Florida House Title Insurance Bill (CS/HB 1229) Unanimously Passes Penultimate Committee

At its meeting this morning, April 13, 2011, the Florida House Government Operations Appropriations Subcommittee unanimously approved CS/HB 1229 relating to Title Insurance.

Sponsored by the House Insurance and Banking Subcommittee and State Representative Doug Holder, the bill was passed without questions or debate.

Although only the House Economic Affairs Committee remains as CS/HB 1229’s final stop before proceeding to the House Floor, no Senate companion bill has been filed.

About CS/HB 1229

Under current Florida law, title policies belonging to an insurer in rehabilitation can only remain in force as long as the insurer has sufficient assets to avoid liquidation.

As passed today by the Subcommittee, CS/HB 1229 would require the receiver of a title insurer in rehabilitation to file a rehabilitation plan that provides for the following:

• Title insurance policies on real property in Florida are to remain in force, unless assessments on other title insurers would be insufficient to pay the insurer’s claims.
• Title insurance policies on real property in other states (“out-of-state policies”) that do not statutorily provide for payment of future losses of title insurers in receivership may be cancelled as of a date approved by the applicable court, with a claims filing deadline established.
• Separate allocations of remaining estate assets to fund claims made on out-of-state policies that, respectively, have been cancelled or remain in force, and a formula for determining funds to be allocated to these claims.

Under the provisions of CS/HB 1229, Florida title insurers would be liable for assessments to pay all outstanding title insurance claims and expenses of administering and settling claims on real property in Florida when a title insurer is ordered into liquidation.  Except as otherwise provided by the legislation, title insurance policies on real property in Florida would remain in force when the insurer that issued the policy is ordered into rehabilitation.

The bill clarifies that the title insurer’s expenses and loss adjustment expenses would be part of the assessment.  The financial impact of an assessment would be offset by the ability of the title insurers to collect surcharge on future policies until it had recovered the amount of the assessment paid. 

The surcharge could not exceed $25 per transaction for each impaired title insurer and would be required to be sufficient to repay all assessments within seven years.

Effective upon becoming law, CS/HB 1229 also would require the Florida Department of Financial Services to review the regulatory structure of the State’s title insurance industry and submit its findings and recommendations to the Florida Legislature by December 31, 2011.

To view the most recent version of the bill, click here.

Should you have any questions or comments, please contact Colodny Fass.