Webinar: TDI Enforcement Overview October 21, Sponsored By:

Transcription

1 Webinar: TDI Enforcement Overview October 21, 2014 Sponsored By:

2 2014 TDI ENFORCEMENT OVERVIEW: PENALTIES, SANCTIONS, & OTHER THINGS THAT GO BUMP IN THE NIGHT! Kergin Bedell, Burton & Hyde, PLLC Summary 1. TDI s Enforcement Section 2. Recent Trends in Enforcement Actions 3. Commissioner Orders 4. Wrap Up and Discussion 1

3 TDI s Enforcement Section 1. Key Enforcement Personnel 2. The Many Ways Cases Reach Enforcement 3. TDI s Enforcement Powers Key Enforcement Personnel Comm. Of Insurance Julia Rathgeber Deputy Comm. (Compliance Division) Mark Einfalt Assoc. Comm. (Enforcement Section) Sandra Nicolas Enforcement Section Staff 2

4 TDI s Enforcement Powers General Sanctioning Authority Cancellation or Revocation (TIC ) Suspension (TIC (1)) Cease and Desist (TIC (2)) Administrative Penalty (TIC (3) and ) Restitution (TIC (4) and ) TDI s Enforcement Powers Penalty Factors Seriousness of Violation Nature, Circumstances, Extent, & Gravity Actual/Potential Hazard to Public Welfare Economic Harm Disciplinary History Deterrence Value Corrective Action Intent Other Matters That Justice May Require 3

5 TDI s Enforcement Powers Informal Resolutions Closed with No Further Action Warning Letters Consent Orders The Many Ways Cases Reach Enforcement Consumer Complaints Industry Complaints Compliance Audits TDI Staff Reviews Data Calls 4

6 Recent Trends 1. Enforcement Actions ( ) 2. Enforcement Actions (2014 So Far) 3. Sanctions & Penalty Amounts 4. Sanctioned Entities 5. Orders From the Last 12 Months 6. Penalties For the Last 12 Months Recent Top Costume Choices Vampires 2011 Snooki & The Situation 2008 The Joker 2006 Pres. Obama 2003 Jack Sparrow 2000 Austin Powers * Spirit Halloween s Top Pop Culture Costumes

7 TDI Enforcement Case Volume ( ) Cases Received Cases Closed Title Commissioner Orders ( )

8 Title Commissioner Orders ( YTD) Sanctions (2012, 2013, 2014) Admin. Penalty Revocation Probation 2013 Cease & Desist Surrender License Restitution 7

9 Penalties (2012, 2013, 2014) High $50,000 $80,000 $40,000 Low $1,000 $1,000 $1,000 Average $9,433 $13,983 $8,823 Median $5,000 $4,000 $3,300 Title Commissioner Orders (Sep Aug. 2014) SANCTIONS Admin. Penalty Surrender License Revocation PENALTIES High $80,000 Low $1,000 Average $15,047 Median $4,400 8

10 Title Commissioner Orders (Sep Aug. 2014) Orders Multiple Violations Filing Deadlines Audit Reports Filing Deadlines Guaranty Fees Rebating Failure to Remit Premuim Past Top Costume Choices Elvira 1996 Scream 1993 Barney 1990 Ninja Turtles 1985 Hulk Hogan 1983 Princess Leia * Spirit Halloween s Top Pop Culture Costumes

11 Commissioner Orders Filing Deadlines Audit Reports Rebating Failure to Remit Premium Multiple Violations Compliance Audits Other Common Violations Filing Deadlines - Audit Reports Tex. Ins. Code Ann (a) Each title insurance agent and direct operation shall have an annual audit made of trust fund accounts (b) Not later than the 90th day after the date of the end of the agentʹs or direct operationʹs fiscal year, the agent or direct operation shall send to the department one copy of the audit report Tex. Ins. Code Ann (a) Each title insurance company shall have an annual audit made of trust fund accounts for each county in which it operates in its own name 10

12 Filing Deadlines - Audit Reports REPRESENTATIVE ORDER LANGUAGE 3. Tex. Ins. Code requires title agencies, including, to file with the department an annual trust fund account audit report prepared by a certified public accountant. The report is due before the 91 st day after the end of the agent s fiscal year. 4. According to department records, fiscal year ended December 31, annual trust fund account audit report was due March 31, The department received annual trust fund account audit report May 7, 2014, five weeks after the March 31, 2014 deadline. Filing Deadlines REPORTING DEADLINE Annual Audit Report 90 days from end of fiscal year Guaranty Fees 2 months after the calendar quarter ends COMPLIANCE TIP Calendar all reporting requirements 11

13 2014 Top Costume #5 Oscar s Pizza Delivery Guy Ellen Degeneres surprised everyone at the Oscar s by ordering pizza for the crowd. The only person more surprised than the actors in attendance was the pizza delivery guy who walked through the audience handing out slices to the stars. * GuestofaGuest.com, The Best 2014 Pop Culture Halloween Costumes Rebating Tex. Ins. Code Ann A commission, rebate, discount, portion of a title insurance premium, or other thing of value may not be directly or indirectly paid, allowed, or permitted by a person engaged in the business of title insurance or received or accepted by a person for engaging in the business of title insurance or for soliciting or referring title insurance business. 12

