Joseph Petrelli, President

The Title Statistical Plan © Working Group was appointed by the Title Insurance © Task Force in 2010 to develop a nationwide title statistical plan that would include, if feasible, title agent data. On August 15, 2010, the Title Statistical Plan Working Group promulgated a proposal. This session will present the major attributes of the proposal, contrast the statistical reporting plan with a financial reporting plan and familiarize attendees with the data requirements of the current proposal.

1) Calendar year reporting 2) State reporting for Agent/Agency/Firm or dba, if applicable 3) Federal tax ID/SSN* 4) Parent Company EIN (if applicable)* 5) License number (for this state) 6) Address (line 1), Address (line 2) 7) City, State, Zip 8) Contact Person, Contact Phone, Contact *For Underwriter Direct Operations: use NAIC Company Code

1. Independent 2. Affiliated (owned by underwriter) 3. Underwriter direct 4. Is reporting agent an Affiliated Business Arrangement (affiliated with real estate brokerage, mortgage company, etc.)? (Y)es/(N)o. If Yes, list affiliated business names on Appendix Agency/Branch Type: a)Title & Closing (full service) b)Title only c)Closing only d)Attorney title

5) State of domicile/resident of Reporting Entity/Person 6) Number of states in which Reporting Entity operates (list all states on Appendix A) 7) Date originally licensed (for this state) 8) Percentage of business for this state (by premium) a)Percentage of law firm revenue b)Number of underwriter appointments, contracts or agreements. (List underwriters and percentage of business for each on Appendix A).

9) Number of employees (total FTE* – as of date of reporting period) a)Number of FTE* on March 31 (end of Q1) b)Number of FTE* on June 30 (end of Q2) c)Number of FTE* on September 30 (end of Q3) d)Number of FTE* on December 31 (end of Q4) *Full Time Equivalent

10) Licensed Employees (total FTE* – as of date of reporting period) a)Number of FTE* on March 31 (end of Q1) b)Number of FTE* on June 30 (end of Q2) c)Number of FTE* on September 30 (end of Q3) d)Number of FTE* on December 31 (end of Q4) 11) List licensed employees (both allocated and unallocated employees) accounted for in Lines 21(a), (b), (c), and (d) on Appendix A *Full Time Equivalent

12) Unlicensed Employees (total FTE* – as of date of reporting period) a)Number of FTE* on March 31 (end of Q1) b)Number of FTE* on June 30 (end of Q2) c)Number of FTE* on September 30 (end of Q3) d)Number of FTE* on December 31 (end of Q4) *Full Time Equivalent

1. Open Title Orders 2. Closed Title Orders in Which Policy Was Issued 3. Total number of policies issued in reporting period 4. Residential Policies 5. Non-residential Policies 6. Number of searches billed to 3 rd parties 7. Number of searches purchased from 3 rd parties

8) Number of non-insurance title products produced 9) Total settlement/escrow/closing transactions conducted 10) Number on line 28 that were sale/purchase settlement/escrow/closing transactions 11) Number of settlement/escrow/closing transactions conducted in which a title policy was not issued

1. Premium written 2. Premium remitted to underwriters 3. Settlement/closing/escrow income 4. Title examination income 5. Abstract/search income 6. Income from cancelled orders 7. Investment income 8. All other income 9. Total income (automatically totals)

1. Employee compensation 2. Contract labor (1099) 3. Temporary labor (non-1099) 4. Payroll taxes 5. Employee benefits 6. Rent, utilities, and repair 7. Title plant maintenance/subscription expenses 8. Abstract/search expenditures

9. Computer/software 10. Depreciation (if applicable) 11. Business insurance 12. Business legal 13. Accounting 14. Licenses, taxes, and fees 15. Marketing/sales 16. Travel and lodging

17) Employee education 18) Bank charges 19) Charge offs 20) Miscellaneous expense 21) Total business expenses (automatically totals)

