It has come to the attention of the Idaho Department of Insurance (DOI) that the practice of title agents providing educational programs at their facilities to producers of title insurance is increasing. The purpose of this advisory is to remind all title agents of the following rules and provide a time period in which all title agents shall be required to come into compliance.
IDAPA 18.01.56.011 prohibits a title entity from providing things of value to a producer of title business, consumer or member of the general public unless such things of value, i.e, services, clearly fit into one of the four exceptions set forth in the rule in Sections 012, 013,014 and 015. The applicable exception for self-promotional educational programs is IDAPA 18.01.56.014.02.a
IDAPA 18.01.56.014.02.a states that “a title entity is permitted to conduct educational programs. The education programs are limited to education solely regarding title and escrow. A title entity is permitted to expend no more than ten dollars ($10) per person at an educational program [underlining added].” As noted in Section 11 of the rule, education programs conducted by the title agent are specifically exempt from “things of value” prohibition only if the education program is within the strict limits set forth in Section 14.02 of the rule. Two tests must be met to qualify under Section 14.02. First the course must be solely about title and escrow. Second, the title company must not incur more than $10.00 per producer in putting on the course. Charging a producer to take a course offered by the title company is not an element of the education program’s rule and does not take the offered course out of the requirements of the rule. The issue of cost focuses not on what the producer pays, but rather on what the title agent pays per producer to put on a permitted course. Any course where the title agent’s costs exceed $10.00 per producer is not allowed under the rule. To calculate this cost, the DOI will permit the title agent to count the number of producers who indicated that they would come to the class (and the title company has evidence of this number), not necessarily the number of producers that actually showed up (unless of course, the latter group is a larger number).
The other issue DOI would like to address is the use of the title company’s facility by producers or other third parties to put on an education program or other use. IDAPA 18.01.56 Exhibit 1, Item 10 states: “A title entity shall not furnish any part of its facility (e.g. conference rooms, meeting rooms, etc.) to a producer of title business or trade association without receiving a fair rental charge commensurate with the average rental for similar facilities in the area.” Further, IDAPA 18.01.56.011 prohibits a title entity from providing things of value to a “consumer or member of the general public.” These rules require that for anyone leasing or renting space at a title agent’s facility, for any purpose, a fair rental charge commensurate with the average rental for similar facilities in the area should be collected by the title agent. Similar facilities would mean corporate office spaces and not convention centers, hotel meeting rooms, etc.
A title agent may list any program on its website or in print that is being held at its facility. If the program is not a title agent’s educational program solely regarding title and escrow, the title agent must prominently state the entity or producer that is sponsoring and conducting the program so as not to be considered self-promotional and subject to IDAPA 18.01.56.014.02.a.
The final issue associated with the educational program rule is whether a title agent may create a separate, non-licensed entity to put on education courses that do not solely concern title or escrow. It is the conclusion of the DOI that such an effort to circumvent the rules is not permitted under the Idaho Insurance Code. Idaho Code § 41-2704(2) states that the business of title insurance includes “transacting or proposing to transact any phase of title insurance including solicitations,” and Idaho Code § 41-41-2704(4) includes “the doing, or proposing to do, any business in substance equivalent to any of the foregoing in the manner designated to evade the provisions of this chapter.” Consequently, an entity created for the purpose of circumventing the DOI’s regulations on education programs would still be considered subject to regulation as “persons and business entities engaged in the business of title insurance” pursuant to Idaho Code § 41-41-2704. Any entity engaged in the business of title insurance that directly or indirectly participates in the formation or financing of an entity to provide self-promotional functions not allowed under IDAPA 18.01.56.014.02 would be in violation of Idaho Code §41-2704(4).
To provide for compliance with the rule as outlined above without creating excessive upheaval, the DOI requires that by May 1, 2015 all title agents remove any educational programs listed on their websites that are conducted by the title agent and not solely regarding title and escrow. Further, any education courses listed on a title agent website that are not conducted by the title agent should prominently name the entity sponsoring and conducting the course. For these educational programs listed and held at a title agent facility, adequate records must be maintained to assure compliance with IDAPA 18.01.56 Exhibit 1, Item 10. For these educational programs listed and not held at a title agent facility, adequate records must be maintained to assure compliance with IDAPA 18.01.56 Exhibit 1, Item 1 and 2.
Examiner Title & Market Insurance Specialist
Idaho Department of Insurance