P-24 Splitting Title Premiums in Texas

P-24 Independent Agent Online Discussion 9-25-2007

Commissioner Geeslin Allows 30-day Extension to Consider P-24

Latest P-24 News:

9-25-2007
Title with Texans holds Online Meeting on P-24 issue
TitlewithTexans held an online meeting with over 35 independnent Title Agents yesterday.

The guests included:

Bob Philo, Western Region Counsel, Southern Title Insurance Corp.
Terry Grantham, Owner, West Texas Title Company, Lubbock
Gregg Lyssy, President, Mission Title Company, San Antonio

There were over 35 Independent Title Agents participating on the call and were able to ask questions of the guest during the call.

The goal of the meeting was to provide independent Title Agents information about the "compromise" proposal of the TLTA Board, Metro Agents, ITAT and Sierra Title. In addition, we discusssed the background of P-24 and the instructions from the Commissioner at the September 5, 2007 Rules Hearing.

We discussed the pros and cons of the compromise proposal and how this proposal if passed would effect a diversity of business models which exist in the market today.

9-12-2007
Title with Texans will host online meeting to discuss Solutions for P-24.
Join other Independent Title Agents to discuss recommendations to the Commissioner of Insurance for changes to P-24. TitlewithTexans.com is sponsoring a FREE Online Meeting to get your input on this important issue. You have a choice. You can allow others to make recommendations to the Commission which will ultimately determine how or if you split premiums or you can add your voice to the discussion.

Date & Time: Friday, September 25, 2007; 9:30 a.m. - 10:30 a.m. - CST

To Register Go to:

As you know, buying or selling Title Evidence and Examination with other Title Agents is regulated by the Texas Department of Insurance Rules. The Rule that regulates Premium splits between Title Agents is Procedural Rule 24 (P-24.)
P-24 is controversial because in Texas it is difficult to reach a balance between Agents in metropolitan areas (Metro Agents) and those in rural communities (Small County Agents.) On September 5, 2007, the TDI Commissioner Mike Geeslin heard testimony regarding proposed changes to Rule P-24 and at the end of the Hearing decided to grant a 30-day extension for additional comments.

P-24 is important Independent Title Agents. The following web pages may give you a better understanding of P-24 issues and you can listen to Testimony and the Commissioner’s comments at the Hearing:

q TitlewithTexans.com P-24 Page
q TLTA Breaking News 9-6-2007
q TDI Hearing Audio – Docket 2668 Part 5 discusses keeping Comments open 30 days

Please attend this “Online” Meeting and bring your SOLUTIONS and recommendation for changes to P-24. The Commissioner was gracious enough to extend the Comments portion of the Biennial Hearing and we should assist the Commission with concrete suggestions. Please attend this online meeting with an open mind. Independent Agents consist of both Metro Agents and Small County Agents so our input should be important to the Commissioner. Our panelists include a Metro Agent, a Small County Agent, and an Underwriter with no Direct Operations

Moderator: Paul Cones, Integrity Title Company

Panelists:




Steps to Register and Join Online Seminar

Register for Seminar at:


Register for Online Meeting at:

Log On to Online Meeting via your computer. Call in via telephone for audio portion of meeting.

As an Attendee, you will be able to submit your comments and questions during the discussion and have those read during the online meeting.




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9-7-2007
TLTA AD-Hoc Committe Recommendation

An AD-Hoc Committee of TLTA in response to the Commissioner’s directive to take Item 2006-65 and address his four items of concern is going to take to the Board (on Sept. 17th in Austin at 9:00 am) King’s Item- 65 with the following amendments:

1. Change the 100% and 0% numbers back to the original 90% and 10%
2. Amend to allow not only contiguous counties to deviate by PWA but also companies within the same county
3. Request that the $125,000 threshold be moved to $ 150,000 in five years, and
4. Parties engaging in such transactions must be paid within 30 days of the issuance of the policy, if not before.


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9-6-2007
TitlewithTexans email to Independent Agents following 9/5/2007 Hearing

Independent Title Agents:

On September 5, 2007, at the 2006 Texas Biennial Rules Hearing, Mike Geeslin, the Commissioner of Insurance heard testimony regarding the proposed changes to Procedural Rule 24 (P-24.) In response, Commissioner Geeslin agreed to leave the record open for 30 days for further comments. Commissioner Geeslin asked that Parties concerned about this issue work together to find common ground on P-24.

Background:

Last week and prior to the Hearing, an Ad-hoc Committee of TLTA met with representatives of Sierra Title to discuss an amendment to Sierra Title's proposed Agenda Item 2006-65 affecting P-24 and premium splits. A compromise was reached between TLTA and Sierra Title. Prior to this compromise, TLTA had agreed to accept the Staff recommendation (see below) so long as the PWA (Prior Written Agreement) language was NOT deleted.

