By: Eltife	S.B. No. 572
	(Sheets)

	A BILL TO BE ENTITLED
	AN ACT
	relating to certain title insurance policy liability and
	reinsurance requirements.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 2551.301, Insurance Code, is amended to
	read as follows:
	Sec. 2551.301.  MAXIMUM POLICY LIABILITY. (a)  Except as
	provided by Subsection (b), a title insurance company may [not]
	issue a title insurance policy on any real property located in this
	state involving a potential policy liability of not more than 50
	percent of the sum of the company's [capital stock and] surplus as
	regards policyholders and the company's statutory premium reserves
	as stated in the most recent annual statement of the company.
	(b)  A title insurance company may exceed the limit described
	by Subsection (a) if the excess liability is reinsured in due course
	in accordance with Section 2551.302, 2551.305, or 2551.3055 [an
	authorized title insurance company].
	SECTION 2.  Section 2551.302, Insurance Code, is amended to
	read as follows:
	Sec. 2551.302.  REQUIREMENTS FOR REINSURING POLICIES. A
	title insurance company may reinsure any of its policies and
	contracts issued on real property located in this state or on
	policies and contracts issued in this state under Chapter 2751, if:
	(1)  the reinsuring title insurance company is
	authorized to engage in business in this state under this title; or
	(2)  the title insurance company acquires reinsurance
	in accordance with Section 2551.305 or 2551.3055.
	SECTION 3.  Subchapter G, Chapter 2551, Insurance Code, is
	amended by amending Section 2551.305 and adding Section 2551.3055
	to read as follows:
	Sec. 2551.305.  [CERTAIN] REINSURANCE FROM NON-ADMITTED
	TITLE INSURER [ALLOWED].  [(a)]  Notwithstanding any other
	provision of this subchapter, a title insurance company may acquire
	reinsurance on an individual policy or facultative basis from a
	title insurance company not authorized to engage in the business of
	title insurance in this state if[:
	[(1)]  the title insurance company from which the
	reinsurance is acquired:
	(1) [(A)]  has a combined capital and surplus of at
	least $20 million as stated in the company's most recent annual
	statement preceding the acceptance of reinsurance; and
	(2) [(B)]  is domiciled in another state and is
	authorized to engage in the business of title insurance in one or
	more states[; and
	[(2)     the title insurance company acquiring
	reinsurance gives written notice to the department at least 30 days
	before acquiring the reinsurance, and the commissioner does not,
	before the expiration of the 30-day period and on the ground that
	the transaction may result in a hazardous financial condition,
	prohibit the title insurance company from obtaining reinsurance
	under this section.
	[(b)     The notice required under Subsection (a)(2) must
	provide sufficient information to enable the commissioner to
	evaluate the proposed transaction, including a summary of the
	significant terms of the reinsurance, the financial impact of the
	transaction on the title insurance company acquiring reinsurance,
	and the specific identity and state of domicile of each title
	insurance company from which reinsurance is acquired.
	[(c)     Notwithstanding any other provision of this
	subchapter, the department may, on application and hearing, permit
	a title insurance company to acquire reinsurance that does not
	comply with Subsection (a) on an individual policy or facultative
	basis from a title insurance company domiciled in another state and
	not authorized to engage in the business of title insurance in this
	state, if:
	[(1)     the company has exhausted the opportunity to
	acquire reinsurance from all other authorized title insurance
	companies; and
	[(2)     the title insurance company from which the
	reinsurance is acquired has a combined capital and surplus of at
	least $2 million as stated in its annual statement preceding the
	acceptance of reinsurance.
	[(d)     Notwithstanding any other provision of this
	subchapter, the department may, on application and hearing, permit
	a title insurance company, including an authorized reinsuring title
	insurance company, to retain an additional potential liability of
	not more than 40 percent of the company's capital stock and surplus
	as stated in the most recent annual statement of the company, if:
	[(1)     the company has exhausted the opportunity to
	acquire reinsurance under Subsection (c); and
	[(2)     the additional potential liability of the company
	is incurred only if the loss suffered by the insured under the
	policy exceeds the amount of insurance and reinsurance accepted by
	the company and its reinsuring title insurance companies under the
	other provisions of this subchapter].
	Sec. 2551.3055.  REINSURANCE FROM INSURER OTHER THAN TITLE
	INSURER. [(e)]  Notwithstanding any other provision of this
	subchapter, a title insurance company may obtain reinsurance by a
	reinsurance treaty or other reinsurance agreement from an assuming
	insurer with a financial strength rating of B+ or better from the A.
	M. Best Company, which reinsurance [that] meets the requirements of
	Subchapter C, Chapter 493, if the title insurance company has
	provided the department with notice [an affidavit] that:
	(1)  contains representations [facts] that
	[demonstrate] the title insurance company was unable after diligent
	effort to procure sufficient reinsurance from another title
	insurance company; and
	(2)  summarizes [states] the terms of the reinsurance
	treaty or other reinsurance agreement that the title insurance
	company will obtain.
	SECTION 4.  Section 2703.001(c), Insurance Code, is amended
	to read as follows:
	(c)  With respect to real property located in this state, a
	corporation may not issue any kind of title insurance coverage, any
	kind of guarantee, or reinsurance of a risk assumed under a title
	insurance policy, except as provided by Section 2551.305 or
	2551.3055 [2551.305(a)], unless the corporation is authorized to
	engage in the business of title insurance under this title and
	otherwise complies with this title. In engaging in the business of
	title insurance with respect to real property located in this
	state, the corporation shall comply with this title and rules
	described by Subsection (b), including when:
	(1)  issuing any kind of title insurance policy or an
	underwriting contract;
	(2)  reinsuring any portion of a risk assumed under a
	title insurance policy; and
	(3)  deleting a title insurance policy exclusion.
	SECTION 5.  (a)  Section 2551.301, Insurance Code, as
	amended by this Act, applies only to a title insurance policy issued
	on or after the effective date of this Act.  A title insurance
	policy issued before the effective date of this Act is governed by
	the law as it existed immediately before the effective date of this
	Act, and the former law is continued in effect for that purpose.
	(b)  Sections 2551.302 and 2551.305, Insurance Code, as
	amended by this Act, and Section 2551.3055, Insurance Code, as
	added by this Act, apply only to a reinsurance contract entered into
	by a title insurance company on or after the effective date of this
	Act.  A reinsurance contract entered into by a title insurance
	company before the effective date of this Act is governed by the law
	as it existed immediately before the effective date of this Act, and
	the former law is continued in effect for that purpose.
	SECTION 6.  This Act takes effect September 1, 2015.