1. Title Insurance The Role of the Arkansas Insurance Department and the Effect on the Title Industry

2. Presented by: 1200 West Third Street Little Rock, AR 72201-1904 501-682-5215 Phone 501-917-2748 FAX  Sarah Harper Gray, Title Insurance Coordinator  Nina Carter, Associate Counsel

3. Insurance Commissioner Jay Bradford

4. Commissioner Bradford was appointed in January 2009 by Governor Mike Beebe. Our Commissioner has more than four decades of experience in the insurance industry, including 30 years as founder of First Arkansas Insurance Group, a statewide network of independent property and casualty agencies. Customer service and consumer protection have been hallmarks of the Commissioner’s career.

5. Previously, the Director of the Division of Behavioral Health Services within the AR Department of Human Services. Arkansas Legislature for 24 years. Numerous honors and awards.

6. How Did We Get Here???

7. The Arkansas Insurance Department gained jurisdiction over the licensing of title insurance agents on January 1, 2008, through the Arkansas Title Insurance Act, AKA Act 684. The Department already had jurisdiction over title insurance companies. Ark. Code Ann. § 23-103-401 et. seq. The ACT abolished the Arkansas Title Insurance Agents’ Licensing Board and transferred its power and duties to the Insurance Department.

8. Department Rules Promulgated Rule 87 – Title Insurance  Provides Department guidance to the Title Insurance Act Rule 88 – Title Insurance Licensing and Appointment Fees

9. What does being a licensed title agent qualify me to do? The statutory definition of a title insurance agent is: an individual affiliated with a title insurance agency that is authorized on behalf of a title insurer (underwriter) to issue a title insurance report or title insurance policy.

10. Do I, or Anyone I Work with, Need a Title Insurance Agent’s License? Issuing agent or signing agent is no longer used. The Title Agent License is a comprehensive license. With some exceptions, anyone who “sells”, “solicits”, or “negotiates” insurance must be licensed as an agent Licensable Acts

12. The chart is not specifically tailored for title insurance. A person who only closes or only examines title does not necessarily require a license. Disseminating information as to rates secured by reference to a published or printed list or computer data base of standard rates Explain, discuss or interpret coverage, analyze exposures or policies, or give opinions or recommendations as to coverage Indicate that requested coverage is or will be bound or issued Bind coverage – signing commitments and policies

13. How to get a Title Insurance Agent’s License? Apply Affidavit of Prior Title Work Experience Fees Background Check Take Exam

14. How to keep a Title Insurance Agent’s License? Renew License on Your Birthday Complete Annual CE Maintain an Company Appointment and Agency Affiliation

15. Continue to be:  Competent  Trustworthy  Financially Responsible  Good Personal and Business Reputation Comply with the PLMA, Ark. Code Ann. § 23-64-501 et seq.  Who must be Licensed, Exceptions  Assumed Business Names

16. How Can I Lose my Title Insurance Agent’s License? § 23-64-512. License denial, nonrenewal, or revocation (a) The Insurance Commissioner may place on probation, suspend, revoke, or refuse to issue or renew an insurance producer’s license or may levy a civil penalty in accordance with § 23-64- 216 or any combination of actions for any one (1) or more of the following causes:§ 23-64- 216

17. (1) Providing incorrect, misleading, incomplete, or materially untrue information in the license application; (2) Violating any of the following that calls into question the insurance producer’s fitness to hold a license: (A) A law; or (B) A regulation, subpoena, or order of: (i) The commissioner; (ii) Another state’s insurance commissioner; or (iii) A court of competent jurisdiction. (3) Obtaining or attempting to obtain a license through misrepresentation or fraud;

18. (4) Improperly withholding, misappropriating, or converting any moneys or properties received in the course of doing insurance business; (5) Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance; (6) Having been convicted of a felony; (7) Having admitted or been found to have committed any insurance unfair trade practice or fraud; (8) Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, lack of good personal or business reputation, or financial irresponsibility;

19. (9) Having an insurance producer license or its equivalent denied, suspended, or revoked in any other state, province, district, or territory; (10) Forging another’s name to an application for insurance or to any document related to an insurance transaction; (11) Improperly using notes or any other reference material to complete an examination for an insurance license; (12) Knowingly accepting insurance business from an individual who is not licensed;

20. (13) Failing to provide a written response after receipt of a written inquiry from the commissioner or his or her representative as to transactions under the license within thirty (30) days after receipt thereof unless the timely written response is knowingly waived in writing by the commissioner; (14) Failing to comply with an administrative or court order imposing a child support obligation; (15) Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; (16) Refusing to be examined or to produce any accounts, records, or files for examination; or (17) Failing to cooperate with the commissioner in an investigation when required by the commissioner.

