insurers on risks located in this state or elsewhere.
14-42 Reinsurance on policies issued on properties located in
14-43 this state must be obtained from title insurers licensed
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LC 25 0328ERS
15- 1 to transact title insurance business in this state or from
15- 2 a foreign title insurer which is a parent or affiliate of
15- 3 such licensed insurer.
15- 4 (b) Upon application by a title insurer, the Commissioner
15- 5 may permit the insurer to obtain reinsurance from a title
15- 6 insurer not specified in subsection (a) of this Code
15- 7 section upon the following conditions:
15- 8 (1) The title insurer is unable to obtain reinsurance
15- 9 from a title insurer licensed in this state; and
15-10 (2) The unlicensed title insurer meets the requirements
15-11 of approved reinsurers in Code Section 33-7-14.
15-12 33-56-15. (Index)
15-13 A title insurer shall provide to the Commissioner on an
15-14 annual basis a certificate of authority filing which shall
15-15 list all of its title agents appointed by such insurer in
15-16 this state.
15-17 33-56-16. (Index)
15-18 On and after August 1, 1996, no person shall act as a
15-19 title agent unless licensed in accordance with the
15-20 provisions of this chapter. All title agents except
15-21 persons licensed pursuant to the authority granted in
15-22 Article 8 of Chapter 2 of Title 15 shall be fully subject
15-23 to the provisions relating to licensing of agents in
15-24 Article 1 of Chapter 23 of Title 33, except for those
15-25 provisions dealing with prelicensing education,
15-26 prelicensing examination, continuing education, or any
15-27 provisions specifically dealing only with adjusters or
15-28 counselors.
15-29 33-56-17. (Index)
15-30 (a) No license shall be issued to, continued, or permitted
15-31 to exist for any person to act as a title agent unless the
15-32 person:
15-33 (1) If a natural person, is at least 18 years of age;
15-34 (2) Is a bona fide resident of and resides within this
15-35 state or any other state which has entered into a
15-36 reciprocal title agent licensing agreement with the
15-37 Commissioner; or is a licensed member in good standing
15-38 of the State Bar of Georgia; and
15-39 (3) Is appointed as a title agent by a title insurer or
15-40 is a member of a Georgia nonprofit membership
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16- 1 corporation organized under Chapter 3 of Title 14,
16- 2 subject to the Commissioner's issuance of a title
16- 3 agent's license.
16- 4 (b) Any person, other than a natural person, to whom a
16- 5 title agent's license is issued shall designate to the
16- 6 Commissioner one or more natural persons who are or will
16- 7 be exercising the powers and performing the duties of the
16- 8 title agent. The designated individuals shall be subject
16- 9 to the provision of paragraphs (1) and (2) of subsection
16-10 (a) of this Code section. Persons performing only
16-11 clerical functions under the control and supervision of a
16-12 designee shall not be subject to the requirements of
16-13 paragraphs (1) and (2) of subsection (a) of this Code
16-14 section.
16-15 (c) Any person, other than a natural person, to whom a
16-16 title agent's license is issued must demonstrate that each
16-17 natural person designated to exercise the powers and
16-18 perform the duties of the title insurance agent meets the
16-19 requirements of paragraphs (1) and (2) of subsection (a)
16-20 of this Code section.
16-21 33-56-18. (Index)
16-22 (a) Application for a license to act as a title agent
16-23 shall be made in writing in the form and manner prescribed
16-24 by the Commissioner. A nonrefundable application fee as
16-25 designated by the Commissioner and consistent with the fee
16-26 of agents pursuant to Code Section 33-8-1, which fee shall
16-27 not be paid directly or indirectly by a title insurer,
16-28 shall be paid at the time of application.
16-29 (b) The application shall be deemed to be a continuing
16-30 one, and any licensee or prospective licensee shall inform
16-31 the Commissioner promptly if any information set forth in
16-32 the application changes or is no longer accurate or if any
16-33 other relevant information regarding the application
16-34 arises after the original application.
16-35 33-56-19. (Index)
16-36 (a) The Commissioner shall issue a license to act as a
16-37 title agent to any person if:
16-38 (1) The prospective licensee files an application
16-39 pursuant to Code Section 33-56-18; and
16-40 (2) The prospective licensee meets the requirements of
16-41 Code Section 33-56-17.
