HOUSE BILL 488
49th legislature - STATE OF NEW MEXICO - first session, 2009
INTRODUCED BY
Ben Lujan
AN ACT
RELATING TO INSURANCE; PROVIDING FOR MAXIMUM TITLE INSURANCE RATES AND MAXIMUM FEES; REPLACING THE ANNUAL TITLE INSURANCE HEARING WITH A BIENNIAL HEARING; REQUIRING COVERAGE FOR DEFECTS NOT SHOWN BY THE PUBLIC RECORD; PROVIDING FOR DAMAGES FROM NEGLIGENT TITLE SEARCHES AND EXAMINATIONS; PROHIBITING INDUCEMENTS FOR THE REFERRAL OF TITLE BUSINESS; PROVIDING FOR TITLE PREMIUM COMPARISON GUIDES; AMENDING AND REPEALING SECTIONS OF THE NMSA 1978.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 59A-16-17 NMSA 1978 (being Laws 1984, Chapter 127, Section 283) is amended to read:
"59A-16-17. UNFAIR DISCRIMINATION, REBATES PROHIBITED--OTHER COVERAGES.--
A. No property, casualty, marine and transportation, surety, vehicle or title insurer, or nonprofit health care or prepaid dental plan or other insurance-type organization, or any employee or representative thereof, and no broker, agent, solicitor or other representative shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to insurance or coverage, or after insurance or coverage has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified or provided for in the policy, except to the extent provided for in an applicable filing with the superintendent as provided by law.
B. No title insurer or title insurance agent shall:
(1) pay, directly or indirectly, to the insured or any person acting as agent, representative, attorney or employee of the owner, lessee, mortgagee, existing or prospective, of the real property, or interest therein, [which] that is the subject matter of title insurance or as to which a service is to be performed any commission or part of its fee or charges or other consideration as inducement or compensation for the placing of any order for a title insurance policy or for performance of any escrow or other service by the insurer with respect thereto; [or]
(2) issue any policy or perform any service in connection with which it or any agent or other person has paid or contemplates paying any commission, rebate or inducement in violation of this section;
(3) give or receive, directly or indirectly, any consideration or thing of value for the referral of title insurance business or escrow or other service provided by a title insurer or title insurance agent; or
(4) enter into a reinsurance agreement with an affiliate of a real estate developer, real estate agency, mortgage lender or referrer of title business without the prior written approval of the superintendent.
C. No insured named in a policy or any employee [or] of such insured shall knowingly receive or accept, directly or indirectly, any such rebate, discount, abatement, credit or reduction of premium, or any such special favor or advantage or valuable consideration or inducement.
D. No such insurer or organization shall make or permit any unfair discrimination between insureds or property having like insuring or risk characteristics, in the premium or rates charged for insurance or coverage, or in the dividends or other benefits payable thereon or in any other of the terms and conditions of the insurance or coverage.
E. Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to licensed agents, brokers, solicitors or other representatives; or as prohibiting the extension of credit to an insured for the payment of any premium and for which credit a reasonable rate of interest is charged and collected; or as prohibiting any insurer from allowing or returning to its participating policyholders, members or subscribers, dividends, savings or unabsorbed premium deposits. As to title insurance, nothing in this section shall prohibit bulk rates or special rates for customers of prescribed classes if such bulk or special rates are provided for in the currently effective schedule of fees and charges of the title insurer as filed with the superintendent.
F. This section does not apply to wet marine and transportation insurance."
Section 2. Section 59A-16-30 NMSA 1978 (being Laws 1984, Chapter 127, Section 296.1, as amended) is amended to read:
"59A-l6-30. PRIVATE RIGHT OF ACTION.--[Any]
A. A person covered by Chapter 59A, Article 16 NMSA 1978 who has suffered damages as a result of a violation of that article by an insurer or agent is granted a right to bring an action in district court to recover actual damages. Costs shall be allowed to the prevailing party unless the court otherwise directs. The court may award [attorneys'] attorney fees to the prevailing party if:
[A.] (1) the party complaining of the violation of that article has brought an action that [he] the party knew to be groundless; or
[B.] (2) the party charged with the violation of that article has willfully engaged in the violation.