14 Rebating REPRESENTATIVE ORDER LANGUAGE 3. entered into a written contract. The written contract provided for to perform certain services and furnish certain goods and facilities in support of title insurance and escrow business. paid $500 for each file in which performed services. sought consultation before entering the agreement, and concluded that their agreement complied with Texas Law. 4. One of the owners of was also the owner and president of a mortgage broker registered under the laws of Texas and Kansas. That owner had an agreement with to send title insurance and escrow business to. Rebating REPRESENTATIVE ORDER LANGUAGE 5. After entering into his agreement with, received a substantial increase in title insurance and escrow business involving the mortgage broker. The increase in business was attributable to business relationship with. 13

15 Rebating RECENT REBATING VIOLATIONS COMPLIANCE TIP Referral fees Discounted closing costs if particular title agency is used Review Title Bulletin No. 158 (Comm. Bulletin B ) Have all co marketing agreements reviewed by legal counsel 2014 Top Costume #4 PHARRELL S HAT Either grab a Canadian Mounty hat and go as the pop artist, or make a giant body sized hat. * Huffington Post, 2014 Halloween Costume Ideas 14

16 Failure to Remit Premium Rate Rule R 2 Each company shall remit the portion of the premium due to the title insurance company no later than the 15th day of the second month following the month in which the premium was collected Failure to Remit Premium REPRESENTATIVE ORDER LANGUAGE 3. Title agencies, including are required to remit underwriter premiums no later than the 15 th day of the second month following the month in which premiums are collected. 4. was required to timely remit underwriter premiums, which were collected for 219 files during April through December, failed to timely remit underwriter premiums for the 219 files before at least February 21, 2014, when the department conducted a compliance audit. 6. A compliance audit in 2011 revealed that premium remittances for 35 files were also delinquent. 15

17 Failure to Remit Premium 2014 TOP COSTUME # 3 COMPLIANCE TIP Create redundancies when assigning responsibilities to ensure obligations are met when employees are out sick or on vacation Multiple Violations Compliance Audit Procedural Rule P 61 Title policies shall be provided and furnished to the insured within ninety (90) days after receipt by the title company of proof of compliance with the companyʹs Schedule C requirements. 16

18 Multiple Violations Compliance Audit REPRESENTATIVE ORDER LANGUAGE 2. In March 2013, TDI audited business. During the audit, 172 files were identified that had been closed more than 90 days for which had failed to issue title insurance policies. has since issued all outstanding policies for the file. Multiple Violations Compliance Audit REPRESENTATIVE ORDER LANGUAGE 3. During the audit, demonstrated that it had failed to timely remit $53, of title insurance premium to its underwriter. has since paid this underwriter and is current on all its remittances to underwriters. 17

19 Multiple Violations Compliance Audit COMPLIANCE AUDIT VIOLATIONS Improper fee splits Failure to issue policies Failure to remit premium Unsupported disbursements COMPLIANCE TIP Discuss with the auditor any corrective action you have taken 2014 Top Costume # 2 GROOT MALEFICENT The Wrap, Maleficent, Groot Top List of Hottest Movie Inspired Halloween Costumes 18

20 Other Common Violations Closing and Claims Handling TIC (4), , & Procedural Rule P 1.f and s Continued Non compliance with Order TIC Continuing Education TIC & Procedural Rule P 28 Misappropriation TIC (4) & (a)(4) Unauthorized Premium Splits TIC & Procedural Rule P 22 Unlicensed Activity TIC , , Wrap Up and Discussion 1. TDI s Enforcement Section 2. Recent Trends in Enforcement Actions 3. TDI s Enforcement Powers 4. TDI Orders From the Last 12 Months 19

21 Key Take Away Penalty Factors Seriousness of Violation Nature, Circumstances, Extent, & Gravity Actual/Potential Hazard to Public Welfare Economic Harm Disciplinary History Deterrence Value Corrective Action Intent Other Matters That Justice May Require Key Take Away- Comm. Orders (9/13-8/14) SANCTIONS Admin. Penalty Surrender License Revocation PENALTIES High $80,000 Low $1,000 Average $15,047 Median $4,400 20

22 Key Take Away Compliance Tips Calendar all reporting requirements Review Title Bulletin No. 158 (Comm. Bulletin B ) Have all co marketing agreements reviewed by legal counsel Create redundancies when assigning responsibilities to ensure obligations are met when employees are absent Discuss with the auditor any corrective action you have taken Key Take Away 2014 Top Costume # 1 ICE BUCKET CHALLENGE Because no one is tired of this yet!!! Huffington Post, 2014 Halloween Costume Ideas 21

23 Thank you for your time. If you have any questions about these presentation materials or would like to follow up with the author, please contact: Kergin B. Bedell t f West 5 th Street, Suite 100 Austin, Texas