2022 -- H 7897 | |
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LC005426 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2022 | |
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A N A C T | |
RELATING TO INSURANCE -- RHODE ISLAND TITLE INSURERS ACT | |
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Introduced By: Representative Joseph J. Solomon | |
Date Introduced: March 04, 2022 | |
Referred To: House Judiciary | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Sections 27-2.6-3 and 27-2.6-16 of the General Laws in Chapter 27-2.6 |
2 | entitled "Rhode Island Title Insurers Act" are hereby amended to read as follows: |
3 | 27-2.6-3. Definitions. |
4 | As used in this chapter: |
5 | (1) "Abstract of title" or "abstract" means a written history, synopsis or summary of the |
6 | recorded instruments affecting the title to real property. |
7 | (2) "Affiliate" means a specific person that directly, or indirectly through one or more |
8 | intermediaries, controls, or is controlled by or is under common control with the person specified. |
9 | (3) "Bona fide employee of the title insurer or title insurance agent" means an individual |
10 | who devotes substantially all of his or her time to performing services on behalf of a title insurer |
11 | or title insurance agent and whose compensation for those services is in the form of salary or its |
12 | equivalent paid by the title insurer or title insurance agent. |
13 | (4) "Commissioner" means the director of the department of business regulation, or his or |
14 | her designee or the commissioner, director or superintendent of insurance in any other state. |
15 | (5) ''Continuing education'' means a minimum or ten (10) hours of continuing education |
16 | credit every two (2) years in title insurance and escrow management specific to this state and |
17 | approved by the department, which shall include at least three (3) hours of continuing education on |
18 | the subject matter of ethics, rules, or compliance with state and federal regulations relating |
19 | specifically to title insurance and closing services. Compliance with continuing education |
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1 | requirements is a condition precedent to the issuance, continuation, reinstatement, or renewal or |
2 | any resident licensee subject to this section. |
3 | (5)(6) "Control" (including the terms "controlling," "controlled by" and "under common |
4 | control with") means the possession, direct or indirect, of the power to direct or cause the direction |
5 | of the management and policies of a person, whether through the ownership of voting securities, |
6 | by contract other than a commercial contract for goods or nonmanagement services, or otherwise, |
7 | unless the power is the result of an official position or corporate office held by the person. Control |
8 | shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power |
9 | to vote, or holds proxies representing, ten percent (10%) or more of the voting securities of another |
10 | person. This presumption may be rebutted by a showing that control does not exist in fact. The |
11 | commissioner may determine, after furnishing all persons in interest notice and opportunity to be |
12 | heard and making specific findings of fact to support the determination, that control exists in fact, |
13 | notwithstanding the absence of a presumption to that effect. |
14 | (6)(7) "Direct operations" means that portion of a title insurer's operations which are |
15 | attributable to business written by a bona fide employee. |
16 | (7)(8) "Escrow" means written instruments, money or other items deposited by one party |
17 | with a depository, escrow agent or escrowee for delivery to another party upon the performance, of |
18 | a specified condition or the happening of a certain event. |
19 | (8)(9) "Escrow, settlement or closing fee" means the consideration for supervising or |
20 | handling the actual execution, delivery or recording of transfer and lien documents and for |
21 | disbursing funds. |
22 | (9)(10) "Foreign title insurer" means any title insurer incorporated or organized under the |
23 | laws of any other state of the United States, the District of Columbia, or any other jurisdiction of |
24 | the United States. |
25 | (10)(11) "Net retained liability" means the total liability retained by a title insurer for a |
26 | single risk, after taking into account any ceded liability and collateral, acceptable to the |
27 | commissioner, maintained by the insurer. |
28 | (11)(12) "Non-U.S. title insurer" means any title insurer incorporated or organized under |
29 | the laws of any foreign nation or any province or territory. |
30 | (12)(13) "Person" means any natural person, partnership, association, cooperative, |
31 | corporation, trust or other legal entity. |