The relief provided in this section is in addition to remedies otherwise available against the same conduct under the common law or other statutes of this state; provided, however, that the Workers' Compensation Act and the New Mexico Occupational Disease Disablement Law provide exclusive remedies.
B. A title insurer or title insurance agent doing business in the same county as a title insurer or title insurance agent who may be in violation of the prohibitions or limitations of Section 59A-16-17 NMSA 1978 has a cause of action against the violating title insurer or title insurance agent or recipient and, upon establishing the existence of a violation, is entitled to injunctive relief as the court deems necessary or desirable to prevent future violations of this section. The court may award court costs and reasonable attorney fees to the prevailing party in an action under this subsection."
Section 3. Section 59A-17-11.1 NMSA 1978 (being Laws 2007, Chapter 367, Section 6) is amended to read:
"59A-17-11.1. CONSUMER INFORMATION.--
A. The superintendent shall use, develop or cause to be developed a consumer information system that will provide and disseminate price and other relevant information on a readily available basis to purchasers of homeowners, private passenger non-fleet automobile or property insurance for personal, family or household needs as well as for title insurance and for any other types of personal or commercial insurance designated by the superintendent. To the extent deemed necessary and appropriate by the superintendent, insurers, advisory organizations and other persons or organizations involved in conducting the business of insurance in New Mexico, to which this section applies, shall cooperate in the development and utilization of a consumer information system.
B. An insurer writing homeowners insurance or private passenger non-fleet automobile insurance in New Mexico shall, upon renewal or upon the transfer of a policy to another insurer under the same ownership or management as the transferring insurer, provide its policyholders with written notification of their right to obtain from the insurer a detailed written explanation of the reasons why their policy premium has changed or is about to change."
Section 4. Section 59A-30-1 NMSA 1978 (being Laws 1985, Chapter 28, Section 1) is amended to read:
"59A-30-1. SHORT TITLE.--[This article] Chapter 59A, Article 30 NMSA 1978 may be cited as the "New Mexico Title Insurance Law"."
Section 5. Section 59A-30-2 NMSA 1978 (being Laws 1985, Chapter 28, Section 2) is amended to read:
"59A-30-2. PURPOSE AND LEGISLATIVE INTENT OF ARTICLE.-- [A.] The purpose of the New Mexico Title Insurance Law is to provide a comprehensive body of law for the effective regulation and active supervision of the business of title insurance transacted within this state in [response to] accordance with the McCarran-Ferguson Act (P.L. 79-15, 15 U.S.C. Sections 1011-1015)
[B. The legislature intends that the business of title insurance be totally regulated by the state] and to provide for the protection of consumers and purchasers of title insurance policies and the financial stability of the title insurance industry."
Section 6. Section 59A-30-3 NMSA 1978 (being Laws 1985, Chapter 28, Section 3, as amended) is amended to read:
"59A-30-3. DEFINITIONS.--As used in the New Mexico Title Insurance Law:
A. "agency agreement" means a document executed by a title insurer and title insurance agent [which] that defines the compensation of the title insurance agent and the scope of the title insurance agent's authority;
B. "business of title insurance" means:
(1) issuing as title insurer or offering to issue as title insurer a title insurance policy; or
(2) transacting or proposing to transact by a title insurer or title insurance agent any of the following activities when conducted or performed in contemplation of the issuance of a title insurance policy:
(a) soliciting or negotiating the issuance of a title insurance policy;
(b) guaranteeing, warranting or otherwise insuring the correctness of title searches;
(c) executing [of] title insurance policies;
(d) effecting contracts of reinsurance;
(e) abstracting, searching or examining titles; [or]
(f) handling of escrows, settlements or closings; or
[(f)] (g) doing or proposing to do any business in substance equivalent to the business of title insurance in a manner designed to evade the provisions of the New Mexico Title Insurance Law or other laws applicable to the business of title insurance;
C. ["charge"] "fees" means any consideration, other than premiums billed by a title insurance agent or title insurer or both, for the performance of services provided for residential properties, including but not necessarily limited to:
(1) consideration for the supervising or handling of escrows, settlements, closings, preparation of abstracts, delivery or recording of transfer and lien documents and disbursing funds;
(2) consideration for services commenced but not completed; and
(3) consideration for title searches conducted for a purpose other than issuance of a title insurance policy. [but not including]
