The current issue of City and State Magazine is dedicated to the topic of insurance.  You can read it online here - https://issuu.com/cityandstate/docs/csny_04092018_version .

This edition contains interviews with the Chairmen of the Insurance Committees in the State Senate and the Assembly, Senator Seward and Assembly Member Cahill.  Both of these gentlemen answer a question on title insurance on page 21 and I encourage you to read their comments. (I also suggest you take a look at the NYSLTA ad on page 23.)

For several months, NYSLTA Members and other concerned citizens have activity communicated with our legislators to repair DFS regulations that threaten our livelihood, disrupt the real estate finance marketplace and create new costs and complications for consumers, lenders and attorneys.

At times, it may appear our efforts are fruitless. I admit the investment is great and to date the returns have been slim. For perspective, I ask you to look closely at Chairman Cahill's reply to the title insurance question.

" Last year, the Assembly Insurance Committee held a hearing on the impact the new regulations are having or would have. The testimony and evidence from stakeholders and consumer advocates was compelling.

Since then, even more colleagues have approached me as chair of the Assembly’s Insurance Committee to discuss title insurance regulatory change.

In fact, more than any other single insurance topic, Assembly members from across the state have brought the concerns of their constituents regarding title insurance regulation to my attention.

While some would attribute the currency of the issue to heavy industry lobbying, it is clear, instead, that the disruption caused by regulatory overreach has impacted stakeholders in every phase of real estate transactions..."

This growing awareness and understanding of the problematic consequences of DFS regulation 208 is the result of YOUR phone calls, YOUR emails, YOUR person-to-person conversations with legislators and key staffers.

The process is slow but this is how we build a presence for the title insurance industry in the halls of government. One by one, one meeting at a time, with follow-up and repetition, with single-minded and consistent messaging - this is how we counter the misinformation and misunderstanding about the work we do and the financial product we provide.

Our work informing and educating the legislators and their staff does not end with Regulation 208. Next year and every year after that, we will function under the purview of the DFS.  Strong relationships in the legislature are our best means of counterbalancing onerous regulation.

If you have sent an email or made a phone call to your Senator or Assembly Member - thank you and now take the next step and meet with them in person.  If you have lobbied in the district office or in Albany - you are a champion, and we need you to bring along others as we continue the effort.

The Title Insurance Industry Objections to DFS Regulation 208 (11 NYCRR 228)

TALKING POINTS

Regulation 208 prohibits most sales and marketing practices – such as coffee during a meeting or an introductory lunch - which are legal and customary in other regulated industries.

Regulation 208 gives title companies the option of a costly, technically complex and logistically difficult refiling of six year’s operating expense data or accept a broad 5% reduction in insurance premiums rates.

DFS overstates title industry marketing expenditures based on anecdotal information.  The NPD Analytics Report show title agents spend 2-5% of the their annual budget on marketing. This is well below the 7-8% recommended by the Small Business Administration.

Regulation 208 also seeks to control business activity outside their authority over title insurance by capping fees for non- title services and adding the expense for non-title insurance services performed by closers.

Typical services performed by title agents that are NOT necessary for title insurance:

·         Pick-ups/satisfaction of an existing mortgage - under certain circumstances Regulation 208 forces agents to provide services without compensation

·         Surveys and searches such as bankruptcy, Patriot, municipal departmental – fees are capped below the cost of providing the service

“Connect the dots” - The NPD Analytics report shows a 40.7% decrease in title agent net income if the 5% rate reductions, the loss of compensation for ancillary services and the added cost absorption are in place as a result of Regulation 208.

What can be done?

S6704 - A8467 clarifies insurance law so that the longstanding definition requirement of a quid pro quo requirement of "inducements" is re-established.

S7901- A10207 clarifies that DFS does not have authority to regulate fees for non-insurance services.

Legislation should be introduced to clarify that DFS does not have authority to regulate fees for non-insurance services.

Include these proposals in the state budget to provide immediate relief to at-risk businesses.

The DFS has updated the instructions regarding the cybersecurity notices.

The instructions for replying to a notice have been revised.

Key Questions About the Recent Cyber Regulation Notice

Why did I receive this notice?

All regulated entities and licensed persons of the Department of Financial Services (DFS) were required to file a cybersecurity regulation Certification of Compliance under 23 NYCRR 500 by February 15, 2018.  Our records indicate that to date you have not made such filings under the regulation. Please be aware that if you hold more than one license, then you need to file a separate Certification of Compliance for each license you hold.

What if I am late with my filing?

All Covered Entities that have failed to submit the Certification and that are in compliance with the regulation should do so via the DFS cybersecurity portal as soon as possible.  The DFS Certification of Compliance is a critical governance pillar for the cybersecurity program of DFS regulated entities, and DFS takes compliance with the regulation seriously.  The Department will consider a failure to submit a Certification of Compliance as an indicator that the cybersecurity program of the Covered Entity has a substantive deficiency.

What if I filed for an exemption from the cybersecurity regulations?

People who received the reminder are required to file the Certificate of Compliance even if you filed for an exemption under 23 NYCRR Part 500.19. These exemptions have been tailored to address particular circumstances and include requirements that the Department believes are necessary for exempted entities. Covered Entities are required to file a Certificate of Compliance to confirm that they are in compliance with those provisions of the regulation that apply to the Covered Entity.