2006-65 Sierra Title / TLTA Compromise [Click Here for Full Text]

Under $125,000

Agent providing Title Evidence and Examination would earn 100% of the Premium and NO PWAs allowed; UNLESS, the Closing Agent is in a "contiguous" County and a PWA is in place for not less than 90 days prior

$125,000 or greater

50/50 Split between Agent providing Title Evidence and Examination and Closing Agent unless a PWA is in place for not less than 90 days prior


2006-67 Staff Recommendation [Click Here for Full Text]

Over $100,000

30% Furnishing Title Evidence
30% Title Examination
40% Closing the Transaction

$100,000 or less

60% Furnishing Title Evidence
30% Title Examination
10% Closing the Transaction

Note: The staff recommendation 2006-67 would eliminate all PWAs.

The Commissioner's gave those present at the Hearing "Marching Orders" and other issues to consider:

o The Department of Insurance needs to make sure "Rural" and/or "Small County" Agents remain financially viable
o The industry should indentify the party (Agent) most at risk to make sure they receive a reasonable rate of return
o The fees MUST BE "commensurate" with the services provided

A couple of other important statements the Commissioner made were:

o The industry needs to find a long term, permenant solution so P-24 will not be revisted in two years
o A direct quote from Commissioner Geeslin was, "Think outside the box"


A few Comments from those tesifying yesterday inlcuded:

o We MUST have Prior Written Agreements in some cases or this is a "non-starter" for many agents

o 100% of the Premium (for under $125,000) seems to be one-sided - 0% is not a number; why not keep the 90/10?

o Requirements of 90 days prior for PWAs is too long; particularly for Commercial Transactions; 30 days might we workable

o Is the 90 days prior to "order being placed" or prior to Closing? This does not appear to have been addressed

o PWAs for contiguous counties will give an unfair advantage to Underwriter Directs who are licensed in many counties

These comments may serve as food for thought as you make your suggestions. As the Commissioner said, we need to THINK OUTSIDE THE BOX and work toward a P-24 agreement that satisfies the needs of Rural, Small County, Metro and Underwriter Direct Agents. The problems with P-24 are fairly well defined. What we need are SOLUTIONS!

The Commissioner seemed sincere in his desire to find a workable solution to the P-24 issue. Let 's do what we can as independent Title Agents to help the Commissioner.



Make comments directly to the Commissioner by sending them to Gene C. Jarmon, General Counsel and Chief Clerk, Texas Department of Insurance, William P. Hobby Jr. State Office Building, P. O. Box 149104, Austin 78714-9104 by 5 p.m. Oct. 5, 2007.



Please add your comments, suggestions and solutions below and we will post those on this site and make sure those are forwarded to TLTA and (ITAT) Independent Title Agents of Texas.

Thank you,

Paul

Note: We realize you may have recieved information from TLTA regarding this issue and we do not want to duplicate TLTA's efforts. We simply want the perspective of Independent Title Agents to be heard loud and clear.

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P-24 Comments & Suggestions Message Board

Suggestion 1: Forget the PWA because the big companies will just call the rural companies as soon as this passes and strong arm them to get PWA how they want it anyway. Pick a number and take the negotiation out of it so everyone is on the same page. Also make better definitions of the difference between "title evidence" and "title examination" because nobdy seems to understand the difference. Also make it clear that issuing the policy does not give you any more percentage because too many people think that entitles them to get more but the rule does not mention anything about that.

Suggestion 2: If an agent is receiving 100% for Title Evidence, what about the company that actually issues the policies? If they are receiving 100% are they also going to be required to issue?

Suggestion 3:
1. Remove P-24 entirely and require policies to be issued by an agent/direct operation licensed in the county where the property is located. NO premium split. Requestor may close and retain all closing fees. Home office issue remains for multi-county transactions.

2. 50-50 ok if before underwriter and issuer pays all underwriter (15%) premium. (Basically the current 60-40 division.)



My basic problem with P-24 is that we provide the full plant service (records, search, review,corrective action, customer contact/relations and risk) but give up a significant portion of the premium because we did not 'receive the initial order' while the closer retains all fees they wish to charge i.e., escrow, copies, email, etc.



We have had instances where we insisted on P-24 division and the underwriter/direct operation/out of county firm would state: "If you do not agree to this division, we will go to your competitor." We hear nothing else even though we are the only agent licensed for this county. We later see the transaction clear the courthouse. Who provided the title evidence and policy? No one knows!