"Fees" does not include consideration collected by a title insurer or title insurance agent when the consideration is limited to the amount billed for services rendered by a third party or consideration for the performance of services provided for non-residential properties;
D. "premium" means the consideration for issuing a title insurance policy and includes the consideration for searching and examining a title when conducted or performed for the purpose of the issuance of a title insurance policy;
E. "available funds" means funds subject to immediate withdrawal by cash or check in a depository account with a financial institution, held in the name of and subject to the control of a title insurance agent, title insurer or third party fiduciary, not including a person or entity that is a party to the transaction, cooperating in the closing of a transaction with a title insurance agent or title insurer;
F. "title insurance agent" means a person licensed as an agent under the Insurance Code and appointed by a title insurer;
G. "title insurance policy" or "policy" means a contract indemnifying against loss or damage arising from any of the following [which] that exist on or before the effective date of the policy:
(1) defects in the insured title;
(2) liens or encumbrances on the insured title;
(3) unmarketability of the insured title; [or]
(4) invalidity or unenforceability of liens or encumbrances on the property [which] that is the subject of the policy; or
(5) lack of legal right of access to the property.
"Title insurance policy" or "policy" does not include an abstract; [and]
H. "title insurer" means any person authorized under the laws of this state to transact as insurer the business of title insurance; and
I. "residential property" means property consisting of one or more dwellings together with appurtenant structures, the land underlying both the dwellings and the appurtenant structures and a quantity of land reasonably necessary for parking and other uses that facilitate the use of the dwellings and appurtenant structures; as used in this subsection, "dwellings" includes both manufactured homes and other structures when used primarily for permanent human habitation, but the term does not include structures when used primarily for temporary or transient human habitation such as hotels, motels and similar structures."
Section 7. Section 59A-30-4 NMSA 1978 (being Laws 1985, Chapter 28, Section 4) is amended to read:
"59A-30-4. CONTROL AND SUPERVISION BY SUPERINTENDENT.--
A. Title insurers and title insurance agents shall operate in New Mexico under the control and supervision of the superintendent. The superintendent shall promulgate such rules and regulations as are necessary to carry out the provisions of the New Mexico Title Insurance Law [including rules and regulations requiring uniform forms of policies and uniform premiums]. The superintendent may adopt uniform rules and regulations [as] to encourage price competition and to address underwriting standards and practices, including but not limited to rules and regulations [which] that prohibit title insurers from insuring specified risks [which] that the superintendent determines may pose an unreasonable risk to the financial stability of title insurers.
B. No title insurer or title insurance agent shall collect any premium or fees, issue any title insurance policy or agency agreement, or reinsure any portion of the risk assumed under any title insurance policy, other than in conformance with the New Mexico Title Insurance Law and rules and regulations adopted by the superintendent as authorized by the New Mexico Title Insurance Law."
Section 8. Section 59A-30-5 NMSA 1978 (being Laws 1985, Chapter 28, Section 5) is amended to read:
"59A-30-5. POLICY FORMS.--No title insurer or title insurance agent shall use any form of title insurance policy other than the uniform forms promulgated by the superintendent under the New Mexico Title Insurance Law. The superintendent shall not promulgate any uniform form under which the coverage offered is excessive or inadequate in relation to the premium charged for the coverage. A policy shall provide coverage for defects in the policyholder's right to title that are not shown by the public records where such failure to appear in the public records is not the fault of the policyholder."
Section 9. Section 59A-30-6 NMSA 1978 (being Laws 1985, Chapter 28, Section 6, as amended) is amended to read:
"59A-30-6. PREMIUMS--[AGENCY AGREEMENTS] DUTY TO [FIX] SET MAXIMUM RATES AND MAXIMUM FEES--EXCEPTION.--
A. The superintendent shall promulgate [the] maximum premium rates [of title insurers and title insurance agents] for title insurance policies and the percentage of premium to be retained by title insurers under agency agreements, except that premium rates for reinsurance as between title insurers shall not be promulgated by the superintendent. [No premium that has not been promulgated by the superintendent shall be charged for any title insurance policy. The superintendent shall not promulgate charges of title insurers and title insurance agents other than premium rates for title insurance policies and the percentage of premium to be retained by title insurers under agency agreements.]