I have a receipt showing I filed already?

Please look at the receipt.  If the receipt number you received begins with an “E” then it is a receipt for filing a Notice of Exemption and not a receipt for filing the required Certificate of Compliance.  Your exemption does not excuse the filing noticed below.  The Certification of Compliance is to cover the period as of December 31, 2017 for all requirements of the cybersecurity regulation in force by that date.  If the receipt number starts with a “C” email cyberregcomments@dfs.ny.gov with your name, license number and the receipt number from your cybersecurity Certificate of Compliance filing.

When will I receive a reply to my email?

DFS will reply to emails received in the above email box within 30 days.

Does this apply to me?

Section 500.01 (c) defines a Covered Entity for purposes of the Regulation as “any Person operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the Banking Law, the Insurance Law or the Financial Services Law.”  You will need to determine the applicability of the regulation to your particular circumstances.

How do a file a Certification of Compliance?

Certifications of Compliance should be filed electronically via the DFS Web Portal https://myportal.dfs.ny.gov/web/cybersecurity/. Please click the big orange box on the right hand corner that says “Cybersecurity Filing”. The Covered Entity will first be prompted to create an account and log in to the DFS Web Portal, then directed to the filing interface. Filings made through the DFS Web Portal are preferred to alternative filing mechanisms because the DFS Web Portal provides a secure reporting tool to facilitate compliance with the filing requirements of 23 NYCRR Part 500.

Dates under New York's Cybersecurity Regulation (23 NYCRR Part 500)

• March 1, 2017 - 23 NYCRR Part 500 becomes effective.
• August 28, 2017 - 180 day transitional period ends. Covered Entities are required to be in compliance with requirements of 23 NYCRR Part 500 unless otherwise specified.
• September 27, 2017 – Initial 30 day period for filing Notices of Exemption under 23 NYCRR 500.19(e) ends. Covered Entities that have determined that they qualify for a limited exemption under 23 NYCRR 500.19(a)-(d) as of August 28, 2017 are required to file a Notice of Exemption on or prior to this date.
• February 15, 2018 - Covered Entities are required to submit the first certification under 23 NYCRR 500.17(b) on or prior to this date.
• March 1, 2018 - One year transitional period ends. Covered Entities are required to be in compliance with the requirements of sections 500.04(b), 500.05, 500.09, 500.12 and 500.14(b) of 23 NYCRR Part 500.
• September 3, 2018 - Eighteen month transitional period ends. Covered Entities are required to be in compliance with the requirements of sections 500.06, 500.08, 500.13, 500.14(a) and 500.15 of 23 NYCRR Part 500.
• March 1, 2019 - Two year transitional period ends. Covered Entities are required to be in compliance with the requirements of 23 NYCRR 500.11.

The following letter was sent to New York Times editor Tom Feyer on February 1, 2018.

In response to:

New York’s Hidden Home Buyer Closing Costs: Luxury Boxes and Mint Mojitos by Shane Goldmacher (1/29/18):

The recent article tells only a portion of the story focusing only on the sensational.

This is really a story of small companies that are now in jeopardy due to the new Department of Financial Services (DFS) regulations. The regulations do much more than just limit marketing activities.

They effectively require the title industry to accept a mandatory five percent rate cut, without industry input or actuarial justification for such a rate cut.

This will be the 4^th cut we have had in 15 years.

They further limit how much title insurance companies can charge for their services. Our members have been very clear about the effect of these regulations: people will lose jobs, businesses will close, and those who remain employed will be forced to take pay cuts and pay more for health insurance. 

In the end, consumers will see less competition, fewer local businesses, higher prices, and potential delays on closings.

We remain committed to working with the DFS to revise the regulations so that they benefit consumers and do not threaten the continued existence of title insurers and agencies throughout the state. However, these drastic regulations will not fix the problems facing consumers, only trigger new ones.

Robert Treuber

Executive Director

New York State Land Title Association

The following was issued via email to NYSLTA Members.

Regulation 208 has introduced complex issues for the title insurance industry.

Within 2 days of the regulation being published, the NYSLTA posted information to assist Members in evaluating how to respond.

NYS Land Title Association Officers and Executive Committee members have worked many hours studying the regulation and discussing it. The NYSLTA engaged a law firm to provide guidance and recently we secured a meeting with the Department of Financial Services to discuss concerns.

The issues of Regulation 208 are too complex to be addressed in one document. We have posted on the Member web site a memo concerning Closers and Regulation 208. As our work progresses, we will seek opportunities to communicate on other aspects of the regulatory environment.

Our aim is to help our Membership understand the impact of the Regulation and to provide information that will help members make the necessary business decisions.

We have concluded that efforts to forestall or block Regulation 208 on December 18, 2017 are not likely to be successful. Any changes in Regulation 208 will not occur prior to December 18. Therefore, we are focused on being prepared for the changes of December 18 while at the same time we continue to explore potential remedies.

If you have not already done so - READ THE REGULATIONS. Read the materials posted on the Member web site. Agents should communicate with their Underwriter as the first source of advice.

As always, Members may contact NYSLTA Staff with questions.