BULLETIN 1989-12
1989 HOUSE BILL
NO. 2497
May 17, 1989
This Bulletin is to advise Kansas title companies and their title agents of a new law that become effective July 1, 1989 in Kansas.
A copy of the entire bill is attached; however, please refer specifically to Section 1(d)(2). It was clearly the intent of the legislature to require the filing of any item which results in a charge to the insured for title insurance or other services performed in connection with real estate transactions by either the title insurance company or its title agents.
In order to implement and comply with House Bill No. 2497, all title insurers must file, prior to July 1, 1989 all material required in Section 1(d)(2) of the law, including every manual or other reference material containing classifications, rules, rates, rating plans and current rate cards.
Furthermore, all title agents and agencies subject to the legislation, must file, prior to July 1, 1989, their current manual of classifications, rating plans, rate cards and all material required by Section 1(d)(2) of the law. In the case of agencies, if the material to be filed by the agency and each agent in the agency would be identical, only one copy of the material needs to be filed but must be accompanied by a listing of the individual agents upon whose behalf it is filed. The format in Attachments 1, 2 and 3 must be used when filing the material. This may be done by using the attached forms and retaining a photocopy of your file or by retyping the form(s) using only the service or transaction descriptions pertinent to your operations. In this regard, we have attempted to include service and transaction descriptions that are common to most title insurance agents, agencies and insurers in this state. However, if you perform services or engage in transactions not included in these descriptions, please describe the service or transaction in the space captioned “OTHER”.
KANSAS BULLETINS
INSURANCE DEPARTMENT
TOPEKA
As used in House Bill No. 2497, it can be assumed that the following terms have the following meanings:
“Classification” means the type of transaction, description, or explanations used to determine what kind of title insurance product and/or title insurance risk a particular rate or rating plans applies to.
“Rules” means the instructions, definitions or other guidance that governs the actual application of a rate or rating plan to a given classification.
“Rates” means the charge per a specified amount of insurance that, when calculated, determines the charge for title insurance.
“Rating plans” means pre-determined formulae or instructions that can be used to modify the otherwise applicable rates or premiums for individual title insurance risks.
“Real estate transaction” means any transfer of interest in real property.
“Services” means notary, escrow, document preparation, filing or other activities performed in connection with a real estate transaction or the sale, service or issuance of a title insurance policy.
Please note that no charge may be made for title insurance or any service performed in connection with a real estate transaction to which the act applies by any title insurance agent, agency or company that has not been filed with the Commissioner.
Also, it is anticipated that filed rates may not produce a reasonable rate for a specific risk. In such situations, an individual risk rate may be filed in accordance with a “Unique and Unusual Rule.” (U&U Rule) A sample copy of a U&U Rule is attached which may be filed by either the insurer, the agent, or both. Once the rule is filed, then individual risk rates can be filed by the entity whose filed rates or charges have been modified in accordance with the rule. It should be emphasized that this rule is to be used only when the characteristics of an individual risk demand special rate considerations.
In situations where, because of competition, inflation, changes in the nature of the described services or transactions, or the rates and charges then on file otherwise become obsolete, new rates for general application to such services or transactions must be filed before they can be quoted or used. Since the rates or charges are not subject to approval this involves only a transmittal to and receipt of the new rates by the insurance department.
Please take such steps as are necessary to file the material required by House Bill No. 2497 prior to July 1, 1989.
KANSAS BULLETINS
HOUSE BILL NO. 2497
AN ACT
relating to title insurance; concerning rate filings therefore and other services in connection with certain real estate transactions; providing for violations; amending K.S.A. 40-1111 as amended by section 19 of chapter 156 of the laws of 1988 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 40-1111, as amended by section 19 of chapter 156 of the laws of 1988, is hereby amended to read as follows: 40-1111. (a) The purpose of this act is to promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate and unfairly discriminatory and to authorize and regulate cooperation among insurers in rate making and other matters under the scope of this act. Nothing in this act is intended: (1) To prohibit or discourage reasonable competition, or (2) to encourage or prohibit, except to the extent necessary to accomplish the aforementioned purpose, uniformity in insurance rates, rating systems, rating plans or practices. This act shall be liberally interpreted to carry into effect the provisions of this section.
