Bill Text: TX HB2604 | 2011-2012 | 82nd Legislature | Enrolled
Bill Title: Relating to unencumbered assets held by title agents.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2011-06-17 - Effective immediately [HB2604 Detail]
Download: Texas-2011-HB2604-Enrolled.html
H.B. No. 2604 |
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relating to unencumbered assets held by title agents. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 2651.012(a)(2), Insurance Code, is | ||
amended to read as follows: | ||
(2) "Unencumbered assets" means: | ||
(A) cash or cash equivalents; | ||
(B) liquid assets that have a readily | ||
determinable market value and that do not have any lien against | ||
them; | ||
(C) real estate, in excess of any encumbrances; | ||
(D) investments, such as mutual funds, | ||
certificates of deposit, and stocks and bonds; | ||
(E) a surety bond, the form and content of which | ||
shall be prescribed by the commissioner in accordance with this | ||
code; | ||
(F) a deposit made in accordance with Section | ||
2651.102; [ |
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(G) a letter of credit that meets the | ||
requirements of Section 493.104(b)(2)(C); and | ||
(H) a solvency account that meets the | ||
requirements of Section 2651.0121. | ||
SECTION 2. Section 2651.012(b), Insurance Code, is amended | ||
to read as follows as follows: | ||
(b) The unencumbered assets required under this section are | ||
reserves for contingencies. The reserves must be deducted from | ||
premiums for purposes of proceedings conducted under Subchapter D, | ||
Chapter 2703. The reserves may only be spent or released: | ||
(1) as permitted by the commissioner if the agent is | ||
declared impaired; | ||
(2) if the agent merges or consolidates with another | ||
agent who maintains the amount of unencumbered assets that would be | ||
required for the survivor of the merger or consolidation; | ||
(3) if the agent surrenders the agent's license under | ||
Section 2651.201 [ |
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(4) if the agent is liquidated; or | ||
(5) if the agent's license is revoked. | ||
SECTION 3. Subchapter A, Chapter 2651, Insurance Code, is | ||
amended by adding Section 2651.0121 to read as follows: | ||
Sec. 2651.0121. SOLVENCY ACCOUNT. (a) An agent may | ||
maintain a solvency account to accrue and hold unencumbered assets | ||
as provided by this section. | ||
(b) An account under this section must be: | ||
(1) in a financial institution in this state that is | ||
insured by an agency of the United States; | ||
(2) accessible only to the department, on order of the | ||
commissioner; and | ||
(3) audited in the same manner provided for trust | ||
funds by Section 2651.151. | ||
(c) Subject to Subsection (d), an account under this section | ||
may be established by an initial deposit in an amount less than the | ||
amount provided by Section 2651.012(c). | ||
(d) An account established by an initial deposit of an | ||
amount less than the amount provided by Section 2651.012(c) must be | ||
funded with a minimum deposit in the amount for each policy of title | ||
insurance issued by the agent that is equal to the greater of $5 or | ||
one percent of the agent's portion of the retained premium received | ||
by the agent rounded to the nearest whole dollar. | ||
(e) Deposits to the account must be made at least quarterly | ||
and must be made from and based on the agent's portion of retained | ||
premiums collected during the calendar quarter during which | ||
premiums were collected. | ||
(f) Interest that accrues in an account the principal | ||
balance of which is less than the amount provided by Section | ||
2651.012(c) must be retained in the account. Interest that accrues | ||
in an account the principal balance of which is greater than the | ||
amount provided by Section 2651.012(c) shall be paid to the agent | ||
maintaining the account. | ||
(g) The commissioner may issue an order to access or release | ||
funds held in an account under this section if any of the events | ||
described by Section 2651.012(b) occur. | ||
(h) The commissioner by rule shall adopt procedures and | ||
requirements for the release, transfer, or expenditure of the funds | ||
held in an account. The rules must establish the procedures and | ||
requirements by which the department shall account for any | ||
expenditures that the department makes from an account or funds | ||
transferred by the department to a third party. | ||
(i) If an agent or an agent's principal office voluntarily | ||
ceases to engage in business, surrenders the agent's license, and | ||
liquidates the agent's assets, the agent may apply to the | ||
department in a form prescribed by the commissioner by rule for the | ||
release of the agent's solvency account. | ||
(j) Not later than the 60th day after the date the | ||
department receives an application under Subsection (i), provided | ||
that the title agent complied with all applicable rules adopted | ||
under Subsection (h), the commissioner shall enter an order | ||
authorizing the financial institution in which the solvency account | ||
is held to release all or part of the account balance to the agent or | ||
the agent's principal office. If the commissioner does not enter | ||
the order within that 60-day period, the application is denied. | ||
(k) An agent may appeal an order of the commissioner or | ||
denial of an application without an order by filing a petition in a | ||
district court of Travis County to seek injunctive or other relief | ||
against the commissioner. | ||
(l) An account established, funded, and maintained as | ||
provided by this section complies with the requirement for | ||
maintenance of unencumbered assets under Section 2651.012(c), | ||
regardless of whether the amount required by that section is fully | ||
accrued. The amount required by Section 2651.012(c) may be accrued | ||
in an account as provided by this section according to the schedule | ||
established by Section 2651.012(g) or as provided by the | ||
commissioner by rule under Section 2651.012(j). | ||
(m) In a home office issue transaction in which a title | ||
insurance company issues a policy of title insurance, an agent who | ||
closes the transaction and remits premium to the title insurance | ||
company shall make the deposit required by this section. An agent | ||
who otherwise participates in a home office issue transaction but | ||
does not close the transaction is not required to make a deposit | ||
under this section. | ||
SECTION 4. Section 2651.158, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2651.158. CERTIFICATION OF UNENCUMBERED ASSETS. (a) | ||
Unless the agent has elected to make a deposit with the department | ||
under Section 2651.012(f), the annual audit of escrow accounts must | ||
be accompanied by a certification by the title insurance agent or | ||
direct operation [ |
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insurance agent has the appropriate unencumbered assets in excess | ||
of liabilities, exclusive of the value of its abstract plants, as | ||
required by Section 2651.012. | ||
(b) The commissioner by rule shall establish[ |
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by this section must be made, which shall not include an audit of | ||
operating accounts or a certification by a certified public | ||
accountant. | ||
SECTION 5. As soon as practicable after the effective date | ||
of this Act, but not later than January 1, 2012, the commissioner of | ||
insurance shall promulgate rules and forms governing the operation | ||
of a solvency account under Section 2651.0121, Insurance Code, as | ||
added by this Act. | ||
SECTION 6. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2011. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 2604 was passed by the House on May 5, | ||
2011, by the following vote: Yeas 144, Nays 2, 1 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 2604 on May 24, 2011, by the following vote: Yeas 142, Nays 0, | ||
2 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 2604 was passed by the Senate, with | ||
amendments, on May 21, 2011, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |