Committee hears bill to change title-agent audits, standardize $100,000 surety bond and remove rural controlled-business exemption

The House Insurance Committee met and heard testimony on House Bill 2042, a Department of Insurance‑sponsored measure that would (1) stop requiring title insurance agents to submit annual audit reports to the commissioner and instead make those audits available on request, (2) standardize the surety bond or irrevocable letter of credit amount at $100,000 for title agents, and (3) remove the controlled‑business exemption that currently applies in counties with populations of 10,000 or fewer.

Why it matters: The department told the committee the changes are intended to reduce administrative burden for both the department and title agents, and to close enforcement gaps that make it difficult to verify whether title orders reported as local actually occurred in the counties claimed.

Kyle Strathman, Deputy Chief of Staff, Kansas Insurance Department, told the committee the bill “would not eliminate that audit audit requirement, just to be clear. We’re not — we’re just simply making it available upon the request of the commissioner” rather than requiring annual submission. He said the department receives roughly 2,000 audit reports now and that routine submission consumes “an inordinate” amount of staff time.

Strathman also summarized the bond change: “We’re proposing with this bill to simplify that to a single bond of $100,000.” He said many agents already carry a bond at that level because they operate across multiple counties, and the proposal is intended to simplify compliance and monitoring.

On the controlled‑business exemption, Strathman said Kansas is among the last states that allow an exemption for very small counties, and that the exemption makes enforcement difficult because the department cannot reliably verify whether reported business was local. He described controlled business as business steered to an agent by an affiliated realtor or other referral relationship, and said existing statute limits how much such business an agent may derive but exempts small counties; HB 2042 would remove that county‑size exemption while leaving the controlled‑business prohibition itself in place.

Committee members asked whether removing the exemption would create access problems in sparsely populated counties and whether the $100,000 bond would be onerous. Strathman said the department discussed the bill with industry stakeholders in the interim and that “there wasn’t much concern” raised about removing the exemption. On bond cost, members noted estimates for surety premiums can vary widely; Strathman said the department could provide more precise cost information.

The department requested, and asked the committee to consider, an amendment to change the bill’s effective date so impacted parties would have time to prepare; Strathman said the department had intended an effective date of Jan. 1, 2026 but omitted that when the bill was filed.

The committee closed the hearing on HB 2042 after taking proponent testimony from the department and recorded no proponents, neutrals or opponents in the gallery who wished to speak.

Ending: The bill will return to the committee for potential amendment and further consideration; no committee vote on the measure was recorded at the hearing.