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    Title Resources Guaranty Company (“Title Resources”) is positioned as a boutique offering to the title insurance space by being one of the largest underwriters in the country, with the smallest number of title agents. Having high-caliber agents helps make Title Resources one of the most secure underwriters in the industry. All Title Resources agents must pass a rigorous test of financial and legal conditions to be approved and remain a Title Resources agent, as follows:
    Title Resources conducts a business review of each of its agents outside of Texas on an annual basis and its Texas agents every two years, as required by the Texas Department of Insurance (TDI). The purpose and scope of its audits include the following:
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    Initial Vetting
    1) As part of the initial onboarding process, prospective agents must submit an Onboarding Information Packet, consisting of the following items:
    .....a. Agent Information Review
    ..........· Basic information regarding the agency such as Federal Tax Id, Year Established,
    ..........Claim History, and list of current underwriters along with supporting documentation
    ..........giving insight of the employees, job duties, and financial statements for review
    .....b. Agent Escrow Information Review
    ..........· A series of questions to familiarize Title Resources with the escrow/accounting
    ..........process of agency
    .....c. Individual/Attorney Information Review
    ..........· Basic information for owners, partners, attorneys and/or employees such as full
    ..........legal name, address, Social Security and question regarding past potential legal issues.
    .....d. Insurance Coverage Review
    ..........· A summary of the agent’s insurance coverage to ensure it meets the state
    ..........minimum requirement coverage for E&O, Surety, and/or Fidelity Coverage
    .....e. Business Source / Marketing Plan Review
    ..........· A summary of the agent’s target market
    .....f. Title Production Review
    ..........· A basic overview of the production procedures of the agency to ensure compliance
    ..........with laws and industry underwriting requirements
    .....g. Disclosure and Release of Information Authorization
    ..........· Provide authorization to conduct background checks on appropriate owners, partners, ..........attorneys and/or employees

    2) Document Review        
    .....a. Financial Statement Review is conducted on the following:
    ..........· Prior full year financial statements, balance sheets and income statements
    ..........· Latest interim financial statements
    ..........· General ledger detail for the prior three months
    ..........· Current three months of all operating account back reconciliations including
    ..........bank statements
    .....b. Trust Account Group (TAG) reviews:
    ..........· Escrow Information Form
    ..........· Trial balance
    ..........· Bank Statements
    ..........· Registers
    ..........· Reconciliation reports
    ..........· Outstanding reports
    ..........· Summary top sheet
     
    ....c. Escrow account bank statement(s) and escrow reconciliations for three months from
    .....each bank account (including inactive bank accounts) in which prospective agent maintains
    .....title escrow funds
     
    3) Review evidence of the 3-way reconciliation for each of the bank accounts referred to above. The reconciliation evidence should consist of:
    .....a. Checkbook balance (deposits, checks and wires out)
    .....b. Trial balance (list of files with outstanding/undisbursed checks and outstanding deposits)
    .....c. Bank statement balance (deposits in transit - outstanding checks = adjusted bank balance)

    4) Background Checks
    .....a. Background/credit checks on the appropriate personnel of the agent
    .....b. Individual/Attorney Information Form and Disclosure and Release of
    .....Information Authorization to IDSnetwork, Inc. via secured email

    5) Issuing Agency Contract is drafted
     
    Initial Auditing

    1) Review of background/credit checks received via secured/password protected email from IDSnetwork, Inc. 

    2) Perform internet and public records search (google, corporate search, dept. of secretary, state bar etc.). Share information with Management and Audit, upload copies into agent database

    3) Copy of title licenses are obtained for the agency and all appropriate agent employees
     
    Initial Approval

    Agents are maintained in the database, once their set up is complete:

    1) Issuing Agency Contract information

    2) Maintain employee and branch office roster

    3) Insurance/bond coverage information

    4) State specific requirements
    .....a. Appointments
    .....b. DOI notifications

