06-05 - Licensure Requirements for Title Insurance Employees

To:             Title Insurers and Title Agencies

From:         Mary Kempker

 Director of the Consumer Affairs Division

 Missouri Department of Insurance, Financial Institutions and Professional


Date:         October 13, 2006

The Consumer Affairs Division of the Missouri Department of Insurance, Financial Institutions & Professional Registration (DIFP) encourages title insurance companies to review the activities of all employees within their business to ensure that they are properly licensed for the tasks they are performing. Recently, the Director issued consent orders against two title agencies requiring compliance with the Department's licensing provisions. This bulletin is intended to provide public notice to all title insurers and title agencies in an effort to increase compliance without immediate legal action.

Missouri law prohibits any person from selling, soliciting or negotiating insurance unless he/she is properly licensed with DIFP. §375.014.1 RSMo Cum. Supp. 2005. "Negotiate" is defined in §375.012.1(12) RSMo Cum. Supp. 2005, as the "act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers." This means title agency employees, who are involved in real estate closings, may be involved in "negotiating" insurance. However, salaried officers or employees of title insurers, title agents or title insurance agencies are exempt from §375.014.1 RSMo Cum. Supp. 2005 if they do not: 1) establish premiums for policies of title insurance; 2) determine insurability; or 3) issue commitments, policies or other contracts of title insurance. § 381.031(17) RSMo Cum. Supp. 1999.

The division seeks to provide guidance in the interpretation of this section and give meaning to the phrase "determining insurability." Determining insurability may be better described as a process rather than a single act and may involve a number of different employees. It occurs whenever a person drafts or reviews for legal accuracy and sufficiency or causes others to draft, prepare or review any document necessary to insure valid title to the subject real property, including:

It is the view of the Consumer Affairs Division that if a salaried employee who negotiates insurance also participates in determining insurability as defined by the above processes, then continued participation without licensure as a title agent would violate § 375.014.1, RSMo Cum. Supp. 2005, subjecting the individual to enforcement actions for unlicensed activity. The employer of the employee also may be subject to enforcement actions under §375.141.3 RSMo Cum. Supp. 2005 for knowingly allowing the unlicensed activity.

Salaried individuals who negotiate insurance and determine insurability are required to be licensed with the Department as a title insurance agent. This guidance should be applied to all salaried employees whether the employee is a closer, searcher, processor or receptionist. It is the actual job duties, not the job title, which governs whether an employee must be licensed.