Illinois bill proposes major shakeup in title insurance oversight

A newly introduced bill in the Illinois General Assembly aims to significantly alter the regulatory oversight of the title insurance industry. Senate Bill 2648, introduced by Sen. Bill Cunningham, proposes shifting enforcement authority from the Department of Financial and Professional Regulation (IDFPR) to the Department of Insurance (DOI). This strategic move could streamline insurance oversight and impact insurers, agents, and real estate professionals across Illinois.

Key regulatory changes proposed:

• Transfer of full regulatory control over title insurance from IDFPR to DOI.
• Existing IDFPR rules and proposed regulations under the Title Insurance Act will become DOI rules.
• Revenues from title insurance activities, currently directed into the Financial Institution Fund, will instead be channeled into the Insurance Financial Regulation Fund.
• DOI will handle all regulatory actions, including licensing, audits, escrow oversight, and enforcement.

Industry implications:

• Administrative Adjustments: Companies and agents must reroute licenses, filings, and communications through DOI.
• Escrow Fund Management: Strict escrow handling requirements continue, now fully under DOI oversight.
• Fraud and Compliance Enforcement: Responsibility for fraud, dishonesty, and improper disbursement cases transfers to DOI.

Predatory Lending Database Oversight Shift: SB2648 also impacts the Residential Real Property Disclosure Act, moving oversight of the predatory lending database from IDFPR to DOI.

Operational continuity and transition:

• Ensures no disruption to existing licenses, investigations, or regulatory proceedings.
• Reinforces penalties for non-compliance during and after the transition.

Industry outlook

This legislative change represents more than a procedural shift; it aligns Illinois title insurance oversight with broader DOI regulatory practices. While beneficial for multi-state insurers accustomed to standard insurance regulation, local agents and escrow providers may encounter new compliance requirements.

SB2648 is currently under review by legislative committees and, if passed, would take immediate effect upon gubernatorial approval.