Current through Register Vol. 49, No. 6, March 15, 2024
(1) Annual On-site
Review Required Under Certain Circumstances.
(A) Insurers must conduct in each calendar
year, after the initial contract year, an on-site review of agent/agency
practices for each agent or agency that is currently appointed as a policy
issuing agent. A report of such review shall be made to the director pursuant
to subsection (2)(A) of this rule.
(B) The on-site review required under this
rule constitutes minimum insurer review levels.
(2) Standards of Annual On-site Review.
Insurer shall conduct an annual on-site review of underwriting, claims, and
escrow practices of agencies where commitments and/or policies of the insurer
have been issued that is reasonably designed to detect violations of Chapter
381, RSMo, compliance with the Issuing Agency Agreement and compliance with the
underwriting standards and guidelines as established by the insurer. The
insurer annual on-site review shall provide, at a minimum, for the following:
(A) Underwriting Practices and Claims. The
title insurer shall review the agency's adherence to its established
underwriting standards. The title insurer shall review the agency's procedures
for notification of claims according to the terms of the Issuing Agency
Contract between the title agency or agent and the insurer and the terms
contained in the insurer's policies of title insurance;
(B) Insurer Remittances. Each on-site review
shall verify that the funds held on behalf of the insurer are reasonably
ascertainable from the books of account and records of the title agency or
agent and are sufficient to satisfy the obligations of the title agency or
agent to the insurer. Each on-site review shall verify that remittances are
being paid to the insurer by the policy issuing agent in a timely manner in
accordance with section 381.038.3, RSMo;
(C) Insurer-Agency Contract. Each on-site
review shall include a review of the title insurer and title insurance
agency/title insurance agent contracts to ensure a) the contract sets forth the
responsibilities of each party and, when both parties share the responsibility
for a particular function, specifies the division of responsibilities, and b)
the contract is up-to-date and properly executed;
(D) Annual Statement. The title insurer shall
obtain from the title insurance agent, or from the title insurance agency if
the title insurance agent is employed by a title insurance agency, a statement
of financial condition of the title insurance agent or title insurance agency
as required pursuant to section 381.023.2(2), RSMo, which includes an income
statement and balance sheet or federal tax return showing the condition of the
title insurance agent/agency affairs as of December 31 of the preceding year,
or fiscal year. This statement of financial condition shall be certified by the
title insurance agent or the title insurance agency's designated agent as being
a true and correct representation of the financial condition. The title insurer
shall document its receipt of the title insurance agent's or title insurance
agency's statement of financial condition in the title insurer's on-site review
report and shall maintain the documentation provided by the agent/agency in
support of such statement for a period of at least four (4) years;
(E) Affiliated Business. The title insurer
shall review the title insurance agent's affiliated business arrangements for
conflicts of interest and regulatory compliance;
(F) Orders. Each on-site review shall
reconcile the title agency or agent's orders with commitments, title searches,
and title policies of the insurer, and collection of premiums on behalf of the
insurer;
(G) Commitments. Each
on-site review shall include a review of:
1.
The title insurance agent's procedure for tracking issued commitments of the
insurer;
2. The title insurance
agent's practices relating to cancellation of commitments of the insurer on
transactions that do not close; and
3. The title insurance agent's procedures for
follow-up after closing to track status of outstanding conditions required for
timely issuance of policies of the insurer;
(H) Voiding Policies. Each on-site review
shall include a review of the title insurance agent's procedure for voiding
policies of the insurer according to the terms of the Issuing Agency Contract
and other guidelines as may be established from time-to-time by the
insurer;
(I) Escrow, Security, and
Settlement File Tracking. Each on-site review shall include a review of the
title insurance agent's tracking of its open escrow files, security settlement,
or closing files where commitments or policies of the insurer have been
issued;
(J) Policy Register. Each
on-site review shall include a reconciliation of policy jackets provided to the
title insurance agent by the insurer, compared to existing outstanding
inventory and policies of the insurer issued by the title insurance
agent;
(K) Policy Issuance. Each
on-site review shall include a review of the title insurance agent's files,
where commitments or policies of the insurer have been issued, to determine the
average length of time between the issuance of the title policy and either all
of the requirements to insure have been met or special circumstances for policy
delay as contained in
20 CSR
500-7.090 have been met; and
(L) Escrow Practices and Account
Reconciliation. For those agents performing escrow, security settlement, or
closing services pursuant to section
381.022,
RSMo, the title insurer shall review the title insurance agent's closing
procedures and shall include a sample of escrow closing files where commitments
or policies of the title insurer have been issued, and based upon the findings
of a review of the monthly reconciliations of all of the fiduciary trust
accounts, as certified by the title agent or agency to the insurer, prepared by
the title agent or agency. The review shall include a determination of
compliance with the following:
a) use of
escrow agreements;
b) adherence to
the "good funds" requirements;
c)
deposit practices;
d) disbursement
of funds in compliance with written instructions; and
e) recording of all deeds, releases, and
other documents required of the title insurance agent.
(3) Insurer's On-site Review
Report (Form T-6A and T-6B).
(A) Insurers
conducting an annual on-site review are required under section 381.023.4, RSMo,
to report the findings to the director. This report shall be made utilizing the
Insurer's On-site Review Report form (Form T-6A) and Title Insurer's On-site
Review Sampling Methods (Form T-6B), or any form that substantially comports
with the specified form.
(B) Review
Reports T-6A and T-6B shall be submitted to the director within one hundred
twenty (120) days of the completion of the review, except that findings
relating to Section 14, Escrow Practices and Account Reconciliation, of Form
T-6A, that do not comply with the escrow standards of the insurer, shall be
submitted to the director within ten (10) days of verification of such
findings.
(C) The title insurer
shall complete Form T-6B for each title insurance agent on-site review report.
Form T-6B shall be deemed by the department to be a trade secret as defined by
section
417.453(4),
RSMo, inasmuch as such data possess economic
value by virtue of its confidential status, the same or like information is
unavailable through other sources, and insurers have made reasonable efforts to
maintain the confidentiality of the data. As such, Form T-6B shall be
considered confidential communications and immune from requests made under
Chapter 610, RSMo, nor shall such data otherwise be made available to the
public or unauthorized individuals except in the manner and form prescribed by
this rule.
*Original authority: 374.045, RSMo 1967, amended 1993,
1995, 2008; 381.023, RSMo 2007; and 381.042, RSMo 2000, amended
2007.