B. The superintendent shall promulgate additional maximum premium rates for searches or examinations of title conducted or performed for the purpose of issuance of a title insurance policy when the search or examination involves more than one chain of title or other unusual complexity.
C. Maximum premium rates promulgated by the superintendent shall not be excessive, inadequate or unfairly discriminatory and shall contain an allowance permitting a profit that is not unreasonable in relation to the [riskiness of] risks incurred in the business of title insurance. In determining maximum rates, the superintendent may give due consideration to past and prospective revenue, loss and expense experience within New Mexico and any other factors the superintendent determines to be relevant. Premium rates may include an allowance for recoupment of assessments made pursuant to the Title Insurance Guaranty Act.
D. The superintendent shall promulgate the maximum fees that title insurers and title insurance agents may charge. A title insurer or a title insurance agent shall not charge any fee that exceeds the maximum fee promulgated by the superintendent.
E. The superintendent shall promulgate maximum premium rates that may be charged for the issuance of title insurance policies purchased in association with the refinance of a property for which the title insurer has previously issued a title insurance policy for the property to the insured. Premium rates promulgated under this subsection shall be at least forty percent lower than premium rates for the original issuance of a title insurance policy on the same property.
F. A title insurer shall file with the superintendent its rates and supplementary rate information, as defined in Section 59A-17-4 NMSA 1978, for title insurance policies prior to their use. No rate or premium derived from a rate that exceeds the maximum rate promulgated by the superintendent shall be filed or used.
G. The superintendent shall disapprove any filed rate if the superintendent finds that the rate is inadequate or unfairly discriminatory. In disapproving rates under this subsection, the superintendent shall comply with the procedural requirements for disapproval of file-and-use rates as contained in the Insurance Rate Regulation Law.
H. No title insurer or title insurance agent shall issue a policy except in accordance with rates that are lawfully filed and in effect as provided in the New Mexico Title Insurance Law."
Section 10. Section 59A-30-7 NMSA 1978 (being Laws 1985, Chapter 28, Section 7) is amended to read:
"59A-30-7. REPORTING OF EXPERIENCE.--The superintendent shall promulgate reasonable rules, including rules providing statistical plans, for use thereafter by all title insurers and title insurance agents in the recording and reporting of revenue, loss and expense experience and search and examination activity, so that the experience and activities of title insurers and title insurance agents may be made available to [him] the superintendent at least annually in such form and detail as may be necessary to aid [him] the superintendent in promulgating maximum premium rates and maximum fees."
Section 11. Section 59A-30-8 NMSA 1978 (being Laws 1985, Chapter 28, Section 8, as amended) is amended to read:
"59A-30-8. HEARINGS--NOTICE.--
A. The superintendent shall [hold an annual] commence a hearing during November of each odd-numbered calendar year to consider promulgation of maximum premium rates, maximum fees and any other matters related to the regulation of the business of title insurance deemed necessary by the superintendent.
B. The superintendent may, in [his] the superintendent's discretion, hold a public hearing at any time to consider promulgation of maximum premium rates or maximum fees and such other matters and subjects related to the regulation of the business of title insurance as the superintendent shall determine necessary or proper.
C. Notice of the public hearings provided for in Subsections A and B of this section shall be as provided in Subsection A of Section 59A-4-16 NMSA 1978.
D. The superintendent may promulgate maximum premium rates or maximum fees and forms of title insurance policies only after a public hearing as provided in Subsections A and B of this section.
