Citations Affected: IC 27-1-15.6-4; IC 27-7-3.5.
Synopsis: Title insurance. Specifies requirements for the conduct of
a title insurance agent or title agency, including licensure, continuing
education, placement of title insurance business, record keeping,
reporting, and management and use of funds. Requires the department
of insurance to establish a title insurance enforcement unit to enforce
title insurance law.
Effective: July 1, 2007.
January 8, 2007, read first time and referred to Committee on Insurance and Financial
A BILL FOR AN ACT to amend the Indiana Code concerning
underwriting, loss control, inspection, or the processing,
adjusting, investigating, or settling of a claim on a contract of
(C) the officer, director, or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers and the officer, director, or employee's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation, or negotiation of insurance.
(2) A person who secures and furnishes information for the purpose of:
(A) group life insurance, group property and casualty insurance, group annuities, group or blanket accident and sickness insurance;
(B) enrolling individuals under plans;
(C) issuing certificates under plans or otherwise assisting in administering plans; or
(D) performing administrative services related to mass marketed property and casualty insurance;
where no commission is paid to the person for the service.
(3) A person identified in clauses (A) through (C) who is not in any manner compensated, directly or indirectly, by a company issuing a contract, to the extent that the person is engaged in the administration or operation of a program of employee benefits for the employer's or association's employees, or for the employees of a subsidiary or affiliate of the employer or association, that involves the use of insurance issued by an insurer:
(A) An employer or association.
(B) An officer, director, or employee of an employer or association.
(C) The trustees of an employee trust plan.
(A) employee of an insurer; or
(B) organization employed by insurers;
that is engaged in the inspection, rating, or classification of risks, or in the supervision of the training of insurance producers, and that is not individually engaged in the sale, solicitation, or negotiation of insurance.
(5) A person whose activities in Indiana are limited to advertising, without the intent to solicit insurance in Indiana, through communications in printed publications or other forms of electronic mass media whose distribution is not limited to
residents of Indiana, provided that the person does not sell, solicit,
or negotiate insurance that would insure risks residing, located, or
to be performed in Indiana.
(6) A person who is not a resident of Indiana and who sells, solicits, or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one (1) state insured under that contract, provided that:
(A) the person is otherwise licensed as an insurance producer to sell, solicit, or negotiate the insurance in the state where the insured maintains its principal place of business; and
(B) the contract of insurance insures risks located in that state.
(7) A salaried full-time employee who counsels or advises the employee's employer about the insurance interests of the employer or of the subsidiaries or business affiliates of the employer, provided that the employee does not sell or solicit insurance or receive a commission.
(8) An officer, employee, or representative of a rental company (as defined in IC 24-4-9-7) who negotiates or solicits insurance incidental to and in connection with the rental of a motor vehicle.
(9) An individual who:
(A) furnishes only title insurance rate information at the request of a consumer; and
(B) does not discuss the terms or conditions of a title insurance policy.
(10) A licensed attorney when acting as a title insurance producer (as defined in IC 27-7-3.5-16) or a title insurance agent (as defined in IC 27-7-3.5-19).
foreign nation or a foreign province or territory.
Sec. 4. As used in this chapter, "associate" means the following:
(1) A business organized for profit in which a producer of title insurance business is a director, an officer, a partner, an employee, or an owner of a financial interest in the business.
(2) An employee of a producer of title insurance business.
(3) A franchiser or franchisee of a producer of title insurance business.
(4) A spouse, parent, or child of a producer of title insurance business.
(5) A person, other than an individual, that controls, is controlled by, or is under common control with a producer of title insurance business.
(6) A person with whom a producer of title insurance business or an associate of a producer of title insurance business has an agreement, arrangement, or understanding, or pursues a course of conduct, the purpose or effect of which is to provide financial benefits to the producer or associate for the referral of title insurance business.
Sec. 5. As used in this chapter, "bona fide employee" means an individual:
(1) who devotes substantially all of the individual's time to performing services on behalf of a title insurer or title insurance agent; and
(2) whose compensation for the services described in subdivision (1) is in the form of salary or the equivalent paid by the title insurer or title insurance agent.
