New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IX - Unfair Trade Practices › Part 228 - TITLE INSURANCE RATES, EXPENSES AND CHARGES › Section 228.0 - Scope and purpose

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Following
				examinations, investigations and analysis relating to the title insurance
				industry, the Department of Financial Services ("Department") has identified
				concerns regarding certain practices that impact consumers and result in higher
				premiums and closing costs, including those that violate Insurance Law section
				6409(d). This regulation
				thus addresses such practices and provides specific requirements. Consumers of
				title insurance usually rely upon the advice of real estate professionals,
				including attorneys or real estate agents, who order the policy on their
				behalf. Consumers also typically pay any invoice presented at the closing
				without seeking documentation or further clarification. The Department seeks to
				protect consumers from unnecessary costs stemming from practices that violate
				the Insurance Law.
(b) The
				Department's investigation of the title insurance industry found that each year
				millions of dollars are spent by title insurance corporations and title
				insurance agents, which the industry has termed "marketing costs", provided to
				attorneys and other real estate professionals involved in the purchase of title
				insurance to induce title insurance business, examples of which include meals,
				entertainment, gifts, vacations, and free classes to select individuals. These
				expenses are included in the calculation of future rates.
(c) The Department's investigation of the
				title insurance industry further found that certain title insurance agents and
				title insurance corporations mark up ancillary charges excessively.
(d) The Department's investigation further
				found that consumers are often encouraged at the closing to pay gratuities and
				required to pay pick-up fees to title insurance closers. These charges are
				often not disclosed to the consumer before the closing, and the consumer has no
				option but to pay the amount changed.
(e) The purpose of this Part is to promote
				the public welfare by proscribing practices that are not in accordance with
				Insurance Law section
				2303, which provides that insurance rates
				shall not be excessive, inadequate, or unfairly discriminatory. This Part also
				provides standards for the title insurance industry with regard to the types of
				expenses the Superintendent finds appropriate with regard to Insurance Law
				section
				6409(d), which prohibits
				giving any consideration or valuable thing as an inducement for title insurance
				business, Insurance Law section
				6409(e), which states that
				title insurance premiums shall reflect the anti-inducement prohibition of
				Insurance Law section
				6409(d) as well as other
				Insurance Law and Financial Services Law provisions that authorize the
				superintendent to regulate market conduct in the title insurance industry.
(f) This Part further protects
				consumers, pursuant to the authority of Insurance Law sections
				2110 and
				2119 and article 24 and Financial Services
				Law sections
				301 and
				302, by ensuring that the title insurance
				industry provides valuable products and services to consumers at reasonable
				rates and fees and does not overcharge consumers or charge improper or
				excessive fees that constitute engaging in unfair and deceptive acts and
				practices.