(b) This act applies to casualty insurance, including fidelity, surety and guarantee bonds, on risks or operation in the state except reinsurance, other than joint reinsurance to the extent stated in K.S.A. 40-935 and amendments thereto, accident and health insurance, insurance against loss of or damage to, or against liability, other than workmen’s compensation and employers’ liability, arising out of the ownership, maintenance or use of any aircraft.
(c) As used herein, the term “casualty insurance” shall be construed to apply to and include the classes of insurance authorized to be transacted in this state pursuant to paragraphs (b), (c), (d), (e) as limited by subsection (d) of this section, (i), (j), (k), (l) and (m), of K.S.A. 40-1102 and amendments thereto; paragraphs (b), (d), (e), (f), (g) and (h) of K.S.A. 40-1203 and amendments thereto; and K.S.A. 40-1301 and amendments thereto, and this act shall also apply to credit insurance written by a mutual insurance company or by a reciprocal or interinsurance exchange. This act shall also apply to reciprocal or interinsurance exchanges organized or operating under article 16 of chapter 40 of the Kansas statutes Annotated, with respect to the classes of insurance enumerated in the preceding sentence of this section. If any kind of insurance, subdivision or combination thereof, or type of coverage, subject to this act, is also subject to regulation by another regulatory act of this state, an insurer to which both acts are otherwise applicable shall file with the commissioner a designation as to which rate regulatory act shall be applicable to it with respect to such kind of insurance, subdivision or combination thereof, or type of coverage.
(d)(1) Only
for the purpose of [Regulating] filing the rates for title insurance as
specified in subsection (e) of K.S.A. 40-1102 and amendments thereto, all
charges made in connection with the issuance, sale and servicing of title
insurance policies or real estate transactions by title insurance companies,
agencies and agents on property located in counties having a population of
more than [150,000] [10,000] shall be [construed as premium and] subject to
[regulation] filing pursuant to this act, [but] only the portion of such
charges made for the assumption of risk under title insurance policies shall
not be construed as premium for the purposes of K.S.A. 40-252, and amendments
thereto. [Nothing in this subsection
shall be construed to give the commissioner any authority to regulate the fees
charged for any abstractor’s services.]
No provision of this act shall apply to the filing or regulation of
title insurance rates other than the requirements imposed by this subsection.
(2) Every insurance agent, agency or company authorized to transact title insurance in this state shall file with the commissioner every manual of classification, rules and rates, every rating plan, every rate card and every modification of the foregoing which may be used in connection with providing title insurance or other services in connection with real estate transactions on property located in counties having a population of 10,000 or more. No charge may be made by any title insurance agent, agency or company that has not been filed with the commissioner as required by this section. Any service customarily provided by a title insurance agent or affiliated entity that is not included in the rates shall be disclosed when the rates are filed with the commissioner.
New Sec. 2. Failure to file the rates or disclose the information required by subsection (d) of K.S.A. 40-1111 and amendments thereto shall constitute a violation of K.S.A. 40-2404 and amendments thereto and shall be subject to the penalties applicable thereto.
Sec. 3. K.S.A. 40-1111, as amended by section 19 of chapter 156 of the laws of 1988, is hereby repealed.
Sec. 4. This act shall take effect and be in force from and after its publication in the statute book.
Note: Italics indicate new material; brackets indicate deleted material.
KANSAS BULLETINS
CHARGE FOR ESCROW, CLOSING AND/OR OTHER SERVICES
Service Charge
COMMERCIAL ESCROW CLOSING $__________
Includes preparation of contracts, escrow agreements, transfer
of title documents (deed, mortgage, notes, assignments, etc.),
settlement statement (HUD-1), disbursement of funds
RESIDENTIAL REAL ESTATE CLOSING $__________
Includes preparation of contracts, escrow agreements, transfer
of title documents (deed, mortgage, notes, assignments, etc.),
settlement statements. Without assistance of attorney and/or
broker.
RESIDENTIAL REAL ESTATE CLOSING $__________
Includes preparation of contracts, escrow agreements, transfer
of title documents (deed, mortgage, notes, assignments, etc.),
settlement statements. With assistance of attorney and/or
broker.