Sec. 6. As used in this chapter, "chattels real" means an interest in real estate that is less than a freehold or fee interest.
Sec. 7. As used in this chapter, "closing protection letter" means an indemnification of or undertaking to a party to a real estate transaction by a principal, such as a title insurance company, setting forth in writing the extent to which the principal is responsible for intentional or unintentional misconduct or errors of the principal's agent in closing the real estate transaction.
Sec. 8. As used in this chapter, "commissioner" means the insurance commissioner appointed under IC 27-1-1-2, the commissioner's representative, or the commissioner, director, or superintendent of insurance in another state.
Sec. 9. As used in this chapter, "department" refers to the department of insurance created by IC 27-1-1-1.
Sec. 10. As used in this chapter, "escrow" means written
instruments, money, or other items deposited by a party with a
depository, an escrow agent, or an escrowee for delivery to another
party upon the performance of a specified condition or the
happening of a certain event.
Sec. 11. As used in this chapter, "financial interest" means a:
(1) direct or indirect; and
(2) legal or beneficial;
interest in an entity, in which the holder of the interest is or will be entitled to at least five percent (5%) of the net profits or net worth of the entity.
Sec. 12. As used in this chapter, "foreign title insurer" means a title insurer that is incorporated or organized under the laws of another state, the District of Columbia, or another jurisdiction of the United States.
Sec. 13. As used in this chapter, "person" means an individual, a partnership, an association, a cooperative, a corporation, a trust, a limited liability company, or another legal entity.
Sec. 14. As used in this chapter, "premium" means the charge:
(1) specified under a rule adopted by the commissioner;
(2) that is made by a title insurer for a title insurance policy, including the charge for:
(A) performance of primary title services by a title insurer or title insurance agent; and
(B) incurring the risks incident to the title insurance policy;
under the several classifications of title insurance policies and forms; and
(3) upon which a premium tax is paid.
Sec. 15. As used in this chapter, "primary title services" means the following services:
(1) Evaluation of a title search or an abstract of title to determine the insurability of title.
(2) Clearance of underwriting objections.
(3) Issuance and assumption of responsibility for the issuance of a title insurance policy.
(4) Issuance of a closing protection letter.
Sec. 16. (a) As used in this chapter, "producer" means a person, including an officer, director, or owner of five percent (5%) or more of the equity or capital of a person, that is engaged in Indiana in the trade, business, occupation, or profession of:
(1) buying or selling interests in real property;
(2) making loans secured by interests in real property; or
insurer delegates authority to act on the title agency's, title
insurance agent's, or title insurer's behalf; and
(3) who engages in title insurance business;
shall be individually licensed under this section. This subsection does not require licensure of an individual who performs only clerical or administrative functions, including quoting title insurance fees.
(e) An applicant for a title agency license or title insurance agent license under this section must also satisfy the requirements of IC 27-1-15.6 that apply to the title agency or title insurance agent.
(f) A title insurer that engages or employs a title agency shall file with the department, on a form prescribed by the department, an application certifying that the proposed title agency meets both of the following requirements:
(1) The title agency has obtained a fidelity bond in an amount that is acceptable to the title insurer, but not less than fifty thousand dollars ($50,000).
(2) The title agency has obtained an errors and omissions insurance policy:
(A) that provides coverage for an opinion of title;
(B) from an insurer that is acceptable to the title insurer; and
(C) in an amount acceptable to the title insurer, but not less than two hundred fifty thousand dollars ($250,000) per claim with an aggregate limit.
The department shall adopt rules under IC 4-22-2 to specify an alternative method of compliance with subdivisions (1) and (2) if a fidelity bond or errors and omissions insurance is generally unavailable.
(g) A title agency shall provide to a title insurer with which the title agency places title insurance business, in a timely manner, information requested by the title insurer to comply with reporting requirements of the department.
Sec. 27. (a) To obtain an initial license under section 26 of this chapter, a title agency shall:
(1) have deposited with the department securities that are of the type described in IC 27-1-13-3(b) and have at all times a market value of not less than ten thousand dollars ($10,000); or
(2) post a surety bond of not less than ten thousand dollars ($10,000) payable to the department;
to secure the title agency's performance of the title agency's duties
and responsibilities under the contract described in section 30 of
this chapter and entered into between the title agency and each title
insurer for which the title agency is appointed. If a surety bond is
generally unavailable, the department may adopt rules under
IC 4-22-2 to establish alternative methods by which a title agency
may comply with this subsection.