32 | (13)(14) "Producer" means any person, including any officer, director or owner of five |
33 | percent (5%) or more of the equity or capital of any person, engaged in this state in the trade, |
34 | business, occupation or profession of: |
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1 | (i) Buying or selling interests in real property; |
2 | (ii) Making loans secured by interests in real property; or |
3 | (iii) Acting as broker, agent, representative or attorney or a person who buys or sells any |
4 | interest in real property or who lends or borrows money with the interest as security. |
5 | (14)(15) "Qualified financial institution" means an institution that is: |
6 | (i) Organized or (in the case of a United States branch or agency office of a foreign banking |
7 | organization) licensed under the laws of the United States or any state and has been granted |
8 | authority to operate with fiduciary powers; |
9 | (ii) Regulated, supervised and examined by federal or state authorities having regulatory |
10 | authority over banks and trust companies; |
11 | (iii) Insured by the appropriate federal entity; and |
12 | (iv) Qualified under any additional rules established by the commissioner. |
13 | (15)(16) "Security" or "security deposit" means funds or other property received by the |
14 | title insurer as collateral to secure an indemnitor's obligation under an indemnity agreement |
15 | pursuant to which the insurer is granted a perfected security interest in the collateral in exchange |
16 | for agreeing to provide coverage in a title insurance policy for a specific title exception to coverage. |
17 | (16)(17) "Subsidiary" means an affiliate controlled by a person directly or indirectly |
18 | through one or more intermediaries. |
19 | (17)(18) "Title insurance agent" or "agent" means an authorized person, other than a bona |
20 | fide employee of the title insurer who, on behalf of the title insurer, performs the following acts, in |
21 | conjunction with the issuance of a title insurance report or policy any person authorized in writing |
22 | by a title insurer who, on behalf of the title insurer, performs the following acts, in conjunction with |
23 | the issuance of a title insurance report or policy: |
24 | (i) Determines insurability and where applicable, marketability, and issues title insurance |
25 | reports or policies, or both, based upon the performance or review of a search or abstract of title; |
26 | and provided that, any determination of marketability shall be made by an attorney licensed to |
27 | practice in the State of Rhode Island who is engaged or employed by the title insurance agent; and |
28 | (ii) Performs one or more of the following functions: |
29 | (A) Collects or disburses premiums, escrow or security deposits or other funds; |
30 | (B) Handles escrows, settlements or closings; |
31 | (C) Solicits or negotiates title insurance business; or |
32 | (D) Records closing documents. |
33 | (18)(19) "Title insurance business" or "business of title insurance" means": |
34 | (i) Issuing as insurer or offering to issue as insurer, a title insurance policy; |
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1 | (ii) Transacting or proposing to transact by a title insurer any of the following activities |
2 | when conducted or performed in contemplation of, or in conjunction with, the issuance of a title |
3 | insurance policy: |
4 | (A) Soliciting or negotiating the issuance of a title insurance policy; |
5 | (B) Guaranteeing, warranting or otherwise insuring the correctness of title searches for all |
6 | instruments affecting titles to real property, any interest in real property, cooperative units and |
7 | proprietary leases and for all liens or charges affecting the same; |
8 | (C) Handling of escrows, settlements or closings; |
9 | (D) Executing title insurance policies; |
10 | (E) Effecting contracts of reinsurance. |
11 | (iii) Guaranteeing, warranting or insuring searches or examination of title to real property |
12 | or any interest in real property; |
13 | (iv) Guaranteeing or warranting the status of title as to ownership of or liens on real |
14 | property and personal property by any person other than the principals to the transaction; or |
15 | (v) Doing or proposing to do any business substantially equivalent to any of the activities |
16 | listed in this subsection in a manner designed to evade the provisions of this chapter. |
17 | (19)(20) "Title insurance policy" or "policy" means a contract insuring or indemnifying |
18 | owners of, or other persons lawfully interested in, real or personal property or any interest in real |
19 | property, against loss or damage arising from any or all of the following conditions existing and |
20 | not excepted or excluded: |
21 | (i) Defects in or liens or encumbrances on the insured title; |
22 | (ii) Unmarketability of the insured title; |