RESIDENTIAL LOAN CLOSING $__________
Includes preparation of all loan documents required by the
lender including, but not limited to mortgage, deed of trust,
notes, riders, assignments, government regulation reports and
disclosures, disbursement of funds
DOCUMENT PREPARATION when not $__________
Included in closings:
1. deeds
2. mortgages, notes
3. affidavits
4. assignments, releases
5. contract for deed/option contracts
6. real estate contracts
7. escrow deposit agreements
FEES FOR ANCILLARY SERVICES $__________
notary public fees
cash
contract for deed
seller carry back
assumption
equity purchase
exchange of property
loan closing for third party lender
other
FORECLOSURE COMMITMENT
Commitment issued for filing foreclosure proceedings
a. Do not take policy $__________
b. Do take policy $__________
LOT SALE TO BUYER
(not builder)
a. No policy until improvement completed $__________
b. Policy issued for cost of lot $__________
PLATTING COMMITMENT $__________
Issued to governmental body in lieu of attorney’s opinion to
show easements, taxes, mortgages, etc. Nominal amount
INFORMATIONAL COMMITMENT $__________
Issued for “amount to be agreed upon” where customer wants
check of title before sale/mortgage
CONVERT CONTRACT PURCHASERS POLICY TO $__________
OWNERS POLICY
Issued when contract purchaser pays off contract and wants
current policy showing title in his name
MECHANICS LIEN WORK OUT $__________
Obtaining lien waivers, disbursing funds to pay claimants
EXCHANGE CLOSING $__________
Closing transaction having more than one parcel of real
property
DISBURSEMENT OF FUNDS $__________
No closing services but asked to disburse money
DISBURSEMENT OF FUNDS $__________
No closing services, disbursing funds and collecting signatures
on documents furnished to us
INDEMNITY DEPOSIT $__________
Held in escrow, no closing
OTHER (Specify) $__________
$__________
$__________
*SERVICES CUSTOMARILY PROVIDED THAT ARE NOT INCLUDED IN THE ABOVE RATES (LIST)
*If there is a charge for such services, they should be included on the previous page.
KANSAS BULLETINS
COMMERCIAL TITLE INSURANCE RATES
(Properties Except 1-4 Single Family Dwelling Units)
Type of Transaction Rate
OWNERS TITLE INSURANCE POLICY $__________
Policies will be issued to owners, contract vendees and lessees
MORTGAGE TITLE INSURANCE POLICY $__________
Issued to lenders in an amount not to exceed 120% of loan
amount
SIMULTANEOUS-ISSUED MORTGAGE POLICY $__________
Not exceeding the amount of owners policy issued simultaneous
therewith
SIMULTANEOUS-ISSUED MORTGAGE POLICY $__________
Where the amount of coverage exceeds the owners policy
SIMULTANEOUS-ISSUED LEASEHOLD POLICY $__________
Not exceeding the amount of owners policy issued to lessee
REFINANCE POLICIES – Loan Policy $__________
Issued on property as a result of refinancing a previous loan
SECOND MORTGAGE POLICIES – Loan policy issued on $__________
2nd, 3rd or more loans
REISSUE POLICIES – Policies issued on $__________
previously insured property
NEW CONSTRUCTION PENDING DISBURSEMENT $__________
POLICY calling for periodic endorsements for increasing
liability and extending time of policy
NEW CONSTRUCTION OWNERS POLICY $__________
NEW CONSTRUCTION LOAN POLICY $__________
Issued to construction lender on construction loan (includes
binder or construction loan policies)
HOLD OPEN CHARGES $__________
ENDORSEMENT TO OWNERS POLICIES $__________
1.
2.
3.
ENDORSEMENT TO LOAN POLICIES $__________
1.
2.
3.
4.
