Bulletin: NY000523

The Title Insurance Rate Service Association (TIRSA) as advised Stewart Title Insurance Company that the New York State Department of Financial Services (NYSDFS) has required all title insurance underwriters operating in New York to collect income and expense data for 2012 from their independent agents.  The information is due by March 15, 2013.  The NYSDFS had directed that the information contained in the Schedule U-4, be collected from independent Agents for the period of January 1, 2012 through December 31, 2012. If you represent multiple underwriters you will receive a similar request for data from your other underwriters and will be required to complete the U-4 for each underwriter.  

At Stewart, we wish to alert you to the data the NYSID is requesting from you to allow you to gather the data within the time frames set forth by the NYSDFS. To assist you in the collection of the data, Stewart has created https://nydatacall.com.  This web site is operational. This web site will afford you a secure, confidential and efficient method to provide the requested data to TIRSA/NYSDFS. The secure web site will mirror the NYSDFS request for data in U-4.  All individual office information will be kept strictly confidential and only the aggregate of all lines on the U-4 will be reported to TIRSA for their report to the NYDFS. 

To access the site you must use Internet Explorer and direct your browser to https://nydatacall.com.  The process to complete this data call is as follows:

• Hit Login on the page https://nydatacall.com
• Username is your six digit Agent ID
• Password is your six digit Agent ID
• The first time you log on it requests you change your password:
• • Current password is “stewart” (all lowercase and no quotes)
  • New Password – any password you like
  • Confirm new password – type new password again
  • Hit Continue
• Company Verification – You can edit address, phone, fax and website data but not Agent ID or Company Name
• Personal Verification – Enter the name, etc. of the person filling out the form
• Read the introduction and FAQ
• Begin Entering Data

Additional Information:

• If you cannot complete the questionnaire in one sitting, you can close Internet Explorer and access the site later.  Some things to remember:
• • Your new password to access the site
  • The data is saved up to the point you hit the “next” button so if you want to leave a screen and have already inputted data in that screen, make sure to hit next so that the system saves the data
• If you have questions on the line item you can hit the text “Help” on the upper right hand side and scroll to the Line Item number in question. 
• Once you submit the data you cannot edit the form.
• You can print out a worksheet to save.

Remittance Data:

To further assist you in the collection of the data as required by the NYSID, Stewart will provide, on the web site, your 2012 remittance data.  This data will be limited to the last remittance submitted for policy dates in 2012 and will consist of total policy premium and endorsement premium remitted for polices made in 2010.  The data will also include a policy count.  All the data will be broken down by zone.  To the extent that you have not remitted on 2012 policies, this information will not be complete. 

The data needs to be completed by MARCH 15, 2013

AGENTS OPERATING IN MULTIPAL STATES

The data covers only New York operations. We understand that offices may not keep track of all their expenses by individual state. If you have expenses that support operations in multiple states, allocate a portion of these expenses to New York by multiplying the total expense by the ratio of total New York revenue to total revenue in all states in which you operate.

The data covers only title insurance operations. We understand that offices may not maintain separate accounting for their title insurance operation. If you have direct or allocated New York expenses that support both title insurance operations and other operations, allocate a portion of your New York expenses to New York title insurance operations by multiplying the expense by the ratio of retained New York title insurance premium to total New York revenues for your operations.

 AGENTS WITH MULTIPAL UNDERWRITERS

We understand that your offices may represent several underwriters and may not keep track of their expenses by individual underwriter, except for the amount of premium remitted. You are to distribute all expenses allocated to New York among your underwriters in proportion to the dollars of premium you retain. You are to report premium remitted as actually remitted to each underwriter.

AGENTS OPERATING AS PART OF A LAW FIRM OR OTHER BUSINESS

The data coverers only title insurance operations in New York.  We understand that you may not maintain separate accounting for your title insurance operation.  If you have direct or allocated New York expenses that support both title insurance operations and other operations, allocate a portion of your New York expenses to New York title insurance operations by multiplying the expenses by the ratio of retained New York title insurance premium to total New York revenues for your operations. 

CASH vs ACCRUAL ACCOUNTING

All Reporting should be done as if the reporting entity was a cash basis taxpayer.  Only include revenue from transactions closed in 2012 and expenses actually paid in 2012.

MUNICIPAL SEARCH INCOME AND EXPENSES

Income derived from and expenses related to municipal searches SHOULD NOT BE REPORED on this schedule.  Such income and expense is to be completely excluded from the reporting.

The data requested in the U-4 schedule is as follows:

INSTRUCTIONS FOR COMPLETION

The reporting Schedule is set forth in the separate Excel file provided.