21. § 23-103-416. Penalties--Liabilities (a) If the Insurance Commissioner determines that a title insurer, title insurance agency, title insurance agent, or any other person has violated this subchapter or any rule or order promulgated under this subchapter, the commissioner may order: (1)(A) Payment of a monetary penalty not to exceed one thousand dollars ($1,000) for each act or violation and not to exceed an aggregate penalty of ten thousand dollars ($10,000) unless the title insurer, title insurance agency, title insurance agent, or other person knew or reasonably should have known that the title insurer, title insurance agency, title insurance agent, or other person was in violation of this subchapter.

22. (B) If the title insurer, title insurance agency, title insurance agent, or other person knew or reasonably should have known that the title insurer, title insurance agency, title insurance agent, or other person was in violation of this subchapter, the penalty shall not exceed five thousand dollars ($5,000) for each act or violation and not exceed an aggregate penalty of fifty thousand dollars ($50,000) in any six- month period; or

23. ( 2) Suspension or revocation of the title insurer’s, title insurance agency’s, title insurance agent’s, or other person’s license if the title insurer, title insurance agency, title insurance agent, or other person knew or reasonably should have known that the title insurer, title insurance agency, title insurance agent, or other person was in violation of this subchapter. (b) If an order of rehabilitation or liquidation of the title insurer or of conservation of assets of the title insurer has been entered and the receiver appointed under the order determines that the title insurance agency or title insurance agent or any other person has not complied with this subchapter or any rule or order promulgated under this subchapter and the title insurer suffered any resulting loss or damage, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the title insurer and its policyholders and creditors. (c) This section does not affect the right of the commissioner to impose any other penalties provided under § 23-64-101 et seq.§ 23-64-101 et seq.

24. Other Penalties… Letter of Reprimand Probation Suspension Revocation of License  Via Consent Order  Via Hearing Order

25. Trade Practices Act § 23-66-201, et seq. Unfair competition, unfair or deceptive acts § 23-66-206 Definitions  Defamation  False information and advertising  False statements or misrepresentations

26. § 23-66-505 Mandatory Reporting of Fraudulent Insurance Acts (a) A person engaged in the business of insurance having knowledge or a reasonable belief that a fraudulent insurance act is being, will be, or has been committed shall provide to the Insurance Commissioner the information required by, and in a manner prescribed by, the commissioner. (b) Any person engaged in the business of insurance who knowingly fails to report as required by subsection (a) of this section shall be guilty of a Class A misdemeanor.

27. The Criminal Investigation Division (CID) is a division within the Arkansas Insurance Department. CID was created by the State Legislature in 1993 to investigate workers' compensation fraud. In 1997, the Legislature expanded our mandate to include all other types of insurance fraud. In 2001, the Legislature gave the division law enforcement status. That means our investigators carry weapons, serve warrants, and have the power to arrest suspects.

28. To report a suspected case of fraud: Mail or fax CID a copy of the Uniform Suspected Insurance Fraud Reporting Form, or Complete the national NAIC Online Reporting Form, or Call CID at (866) 660-0888 or (501) 371-2790 or email at insurance.fraud@arkansas.gov.insurance.fraud@arkansas.gov

29. www.fightfraud.arkansas.gov

30. Consumer Protection Consumer Protection is a focus Agent License Protection

31. Complaints Complaints can be filed by consumers or other agents Looking for Violations of the Insurance Code Possible Fraud? May Review Audits

32. Audits Why? When What to Expect?

33. FAQs Licensing Title Agent Requirements Licensable Acts Continuing Education Your Responsibility during an Audit Defalcations -- Statistics

36. Thank You! Please contact us if you have any other questions. Arkansas Insurance Department 1200 West Third Street Little Rock, AR 72201-1904 501-682-5215 Phone 501-371-2748 FAX  Sarah Harper, Title Insurance Coordinator sarah.harper@arkansas.gov  Nina Carter, Associate Counsel nina.carter@arkansas.gov

37. Top 10 Questions Most Asked by the Industry

38. 10.Can a prior owner’s title insurance policy be used starting point for the minimum 30-year search?

39. Yes, as long as the underlying search for the insurance report or policy covers at least the preceding thirty years. Section 15(C) of Rule 87 provides various evidence the search may be based upon. Any policy upon which the title insurance agent is willing to rely, subject to a determination of insurability of title in accordance with the title insurer’s underwriting practices may be used as a starting point.

