R590. Insurance,
Administration. (Effective 8-8-07)
R590-153. Unfair Inducements and Marketing Practices in Obtaining Title
Insurance Business.
R590-153-1. Authority.
This rule is promulgated pursuant to
Section 31A-2-201(3)(a), in which the commissioner is empowered to make rules to
implement the Insurance Code, and pursuant to the specific authority of Section
31A-23a-402(8), which authorizes the commissioner to define unfair methods of
competition or any other unfair or deceptive act or practice in the business of
insurance.
R590-153-2.
Purpose.
The purpose of this rule is
to identify certain practices, which the commissioner finds provide unfair
inducements for the placement of title insurance business and as such constitute
unfair methods of competition. These practices include, but are not limited to,
the payment of expenses that are considered normal, customary, reasonable and
recurring in the operation of a client of a title insurer, agency or producer.
R590-153-3. Scope.
This rule applies to all
title insurers, title insurance agencies and title insurance producers and all
employees, representatives and any other party working for or on behalf of said
entities whether as a full time or part time employee or as an independent
contractor.
R590-153-4.
Definitions.
For the purpose of this rule
the commissioner adopts the definitions as set forth in Section 31A-1-301, and
the following:
A. "Client" means any person, or group, who influences, or who may
influence, the placement of title insurance business or who is engaged in a
business, profession or occupation of:
(1) buying or selling interests in real property;
(2) making loans secured by interests in real property; and
(3) shall include but not be limited to real estate agents, real estate
brokers, mortgage brokers, lending or financial institutions, builders,
developers, sub-dividers, attorneys, consumers, escrow companies and the employees, agents, representatives, solicitors
and groups or associations of any of the foregoing.
B. "Discount" means the
furnishing or offering to furnish title insurance, services constituting the
business of title insurance or escrow services for a total charge less than the
amounts set forth in the applicable rate schedules filed pursuant to Section
31A-19a-203 or 31A-19a-209.
C. "Trade Association" means a recognized association of persons, a
majority of whom are clients or persons whose primary activity involves real
property.
D. "Business meals" shall include, but are not limited to, breakfast,
brunch, lunch, dinner, cocktails and tips. In no case shall such business meals
rise to the level of ceremonies, for example, awards banquets, recognition
events or similar activities sponsored by or for clients.
E. "Official Trade Association Publication" means:
(1) a membership directory, provided its exclusive purpose is that of
providing the distribution of an annual roster of the association's members to
the membership and other interested parties; or
(2) an annual, semiannual, quarterly or monthly publication containing
information and topical material for the benefit of the members of the
association.
F. "Business Activities" shall include,
but are not limited to, sporting events, sporting activities, music and art
events. In no case shall such business activities rise to the level of
ceremonies, for example award banquets, recognition events or similar activities
sponsored by or for clients, or include travel by air, or other commercial
transportation.
G. “Bona fide real estate transaction” means:
(1) a preliminary title report is issued to a
seller or listing agent in conjunction with the listing of a property, or
(2) a commitment for title insurance is ordered,
issued, or distributed in a purchase and sale transaction showing the name of
the proposed buyer and the sales price, or in a loan transaction showing the
proposed lender and loan amount.
R590-153-5. Unfair
Methods of Competition, Acts and Practices.
The commissioner finds that
providing or offering to provide any of the following benefits by parties
identified in Section R590-153-3 to any client, either directly or indirectly,
except as specifically allowed in Section R590-153-6 below, is a material and
unfair inducement to obtaining title insurance business and constitutes an
unfair method of competition in the business of title insurance prohibited under
Section 31A-23a-402:
A. The furnishing of a title insurance commitment without one of the
following:
(1) sufficient evidence in the file of the title insurer, agency or
producer that a bona fide real estate transaction exists; or
(2) payment in full at the time the title insurance commitment is provided.
B. The paying of any charges for the cancellation of an existing title
insurance commitment issued by a competing organization, unless that commitment
discloses a defect which gives rise to a claim on an existing policy.