NOTE THAT THIS YEAR THERE ARE THREE PARTS TO THE SCHEDULE.

• Part 1 is identical to the Schedule that has been requested in the past.  The only change is that it is now labeled Part 1.
• Part 2 is new this year.  It appears immediately below Part 1 in the Excel file.
• Part 3 is also new this year and it appears immediately below Part 2 in the Excel file.

Instructions for completing Parts 2 and 3 follow the instructions for Part 1 below.

Part 1 Instructions

Enter amounts on each line as follows:

INCOME SECTION

Line 1 -          Policy Charges - Report premiums from policies priced under manual rates excluding endorsement premiums.

Line 2 -          Endorsements - Report all endorsement premiums

Line 3 -          Special Charges - Include charges for

Special Risks - Affirmative Coverage

Affirmative Covenant Insurance - Existing Construction

Construction Loan Continuation Searches beyond 5

Commercial Contract Vendee Continuation Searches beyond 5

Option Insurance Continuation Searches

Mortgage Foreclosure Guarantees

Recorded Document Certificates with Open Order

Recorded Document Certificates with No Open Order

Line 4 -          Gross Title Insurance Charges - Sum of Lines 1, 2 and 3

Line 5 -          Amount Remitted to Underwriter - Report the amount of premium remitted to the underwriter covered by this report. If you write for more than one underwriter, do not report the total remitted to all underwriters. The total must be broken down so that the amount remitted to each underwriter is reported only on the report for that underwriter.

Line 6 -          Retained Title Insurance Charges - Line 4 less Line 5

EXPENSE SECTION

New York expenses must be distributed between two general categories: 1) title order processing; and 2) general administration.

Title Order Processing includes order entry, searching, abstract production or updating (where applicable), title examination, commitment or certificate preparation, continuations, policy typing, attendance at closings, and related activities.

General Administration includes sales and marketing, personnel administration, accounting and data processing, and other overhead activities.

We understand that some agents do not keep track of all their expenses according to these categories.  If you do not maintain separate accounting for these categories, we ask that you allocate expenses between these categories using your best professional judgment.

Line 7 -          Search & Exam Costs Paid To Independent Searchers - includes payments to non-employees for abstracts, title reports, chain of title documents, etc.

Line 8 -          Purchase of Copies of Public Record - includes payments to governmental entities for paper copies of deeds, mortgages, judgments, etc.; fees to government entities for online access to databases such as real estate tax records, etc.  Do not include fees paid to private data providers, which are reported on line 18.

Line 9 -          Salaries - Include:

Salaries of both full-time and part-time personnel.

Compensation paid on an hourly basis

Bonuses

Sales Commissions

Partnership draws (if organized as a partnership)

Note: agents conducting business in multiple states are required to make a reasonable allocation of salaries for title insurance operations in New York State, as described above.  Similar allocations need to be made for agents that are part of a law firm or have multiple underwriters.

Line 10 -        Employee Benefits include group insurance (life, health, dental, disability, etc.), company contributions to profit-sharing plans, company contributions to 401(k) plans, etc.

Line 11 -        Payroll Taxes include city, state and Federal levies on payroll (including company portion of Social Security, Medicare, unemployment, etc.)

Line 12 -        Rent and Rent Items includes all utilities (i.e., heat, light, power, water), rental of main office, branch offices, and other offices; non-rental payments under net leases (utilities, taxes, etc.); maintenance expenses (janitorial supplies and services, repairs, etc.), etc.

Line 13 -        Real Estate Expenses include expenses for real estate your agency owns, such as janitorial services, real property insurance, interest on mortgage loans, etc.

Line 14 -        Real Estate Taxes include real estate taxes for real estate your agency owns.

Line 15 -        Taxes, Licenses, and Fees include non-real-estate-related and non-payroll taxes EXCLUDING state and Federal income taxes.

Line 16 -        Advertising includes advertising space purchased in Yellow Pages, advertising spots purchased on radio and television, billboards, advertising space purchased in trade or popular newspapers and magazines, etc.  Additional details for this expense category are to be provided on Part 2.  The total amount for this expense category on Part 2 must agree to the amount reported on Part 1.

Line 17 -        Marketing and Promotional Expenses include the cost of pens, pads, calendars, and similar materials distributed to customers; costs for providing training seminars; event sponsorships; costs of maintaining a website; costs of telemarketers; cost of newsletters and other marketing materials distributed to customers; etc.  Additional details for this expense category are to be provided on Part 2.  The total amount for this expense category on Part 2 must agree to the amount reported on Part 1.

