Florida Clarifies Unlawful Inducements Related to Title Insurance

February 19, 2016 The Florida Department of Financial Services, Division of Insurance Agents and Agency Services has adopted Regulation 69-B-186.010 to help interpret Florida Statute 626.9541(1)(h)3, which prohibits certain activities related to title insurance because such activities constitute unfair methods of competition or deceptive acts or practices prohibited by Florida Statute 626.9521. Regulation 69-B-186.010 provides a non-exhaustive list of examples of activities that are prohibited whether performed directly or indirectly for or by any referrer of settlement services. 
“A referrer of settlement service business may be a title insurance agent, title insurance agency, title insurance company, attorney, real estate broker, real estate agent, real estate licensee, broker associate, sales associate, mortgage banker, mortgage broker, lender, real estate developer, builder, property appraiser, surveyor, escrow agent, closing agent, or any other person or entity involved in a real estate transaction for which title insurance could be issued; or any employee, officer, director, or representative of such a person or entity.”  Fla. Reg. 69-B-186.010.
Important Examples of Prohibited Activities

• “Facilitating any discount, reduction, credit, or paying any fee or portion of the cost of an inspection, inspection report, appraisal, or survey, including wind inspection, to a purchaser or prospective purchaser of title insurance.”  Fla. Reg. 69-B-186.010(4)(a)

• “Making or offering to make a charitable or other tax-deductible contribution on behalf of the purchaser or prospective purchaser of title insurance.” Fla. Reg. 69-B-186.010(4)(c)
• “Providing or offering employment to a referrer of settlement service business in exchange for the purchase of title insurance.”  Fla. Reg. 69-B-186.010(4)(e)
• “Providing “leads” or mailing lists to or on behalf of a referrer of settlement service business at no cost or a reduced cost.” Fla. Reg. 69-B-186.010(4)(p)
• “Providing, or offering to provide, non-title services, without a charge that is commensurate with the actual cost, to a referrer of settlement service business.” Fla. Reg. 69-B-186.010(4)(r)

Expenditures Not in Violation of the Rule
The regulation also provides a non-exhaustive list of examples of expenditures that are not in violation of the rule. Important examples:

• “Furnishing educational materials…exclusively related to title insurance for a referrer of settlement service business that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by a referrer of settlement service business.” Fla. Reg. 69-B-186.010(5)(b)

• “Compensation paid to a referrer of settlement service business for goods and services actually performed at amounts not exceeding the reasonable fair market value of the goods and services and that is not intended to induce the referral of title insurance business.”  Fla. Reg. 69-B-186.010(5)(c)
• “A payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.”  Fla. Reg. 69-B-186.010(5)(f)

This regulation is effective February 9, 2016.