[31 PA. CODE CH. 125] Title Insurance Rebates [28 Pa.B. 4796] The Insurance Department (Department) hereby proposes to amend Chapter 125 (relating to title insurance rebates) to read as set forth in Annex A, under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412), sections 701(4) and 731 of The Insurance Company Law of 1929 (40 P. S. §§ 910-1(4) and 910-31) and sections 635 and 636 of The Insurance Company Act of 1921 (40 P. S. §§ 275 and 276).
Purpose
The purpose of this proposal is to amend Chapter 125 to make it consistent with the act of December 21, 1995 (P. L. 714, No. 79) (Act 79). This Chapter, adopted in 1968, identified and defined prohibited rebating and inducement activities associated with title insurance transactions.
Explanation of Regulatory Requirements
The Department has determined that § 125.1(b) (relating to prohibited rebates and inducements) and §§ 125.5--125.9 should be deleted from the chapter as sections without statutory basis or are redundant and unnecessary.
Section 125.1(b) is being deleted as the controlling law, section 730 of the Insurance Company Law (40 P. S. § 910-30), was repealed in 1995. Section 10 of Act 79, further amended section 731 of The Insurance Company Law (40 P. S. § 910-31) having to do with ''Commissions; Other Considerations Prohibited.'' Act 79 specifically identifies and defines activities which constitute per se unlawful inducements. Sections 125.5--125.9 do not enhance the prohibitions already delineated in section 10 of Act 79, and are, therefore, found to be redundant.
Minor revisions to § 125.3 (relating to increasing the charge or fee) have been made to clarify the nature of the prohibited activity.
External Comments
Comments regarding these proposed amendments were solicited from the Pennsylvania Land Title Association (PLTA), which represents the title insurance industry. The PLTA agreed with the Department that this chapter should be amended as recommended.
Fiscal Impact
There is no fiscal impact as a result of the proposed amendments.
Paperwork
The proposed amendments will affect all licensed title insurers, agents and approved attorneys in this Commonwealth.
Effectiveness/Sunset Date
The proposed rulemaking will become effective upon final publication in the Pennsylvania Bulletin. Because the rulemaking proposes to amend the chapter, no sunset date has been assigned.
Contact Person
For information on this matter, contact Peter J. Salvatore, Regulatory Coordinator, 1326 Strawberry Square, Harrisburg, PA 17120 within 30 days of this publication.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 14, 1998, the Department submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Insurance Committee and the Senate Banking and Insurance Committee. In addition to the submitted proposed rulemaking, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of that material is available to the public upon request.
If IRRC has objections to any portion of the proposed amendments, it will notify the Department within 10 days after the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for the Department, the Governor and the General Assembly to review these objections before final publication of the proposal.
M. DIANE KOKEN,
Insurance CommissionerFiscal Note: 11-175. No fiscal impact; (8) recommends adoption.
Annex A TITLE 31. INSURANCE PART VIII. MISCELLANEOUS PROVISIONS CHAPTER 125. TITLE INSURANCE REBATES § 125.1. Prohibited rebates and inducements.
[(a)] A title insurance company or agent or approved attorney of a title insurance company may not pay to an approved attorney, real estate broker, real estate salesman, attorney at law or other person, partnership or corporation, who or which, from time to time, apply to a title insurance company or to an agent of a title insurance company for title insurance and who at the time of the application are not licensed agents for a title insurance company, compensation, consideration, benefit or remuneration directly or indirectly.
[(b) The payment of compensation, consideration, benefit or remuneration shall be deemed to be an illegal rebate and inducement, except that a title insurance company or an agent of a title insurance company may pay to an attorney at law in good standing (but not to an approved attorney of the title insurance company) or a real estate broker licensed in this Commonwealth, a cash commission for procuring a title insurance for a client in a real estate transaction, if the cash commission is not in excess of that set forth in the schedule of commissions filed by the title insurance company with the Insurance Department.]
§ 125.3. Increasing the charge or fee.
Increasing the charge or fee for a title insurance policy by an amount and [payment of] returning any or all of the added amount [or increase] to [anyone] any person is an illegal rebate and inducement.
(Editor's Note: The Department is proposing to delete §§ 125.5--125.9 as they currently appear in the Pennsylvania Code at pages 125-2 and 125-3 (serial pps. (143746) and (143747).)
§§ 125.5--125.9. (Reserved).
[Pa.B. Doc. No. 98-1553. Filed for public inspection September 25, 1998, 9:00 a.m.]