23 | (iii) Invalidity, lack of priority or unenforceability of liens or encumbrances on the stated |
24 | property; |
25 | (iv) Lack of legal right of access to the land; or |
26 | (v) Unenforceability of rights in title to the land. |
27 | (20)(21) "Title insurer" or "insurer" means a company organized under laws of this state |
28 | for the purpose of transacting the business of title insurance and any foreign or non-United States |
29 | title insurer licensed in this state to transact the business of title insurance. |
30 | (21)(22) "Title plant" means a set of records consisting of documents, maps, surveys or |
31 | entries affecting title to real property or any interest in or encumbrance on the property, which have |
32 | been filed or recorded in the jurisdiction for which the title plant is established or maintained. |
33 | 27-2.6-16. Premium rate filings and standards. |
34 | (a) No title insurer may charge any rates regulated by the state after the effective date of |
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1 | this act, except in accordance with the premium rate schedule and manuals filed with and approved |
2 | by the commissioner in accordance with the provisions of chapter 44 of this title. |
3 | (b) No title insurer may reduce or discount the amount of the title insurance premium from |
4 | the gross title premium set forth in the manual so filed and approved, except in accordance with a |
5 | refinance or reissue rate as set forth in the manual. For insurance amounts higher than any amount |
6 | specifically set forth in the title insurer's rate manual, the gross premium shall be calculated at the |
7 | same rate per thousand dollars of insurance for the highest stated amount set forth in the manual. |
8 | (c) Only licensed title agents are entitled to receive, collect and share in any title insurance |
9 | premiums, or any portion thereof. |
10 | SECTION 2. Chapter 27-2.6 of the General Laws entitled "Rhode Island Title Insurers |
11 | Act" is hereby amended by adding thereto the following section: |
12 | 27-2.6-4.1. Nonresidents. |
13 | (a) A nonresident person shall receive a nonresident license if: |
14 | (1) The person is currently licensed as a resident agent and is in good standing in his or her |
15 | home state; |
16 | (2) The person has submitted the proper request for licensure and has paid the required |
17 | fees; |
18 | (3) The person has submitted or transmitted to the department the appropriate, completed |
19 | application for licensure for the equivalent type of license and lines of authority; |
20 | (4) The insurance commissioner may verify the licensee's licensing status through the |
21 | database maintained by the NAIC, its affiliates, or subsidiaries; and |
22 | (5) As a condition to continuation of a license issued under this section, the licensee shall |
23 | maintain a resident license in his or her home state. The nonresident license issued under this |
24 | section shall terminate and be surrendered immediately if the home state license terminates for any |
25 | reason, unless the licensee has been issued a license as a resident title insurance agent in his or her |
26 | new home state. Notification to any state where a nonresident license is issued must be made as |
27 | soon as possible, yet no later than thirty (30) days of change in new state resident license. The |
28 | licensee shall include new and old addresses in the notification to the department. A new state |
29 | resident license is required for nonresident licenses to remain valid. The new state resident license |
30 | must have reciprocity with the licensing nonresident state(s) for the nonresident license not to |
31 | terminate. |
32 | (b) If neither the state in which the licensee maintains the principal place of residence, nor |
33 | the state in which the licensee maintains the principal place of business has a substantially similar |
34 | law governing licensees, the licensee may declare another state in which it becomes licensed and |
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1 | acts as a licensee to be the home state. |
2 | SECTION 3. This act shall take effect upon passage. |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO INSURANCE -- RHODE ISLAND TITLE INSURERS ACT | |
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1 | This act would provide that any person authorized by a title insurance company may act as |
2 | a title insurance agent. Additionally, this act would add a definition for the term "continuing |
3 | education" and provide for ten (10) hours of biennial continuing education for resident title |
4 | insurance agents and a licensing procedure for non-resident title insurance agents. |
5 | This act would take effect upon passage. |
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LC005426 | |
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