Suggestion 4: When it comes to splits, I always get the short end of the stick. The big city agents want the commitment RUSH! RUSH! RUSH! and then they take 6 to 8 months to pay the split, if at all. When the TDI was called to ask how to handle the nonpayment, I was told that they don't like to get mixed up with financial areas. On a property that was on the list at $6M, through a split, I got a check for a whopping $500.00 as this was calculated by a New York firm because they had multiple properties in multiple states. I think splits should be done away with entirely. There is no reason for Houston or Dallas to want 60 to 80% for closing, when they don't have to keep up a plant. I think the policy should be issued in the county where the land lies and let the metro companies compete in their own areas and leave us alone.




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Comments below were made Prior to the
September 5, 2007 Rules Hearing

Independent Title Agent Poll

Attention Independent Title Agents
Vote Now!


A change to Procedural Rule 24 (P-24) has been proposed by the TDI staff regarding:

(i) furnishing title evidence
(ii) furnishing title evidence and examining title
(iii) closing a transaction, or
(iv) closing a transaction and examining title

How do you feel about the proposed staff recommendation for changes to P-24 and the TLTA's position regarding this proposed Rule change?

Please take a moment to read the staff recommendation, the TLTA position, answer the poll questions and then Vote. Feel free to add comments and suggestions. YOUR IDENTITY WILL REMAIN ANONYMOUS!

Your business may be effected by a change to Rule P-24. The opinions of Independent Title Agents are important as the Commissioner considers these proposed rule changes. Thank you for taking your time to add your voice to this discussion.

Notice of 2006 Texas Title Insurance Biennial Hearing

Agenda Item - 2006-67 - P-24 Staff Recommendation


Note: On Thursday, August 30, 2007 an Ad-hoc Committee of TLTA had a meeting with representatives of Sierra Title to discuss the amendment of Sierra Title's proposed Agenda Item 2006-65 affected P-24 and premium splits. In essense it keeps PWA's "Prior Written Agreements" so long as there are at least 90 days prior to closing; and mandates no fees splitting for transactions less than $125,000 (unless you are in a contiguous county and have a PWA at least 90 days prior to closing) and a 50/50 split on transactions greater than $125,000 unless a PWA is in place at least 90 days prior. The complete text is below. How do you feel about this? Please add your comments below.

P-24 Amendment agreed upon between TLTA and Sierra Title

Steps to Participate in P-24 Poll

1) Review TDI Staff Recommendation (P-24)

2) Review TLTA Position (Below)

3) Answer Polling Questions ====>>>

4) Vote ====>>>

5) Add Comments & Suggestions
Express your opinion!

Agenda Item 2006-67 - Re: P-24
Do you agree with the TDI Staff recommendation for changes to P-24?


Agree w/ TDI Staff Reccomendation
Agree w/ TLTA Position allowing Agent Agreements
Leave P-24 the way it is



SEE POLL RESULTS


Thank you for Voting!



TLTA Position
Agenda Item #2006-67
Filed by: Texas Department of Insurance
Date filed: Sept.7, 2004
Amends: Procedural Rule P-24 to set reasonable percentage rates for payment of services for furnishing title evidence and title examination and to remove language in the rule that often prevents urban and rural agents from receiving the same amount of premium for the same work.
TLTA Position: SUPPORT, but only if Prior Written Agreement provision is not deleted


Below are comments from Independent Title Agents related to proposed Rule change:

Comment 1: Need some protection for low value policies. We have several that are less than 50k. They are not economical to process now, even in house, and to give up 40% of premium after underwriter is cost prohibitive. Should require underwriters with no agents in the field to absorb the underwriter portion (15%) in their identified division.

Comment 2: Our company policy follows P-24 recommendations and do not have separate agreements.

Comment 3: ...are taking money from those of us that are having a hard time anyway and giving it to the XXXXX and the XXXXX and leaving those that work in the small counties with nothing that we can help our own businesses with...it needs to be left alone!!!

Comment 4: If the issue is with the rural agents then consider a minimum county population for the guidelines to pertain to.

Comment 5: I agree with setting a standard split across the board without the need to negotiate but differentiating between providing title evidence and examining is a waste of time. Providing title evidence without examining and putting in a commitment is sometimes more work and nobody does it anyway. Also there needs to be a clarification that issuing the policy does nothing to enhance your split.

Comment 6: I agree with the Staff Recommendation to fix the premium splits. In our market we complete with Agents who are purchasing Title Evidence from Underwriters for $50 to $75 per file so the Underwriters can write the Policies. By doing so, the title industry is diminishing the value of its product and making it more diffuclt for independent agents to compete. If the Insurance Commissioner thinks $50 is the true cost of Title Evidence, which we know it's NOT, then expect rates to continue to decline.