(b) The deposit made or bond posted under subsection (a) is for the benefit of a person insured under a title insurance policy and damaged by the title agency's violation of this chapter or of a contractual duty or responsibility described in subsection (a).
(c) A title insurer may not, directly or indirectly on behalf of a title agency, provide a deposit or bond required under subsection (a).
(d) A title agency may:
(1) exchange or substitute securities:
(A) described in IC 27-1-13-3(b); and
(B) of like quality and value;
for securities on deposit;
(2) receive interest and other income accruing on securities deposited; and
(3) at reasonable times, inspect a deposit of securities made;
under subsection (a)(1).
(e) If a properly documented claim is timely filed with the department by a person described in subsection (b), the department may remit to the person in payment of the claim an appropriate amount of:
(1) a deposit made under subsection (a); or
(2) proceeds that are received from the surety.
(f) A deposit or bond described in subsection (a) must remain unimpaired while the title agency continues in business in Indiana and for one (1) year after termination of all title agency appointments held by the title agency. If there are no claims outstanding against the deposit or bond one (1) year after termination of the appointments, the department shall return the deposit or bond and any accrued interest to the title agency.
Sec. 28. (a) A title agency or title insurance agent that is licensed under section 26 of this chapter shall comply with the requirements of IC 27-1-15.7 that apply to the title agency or title insurance agent.
(b) A continuing education course must be approved under IC 27-1-15.7-4.
(c) An individual who teaches an approved course of instruction
or lectures at an approved seminar qualifies for the same number
of continuing education hours as would be granted to an individual
who takes and successfully completes the course or seminar.
(d) The department may grant an individual waiver of the continuing education requirements of IC 27-1-15.7 upon a showing by a licensee that it is not feasible for the licensee to satisfy the requirements before the licensee's license renewal date for an acceptable reason, including the licensee's:
(1) serious physical injury or illness; or
(2) active duty in the armed services for an extended period.
(e) An individual who is subject to this section shall furnish, in a manner satisfactory to the department, certification of the individual's completion of courses, programs, or seminars required by this section.
Sec. 29. (a) In addition to the requirements of sections 26(f) and 27 of this chapter, the commissioner may require a title insurance agent to maintain, for the benefit of a title insurer, an insured, or a depositor, under terms and conditions to be prescribed by the commissioner, in amounts commensurate with the title insurance agent's average exposure and the volume and nature of the title insurance agent's business, a sufficient net worth to ensure the title insurance agent's solvency and commitment to the purpose of being a title insurance agent.
(b) In determining the precise amount and terms and conditions described in subsection (a), the commissioner may adopt rules under IC 4-22-2 that:
(1) specify acceptable alternatives to the net worth requirements described in subsection (a); and
(2) exempt certain persons from complying with all or part of the net worth requirements described in subsection (a) or specified alternatives to the net worth requirements by virtue of:
(A) the person's actual or expected volume of business; or
(B) individual circumstances that show that the requirements would pose an undue hardship on the title insurance agent and the title insurance agent's services will be needed by and desirable to insureds.
(c) The commissioner may adopt rules under IC 4-22-2 to specify information that must be provided to evidence sufficiency of a title insurance agent's net worth as described in subsection (a).
(d) Financial information provided to evidence sufficiency of a title insurance agent's net worth under this section is confidential.
insurance agent during a pending dispute regarding a
cause for termination of the contract described in
subsection (a); or
(i) the title insurer's written notice to the title insurance agent; or
(ii) the termination of the contract described in subsection (a);
immediately terminate a settlement authority granted to the title insurance agent.
This subdivision does not relieve a title insurance agent or title insurer of any other contractual obligation.
(i) If electronic claims files exist in the records of a title insurance agent, the contract described in subsection (a) must address the immediate transmission of the data contained in the electronic claims files.
