Effective 01 Jan 2008, see footnote

381.023. Underwriting claims and escrow practices, review of, required when — standards for review. — 1. A title insurer shall, at least annually, conduct an on-site review of the underwriting, claims, and escrow practices of the title agency or agent with which it has a contract. If the title agency or agent does not maintain separate fiduciary trust accounts for each title insurer it represents, the title insurer shall verify that the funds held on its behalf are reasonably ascertainable from the books of account and records of the title agency or agent.

2. Each title insurer authorized to do business in Missouri shall adopt and utilize the following standards and procedures for the on-site review of title agencies and agents. On-site review documentation, work papers, summaries, and reports shall be maintained by each title insurer for a period of at least four years and shall be made available to the director for examination upon request. A report shall be prepared by the title insurer at the completion of the on-site review setting forth the title insurer's findings. On-site review findings shall include, but not be limited to, the following:

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

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

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

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

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

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

(7) A review of the procedures for follow-up after closing to track status 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 or closing files;

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

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

(12) A review of a three-way reconciliation of bank balance, book balance 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 more title insurers, the title insurers may cooperate in complying with the requirements of this section and shall be exempt from liability for sharing findings with other title insurers represented by the agency or agent.

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

5. A violation of any provision under this section is a level two violation under section 374.049.

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(L. 2007 S.B. 66)

Effective 1-01-08