Posted by LCS_CA on 9/1/06 1:06pm
Msg #142887
UPDATE: California Insurance Commissioner Hearing 8/30/06
Following is the update that the California Escrow Association sent out to it's membership concerning the 8/30/06 hearing on their proposed regulations regarding reducing escrow/title fees.
To: CEA Members and Friends
From: Mike Belote, CEA Legislative Advocate and Executive Director
Date: September 1, 2006
Subject: Update on Proposed Department of Insurance Regulations
On Wednesday, August 30th, CEA members participated in a press conference protesting
proposed regulations from the Department of Insurance mandating escrow fee reductions of 27% below year-2000 filed rates. CEA members also testified in opposition to the proposed
regulations at an all-day hearing conducted by the Department. This memo briefly summarizes
these important events, and what may happen next on the proposals.
Press Conference: We enjoyed an excellent turn-out from CEA members at this event, which
was co-sponsored with the Escrow Institute of California. The event began at 9:30 a.m., in front of the Department of Insurance building in San Francisco. Total CEA and Escrow Institute
attendance at the press conference probably approached 75 persons, a very fine showing for this type of event. Thanks to all who gave of their time to attend!
Speaking at the press conference was Escrow Institute President P.J. Garcia, and CEA leaders
Fran Butler, Lexi Howard, and Juliana Tu. A prominent local television station and Fox affiliate
was in attendance, and well as reporters from a number of general and trade newspapers. The television station later ran footage of our event in their newscast, and several of the daily papers ran stories of the press conference and public hearing as well. Additionally, DNN TV ran an Internet-based newscast. To view this newscast, go to: http://www.dnn.tv/ - click on the Real Estate News box and you should see the newscast . . . it is about 1 minute into the broadcast that the CEA story comes on.
Public Hearing: The public hearing conducted by the Department of Insurance on the proposed
regulations began at 10:00 a.m. and lasted until well after 4:00 p.m. The hearing was conducted by Department General Counsel Gary Cohen; Commissioner Garamendi did not attend. A number of large title insurers, as well as underwritten companies, testified in opposition to the proposal. Some brought expert economists and actuaries to testify as well. The title testimony generated several fairly sharp exchanges between company witnesses and the Department.
In addition to company witnesses, representatives from CEA, CLTA, the Escrow Institute, and
the National Notary Association testified as well. Our major point was that the escrow industry
is characterized by a fiercely-competitive marketplace, both within industry segments and
between title, independent, and broker-owned providers. We spent considerable time explaining what escrow officers do, how the duties have expanded in recent years, and why mandated fee reductions will hurt both escrow officers and consumers generally.
Next Steps: The Department of Insurance is pursuing the proposed regulations consistent with the Administrative Procedures Act, as required by law. The “APA” imposes many requirements on agencies seeking to adopt regulations, including public hearings and responses to arguments submitted verbally and in writing by the public. At this point, the Department will be considering over 700 comments received and deciding how to respond to them.
The Department may decide to proceed with the regulations as proposed, or they may decide to pursue changes in the proposals, or they may withdraw the proposals entirely. Once this
decision is made, the law requires the proposal to be evaluated by a state agency known as the Office of Administrative Law. “OAL” reviews the proposal against a series of standards
contained in the law, and may decide to approve the regulations, reject them, or require more
information.
Even if the Department decides to continue pursuit of the regulations, and even if the Office of
Administrative Law approves them, lawsuits may be brought against the Department to block
implementation of the regulations. The point is that the whole issue is far from over, no
matter what the short-term decision of the Commissioner is!
For now, we just want to thank all those CEA members and friends who have helped oppose the regulations: those who submitted written comments, and those who attended the press
conference and public hearing. We should also thank our industry partners CLTA, the Escrow
Institute, and NNA California for joining with us and supporting the escrow industry with a
unified message. We will keep you posted as soon as we have more information.
California Escrow Association
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