Texas Department of Insurance Rule P-24 - A to Z
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Texas Department of Insurance Commissioner has issued an order officially adopting amendments considered during the rulemaking phase of the 2006 Texas Title Insurance Biennial Hearing. Agenda item 2006-65 relating to P-24 will be effective July 1, 2008. All other adopted agenda items will be effective May 1, 2008.
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Brief History of P-24 Rule Change
The buying and selling of Title Evidence and Examination among Title Agents is regulated by the Texas Department of Insurance. The Rule regulatating Premium splits among Title Agents is Procedural Rule 24 "P-24."
P-24 historically has been a controversial issue because it is difficult to reach a balance between the needs of Title Agents in metropolitan areas and those in rural communities.
On September 5, 2007, at the 2006 Rules Hearing, the Insurance Commissioner Mike Geeslin heard testimony regarding proposed changes to Rule P-24 (see below) Agenda Items 2006-65, 2006-66 and 2006-67.
Commissioner's Comments
At the conclusion of the hearing, Mr. Gesslin, gave marching orders to those present and asked them to consider the following:
o The Department of Insurance needs to make sure "Rural" and/or "Small County" Agents remain financially viable
o The industry should indentify the parties (Agents) most at risk to make sure they receive a reasonable rate of return
o Fees MUST BE "commensurate" with the services provided
o The industry needs to find a long term, permenant solution so P-24 will not be revisted in two years
o A direct quote from Commissioner Geeslin was, "Think outside the box"
Following the hearing, the Commission left this Agenda open for public comment for thirty days. During that time the Texas Land Title Associaton, the Independent Title Agents of Texas, and other Petitioners offered the Commissioner a compromise position which became an amendment to Agenda Item 2006-65.
Subsequently, the Commission concurred and made recommendations for changes to P-24 which mirrored the compromise.
If there are no additional changes then the "New Rule P-24" will be effective April 1, 2008.
P-24 is important to all Title Agents in Texas particularly with the advent of the Internet where many Title Agents receive orders from all over the State.
Additional Information
The following links may give you a better understanding of activities before and after Rules Hearing where P-24 was discussed. This includes testimony at the hearing and instructions from the Commissioner:
o Proposed P-24 Language from the Commisioner of Insurance
o Basic Manual Proposed Rule Changes (see page 5 of 8) Proposed by TDI for Approval
o TLTA Breaking News 9-6-2007 - Summary of Biennial Hearing Re: P-24 from TLTA
o TDI Hearing Audio – Docket 2668 Part 5 Comments from the Commission Re: P-24
o P-24 Independent Agent Online Discussion 9-25-2007 - PowerPoint of Online Discussion 9-25-2007
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Parsing the P-24 Language
Note: The following is the reccomended lanugage from the Commissioner of Insurance. The end of the comment period was January 21, 2008 and if no changes are made then the new rule will be effective April 1, 2008. Underlined words and phrase indicate NEW wording in the rule and [brackets] indicate language in P-24 before the proposed rule change.
Item 2006-65
P-24. PAYMENT FOR SERVICES RENDERED BY A TITLE INSURANCE COMPANY, TITLE INSURANCE AGENT, OR DIRECT OPERATION TO ANOTHER TITLE INSURANCE COMPANY, TITLE INSURANCE AGENT OR DIRECT OPERATION
In negotiating the portion of the premium to be paid by a Title Insurance Company (Company”), Title Insurance Agent (Agent”), or Direct Operation (Direct Operation”), including any of their attorneys who are licensed escrow officers (Escrow Officers”) [(collectively “Company”)] to another [Title Insurance ]Company, [Title Insurance]Agent~ [8c]Direct Operation or any of their Escrow Officers for: (i) furnishing title evidence, (ii) furnishing title evidence and examining title, (iii) closing a transaction, or (iv) closing a transaction and examining title, the payments shall not exceed the following percentages as applied to the portion of the title insurance premium remaining after payment of the underwriter’s portion of the premium:
(a) If the insured policy amount is in excess of [$100,000]$125,000
Furnishing title evidence, or furnishing title evidence and title examination
by the Company, Agent, or Direct Operation furnishing the evidence [60]50%
Closing the transaction, or Closing the transaction and title examination [40]50%
(b) If the insured policy amount is $100,000 125,000, or less.
Furnishing title evidence, or furnishing title’ evidence and title examination
by the Company, Agent, or Direct Operation furnishing the evidence 90%
Closing the transaction, or Closing the transaction and title examination 10%
In addition to these percentages, reasonable charges may also be made and paid for copies of documents.
Any payment in excess of the sums calculated by use of the percentages specified in this Rule shall be deemed to be an unreasonable and excessive amount, unless the Company, Agent, or Direct Operation providing such services and the Company, Agent, or Direct Operation, paying for such services (i) under section (a) above enter into a prior written agreement not less than ninety (90) days prior to closing specifying and agreeing to percentages (but not services) different from those provided in this Rule or (ii) under section (b) above are licensed in the same county or in contiguous counties and enter into a prior written agreement not less than ninety (90) days prior to closing specifying and agreeing to percentages (but not services) different from those provided in this Rule . All payments must be remitted no later than the thirtieth (30th) day after the date of recording by the county clerk of an instrument conveying an interest in the land.
On and after January 1 2013, the insured policy amount in sections (a) and (b) above shall be $150000.00.
This Rule, including the provisions pertaining to prior written agreements, and the percentages specified in this Rule apply to each Escrow Officer of a Company, Agent, or Direct Operation to the same extent and in the same manner as is applicable to the Company, Agent, or Direct Operation for which the person is acting as an Escrow Officer.
Nothing in this Rule shall affect the division of premium between a title insurance company and its subsidiary title insurance agent when the title insurance company directly issues its policy or contract of title insurance company pursuant to Article 9.3’1,~ 2704.002, Insurance Code. For purposes of this Rule, a subsidiary is a company at least fifty percent (50%) of the voting stock of which is owned by the title insurance company or by a wholly owned subsidiary of the title insurance company.
1. Changes premium split for transactions involving an insured policy amount in excess of $125,000 from a recommended 60/40 split to a mandatory 50/50 split unless a Prior Written Agreement is in place 90 days prior to Closing:
P-24 premium splits as we know them today will no longer be effective after April 1, 2008 unless you already have a PWA in place.
2. Payment shall not exceed fifty percent for furnishing title evidence, or furnishing title evidence and title examination, and shall not exceed fifty percent for closing the transaction, or closing the transaction and title examination unless a PWA is in place 90 days prior to closing the transaction.
Furnishing title evidence, or furnishing
Title evidence and title examination 50%
Closing the transaction, or closing the
transaction and title examination 50%
3. Transactions less than $125,000 a 90/10 split will be a mandatory split unless both conditions are met:
(1) You are a licensed Agent in a contiguous county
(2) You have a PWA in place at least 90 days prior to Closing
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