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LC 25 0328ERS
17- 1 (b) Each title agent's license shall expire on April 30 of
17- 2 each year and shall be renewed by the Commissioner upon
17- 3 filing by the licensee, prior to the expiration of the
17- 4 license, of a properly completed renewal application in
17- 5 the form prescribed by the Commissioner and upon payment
17- 6 of a renewal fee as designated by the Commissioner, which
17- 7 fee shall not be paid directly or indirectly by a title
17- 8 insurer.
17- 9 33-56-20. (Index)
17-10 (a) A title agent shall keep books of accounts and records
17-11 and vouchers pertaining to the business of title
17-12 insurance. All such records shall be maintained in such a
17-13 manner that the Commissioner or the authorized
17-14 representative of the Commissioner may readily ascertain
17-15 from time to time whether the title agent has complied
17-16 with all applicable provisions of this chapter.
17-17 (b) If the Commissioner has good cause to believe a title
17-18 agent is in violation of any provision of this chapter,
17-19 the Commissioner or the representative of the Commissioner
17-20 may, at any time during normal business hours, examine,
17-21 audit, and inspect books and records maintained by title
17-22 agents under the provisions of this chapter. The title
17-23 agent so examined shall be liable for the cost of such
17-24 examination and shall pay the same to the Commissioner
17-25 upon presentation of a written statement of costs, which
17-26 costs shall not be paid directly or indirectly by a title
17-27 insurer.
17-28 (c) A title insurer may not pay, directly or indirectly, a
17-29 title agent a commission or other fee, however
17-30 denominated, for the issuance of a title insurance policy,
17-31 policies, endorsement, or endorsements in excess of 60
17-32 percent of the applicable premium; nor may a title insurer
17-33 pay any amount, however denominated, to any person
17-34 including the title agent which, when taken together with
17-35 commissions or fees paid to a title agent, are in excess
17-36 of 60 percent of the applicable premium.
17-37 (d) Notwithstanding the provisions of subsection (c) of
17-38 this Code section, a title insurer may not pay, directly
17-39 or indirectly, a title agent which is a Georgia nonprofit
17-40 membership corporation organized under Chapter 3 of Title
17-41 14 with its membership limited to approved attorneys who
17-42 are title agents, a commission or fee, however
17-43 denominated, for the issuance of a title insurance policy,
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LC 25 0328ERS
18- 1 policies, or endorsements in excess of 80 percent of the
18- 2 applicable premium; provided, however, said nonprofit
18- 3 membership corporation title agent may not pay, directly
18- 4 or indirectly, to a member title agent of said nonprofit
18- 5 membership corporation a commission or other fee, however
18- 6 denominated, for the issuance of a title insurance policy,
18- 7 policies, or endorsements in excess of the commission
18- 8 percentage of the applicable premium allowed under
18- 9 subsection (c) of this Code section.
18-10 (e) A title insurer or title agent shall not pay, directly
18-11 or indirectly, to any person any part of its premium or
18-12 other charges collected as a rebate or inducement for the
18-13 referral of title insurance business on property located
18-14 in this state. This prohibition shall not limit the
18-15 ability of the title insurer or title agent to pay an
18-16 approved attorney a reasonable fee for the issuance of an
18-17 opinion of title and other services actually rendered by
18-18 such approved attorney.
18-19 33-56-21. (Index)
18-20 (a) In addition to any other grounds stated in this
18-21 chapter, the Commissioner may refuse to license any person
18-22 as a title agent or may suspend a title agent's license,
18-23 after providing due notice and an opportunity to be heard,
18-24 upon a finding that the person:
18-25 (1) Fails to meet or fails to continue to meet the
18-26 qualifications for licensure under this chapter;
18-27 (2) Has violated any provision of this chapter or any
18-28 rule or regulation of the Commissioner;
18-29 (3) Has made a material misstatement in an application
18-30 for a title agent's license or has obtained a title
18-31 agent's license by fraud or willful misrepresentation;
18-32 (4) Has misappropriated or converted to his or her own
18-33 use funds belonging to applicants, insureds, title
18-34 insurers, lenders, or others;
18-35 (5) Has intentionally misrepresented the terms of a
18-36 title insurance policy to any applicant or policyholder
18-37 or has misrepresented material facts to, concealed
18-38 material facts from, or made false statements to any
18-39 party to an escrow, settlement, or closing transaction;
18-40 (6) Has, in the conduct of affairs under his or her
18-41 title agent's license, used fraudulent, coercive, or
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19- 1 dishonest practices or has shown himself or herself to
19- 2 be incompetent, untrustworthy, financially
19- 3 irresponsible, or a source of injury and loss to the
19- 4 public;
19- 5 (7) Has willfully violated any provision of this chapter
19- 6 relating to the collection of premiums; or
19- 7 (8) Has aided, abetted, or assisted another person in
19- 8 violating the provisions of this chapter or any rule or
19- 9 regulation promulgated under this chapter.
