SECTIONS 12396-12399 - California Statutes

INSURANCE CODE

SECTION 12396-12399

12396. (a) For purposes of this article, "controlled business
source" means an affiliate, as defined in subdivision (a) of Section
1215, of any title insurer, controlled escrow company, or
underwritten title company.
(b) For purposes of this article:
(1) "License" means a securities permit issued to a title
insurance entity, a license to operate as an underwritten title
company, or a certificate of authority to act as a title insurer.
(2) "Licensee" means the holder of a license.
(c) For purposes of this article, a title order shall be deemed to
emanate from a controlled business source if the controlled business
source is acting in the capacity of a principal, lender,
representative, or agent of any of the parties to the transaction, or
any other person or entity with which the reporting entity has an
agreement, written or otherwise, whereby title orders are traded or
otherwise exchanged in order to achieve compliance with this article.

12397. Any applicant for a license shall indicate the applicant's
intent to actively compete in the marketplace for title insurance in
each county in which the applicant seeks to or does conduct the
business of title insurance. The failure to so indicate shall
constitute grounds for denial of the license. Each applicant for a
license shall also demonstrate that its plan of operation and
intended course of business conduct will not involve reliance for
more than 50 percent of its closed title orders from controlled
business sources.

12397.5. (a) Each licensee shall make submissions as are required
by the Department of Insurance to enable the department to determine
the nature and extent of the licensee's efforts to actively compete
in each county in which it transacts its business. The licensee shall
maintain records of its title orders sufficient to indicate the
source of the title orders.
(b) Competitive behavior shall be measured by the source of closed
title orders in each county in which the licensee engages in the
title business and by the entity's progress toward meeting the 50
percent objective specified in Section 12397, as indicated in the
annual, verified report filed pursuant to subdivision (c).
(c) Within 90 days following the end of each business year, as
established by the licensee, each licensee shall file with the
commissioner, and any title insurer with which the licensee maintains
an underwriting agreement, a verified report executed by the
licensee's chief executive officer or his or her designee under
penalty of perjury, stating the percent of closed title orders for
each county originating from controlled and noncontrolled business
sources. Each title insurer that maintains an underwriting agreement
with another licensee shall, within 30 days after receipt of this
report, file with the commissioner a verified statement, signed by
the licensee's chief executive officer or by his or her designee
under penalty of perjury, that the report is substantially correct or
that insufficient information is contained in the report to enable
an opinion to be formed concerning the correctness of the report.
(d) Upon receipt by the department of a verified statement, signed
under penalty of perjury, that less than 5 percent of the business a
licensee transacts emanates from controlled business sources, the
licensee shall be relieved of further reporting under this article,
but shall be subject to reporting under subdivision (c) at any time
that 5 percent or more of the business which the licensee transacts
emanates from controlled business sources.

12398. The failure of an applicant or licensee to comply with any
of the requirements of this article shall be grounds for the denial
of an application for a license, the suspension or revocation of an
issued license, or other disciplinary action determined by the
commissioner, in accordance with procedures prescribed by law
therefor.

12399. Nothing in this article shall limit or preclude the
consideration or approval of an application for a license, except as
expressly provided in this article.