C. Furnishing escrow services pursuant to Section 31A-23a-406, for a
charge less than the charge filed pursuant to Section 31A-19a-209(5) or the
filing of charges for escrow services with the commissioner, which are less than
the actual cost of providing the services.
D. Waiving all or any part of established fees or charges for services,
which are not the subject of rates filed with the commissioner.
E. Deferring or waiving any payment for insurance or services otherwise
due and payable, including "holding for resale".
F. Furnishing services not reasonably related to a bona fide title
insurance or escrow, settlement, or closing transaction, including, but not
limited to computer services, non-related delivery services, accounting
assistance, legal counseling.
G. The paying for, furnishing, or waiving all or any part of the rental or
lease charge for space, which is occupied by any client.
H. Renting or leasing space from any client, regardless of the purpose, at
a rate which is excessive or inadequate when compared with rental or lease
charges for comparable space in the same geographic area, or paying rental or
lease charges based in whole or in part on the volume of business generated by
any client.
I. Furnishing all or any part of the time or productive effort of any
employee of the title insurer, agency or producer, for example, secretary,
clerk, messenger or escrow officer, to any client.
J. Paying for all or any part of the salary of a client or an employee of
any client.
K. Paying, or offering to pay, either directly or indirectly, salary,
commissions or any other consideration to any employee who is at the same time licensed as a real estate agent or real estate broker or as a mortgage lender
or mortgage company.
L. Paying for the fees or charges of a professional, for example, an
appraiser, surveyor, engineer or attorney, whose services are required by any
client to structure or complete a particular transaction.
M. Sponsoring, cosponsoring, subsidizing, contributing fees, prizes,
gifts, food or otherwise providing anything of value for an activity, except as
allowed under Subsection R590-153-6(F) of a client. Activities include, but are
not limited to "open houses" at homes or property for sale, meetings,
breakfasts, luncheons, dinners, conventions, installation ceremonies,
celebrations, outings, cocktail parties, hospitality room functions, open house
celebrations, dances, fishing trips, gambling trips, sporting events of all
kinds, hunting trips or outings, golf or ski tournaments, artistic performances
and outings in recreation areas or entertainment areas.
N. Sponsoring, subsidizing, supplying prizes or labor, except as allowed
under Subsection R590-153-6(C), or otherwise providing things of value for
promotional activities of a client. Title insurers, agencies or producers may
attend activities of a client if there is no additional cost to the title
insurer, agency or producer other than their own entry fees, registration fees,
meals, etc., and provided that these fees are no greater than those charged to
clients or others attending the function.
O. Providing gifts or anything of value to a client in connection with
social events such as birthdays or job promotions except as provided in
Subsection R590-153-6(H). A letter or card in these instances will not be
interpreted as providing a thing of value.
P. Providing either directly or indirectly, a compensating balance or
deposit in a lending institution either for the express or implied purpose of
influencing the placement or steering of title insurance business by such
lending institution. This does not preclude transactions with lending
institutions, which are in the normal course of business.
Q. Furnishing any part of a title insurer's, agency's or producer's
facilities, for example, conference rooms or meeting rooms, to a client or trade
association without receiving a fair rental or lease charge comparable to other
rental or lease charges for facilities in the same geographic area.
R. Furnishing information packets, listing kits, "farm" packages, reports,
or any form of title evidence without first filing a specimen form copy with the
commissioner and specifying a rate for which the form is available. The rate may
not be less than the actual cost of producing the information and the material
furnished.
S. Paying for any advertising on behalf of a client.
T. Advertising jointly with a client on subdivision or condominium project
signs, or signs for the sale of a lot or lots in a subdivision or units in a
condominium project. A title insurer, agency or producer may advertise
independently that it has provided title insurance for a particular subdivision
or condominium project but may not indicate that all future title insurance will
be written by that title insurer, agency or producer.
U. A direct or indirect benefit provided to a client which is not
specified in Section R590-153-6 below, will be investigated by the department
for the purpose of determining whether it should be defined by the commissioner
as an unfair inducement under Section 31A-23a-402(8).
