Documente Academic
Documente Profesional
Documente Cultură
As a preliminary matter, it should be noted that since July of 2009 the ODI has
had no formal contact with our organization. Despite our sincere desire to engage in
discussions regarding this proposed amended rule and our previous entreaties to
accomplish same1, the ODI has refused to have any meaningful discussion regarding the
economic impacts of this rule with our members. We remain open to that possibility
despite the apparent lack of willingness on the part of the ODI to engage our members in
this discussion. Nevertheless, please be advised of the following.
1
See Letter to Director Mary Jo Hudson, dated July 22, 2009 and Letter to Stephen Hombach, dated
August 31, 2009.
2 Letter to Director Mary Jo Hudson
April 22, 2010
As originally drafted and made effective January 1, 2007, OAC 3901-7-01 was
created to establish the criteria for the annual independent review of title insurance
agents’ escrow, settlement, closing, and security deposit institution accounts.2
The original rule, which currently remains in effect, requires title insurance agents
to report the following: (a) account information for all depository institutions the agent
conducts business with3; (b) the results of three-way reconciliations (depository
institution statement to book balance to open escrow trial balance) for the most recent
monthly period4; (c) a listing of all jurisdictions in which the agent conducts settlements5;
(d) a certification of required insurance coverage6; and (e) a listing of all the agency’s
affiliated companies that are owned or controlled, in whole or in part, by a person or
persons prohibited from acting as a title agent pursuant to division (B) of Ohio Rev. Code
§ 3953.21 or by a builder or developer.7
The proposed rule seeks, among other things, to correct certain clerical mistakes
made in the drafting of the current rule (i.e., adding the term “insurance” to the defined
term “agent” in OAC 3901-7-01(A) and (C)(2), or clarifying filing requirements relative
to the as-yet-to-be prescribed ODI form for reporting the review findings). In addition,
the proposed rule separates exempt agents from non-exempt agents in OAC 3901-7-01(E)
and (F), creates a new filing requirement section under OAC 3901-7-01(I) and eliminates
the current form system for reporting the review findings to the ODI.
Most notably for the OAITA’s purposes, the proposed amended rule eliminates
the definition of “affiliated company” previously found in OAC 3901-7-01(C)(1) which
had continued the well-established legislative intent demonstrated throughout Title 39 of
the Ohio Revised Code by extending the regulatory reach of the insurance code to any
non-licensed holder of 10% or more of a licensed company engaged in the “business of
insurance” or the same definition that already exists in Ohio Rev. Code § 3901.32(B).
Obviously, the ODI, in removing this definition from the proposed amended rule OAC
3901-7-01 recognizes the fact that the Ohio legislature has already defined “affiliated
company” and “control” per Ohio Rev. Code § 3901.32(B). The definitions found in
Ohio Rev. Code § 3901.32(B) remain the only such definitions found anywhere in the
Ohio Revised Code.
The proposed amended rule also eliminates the current form of OAC 3901-7-
01(F)(2)(b) which states as follows:
2
OAC 3901-7-01(A)
3
OAC 3901-7-01(F)(2)(a)
4
OAC 3901-7-01(F)(2)(c)
5
OAC 3901-7-01(F)(2)(d)
6
OAC 3901-7-01(F)(2)(e)
7
OAC 3901-7-01(F)(2)(b)
3 Letter to Director Mary Jo Hudson
April 22, 2010
How can an administrative body enforce the clear statutory mandates without
information? Why not let the self-reporting feature of the escrow account review rule
provide you with the information your investigators seem to lack? Where is the required
oversight? These repeated failings are highlighted below.
Now with your decision to eliminate the collection of this information in the
proposed amended version of the rule, it must equally be assumed that you do not intend
on researching any information relative to the prohibited person status of a title insurance
agency. Without collection of information by ODI of those title insurance agencies that
are subject to OAC 3901-704 presumptions of “control,” it is difficult to understand how
ODI can determine which licensed title insurance agencies may be subject to an inquiry
under OAC 3901-704 (E)’s prohibition that:
In order to remedy these failings, the ODI must change proposed OAC 3901-7-
01(H)(2)(b) to require as follows:
Revised in this fashion, the ODI can collect the same type of data already required under
the title insurance holding company system statute found at Ohio Rev. Code § 3901.32
and § 3901.33, without limiting the information to just prohibited persons under Ohio
5 Letter to Director Mary Jo Hudson
April 22, 2010
Rev. Code § 3953.21(B). Clearly, this was information the Ohio General Assembly
deemed important to collect and is already required under the title insurance holding
company statute Ohio Rev. Code § 3901.33. Further, the above-cited language would
require all title insurance agents and title insurance agencies to annually report and certify
their corporate structures. In our ever-changing environment, this information is
invaluable to proper enforcement of rules and statutes against licensed entities.
The net result of OAC 3901-7-01 and similar rules recently promulgated by the
ODI is that enforcement obligations will undoubtedly increase. To our knowledge, there
is only one ODI employee who has full-time obligations concerning the title insurance
industry and issues relative to the promulgation, interpretation and enforcement of
insurance-related rules and statutes. There are other ODI employees who commit lesser
amounts of time to title insurance concerns. Even so, this response leaves much to be
desired.
The ODI requires a title insurance division to conduct its enforcement and
oversight obligations under Ohio law. We have already engaged in these discussions
with the members of the insurance committee at the Ohio House of Representatives. It is
our opinion that the Director’s mission, as it pertains to title insurance, could be greatly
enhanced with a dedicated title insurance division. Further, it is our belief that rules such
as OAC 3901-7-01 could be better enforced from the perspective of title insurance field
examiners staffed by personnel from the ODI, rather than the current self-reporting
requirements found in the proposed rule.
The title insurance industry in Ohio consists of four insurer groups controlling
more than 96% of Ohio’s title insurance market. The ODI has one dedicated full-time
title insurance employee. There are over 3,000 title insurance agents and agencies in
Ohio. Ohio’s title insurance industry is dangerously consolidated. Now is not the time
for the ODI to take a passive role in its oversight responsibilities. We urge you to
embrace the idea of forming a title insurance division and to support title insurance
reforms through the Ohio General Assembly.
Yours truly,
OAITA/rbh