The New York State Senate is again considering enacting legislation that would require title insurance agents to become licensed in order to operate in New York. The bill, S5923-2013, was introduced on August 7, 2103 by Senator James L. Seward.
While New York has long required insurance agents of all types to become licensed in order to conduct business in the state, title insurance agents have always been exempt from licensing. This new measure would treat title insurance agents in the same way as other insurance producers. Some of the notable provisions in the bill are:
- Title insurers cannot pay any percentage of the premium to anyone except a licensed title agent;
- Title agents cannot share premium or fees with another title agent;
- Title agents are responsible in a fiduciary capacity for all funds received or collected as title agents, and cannot comingle such funds with their own funds;
- Title insurance agents will be required to pass an exam before becoming licensed, with some exceptions, including those that have acted as title agents in New York for five years or more;
- Title agents would be subject to continuing education requirements.
In the past, efforts to require title agents to become licensed have not met success in the legislature, despite the support of the New York State Department of Financial Services. If this legislation is passed, title agents will be included in the definition of insurance producers, and therefore, other provisions of the Insurance Law that affect insurance producers, such as increased scrutiny of producer-controlled insurers, would also apply to title agents. If you have any questions about these issues, please be sure to contact your insurance counsel at Smith, Gambrell & Russell, LLP.