E. The superintendent shall issue [his] a decision within sixty days following the [conclusion of a] superintendent's closure of the administrative record for the public hearing provided for in Subsections A and B of this section. However, if the superintendent determines that the data and information presented to the superintendent pursuant to Section 59A-30-7 NMSA 1978 [is] are incomplete, inaccurate or otherwise insufficient to determine whether [the] a change in maximum rates or maximum fees is warranted, the superintendent shall require the [title insurers or the title agents or both] relevant person to furnish the additional necessary data and information, and, in such event, the period of time allowed for the superintendent to issue [his] a decision shall commence from the date such additional data and information [is] are furnished."
Section 12. Section 59A-30-9 NMSA 1978 (being Laws 1985, Chapter 28, Section 9, as amended) is amended to read:
"59A-30-9. REVIEW--APPEALS.--A person aggrieved by an order of the superintendent promulgating maximum rates or maximum fees under the New Mexico Title Insurance Law shall have the rights to review and appeal provided for in Sections 59A-17-34 and 59A-17-35 NMSA 1978. The request for review shall be filed no later than thirty days after the superintendent's issuance of the order that promulgated the rates or fees."
Section 13. Section 59A-30-11 NMSA 1978 (being Laws 1985, Chapter 28, Section 11, as amended) is amended to read:
"59A-30-11. UNDERWRITING STANDARDS AND RECORD RETENTION.--
A. No title insurance policy may be written unless the title insurer or its title insurance agent has caused to be conducted a reasonable search and examination of the title using an abstract plant meeting the requirements of Section 59A-12-13 NMSA 1978 and has caused to be made a determination of insurability of title in accordance with sound underwriting practices. [The duty to search and examine imposed by this section is solely for the purpose of enhancing the financial stability of title insurers for the benefit of insureds under title insurance policies. The New Mexico Title Insurance Law is not intended and should not be construed to create any duty to search and examine that runs to the benefit of, or to create any right or cause of action in favor of, any person other than a title insurer.] Provided that a title insurance policy has been issued, only the title insurer, and not its agent or the agent's employees, shall be liable for damages caused to the insured or any other party by a negligent search and examination. In no case shall an award of damages caused by a negligent search and examination exceed the fair market value of the property as of the date of the search and examination.
B. Evidence of the examination of title and determination of insurability shall be preserved and retained in the files of the title insurer or its title insurance agent for a period of not less than fifteen years after the title insurance policy has been issued. Instead of retaining the original evidence, the title insurer or title insurance agent may in the regular course of business establish a system whereby all or part of the evidence is recorded, copied or reproduced by any process that accurately and legibly reproduces or forms a durable medium for reproducing the contents of the original. This subsection shall not apply to:
(1) a title insurer assuming liability through a contract of reinsurance; or
(2) a title insurer acting as coinsurer if one of the other coinsuring title insurers has complied with this section."
Section 14. Section 59A-30-12 NMSA 1978 (being Laws 1985, Chapter 28, Section 12) is amended to read:
"59A-30-12. MAINTENANCE ASSESSMENT.--The superintendent shall determine a rate of assessment and collect a maintenance fee in an amount not to exceed one percent of the correctly reported gross title insurance premiums on policies written in New Mexico of all authorized title insurers. The fee required by this section is in addition to all other taxes and fees now imposed or that may be subsequently imposed and that are not in conflict with this article. The superintendent, after taking into account the unexpended funds produced by this fee, if any, shall adjust the rate of assessment each year to produce the amount of funds that [he] the superintendent estimates will be necessary to pay all the expenses of regulating the business of title insurance during the succeeding year. The superintendent in promulgating maximum premium rates and maximum fees shall take into account assessments made under this section."
Section 15. A new section of the New Mexico Title Insurance Law is enacted to read:
"[NEW MATERIAL] REPORTING BY SUPERINTENDENT.--The superintendent shall compile a report for the commission and the legislature no later than October 1 each year beginning in 2010 detailing title insurance statistics, including a report on the status of price competition within the title insurance industry in New Mexico. Annual reports shall be made available to interested parties and the general public."
Section 16. REPEAL.--Section 59A-30-15 NMSA 1978 (being Laws 1985, Chapter 28, Section 16) is repealed.
Section 17. SEVERABILITY.--If any part or application of this act is held invalid, the remainder or its application to other situations or persons shall not be affected.
Section 18. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2009.
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