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AN ACT
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relating to title insurance. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 2501, Insurance Code, is amended by |
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adding Section 2501.009 to read as follows: |
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Sec. 2501.009. GIFTS, GRANTS, AND DONATIONS FOR EDUCATIONAL |
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PURPOSES. (a) The department may accept gifts, grants, and |
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donations to enable employees of the department to participate in |
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educational events, and for other educational purposes, related to |
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title insurance. |
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(b) The commissioner may adopt rules related to the |
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acceptance of gifts, grants, and donations described in Subsection |
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(a). |
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SECTION 2. Section 2502.055(a), Insurance Code, is amended |
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to read as follows: |
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(a) The activities described in this section are not |
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rebates. Nothing in this subchapter prohibits a title insurance |
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company or a title insurance agent from: |
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(1) engaging in [legal] promotional and educational |
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activities that are not conditioned on the referral of title |
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insurance business and not prohibited by Subchapter B, Chapter 541; |
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(2) purchasing advertising promoting the title |
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insurance company or the title insurance agent at market rates from |
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any person in any publication, event, or media; |
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(3) delivering to a party in the transaction or the |
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party's representative legal documents or funds which are directly |
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or indirectly related to a transaction closed by the title |
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insurance company or title insurance agent; [or] |
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(4) participating in an association of attorneys, |
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builders, developers, realtors, or other real estate practitioners |
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provided that the level of such participation does not exceed |
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normal participation of a volunteer member of the association and |
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is not activity that would ordinarily be performed by paid staff of |
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an association; or |
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(5) providing continuing education courses at market |
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rates, regardless of whether participants receive credit hours. |
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SECTION 3. Section 2651.007, Insurance Code, is amended by |
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adding Subsections (d), (e), (f), and (g) to read as follows: |
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(d) Not later than the 20th business day after the date the |
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department receives a renewal application, the department shall |
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notify the applicant in writing of any deficiencies in the |
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application that render the renewal application incomplete. |
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(e) Not later than the fifth business day after the date the |
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renewal application is complete, the department shall notify the |
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applicant in writing of the date that the renewal application is |
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complete. |
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(f) A renewal application is automatically approved on the |
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30th business day after the date the renewal application is |
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complete, unless on or before that date the department notifies the |
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applicant in writing of the factual grounds on which the department |
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proposes to deny the license under Section 2651.301. |
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(g) The department may provide a notice required under this |
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section by e-mail. |
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SECTION 4. Section 2651.009, Insurance Code, is amended by |
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amending Subsection (c) and adding Subsections (c-1), (c-2), and |
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(c-3) to read as follows: |
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(c) Not later than the 20th business day after the date the |
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department receives a notice under Subsection (b), the department |
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shall notify the title insurance agent and appointing title |
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insurance company in writing of any deficiencies in the notice that |
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render the notice incomplete. A notice under Subsection (b) is |
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considered complete on the date the department receives the notice, |
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unless the department provides notice of the deficiencies under |
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this section. |
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(c-1) Not later than the fifth business day after the date |
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the notice under Subsection (b) is complete, the department shall |
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notify the title insurance agent and appointing title insurance |
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company in writing of the date that the notice under Subsection (b) |
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is complete. |
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(c-2) The appointment is effective on the eighth business |
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day following the date [the department receives] the [completed] |
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notice of appointment is complete and the department receives the |
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fee, unless the department proposes to reject [rejects] the |
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appointment. If the department proposes to reject [rejects] the |
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appointment, the department shall notify the title insurance agent |
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and the appointing title insurance company [state] in writing of |
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the factual grounds on which the department proposes to reject the |
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appointment [reasons for rejection] not later than the seventh |
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business day after the date on which the [department receives the
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completed] notice of appointment is complete. |
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(c-3) The department may provide a notice required under |
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this section by e-mail. |
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SECTION 5. Subchapter G, Chapter 2651, Insurance Code, is |
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amended by adding Sections 2651.3015 and 2651.303 to read as |
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follows: |
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Sec. 2651.3015. PROHIBITED GROUNDS FOR REJECTION, DELAY, OR |
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DENIAL. (a) Except as provided by Subsection (b) or (c), the |
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department may not reject, delay, or deny a notice of appointment |
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under Section 2651.009 based wholly or partly on a pending |
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department audit or complaint investigation or a pending |
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disciplinary action against a title insurance agent or appointing |
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title insurance company that has not been finally closed or |
