381.023. Underwriting claims and escrow practices, review of, required when--standards for review. - Missouri Statutes

Underwriting claims and escrow practices, review of, requiredwhen--standards for review.

381.023. 1. A title insurer shall, at least annually, conduct anon-site review of the underwriting, claims, and escrow practices of thetitle agency or agent with which it has a contract. If the title agency oragent does not maintain separate fiduciary trust accounts for each titleinsurer it represents, the title insurer shall verify that the funds heldon its behalf are reasonably ascertainable from the books of account andrecords of the title agency or agent.

2. Each title insurer authorized to do business in Missouri shalladopt and utilize the following standards and procedures for the on-sitereview of title agencies and agents. On-site review documentation, workpapers, summaries, and reports shall be maintained by each title insurerfor a period of at least four years and shall be made available to thedirector for examination upon request. A report shall be prepared by thetitle insurer at the completion of the on-site review setting forth thetitle insurer's findings. On-site review findings shall include, but notbe limited to, the following:

(1) A review of contracts between the title insurer and the titleagency or agent;

(2) A confirmation that the title agency or agent has prepared anannual statement of financial condition of the title agency or agent,certified by the title insurance agent or designated agent of the titleagency under oath or by affirmation as being a true and accuraterepresentation of financial condition;

(3) A review of policies and practices related to conflicts ofinterest affiliated business arrangements, and regulatory compliance;

(4) Reconciliation of orders with commitments, title searches, titlepolicies, and collection of premiums;

(5) A review of the agent's procedures for tracking issuedcommitments;

(6) A review of the practices to cancel commitments on transactionsthat do not close;

(7) A review of the procedures for follow-up after closing to trackstatus of outstanding conditions required for timely issuance of policies;

(8) A review of the procedures for voiding policies;

(9) A review of the tracking of open escrow, security, settlement orclosing files;

(10) A review of issued policy reports to the title insurer by thetitle agency or agent;

(11) A review of any files awaiting policy issuance that includes adetermination of the average length of time between closing and theissuance of the title policy; and

(12) A review of a three-way reconciliation of bank balance, bookbalance and escrow trial balance for each individual escrow bank account.

3. If the title agency or agent is an agency or agent for two or moretitle insurers, the title insurers may cooperate in complying with therequirements of this section and shall be exempt from liability for sharingfindings with other title insurers represented by the agency or agent.

4. The title insurer shall provide a copy of the report of each suchreview it performs to the director. The director shall promulgate rulessetting forth the minimum threshold level at which a review would berequired, the standards thereof and the form of report required.

5. A violation of any provision under this section is a level twoviolation under section 374.049, RSMo.

(L. 2007 S.B. 66)

Effective 1-01-08