Mr. Gene Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
P.O. Box 149104
Austin, Texas  78714-9104

Re: 2006 Texas Title Insurance Bi-annual Hearing, Item 2006-64

 

Dear Mr. Jarmon:

 

In our recent telephone conversation, I shared with you concerns that the banking industry have regarding the above-referenced agenda item.  As I indicated on the phone, I am general counsel for the Independent Bankers Association of Texas (IBAT), a trade association representing approximately 600 independent community banks domiciled in Texas.  As you are also doubtless aware, Texas banks are authorized to own title insurance companies and in fact a number do so.  Therefore, community banks are interested in any promulgated rule or guideline that impacts their ability to offer title insurance to their customers.  Item 2006-64 in Docket No. 2669 appears to indirectly adversely affect the ability of banks to offer insurance as an affiliated business.  IBAT would respectfully suggest that this item should be classified under the rule-making agenda rather than exclusively under the rate-making agenda.  It is our request that this item be reclassified so that all of the affected industries have an opportunity to comment on this item rather than only parties to the rate-making process.

 

According to the preamble to the Notice of Public Hearing, the rate-making phase is for the consideration of fixing the premium rate and “other matters with direct rate implications."   (emphasis added)  IBAT would respectfully suggest that Agenda Item 64 which deals with affiliated business relationships is not a matter with direct rate implications.  It is our understanding that in the pre-hearing conference a decision was made to include Agenda Item 64 in both the rule-making and the rate-making process.  That appears to be an appropriate classification of this matter.  If this understanding is incorrect, please let me know.  Again, IBAT strongly believes that the item should be in the rule-making section.

 

Next, IBAT believes that this particular proposal has perhaps unintended anti-competitive effects.  Before something of that nature is adopted, it would seem prudent from a public policy perspective to obtain the widest possible input to the item.  In addition, the association would note that affiliated business arrangements are covered exhaustively in the Real Estate Settlement Procedures Act, Regulation X implementing RESPA, and the Department of Housing and Urban Development Policy Statements.  In short, there is extensive existing regulation in this area intended to protect the public and to assure that there are no sham control business arrangements.

 

Thank you for your consideration.

 

Sincerely,