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resolved by a final order issued by the commissioner on or before |
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the date on which the notice is received by the department. |
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(b) The department may reject a notice of appointment under |
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Section 2651.009 if the department determines that the appointing |
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title insurance company or the title insurance agent intentionally |
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made a material misstatement in the notice of appointment or |
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attempted to have the appointment approved by fraud or |
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misrepresentation. |
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(c) The department may delay approval of a notice of |
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appointment if: |
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(1) the title insurance agent or the appointing title |
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insurance company is the subject of a criminal investigation or |
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prosecution; or |
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(2) the deputy commissioner of the title division of |
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the department makes a good faith determination that there is a |
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credible suspicion that there are ongoing or continuing acts of |
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fraud by the title insurance agent or appointing title insurance |
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company. |
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(d) Except as provided by Subsection (e) or (f), the |
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department may not delay or deny a renewal application under |
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Section 2651.007 based wholly or partly on a department audit or |
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complaint investigation of, or disciplinary or enforcement action |
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against, an applicant or license holder that is pending and has not |
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been finally closed or resolved by a final order issued by the |
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commissioner on or before the date on which the application is |
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complete. |
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(e) The department may deny a renewal application under |
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Section 2651.007 if the department determines that the applicant or |
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license holder intentionally made a material misstatement in the |
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renewal application or attempted to obtain the license renewal by |
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fraud or misrepresentation. |
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(f) The department may delay a renewal application if: |
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(1) the applicant or license holder is the subject of a |
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criminal investigation or prosecution; or |
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(2) the deputy commissioner of the title division of |
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the department makes a good faith determination that there is a |
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credible suspicion that there are ongoing or continuing acts of |
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fraud by the applicant or license holder. |
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Sec. 2651.303. NOTICE OF DISCIPLINARY OR ENFORCEMENT |
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ACTION; AUTOMATIC DISMISSAL. (a) The department shall notify a |
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license holder in writing of a disciplinary or enforcement action |
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against the license holder not later than the 30th business day |
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after the date the department assigns a file number to the action, |
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except that this subsection does not apply to a file or action: |
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(1) that is the subject of a pending criminal |
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investigation or prosecution; or |
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(2) about which the deputy commissioner of the title |
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division of the department makes a good faith determination that |
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there is a credible suspicion that there are ongoing or continuing |
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acts of fraud by a person who is the subject of the action. |
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(b) A notice required by Subsection (a) may be provided by |
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e-mail and must provide a license holder fair notice of the alleged |
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facts known by the department on the date of the notice that |
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constitute grounds for the action. |
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(c) A disciplinary or enforcement action is automatically |
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dismissed with prejudice, unless the department serves a notice of |
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hearing on the license holder not later than the 60th business day |
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after the date the department receives a hearing request from the |
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license holder. |
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(d) The department may provide information about an |
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enforcement action, including a copy of a notice issued under this |
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section, to each title insurance company with which a title |
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insurance agent has, or proposes to obtain, an appointment. |
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SECTION 6. Subchapter B, Chapter 2652, Insurance Code, is |
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amended by adding Section 2652.059 to read as follows: |
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Sec. 2652.059. DENIAL OF LICENSE APPLICATION OR LICENSE |
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RENEWAL; APPROVAL. (a) Not later than the 20th business day after |
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the date the department receives a license application or a license |
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renewal under this chapter, the department shall notify the |
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applicant or license holder in writing of any deficiencies in the |
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application that render the application incomplete. |
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(b) Not later than the fifth business day after the date the |
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application is complete, the department shall notify the applicant |
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or license holder in writing of the date that the license |
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application or license renewal is complete. |
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(c) An application is automatically approved on the 30th |
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business day after the date the application is complete, unless on |
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or before that date the department notifies the applicant or |
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license holder in writing of the factual grounds on which the |
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department proposes to deny the application. |
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(d) The department may provide a notice required under this |
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section by e-mail. |
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SECTION 7. Subchapter E, Chapter 2652, Insurance Code, is |
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amended by adding Sections 2652.2015 and 2652.203 to read as |
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follows: |
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Sec. 2652.2015. PROHIBITED GROUNDS FOR DELAY OR DENIAL. |
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(a) Except as provided by Subsection (b) or (c), the department may |
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not delay or deny a license application or a license renewal based |
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wholly or partly on a department audit or complaint investigation |
