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or dishonest practices, the underwriter must report the suspected violation to theCommissioner and provide the Commissioner with a copy of the on-site review report.From January 1, 2008 through December 31, 2011, the MIA received 24 notices that anunderwriter had terminated a producer agency for cause as a result of an annual on-sitereview that revealed the producer had stolen escrow funds. The MIA has taken finaladministrative action in 12 of those cases.Beginning in June 2010, the MIA initiated focused market conduct examinationsto monitor compliance with § 10-121(k). To date, the MIA has commenced such focusedmarket conduct examinations for the following companies: The Security Title GuaranteeCorporation of Baltimore, Old Republic National Title Insurance Company, FirstAmerican Title Insurance Company, Fidelity National Title Insurance Company, StewartTitle Guaranty Company, North American Title Insurance Company, Southern TitleInsurance Corporation (currently in receivership in the State of Virginia), Ticor TitleInsurance Company (no longer licensed; merged into another Fidelity Nationalcompany), Conestoga Title Insurance Company, National Title Insurance Company ofNY, Inc., Title Resources Guaranty Company, Commerce Title Insurance Company (nowPremier Title Insurance Company), Westcor Land Title Insurance Company, AmericanGuaranty Title Insurance Company, EnTitle Insurance Company and WFG National TitleInsurance Company. Seven of those market conduct examinations have been completedand the MIA is in the process of finalizing the remaining examination reports.Additionally, the MIA will begin its periodic financial examination of Maryland’s onlydomestic underwriter, Security Title Guarantee Corporation of Baltimore, in mid-2013.12
The seven finalized market conduct examinations revealed that most of theunderwriters examined were complying, at least in part, with the on-site reviewrequirements of § 10-121(k). MIA's examiners discovered, however, that certainunderwriters were failing to review all of their title insurance producers, and in oneinstance, the underwriter did not conduct the required on-site review of any of itsproducers. In another instance, MIA examiners determined that the underwriter’s on-sitereview had revealed that a producer lacked sufficient documentation of its financialactivities, but the insurer had failed to report this outcome to the MIA, as required.Whenever compliance deficiencies were identified, the MIA directed the underwriter totake corrective action and designated the company for re-examination in approximatelyone year.In the MIA’s experience, defalcations typically do not occur as a one-time theft,but rather occur over an extended period of time. MIA investigations have revealed thatthere is a high correlation between the occurrence of a defalcation in Maryland and thelack of rigor in the methodologies used by some underwriters in the annual on-site reviewof their appointed producer agencies. To establish more consistent and rigorousstandards for conducting on-site reviews and reporting the results thereof, the MIA issueddraft proposed regulations for public comment on November 20, 2012. The commentperiod is scheduled to close on December 20, 2012. 16The lack of consistency and rigor of some on-site reviews is further supported byvarious practices reported by title insurance producers in the Producer Survey. Twentyeightagencies reported having at least one dormant escrow account and seven agencies16 The draft proposed regulations can be found online athttp://www.mdinsurance.state.md.us/sa/docs/documents/insurer/bulletins/bulletin12-28titlereg.pdf.13
Page 2 and 3: Report of the Study ofClosing or Se
Page 4 and 5: TABLE OF CONTENTSI. EXECUTIVE SUMMA
Page 6 and 7: Although in a minority of states an
Page 8 and 9: or misuse of closing or settlement
Page 10 and 11: (4) Division of Consumer Protection
Page 12 and 13: title insurance producer or agency
Page 14 and 15: As part of its Insurer Survey, the
Page 18 and 19: eported having a least one escrow a
Page 20 and 21: ond also may be purchased by an und
Page 22 and 23: 4. Other Protection Available to Un
Page 24 and 25: 1. Preventive MeasuresProducer Lice
Page 26 and 27: lender’s funds or documents. The
Page 28 and 29: In the event of the insolvency of a
Page 30 and 31: insurance task force. The informati
Page 32 and 33: in excess of 20 cents in claims on
Page 34 and 35: create an environment vulnerable to
Page 36 and 37: Appendix 1MARTIN O'MALLEY, Governor
Page 44 and 45: AppendixAppendix22MARTIN O’MALLEY
Page 46 and 47: Appendix 2c. If you answered “No
Page 48 and 49: Appendix 2Certification of Informat
Page 50 and 51: Appendix 2QUESTION #3Schedule BStat
Page 52 and 53: Appendix 3
Page 54 and 55: Appendix 3SURVEYTitle Insurance - C
Page 56 and 57: Appendix 3a. Does your title insura
Page 58 and 59: Appendix 3QUESTION # 2Schedule ADor
Page 60: Appendix 3QUESTION # 10Schedule CMi

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