1. Title losses paid and not reimbursed by underwriter or included in underwriter loss reserves 2. Title loss files opened (I have a brainstorm) 3. Title loss files paid (I have a brainstorm) 4. Reimbursements paid to underwriter for title losses 5. Closing/Escrow losses 6. Number of Closing/Escrow losses resulting from escrow shortages 7. Total amount of funded shortages

8) Abstract/search losses (from abstracts/searches sold) 9) Title loss-related and Closing/Escrow loss-related legal expenses 10) Deductibles paid 11) E&O insurance premiums 12) Fidelity/Surety bond premiums 13) Total loss expenses (automatically totals)

14) Total expenses (automatically totals) 15) Net income before taxes (automatically totals) 16) Federal income tax incurred 17) Net income (automatically totals)

The purpose of the statistical plan is to give a basic picture to regulatory agencies of the business of title insurance at the agency level. While annual financial reporting by insurance companies (underwriters) captures the overall picture of premiums and losses, there are many factors of the business which are only experienced by the ground-level title agent, including actual operating costs and losses not typically paid by an underwriter. As a result, the business of title insurance is particularly susceptible to criticisms of excessive rates from underwriters, excessive retention of premiums by agencies (often incorrectly categorized as commission), and general lack of value in the product due to low loss ratios – ratios which are possibly artificially low due to unreported loss payments by title agencies.

It should be noted that the statistical plan in its current form does not necessarily capture all information regarding the daily experience of title agencies. In the course of searching and examining land records, title agencies fulfill their main role in the title insurance process of identifying potential clouds on title and future losses, and work to correct or eliminate risk before the premium is even paid. This is, in fact, the fundamental nature and basis of title insurance. However, many small agencies across the country still do much of their searching by hand, and software systems to collect information on these identified elements is either not yet available or prohibitively expensive for smaller agencies. In an effort to keep the burden of completing the stat plan as low as possible, these items are not collected at this time. If, in the future, software makes such collection of information more viable, then such items may be added and requested.

Need further discussion to determine what, if any, definitions are necessary (or if it is appropriate to leave for state specific definitions)

This guideline is intended as a resource for use by state insurance departments and other regulatory agencies implementing the NAIC Title Agent Statistical Data Plan (the “stat plan”). Under the stat plan, it is expected that all operating title insurance agencies in the participating state will be subject to a yearly report of their policy issuance, business income and expense, and loss experience (beyond losses forwarded to or paid by an underwriter). Agencies include independent title agencies, affiliated business arrangement (AfBA) title agencies, attorney firms/title agencies, and underwriter direct operations. A comprehensive set of instruction for each type of agency was also developed.

Although the actual data points collected in the stat plan are points that should be readily available to reporting entities, it is important to note that most have not been previously required to collect and report this data in the current form. Many smaller agencies will need time to develop and put in place systems for collecting and organizing the data, which may involve purchasing new or updating existing software systems, developing tracking spreadsheets, and other administrative tasks involved with the collection of requested data.

Therefore, it is suggested that state regulatory agencies provide as much advance notice as possible prior to the actual expected dates for reporting. For example, a state agency could give three to six months’ notice prior to January 1 of the year that collection will begin, thereby ensuring enough time for agencies to adopt and adapt their systems before having to track and collect the data. After that, title agencies will track the data points through the year, and ongoing basis, enabling them to easily compile, prepare, and submit the data plan each year to their regulatory agency. The Task Force recommends a yearly reporting date of June 1 for the previous year’s data.

Needs further discussion

Due to the sensitive nature of individual agent data, including income, expense, and loss experience, it is strongly recommended that state regulatory agencies keep individual response on the stat plan confidential. While such data may already be protected as proprietary, financial, or other sensitive information, it is highly recommended that states determine whether they can hold the state plan information confidential, and enact any statutory or regulatory amendments necessary to do so.

However, nothing herein should be construed as attempting to limit the sharing or publication of aggregate data, since such publication may in fact make important disclosures regarding the experience of title agents in a particular geographic area or business demographic (i.e. by county, state, or by agency type).

The commissioner shall adopt any rules needed for implementing the provisions of this Act.

This Act shall take effect on [insert date]