TDI has approved changes to rates and several rate rules that will go into effect September 1, 2019. The Department held both informal meetings and formal hearings before approving the changes, at which the Texas Department of Insurance represented the State; Texas Land Title Institute represented the insurance industry, and the Office of Public Insurance Counsel represented Texas consumers.
Below are details of each change.
Rate Adjustments
Basic premium rates have been decreased by 4.9 percent, as shown in the
new schedule
.
Minimum Basic Rate Increased
The lowest rate tier is raised for policies with face values of up to $10,000 to those with values up to $25,000. The minimum basic premium rate will therefore now be $328.
New Rate Tiers for High Dollar Deals
The Department also approved new discounted tiers for high-end commercial transactions, as follows:
$25,000,000.01--$50,000,000.00
$50,000,000.01--$100,000,000.00
More than $100,000,000.00
Expansion of Rate Rule R-5: Simultaneous Issue
More transactions will now qualify for the benefit of Rate Rule R-5 Simultaneous Issuance of Owner’s and Loan Policies. Specifically, for loan policies over $5,000,000, the R-5 premium may be applied if the loan policy is purchased within 90 days of the owner’s policy, as long as the owner has not changed in that time. This change will allow buyers to close high-end purchases with cash and have more time to arrange financing.
Simplification of Rate Rule R-8: Refinance Credit
The new rules simplifies the credit under Rate Rule R-8. When purchasing a policy on a loan that takes up, renews, extends, or satisfies a previously insured loan, a borrower will now have a longer period during which they can get a credit for their prior loan policy. Previously, a credit was permitted for up to seven years from the date of issuance of the first policy; it is now eight years. Additionally, the credit chart is greatly simplified, from six tiers ranging from 15 to 40 percent, down to just two:
AGE OF PRIOR POLICY - 0-4 YEARS
CREDIT TO BASIC PREMIUM - 50%
AGE OF PRIOR POLICY - 5-8 YEARS
CREDIT TO BASIC PREMIUM - 25%
Rate Rule R-20. Owner’s Policy after Construction Period
Extended Time for Reduced Premium:
If an owner’s policy for $5 million or more is issued that includes the cost of immediately contemplated improvements, the deadline is now two years, versus one year, from the date of completion to obtain a policy at the minimum basic rate.
Simultaneous Issue for Loan Policies
: Rate Rule R-20.B now expressly permits the simultaneous issue premium for loan policies.
If you have any questions about the application of the new rate rules, please contact Teresa Frost or Underwriting Counsel.
Teresa Frost, CTIP
