Each title insurer authorized to do business in Nebraska
shall adopt and utilize the following standards and procedures for the on-site
review of title insurance agents as required by Neb. Rev. Stat. §
44-1993(3).
Such standards shall be deemed minimum standards and will not preclude title
insurers from applying more stringent or comprehensive procedures. On-site
review documentation, work papers, summaries and reports shall be maintained by
each title insurer for the period of at least four (4) years and shall be made
available to the Director of Insurance upon request pursuant to the Insurers
Examination Act, Neb. Rev. Stat. §
44-5901
et seq. 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 each item
listed below as well as any additional items the title insurer includes in its
on-site review. In the case of a title insurance agency on-site review, the
title insurer shall include in the report a list of title insurance agents
employed by said title insurance agency on the date of the on-site review. The
report shall be maintained by the title insurer and provided to the Director of
Insurance upon request. If the title insurer's on-site review indicates the
title insurance agent is deficient in any of the areas listed below, the title
insurer shall notify the Department within five (5) business days if the title
insurance agent has not remedied or can not remedy the deficiency within that
time. The title insurer shall file the on-site review report with the Director
of Insurance and explain the areas of deficiency and the agent's progress made,
if any, during the five-business day grace period.
006.01 Agency Contract
Each on-site review shall include a review of the title
insurer and title insurance agency/title insurance agent contracts to ensure
(a) the contract sets forth the responsibilities of each party and, when both
parties share the responsibility for a particular function, specifies the
division of responsibilities and (b) the contract is up-to-date and properly
executed.
006.02 Licensure
Review
Each on-site review shall include a review of compliance with
Nebraska licensing requirements related to the title insurance agent, and
abstractors, if applicable.
006.03 Financial Responsibility
The title insurer shall obtain from the title insurance
agent, or from the title insurance agency if the title insurance agent is
employed by a title insurance agency, a statement of financial condition of the
title insurance agent or title insurance agency as required pursuant to Neb.
Rev. Stat. §
44-1993(2)
and §
44-19,114(14)
which includes an income statement and
balance sheet showing the condition of the title insurance agent/agency affairs
as of December 31 of the preceding year. This statement of financial condition
shall be certified by the title insurance agent or the title insurance agency's
designated agent as being a true and correct representation of the financial
condition. The title insurer shall document its receipt of the title insurance
agent's or title insurance agency's statement of financial condition in the
title insurer's on-site review report.
006.04 Management Evaluation
Each on-site review shall include a review of management
practices related to conflicts of interest, affiliated business arrangements,
and regulatory compliance.
006.05 Title Plant Maintenance
The title insurer shall review the title insurance agent's
procedures to update and maintain title plant records, if
applicable.
006.06
Underwriting Practices
The title insurer shall establish underwriting standards to
minimize claims or potential losses to insurers, lenders, and consumers. The
title insurer shall conduct a random file review using an audit sample to
ascertain the thoroughness and accuracy of the title insurance agent's search
procedures.
006.07 Office
Maintenance
006.07(A) Each on-site review
shall include a review of the following items:
006.07(A)(1) Order log and policy
register;
006.07(A)(2)
Reconciliation of orders with commitments, title searches, title policies, and
collection of premium;
006.07(A)(3)
Reconciliation of policy numbers provided to the title insurance agent,
existing inventory and issued policies;
006.07(A)(4) Review of the title insurance
agent's procedure for tracking issued commitments;
006.07(A)(5) Review of the title insurance
agent's practices to cancel commitments on transactions that do not
close;
006.07(A)(6) Review of the
title insurance agent's procedures for follow-up after closing to track status
of outstanding conditions required for timely issuance of policies;
006.07(A)(7) Review of the title insurance
agent's procedure for voiding policies;
006.07(A)(8) Review of the title insurance
agent's tracking of open escrow, security, settlement or closing
files;
006.07(A)(9) Review of title
insurance agent's issued policy reports to the title insurer.
006.07(B) To assist the title
insurer and the Department, the title insurance agent shall maintain a log or
logs containing the above referenced information and any additional information
if required to be tracked by the title insurer.
006.08 Claims
If the title insurance agent has the authority to settle
claims on behalf of the title insurer, the on-site review shall include a
review of the agent's claims procedures to ensure timely review, proper
investigation, adequate documentation, and resolution.
006.09 Policy Delays
The on-site review shall include a review of the title
insurance agent's files awaiting policy issuance to determine the average
length of time between closing and the issuance of the title policy. The title
insurer shall document whether the title insurance agent has appropriate
follow-up procedures in place to request needed items after the closing, and
whether the title insurance agent is actively using those procedures. The delay
between the date all of the requirements to insure have been met and policy
issuance shall be no longer than sixty (60) days.
006.10 Policy Issuance
The on-site review shall include an audit sample and review
of issued policy files. The review of the sample should determine compliance
with the following:
(a) use of
correct policy and endorsement forms;
(b) accuracy of insured information,
exclusions, and property identification;
(c) timely processing of policies after
requirements to insure have been met;
(d) accuracy of premium charged;
(e) proper use of required disclosures;
and
(f) the title insurer shall
track the receipt of premium funds from the closing to the agent's escrow,
settlement, security or closing account and any other accounts to the title
insurance agent's premium remittance account.
006.11 Escrow Closings
For those agents performing escrow, security settlement or
closing services pursuant to Neb. Rev. Stat. §
44-19,116,
the title insurer shall review the title insurance agent's closing procedures
and shall include an audit sample of escrow closing files. The review shall
include a determination of compliance with Neb. Rev. Stat. §
44-19,116
with the following:
(a) use of escrow
agreements;
(b) adherence to the
"good funds" requirements,
(c)
deposit practices,
(d) disbursement
of funds in compliance with written instructions, and
(e) recording of all deeds, releases, and
other documents required of the title insurance agent.