(j) A title insurance agent may not:
(1) bind reinsurance or retrocession on behalf of a title insurer; or
(2) appoint a title insurance subagent, without the expressed written consent of the title insurance underwriter that provides underwriting services under a contract with a title insurer.
(k) The contract described in subsection (a) must include specific terms of a title insurance agent's compensation.
(l) A title insurance agent shall maintain an inventory of title insurance policy forms or title insurance policy numbers assigned to the title insurance agent by a title insurer.
(m) A title insurance agent shall:
(2) within a time specified by the contract described in subsection (a); or
(3) concurrent with the renewal date of the title insurance agent's contract with a title insurer;
furnish a title insurer with proof that the title insurance agent is in compliance with section 26 of this chapter.
(1) title insurer; or
(2) title insurance agent on behalf of a title insurer;
shall issue a title insurance policy not later than sixty (60) days after all conditions or requirements specified in the title insurance report have been satisfied. However, if a title insurance policy
cannot be issued within the period set forth in this subsection due
to an act of God or war, the title insurance policy must be issued
within a reasonable period determined by the department.
Sec. 31. (a) If:
(1) a title insurance agent or title insurer provides settlement services and issues a lender's title insurance policy in conjunction with a mortgage loan made simultaneously with the purchase of all or part of residential real estate securing the loan; and
(2) an owner's title insurance policy has not been requested;
the title insurance agent or title insurer shall, at the time the title insurance report is prepared, provide written notice described in subsection (b) to the purchaser-mortgagor or the purchaser-mortgagor's representative.
(b) Notice provided under subsection (a) must explain:
(1) that a lender's title insurance policy will be issued to protect the mortgage lender;
(2) that the lender's title insurance policy does not provide title insurance protection to the purchaser-mortgagor as the owner of the property being purchased;
(3) what possible risks exist for the purchaser-mortgagor that could be insured against through the purchase of an owner's title insurance policy; and
(4) that the purchaser-mortgagor may obtain an owner's title insurance policy protecting the property owner for an additional cost.
(c) A title insurer or title insurance agent shall, at the time the title insurance report is prepared, provide written notice to all parties that receive the title insurance report that a closing protection letter may be purchased.
(d) The department shall adopt rules under IC 4-22-2 to specify the content of each notice required under this section.
Sec. 32. (a) A title insurance agent shall maintain sufficient records of the title insurance agent's affairs, including the title insurance agent's escrow operations and escrow trust accounts, to allow the commissioner to adequately ensure that the title insurance agent is in compliance with this chapter.
(b) The commissioner may prescribe:
(1) specific record entries and documents that must be maintained under subsection (a); and
(2) the length of time for which the records and documents must be maintained.
(2) Investigate violations of this chapter.
(3) Cooperate with federal, state, and local law enforcement agencies in the investigation of:
(A) deceptive acts in connection with title insurance; and
(B) violations of the federal Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.).
(c) The following may cooperate with the title insurance enforcement unit, including sharing information that is otherwise confidential, to enforce compliance with this chapter:
(1) The professional licensing agency and appropriate licensing boards with respect to a person licensed under IC 25.
(2) The department of financial institutions.
(3) The securities division of the office of the secretary of state.
(4) The supreme court disciplinary commission, with respect to attorney misconduct.
(5) The housing and community development authority.
(6) The department of state revenue.
(7) The state police department.
(8) A prosecuting attorney.
(9) Local law enforcement agencies.
(10) The Indiana real estate commission.
(d) The commissioner may file a complaint with an entity specified in subsection (c) to enforce this chapter.
(e) This section does not limit the jurisdiction of an entity described in subsection (c).
Sec. 35. The commissioner may adopt rules under IC 4-22-2 to implement this chapter.
Sec. 36. (a) If the commissioner, after notice and hearing under IC 4-21.5, determines that a person has violated this chapter, the commissioner may:
(1) impose a civil penalty of not more than ten thousand dollars ($10,000) for each violation; and
(2) if the person is a title insurance agent, order revocation or suspension of the title insurance agent's license.
(b) If an order of rehabilitation or liquidation of a title insurer has been entered under IC 27-9 and:
(1) the receiver appointed under the order determines that a title insurance agent or another person has violated this chapter; and