KANSAS INSURANCE DEPARTMENT

Proposed Regulation K.A.R. 40-3-43

K.A.R.  40-3-43. Title insurance; controlled business; definitions; requirements. For purposes of section 1, subsection (14)(e) and (f) of 1989 House Bill 2502 K.S.A. 40-2404, (14)(f) through (i) and amendments thereto, these terms shall have the following meanings: (a)  “Producer of title business” or “producer” means any natural person, firm, association, organization, partnership, business trust, corporation, or other legal entity engaged in this state in the trade, business, occupation, or profession of:

(1) buying or selling interests in real property;

(2) making loans secured by interests in real property; or

(3) acting as broker, agent, representative, or attorney of natural persons or other legal entities that buy or sell interests in real property or that lend money with such interests as security. “Closed title order” shall mean an order when a policy or policies of title insurance are actually issued.

(b) “Associate” means any firm, association, organization, partnership, business trust, corporation, or other legal entity organized for profit in which a producer of title business is a director, officer, or partner, thereof, or owner of a financial interest; the spouse or any relative within the second degree by blood or marriage of a producer of title business who is a natural person; any director, officer, or employee of a producer of title business or associate; any legal entity that controls, is controlled by, or is under common control with a producer of title business or associate; and any natural person or legal entity with whom a producer of title business or associate has any agreement, arrangement, or understanding or pursues any course of conduct the purpose or effect of which is to evade the provisions of this section.

(c) “Financial interest” means any direct or indirect interest, legal or beneficial, where the holder is or will be entitled to one percent or more of the net profits or net worth of the entity in which such interest is held. Notwithstanding the foregoing, an interest of less than one percent or any other type of interest shall constitute a “financial interest” if the primary purpose of the acquisition or retention of that interest is the financial benefit to be obtained as a consequence of that interest from the referral of title business.

(d) “Refer” or “referral” means to direct or cause to be directed, or to exercise any power or influence over the direction of title business whether or not the consent or approval of any other person is sought or obtained with respect to the referral.

(e) “Gross operating revenue” means the total revenue received by a title insurer, title agent or title agency from application of the rates, premiums and charges filed or required to be filed pursuant to 1989 House Bill No. 2497, Sec. 1 (d)(2) in connection with providing title insurance or other services on real estate transactions involving properties located in counties in Kansas that have a population, as shown by the last preceding decennial census, in excess of 10,000.

(f) “Controlled business” shall mean any portion of a title insurer's or title agent's business in this state that was referred by any producer of title business or by any associate of such producer, where if the producer of title business, the associate, or both, have with a financial interest in the title insurer or title agent to which the business is referred initiates the referral.

(c) “Title insurance order” shall mean an order for an owner’s title insurance policy or an order for a loan policy of title insurance, or both. Each pair of orders for an owner’s title insurance policy and a loan policy of title insurance to be issued simultaneously for the same real estate transaction shall constitute one order. The policies of title insurance issued under this transaction shall constitute one closed title order only if both policies are issued by the same title insurer or title agency. (Authorized by K.S.A. 40-103, 1989 HB 2502, Sec. 1 (14)(g) K.S.A. 2004 Supp. 40-2404; implementing 1989 HB 2502, Sec. 1 (14)(e) and (f) K.S.A. 2004 Supp. 40-2404; effective, T-40-7-27-89, July 27, 1989; effective Sept. 11, 1989; amended P- ____________.)