As previously reported to you, the Florida Office of Insurance Regulation (“OIR”), required all Florida title insurance underwriters to pay assessments for two failed title insurance underwriters, National Title Insurance Company and K.E.L. Title Insurance Group. The Department of Financial Services (“DFS”), as receiver, requested the assessments to pay the claims and administrative costs for both failed underwriters.
Florida law requires that each title insurer pay a pro rata portion (based on market share) of the assessments, and that each title insurer shall recoup its payment by collecting a surcharge on future policies. The OIR has ordered that a surcharge of $3.28 be collected on each title insurance policy with an effective date of September 2, 2014, or later.
We understand the additional cost and inconvenience to your agency of collecting the surcharge, and we want to make this as easy for you as possible. We appreciate your assistance in complying with Florida law and the orders of the OIR and DFS.
1. The surcharge applies to policies with an effective date of September 2, 2014 or later.
2. The surcharge is applied in all transactions (residential and commercial) where a title insurance policy is issued. The surcharge does NOT apply to endorsements. For example, if issuing an endorsement insuring a mortgage modification, the surcharge does not apply even if the endorsement changes the effective date of the original policy to
September 2, 2014, or later.
3. The surcharge does NOT apply to simultaneously issued policies. Do NOT collect a $3.28 surcharge for any simultaneously issued loan policy. In other words, if an owner’s policy and a simultaneous loan policy are being issued, only one surcharge of $3.28 is to be collected.
4. The surcharge is set forth in Florida Statutes as a governmental assessment. It is not considered a premium and therefore, it is not subject to the agency/underwriter split.
5. The entire surcharge is paid to the underwriter upon which the policy is written.
6. Florida law requires that the surcharge be sent to the underwriter within 60 days of the issuance of the policy.
7. Continue to collect the surcharge until we receive further notice from OIR.
Disclosure of Surcharge on Closing Statement
1. The surcharge should be shown as a separate line item on the closing statement as, for example, “Government Surcharge”, “Statutory Surcharge” or other similar label. On a HUD-1 settlement statement form, we suggest you use a blank line in the 1300 series, or if requested by the lender, a line in the 1100 series.
2. The closing statement may indicate that the surcharge is being paid to the underwriter of the title insurance policy.
3. It is to be charged to the party responsible for payment of the title insurance premium, unless otherwise agreed upon between the parties. If an owner’s policy and a simultaneous loan policy are being issued, the $3.28 is charged to the party responsible for payment of the owner’s policy.
Remitting the Surcharge – Payment Form
How the surcharge is then remitted to us will depend on your closing software (if any) and your
accounting process. You have several options:
Option A Generate one check per file for the $3.28 surcharge. You may need to code the charge so the check prints separately from the premium check.
Option B Generate one check per file which includes the premium and the surcharge in the same check. Remember, the surcharge is not premium and is shown as a separate line item on the closing statement.
Option C Group the surcharges from several files and generate a single check for the total surcharges collected. Surcharges may be grouped as often as desired at whatever frequency works best from time to time, such as weekly or monthly.
Option D Use whatever guidelines your other underwriters instruct you to follow. We want to make it as easy on you as possible, and therefore, we are willing to abide by guidelines that your other underwriters may require if that works best for you.
You do not have to use the same method every month, just do what works best for your operation from time to time.
The surcharges can either be sent to us separately as you collect them or they can be sent to us with your premium remittance, either as separate checks or in the same check with the policy premium, or lumped together with surcharges/premiums from several files. Just remember that Florida law requires the surcharge be sent to the underwriter within 60 days of the effective date of the policy for which it was collected.
Where/How to Send the Surcharge
For those of you who send your policies and premium directly to our agency accounting department, the address for the surcharge payments is the same as the address for remitting premium:
FNTG Agency Accounting
1431 Opus Place, Suite 635
Downers Grove, IL 60515
For those of you who pay your remittance from the monthly account statement, the statement will reflect the $3.28 surcharge for each policy (excluding simultaneous issue policies) with an effective date of September 2, 2014, or later. Please do not include the surcharges in any check for title searches.
-FNTG Florida Underwriting Department