Report urges title industry competition
|April 19, 2007|
WASHINGTON (AP) - Federal and state officials should strengthen regulation of the title insurance market, with the goal of improving consumers' ability to choose among insurers in a market dominated by five major companies, the investigative arm of Congress said this week in a new report.
Title insurers provide a guarantee to lenders that buyers will be able to establish ownership of a piece of property. It is sold mostly through agents, who perform searches of public records to check the title history of properties -- checks that can reveal problems such as unpaid taxes. Insurance guards against claims not found through record searches.
The report, released Tuesday by the Government Accountability Offices, questioned whether consumers are paying too much money for title insurance.
Consumers find it difficult to shop for title insurance, the report said, and put little pressure on insurers to compete on price, partly because charges for title insurance are buried within a much larger real estate transaction.
The report also said investigations by federal housing officials and state regulators have alleged "illegal activities within the title industry that appear to reduce price competition and could indicate excessive prices"
The report found that 92 percent of the title insurance market is dominated by major five major players, the largest of which is Fidelity National Financial Inc., with a 29 percent market share. Rival First American Corp. is second with a 27 percent market share.
Rounding out the top three are Stewart Information Services Corp., LandAmerica Financial Group Inc. and Old Republic International Corp. Most states are dominated by two or three of the insurers, the report found.
Premiums for a median-priced home can range from about $700 in Des Moines, Iowa, to nearly $2,200 in New York, the report said.
The American Land Title Association, the national trade association for title insurance firms, applauded the report in a prepared statement Wednesday.
"We strongly support efforts to educate home buyers, to ensure the title search, examination and insurance process is open and transparent and to allow consumers to compare policies and prices before they buy," Greg Kosin, the group's president, said in a statement.
Copyright 2007 Associated Press. All rights reserved.