The Trusted Adviser
February 2019 | Volume 12 · Number 2

Illinois Land Title Association to Propose New Changes to the Title Insurance Act

Tania M.S. Stori photoThe Illinois Land Title Association (ILTA) has submitted draft legislation to the Legislative Reference Bureau that would make significant changes to the Illinois Title Insurance Act. ATG is a member of ILTA and supports ILTA's decision to propose this legislation. ATG member agents who are also members of ILTA have a chance to offer their comments on the proposed legislation to ILTA until March 1, 2019.

The purpose of the proposed legislation is to provide a framework for the Illinois Department of Financial and Professional Regulation (IDFPR) to regulate rates for title insurance policies and related services, provide for fair compensation to providers, and benefit consumers by limiting the drivers of higher pricing. Illinois's regulatory framework is unique in that the IDFPR has no authority to require underwriters to file title insurance rates and it has no authority to regulate those rates. Most states have statutes that regulate rates for title insurance that work well to benefit providers and consumers. ILTA has researched the statutory frameworks and experience of other states and the proposed legislation contains measures that have been effective, with an effort to keep the practices and structure that have worked in Illinois for so long.

The proposed legislation will make changes to three main areas of the Title Insurance Act: Rate Regulation, Title Agent Licensing, and Specific Prohibited Acts.

Rate Regulation and a Rating Bureau

The proposed legislation will allow for the creation of a rating bureau to research and file rates and forms on behalf of its subscribers. A rating bureau is a private entity created by a group of member underwriters. The rating bureau has the authority to research the costs of providing title insurance, propose and file with the IDFPR the rates and forms manual that the members will use. Once the IDFPR approves the rating bureau's filed rates and forms, all title insurance agents for the member underwriters, and any underwriters who later subscribe to the rating bureau, must use the filed rates and forms. The rating and forms manual is updated annually, and the proposed legislation includes provisions for rate deviation procedures, when needed. The rating bureau allows underwriters to bear the cost and provide the expertise in figuring rates and choosing the forms in a way that is not anti-competitive, while allowing the IDFPR to retain the authority to approve the proposed rates and forms.

Underwriters that do not participate in the rating bureau must file their own rates and forms and obtain IDFPR approval, and their title insurance agents must use their filed and approved rates and forms.

Some other relevant points concerning rate regulation in the proposed legislation are as follows:

  • The proposed legislation creates two geographic zones for separate rates in Illinois, consisting of one zone that includes Cook, Lake, DuPage, McHenry, Kane, Will, Grundy, and Kendall Counties. The other zone includes all other Illinois counties. If at some point it appears that the rates are similar between the two zones, the statute provides a procedure to consolidate rates in all of Illinois into a single rate filing. We anticipate that the new rate structure may eventually bring better parity to the wide pricing gap that currently exists between the zones.
  • Filed rates will cover both residential and commercial transactions, and all possible exposure amounts.
  • Rates will also be filed for escrow fees.
  • For the Owner's Policy, Loan Policy and Endorsement premiums, the proposed legislation requires that the underwriter retain 20% and the title insurance agent retain 80% of the premium collected.

Title Agent Licensing

To facilitate the IDFPR authority to regulate rates and splits for title insurance charges, the proposed legislation will change the current registration process for title insurance agents. Now, underwriters register their title insurance agents with the IDFPR and update their agents' status with the IDFPR, and annually confirm their list of registered agents. Under the proposed legislation, title insurance agents will apply to the IDFPR directly to be licensed, and renew their licenses every two years. The proposed legislation provides for entity licensing, rather than requiring individual employees to all have separate licenses. For each entity obtaining a license, one designated individual who has a financial interest in the entity and is authorized to determine insurability of title must be identified. In order to participate in title insurance related activities,each title insurance agent or agency must have at least one title insurance underwriter.

Some other relevant points concerning title insurance agent licensing in the proposed legislation are as follows:

  • Current title insurance agents will be covered by a grandfather clause and not have to reapply as a new agent.
  • Errors and omissions insurance coverage of $250,000 per claim and $500,000 in aggregate, with a deductible of $25,000 or less, will be required for all title insurance agents.
  • Currently, underwriters bear the costs of IDFPR visits, but under the proposed legislation, the IDFPR will pay for its own visits to agents and underwriters.
  • Fees will be charged for new licenses and for license renewals, to help pay for the additional resources that the IDFPR will require. Proposed fees are $80 for residents, $120 for non-residents, $80 for two-year renewals and $120 for lapsed reinstatements.

Specific Prohibited Acts

To ensure the fairness of competition in the marketplace for title insurance, some provisions prohibiting specific acts that currently appear in the federal Real Estate Settlement Procedures Act and in the Illinois Administrative Code have been added to the proposed legislation, to highlight the importance of fair conduct and allow the IDFPR the authority to enforce reasonable market conduct.

Of note is the fact that one of the proposed prohibited acts arises out of ISBA Ethics Opinion 10-02, which prohibits accepting or referring a title order with knowledge that the order was placed in exchange for the express or implicit promise that a consumer will be referred to that provider for services. By including this prohibition in the proposed legislation, the rule would now apply not just to attorney title insurance agents, but to all title insurance agents. We view this as a positive step toward curing some of the more objectionable practices in the industry today.

The proposed legislation also specifically designates acceptable conduct, to provide a safe harbor for business practices that don't harm market competition and build good will. For example, the proposed legislation authorizes providing educational information and seminars without charge to title insurance providers and providing property descriptions and names of record owners without charge to lenders, real estate brokers, attorneys, or others.


ATG encourages its agents who are also members of ILTA to review the proposed legislation and provide comments to ILTA by March 1, 2019. For all ATG agents, ATG will continue to advocate for your interests and to keep you informed of developments as this legislation proceeds.

Tania M.S. Stori
ATG Vice President – Claims and Litigation

[Last update: 2-26-19]

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