    Ongoing Vetting

    1) Preparation
    .....a. Identify any concerns or risk issues with agent
    ..........· Identify if the agency has an affiliated business relationship with a realtor, lender, etc.
    ..........· Identify if the agency operates in different states, and review the requirements of
    ..........each state for escrow accounts, mandated audit requirements, etc.
    .....b. Contact agent to schedule the audit and provide a list of items that the Field Auditor
    .. ..and Trust Account Group requires
    .....c. Pull reports for agent and review for potential risk issues
    .....d. Review prior internal audit report
    ..........· Department of Insurance audit reports (Texas)
    ..........· Outside CPA audit reports (Ohio, Arizona)
    ..........· Other underwriter (Virginia, Kansas)
    .....e. Perform an internet search and look for potential risk issues involving the managers
    .....or principals and company business name(s).

    2) Trust Account Group Preliminary Results
    .....a. Obtain and review Trust Account Group’s preliminary results, consisting of:
    ..........· Initial report draft with any preliminary findings
    ..........· Work papers detailing follow-up needed during the on-site file review to finalize
    ..........Trust Account Group’s reconciliation work

    3) Obtain Issuing Agency Contract from Title Resource Production System (TRUE)
    .....a. Review terms as indicated in TRUE
    .....b. Document agency-underwriting split as indicated in TRUE

    4) Discuss with legal if Agent Metric reports indicate significant issues in the following areas:
    .....a. Lag calculation- time span between the effective date of policy versus when the policy
    .....has been reported to Title Resources
    .....b. Accounts Receivable
    .....c. Claims
    .....d. Monthly remittances
     
    General Field Work

    1) Confirm insurance coverage is current (e.g. E&O, Surety, and Fidelity) and in compliance with Issuing Agency Contract

    2) Complete Internal Control Questionnaire
     
    Ongoing Auditing


    Escrow Review

    1) Based upon fieldwork, we ensure the list of bank accounts supplied by the agent is complete.
    .....a. Recording and all escrow accounts
    .....b. Reconcile Schedule A from prior year's audit

    2) Determine if escrow accounts contain an investment feature, if so; determine type of investment (e.g., sweep, repurchase, etc.)

    3) Complete testing of the unusual items noted by Trust Account Group’s reconciliation review

    4) Review a random sample of files using the standard Title Resources’ File Review.  Title Resources may pull its sample from the following:
    .....a. Remittance reports
    .....b. Policy registers
    .....c. Check registers
    .....d. Order logs
    .....e. Trust Account Group 3-way reconciliation components
    .....f. CPL reports

    5) Review random sample of files for verification of mortgage payoffs clearing and note exceptions

    6) Reconcile checks from bank statement to the cancelled checks for one month (if applicable)

    7) Review a sample of cancelled checks (images or hard copies) for the following:
    .....a. Payoff check slow clearing
    .....b. Improper, unusual or lack of endorsement
    .....c. Alterations
    .....d. Unusual payees, unusual check signer, unusual or lack of file number
    .....e. Large check payable to the agent or an employee
    .....f. Large even dollar check, or transfer to/from bank accounts

    8) Request three month listing of all voided checks, review and test small sample for proper payee

    9) Determine if the agent has interest bearing (escrow savings) accounts and withdrawal activity


    Premium Payments

    1) Document how often the agent remits (operating system contains a field for Average Report Date which is to be completed by revenue manager)

    2) Determine the number of files that require a policy to be typed and the corresponding lag

    3) Based on the number of policies not remitted, determine the amount due based upon the average net remittance per policy

    4) If the agent has a separate premium account, perform the following:
    .....a. Determine if the agency has adequate funds in the account to cover outstanding premiums
    .....b. Review disbursements out and determine if the payments are all paid to underwriters; .....note any exceptions
     
    Ongoing Approval


    Final Report

    1) At conclusion of review, we meet with the principal to discuss findings and recommendations. For significant findings, we obtain an agreement on a reasonable implementation date.

    2) Written summary and report findings to Audit Manager
     
    Much goes into an agent becoming and remaining Title Resources certified. We take much pride in knowing that each of our agents have been vetted, audited and approved in the past and will be held to the same standards continually. After all, being selective makes a big difference.