OTHER (Specify) $__________
$__________
$__________
RESIDENTIAL TITLE INSURANCE RATES
(1-4 Single Family Living Units)
Type of Transaction Rate
SPECIAL COVERAGES $__________
RESIDENTIAL NEW CONSTRUCTION LOAN $__________
POLICY issued with owners policy on new construction
SECOND MORTGAGE POLICIES – Loan policies issued on $__________
2nd, 3rd or more loans
HOLD OPEN CHARGES $__________
RESIDENTIAL OWNERS POLICIES – Policies of title $__________
insurance protecting the owners interest in one – four family
residences
RESIDENTIAL MORTGAGEES POLICIES – Policies of $__________
title insurance protecting the interest of mortgage lenders
SIMULTANEOUSLY ISSUED LOAN POLICIES – A $__________
loan policy issued simultaneously with the issue of an owners
policy in an amount equal to or exceeding the amount of said
loan policy
RESIDENTIAL CONSTRUCTION LOAN POLICY – A $__________
loan policy issued specifically for the protection of the interest
in property taken as the result of the filing of a mortgage for
construction purposes
CONSTRUCTION LOAN BINDER (COMMITMENT) – A $__________
commitment for title insurance issued specifically for the
protection of the interest in property taken as the result of the
filing of a mortgage for construction purposes
DEVELOPMENT LOAN POLICY – A mortgages policy $__________
issued for the protection of the lender who provides the funds
to make improvements to the land so that said land can be
resold for a different purpose (i.e. subdivision development and
subsequent loan sales)
BUILDERS RATE (Residential Owners Policies) - $__________
A rate afforded to builder/developers which is less than the
normal residential owners rate due to discount for volume as
well as simplicity of search and examination
RE-FINANCE RATE FOR RESIDENTIAL $__________
MORTGAGEES POLICIES – A rate afforded to home
owners where a lenders policy is required by the lender as the
result of the refinance of the owners existing financing
RE-ISSUE RATE – A rate afforded to the owner as a seller $__________
or borrower due to the fact that the title at issue had
previously been searched and examined for durability as
evidenced by the issuance of a policy of title insurance with a
prior date.
MULTIPLE LOT OR TRACT CHARGES – A charge made $__________
in connection with the issuance of either an owners or a
mortgagees policy when the subject property consists of more
than one chain of title.
ABSTRACT RETIREMENT RATE – A reduction in the $__________
premium charge as a result of being furnished an abstract of
title on the property to be insured and that the abstract
remains the property of the insured.
ENDORSEMENTS – Coverages added to the basic insurance $__________
contract which add additional coverage to the insured and
consequently additional risk to the insurer. Specify type of
endorsement and the charge/rate for each.
LEASEHOLD POLICIES – Policies issued to protect the $__________
interest of a lessee in real property insuring the validity of an
option to purchase granted to a lessee.
COMMERCIAL TITLE INSURANCE RATE - $__________
Premiums charged on policies issued on transactions involving
commercial, multi-family, or industrial real estate.
CANCELLATION FEE – A charge made for actual work $__________
performed on a title insurance file that for some reason or
circumstances does not result in the issuance of a title
insurance policy
OTHER – (Specify) $__________
$__________
$__________
TITLE INSURANCE
SPECIAL RULE FOR RATING UNIQUE
OR UNUSUAL CONDITIONS
IF IT CAN BE CLEARLY DEMONSTRATED THAT A RISK PRESENTS UNIQUE OR UNUSUAL CONDITIONS OF EXPOSURE OR HAZARD SUCH THAT THE APPLICATION OF THE NORMAL RATING PROCEDURE DOES NOT PRODUCE A REASONABLE AND EQUITABLE RATE FOR THE RISK, SUCH RISK MAY BE TREATED ON AN INDIVIDUAL RATE BASIS.
REQUESTS FOR TREATMENT UNDER THIS RULE SHALL BE SUBMITTED TO THE INSURANCE COMMISSIONER AND SHALL BE ACCOMPANIED BY EVIDENCE SPECIFICALLY SETTING FORTH THE REASONS FOR THE REQUEST ALONG WITH THE FULL SUPPORTING INFORMATION EVIDENCING THAT THE SPECIAL TREATMENT IS NOT A VIOLATION OF K.S.A. 40-2404(14) RELATING TO REBATES AND OTHER INDUCEMENTS IN TITLE INSURANCE. SUCH RATES MUST BE FILED WITH THE COMMISSIONER OF INSURANCE WITHIN THIRTY (30) DAYS AFTER BEING MADE EFFECTIVE.