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of, or disciplinary or enforcement action against, a license holder |
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or applicant that is pending and has not been finally closed or |
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resolved by a final order issued by the commissioner on or before |
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the date on which the initial or renewal application is complete. |
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(b) The department may delay a license application or |
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license renewal if: |
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(1) the applicant or license holder is the subject of a |
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criminal investigation or prosecution; or |
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(2) the deputy commissioner of the title division of |
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the department makes a good faith determination that there is a |
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credible suspicion that there are ongoing or continuing acts of |
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fraud by the applicant or license holder. |
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(c) The department may deny a license application or license |
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renewal if the department determines that the applicant or license |
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holder intentionally made a material misstatement in the license |
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application or license renewal or the applicant or license holder |
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attempted to obtain the license or renewal by fraud or |
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misrepresentation. |
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Sec. 2652.203. NOTICE OF DISCIPLINARY OR ENFORCEMENT |
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ACTION; AUTOMATIC DISMISSAL. (a) The department shall notify a |
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license holder of a disciplinary action or enforcement action |
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against the license holder not later than the 30th business day |
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after the date the department assigns a file number to the action, |
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except that this subsection does not apply to a file or action: |
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(1) that is the subject of a pending criminal |
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investigation or prosecution; or |
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(2) about which the deputy commissioner of the title |
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division of the department makes a good faith determination that |
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there is a credible suspicion that there are ongoing or continuing |
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acts of fraud by a person who is the subject of the action. |
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(b) A notice required by Subsection (a) must provide a |
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license holder fair notice of the alleged facts known by the |
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department on the date of the notice that constitute grounds for the |
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action. |
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(c) A disciplinary or enforcement action is automatically |
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dismissed with prejudice, unless the department serves a notice of |
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hearing on the license holder not later than the 60th business day |
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after the date the department receives a hearing request from the |
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license holder. |
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(d) The department may provide information about an |
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enforcement action, including a copy of a notice issued under this |
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section, to each title insurance agent or direct operation with |
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which an escrow officer has, or proposes to obtain, employment. |
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SECTION 8. Subchapter B, Chapter 2703, Insurance Code, is |
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amended by adding Section 2703.0515 to read as follows: |
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Sec. 2703.0515. CERTAIN REQUIREMENTS PROHIBITED. (a) A |
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title insurance company is not required to offer or provide in |
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connection with a title insurance policy an endorsement insuring a |
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loss from damage resulting from the use of the surface of the land |
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for the extraction or development of coal, lignite, oil, gas, or |
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another mineral if the policy includes a general exception or |
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exclusion from coverage a loss from damage resulting from the use of |
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the surface of the land for the extraction or development of coal, |
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lignite, oil, gas, or another mineral. |
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(b) In this section, "general exception or exclusion" means |
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a provision in a title insurance policy or other title insuring form |
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that provides that title insurance coverage under the policy or |
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form: |
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(1) is subject to, and the title insurer does not |
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insure title to, and excepts from the description of the covered |
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property, coal, lignite, oil, gas, and other minerals in and under |
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and that may be produced from the covered property, together with |
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related rights, privileges, and immunities; or |
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(2) does not cover a lease, grant, exception, or |
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reservation of coal, lignite, oil, gas, or other minerals, or |
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related rights, privileges, and immunities, appearing in the public |
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records. |
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(c) An additional premium or other amount may not be charged |
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for an endorsement to a loan policy of title insurance if the |
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endorsement: |
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(1) insures against loss from damage to improvements |
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or permanent buildings located on land that results from the future |
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exercise of any right existing on the date of the loan policy to use |
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the surface of the land for the extraction or development of coal, |
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lignite, oil, gas, or another mineral; |
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(2) expressly does not insure against loss resulting |
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from subsidence; and |
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(3) was promulgated by the commissioner in calendar |
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year 2009. |
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SECTION 9. Subchapter B, Chapter 2703, Insurance Code, is |
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amended by adding Sections 2703.055 and 2703.056 to read as |
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follows: |
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Sec. 2703.055. REQUIREMENT OF CERTAIN PROVISIONS |
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PROHIBITED. The commissioner may not require by rule, or through |
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adoption of a title insurance policy or other insuring form, that a |
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title insurance policy delivered or issued for delivery in this |
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state: |
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(1) insure against a loss that a person with an |
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interest in real property sustains from damage to the property by |
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reason of severance of minerals from the surface estate; or |
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(2) provide insurance as to ownership of minerals. |
