Public Hearing Set in New York to Examine New Title Regs
January 4, 2018
The New York Assembly Standing Committee on Insurance will hold a public hearing to evaluate new title insurance regulations that clarify rules about marketing expenses and ancillary fees that title agents or title insurers may charge.
The January 12 hearing comes after several legislators wrote to the state’s Department of Financial Services (DFS) seeking a delay in implementation of the regulation for six months and the department’s subsequent announcement that it would delay enforcement of portions of the new regulation until February.
The purpose of the hearing is to examine the implementation of these regulations, their subsequent impact on consumers and the title insurance industry to determine if the regulations have reduced costs for consumers while maintaining a healthy and competitive title insurance market.
On Dec. 19, the DFS announced that “given the important consumer protections and impact of the necessary reforms of the title insurance industry,” it would not enforce the regulation until Feb. 1, 2018. The regulation was slated to go into effect Dec. 18, but three New York lawmakers had asked the DFS for a delay.
In a letter to Superintendent Maria Vullo, the head of the Assembly’s Insurance Committee, Kevin Cahill, wrote that members of the legislature and industry officials have “serious concerns” about the title insurance regulations. State Sen. James Seward, who chairs the Senate Insurance Committee, shared the same thoughts in a letter saying that he was concerned the regulation would increase “costs to consumers, disruption in the real estate market, and put small businesses at risk. Of equal concern, I have seen no actuarial justification for the serious overreach that is contained within (the regulation).”
Since the final adoption of the regulations, members of the title insurance industry have shared concerns with the committee. These include how insurers and agents will be able to market themselves following the final adoption, the requirement for insurers to restate six years of prior expenses and certify their compliance with the new regulations or agree to implement a five percent rate reduction for all categories of title insurance policies with no expiration date, as well as whether insurers, agents and title closers will be able to cover their costs due to the caps placed on certain categories of ancillary and discretionary fees.
Another regulation finalized by the state and is in effect requires title insurance companies or agents that generate a portion of their business from affiliates to function separately and independently from any affiliate and be open for business from other sources.
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