Articles of Interest
Calif. regulators advised to wait on data call standardization
August 21, 2008
Expressing concern that the California Department of Insurance proposed statistical plan for title insurance companies could be overly burdensome, the American Land Title Association has asked the DOI to wait for the emergence of the proposed NAIC nationwide data call standard before putting potentially costly regulations in place. Read on to see what CLTA and others had to say about the proposed regulation at last week’s hearing.
The American Land Title association has expressed concern that the California Department of Insurance proposed statistical plan for title insurance companies could be overly burdensome, and advised California Insurance commissioner Steve Poizner to temper his proposal until the National Association of Insurance Commissioners has a chance to establish its proposed nationwide data call standard.
The California Department of Insurance held a public hearing on August 14 to discuss proposed REG-2008-00024, the third of four regulations being proposed by the department for the title insurance industry, this one addressing the collection and reporting of rate and rating system data to the department in an established format
“The NAIC Title Insurance Issues Working Group at its summer meetings in San Francisco announced an aggressive agenda including updating the Model Title Insurance Laws, and the potential drafting of a nationwide data call standard,” ALTA said in its remarks to the department. “We are committed to working with this group to ensure that their proposals meet the objectives of regulators nationwide, while being workable for our member companies. ALTA recognizes the need for individual states to obtain sufficient information from our member companies, but urges restraint on proposals that may impede the efforts of the NAIC working group and its effort to develop a standardized data call and database.”
ALTA urged the department to limit its data collection to “in-state” information to avoid overburdening companies with “duplicative requirements that will necessitate costly new systems to ensure compliance.”
In his comments to the commissioner on behalf of First American, Stevens &O’Connell Attorney David Chiet suggested that the legislature had intended to exclude countrywide reporting from the scope of the commissioner’s authority with respect to title insurers.
Chiet noted that when the state legislature first enacted regulatory legislation for the title insurance industry in 1973, it explicitly narrowed the scope of the commissioner’s powers with respect to statistical plans – eliminating provisions which then existed in the McBride Grunsky Act for reporting countrywide expense experience, and replacing it with a provision for reporting only information concerning operations within the state.
According to Chiet, the commissioner may look to information developed in other states for use in assessing the reasonableness of filed rates in California, but such information is to be gathered from insurance officials and rating organizations in such states.
“Even to the extent that any of the information sought by these regulations is within the allowable scope of a statistical plan as authorized by §12401.5, the commissioner has made no showing that such information could not be obtained by means that impose a lesser burden on the regulated entities,” he said.
In its response, LandAmerica highlighted the industry downturn that would severely impact title companies’ ability to invest in new processes to meet the proposed data collection requirements.
“The current economic downturn in the title industry continues without sight of improvement through 2010,” the company said. “Because the proposed regulation will impose significant additional costs, a delay in implementation until 2010 for data collection, and 2011 for reporting, is essential.”
The California Land Title Association echoed those concerns
“While collectively the industry remains strong through the streamlining of their operations in the state, the implementation of regulations requiring additional systems or process changes should be done carefully so that any necessary capital or production costs are kept to a minimum,” CLTA EVP amd Counsel Craig Page said.
In addition to delaying the implementation date CLTA called for:
- Eliminating the requirements for the immediate reporting of any historical data and instead provide for the population of such historical data from prior years over successive years after implementation.
- Modifying the balance sheet and income statement forms to provide for more limited data collection consistent with current practice of other states requesting such data.
- Eliminating task-based reporting items contained in the income statement, or in the alternative, limiting the collection to California information only.
- Correcting, clarifying or removing various provisions of the balance sheet and income statement, and removing provisions requiring duplicative data collection and reporting.
- Postponing the implement of form CATI-R4 pending the completion of further study and the crafting of a more meaningful substitute.