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Sec. 2703.056. EXCEPTIONS; MINERAL INTERESTS. (a) Subject |
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to the underwriting standards of the title insurance company, a |
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title insurance company may in a commitment for title insurance or a |
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title insurance policy include a general exception or a special |
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exception to except from coverage a mineral estate or an instrument |
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that purports to reserve or transfer all or part of a mineral |
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estate. |
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(b) A reduction to, or credit on a premium charge for, a |
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policy of title insurance or other insuring form may not be directly |
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or indirectly based on an exclusion of, or general or special |
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exception to, a mineral estate in the title insurance policy. |
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(c) The inclusion in a title insurance policy of a general |
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exception or a special exception described by Subsection (a) does |
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not create title insurance coverage as to the condition or |
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ownership of the mineral estate. |
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SECTION 10. Section 2703.153, Insurance Code, is amended by |
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amending Subsection (d) and adding Subsections (h) and (i) to read |
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as follows: |
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(d) A title insurance company or a title insurance agent |
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aggrieved by a department requirement concerning the submission of |
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information may bring a suit in a district court in Travis County |
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alleging that the request for information: |
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(1) is unduly burdensome; or |
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(2) is not a request for information material to |
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fixing and promulgating premium rates or another matter that may be |
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the subject of the periodic [biennial] hearing and is not a request |
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reasonably designed to lead to the discovery of that information. |
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(h) The contents of the statistical report, including any |
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amendments to the statistical report, must be established in a |
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rulemaking hearing under Subchapter B, Chapter 2001, Government |
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Code. |
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(i) An amendment to the contents of the statistical report |
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may not apply retroactively. |
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SECTION 11. Section 2703.202, Insurance Code, is amended by |
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amending Subsections (b) and (d) and adding Subsections (g), (h), |
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(i), (j), (k), (l), (m), (n), and (o) to read as follows: |
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(b) The commissioner shall order a public hearing to |
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consider changing a premium rate, including fixing a new premium |
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rate, in response to a written [At the] request of: |
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(1) a title insurance company; |
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(2) an association composed of at least 50 percent of |
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the number of title insurance agents and title insurance companies |
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licensed or authorized by the department; |
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(3) an association composed of at least 20 percent of |
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the number of title insurance agents licensed or authorized by the |
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department; or |
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(4) the office of public insurance counsel[, the
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commissioner shall order a public hearing to consider changing a
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premium rate]. |
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(d) Notwithstanding Subsection (c), [at the request of a
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title insurance company or the public insurance counsel,] a public |
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hearing held under Subsection (a) or under Section 2703.206 must be |
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conducted by the commissioner as a contested case hearing under |
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Subchapters C through H and Subchapter Z, Chapter 2001, Government |
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Code, at the request of: |
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(1) a title insurance company; |
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(2) an association composed of at least 50 percent of |
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the number of title insurance agents and title insurance companies |
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licensed or authorized by the department; |
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(3) an association composed of at least 20 percent of |
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the number of title insurance agents licensed or authorized by the |
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department; or |
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(4) the office of public insurance counsel. |
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(g) If a hearing held under Subsection (a) is not conducted |
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as a contested case hearing, the commissioner shall render a |
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decision and issue a final order not later than the 120th day after |
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the date the commissioner receives a written request under |
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Subsection (b). |
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(h) If a hearing held under Subsection (a) is conducted as a |
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contested case hearing: |
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(1) not later than the 30th day after the date the |
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commissioner receives a request for a public hearing under |
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Subsection (b), the commissioner shall issue a notice of call for |
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items to be considered at the hearing; |
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(2) the commissioner may not require responses to the |
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notice of call before the 60th day after the date the commissioner |
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issues the notice of call; |
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(3) the commissioner shall issue a notice of public |
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hearing requested under Subsection (d) not later than the 30th day |
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after the date responses to the notice of call are required under |
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Subdivision (2); |
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(4) the commissioner shall commence the public hearing |
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not earlier than the 120th day after the date the commissioner |
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issues a notice of hearing under Subdivision (3); |
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(5) the commissioner shall close the public hearing |
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not later than the 150th day after the date the commissioner issues |
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the notice of hearing under Subdivision (3); and |
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(6) the commissioner shall render a decision and issue |
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a final order not later than the 60th day after the record made in |
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the public hearing is closed under Subdivision (5). |
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(i) A party's presentation of relevant, admissible oral |
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testimony in a hearing under this section may not be limited. |