Line 18 -        Title Plant Maintenance and Rental includes the costs of maintenance of any daily takeoff title or abstract plant and/or back title plant; and payments for the right to access another company’s title or abstract plant, back title files, and copies of the public record.

Line 19 -        Travel includes cost of tickets for public transportation, including trains and airlines; all automobile expenses paid including cost of automobile lease or rental; depreciation of owned automobiles; cost of hotels and meals; etc.  Additional details for this expense category are to be provided on Part 2.  The total amount for this expense category on Part 2 must agree to the amount reported on Part 1.

Line 20 -        Printing and Office Supplies excludes item reported on Line 19, include copier expenses.

Line 21 -        Postage, Telephone and Freight includes cost of stamps, local and long-distance telephone service, leased dedicated telephone lines (such as T1 or T3 lines), internet services, Federal Express, UPS, etc.

Line 22 -        Equipment Depreciation and Rental (Non-EDP) includes rental or depreciation charges for furniture, copiers, fax machines, telecommunications equipment, and other non-computer office equipment;

Line 23 -        Cost or Depreciation of EDP Equipment and Software includes cost of leasing or depreciation charges on computer equipment including laptops, desktops, servers, network attached storage, etc.; cost of purchased software; cost of software licensing and upgrade agreements; etc.

Line 24 -        Errors and Omissions Insurance

Line 25 -        Other Insurance includes property insurance (excluding amounts reported on Line 14), liability insurance, fidelity and surety bonds, etc.

Line 26 -        Director’s Fees, including expense allowances for travel to Board meetings.

Line 27 -        Boards and Associations includes dues paid by your agency for itself or for its employees to trade and professional associations (e.g., American Land Title Association, New York State Land Title Association, Chamber of Commerce, bar associations, etc.); fees to attend professional and trade association meetings; etc.

Line 28 -        Legal and Auditing includes fees paid to outside accounting firms and law firms

Line 29 -        Bad Debts includes amounts originally booked as income that were written off as uncollectable including any charge offs.  Please include any unreimbursed Closing / Escrow losses and any Abstract / Search losses (from abstracts /searches sold) in this category.

Line 30 -        Interest includes interest paid to banks and/or suppliers. It excludes mortgage interest reported on Line 15

Line 31 -        Other includes all expenses not reported on Lines 11 to 30.  Additional details for this expense category are to be provided on Part 2.  The total amount for this expense category on Part 2 must agree to the amount reported on Part 1.

Line 32 -        Total Expenses is the sum of Lines 7 to 31

Line 33 -        Net is Line 6 less Line 32

Line 34 -        Number of Employees is the number of full-time equivalent personnel (i.e., report two half-time employees as one full-time equivalent employee)

Note: agents conducting business in multiple states are required to make a reasonable allocation of the number of employees devoted to title insurance operations in New York State, as described above.  Similar allocations need to be made for agents that are part of a law firm or have multiple underwriters.

Part 2 Instructions

The NYSDFS has requested that all agents provide additional detail for the amounts reported in the following expense categories:

• Advertising Expense (Part 1 Line 16)
• Marketing and Promotional Expenses (Part 1 Line 17)
• Travel (Part 1 Line 19)
• Other (Part 1 Line 31)

In Part 2 of the schedule we have provided a line for each of several possible expense types that may appear in the broader categories mentioned above and displayed on Part 1.  Please enter the amounts for each of these categories on Part 2.  Within each of the four main categories, there is also provided an “Other” line to accommodate the entry of any amounts not covered by the items explicitly identified.

Note: it is important that the sums of the detailed items in Part 2 for each category agree with the amounts reported on Part 1.

Part 3 Instructions

In the event that amounts have been entered in the “Other” line for Advertising Expenses (16.16), Marketing and Promotional Expenses (17.03), Travel Expenses (19.08) or Other Expenses (31.09) in Part 2, enter a detailed description for each of the items that fall within these “Other” lines.  10 lines have been provided for each of the 4 categories.  Also, provide an overall amount for each item entered on Part 3 if possible.

Note: it is important that the sums of the detailed items in Part 3 for each category agree with the amounts reported on Part 2.

The NYSID as also required that Stewart report to the NYSID names of offices that have provided the data.  We know that this data call may be difficult for each office to accomplish and we stand ready to assist you.  We appreciate your best efforts to assist in the full compliance with the NYSID directive. 

Attached is a sample of the U-4 schedule.  More information and the web site will be forthcoming.  Please do not hesitate to contact company counsel with any questions you might have.