Comment 7: In order to "furnish title evidence" you have to "examine title" so that you can present the evidence in such a way that it can be "examined". Under the TDI proposal you do the same work for half the money, so some clerk can "examine" title. These items need to be kept together and the "opt out" written agreement provision deleted as proposed by TDI. With the loose standards for home office issue, urban agencies which control business will just want a run sheet, no commitment, will prepare their own commitment and close and issue.

Comment 8: This is likely one of the most frustrating things we deal with. You establish policy based on the rule to give your employees guidelines to follow but you might as well not even bother. Practically every call we get begins with an offer that never follows P-24 and is less than what we feel our services are worth and ends with a threat that if we do not take what is offered we will get nothing. If we crater, we often find the work required makes us regret we took less. The "prior written agreement" language makes P-24 useless. We work in a regulated environment. Regulate the premium splits. No negotiating.

Comment 9: I suggest changing the language, "Any payment in excess of sums calculated by use of the percentage specified in this Rule shall be deemed to be an unreasonable and excessive amount." to "Any payment less than the sums calculated by use of percentages specified in this Rule shall be deemed to be a violation of P-22 (D) as such payment would not be commensurate with the services actually perfomed."

Comment 10: Without striking the language concerning prior written agreements, there would be no point to this change. Rural agents would still be faced with the pressure to agree to take less to get the business. The split should be non-negotiable, so that all agents are treated the same.

Comment 11: Allowing prior written agreements negates the entire rule change.

Comment 12: What is the purpose of having a rule if no one follows it? We get calls from underwriter owned offices in Houston and Dallas daily. They never want to follow the P-24 and if we do not agree to their offer they go to another local office who will sell out their services. Often the underwriter chooses another underwriter's agent and sticks it to their own agents. TDI needs to enforce whats there and our legislature needs to protect the local independent TEXAS agents.

Comment 13: I wouldn't see a problem with making the split the same across the board, if "furnishing title evidence" and title examination" were not separate. You have to examine in order to issue a commitment. I don't think an examiner would want to examine someone's hand written report and my abstractors do not have the time to type the reports, which would also cut into any money made on the premium split to begin with. I personally haven't had a problem with prior written agreements, but I do spend ALOT of time getting that premium split paid to me in a timely manner. So my opinion is leave it as it is, but do something to regulate the time frame that split has to be paid to the agent providing the service.

Comment 14: If it is changed, our company will likely stop taking out of county orders. They are hardly worth our time under the current rule. The only other title company in our county already severely limits their out of county orders, so we are getting most of them right now, even from companies that share the "other guy's" underwriters. Then the out of county title companies can come do stand-ups in our county or even better set up their own company here so they can deal with rural acreage and our County Clerk, and then maybe they will realize why I think its funny when they ask for their title evidence order back in 3 days.

Comment 15: Regarding Comments 7 & 14, if you knew you would get a split of either [30% or 60%] or [60% or 90%] depending on the dollar amount of the transaction, as required by the staff recomendation for P-24, would this not solve the problem of getting too little per transaction? I suppose you could choose to sell only "Examined" title searches to get the larger premium split.

Comment: 16: 15, my concern is that under the new rule, most orders will be for title evidence only since "Examination" would be worth 30%, I'm assuming out of county companies would claim they will do the examining...but as was mentioned, "furnishing title evidence" requires examining the title.

Comment 17: What is our recourse? Work was done in May, closed in June, not yet paid (in August) because we will not sign a T-OO for a 60-40 split with us getting 40 on a $54k deal. Apparently, we sign or get nothing, including expenses.

Comment 18: The proposed P-24 amendment is not satisfactory for small agents. Sub par b is a step in the right direction in that small firms need protection on low value projects. However, the reduction in the 60-40 provision to 50-50 is a sell out to larger firms that do not have agents in an area. We, as a small firm, maintain a full record office and need some compensation from those that use that service. Giving the large firms that call demanding a short time frame that requires local projects to be delayed a larger percentage when they also close the transaction is not realistic.

I recommend that all premium go to the office supplying title information, regardless of the project value, with the closing office retaining all closing fees. The information supplier should also issue the policy. This will save time and effort for all as there will be no need for a T-OO (no split) and no the related bookkeeping/tracking/overhead for the Statistical Summary.

It appears that, again, TLTA is looking out for the large companies in the metropolitan areas and underwriter direct operations at the expense of the small agents in rural areas. One option to protect our investment and firms, will be to adopt a policy of non-support for firms requesting us to provide title evidence. They can get a landman ($500 per day) or send in one of their employees to do a standup examination at the courthouse.