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(j) The commissioner shall consider each matter presented |
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in a hearing under this section and announce in a public hearing all |
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decisions on all matters considered. |
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(k) A party described by Subsection (b) may petition a |
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district court in Travis County to enter an order requiring the |
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commissioner to comply with the deadlines described by this section |
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if the commissioner fails to meet a requirement in Subsection (g) or |
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(h). |
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(l) Subject to Subsection (m), if the commissioner fails to |
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comply with the requirements under Subsection (g) or (h)(6), a |
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combination of at least three associations, persons, or entities |
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listed in Subsection (b) may jointly petition a district court of |
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Travis County to adopt a rate based on the record made in the |
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hearing before the commissioner under this section. |
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(m) If the record made in the hearing before the |
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commissioner is not complete before the request for the court to |
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adopt a premium rate under Subsection (l), the court shall hold an |
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evidentiary hearing to establish a record before adopting the |
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premium rate. |
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(n) After a petition has been filed under Subsection (l), |
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the commissioner may not issue findings or an order related to the |
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subject matter of the petition until after the date the court enters |
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a final judgment. |
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(o) A district court may appoint a magistrate to adopt a |
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rate under this section. |
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SECTION 12. Section 2703.203, Insurance Code, is amended to |
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read as follows: |
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Sec. 2703.203. PERIODIC [BIENNIAL] HEARING. The |
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commissioner shall hold a [biennial] public hearing not earlier |
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than July 1 after the fifth anniversary of the closing of a hearing |
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held under this chapter [of each even-numbered year] to consider |
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adoption of premium rates and other matters relating to regulating |
|
the business of title insurance that an association, title |
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insurance company, title insurance agent, or member of the public |
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admitted as a party under Section 2703.204 requests to be |
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considered or that the commissioner determines necessary to |
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consider. |
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SECTION 13. Section 2703.204, Insurance Code, is amended to |
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read as follows: |
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Sec. 2703.204. ADMISSION AS PARTY TO PERIODIC [BIENNIAL] |
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HEARING. (a) Subject to this section, a trade association whose |
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membership is composed of at least 20 percent of the members of an |
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industry or group represented by the trade association, an |
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association, a person or entity described by Section 2703.202(b), |
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or department staff [an individual or association or other entity
|
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recommending adoption of a premium rate or another matter relating
|
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to regulating the business of title insurance] shall be admitted as |
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a party to the periodic [biennial] hearing under Section 2703.203. |
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(b) A party to any portion of the periodic [the ratemaking
|
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phase of the biennial] hearing relating to ratemaking may request |
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that the commissioner remove any other party to that portion of [the
|
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ratemaking phase of] the hearing on the grounds that the other party |
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does not have a substantial interest in title insurance. A decision |
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of the commission to deny or grant the request is final and subject |
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to appeal in accordance with Section 36.202. |
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SECTION 14. Section 2703.207, Insurance Code, is amended to |
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read as follows: |
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Sec. 2703.207. NOTICE OF CERTAIN HEARINGS. Not later than |
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the 60th day before the date of a hearing under Section 2703.202, |
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2703.203, or 2703.206, notice of the hearing and of each item to be |
|
considered at the hearing shall be: |
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(1) sent directly to all parties to the previous |
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hearing conducted under Section 2703.202, 2703.203, or 2703.206, if |
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the hearing was conducted as a contested case hearing [title
|
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insurance companies and title insurance agents]; and |
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(2) published in the Texas Register and on the |
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department's Internet website [provided to the public in a manner
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that gives fair notice concerning the hearing]. |
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SECTION 15. Section 2703.205, Insurance Code, is repealed. |
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SECTION 16. Section 2703.0515, Insurance Code, as added by |
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this Act, applies only to a title insurance policy that is delivered |
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or issued for delivery on or after January 1, 2012. A policy |
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delivered or issued for delivery before January 1, 2012, is |
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governed by the law as it existed immediately before the effective |
|
date of this Act, and that law is continued in effect for that |
|
purpose. |
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SECTION 17. Sections 2703.055 and 2703.056, Insurance Code, |
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as added by this Act, apply only to a title insurance policy that is |
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delivered or issued for delivery on or after January 1, 2012. A |
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policy delivered or issued for delivery before January 1, 2012, is |
|
governed by the law as it existed immediately before the effective |
|
date of this Act, and that law is continued in effect for that |
|
purpose. |
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SECTION 18. This Act takes effect September 1, 2011. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2408 was passed by the House on May |
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13, 2011, by the following vote: Yeas 134, Nays 1, 2 present, not |
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voting; and that the House concurred in Senate amendments to H.B. |
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No. 2408 on May 25, 2011, by the following vote: Yeas 143, Nays 0, |
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3 present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2408 was passed by the Senate, with |
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amendments, on May 23, 2011, by the following vote: Yeas 30, Nays |
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0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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Governor |