19-10 (b) The Commissioner may revoke the title agent's license
19-11 of any person convicted by final judgment of a felony.
19-12 (c) Any of the penalties provided under this Code section
19-13 may be imposed on a title agent other than a natural
19-14 person for action of individuals designated by that agent
19-15 under subsection (b) of Code Section 33-56-17.
19-16 33-56-22. (Index)
19-17 (a) No title insurer or title insurance agent may accept
19-18 an order for, issue a title insurance policy to, or
19-19 provide services to an applicant if it knows or has reason
19-20 to believe that the applicant was referred to it by any
19-21 producer of title business or by any associate of the
19-22 producer where the producer, the associate, or both have a
19-23 financial interest in the title insurer or title agent to
19-24 which business is referred unless the producer has
19-25 disclosed to the buyer, seller, or lender the financial
19-26 interest of the producer of title business or associate
19-27 referring the title business. The disclosure must be made
19-28 in writing on forms prescribed by the Commissioner. The
19-29 title insurer or agent shall maintain the disclosure forms
19-30 for a period of three years.
19-31 (b)(1) Each title insurer and title agent shall file
19-32 with the Commissioner, on forms prescribed by the
19-33 Commissioner, reports setting forth the names and
19-34 addresses of those persons, if any, who have had a
19-35 financial interest in the title insurer or title agent
19-36 during the calendar year who are known or reasonably
19-37 believed by the title insurer or title agent to be
19-38 producers of title business or associates of producers.
19-39 (2) Each title insurer shall file the report required
19-40 under paragraph (1) of this subsection with its
19-41 application for a license and at any time there is a
19-42 change in the information provided in the last report.
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LC 25 0328ERS
20- 1 (3) Each title agent shall file the report required
20- 2 under paragraph (1) of this subsection with its
20- 3 application for license and at any time there is a
20- 4 change in the information provided in its last report.
20- 5 (4) Each title insurer or title agent licensed on August
20- 6 1, 1996, shall file the report required under paragraph
20- 7 (1) of this subsection within 90 days after July 1,
20- 8 1996.
20- 9 33-56-23. (Index)
20-10 In addition to or without imposing the penalties otherwise
20-11 provided for in this chapter, the Commissioner may, in his
20-12 or her discretion, impose a fine in an amount not to
20-13 exceed $2,500.00 for each violation of any provision of
20-14 this chapter or of any rule or regulation promulgated
20-15 under this chapter. No title insurer shall pay, directly
20-16 or indirectly, any portion of a fine imposed on any agent.
20-17 33-56-24. (Index)
20-18 (a) Title insurers and title agents unless otherwise
20-19 permitted by law to do so cannot through their employees
20-20 or subsidiaries conduct a real estate closing in this
20-21 state, except in the settlement or resolution by a title
20-22 insurer of claims or wherein the title insurer is a
20-23 buyer, seller, mortgagor, grantor of a security deed, or
20-24 an assignee or assignor of a security interest in real
20-25 property.
20-26 (b) Nothing in this chapter shall prohibit title insurers
20-27 or title agents from serving as escrow agents for the
20-28 purpose of, but not limited to, holding, investing, and
20-29 disbursing earnest money, settlement funds, construction
20-30 disbursements, loan disbursements, indemnity funds, and
20-31 other such funds or documents as required by the parties
20-32 of such escrow and not otherwise prohibited by law.
20-33 33-56-25. (Index)
20-34 This chapter is not intended to enable any conduct or
20-35 activity which would otherwise be prohibited as a
20-36 violation of the laws regulating the practice of law. No
20-37 provision of this chapter shall be interpreted or
20-38 construed as attempting to regulate or regulating the
20-39 practice of law."
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SECTION 2.
21- 1 This Act shall become effective on July 1, 1996; provided,
21- 2 however, that no rate shall become effective pursuant to the
21- 3 provisions of this Act before January 1, 1997.
SECTION 3.
21- 4 All laws and parts of laws in conflict with this Act are
21- 5 repealed.
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Office of the Clerk of the House
Robert E. Rivers, Jr., Clerk of the House
Last Updated on 01/02/97