Title Insurance Reform Bills Deliver Needed Price Competition, Transparency that will Benefit Consumers and the Economy
AUSTIN – Texans for Free Enterprise (TFE) today applauded the authors of two pieces of legislation that will bring badly needed reform to outdated title insurance practices in Texas.
“Senator Hancock and Representative Munoz are introducing transparency and rate competition to title insurance in Texas that, if passed, would put title insurance more in line with other forms of insurance. By giving the Insurance Commissioner rate flexibility, through the application of rate bands, title insurance companies will have to compete on rates for the very first time,” said TFE Chairman Doug Deason. “Texas has some of the highest title insurance rates in the nation, across all income brackets and demographics. Senator Hancock and Representative Munoz have taken a strong stand for all Texans who pay too much for title insurance when they purchase or refinance their home. Consumers will be the real winners if these bills are passed into law.”
SB 2203 by Senator Hancock brings much needed transparency to the settlement and closing statements and greater detail to the expense data filed by the title insurance industry. It is imperative that consumers and regulators know where premium dollars are being spent and how they can be reduced.
HB 4239 by Rep. Munoz, in addition to transparency, introduces price competition in a measured way. Instead of providing for a file and use system used for homeowners and auto policies today, it creates flexible rate bands set by the commissioner of insurance, which would allow title insurance companies to set their price within a fixed percentage above or below the promulgated rate.
HB 4239 also makes title insurance more transparent, shining the light of day on rate filings at the Texas Department of Insurance (TDI). It directs that all rate filings at TDI are public information subject to the Open Records Act, and requires all settlement and closing statements to include an accurate statement of the insurance premium, the amount paid to third parties, and an itemization of fees and charges paid to the settlement agent.
The bill also grants standing to policyholders for the first time. Unlike other lines of insurance, title insurance policyholders have no standing at rate hearings, which gives title insurance companies a disproportionate voice at the table when the rate is promulgated.
“The bills filed by Sen. Hancock and Rep. Munoz correct a gross injustice, where consumers are shut out of the rate-setting process, which was created in statute by and for the title insurance industry,” said Deason. “The bills also make title insurance more transparent. The title industry has released very little data on its pricing, and what they have released cannot be reproduced or verified by independent third parties.
“You can’t trust what you can’t verify. By shining the light of day on title insurance pricing practices, Senator Hancock and Representative Munoz are working to help all consumers better understand why they are being overcharged. I applaud Senator Hancock and Rep. Munoz for being such strong champions of title insurance reform.”
Texans for Free Enterprise (http://txenterprise.com and @txenterprise) is a 501(c)4 non- profit, non-partisan organization that unites businesses and individual Texans to defend our free enterprise system and advance public policy that strengthens the foundation and fundamentals of the Texas economy.
Doug Deason is president of Deason Capital Services, and president of the Deason Foundation. He and his father Darwin Deason, both TFE supporters, have a long history of philanthropy and supporting efforts to remove barriers to success for working-class Texans.
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Media contact: Eric Bearse, 512-633-6446