40. However, agents should be aware that it is not the prior POLICY that provides compliance with the regulation; it is the underlying EVIDENCE of a thirty year search. A policy issued prior to the subject Act and Rule might not have been written from a thirty-year chain and may not report all matters of record within the thirty year search period as required. Using such a policy as a starter policy would be in violation of the regulation.

41. Agents should always be able to produce the thirty-year search EVIDENCE, not just a prior policy. Regardless of whether a prior policy is used as a starting point, any combination of evidence upon which the search is based, must cover a continuous period of no less than the immediately preceding thirty years.

42. 9.What if my name or my address changes?

43. Arkansas Code Annotated § 23-64-507(f) provides that the failure to inform the Commissioner of a change in legal name or address within 30 days of that change shall result in a penalty pursuant to § 23-64-216. If your name changes due to marriage, divorce, or court order, you must notify the Department in writing and attach copies of the legal documents which reflect the name change within 30 days of the change.

44. If your address or e-mail address changes you must notify the Department within 30 days by using the address change form at http://insurance.arkansas.gov/License/f orms.htm.

45. 8.How can I become exempt from meeting the CE requirement?

46. There are no exemptions from CE.

47. 7.Where should we put the Department contact information?

48. Pursuant to Ark. Code Ann. § 23-79-138, insurers are required to include certain information with every insurance policy issued in the state of Arkansas. This information can be attached to the policy by a sticker or as a separate form. Bulletin No. 15-2009 outlines the suggested notice for insurers to use.

49. We suggest that you don’t just put the Department’s name, address and phone number because that is only causes confusion. Banks call us frequently looking for a final policy, an updated policy or an endorsement. I have to help them find the agency name and, provided it’s there, have them contact the issuing agency. I have seen more than one case where an agency lists the Department information under the Schedule B, Exceptions. That’s not an appropriate place for this information. Don’t take exception to the Department!!! Some insurers incorporate the suggestions from our bulletin into their own separate form.

51. 6.What specific agent/agency information is required to be on commitments and policies?

52. Each commitment and policy should be countersigned by a licensed title insurance agent who is affiliated with a licensed title insurance agency and appointed by the insurer. The agent’s name and license number should be printed or legibly written beneath the title insurance agent’s signature. Also, the printed names and license numbers of the title insurance agency should appear on each commitment and policy.

53. 5.I attended a CE seminar which should have met all my requirements, but when I tried to renew I got a letter back saying I did not have an hour ethics …why?

54. Ethics does not carry over from year to year. If you don’t take the ethics course between renewal dates for the current year in which you are licensed, you won’t get credit.

55. 4.I attended a CE seminar, but didn’t get credit…why?

56. Provided there was not an error made entering the credits for your CE, most of the time, the answer is that the agent did not sign the roster. According to Rule 50, Section 8(A) If an attendee does not sign the roster provided as Appendix “H”, credit will not be granted for the course.

57. 3.I am the only agent affiliated with the agency where I work. My license expired; why was the agency license terminated? It was renewed on time.

58. The agency license is automatically terminated if there are no licensed title agents affiliated with the agency. It’s always a good idea to have at least two agents affiliated with your agency.

59. 2.My license expired and I renewed it; now, why do I have to be reappointed?

60. If your license is expired for more than 30 days, the agency affiliation and appointments are automatically terminated.

61. 1. My license expired. I didn’t get a renewal notice. What do I do?

62. Does everyone know when their license expires?

63. Go to: www.insurance.arkansas.gov/License/fo rms.htm and print out the Replacement License Renewal for Producers, Adjusters and Consultants (under LICENSE (ARF) REPLACEMENT FORMS) If your license has not expired yet, you can always renew online. Same link as above. Click on Leo Online Services under the PRODUCER category.

64. For an agency, go to the same page and look under TITLE. Print out the Title Agency Replacement Renewal form and send that in. Late fees:An additional $35.00 for an agent’s license An additional $100.00 for an agency license For late CE: Fines begin the first day after the due date (your birthday).

65. 1 to 30 days---license will not renew and will be inactive---$25.00 31 to 60 days—license inactive and $50.00 fine 61-90 days –license inactive and $100.00 fine 91 days to 365 days—license inactive and $150.00 fine –After 365 days—the license is terminated and you must start over as if you were never licensed, including applications and license exams. –If the license is inactive due to non-compliance with continuing education, you cannot write business until the requirements are filed and the license is reactivated.