V. Donations to charitable organizations must:
(1) not be paid in cash; and
(2) if paid by negotiable instrument, be made payable only to the
charitable organization; and
(3) be distributed directly to the charitable organization; and
(4) not provide any benefit to a client.
W. Title insurers, agencies and producers who have ownership in, or control
of, other business entities may not use those other business entities to enter
into any agreement, arrangement, or understanding or to pursue any course of
conduct, designed to avoid the provisions of this rule.
R590-153-6.
Permitted Advertising and Business Entertainment.
A.
A title insurer, agency
or producer may furnish the following without charge, and without additions,
addenda or attachments which may be construed as reaching conclusions of the
insurer, agency or producer regarding matters of marketable ownership or
encumbrances:
(1) A copy of an existing plat map; or
(2) Tax information covering a specific parcel of real estate, for example,
tax identification number, assessed owner, assessed value of land and
improvements, or the latest tax amount; or
(3) other information regarding real property which the county recorder's
office provides to the public free of charge, or at a nominal charge, and in the
exact format and content as provided by the county recorder's office.
B. Advertisements by title insurers, agencies or producers must comply
with the following:
(1) The advertisement must be purely self-promotional.
(2) Advertisements may not be placed in a publication, including an
Internet web page and its links, that is hosted, published, produced for,
distributed by or on behalf of a client except as allowed under R590-153-6
(B)(3).
(3) Advertisements in official trade association publications are
permissible as long as any title insurer, agency or producer has an equal
opportunity to advertise in the publication and at the standard rates other
advertisers in the publication are charged.
C. A title, insurer, agency or producer may donate time to serve on a trade
association committee and may also serve as an officer for the trade
association.
D. A title insurer, agency or producer may have two self-promotional open
houses per calendar year for each of its owned or occupied facilities, including
branch offices. The title insurer, agency or producer may not expend more than
$15 per guest per open house. The open house may take place on or off the title
insurer's, agency's or producer's premises but may not take place on the
client's premises.
E. A title insurer, agency or producer may distribute self-promotional
items having a value of $5 or less to clients, consumers and members of the
general public. These self-promotional items shall be novelty gifts which are
non-edible and may not be personalized or bear the name of the donee.
Self-promotional items may only be distributed in the regular course of
business. Self-promotional items may not be given to clients or trade
associations for redistribution by these entities.
F. A title insurer, agency or producer may make expenditures for business
meals or business activities on behalf of any person, whether a client or not,
as a method of advertising, if the expenditure meets all the following criteria:
(1) The person representing the title insurer,
agency or producer
must be present during the business meal or business activity.
(2) There is a substantial title insurance business discussion directly
before, during or after the business meal or business activity.
(3) The total cost of the business meal, the business activity, or both is
not more than $100 per person, per day.
(4) No more than three individuals from an office of a client may be
provided a business meal or business activity by a title insurer, agency or
producer in a single day.
(5) The entire business meal or business activity may take place on or off
the title insurer's, agency's or producer's premises, but may not take place on
the client's premises.
G. A title insurer, agency or producer may conduct educational programs
under the following conditions:
(1) The educational program shall address only title insurance, escrow or
topics directly related thereto.
(2) The educational program must be of at least one hour duration.
(3) For each hour of education $15 or less per person may be expended,
including the cost of meals and refreshments.
(4) No more than one such educational program may be conducted at the
office of a client per calendar quarter.
H. A title insurer, agency or producer may acknowledge a wedding, birth or
adoption of a child, or funeral of a client or members of his/her immediate
family with flowers or gifts not to exceed $75.
I. Any other advertising and/or business entertainment must be requested
in writing and approved in advance and in writing by the commissioner.
R590-153-7. Enforcement Date.
The commissioner will begin enforcing the provisions of this rule 45
days from the effective date of the rule.
R590-153-8.
Severability.
If any provision or clause
of this rule or its application to any person or situation is held invalid, such
invalidity may not affect any other provision or application of this rule which
can be given effect without the invalid provision or application, and to this
end the provisions of this rule are declared to be severable.
KEY: title insurance
2004
Notice of Continuation November 27, 2002
31A-2-201
31A-23a-402
Last
Changes finalized 8-8-07
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